Horan v. Kenai Peninsula Borough Board of Equalization

Summary

The Supreme Court of Alaska reviewed the valuation of a low-income housing tax credit property for borough property-tax purposes. The court upheld use of the cost approach and consideration of rental restrictions but remanded for clarification regarding federal tax credits, the comparison properties supporting a finding of grossly disproportionate valuation, and the basis for a 40% economic-obsolescence adjustment.

Holdings

1. The Board could use the cost approach to value Pacific Park's post-2000 low-income housing tax credit property because the property was governed by the general full-and-true-value provision, the municipality had exempted post-2000 LIHTC properties from mandatory use of the statutory income approach, and Pacific Park's request for an Assembly resolution requiring that approach had failed.
2. The Board could reasonably consider the property's restricted rental rates and the resulting economic effects when valuing the property under the cost approach.
3. The Board's decision could not be affirmed because the record did not disclose whether or why the Board considered or ignored the federal LIHTC tax credits in adjusting the property's valuation.
4. The Board's findings were insufficient because they did not identify the basis for the 40% economic-obsolescence factor or the comparison properties supporting the finding that the assessor's valuation was grossly disproportionate.

Questions Presented

1. Whether the Board was required to use the income approach rather than the cost approach to value Pacific Park's post-2000 low-income housing tax credit property.
2. Whether rental restrictions could be considered in valuing the property under the cost approach even though the statutory income approach was not mandatory.
3. Whether the Board's findings adequately explained its treatment of federal low-income housing tax credits in adjusting the valuation.
4. Whether the Board adequately supported its findings that the assessor's valuation was excessive and grossly disproportionate compared with similar properties.
5. Whether the Board adequately explained and supported the 40% economic-obsolescence adjustment.

Disposition

vacated