Cottonwood Affordable Housing v. Yavapai
In Cottonwood Affordable Housing v. Yavapai, 205 Ariz. 427, 72 P3d 357 (Ariz TC 2003), the owner of a LIHTC project in Arizona challenged the county assessor's valuation of $ 2,121,859.
Both sides agreed that the property should be assessed under the income approach, but disagreed on what types of income should be considered.
The property owner thought the valuation should be based on the actual project income and expenses, while the county believed that either regular market rent rates should be used or the tax credits should be also considered. Cottonwood Affordable Housing, 72 P3d at 359.
The court rejected use of the tax credits because they were intangibles, "not an integral part of the real estate", and added no "value [to] the property as their use is limited to ten years . . . ." Id.
On the restricted rents issue, the Cottonwood Affordable Housing court again agreed with the property owner: "A willing buyer, knowing that there is a restriction as to the amount of rent that can be charged, would pay less for a low income housing project than for a regular commercial apartment complex. This property should not be valued as though a buyer would not consider the restrictions." Id. at 360.