Stillwater Hous. Associates v. Rose

Decision Date28 March 2011
Docket NumberReleased for Publication by Order of the Court of Civil Appeals of Oklahoma,Division No. 1. , No. 108682
Citation254 P.3d 726,2011 OK CIV APP 51
PartiesSTILLWATER HOUSING ASSOCIATES, Petitioner/Appellee,v.Jacquie ROSE, Payne County Assessor and Payne County Board of Equalization, Respondents/Appellants.
CourtUnited States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

OPINION TEXT STARTS HERE

Appeal from the District Court of Payne County, Oklahoma; Honorable Stephen R. Kistler, Trial Judge.AFFIRMED.William K. Elias, Karolina D. Roberts, Elias, Books, Brown & Nelson, Oklahoma City, Oklahoma, for Petitioner/Appellee.Lowell A. Barto, Assistant District Attorney, Stillwater, Oklahoma, for Respondents/Appellants.CAROL M. HANSEN, Judge.

¶ 1 Appellants, Payne County Assessor Jacquie Rose and Payne County Board of Equalization (collectively Assessor), seek review of the trial court's orders granting partial summary judgment finding low income housing tax credits are exempt from taxation as intangible personal property, and granting an agreed judgment valuing certain low income housing without including the tax credits as income of the property. We affirm, holding low income housing tax credits are not income and are exempt from taxation as intangible personal property.

¶ 2 Appellee, Stillwater Housing Associates (Owner), is a limited partnership created in 1998 to develop an apartment complex and twenty-four single-family residential properties in Stillwater, Oklahoma, to be operated as a low income housing complex pursuant to the Internal Revenue Code (IRC), 26 U.S.C. § 42. In 2000, Owner applied to the Oklahoma Housing Finance Agency (OHFA), the state agency which administers the IRC § 42 program in Oklahoma, for annual tax credits in the amount of $455,235.00, which were approved. Owner then sold the tax credits to its limited partners to generate private equity to complete construction of the housing complex. The tax credits are allocated to the limited partners in ten annual increments and flow through Owner directly to the limited partners.

¶ 3 In 2007, Assessor valued the property at $6,268,875.00 for ad valorem tax purposes. Owner appealed, asserting the property's value was only $3,975,000.00 based upon the capitalized net operating income of the property. The Board of Equalization instructed Assessor's appraisers to capitalize the tax credits as though they were income attributable to the property, which increased the property's valuation to $8,617,200.00. The Board certified that amount on the tax rolls and Owner appealed to the district court for trial de novo pursuant to 68 O.S.2001 § 2880.1. The Board certified the same amount in 2008 and 2009, and Owner appealed each of those orders. The three cases were consolidated.

¶ 4 Both sides filed motions for partial summary judgment as to whether the tax credits should be treated as income to the property. Both sides agreed the property was income-producing and therefore properly valued under the income and expense approach, which is defined in 68 O.S.Supp.2005 § 2802(20) as “a method to estimate fair cash value of a property by determining the present value of the projected income stream.”

¶ 5 Owner argued the tax credits are exempt from ad valorem taxation because they are intangible personal property, citing the Oklahoma Constitution, Art. X, § 6A, which provides, Intangible personal property as below defined shall not be subject to ad valorem tax or to any other tax in lieu of ad valorem tax within this State:

...

(c) Accounts and bills receivable, including brokerage accounts, and other credits, whether secured or unsecured.

Owner argued in the alternative the tax credits are not income, but are a financing mechanism to encourage investment in low income housing projects.

¶ 6 Assessor argued the low income housing tax credits are included in the definition of real property subject to ad valorem taxation, under the Ad Valorem Tax Code, 68 O.S.Supp.2006 § 2806(A), which provides:

Real property, for the purpose of ad valorem taxation, shall be construed to mean the land itself, and all rights and privileges thereto belonging or in any wise appertaining, such as permanent irrigation, or any other right or privilege that adds value to real property....

Assessor argued the tax credits are rights and privileges belonging to the land because they add value to the land and do not exist separately from the land. She contended including the tax credits in the income stream balanced the value-depressing effect of the rent restrictions on the property, and if the tax credits were not included, then the valuation should be based on market rent rather than restricted rent. Assessor also argued the tax credits are not exempt intangible property under Okla. Const., Art. X, § 6A, because the word “credit” in that section is limited by the rule of ejusdem generis to things of the same class as the other things mentioned, and tax credits are not like accounts or bills receivable.

¶ 7 In response, Owner argued the tax credits were not part of the real property because the Legislature had never enumerated them as such, and the Oklahoma Supreme Court has defined the term “credit” to include tax credit in In re Assessment of Personal Property Taxes...

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4 cases
  • Heron Lake II Apartments, LP v. Lowndes Cnty. Bd. of Tax Assessors
    • United States
    • Georgia Supreme Court
    • September 23, 2019
    ...359 (Ariz. Tax Ct. 2003) (stating that LIHTCs "are not income flowing from the rental of the property"); Stillwater Housing Assoc. v. Rose , 254 P.3d 726, 728 (Okla. Ct. Civ. App. 2011) (holding that LIHTCs are not income and do not replace income).7 OCGA § 48-5-2 (3) defines the "fair mark......
  • Kingfisher Wind, LLC v. Wehmuller
    • United States
    • Oklahoma Supreme Court
    • October 18, 2022
    ...not be subject to ad valorem tax or to any other tax in lieu of ad valorem tax within this State;" and 2) StillwaterHousingAssociates v. Rose, 2011 OK CIV APP 51, 254 P.3d 726 which held that tax credits are exempt from ad valorem taxation because they are intangible personal property and n......
  • Williams v. Muses, Ltd., 2016-CA-0250
    • United States
    • Court of Appeal of Louisiana — District of US
    • October 19, 2016
    ...its brief to this court. The LTC's prior decision is discussed elsewhere in this opinion.21 See Stillwater Housing Associates v. Rose , 254 P.3d 726, 729 (Okla. Civ. App. 2011) (holding that "[t]he low income housing tax credit is a tax benefit that belongs to the investor rather than a rig......
  • Pryor v. State.
    • United States
    • United States State Court of Criminal Appeals of Oklahoma. Court of Criminal Appeals of Oklahoma
    • June 23, 2011

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