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Williams v. Opportunity Homes Limited Partnership and Louisiana Tax Commission

Court of Appeals of Louisiana, Fourth Circuit

May 10, 2017

ERROL G. WILLIAMS, ASSESSOR, PARISH OF ORLEANS
v.
OPPORTUNITY HOMES LIMITED PARTNERSHIP AND LOUISIANA TAX COMMISSION

         APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2015-08441, DIVISION "C" Honorable Sidney H. Cates, Judge

          Galen S. Brown SULLIVAN STOLIER AND John Jurgen Weiler Christian N. Weiler WEILER & REES, LLC COUNSEL FOR PLAINTIFF/APPELLANT.

          Pierre G. Walker, III Robert Dean Hoffman, Jr. ROBERT D. HOFFMAN, JR., APLC COUNSEL FOR DEFENDANT/APPELLEE.

          (Court composed of Chief Judge James F. McKay, III, Judge Roland L. Belsome, Judge Regina Bartholomew-Woods).

          Regina Bartholomew-Woods Judge.

         Plaintiff-Appellant, Erroll G. Williams, Assessor for the Parish of Orleans ("Assessor Williams" or "the Assessor"), appeals the judgment of the Orleans Parish Civil District Court dated July 11, 2016, in favor of Defendants-Appellants, Opportunity Homes Limited Partnerships ("Opportunity Homes") and the Louisiana Tax Commission (the "LTC" or "the Commission"). Assessor Williams asserts four (4) assignments of error relative to two decisions rendered by the Tax Commission on August 5, 2015, determining the fair market value for certain affordable housing rental properties for the 2014 and 2015 tax years for purposes of ad valorem taxation. For the reasons that follow, we reverse the judgment of the district court and reinstate the fair market valuations as determined by Assessor Williams.

         FACTUAL AND PROCEDURAL BACKGROUND

         Opportunity Homes describes itself as a "scattered-site, low income affordable housing development." It consists of thirty-two (32) single- and double-unit residential buildings. The separate properties are connected by way of a Tax Credit Regulatory Agreement ("TCRA"). Opportunity Homes notes the TCRA prohibits separation and sale of the various properties, and restricts the chargeable rents to "no more than sixty percent (60%) of the Area Median Income ("AMI")" for an extended period of time, but the rates are even lower for some buildings.

         Pursuant to the powers and authority delegated to him by La. R.S. 47:1903, La. R.S. 47:1957, and La. R.S. 47:2323, Assessor Williams determined the fair market value ("FMV") of Opportunity Homes' scattered-site properties using what is known as the "market approach." In using this particular approach, Assessor Williams determined the FMV of Opportunity Homes' properties to be $4, 200, 900 and $4, 083, 610 for tax years 2014 and 2015, respectively.

         Pursuant to its authority under La. Const. art. VII, § 18, the Commission reviewed the "correctness" of Assessor Williams' assessment. At a January 13, 2015 hearing, counsel for Opportunity Homes noted that in 2013, the same properties were valued at $1, 525, 000, and assessed accordingly. The Commission relied on assessments by Randy Harrington, its own staff appraiser, who used what is known as the "income approach" and reached FMVs of $1, 525, 000 for both tax years 2014 and 2015, which assessments specifically excluded the value of "Low Income Housing Tax Credits" ("LIHTCs") received by the taxpayer for encumbering the properties with below-market-value rents. Counsel for Opportunity Homes noted that pursuant to adopted and promulgated regulations, the income approach is the "recommended" approach for determining the FMV of "affordable rental housing." Based on the foregoing, the Commission moved to accept the staff recommendations as to each tax year.

         As a result of the Commission's actions, on September 2, 2015, Assessor Williams commenced suit in the district court pursuant to La. R.S. 47:1998, La. R.S. 47:1989 and La. R.S. 49:964. The district court affirmed the Commission's decision, finding that the Commission's decision "was not in violation of any constitutional or statutory provisions, was not in excess of its statutory authority, was not made upon unlawful procedure, or affected by other error of law, was not arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion." The district court further noted the decision "was clearly supported by the testimony and preponderance of the evidence before it, where [the Commission] had the opportunity to judge the credibility of witnesses by first-hand observation."

         STANDARD OF REVIEW

         We review the decision of the Commission pursuant to La. Const. art. VII, section 18(E) and La. R.S. 47:1998(A)(1). Judicial review of an agency's adjudication is governed by La. R.S. 49:964(G), which provides as follows:

The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted ...

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