ERROL G. WILLIAMS, ASSESSOR, PARISH OF ORLEANS
OPPORTUNITY HOMES LIMITED PARTNERSHIP AND LOUISIANA TAX COMMISSION
OF CERTIORARI TO THE COURT OF APPEAL, FOURTH CIRCUIT, PARISH
issue in these consolidated cases is the correctness of
administrative decisions issued by the Louisiana Tax
Commission ("Commission") on review of the
valuations, for the 2014 and 2015 tax years, by the Orleans
Parish Tax Assessor ("Assessor") of a low-income
housing development, owned by Opportunity Homes Limited
Partnership ("Opportunity Homes"), for purposes of
assessment of ad valorem taxes. The Commission ruled in favor
of Opportunity Homes for both tax years. The administrative
decisions were upheld by the district court but reversed by
the appellate court. For the reasons that follow, we reverse
the appellate court and reinstate the assessment values as
determined by the Commission.
AND PROCEDURAL HISTORY
factual and procedural history of this case was concisely set
forth by the appellate court as follows:
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."
Williams v. Opportunity Homes Limited Partnership,
16-1185, pp. 1-3 (La.App. 4 Cir. 5/10/17), 220 So.3d 188,
189-90. Upon review, the appellate court ruled that the
Commission's decisions were "in violation of
statutory provisions, in excess of its authority, . . . based
upon unlawful procedures, " and "legally
incorrect." Id., 16-1185 at p.
4, 220 So.3d at 191. Accordingly, the appellate court
reversed and reinstated the Assessor's fair market values
for the 2014 and 2015 tax years.
Opportunity Homes and the Commission sought review in this
court, and we granted the writ applications. Williams v.
Opportunity Homes Limited Partnership, 17-0955, 17-0957
(La. 10/27/17), 228 So.3d 1228, 228 So.3d 1231.
Homes urges this court to reverse, contending the appellate
court decision: is in conflict with other jurisprudence,
harms the administrative authority of the Commission;
negatively impacts statewide uniformity for ad valorem
property assessment and taxation; misinterprets jurisprudence
and law (including the Louisiana Administrative Procedure Act
("APA"), La. R.S. 49:950 et seq., relative to
review of administrative agency decisions); and,
alternatively, should have remanded the matter to the
Commission to determine whether the market/sales comparison
approach could have been applied to value the subject
property so as to ensure statewide uniformity. The Commission
additionally asserts that the appellate court erred in
reversing the decisions of the Commission and the district
court since there was "no evidence to reinstate prior
assessed values of the Orleans Parish Assessor."
essence of the dispute between the Assessor and Opportunity
Homes is whether the method of valuing Opportunity Homes'
low-income housing development for purposes of ad valorem
taxation should be via the "market approach, " as
asserted by the Assessor, or via the "income approach,
" as asserted by Opportunity Homes.
stated in La. Const. Art. VII, § 18(A), "[p]roperty
subject to ad valorem taxation shall be listed on the
assessment rolls at its assessed valuation, which . . . shall
be a percentage of its fair market value. The percentage of
fair market value shall be uniform throughout the state upon
the same class of property." Each assessor is authorized
by La. Const. Art. VII, § 18(D), to "determine the
fair market value of all property subject to taxation within
his respective parish or district except public service
properties, which shall be valued at fair market value by the
Louisiana Tax Commission or its successor."
fair market value shall be determined in accordance with
criteria established by law, which must be uniformly applied
throughout the state. La. Const. Art. VII, § 18(D); La.
R.S. 47:2323(A). Fair market value is defined by La. R.S.
47:2321 as "the price for property which would be agreed
upon between a willing and informed buyer and a willing and
informed seller under usual and ordinary circumstances; it
shall be the highest price estimated in terms of money which
property will bring if exposed for sale on the open market
with reasonable time allowed to find a purchaser who is
buying with knowledge of all the uses and purposes to which
the property is best adapted and for which it can be legally
furtherance of maintaining the uniformity required by La.
Const. Art. VII, § 18(D), La. R.S. 47:2323(A) provides
that "[u]niform guidelines, procedures and rules and
regulations as are necessary to implement said criteria shall
be adopted by the Louisiana Tax Commission only after public
hearings held pursuant to the Administrative Procedure
Act." Furthermore, each assessor is required by Section
2323(B) to "follow the uniform guidelines, procedures,
and rules and regulations in determining the fair market
value of all property subject to taxation within his
respective parish or district, " and "[a]ny manual
or manuals used by an assessor shall be subject to approval
by the Louisiana Tax Commission or its successor
approaches for determining fair market value are set forth in
Section 2323(C), as follows: "The fair market value of
real and personal property shall be determined by the
following generally recognized appraisal procedures: the
market approach, the cost approach, and/or the income
approach." In utilizing the market approach, an assessor
is required to "use an appraisal technique in which the
market value estimate is predicated upon prices paid in
actual market transactions and current listings." La.
R.S. 47:2323(C)(1). In utilizing the cost approach, an
assessor is required to "use a method in which the value
of a property is derived by estimating the replacement or
reproduction cost of the improvements; deducting therefrom
the estimated depreciation; and then adding the market value
of the land, if any." La. R.S. 47:2323(C)(2). In
utilizing the income approach, an assessor is required to
"use an appraisal technique in which the anticipated net
income is capitalized to indicate the capital amount of the
investment which produces the net income." La. R.S.
Statute 47:1837(D) requires: "In order to promote
compliance with the requirements of the constitution and laws
of the state, the tax commission shall issue and, from time
to time, may amend or revise rules and regulations containing
minimum standards of assessment and appraisal performance . .
. ." In compliance with that responsibility,
the Commission issued the ...