Gateway Pines Hahira, Lp v. Lowndes County Board of Tax Assessors

Gateway Pines Hahira owns a Section 42 affordable housing complex in Lowndes County, a type of property whose owners agree to below-market rents in exchange for federal tax credits. When the Lowndes County Board of Tax Assessors set the property's taxable value for 2018, Gateway Pines challenged the assessment. A trial court sided with the assessors, and the Court of Appeals of Georgia affirmed, relying on its own earlier decision that read a prior Supreme Court of Georgia case as barring assessors from using the 'income approach' (a valuation method based on projected income) for these properties altogether. The Supreme Court of Georgia disagreed. It held that its earlier decision never said assessors could not use the income approach at all. It only said that, under current law, the tax credits themselves cannot be counted as income within that approach unless they actually generate real income. The court overruled the Court of Appeals precedent, reversed the judgment against Gateway Pines, and sent the case back for further proceedings.

Tax assessors may use the income approach to value Section 42 affordable housing properties; the statute only bars them from counting the tax credits themselves as 'actual income' under that approach unless the credits truly generate actual income, which they currently do not.

The ruling affects how county tax assessors across Georgia value thousands of affordable housing properties. It preserves assessors' ability to use income-based valuation methods, while still barring them from treating Section 42 tax credits themselves as income under that method, which can affect owners' tax bills.

Reversed and remanded

1. The court reviewed OCGA § 48-5-2(3)(B)(vii)(II), a statute governing how tax credits from Section 42 of the federal tax code may be treated when assessors use the income approach, a valuation method based on a property's projected future income stream.
2. It explained that in its earlier decision, Heron Lake Two, it had interpreted this statute by its plain text as limiting only how tax credits can be counted within the income approach, not whether the income approach itself could be used at all.
3. The court found that the Court of Appeals had misread isolated phrases from Heron Lake Two, such as language about the method's 'narrow range of potential applications,' without considering the full context showing those phrases described only the treatment of tax credits, not a total ban on the income approach.
4. Applying the statute's plain language, the court concluded that because the provision does not completely block assessors from ever considering the tax credits' contribution to a property's value through other valuation methods, it does not create an unconstitutional special class of property.
5. Because the Court of Appeals' prior decision in Freedom Heights had wrongly held that assessors could never use the income approach for these properties, the court overruled that precedent and reversed the judgment relying on it.

• Section 42 tax credits
• affordable housing valuation
• income approach
• fair market value
• Lowndes County