New Orleans officials are pushing back against a bill filed by the speaker of the state House of Representatives that would reduce the property taxes paid by companies that get a tax credit in exchange for providing low-income housing.
The bill would prevent the Assessor’s Office from counting those credits as part of the rent on those properties.
Assessor Erroll Williams and City Councilwoman Stacy Head, who have led the opposition to the bill, said it would essentially be a giveaway to developers whose projects are partially funded by the tax credit. It also would be unfair to landlords who do not have that benefit and would force up taxes on other residents, they said.
“The guys developing these projects aren’t doing it out of a sense of social responsibility,” Williams said. “They’re doing it to make a profit.”
House Bill 682 by Speaker Chuck Kleckley, R-Lake Charles, is waiting on action by the full House. If it gets approval there, it would have to make its way through the Senate in the last two weeks of the current legislative session and be signed by Gov. Bobby Jindal before it becomes law.
Two legislators, Rep. Barbara Norton, D-Shreveport, and Rep. Robert Shadoin, R-Ruston, have sought amendments that would exempt their parishes from the change.
Kleckley did not respond to a request for comment on the bill.
When evaluating rental properties, assessors have several options to determine their value for tax purposes, including evaluating the revenue they bring in. For properties that receive a tax credit for providing low-income housing, Williams includes the value of the credit along with the reduced rents they bring in to determine the total amount the developer is making on the project.
Kleckley’s bill would require assessors to use a specific method of determining the value of such rental property and would prevent them from counting the tax credits or benefits from below-market mortgage rates as part of that assessment.
A review by the Assessor’s Office of 11 out of 29 properties in New Orleans that make use of the tax credit and have filed financial statements shows that excluding the tax credits would cause the assessed value of those properties to drop by 78 percent, Williams said. That translates into $1.8 million less in taxes.
“It’s an unfunded mandate,” Head said, referring to the loss in revenue that changing the assessments would have on the city. “If the state wants these guys to make a bigger profit, give them bigger tax credits.”
Both Head and Williams said the dispute is not about low-income housing itself, and they praised the tax credits for low-income housing. Head said the program has led to “some of the best developments in our city.”
Williams noted in a letter to legislators that the bill would also provide a break for entire developments where only some of the units are subsidized and the rest are rented at market rates.
He also pointed to his own history as evidence that he treats low-income developers fairly.
“As a guy who grew up in (low-income housing), I don’t think I’d discriminate against them,” Williams said.
But he and Head said that if the bill passes, the developers would essentially get to double-dip: They’d get the money from the credits and the additional benefit of lower property taxes. That means higher tax bills for other property owners, including those who rent to low-income families but don’t benefit from a specific tax credit, Head and Williams said.
“This is a special-interest bill designed to shield a particular group of developers from the obligation to pay for our city services like the rest of us,” Head said. “Our tax base already relies on less than 50 percent of the properties in the city and can’t take another hit.”
Follow Jeff Adelson on Twitter, @jadelson.