(The Center Square) — The Virginia House of Delegates will likely soon vote on legislation that could significantly impact the state’s affordable housing market, as the bill advanced from committee Wednesday.
Patroned by Del. Katrina Callsen, D-Albemarle, the bill would require that property assessors determine the fair market value of affordable housing units by income instead of by the likely sale value or how much it would cost to build them today – also known as the sales comparison and cost approaches. The language in existing Virginia law is confusing and has led to assessors choosing “whatever assessment value approach they want,” according to Callsen.
House Bill 2245 was devised to lower affordable housing property taxes and stimulate an industry that currently faces a shortage of approximately 300,000 homes, according to the Virginia Housing Alliance. Its advocates have argued that an income-based approach is the only fair way to assess affordable housing properties.
“It is essential that [our members’] apartments be taxed at the income that is being brought in because they need to match that income to the tax that’s being paid out. If they’re being assessed at a higher rate, they have to charge a higher rent,” said Scott Pedowitz, speaking in support of the bill on behalf of two apartment management organizations.
“Our goal is to have affordable housing at all price points across the commonwealth… and this is a fair and equitable way to ensure that we’re able to provide that,” Pedowitz said.
Opponents have claimed the law is unconstitutional, wouldn’t lead to a true fair market value assessment and would unnecessarily complicate assessors’ jobs.
The Virginia Constitution stipulates that assessments of properties falling under the same category or class must be uniform. Though he said he supported the goal of lowering property taxes for affordable housing, Virginia local government attorney Andrew McRoberts said the bill wasn’t the best way to do that.
“The right way to do it is to set it up as a classification and then allow local governments to have a tax rate that actually gives a basic tax break instead of imposing upon the assessment community to apply a methodology that they’re not trained in, that is not USPAP” – the “generally recognized ethical and performance standards” for appraisers in the U.S. – “and not standard,” McRoberts said, addressing the finance subcommittee.
Several others testified before the subcommittee, outright opposing the bill. Scott Mayausky, commissioner of the revenue for Stafford County, thought the bill might directly conflict with USPAP.
“My concern is with the potential USPAP violations. Any local assessing officer that has a state license will most likely be in violation of USPAP if they don’t consider all three approaches to value,” Mayausky said.
Some opposed the bill in its current condition but expressed a desire to collaborate with the patron. Ultimately, Del. Karen Keys-Gamarra, Fairfax, seemed to voice the opinion of the majority of the committee with her comment before the bill was voted on.
“Obviously, this is a very difficult issue to resolve,” Keys-Gamarra said, “However,” she said, speaking to Callsen, “I do appreciate your going forward to try to address this issue of providing an incentive for affordable housing and I’d like to give this patron more time to be able to address some of the concerns that were raised.”
The subcommittee voted along party lines to advance the bill to the finance committee, but the bill did secure some bipartisan support in the full committee, garnering three Republican votes.
