FISCAL NOTE
FUND(S):
General Revenue Fund, Local Government Funds
Sources of Revenue:
General Fund,Other Fund Local Government Funds
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to provide for the method of appraising certain affordable, multifamily rental property for property tax assessment purposes. The bill also grants rule- making authority.
As written, this bill would require County Assessors to consider the following in determining the value of improved real property containing four or more residential units operated as affordable rental housing when using the income approach: the actual rents received; actual expenses incurred in the operation of the property, excluding mortgage interest and depreciation; and, a capitalization rate determined from recent actual sales of commercial property used for residential purposes. And, when using the cost approach, the following are to be considered: a determination of the amount of economic obsolescence resulting from differences between the actual rents received and the unrestricted rents of similar units not subject to restrictions; and the impact of rent restrictions on transfer of title and other restraints on alienation of the property.
According to our interpretation and based upon information from a survey of County Assessors, passage of this bill would result in an annual decrease of roughly $3 million in local Property Tax revenues and a minimal loss in State revenue.
Additional administrative costs associated with this bill would be significant. Additional costs would be related to training that would be required for Assessors to comply with the legislation.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2014
Increase/Decrease
(use"-") |
2015
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-3,000,000 |
Explanation of above estimates (including long-range effect):
Passage of this bill would require County Assessors to consider the following in determining the value of improved real property containing four or more residential units operated as affordable rental housing when using the income approach: the actual rents received; actual expenses incurred in the operation of the property, excluding mortgage interest and depreciation; and, a capitalization rate determined from recent actual sales of commercial property used for residential purposes. And, when using the cost approach, the following are to be considered: a determination of the amount of economic obsolescence resulting from differences between the actual rents received and the unrestricted rents of similar units not subject to restrictions; and the impact of rent restrictions on transfer of title and other restraints on alienation of the property.
According to our interpretation and based upon information from a survey of County Assessors, passage of this bill would result in an annual decrease of roughly $3 million in local Property Tax revenues and a minimal loss in State revenue.
Additional administrative costs associated with this bill would be significant. Additional costs would be related to training that would be required for Assessors to comply with the legislation.
Memorandum
The stated purpose of this bill is to provide for the method of appraising certain affordable, multifamily rental property for property tax assessment purposes. The bill also grants rule- making authority.
As written, the bill does not provide a date at which the described method of appraisal is to commence. The absence of a specific effective date could lead to some administrative issues.
Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox@wv.gov