In Georgetown Partners Ltd. 1 v. Scott County Property Valuation Administrator, the KBTA held that when assessing an apartment complex that is subject to federal income and rent restrictions, the restrictions on the complex must be considered by the assessor in the valuation of the apartment complex. The taxpayer presented an appraisal and expert testimony by an MAI appraiser with significant experience appraising low income properties. The appraiser used an income approach to valuation and supported it with the use of comparable sales of similar types of properties in the region.
The appraiser opined that the Property Valuation Administrator (“PVA”) overvalued the property by failing to consider that the operating expenses of an income-restricted apartment complex are generally higher than those of a non-restricted property. The PVA acknowledged that his valuation was done using expenses for the property as-if it were a non-restricted apartment complex. The Board held the taxpayer had met its burden of proof and the estimated value set forth in the appraisal was the proper value for the property. Thus, the Board reduced the assessment from $2,323,850 to $1,230,000. It is unknown whether the PVA will appeal.