Maples

This appeal concerns the property tax assessment of low-income housing developed and operated by appellant, Lake Isabella Enterprises n, LP (Lake Isabella), under section 515 of the National Housing Act of 1949. Such housing is subject to various restrictions, including a maximum return on equity. However, the financing is federally subsidized. The government provides credits that result in a 1 percent effective mortgage interest rate.

At issue here is the proper method of determining the value of this restricted property. Respondent, James W. Maples, Assessor/Recorder, County of Kern (Assessor), relied on the cost approach, supported by a capitalized income calculation using the subsidized 1 percent mortgage interest rate. Lake Isabella challenged this assessment arguing that the property had to be valued with an income approach that considered and incorporated a “market” interest rate.

The Kern County Assessment Appeals Board (Board) determined that the Assessor had incorrectly assessed the property and adopted Lake Isabella’s value calculation. Thereafter, the trial court granted the Assessor’s petition for writ of mandate and directed the Board to vacate its value…