Laws, Regulations & Annotations

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535.0000 LAND USE RESTRICTIONS

Annotation 535.0018.005

535.0018.005 Federal Housing Projects. The contractual limitations placed on Department of Housing and Urban Development (HUD) Section 8 Project-Based Family properties (project based properties) are enforceable restrictions for purposes of Revenue and Taxation Code section 402.1 since the regulatory agreement imposes several significant restrictions upon the owner as to the property�s use and operations, including determining the amount of rent which may be charged to the tenants of the project (thereby restricting the maximum rent). Thus, comparable sales and income and expense data derived from market transactions of unrestricted property should not be used when valuing HUD project-based properties.

However, an assessor may use non-restricted comparables to value a HUD project-based property in two situations: (1) when the assessor can rebut the presumption in section 402.1(b) that the restriction will not be removed in the predictable future, or (2) by establishing that the restrictions have a demonstrably minimal effect upon value as provided in section 402.1(d). In rebutting the presumption that restricted properties should be treated as if the restrictions will remain, the assessor may use the past history of similar restrictions in the jurisdiction or the similarity of sales prices for restricted and unrestricted properties. Section 402.1(c), however, prohibits treating the expiration of a restriction at a certain time as conclusive evidence that the restriction will be removed at that time. The only exceptions to this prohibition are very specific and very narrow � when there is no opportunity or likelihood that the restriction will continue or if a necessary party has indicated an intention to allow the restriction to expire. C 2/27/2013.