Section 110.112 Procedures for Assessment of Section 515 Low-income Housing Projects

Section 110

Section 110.112  Procedures

for Assessment of Section 515 Low-income Housing Projects

a)         Definitions

"Section

515 low-income housing project" means a rental apartment facility:

developed and managed under a United States Department of Agriculture Rural

Rental Housing Program designed to provide affordable housing to low to

moderate income families (as defined in 42 USC 1437) and seniors in rural

communities with populations under 20,000; that receives a subsidy in the form

of a 1% loan interest rate and a 50-year amortization of the mortgage; that

would not have been built without a Section 515 interest credit subsidy; and

where the owner of the project is limited to an annual profit of an 8% return

on a 5% equity investment.

[35 ILCS 200/10-240]

"Section

515 low-income housing project certificate" means a document issued to the

owner of the property by the State Director of the United States Department of

Agriculture, Rural Development Office, certifying that the property described

in that document qualifies for assessment as a Section 515 low-income housing

project.

b)         Assessment of Section 515 Low-income Housing Projects

Beginning

on January 1, 2000, except in counties of more than 200,000 that classify

property for the purpose of taxation, local property assessment officers shall

assess property that has been certified for the year of assessment as a Section

515 low-income housing project in accordance with Section 10-245 of the

Property Tax Code

[35 ILCS 200/10-245] and the method of valuation provided

in this Part.  [35 ILCS 200/10-250]

c)         Certification

For a rental

apartment facility to be certified as a Section 515 low-income housing project,

the owner must file an application for a Section 515 low-income housing

project certificate with the State Director of the United States Department of

Agriculture, Rural Development Office, in the form and manner prescribed in

regulations issued by that office

ILCS 200/10-250]

c)         Certification

For a rental

apartment facility to be certified as a Section 515 low-income housing project,

the owner must file an application for a Section 515 low-income housing

project certificate with the State Director of the United States Department of

Agriculture, Rural Development Office, in the form and manner prescribed in

regulations issued by that office.  If the application is approved, the office

will issue to the owner a Section 515 low-income housing project certificate

for that property.

[35 ILCS 200/10-250]

d)         Submittal of Certificate to Local Assessment Office

For a

Section 515 low-income housing project to be assessed under the method of

valuation provided under subsection (e) of this Section, the owner must submit

by the 1st day of April, for the year 2001 and thereafter,

to the local

assessment office a copy of the Section 515 low-income housing project

certificate

issued to him for that property, a copy of the financial

statement for the applicable assessment year for that property filed with the

United States Department of Agriculture, Rural Development Office, and any

other information the local assessment office may request.  [35 ILCS

200/10-250]

e)         Method of Valuation

1)

Local assessment officers shall assess

for local

property tax purposes property that has been certified for the year of

assessment as

a Section 515 low-income housing project at 33⅓% of the

fair market value of its economic productivity to the owner.

[35 ILCS

200/10-245]

2)

The fair market value of the property's economic

productivity to the owner shall be determined by considering the actual or

probable net operating income attributable to the project, using a vacancy rate

of not more than 5%, capitalized at typical market rates

for similar,

non-subsidized property

33⅓% of the

fair market value of its economic productivity to the owner.

[35 ILCS

200/10-245]

2)

The fair market value of the property's economic

productivity to the owner shall be determined by considering the actual or

probable net operating income attributable to the project, using a vacancy rate

of not more than 5%, capitalized at typical market rates

for similar,

non-subsidized property. [35 ILCS 200/10-245]

3)         In determining the net operating income attributable to the

property, property taxes paid cannot be considered as an expense of any kind,

and must be deducted if included as an expense in the financial statement, and

income and expense items not pertaining to the real property itself cannot be

considered in determining net operating income for purposes of valuation under

this Part.

4)

For the purpose of determining the interest rate to be used

in developing the

overall

market value capitalization rate for a Section

515 low-income housing project, local assessment officers shall use an interest

rate that reflects the prevailing cost of cash for other types of commercial

real estate in the geographic market area in which the Section 515 low-income

housing project is located.

[35 ILCS 200/10-245]

5)         Local assessment officers shall use the effective tax rate as

a component of the overall market capitalization rate for purposes of valuation

under this Part.

f)         Cancellation or Revocation of Certificate

In the event

that a Section 515 low-income housing project certificate is cancelled or

revoked, the local assessment officer shall assess the property described in

the cancelled or revoked certificate for the applicable assessment year in

accordance with the assessment procedures used for other commercial property in

the county

r this Part.

f)         Cancellation or Revocation of Certificate

In the event

that a Section 515 low-income housing project certificate is cancelled or

revoked, the local assessment officer shall assess the property described in

the cancelled or revoked certificate for the applicable assessment year in

accordance with the assessment procedures used for other commercial property in

the county.

g)         Address

The address to

which an owner may submit an application for certification of property as a

Section 515 low-income housing project is:  State Director, Rural Development

Office, United States Department of Agriculture, 1817 South Neil Street,

Champaign, Illinois 61820.