MEMORANDUM

TO: Gary Superman, Assembly President

Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Mayor

FROM: Shane Horan, Director of Assessing

DATE: May 26, 2005

SUBJECT: Resolution 2005-051, Valuation of Low-Income Housing Tax Credit

(LIHTC) Apartment Projects

According to Alaska Statute 29.45.110(d)(1), the assessor is required to value low-income housing tax credit projects existing as of January 1, 2001, the effective date of the legislation, based on the actual income derived from the property. This can result in a value that is less than "full and true value" as defined for other property. These projects must be qualified and recognized under the United States Tax Code, 26 U.S.C. � 42.

AS 29.45.110(d)(2) also requires the governing body to determine by ordinance whether projects that qualify after January 1, 2001, shall be assessed based on income derived in the same way as are pre-qualified LIHTC projects. If the assembly does not exempt newly qualified parcels from the income method, it shall determine on a parcel-by-parcel basis whether the property shall be assessed based on the actual income derived (also known as the restricted rent income approach) or at full and true value.

In accordance with state statute, the assembly, through Ordinance 2003-43 (KPB 5.12.085), may determine whether or not it wishes the Pacific Park Apartment project to receive the preferential assessment based on the restricted rents to be assessed at traditional full and true value.

The Pacific Park Apartment project qualifies after January 1, 2001, as a LIHTC property and has submitted timely application for a determination by the Assembly on the method of valuation. If enacted, this resolution would authorize the assessor to value this parcel based on the value of the restricted rents received instead of full and true value. The different values are shown in the resolution.