The Roundup

Issue No. 24-002 | May 29, 2024

Property Tax

Notable property tax developments in the past week:

• Ohio > Litigation in Ohio continues over whether school boards can appeal board of revision decisions on property tax valuations to the local court of common pleas. School board appeals have long been a risk for market participants purchasing multifamily assets in Ohio and Pennsylvania, resulting in reassessments at or near the sales price. The favorable ruling in Olentangy Local Sch. Dist. Bd. of Educ. decision provides hope that the practice of individual taxing jurisdictions appealing valuations will come to an end. Read more from Steve Nowak here.
• Florida > The first multifamily community utilizing Floriday's Live Local Act opened last week. Cymbal DLT developed Laguna Gardens, a 341-unit community located in Miami Gardens, FL, and rent restricted all of the units in the community as part of the company's goal to develop attainable luxury housing. The Live Local Act provides a full or partial property tax exemption for multifamily units depending on the level of affordability. Read more here.
• Arizona > The Maricopa County Board of Supervisors has unanimously approved a tentative budget for the upcoming fiscal year. The new budget, set at approximately $3.8 billion, reflects an 11% decrease from the previous year's budget. This marks the fourth consecutive year that the Board has reduced the property tax rate. Read more here.
• Massachusetts > A recent report by the tax consulting firm Ryan sparked a discussion on the potential effects of Mayor Michelle Wu's Property Tax Classification Proposal on businesses in Boston. The proposal, which is set for a hearing on May 30, could significantly alter the financial landscape for both residential and commercial properties in the city. Read more here.
• Oregon > Multnomah County voters have cast their ballots in favor of a property tax increase aimed at funding the repair and enhancement of the region's flood protection system. This measure is set to allocate $150m via a local property tax levy of about 11 cents per $1,000 of assessed value and unlock an additional $100m in federal funding towards the refurbishment of levees, floodwalls, and pump stations that play a pivotal role in managing water levels and mitigating flood risks. Read more here.

Multifamily Housing

Metro Nashville is gearing up to leverage new legislation aimed at boosting affordable housing.

Darren Jernigan, Metro’s director of legislative affairs, is organizing a roundtable with city leaders to discuss the implementation of housing bills passed by the Tennessee General Assembly. These discussions are crucial as the city explores practical ways to utilize these laws to increase the affordable housing supply.

The legislation, particularly SB2496/HB2623, introduces a voluntary attainable housing incentive program for developers, marking a significant shift from the state's 2018 preemption of a Metro policy that mandated affordable units in new developments. This bipartisan effort reflects a growing recognition of housing challenges across Tennessee, extending beyond urban centers to rural and suburban communities.

The spotlight is also on SB1137/HB1229, which designates affordable housing as a public purpose, enabling local governments like Metro to support private developers in financing housing projects through the Industrial Development Board. This bill, supported by both parties, underscores a statewide commitment to addressing the housing crisis. Metro Councilmember At-Large Burkley Allen and former Metro official Matthew Wiltshire are among those advocating for the effective use of these new powers.

As Nashville and other Tennessee communities face an affordable housing crunch, these legislative tools offer a promising path forward for creating inclusive and sustainable housing solutions. Read more about the pro-housing bills passed this session here and additional coverage of SB1137/HB1229 here.

Other notable developments:

• California > Assembly Bill 2560 aims to increase housing density in California's coastal areas by removing an exemption from the state's "density bonus law". This change would allow developers to build more units in exchange for adding a certain number of affordable ones. The bill has passed through the State Assembly and is seen as a step towards creating more mixed-income units in some of the state’s most expensive neighborhoods. Read more here.
• Interest Rates > U.S. Treasury yields rose this week, influenced by weaker-than-expected auctions in 5-year and 7-year notes, which highlighted tepid demand from investors. This development comes as the latest consumer confidence report indicates an uptick to 102.0 in May, after three consecutive months of decline, suggesting a resilient economic sentiment despite ongoing inflation and interest rate concerns. With the market digesting these mixed signals, all eyes are now on the personal income and expenditures report set to be released on Friday for further direction on the economic and inflationary trajectory.
• Affordable Housing > Pension funds, traditionally cautious about investing in affordable housing, are showing increased interest in this sector. This shift is being driven by a growing recognition of the financial viability of affordable housing as an asset category. Read more here.

. . . and Much More

• Kyla Scanlon published her first book In This Economy?: How Money & Markets Really Work. The book unravels the intricacies of the economy with remarkable clarity, making it approachable for readers of all backgrounds. I highly recommend picking up her book for a summer read and for a young person in your life that would benefit from learning more about economics.

• Joe Weisenthal and Tracy Alloway sat down with Isaac Rose-Berman, a professional sports gambler, to learn about the sports betting market. It's a fascinating discussion on how odds are created and the different market dynamics that characterize the sports betting industry.