Bonds; authorize issuance for various purposes.

2025 Regular Session Introduced by Trey Lamar

HB 1894 requires income-based valuation for affordable-housing properties with rent/operational restrictions, using NOI ÷ cap rate (no subsidies), effective 2026.

Died In Conference

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Summary — HB 1894 (2025): Method of Valuation for Real Property Used for Affordable Housing

Status note: the metadata provided lists the bill as "Died In Conference." The document set also contains later legislative activity for an engrossed version and an "Act 842" reference. These records conflict; verify current official status with the Arkansas General Assembly or Secretary of State before relying on enactment.

Main purpose

HB 1894 would require that certain real property used for affordable housing be valued for assessment purposes using an income-based appraisal approach. The intent is to provide a "fair and equitable" assessment method for housing properties subject to rent/operational restrictions tied to public subsidies or tax-credit programs.

Key provisions

Defines an "income-based approach" that:

Uses actual net operating income (NOI) for the parcel divided by an appropriate market-derived capitalization (cap) rate.
Limits the cap rate to not exceed the county's market data average from sales of comparable income-producing properties reflecting prevailing investment conditions, risks, and returns.
Prohibits inclusion of federal/state tax credits or other subsidies when calculating NOI or cap rates.

Applies to real property that has federally or state-imposed rent limitations, operational requirements, or other restrictions connected to:

Eligibility for the federal Low-Income Housing Tax Credit (26 U.S.C. § 42);
Construction using HUD HOME Investment Partnerships Program funds; or
Construction using USDA Rural Development incentives under 42 U.S.C. § 1485.

Valuation approach ceases to apply after the expiration of any applicable land-use restriction agreement.

Directs the Assessment Coordination Division (ACD) to promulgate rules and guidelines for implementation.

Amendment H1 adds legislative intent language and prescribes rule-filing deadlines (final rules to be filed on or before January 1, 2026, or as soon as practicable after required approvals).

Who is affected

Owners/operators of affordable housing developments that participate in LIHTC, HUD HOME, USDA RD, or similar subsidy programs.

County assessors and other local taxing authorities across all 75 counties.

Assessment Coordination Division, Public Service Commission (for rulemaking coordination), county officials, and third‑party appraisers.

Fiscal and administrative impact

Fiscal impact to property tax collections: unknown (could lower or raise assessed values depending on NOI and market cap rates).

Administrative costs: ACD must publish new valuation guides and promulgate rules; counties need training, revised courses/materials, and possible renegotiation of reappraisal contracts. The DFA estimates incorporation into new contracts could take up to four years without significant ACD action.

Timeline / Procedural notes

The bill sets the valuation method to be effective for assessment years beginning on or after January 1, 2026 (per the DFA statement and Amendment H1 rule‑filing timetable).

Rulemaking required under Arkansas rulemaking procedures (including Legislative Council review under § 10‑3‑309) before full implementation.

For further use: confirm current enactment status and review the final ACD rules (if adopted) to see detailed implementation guidance and caps/rate‑calculation methodology.