Over at DavidsonNews.net there is a piece that poses the question Is assessor ignoring Davidson affordable housing rules? In an unfortunate situation, there are Davidson homeowners in the Town's affordable housing program who after the last revaluation now have homes assessed for more than they can legally sell them according to the rules that keep the homes "affordable".
The question that should probably be asked is why shouldn't the assessor ignore those rules?
I know what I am about to say may be seen as an attack on the affordable housing program. It is not. I actually see the value in the program under certain circumstances and when it is done right. However, this situation provides an opportunity to look at the affordable housing program, and its possible unintended consequences. In this case, I hesitate to call the situation an unintended consequence. Rather, it is more like a logical conclusion.
Affordable housing programs are by their very nature endeavors at market manipulation - albeit endeavors with good intentions. However, we've all heard the saying about the road to hell being paved with those same good intentions. This may be one of those situations.
When the County does its revaluation, I'm not sure they should have to take into account a municipality's rules when setting values. Why should they? The valuation applies to the tax rate of the municipality and the County. If the County applies the valuation based on rules applied by the municipality rather than the true market value, they are effectively taking money out of the pockets of all the other County taxpayers, or they have to raise rates to make up that difference. Davidson's rules should not become the County's problem. Yes, the difference here is minuscule compared to the whole County. However, the principle still stands. If the County takes into account Davidson's rules on a few homes, then they have to take into account every municipality's rules. Those rules might not always be affordable housing, but once the County goes down that path, it becomes a slippery slope.
While there certainly were numerous issues with the revaluation process, Davidson did not have as many appeals as some of the neighboring areas. In fact there were only a few outstanding appeals a few months ago when the Red Line project was coming up with its initial numbers. What seems to have happened here is that the assessors inadvertently revealed the market manipulation that exists in an affordable housing program by doing their jobs. There were dozens of other moderately priced properties in Davidson that received huge revaluations that were not "protected" by the Affordable Housing program. The only difference is that these homeowners can now sell their home at a market price if they want to do so.
All of the above may be irrelevant in many circumstances. There are situations where the state law would require the assessor to take these rules into account such as Community Land Trust properties. However, the examples sited in the DavidsonNews.net article appear to not be covered by the law. That example is a condo. The law appears to only cover houses or possibly other property where the underlying land is owned by a Community Land Trust. Individual "affordable" condos in a building not owned by a CLT would not be covered. See Taxation of Affordable Housing in Community Land Trusts from the UNC-School of Government.
As was mentioned in the DavidsonNews.net article, the Town of Davidson is one of only two NC municipalities with Affordable Housing ordinances built into all new development - including townhouses and condos. It appears that this is an example where the consequences of doing so were not fully thought out.