Senator Frix Examines Property Taxes and Housing Costs in Oklahoma

OKLAHOMA CITY – Sen. Avery Frix, R-Muskogee, held an interim study Tuesday examining how properties developed through the Low-Income Housing Tax Credit (LIHTC) program are valued for property tax purposes and how Oklahoma can ensure its tax policies don't unnecessarily drive up the cost of housing.

The LIHTC program, also known as Section 42, provides federal tax credits to developers to help finance rental housing. In exchange, properties are subject to long-term restrictions on rents and tenant eligibility.

Frix said Oklahoma needs to keep taxpayers and working families at the center of the conversation while ensuring government policies don't discourage private investment and housing construction.

“Government shouldn’t be making it harder or more expensive to build housing in Oklahoma," said Frix. "We need to put taxpayers first, respect private property and let the private sector do what it does best. If a property has government-imposed restrictions on how it can operate and what it can charge, those restrictions need to be taken into account when determining its value for taxation."

Katrina Washington with Neighborhood Housing Services Oklahoma said the organization works with approximately 3,500 workforce housing units across the state. The organization provides compliance oversight to ensure properties remain affordable, along with housing counseling, down payment assistance and other support services.

Muskogee County Assessor Ron Dean shared the county’s experience with LIHTC properties. Muskogee County has 155 single-family homes and approximately 300 apartment and duplex units developed through the program, totaling 455 units. The county developed its valuation methodology in 2006 and has used it for nearly 20 years. The method uses HUD rents and accounts for increased expenses common to these developments.

Another development group, Dominium, is developing more than 1,000 units through the LIHTC program over the next several years.

Speakers also discussed the importance of maintaining quality standards and ensuring housing developments remain financially viable while meeting the requirements of the LIHTC program. Frix said the information gathered during the study will help inform discussions surrounding HB 4305 and future legislation affecting property taxation and housing development. HB 4305 would establish an alternative income-based valuation method for qualifying affordable rental housing and exclude state and federal housing tax credits from the property's fair cash value.

“We have to be careful about creating government policies that sound good on paper but end up making housing more expensive or discouraging investment. The private sector is going to play a major role in building the housing Oklahoma needs," said Frix. "Our job is to make sure our tax code is fair, predictable and doesn’t stand in the way of that investment. We can protect taxpayers, respect property rights and encourage more housing without putting more government between Oklahomans and the opportunity to own or afford a home."

Sen. Frix said the information gathered during the study will help inform discussions surrounding House Bill 4305 and future policies affecting the LIHTC program.