ÿWPCl{ øGD/–©fgvŠXM£fe¦7Zôƒ„ÇÅO¨îú†µ«çm0á]/<"¡Ã(.Vý[_ŸlÒ¦Ú~f8® vŠÚU£Úlè£yls§ˆZ´è@9-Ò.KöŽ°Ø÷¯%óôYÄoÍ#Õì…Áé,ôÒK3º…aþ4ݼ™VU²'ÿ\ÆâÞ¡ú ƒ9ÇúÞè¬Ëz™?eÔÉ•~'ÌÚ²wÍ Ü¹¹VÁ€¶=]ÊäQ’G1±_ 5Yñ¡¾ ÿ;í<)ÞsËA›ŒÝZá€! ¾ïå+lc]ãzªŸùÔ•…pUÌ›ûÇhç»Fw/æUu±HZ/ÌZÅsL¥Ju¼»¦Žó9öä¬õkSJãÝ{ÓUøó°J°'±‡­PƤû¢þ½÷w n+Zdzâ'!(8–•U¦Ù†—Ø®'+<ÃóH3Þë¸ò¡ï˜Aì.î<øÐj¶’ ~Zø²zOÐÂlSdm“£û’+>O8D"2F]Ö™5¦JÁÂ!Å©ä¢jI‚u¸;šMc¤p2~äG^‘|]V¢]ⵇå—)–’K?ÄÄúÿé×SÙ_;‡ÏHƒ  ã#À|ÿê4S)æ³ÝÑÇtZ"HR2.UyÖÌáÀß·sfZ?9wþ,}#ÉÖUÙNŸ %í 0:ó UvN- UQ>{ ^ ¹ wÅ 4É Ý ì mî : 0©? 0DèN, ..U@γÇÁEˆFŠzÐ"¯J)Íù-{Æ/A3TF8F8F8Cš9;Ý:Ý:<õ?ACC%E%E%E`%GÓ…J…JVXLXLXLXLk®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q®Q BSSSSSSSSSSSSZ6S6SnVþWþWþWŒZZZZZZÇ[[[[[ÙTp­-r-r-r-r-r-r-r-r’Úx˜\\IB01S01\CLERK1NASÈÈ,,,,ÈÈ0(ÖÃ9 Z‹6Times New Roman RegularX(üœ$¡¡ÔUSUS.,Ô(í€"  Z6Times New Roman Regularô\  `‹&Times New Roman¡€Ÿ/Ï ¨ƒž/ê:i¢×+003|xÿU‹ÿÀÀÀ 0Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú11Ú  ÚóóÝ  ÝÔ_ÔMr.€Davis€conducted€a€discounted€cash€flow€analysis€to€determine€the€effect€of€the€tax€credit€on€the€value€ofÐ ° Ðthe€each€property€in€dispute.(Y(2Íd$¤¤Ý ƒüœ!ÝÔUSUS.,ÔÝ  ÝÔ€ôòXXÔÓ  Óà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó –Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú4Ú  ÚóóÝ  ÝÔ_ÔThis€court€granted€the€Greater€Nashville€Apartment€Association,€Tennessee€Network€for€Community€EconomicÐ ° ÐDevelopment,€and€Tennessee€Apartment€Association€leave€to€file€an€òòamici€curiae€óóbrief.€€The€òòAmicióó€argue€that€the€trialÐ tÄ Ðcourt€misinterpreted€the€nature€of€the€LIHTC€program€and€that€if€its€ruling€stands,€the€economic€incentives€for€developersÐ 8ˆ Ðto€build€much€needed€low„income€housing€developments€within€the€state€will€be€significantly€reduced.(ÖÃ9 Z‹(Times New Roman  ©Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú23Ú  ÚóóÝ  ÝÔ_ÔThe€Declaration€of€Land€Use€Restrictive€Covenants€provided€in€part:Ð ° ÐÌà8  àOwner€intends,€declares€and€covenants€on€behalf€of€itself,€its€successors€and€assigns€and€all€futureÐ 8ˆ Ðowners€and€operators€of€the€project€that,€during€the€Term€of€this€Agreement,€all€provisions€of€thisÐ üL ÐAgreement;€(I)€shall€be€and€are€ò òcovenants€running€with€the€landó ó,€encumbering€the€Project;€(ii)€areÐ À Ðò ònot€merely€personal€covenants€of€the€Owneró ó.€€(Emphasis€added).€ ½Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú21Ú  ÚóóÝ  ÝÔ_ÔÔ‡ôòòôÔThe€AAC€explained€the€last€statement€in€a€footnote€which€stated:Ð ° ÐÌà8  àConsidering€the€original€loan€amount€(Ô#†ôòòô‘#ÔÔ‡ôòòôÔ$3,825,400)€for€this€property€and€the€proceeds€of€the€sale€ofÐ 8ˆ Ðtax€credits€($3,010,600),€the€owners€funded€the€total€cost€of€this€property€($7,050,159)€with€an€equityÐ üL Ðinvestment€of€only€$214,159.€€When€annual€debt€service€on€the€original€loan€($333,639)€isÔ#†ôòòô[#ÔÔ‡ôòòôÔ€Ô#†ôòòôÄ#ÔÔ‡ôòòôÔdeductedÐ À Ðfrom€annual€net€operating€income€($422,500),€the€property€produces€annual€cash€flow€of€$88,861,€aÐ „Ô Ðreturn€on€the€original€equity€of€over€40%.€€If€the€owners€applied€the€program€developerððs€profitÐ H ˜ Ð($737,000)€to€the€required€equity,€they€incur€no€initial€investment€requirement€at€all€and€instead€clearÐ  \ Ð$523,000€at€the€outset.€€These€factors€may€illustrate€why,€as€one€witness€testified,€there€are€threeÐ Ð  Ðapplications€submitted€for€every€one€applicant€chosen€to€participate€in€the€program.Д ä Ð Ð  ÐÔ#†ôòòô#Ô <Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú7Ú  ÚóóÝ  ÝÔ_Ôà8 ` àLittle€is€known€about€the€LIHTC€program€outside€of€the€circle€of€affordableÐ ° Ðhousing€developers,€syndicators,€and€some€investors€who€have€waded€through€itsÐ tÄ Ðsometimes€oblique€rules€to€take€advantage€of€this€rather€unique€incentive€for€theÐ 8ˆ Ðcreation€of€affordable€rental€housing€for€lower€income€people.€€Neither€non€profitsÐ üL Ð(because€they€have€no€tax€liability€to€offset€with€the€tax€credit)€nor€often€developersÐ À Ð(because€of€limitations€on€the€amount€of€credit€that€an€individual€can€claim)€can€useÐ „Ô Ðthe€credit€for€their€own€accounts.€For€this€reason,€they€generally€use€the€vehicle€ofÐ H ˜ Ðlimited€partnership€whereby€limited€partner€investors€(many€individuals€or€a€singleÐ  \ Ðor€several€corporations)€buy€up€to€99%€of€limited€partner€interests€in€the€ownershipÐ Ð  Ðof€the€development€in€return€for€an€allocation€of€up€to€90%€of€the€tax€credit€benefitsÐ ” ä  Ðexpected€to€be€realized€in€the€10„year€period€.€.€.€.Once€a€developer€has€a€tax€creditÐ X ¨  Ðreservation,€he€or€she€usually€will€begin€serious€negotiations€for€syndicating€theÐ  l  Ðdevelopment€with€limited€partners€and€therein€receiving€equity€to€be€applied€toÐ à 0  Ðproject€costs,€as€well€as€the€developerððs€own€profitÔ‡ôòòôÔ.€€€Ô#†ôòòô#ÔGenerally,€investors€are€mostÐ ¤ô  Ðinterested€in€the€internal€rate€of€return€that€will€be€generated€from€the€development,Ð h¸  Ðarrived€at€primarily€from€an€analysis€of€the€tax€credit€benefits€and€allowableÐ ,|  Ðdepreciation.Ðð@ ` x` x ÐÌ€Jeanne€L.€Peterson,€òòThe€Low„Income€Housing€Tax€Creditóó,€73€òòMich.B.Jóó.€1154,€1157„8€(1994).Ô‡ôòòôÔà0 x àÔ#†ôòòôî#Ô pÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú25Ú  ÚóóÝ  ÝÔ_ÔTaxpayers€and€òòamici€óóhave€urged€us€to€consider€the€policy€implications€of€the€inclusion€of€the€Tax€Credits€inÐ ° Ðvaluation.€€We€note€that€a€number€of€states€have€addressed€this€issue€by€legislation€specifically€excluding€LIHTC€creditsÐ tÄ Ðfrom€being€included€in€the€valuation.€€Ô‡ôòòôÔThe€Georgia€legislature€enacted€legislation€prohibiting€the€consideration€of€taxÐ 8ˆ Ðcredits,€effective€July€1,€2001.€€OCGA€ðð€48„5„2(3)(B.1).€Ô#†ôòòôÍ#ÔÔ‡ôòòôÔòòPine€Point€Housing,€L.P.,óó561€S.E.2d€at€202Ô#†ôòòô°#ÔÔ‡ôòòôÔòò.€€óóThe€IllinoisÐ üL Ðlegislature€amended€the€definition€of€property€to€exclude€ðð€42€low„income€housing€tax€credits€from€the€definition€ofÐ À Ðproperty.€€35€Ô_ÔILCSÔ_Ô€200/1„130.€€Ô#†ôòòô"#ÔÔ‡ôòòôÔòòRainbow€Apartments,€óó762òò€óóN.E.2d€at€537.€€òòÔ#†ôòòôY#ÔÔ‡ôòòôÔSee€also€óóWis.€Stat.€ðð€70.32(1g)€(effective€JulyÐ „Ô Ð1,€2000,€assessor€may€not€consider€ðð€42€Tax€Credits€effect€on€value€of€property).€€The€legislature€is€the€appropriate€bodyÐ H ˜ Ðto€determine€public€policy€on€this€issue.Ô#†ôòòôÒ#ÔÔ‡ôòòôÔÐ  \ ÐÔ#†ôòòô#Ô ¥Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú22Ú  ÚóóÝ  ÝÔ_ÔòòÔ‡ôòòôÔSee€Cottonwood€Affordable€Housing€v.€Yavapai€Co.óó,€72€P.3d€357€(Ariz.€2003)(finding€Tax€Credits€intangiblesÐ ° Ðand€therefore€unlawful€to€tax);€òòMaryville€Properties€,€L.P.€v.€Nelsonóó,€83€S.W.3d€608€(Mo.€Ct.€App.€2002)€(finding€TaxÐ tÄ ÐCredits€intangibles,€and€Missouri€state€law€prohibits€property€taxation€of€intangibles);òòóó€òòBayridge€Assoc.óó€òòLtd.€v.€Dept.€ofÐ 8ˆ ÐRevenueóó,€892€P.2d€1002€(Or.€1995)€(finding€Tax€Credits€governmental€restrictions,€as€definedÔ‡XçÔXòôÔ€Ô#†ôòXXçÔÁ#Ôby€statute€and€underÐ üL ÐOregon€law€not€permitted€to€be€considered€in€determining€market€value);€òòCascade€Court€Ltd€v.€Nobleóó,€20€P.3dÐ è8 Ð997(Wash.€Ct.€App.€2001)Ô#†ôòòô”#ÔÔ‡ôòòôÔ€(finding€Tax€Credits€intangibles,€and€Washington€state€law€prohibits€taxation€of€intangibles).€Ð ¬ü ÐÔ#†ôòòôî#Ô ÃÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú12Ú  ÚóóÝ  ÝÔ_ÔThe€trial€court€entered€an€agreed€order€providing€that€the€court€would€hear€the€cases€together.€€The€court,Ð ° Ðhowever,€did€not€consolidate€the€cases€because€of€the€additional€issue€in€Acorn€regarding€whether€it€had€been€improperlyÐ tÄ Ðre„classified€as€commercial€property. qÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú24Ú  ÚóóÝ  ÝÔ_ÔÔ‡ôòòôÔTo€induce€THDA€to€allocate€Tax€Credits€to€them,€each€Taxpayer€agreed€that:Ð ° ÐÌà8  àSubject€to€the€requirements€of€Section€42,€the€Application€[for€reservation€or€allocation€of€TaxÐ 8ˆ ÐCredits],€and€this€Agreement,€Owner€may€sell,€transfer,€exchange€or€refinance€not€less€than€the€entireÐ üL ÐProject€at€any€time;€provided,€however,€.€.€.€Owner€shall€obtain€and€deliver€to€THDA€the€writtenÐ À Ðagreement€of€any€buyer,€.€.€.€that€such€sale.€.€.€.€is€subject€to€this€Agreement,€Section€42€and€theÐ „Ô ÐApplication.€.€.€€Ô#†ôòòô‘#ÔÔ‡ôòòôÔÔ#†ôòòô/#Ô ûÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú19Ú  ÚóóÝ  ÝÔ_ÔAlthough€some€intangibles€have€been€determined€to€be€excludable,€they€generally€fall€into€the€category€ofÐ ° Ðrights€personal€to€the€owner,€not€running€with€the€land.€€òòÔ‡ôòòôÔSeeóó,€òòe.g.,€County€of€Orange€v.€Orange€County€AssessmentÐ tÄ ÐAppeals€Bd.óó,€òòóó16€Cal.€Ô_ÔRptrÔ_Ô.2d€695€(4òòthóó€Dist.€1993)€(holding€improper€to€consider€value€of€cable€television€companyððsÐ 8ˆ Ðfranchises€and€licensesÔ#†ôòòôL#ÔÔ‡ôòòôÔ);€òòHecht€v.€Dade€Countyóó,€234€So.€2d€709€(Fla.€Dist.€Ct.€App.€3d€Dist.€1970)€(holding€improperÐ üL Ðto€consider€value€of€dog€racing€trackððs€wagering€license);€Ô#†ôòòô±#ÔÔ‡ôòòôÔòòMetropolitan€Dade€County€v.€Tropical€Park,€Inc.óó,€231€So.€2dÐ À Ð243€(Fla.€Dist.€Ct.€App.€3d€Dist.1970)€Ô#†ôòòô©#ÔÔ‡ôòòôÔ(holding€improper€to€consider€value€of€horse€racing€trackððs€wagering€license).Ô#†ôòòôh#Ô JÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú2Ú  ÚóóÝ  ÝÔ_ÔGreentree€Pointe€consists€of€18€one€and€two„story€buildings€containing€one,€two,€and€three„bedroom€units€andÐ ° Ða€clubhouse/office€on€12.27€acres€in€Lebanon,€Tennessee.€ 9Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú1Ú  ÚóóÝ  ÝÔ_ÔSpring€Hill€consists€of€10€two„story€buildings€containing€88€two€and€three„bedroom€units€and€aÐ ° Ðclubhouse/office€on€12.57€acres€in€Lebanon,€Tennessee. 1Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú3Ú  ÚóóÝ  ÝÔ_ÔAcorn€Hills€consists€of€44€detached€single„family€rental€homes,€including€22€two„story€units€and€22€one„storyÐ ° Ðunits€in€Lewisburg,€Tennessee.€ üÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú13Ú  ÚóóÝ  ÝÔ_ÔWhile€it€is€true€that€in€many€states€intangible€property€is€exempt€from€property€taxation,€òòseeóó€òòSalt€Lake€CityÐ ° ÐSouthern€R.R.€Co.€Inc.€v.€Utah€State€Tax€Commððnóó,€987€P.2d€594,€597€(Utah€1999);×Ã+×× C ×€Ô‡ôòòôÔJames€A.€Amdur,òò€Inclusion€ofÐ tÄ ÐIntangible€Asset€ValuesÔ#†ôòòôŽ#ÔÔ‡ôòòôÔ€in€Tangible€Property€Tax€Assessmentsóó,€90€òòALR€5thóó€547€(2001),€Ô#†ôòòô#ÔTaxpayers€correctly€recognizeÐ 8ˆ Ðthat€this€is€not€the€law€in€Tennessee. ëÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú14Ú  ÚóóÝ  ÝÔ_Ôð ðThe€ratio€of€assessment€to€value€of€property€in€each€class€or€subclass€shall€be€equal€and€uniform€throughoutÐ ° Ðthe€State,€the€value€and€definition€of€property€in€each€class€or€subclass€to€be€ascertained€in€such€manner€as€the€LegislatureÐ tÄ Ðshall€direct.ðð€€òòòòóóTenn.€Constóó.€Art.€II,€ðð€28òòóó. øÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú15Ú  ÚóóÝ  ÝÔ_ÔAlso€under€òòTenn.€Constóó.€Article€II,€ðð€28,€the€legislature€has€the€power€to€classify€Intangible€Personal€PropertyÐ ° Ðinto€subclassifications,€and€to€establish€a€ratio€of€assessment€to€value€in€each€class€or€subclass,€and€to€provide€fair€andÐ tÄ Ðequitable€methods€of€apportionment€of€the€its€value.Ð 8ˆ Ð Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú16Ú  ÚóóÝ  ÝÔ_ÔIn€the€absence€of€a€statutory€definition€of€intangible€property€for€sales€tax€purposes,€the€Tennessee€SupremeÐ ° ÐCourt€has€stated€that€intangible€property€has€no€intrinsic€and€marketable€value,€but€is€merely€the€representative€orÐ tÄ Ðevidence€of€value€or€the€medium€of€exchange.€€òòState€v.€Sandersóó,€923€S.W.2d€540,€542„43€(Tenn.€1996). öÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú18Ú  ÚóóÝ  ÝÔ_ÔAdditionally,€to€taxpayersðð€argument€that€the€legislature€had€not€seen€fit€to€tax€leases,€the€court€responded€thatÐ ° Ðthe€obvious€reason€was€that€a€lease€is€an€interest€in€the€property€and€ð ðthe€profitable€or€unprofitable€incidents€of€the€leaseÐ tÄ Ðattach€to€and€affect€the€value€of€the€property.ðð€€òòIdóó.,€at€*5. VÝ ƒ΢$ÝÔUSUS.,ÔÔ‡ô¯òXXÔÓ  Óà  àòòÚ  Ú25Ú  ÚóóÝ  ÝÔ_ÔÔ‡ô¯òòô¯ÔIn€òòSalt€Lake,€óóÔ#†ô¯òòô¯‘#ÔÔ‡ô¯òòô¯ÔTaxpayer,€a€railroad€shuttler,€challenged€its€property€tax€assessment€which€included€itsÐ ° Ðeasement€.€€The€issue€before€the€Utah€Supreme€Court€was€whether€the€easement€should€be€considered€tangible€orÐ xÈ Ðintangible€property€for€property€tax€purposes.€€Ô#†ô¯òòô¯ç#ÔÔ‡ô¯òòô¯ÔIn€Utah,€intangible€property€is€exempt€from€taxation.€€Utah€Code€Ann.Ð @ Ððð€59„2„11„1(20(g).Ô#†ô¯òòô¯H#Ô€€The€Court€found€the€easement€to€be€tangible€property€properly€considered€in€the€assessment. ÉÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú6Ú  ÚóóÝ  ÝÔ_ÔTypically,€forty€percent€of€the€units€are€rented€to€households€whose€income€does€not€exceed€fifty€percent€ofÐ ° Ðthe€area€median€income,€and€the€remaining€sixty€percent€of€the€units€are€rented€to€households€whose€income€does€notÐ tÄ Ðexceed€sixty€percent€of€the€area€median€income.€ Cantrell P.J.GlassfordPieperKrivackaGreentreePointeKinkleyLewisburgHaislipTyreeLasaterI.R.C.LIHTCs THDApropert[iesDicksonBoeckh ALJA.L.J.Commn UAPAGluckComm'n T]heEdmundsonBeareCarvellMcKnightComdata WittMulleComnAmdurCastlewoodWestvacoSeatonNatlInsur a]nLITHC Cty JMBGreendaleexcludable RptrHechtObion AAC DCFLoeschLowndes OCGAParksideTownhomesCmwlth AptsMcDevittturn[s S.W.McCordKhouryLIHTCFormanNicholsHambyMcDaniel COAEskridgeTextualism UCLAL.Rev L.Edw]ordsCardwell aÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú17Ú  ÚóóÝ  ÝÔ_ÔÔ‡ôòòôÔExcept€for€the€land€value€portion€of€the€appraisals,€Mr.€Lewis€did€not€consider€the€comparable€sales€approachÐ ° Ðapplicable.€Ô#†ôòòô‘#Ô d PÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú5Ú  ÚóóÝ  ÝÔ_Ôð ðThe€LIHTC€represents€another€step€in€Congressðð€increasing€reliance€on€the€private€sector€to€supply€low„Ð ° Ðincome€housing.€.€.€.€With€the€continual€decline€in€direct€federal€funding€for€low„income€housing,€the€LIHTC€has€becomeÐ tÄ Ða€substantial€housing€program.€.€.€.€The€Congressional€Budget€Office€estimates€that€the€low„income€housing€tax€creditÐ 8ˆ Ðhas€the€potential€to€become€an€even€larger€program,€costing€as€much€as€$3€billion€per€year.ðð€€David€Philip€Cohen,Ð üL ÐòòImproving€the€Supply€of€Affordable€Housing:€The€Role€of€the€Low„Income€Housing€Tax€Creditóó,€òò6€J.L.€&€polððy€537,€538óóÐ À Ð(1998).€ dÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú26Ú  ÚóóÝ  ÝÔ_ÔSingle„family€residences€and€duplexes€occupied€one„half€by€the€owner€enjoy€a€25%€assessment€ratio,€whileÐ ° Ðmulti„unit€apartments€and€duplexes€with€both€sides€rented€are€assessed€at€a€40%€ratio. ùÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú8Ú  ÚóóÝ  ÝÔ_ÔThe€buyer€of€the€property€ð ðsteps€into€the€shoesðð€of€the€original€owner.€€Assuming€the€taxpayer€who€originallyÐ ° Ðqualified€for€the€Tax€Credits€sells€the€property€and€the€purchaser€continues€the€low€income€use,€the€purchaser€is€entitledÐ tÄ Ðto€assume€the€favorable€tax€position€of€the€seller€under€I.R.C.€ðð€42€(d)(7)(A). ‚Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú27Ú  ÚóóÝ  ÝÔ_ÔThe€òòSnowóó€decision€upheld€a€constitutional€provision€requiring€that€residential€properties€containing€two€orÐ ° Ðmore€rental€units€be€sub„classified€commercial€rather€than€residential.€€The€case€involved€rental€duplexes. ½Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú20Ú  ÚóóÝ  ÝÔ_ÔòòÔ‡ôòòôÔóóThe€Boardððs€interpretation€is€consistent€with€the€treatment€by€other€courts€of€other€federal€subsidy€programsÐ ° Ðwhich€treat€the€subsidies€as€having€a€significant€impact€on€the€value€of€the€properties€and€therefore€included€whenÐ tÄ Ðdetermining€the€fair€market€value€for€property€tax€purposes.€òò€See€Maples€v.€Kern€County€Assessment€Appeals€Bd.,€óó117Ð 8ˆ ÐCal.€Rptr.€2d€663€(Cal.€App.€5òòthóó€Dist.€2002)€(holding€assessor€entitled€to€consider€the€effective€interest€rate€of€1%€paidÐ üL Ðby€taxpayer€to€develop€low„income€apartment€complex€in€its€valuation€of€property€tax);€òòKankakeeóó€òòCounty€Bd.€of€ReviewÐ À Ðv.€Property€Tax€Appeal€Bd.óó,€544€N.E.2d€762€(Ill.€1989)€(holding€assessor€properly€considered€both€the€positive€effectÐ „Ô Ðof€a€government€rent€subsidy€on€the€value€of€a€subsidized€apartment€for€elderly€residents€and€also€the€negative€effectsÐ H ˜ Ðof€the€restrictions€placed€on€the€owner);€òòPedcor€Investments€v.€State€Ô_ÔBd.TaxÔ_Ô€óóComm.,€715€N.E.2d€432€(Ind.€Tax€1999);Ð  \ Ð(concluding€that€tax€incentives€from€federal€subsidy€offset€deed€restrictions€that€may€create€economic€obsolescence)Ô#†ôòòô”#ÔÔ‡ôòòôÔ;€Ð Ð  ÐòòIn€re:€Ottawa€Housing,€L.P.óó,€10€P.3d€777€(Ô_ÔKanÔ_Ô.€Ct.€App.€2000)€(holding€taxing€authority€should€consider€the€effects€ofÐ ” ä  Ðthe€low„income€housing€contract€when€valuing€property€for€òòad€valorem€óótaxes);€€òòNew€Walnut€Square;€Ltd.€PartnershipÐ X ¨  Ðv.€Louisiana€Tax€Ô_ÔComððnÔ_Ôóó,€626€So.€2d€430€(La.€Ct.€App.€4òòthóó€Cir.€1993)€(holding€appropriate€to€consider€as€ð ðincomeðð€theÐ  l  Ðsubsidized€low„interest€mortgage€used€to€finance€complex€for€property€tax€purposes)Ô#†ôòòôÖ#ÔÔ‡ôòòôÔ;€òòÔ_ÔGlenridgeÔ_Ô€Development€Co.€v.€CityÐ à 0  Ðof€Augusta,€óó662€A.2d€928€(Me.€1995)(holding€assessor€properly€considered€both€the€interest€subsidy€payments€madeÐ ¤ô  Ðby€federal€government,€as€well€as€the€rent€ceiling€in€his€income€approach€valuation);òòóó€òòÔ_ÔDowagiacÔ_Ô€Ltd.€Dividend€HousingÐ h¸  ÐÔ_ÔAssððnÔ_Ô€v.€City€of€Ô_ÔDowagiacÔ_Ôóó,€420€Ô_ÔN.W.Ô_Ô€2d€114€(Mich.€App.€1987)€(holding€assessor€properly€considered€low„incomeÐ ,|   Ðprojectððs€reduced€interest€as€factor€in€valuation€where€trial€court€rejected€taxpayers€argument€that€assessor€wasÐ ° Ðimproperly€taxing€the€intangible€ð ðbusiness€valueðð);€òòÔ_ÔMeadowlanesÔ_Ô€Ltd.€Dividend€Housing€Ô_ÔAssððnÔ_Ô€v.€City€of€Hollandóó,€473Ð tÄ ÐN.W.2d€636€(1991),òò€Ô_ÔrehððgÔ_Ô€deniedóó,€(Sept.€17,€1991)€and€on€remand€to,€1993€WL€302444€(Mich.€Tax€Trib.€1993)€(subsidyÐ 8ˆ Ðmakes€the€property€economically€feasible€and€therefore€had€to€be€considered€in€the€valuation€process)Ô#†ôòòô}#ÔÔ‡ôòòôÔ;€€òòSupervisor€ofÐ üL ÐAssessments€of€Baltimore€City€v.€Ô_ÔHarÔ_Ô€Sinai€West€Corpóó,€622€A.2d€786€(1993)€(Me.€App.€1993)€(holding€inclusion€ofÐ À ÐHUD€rent€subsidy€appropriate€in€valuation€for€property€tax€purposes);€òòRebelwood,€Ltd.€v.€Hinds€County,€óó544€So.€2dÐ „Ô Ð1356,€1364€(Miss.€1989)(holding€that€because€the€benefits€of€participating€in€a€federal€low„income€housing€programÐ H ˜ Ðaffect€the€value€of€the€property€in€the€open€market,€they€must€sensibly€be€considered€in€assessing€value);òò€In€re€JohnsonÐ  \ ÐAssociatesóó,€431€A.2d€932€(Md.€App.€1981)€(holding€assessor€must€consider€both€the€positive€and€negative€effects€of€theÐ Ð  Ðsubsidized€property);€òòAlta€PacÔ_ÔificÔ_Ô€v.€Utah€State€Tax€Ô_ÔComððnÔ_Ôóó,€931€P.€2d€103,€115„16€(Utah€1997)€(holding€effects€of€low„Ð ” ä  Ðincome€housing€contract€should€have€been€considered€in€assessment)Ô#†ôòòôµ #ÔÔ‡ôòòôÔ;€òòbut€see€Ô#†ôòòô #ÔÔ‡ôòòôÔPiedmont€Plaza€Investorsóó€òòv.€Dept.€ofÐ X ¨  ÐRevenueóó,€331€Or.€585,€18€P.3d€1092€(2001)(assessment€best€calculated€without€making€adjustment€for€the€federal€interestÐ  l  Ðsubsidy);òò€Alliance€Towers,€Ltd.€v.€Starkóó€òòCounty€Bd.€Of€Revisionóó,€523€N.E.2d€826€(Ohio€1988),€òòappeal€after€remandóó,€552Ð à 0  ÐÔ_ÔN.E.Ô_Ô€2d€632€(1990)(artificial€effects€of€the€federal€housing€assistance€program€not€indicative€of€the€value€of€the€realÐ ¤ô  Ðestate).€Ô#†ôòòô\#Ô ÏÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú9Ú  ÚóóÝ  ÝÔ_ÔÔ‡ôòòôÔState€housing€agencies€play€an€essential€role€in€the€LIHTC€program.€€Cohen,€òòsupraóó€note€5€at€537.€òòóó€A€stateððsÐ ° Ðannual€credit€ceiling€is€determined€by€multiplying€$1.25€by€the€state€population.€€I.R.C.€ðð€42(h)(3)(C)(I)Ô#†ôòòô#Ô. £Ý ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú10Ú  ÚóóÝ  ÝÔ_ÔÔ‡ôòòôÔThe€legislature€afforded€Taxpayers€temporary€relief€from€the€increase€in€their€property€taxes.€Tenn.€Code€Ann.Ð ° Ððð€67„4„2009(9)€provides:€€Ð tÄ ÐÌà8  àThere€shall€be€allowed€as€a€credit€against€the€sum€total€of€the€taxes€imposed€by€the€franchise€tax€law,Ð üL Ðcompiled€in€title€67,€chapter€4,€part€21,€and€by€the€excise€tax€law,€compiled€in€title€67,€chapter€4,€partÐ À Ð20,€certain€unbudgeted€property€taxes€associated€with€LIHTC€property.€As€used€herein,€"LIHTCÐ „Ô Ðproperty"€means€property€participating,€as€of€June€28,€2000,€in€the€low€income€housing€tax€creditÐ H ˜ Ðprogram€authorized€by€Ô#†ôòòô‘#ÔÔ‡ôòòôÔðð€Ô#†ôòòô#ÔÔ‡ôòòôÔ42€of€the€Internal€Revenue€Code,Ô#†ôòòôÔ#ÔÔ‡ôòòôÔ€and€"unbudgeted€property€taxes"€meansÐ  \ Ðactual€property€taxes€due€on€the€LIHTC€property€minus€the€average€property€taxes€projected€for€allÐ Ð  ÐLIHTC€properties€in€the€county€in€LIHTC€program€applications€filed€prior€to€June€28,€2000€but€afterÐ ” ä  Ð1995€and€based€on€the€final€applications.€With€respect€to€each€LIHTC€property,€the€credit€exists€forÐ X ¨  Ðfive€(5)€years€and€shall€expire€after€the€fifth€year€for€which€it€is€claimed.Ð  l  ÐÐ ÐÐ Ð Ð  ÐÔ#†ôòòô6#Ô ˆÝ ƒÍd$ÝÔUSUS.,ÔÔ€ôòXXÔÓ  Óà  àòòÚ  Ú28Ú  ÚóóÝ  ÝÔ_ÔAs€explained€òòinfraóó,€5€n.10,€the€legislature€provided€Taxpayers€temporary€relief€from€their€ð ðunderbudgetedððÐ ° Ðproperty€taxes€pursuant€to€Tenn.€Code€Ann.€ðð€67„4„2009(9).€€òòSee€alsoóó€Tenn.€Op.€Atty.€Genòò.óó€No.€00„66€(opining€that€billÐ tÄ Ðwould€be€proper€exercise€of€legislatureððs€authority€under€òòÔ_ÔTenn.ConstÔ_Ôóó.€Art.€II,€ðð€28€&€29€to€exclude€Tax€Credits€fromÐ 8ˆ Ðconsideration€in€appraisals).Ý ƒüœ!ÝÔUSUS.,ÔÝ  ÝÔ_ÔÔ_ÔÔ‡XçÔXXXÔÔ‡¼Q»XXçÔÔà@ü ü ìàÔ#†XçÔX»¼Ql#ÔÔ‡îAÄîXXçÔÔIN€THE€COURT€OF€APPEALS€OF€TENNESSEEˆÐ ° Ðà@kk$ìàAT€NASHVILLEÔ#†XçÔXîîAÄÀ#ÔÔ‡¼Q»XXçÔԈРÖ& ÐÓ  ÓSeptember€4,€2002€SessionÐ üL ÐÔ#†XçÔX»¼QZ#ÔÔ‡¼Q»XXçÔÔÌò òÔ#†XçÔX»¼Qì#ÔÔ‡¼Q»XXçÔÔSPRING€HILL,€L.P.,€et€al.€v.€TENNESSEE€STATEÐ  p ÐBOARD€OF€EQUALIZATION,€et€al.Ô#†XçÔX»¼Q2#ÔÔ‡¼Q»XXçÔÔó óÐ 4 „ ÐÌÔ#†XçÔX»¼QÒ#Ôà@@½½ìàò òAppeal€from€the€Chancery€Court€for€Davidson€CountyÐ Z ª Ðà@@øøìàNo.€00„152„II€€€€€€Carol€McCoy,€ChancellorÐ F – ÐÌÌà@@ìì*ìàßA€V) °°` d€÷E< ` AßÐ  Z  ÐÌà@@TTìàNo.€M2001„02683„COA„R3„CVÔ#†XçÔXXXçÔM#ÔÔ‡XçÔXXXçÔÔ€„€Filed€December€31,€2003ó óÔ#†XçÔXXXçÔ“#ÔÔ‡XçÔXXXçÔÔò òÐ U  ÐÌßA€V) °°` dE<Ü` AßÐ Ý- Ðó óÌÓ  ÓTaxpayers€appeal€their€property€tax€assessments€for€the1998€tax€year.€€Ô#†XçÔXXXçÔò#ÔAll€of€the€properties€in€dispute€Ð Ø( Ðreceive€€federal€income€tax€credits€authorized€by€ðð€42€of€the€Internal€Revenue€Code€of€1986,€underÐ Ä Ðthe€Federal€Low€Income€Housing€Tax€Credit€Program.€Ô‡XçÔXXXçÔÔ€Taxpayers€complain€that€the€county€assessorsÐ ° Ðimproperly€included€the€present€value€of€the€federal€tax€credits€in€the€valuations€of€their€low„incomeÐ œì Ðhousing€€properties,€thereby€making€the€assessments€too€high.Ô#†XçÔXXXçÔÝ#ÔÔ‡XçÔXXXçÔÔ€Ô#†XçÔXXXçÔ#ÔÔ‡XçÔXXXçÔÔ€The€trial€court€affirmed€the€decisionsÐ ˆØ Ðof€the€State€Board€of€Equalization,€finding€that€the€tax€credits€were€properly€included€in€theÐ tÄ Ðvaluations.€€In€addition,€Taxpayer€Acorn€challenges€its€reclassification€from€residential€toÐ `° Ðcommercial€for€property€tax€purposes.€€The€trial€court€affirmed€Acornððs€reclassification.€€We€affirmÐ Lœ Ðthe€judgment€of€the€trial€court.€Ô#†XçÔXXXçÔ\#ÔÔ‡XçÔXXXçÔÔÐ 8ˆ ÐÌò òÓ  ÓTenn.€R.€App.€P.€3€Appeal€as€of€Right;€Judgment€of€the€Chancery€CourtÐ ` ÐAffirmed€and€Remandedó óÐ üL ÐÓ“ ÓÌòòPatricia€J.€Cottrell,€J.óó,€delivered€the€opinion€of€the€court,€in€which€òòBen€H.€Cantrell,€P.J.,€M.S.óó,Ð Ô$ Ðand€òòAllen€W.€Wallace,€Sp.€J.óó,€joined.Ð À  ÐÌGrant€C.€Glassford,€Bryan€E.€Pieper,€Paul€D.€Krivacka,€Nashville,€Tennessee,€for€the€appellants,Ð ˜"è! ÐSpring€Hill,€L.P.,€Greentree€Pointe,€L.P.,€and€Acorn€Hills,€L.P.Ð „#Ô" ÐÌPaul€G.€Summers,€Attorney€General€and€Reporter;€Michael€E.€Moore,€Solicitor€General;€MargaretÐ \%¬ $ ÐM.€Huff,€Assistant€Attorney€General,€for€the€appellees,€Tennessee€State€Board€of€Equalization.Ð H&˜!% ÐÌRobert€O.€Ô_ÔBinkleyÔ_Ô,€Lewisburg,€Tennessee€for€the€appellees€Linda€Haislip,€Marshall€County€PropertyÐ  (p#' ÐAssessor,€and€Margaret€Tyree,€Marshall€County€Trustee.Ð  )\$( ÐÌMichael€R.€Jennings,€Lebanon,€Tennessee€for€the€appellees€Jennifer€Bell,€Wilson€County€PropertyÐ ä*4&* ÐAssessor,€and€Ernest€Lasater,€Wilson€County€Trustee.Ô#†XçÔXXXçÔ[ #ÔÔ‡XçÔXXXçÔÔÐ Ð+ '+ ÐÌStephen€H.€Price,€Dwayne€W.€Barrett,€Michael€D.€Orr,€Nashville,€Tennessee,€for€the€Amici€Curiae,Ð ¨-ø(- ÐÔ_ÔGreater€Nashville€Apartment€Association,€Tennessee€Network€for€Community€EconomicÐ ° ÐDevelopment,€and€Tennessee€Apartment€Association.Ô#†XçÔXXXçÔZ#ÔÔ‡XçÔXXXçÔÔÐ œì ÐÌò òÑ8€çÔXXdìdÈ8ÑÓ  ÓOPINIONó óÐ tÄ ÐÓ>ÓÌà  àÔ#†XçÔXXXçÔÎ#ÔÔ‡XçÔXXXçÔÔIn€this€consolidated€appeal,€Taxpayers€are€three€limited€partnerships,€Spring€Hill,€L.P.,Ô#†XçÔXXXçÔ©#ÔÔ‡XçÔXXXçÔÔÐ L œ ÐGreentree€Pointe,€L.P.,€and€Acorn€Hills,€L.P.,€that€Ô#†XçÔXXXçÔD#ÔÔ‡XçÔXXXçÔÔseek€judicial€review€of€two€Wilson€CountyÐ 8 ˆ Ðassessments€of€their€properties,€Spring€Hill׃ ×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€and€Greentree€Pointe,׃×Ý ƒ#ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×€and€one€Marshall€CountyÐ $ t Ðassessment€regarding€Acorn€Hills.׃!h×Ý ƒ#ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€All€of€the€properties€at€issue€have€qualified€for,€and€use,€certain€Ð  ` Ðfederal€income€tax€credits€(ð ðTax€Creditsðð€or€ð ðLIHTCðð)€authorized€by€ðð€42€of€the€Internal€RevenueÐ ü L  ÐCode€of€1986€under€the€Federal€Low€Income€Housing€Tax€Credit€Program.Ô#†XçÔXXXçÔÏ#ÔÔ‡XçÔXXXçÔÔ€€Ô#†XçÔXXXçÔü#ÔÔ‡XçÔXXXçÔÔTaxpayers€complain€thatÐ è 8  Ðthe€appraisals€improperly€considered€the€present€value€of€the€Tax€Credits€in€the€valuations€of€theirÐ Ô$  Ðlow„income€housing€properties,€thereby€making€the€valuations€and€resulting€assessments€too€high.׃¸×Ý ƒ#ÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×€Ô#†XçÔXXXçÔ@#ÔÔ‡XçÔXXXçÔÔÐ À  ÐIn€addition,€Taxpayer€Acorn€challenges€its€reclassification€from€residential€to€commercial€forÐ ¬ü  Ðproperty€tax€purposesÐ ˜è  Ðà  àÔ#†XçÔXXXçÔÛ#ÔÔ‡XçÔXXXçÔÔ¹Ó  Óò òòòà @ àà @` àà @¸ àà @ àà @h àà @À àI.€€BackgroundÐ pÀ ÐÓ  ÓòòóóÌà@ ìàA.€€The€LIHTC€ProgramˆÐ H˜ Ðóóó óÌÓ  Óà  àÔ#†XçÔXXXçÔÛ#ÔÔ‡XçÔXXXçÔÔThe€LIHTC€program€was€created€as€part€of€the€Tax€Reform€Act€of€1986,€and€utilizes€theÐ  p ÐInternal€Revenue€Code€to€provide€an€incentive€for€the€construction€and€rehabilitation€of€low„incomeÐ  \ Ðrental€housing.׃b ×Ý ƒ#ÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×€Ô#†XçÔXXXçÔ #ÔÔ‡XçÔXXXçÔÔ€Specifically,€the€LIHTC€program€provides€the€owners€of€qualified€low„incomeÐ øH Ðrental€housing€an€annual€credit€against€federal€income€tax€liability€for€a€ten„year€period.Ô#†XçÔXXXçÔ‘#ÔÔ‡XçÔXXXçÔÔ€Ô#†XçÔXXXçÔ#ÔÔ‡XçÔXXXçÔÔ€Ô#†XçÔXXXçÔÒ#ÔÔ‡XçÔXXXçÔÔThe€amountÐ ä4 Ðof€the€Tax€Credits€is€based€on€the€costs€of€the€project€development€and€the€number€of€qualified€low„Ð Ð  Ðincome€housing€units€included€in€the€project.€€In€exchange€for€the€Tax€Credits,€theÐ ° Ðdevelopers/owners€enter€into€a€binding€contractual€agreement€to€restrict€the€use€of€the€property€forÐ œì Ðthe€benefit€of€low„income€households.׃,×Ý ƒ#ÃÝòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×Ô#†XçÔXXXçÔ#ÔÔ‡XçÔXXXçÔÔ€€Ô#†XçÔXXXçÔH#ÔÔ‡XçÔXXXçÔÔThe€agreements€are€binding€for€a€minimum€of€fifteen€years,Ð ˆØ Ðrun€with€the€land,€and€extend€to€the€ownersðð€successors€and€assigns.€€I.R.C.€ðð€42(f),(g).€€Here,Ð tÄ ÐTaxpayers€agreed€to€restricted€covenants€for€a€period€of€thirty€years€in€order€to€enhance€theÐ `° Ðprobability€that€their€applications€for€the€Tax€Credits€would€be€accepted.€€The€restrictive€covenantsÐ L œ Ðare€publicly€recorded€as€part€of€the€deed€to€the€propertyÔ#†XçÔXXXçÔŒ#ÔÔ‡XçÔXXXçÔÔ.€Ô#†XçÔXXXçÔ½!#ÔÔ‡XçÔXXXçÔÔÐ 8 ˆ ÐÌà  àThe€subsidy€provided€by€the€Tax€Credits€is€designed€to€bridge€the€gap€between€the€value€ofÐ  ` Ðthe€property€in€a€restricted€use€and€the€cost€of€development€of€the€project.€€The€market€value€of€theÐ ü L  Ðproperty€in€a€restricted€use,€as€defined€by€the€present€value€of€rental€income,€will€typically€representÐ è 8  Ð30%€of€the€total€development€cost€of€the€project.€€Little€or€no€cash€will€typically€be€invested€asÐ Ô$  Ðequity€in€these€propertiesÔ‡ôòXXçÔÔ.Ô#†ôòòô"#ÔÔ#†XçÔXòô9$#ÔÔ‡XçÔXXXçÔÔ€€Instead,€the€developer€will€obtain€conventional€mortgage€financing€forÐ À  Ðthe€30%€portion€of€the€total€funds€required€to€develop€the€project.€€Tax€Credits€will€then€be€awardedÐ ¬ü  Ðto€provide€the€remaining€70%€portion€of€the€total€funds€required€to€develop€the€project.€€Once€TaxÐ ˜è  ÐCredits€are€allocated€to€a€property,€the€owner€can€assign€the€Tax€Credits€in€order€to€finance€the€costsÐ „Ô  Ðof€development€or€rehabilitation€of€the€qualified€properties.€€Ð pÀ ÐÌà  àThis€assigning€of€the€Tax€Credits€is€usually€accomplished€by€creating€limited€partnershipsÐ H˜ Ðin€the€development.€€In€exchange€for€investing€in€the€project,€the€limited€partners€are€allocated€theÐ 4„ ÐTax€Credits€on€an€yearly€basis€and€can€apply€those€credits€to€their€tax€liability€unrelated€to€theÐ  p Ðprojects€for€which€the€credits€are€awarded.€€Ô#†XçÔXXXçÔŸ$#ÔÔ‡XçÔXXXçÔÔLarge€companies€comprise€the€majority€of€the€investorsÐ  \ Ðin€€LIHTC€projects€and€use€the€credits€to€offset€federal€income€tax€liability.׃Ü×Ý ƒ#ÃÝòòÚ  Ú7Ú  ÚóóÝ  Ý×  ×Ô#†XçÔXXXçÔ™(#ÔÔ‡XçÔXXXçÔÔ€€In€addition€to€internalÐ øH Ðallocations€of€the€Tax€Credits€through€a€limited€partnership€arrangement,€the€Tax€Credits€may€beÐ ° Ðsold€together€with€the€property€to€a€purchaser€who€is€willing€to€honor€the€restrictions€on€use.Ô#†XçÔXXXçÔÇ)#ÔÔ‡XçÔXXXçÔÔ׃e×Ý ƒ#ÃÝòòÚ  Ú8Ú  ÚóóÝ  Ý×  ×Ô#†XçÔXXXçÔ +#ÔÔ‡XçÔXXXçÔÔ€€Ô#†XçÔXXXçÔ +#ÔÔ‡XçÔXXXçÔÔÐ œì ÐÌà  àIn€Tennessee,€the€Tennessee€Housing€Development€Authority€(ð ðTHDAðð)€administers€theÐ tÄ Ðprogram€and€monitors€compliance€with€the€restrictive€covenants€agreed€to€by€the€participatingÐ `° Ðdevelopers/owners.׃sÜ×Ý ƒ#ÃÝòòÚ  Ú9Ú  ÚóóÝ  Ý×  ×€Ô#†XçÔXXXçÔä+#ÔÔ‡XçÔXXXçÔÔ€In€the€event€the€owner€fails€to€honor€the€restricted€rent€rates,€THDA€issuesÐ L œ Ðnotices€of€non„compliance€to€the€IRS€that€can€result€in€the€disallowance€of€the€Tax€Credits€toÐ 8 ˆ Ðdefaulting€owners.Ô#†XçÔXXXçÔ-#ÔÔ‡XçÔXXXçÔÔÔ‡ôòXXçÔÔ€€Ô#†XçÔXòôÕ.#ÔÔ#†XçÔXXXçÔ¶.#ÔÔ‡XçÔXXXçÔÔThe€application€process€for€the€right€to€participate€in€the€LIHTC€Program€isÐ $ t Ðgoverned€by€policies€and€procedures€established€by€THDA.€€The€application€process€is€veryÐ  ` Ðcompetitive.€Ô#†XçÔXXXçÔ#ÔThe€second€table€below€sets€forth€the€impact€of€the€Tax€Credits€on€the€real€property€tax€dueÐ " r  Ðand€payable€for€the€1998€tax€year€for€each€of€the€disputed€properties:Ð ^  ÐÌà  àò òòòpropertyóóà0 ¸ àòòProperty€Tax€Dueà0À¸ (#¸ (#àà0À(#À(#àProperty€Tax€Dueà0 (#(#àà0x (# (#àDifferenceóóó ó׃t×Ý ƒ#ÃÝòòÚ  Ú10Ú  ÚóóÝ  Ý×  ×Ô‡XçÔXXXçÔÔÔ‡ôòXXçÔÔò òòòÐæ6 x(#x(# Ðà  àà ` àà ¸ àwith€Tax€CreditsÔ#†XçÔXŒôV@#ÔÔ‡¼Q»àXçÔÔà À àÔ#†XçÔX.¼Qñ@#ÔÔ‡ôòàXçÔÔà0  àWithout€Tax€CreditsÔ#†XçÔXŒô?A#Ôó óóóÐÒ" (#(# ÐÌà  àSpring€Hillà0 ¸ à$€79,156.88€€€€€€€€€à0À¸ (#¸ (#àà0À(#À(#à$52,040.32à0È(#(#àà0 È(#È(#àà0x (# (#à$22,131.03ЀРx(#x(# Ðò òÌà  àó óGreentree€à0 ¸ à$104,134.80€€€€€€€€€€€à0À¸ (#¸ (#àà0À(#À(#à$48,466.68à0È(#(#à€à0 È(#È(#àà0x (# (#à$51,478.44ÐX¨x(#x(# ÐÌà  àAcornà0 ` àà0¸ ` (#` (#à$€23,697.99€€€€€€€€€€à0À¸ (#¸ (#àà0À(#À(#à$64,345.64à0È(#(#àà0 È(#È(#àà0x (# (#à$40,647.65Ð0€x(#x(# ÐÌà  àTaxpayers€first€appealed€the€assessments€to€their€€respective€county€boards€of€equalization,Ð X Ðarguing€that€the€valuations€established€by€the€county€appraisals€were€too€high€based€on€the€erroneousÐ ôD Ðinclusion€of€the€present€value€of€the€Tax€Credits.€€Both€the€Wilson€and€Marshall€county€boardsÐ à0 Ðaffirmed€the€assessments.€€Taxpayers€next€appealed€to€the€State€Board€of€Equalization€where€aÐ Ì Ðcontested€case€hearing€was€conducted.€€Ð ¸ ÐÌà  àAt€the€administrative€hearing,€€Mr.€A.€Dean€Lewis,€the€State€Valuation€Coordinator,€DivisionÐ à Ðof€Property€Assessments€of€the€Office€of€the€Comptroller€of€the€Treasury,€introduced€his€appraisals.€Ð |Ì ÐMr.€Lewis€gave€considerable€weight€to€the€income€capitalization€approach€in€appraising€theÐ ° Ðproperties.€€This€approach€determines€market€value€by€converting€the€future€benefits€of€the€propertyÐ œì Ðinto€an€expression€of€present€worth.€€In€his€calculations,€Mr.€Lewis€used€both€a€value„decreasingÐ ˆØ Ðfactor,€the€lower€restricted€rents€(rather€than€market€rents€the€properties€would€command€if€they€wereÐ tÄ Ðnot€LIHTC€properties),€and€also€a€value„enhancing€factor,€the€present€worth€of€the€Tax€Credits.׃ ×Ý ƒ#ÃÝòòÚ  Ú11Ú  ÚóóÝ  Ý×  ×Ô#†XçÔXXXçÔ7@#ÔÔ‡XçÔXXXçÔԀР`° ÐMr.€Lewis€explained:Ð L œ ÐÌà8  àà0` Ð Ð àThe€owner€contracted€with€the€Tennessee€Housing€Development€Agency€toÐ $ t Ðreceive€tax€credits€for€a€ten„year€period€for€the€subject€propert[ies].€€ByÐ  ` Ðcontract€he€gave€up€some€of€his€property€rights€in€order€to€receive€thisÐ ü L  Ðbenefit.€€These€were:Ðè 8 ` Ð ` Ð  ÐÌà8  àà0` Ð Ð à„à0¸ ` Ð ` Ð àthe€right€to€lease€the€property€to€whoever€he€pleases€and€for€theÐ À  Ðamount€he€€wishes;Ьü ¸ Ð ¸ Ð  Ðà8  àà8` Ð Ð à„€à0¸ ` x` xàthe€right€to€sell€without€restraint;Ð˜è ¸ x¸ x Ðà8  àà8` Ð Ð à„€à0¸ ` x` xàthe€right€to€use€the€property€without€restraint.Ð„Ô ¸ x¸ x Ðà8  àà8` Ð Ð àÐ ` x` x Ðà8  àà8` Ð Ð àTherefore,€in€order€to€properly€appraise€the€subjectððs€fee„simpleÐ \¬ Ðinterest,€the€full€bundle€of€rights,€the€present€worth€of€the€tax€creditsÐ H˜ Ðmust€be€added€to€the€income€value€for€this€is€payment€forÐ 4„ Ðrelinquishing€the€rights€listed€above.€€The€Administrative€Judges€inÐ  p ÐDickson€County€and€Montgomery€County€recently€rejected€theÐ  \ Ðtaxpayers€agentððs€argument€on€the€relevance€of€the€tax€credits€onÐ øH Ðvalue.€€This€appraiser€has€studied€cases€in€three€other€states€as€well€asÐ ä4 Ða€1994€sample€appraisal€of€a€LIHTC€project€by€E.€H.€Boeckh.€€EachÐ Ð  Ðof€these€cases€state€that€tax€credits€definitely€affects€the€value€of€theÐ ¼  Ðreal€propertyÔ#†XçÔXXXçÔ J#ÔÔ‡XçÔXXXçÔÔ.Шø` x` x ÐÔ#†XçÔXXXçÔ-Q#ÔÔ‡XçÔXXXçÔÔÌà  àWhile€this€case€was€pending€before€the€Administrative€Law€Judge€(ð ðALJðð),€the€parties€askedÐ €Ð Ðfor€and€the€ALJ€granted€a€stay€of€her€ruling€pending€a€decision€by€the€Assessment€AppealsÐ l¼ ÐCommission€in€another€case€that€involved€both€the€same€issue€and€the€same€Taxpayer€counsel€as€theÐ X ¨ Ðcase€before€us.€€€After€the€Assessment€Appeals€Commission€rendered€its€decision€in€that€case,Ð D!” ÐòòAppeal€of€CP€Associates,€L.P.óó,€Dickson€County,€Tax€Year€1997€(Assessment€Appeals€CommissionÐ 0"€  ÐMarch€25,1999),€the€ALJ€herein€òòóóentered€an€initial€decision€and€order€affirming€the€valuations€andÐ #l! Ð1998€assessments€for€Spring€Hill€and€Greentree,€finding€that€the€recently€decided€òòCP€Associates€óócaseòòÐ $X" Ðóówas€controlling.€€On€the€same€day,€the€ALJ€issued€an€initial€decision€and€order€in€Acorn€Hills,Ð ô$D # Ðaffirming€the€valuation€and€assessment,€once€again€relying€on€Ô#†XçÔXXXçÔQ#ÔÔ‡XçÔXXXçÔÔòòCP€Associates,óóÔ#†XçÔXXXçÔÒU#ÔÔ‡XçÔXXXçÔÔ€which€held€that€theÐ à%0!$ ÐLIHTCs€awarded€to€the€owners€were€a€proper€value€enhancing€factor€to€consider€when€determiningÐ Ì&"% Ðthe€value€of€the€propertyÔ#†XçÔXXXçÔ(V#ÔÔ‡XçÔXXXçÔÔòòóó.€€Ô#†XçÔXXXçÔW#ÔThe€A.L.J.€further€found€that€the€Boardððs€reclassification€of€the€AcornÐ ¸'#& Ðdevelopment€from€residential€to€commercial€property€was€properÔ‡ôòXXçÔÔ.Ô#†XçÔXòôX#ÔÔ‡XçÔXXXçÔÔÐ ¤(ô#' ÐÔ#†XçÔXXXçÔJX#ÔÔ‡XçÔXXXçÔÔà  àTaxpayers€appealed€the€A.L.J.ððs€decisions€to€the€Assessment€Appeals€Commission,€which€Ð ° Ðaffirmed€the€valuations€underlying€the€assessments,€as€well€as€Acornððs€reclassification€fromÐ œì Ðresidential€to€commercial.€€The€decisions€of€the€A.L.J.€and€the€Assessment€Appeals€CommissionÐ ˆØ Ðbecame€final€when€the€State€Board€of€Equalization€took€no€action€on€the€decisions,€pursuant€to€Tenn.Ð tÄ ÐCode€Ann.€ðð€67„5„1502(k).Ð `° ÐÌà  àTaxpayers€then€filed€petitions€for€review€in€the€Davidson€County€Chancery€Court€pursuantÐ 8 ˆ Ðto€Tenn€Code.€Ann.€ðð€67„5„1511.׃×Ý ƒ#ÃÝòòÚ  Ú12Ú  ÚóóÝ  Ý×  ×€Ô#†XçÔXXXçÔ¡X#ÔÔ‡XçÔXXXçÔÔ€The€trial€court€rejected€Taxpayersðð€arguments€and€upheld€theÐ $ t Ðdecision€of€the€Board.€€The€court€€determined€that€the€LIHTCs€were€properly€included€in€theÐ  ` Ðvaluation€of€the€subject€properties€for€tax€assessment€purposes€and€that€the€Acorn€reclassificationÐ ü L  Ðfrom€residential€to€commercial€was€proper.€€Ô#†XçÔXXXçÔÞ[#ÔÔ‡XçÔXXXçÔÔThe€court€concluded:Ð è 8  ÐÌà8  àThe€main€issue€before€the€Court€is€whether€the€federal€tax€credits€enjoyed€by€theÐ À  Ðowners€of€the€subject€properties€affect€the€value€of€those€properties.€€Those€taxÐ ¬ü  Ðcredits€made€ownership€of€the€properties€more€desirable€to€Petitioners.€€Further,Ð ˜è  Ðbecause€the€tax€credits€may€be€transferred€to€purchasers,€they€enhance€the€value€ofÐ „Ô  Ðthe€properties€in€the€marketplace.€€The€Court€concludes€that€the€LIHTCs€wereÐ pÀ Ðproperly€included€in€the€valuation€of€the€subject€properties€for€tax€assessmentÐ \¬ Ðpurposes.€Accordingly,€the€decision€of€the€State€Board€of€Equalization€is€upheld.Ô#†XçÔXXXçÔ‰]#ÔÔ‡XçÔXXXçÔÔÐH˜Ð Ð  ÐÌà  àTaxpayers€filed€timely€appeals€to€this€court.Ð  p ÐÌÔ#†XçÔXXXçÔ±`#ÔÔ‡XçÔXXXçÔÔÓ  Óò òòòII.€€à @ àà @` àà @¸ àStandard€of€ReviewÐ øH Ðóóó óÓaÓÔ#†XçÔXXXçÔba#ÔÔ‡XçÔXXXçÔÔÒe°ÒÌà  àTenn.€Code€Ann.€ðð€67„5„1511€provides€in€pertinent€part:Ð Ð  ÐÌà8  àà8` !!à(a)€The€action€of€the€State€Board€of€Equalization€shall€be€final€andÐ ¨ø Ðconclusive€as€to€all€matters€passed€upon€by€the€board,€subject€toÐ ”ä Ðjudicial€review,€and€taxes€shall€be€collected€upon€the€assessmentÐ €Ð Ðdetermined€and€fixed€by€the€board.Ðl¼` Ã` à ÐÌà8  àà8` !!à(b)€The€judicial€review€provided€in€subsection€(a)€shall€consist€of€aÐ D!” Ðnew€hearing€òòóóin€the€chancery€court€based€upon€the€administrativeÐ 0"€  Ðrecord€and€any€additional€or€supplemental€evidence€which€either€partyÐ #l! Ðwishes€to€adduce€relevant€to€any€issue.€.€.€.€.Ð$X"` Ã` à ÐÌÔ#†XçÔXXXçÔb#Ôà  àAlthough€the€possibility€of€presenting€additional€evidence€in€the€trial€court€differentiates€thisÐ à%0!$ Ðtype€of€case€from€most€reviews€of€administrative€decisions,€judicial€review€of€a€Board€of€EqualizationÐ Ì&"% Ðdecision€clearly€falls€under€the€Uniform€Administrative€Procedures€Act€(ð ðUAPAðð).€€òòWillametteÐ ¸'#& ÐIndustries,€Inc.€v.€Tenn.€Assessment€Appeals€Commððnóó,€11€S.W.3d€142,€147€(Tenn.€Ct.€App.€1999).€Ð ° ÐAccordingly,€courts€are€to€apply€ð ðthe€narrow,€statutorily€defined€standard€contained€in€[Tenn.€CodeÐ œì ÐAnn.]€ðð€4„5„322(h)€rather€than€the€broad€standard€of€review€used€in€other€civil€appeals.ðð€€òòWayneÐ ˆØ ÐCounty€v.€Tenn.€Solid€Waste€Disposal€Control€Bd.óó,€756€S.W.2d€274,€279€(Tenn.€Ct.€App.€1988).Ð tÄ ÐÌà  àÔ‡XçÔXXXçÔÔIn€accordance€with€Ô#†XçÔXXXçÔi#ÔÔ‡XçÔXXXçÔÔTenn.€Code€Ann.€Ô#†XçÔXXXçÔmi#ÔÔ‡XçÔXXXçÔÔðð€Ô#†XçÔXXXçÔ¿i#ÔÔ‡XçÔXXXçÔÔ4„5„322(h)Ô#†XçÔXXXçÔj#ÔÔ‡XçÔXXXçÔÔ,€a€reviewing€court€may€reverse€or€modifyÐ L œ Ðthe€administrative€agency€decision€if€the€rights€of€the€petitioner€have€been€prejudiced€because€theÐ 8 ˆ Ðadministrative€findings,€inferences,€conclusions€or€decisions€are:€Ð $ t ÐÌà8  à(1)€€In€violation€of€constitutional€or€statutory€provisions;€Ðü L !! Ðà8  à(2)€€In€excess€of€the€statutory€authority€of€the€agency;€Ðè 8 !! Ðà8  à(3)€€Made€upon€unlawful€procedure;€Ð Ô$  Ð(4)€Arbitrary€or€capricious€or€characterized€by€abuse€of€discretion€or€clearly€€€€€€€€Ð À  Ðunwarranted€exercise€of€discretion;€orЬü !! Ðà8  à(5)€€Unsupported€by€evidence€which€is€Ô#†XçÔXXXçÔRj#ÔÔ‡XçÔXXXçÔÔboth€substantial€and€material€in€light€of€the€€€Ð ˜è  Ѐ€€€€entire€record.Ð„Ô !! ÐÌà8  àIn€determining€the€substantiality€of€evidence,€the€court€shall€take€into€accountÐ \¬ Ðwhatever€in€the€record€fairly€detracts€from€its€weight,€but€the€court€shall€not€substituteÐ H˜ Ðits€judgment€for€that€of€the€agency€as€to€the€weight€of€the€evidence€on€questions€ofÐ 4„ Ðfact.Ô#†XçÔXXXçÔ–m#ÔÐ p!! ÐÌà  àIn€a€review€of€a€decision€made€by€an€administrative€agency€following€a€contested€caseÐ øH Ðproceeding,€the€standard€of€review€in€this€court€is€the€same€as€it€is€in€the€chancery€court.€€òòTerminix€Ð ä4 ÐIntððl€Co.,€L.P.€v.€Tenn.€Dept.€of€Laboróó,€77€S.W.3d€185,€191€(Tenn.€Ct.€App.€2001).€€Thus,€both€theÐ Ð  Ðtrial€court€and€the€appellate€court€should€review€factual€issues€upon€a€standard€of€substantial€andÐ ¼  Ðmaterial€evidence.€€òòWayne€Countyóó,€756€S.W.2d€at€279;€òòHumana€of€Tenn.€v.€Tenn.€Health€FacilitiesÐ ¨ø ÐCommððnóó,€551€S.W.2d€664€(Tenn.€1977).òòóó€€Although€not€clearly€defined,€substantial€and€materialÐ ”ä Ðevidence€ð ðrequires€something€less€than€a€preponderance€of€the€evidence€but€more€than€a€scintilla€orÐ €Ð Ðglimmer.ðð€€òòWayne€Countyóó,€756€S.W.2d€at€280.€€This€court€must€carefully€review€the€record,€but€mayÐ l¼ Ðnot€substitute€our€judgment€regarding€the€weight€of€the€evidence€for€that€of€the€Board,€even€whereÐ X ¨ Ðthe€evidence€could€support€a€different€result.€€òòóó€òòGluck€v.€Civil€Service€Comm.óó,€15€S.W.3d€486,€490Ð D!” Ð(Tenn.€Ct.€App.€1999)òò;€Willametteóó,€11€S.W.3d€at€147.€Ð 0"€  ÐÔ‡XçÔXXXçÔÔÌÔ#†XçÔXXXçÔåt#ÔÔ‡XçÔXXXçÔÔòòóóà  àAdditionally,€courts€will€generally€defer€to€decisions€of€administrative€agencies€on€questionsÐ $X" Ðinvolving€complex€or€technical€areas€within€the€agencyððs€expertise.€€òòWayne€Countyóó,€756€S.W.2d€atÐ ô$D # Ð279„80.€€ð ð[T]he€legislature€established€specific€administrative€agencies€to€determine€property€valuesÐ à%0!$ Ðwhich€have€acquired€extensive€knowledge€and€expertise.€€The€process€of€valuing€property€is€intenselyÐ Ì&"% Ðfactual,€and€flexibility€is€necessary€for€the€expert€agencies€to€value€property€in€wide€rangingÐ ¸'#& Ðcircumstances.ðð€€òòWillametteóó,€11€S.W.3d€at€146.€€Ô#†XçÔXXXçÔ(u#ÔÔ‡XçÔXXXçÔÔTax€assessments€are€presumed€valid,€and€theÐ ¤(ô#' Ðtaxpayer€has€the€burden€of€proving€they€are€erroneous.€€òòEdmundson€Management€Service€Inc.€v.Ð )à$( ÐWoodsóó,€603€S.W.2d€716,€717€(Tenn.€1980).Ô#†XçÔXXXçÔx#ÔÐ |*Ì%) ÐÐ h+¸&* ÐÔ‡XçÔXXXçÔÔà  àAn€allegation€under€Tenn.€Code€Ann.€ðð€4„5„322(h)(l)€that€an€agency€decision€was€made€inÐ ° Ðviolation€of€a€constitutional€or€statutory€provision€includes€an€allegation€that€the€agency€interpretedÐ œì Ðor€applied€a€statute€incorrectlyÔ#†XçÔXXXçÔ[y#ÔÔ‡XçÔXXXçÔÔ.€€Where€the€resolution€of€an€issue€presented€in€a€judicial€review€of€anÐ ˆØ Ðadministrative€decision€under€the€UAPA€hinges€upon€the€interpretation€and€application€of€a€statute,Ð tÄ Ðcourts€will€review€the€question€de€novoòò.€€King€v.€Popeóó,€91€S.W.3d€314,€318€(Tenn.€2002).€€That€isÐ `° Ðbecause€construction€and€application€of€a€statute€present€questions€of€law,€and€review€of€questionsÐ L œ Ðof€law€is€de€novo,€with€no€presumption€afforded€to€the€conclusions€of€the€court€below.€€òòIdóó.Ô#†XçÔXXXçÔ´z#ÔÔ‡XçÔXXXçÔԀР8 ˆ ÐÌÔ#†XçÔXXXçÔ }#Ôà  àFurther,€Tennessee€case€law€is€clear€that€when€construing€€tax€statutes€the€ð ð[w]ords€employedÐ  ` Ðby€the€General€Assembly€in€the€enactment€of€tax€statutes€are€to€be€taken€in€their€natural€and€ordinaryÐ ü L  Ðsenseðð€and€ð ðliberally€construed€in€favor€of€the€taxpayer€and€against€the€taxing€authority.ðð€€òòCovingtonÐ è 8  ÐPike€Toyota,€Inc.€v.€Cardwellóó,€829€S.W.2d€132,€135€(Tenn.€1992).€€Furthermore,€ð ð[s]tatutes€levyingÐ Ô$  Ðtaxes€will€not€be€extended€by€implication€beyond€the€clear€import€of€the€language€used,€nor€will€theirÐ À  Ðoperation€be€enlarged€so€as€to€embrace€matters€not€specifically€pointed€out,€although€standing€onÐ ¬ü  Ðclose€analogy.ðð€€òòId.óó;€òòSeeóó€òò€Union€Carbide€Corp.€v.€Alexanderóó,€679€S.W.2d€938,€942€(Tenn.€1984).€€ð ðInÐ ˜è  Ðinterpreting€statutes€the€legislative€intent€must€be€determined€from€the€plain€language€it€contains,€readÐ „Ô  Ðin€the€context€of€the€entire€statute,€without€any€forced€or€subtle€construction€which€would€extend€orÐ pÀ Ðlimit€its€meaning.ðð€€òòNational€Gas€Distributors,€Inc.€v.€Tayloróó,€804€S.W.2d€66,€67€(Tenn.€1991).Ô‡XçÔXXXçÔÔÐ \¬ ÐÌÔ#†XçÔXXXçÔZ‚#ÔÔ‡XçÔXXXçÔÔà  àThe€taxpayers€and€the€Board€differ€somewhat€on€the€appropriate€standard€of€review.€Ð 4„ ÐTaxpayers€assert€the€issue€they€raise€is€one€of€law€and,€consequently,€our€review€is€òòde€novoóó€with€noÐ  p Ðpresumption€of€correctness.€€They€define€the€issue€as€whether€it€is€lawful€under€the€TennesseeÐ  \ ÐConstitution€and€relevant€statutes€to€include€the€LIHTCs€in€the€assessed€value€of€the€real€property.€Ð øH ÐOn€the€other€hand,€the€Board€asserts€this€case€presents€a€mixed€question€of€law€and€fact€involving€theÐ ä4 Ðproper€appraisal€methodology,€an€area€within€the€expertise€of€the€Board,€and€that€courts€should€deferÐ Ð  Ðto€decisions€by€administrative€agencies€in€their€area€of€specialized€knowledge,€experience,€andÐ ¼  Ðexpertise.Ð ¨ø ÐÌòòÔ#†XçÔXàXçÔ²‚#ÔÔ‡XçÔXàXçÔÔÓ  Óò òIII.€€Treatment€of€the€Tax€Credits€Ð €Ð Ðóóó óÓ†ÓòòóóÌà  àÔ#†XçÔXXXçÔ`†#ÔÔ‡XçÔXXXçÔÔThe€essence€of€the€Taxpayersðð€appeal€is€that€the€Tax€Credits€are€intangible€personal€propertyÐ X ¨ Ðthat€cannot€be€taxed€without€legislative€authority€to€do€so€and€no€such€authority€exists.€€Ô#†XçÔXXXçÔ‡#ÔÔ‡XçÔXXXçÔÔSpecifically,Ð D!” ÐTaxpayers€argue€that€the€LIHTCs€are€intangible€property€as€defined€in€Ô#†XçÔXXXçÔ$ˆ#ÔÔ‡XçÔXXXçÔÔTenn.€Code€Ann.€ðð€67„5„Ð 0"€  Ð501(5)Ô#†XçÔXXXçÔΈ#ÔÔ‡XçÔXXXçÔÔ€and€that€Ô#†XçÔXXXçÔE‰#ÔÔ‡XçÔXXXçÔÔalthough€the€Tennessee€Constitution€recognizes€intangible€personal€property€as€aÐ #l! Ðpotentially€taxable€class€of€property,€the€state€legislature€has€not€acted€to€provide€statutory€proceduresÐ $X" Ðfor€specifically€taxing€Tax€Credits.׃#×Ý ƒ#ÃÝòòÚ  Ú13Ú  ÚóóÝ  Ý×  ×€€Because€the€Tax€Credits€meet€the€statutory€definition€ofÐ ô$D # Ðintangible€property,€they€argue,€Ô#†XçÔXXXçÔ‘‰#ÔÔ‡XçÔXXXçÔÔthere€is€no€reasonable€construction€under€the€Property€Tax€Act€thatÐ à%0!$ Ðwould€allow€inclusion€of€the€value€of€the€Tax€Credits€in€the€value€of€€real€property€for€assessmentÐ Ì&"% ÐpurposesÔ#†XçÔXXXçÔŸ‹#ÔÔ‡XçÔXXXçÔÔ.€Ô#†XçÔXXXçÔ¹Œ#ÔÔ‡XçÔXXXçÔÔÐ ° ÐÌà  àOn€the€other€side,€the€Board€asserts€that€Taxpayers€are€incorrect€in€equating€the€inclusion€ofÐ ˆØ Ðthe€present€value€of€the€Tax€Credits€as€a€value„enhancing€factor€in€assessing€the€real€property€toÐ tÄ Ðwhich€they€are€attached€with€taxing€the€credits€themselves.€€The€Board€argues€that€under€relevant€lawÐ `° Ðit€is€appropriate€to€include€all€interests€in€the€real€property€in€assessing€its€value€and€to€consider€value„Ð L œ Ðenhancing€as€well€as€value„reducing€factors.€The€Boardððs€position€is€that,€regardless€of€whether€theÐ 8 ˆ ÐTax€Credits€could€be€characterized€as€intangible€property,€they€are€indisputably€a€factor€properlyÐ $ t Ðincluded€in€the€assessment.Ð  ` ÐÌÓ  Óò òòòA.€€Constitutional€and€Statutory€System€for€Taxing€PropertyÐ è 8  Ðóóó óÓHÓÌà  àWe€begin€our€analysis€with€the€source€of€all€taxing€authority€in€Tennessee,€our€Constitution.€Ð À  ÐÔ#†XçÔXXXçÔýŒ#ÔArticle€II,€ðð€28€of€the€Tennessee€Constitution€òòóóprovides€that€all€property€real,€personal,€or€mixed€shallÐ ¬ü  Ðbe€subject€to€taxation.òòóó€€For€purposes€of€taxation,€property€is€to€be€classified€into€one€of€three€distinctÐ ˜è  Ðclasses:€(1)€real€property,€(2)€tangible€personal€property,€and€(3)€intangible€personal€property€òòóóòòTenn.Ð „Ô  ÐConstóó.€Art.€II,€ðð€28;€òòIn€the€Matter€of€All€Assessmentsóó,€58€S.W.3d€95,98€(Tenn.€2000).Ð pÀ ÐÌà  àPursuant€to€this€Constitutional€authority,€the€General€Assembly€has€enacted€a€system€forÐ H˜ Ðtaxation€of€property,€The€Property€Tax€Act,€Tenn.€Code€Ann.€ðð€67„5„101€òòet€seqóó.€€Under€that€system,Ð 4„ Ðð ðAll€property,€real€and€personal,€shall€be€assessed€for€taxation€for€state,€county€and€municipalÐ  p Ðpurposes,€except€such€as€is€declared€exempt€in€part€2€of€this€chapter,€or€unless€otherwise€provided.ððÐ  \ ÐTenn.€Code€Ann.€ðð€67„5„101.€€For€purposes€of€taxation,€all€property€must€be€classified€into€one€ofÐ øH Ðthree€classes,€real€property,€tangible€personal€property,€and€intangible€personal€property,€and€theÐ ä4 Ðproper€ratio€of€assessment€to€value€must€be€applied€uniformly.€€Tenn.€Code€Ann.€ðð€67„5„503.׃$×Ý ƒ#ÃÝòòÚ  Ú14Ú  ÚóóÝ  Ý×  ×€€Ð Ð  ÐÌà  àòòóóArticle€II,€ðð€29€empowers€the€General€Assembly€to€authorize€counties€and€incorporated€townsÐ ¨ø Ðto€impose€taxes€ð ðin€such€manner€as€shall€be€prescribed€by€law;€and€all€property€shall€be€taxedÐ ”ä Ðaccording€to€value,€upon€the€principles€established€in€regard€to€State€taxation.ðð€€Tennessee€CodeÐ €Ð ÐAnnotated€ðð€67„5„102(a)(1)€permits€counties€to€levy€an€òòad€valorem€óó(according€to€its€value)€tax€on€allÐ l¼ Ðproperty€subject€to€property€taxation.€€Such€taxes€are€to€be€imposed€on€the€value€of€the€property,€ð ðasÐ X ¨ Ðthe€same€is€ascertained€by€the€assessment€for€state€taxation.ðð€€Tenn.€Code€Ann.€ðð€67„5„102(b).€€Ð D!” ÐÌà  àThus,€before€the€State€or€a€county€can€tax€any€property,€that€property€must€be€classified€so€thatÐ #l! Ðthe€appropriate€ratio€of€assessment€to€value€can€be€established.€€Definitions€of€the€three€propertyÐ $X" Ðclasses€are€set€out€in€Tenn.€Code€Ann.€ðð€67„5„501.€€Taxpayers€in€the€case€before€us€assert€that€the€TaxÐ ô$D # Ðâ âCredits€fall€within€the€statutory€definition€of€intangible€personal€property€and€should€be€classified€asÐ à%0!$ Ðsuch.׃%×Ý ƒ#ÃÝòòÚ  Ú15Ú  ÚóóÝ  Ý×  ×€€The€pertinent€statutory€provision€states:€Ð ° Ðâ âÌà8  àððIntangible€personal€propertyðð€includes€personal€property,€such€as€money,€anyÐ ˆØ Ðevidence€of€debt€owed€to€a€taxpayer,€any€evidence€of€ownership€in€a€corporation€orÐ tÄ Ðother€business€organization€having€multiple€owners,€and€all€other€forms€of€property,Ð `° Ðthe€value€of€which€is€expressed€in€terms€of€what€the€property€represents€rather€thanÐ L œ Ðits€own€intrinsic€worth.€€ððIntangible€personal€propertyðð€includes€all€personal€propertyÐ 8 ˆ Ðnot€defined€as€ððtangible€personal€property.ððÔ‡XçÔXXXçÔÔÐ$ t!! ÐÔ#†XçÔXXXçÔúž#ÔÔ‡XçÔXXXçÔÔÌTenn.€Code€Ann.€ðð€67„5„501(5).׃& ×Ý ƒ#ÃÝòòÚ  Ú16Ú  ÚóóÝ  Ý×  ×Ð ü L  ÐÌà  àThe€Board€does€not€dispute€Taxpayersðð€contention€that€no€specific€statutory€authority€existsÐ Ô$  Ðfor€taxing€the€credits€as€intangible€property,€but€argues€that€the€inclusion€of€the€Tax€Credits€in€theÐ À  Ðassessment€of€the€value€of€the€housing€complexes€is€not€a€tax€on€the€credits€themselves.€€Further,€theyÐ ¬ü  Ðassert€that€the€law€regarding€assessment€of€real€property€authorizes€consideration€of€the€credits.€€Ð ˜è  ÐÌà  àThe€statutory€definition€of€real€property€ð ðincludes€lands,€tenements,€hereditaments,€structures,Ð pÀ Ðimprovements,€movable€property€assessable€under€ðð€67„5„802,€or€machinery€and€equipment€affixedÐ \¬ Ðto€realty€(with€exceptions)€and€all€rights€thereto€and€interests€therein,€equitable€as€well€as€legal.ðð€TennÐ H˜ ÐCode€Ann.€ðð€67„5„501(9)€(emphasis€added).€€Ð 4„ ÐÌà  àAs€set€out€above,€òòóóArticle€II,€ðð€29€requires€that€property€be€taxed€according€to€value.€€This€courtÐ  \ Ðhas€noted,€ð ðThe€constitution€does€not€give€any€clue€as€to€how€value€is€to€be€determined;€instead€itÐ øH Ðleaves€the€method€of€determining€value€to€the€legislature.ðð€€òòMarion€County€v.€State€Bd.€ofÐ ä4 ÐEqualizationóó,€710€S.W.2d€at€523.€€The€Constitution€grants€broad€authority€to€the€General€AssemblyÐ Ð  Ðregarding€valuation€of€property.€€òòAssessmentsóó,€58€S.W.3d€at€99.€€The€statutes€enacted€in€exercise€ofÐ ¼  Ðthe€authority€to€set€the€method€of€determining€value€include€Tenn.€Code€Ann.€ðð€67„5„601(a),€whichÐ ¨ø Ðprovides€in€pertinent€part,€ð ð[t]he€value€of€all€property€shall€be€ascertained€from€the€evidence€of€itsÐ ”ä Ðsound,€intrinsic€and€immediate€value,€for€purposes€of€sale€between€a€willing€seller€and€a€willing€buyerÐ €Ð Ðwithout€consideration€of€speculative€values.€.€.€.ððÐ l¼ ÐÌà  àThe€sound,€intrinsic€and€immediate€value€of€property€is€to€be€ascertained€in€accordance€withÐ D!” Ðofficial€assessment€manuals€issued€pursuant€to€law.€€Tenn.€Code€Ann.€ðð€67„5„601(b)€and€ðð€67„5„Ð 0"€  Ð602(b).€€Further,€ò òòòó óóóÐ #l! ÐÐ $X" Ðà8  àFor€determining€the€value€of€real€property,€such€manuals€shall€provide€forÐ ° Ðconsideration€of€the€following€factors:Ðœì!! Ðà  àà ` à(1)€location;€Ð ˆØ Ðà  àà ` à(2)€current€use;Ð tÄ Ðà  àà ` à(3)€whether€income€bearing€or€non„income€bearing;€Ð `° Ðà  àà ` à(4)€zoning€restrictions€on€use;Ð L œ Ðà  àà ` à(5)€ò òlegal€restrictions€on€useó ó;€Ð 8 ˆ Ðà0  àà0` s#s#à(6)€availability€of€water,€electricity,€gas,€sewers,€street€lighting,€and€other€municipalÐ ( x Ðservices;€Ð d` s#` s# Ðà  àà ` à(7)€inundated€wetlands;€Ð  P  Ðà  àà ` à(8)€natural€productivity€of€the€soil.€.€.€.;Ð ì <  Ðà0  àà0` s#s#à(9)€ò òAll€other€factors€and€evidence€of€value€generally€recognized€by€appraisers€asÐ Ø(  Ðbearing€on€sound,€intrinsic€and€immediate€economic€value€at€the€time€ofÐ È  Ðassessmentó ó.д ` s#` s# ÐÌTenn.€Code€Ann.€ðð€67„5„602(b)€(emphasis€added).Ð à  ÐÌà  àThus,€the€statutory€system€recognizes€(1)€that€all€interests€in€land€are€included€as€real€property;Ð h¸ Ð(2)€that€the€tax€is€to€be€based€upon€the€sound,€intrinsic€and€immediate,€not€speculative,€value;€(3)€thatÐ T¤ Ðvalue€reflects€the€price€between€a€willing€buyer€and€a€willing€seller;€and€(4)€that€all€factors€generallyÐ @ Ðrecognized€as€bearing€on€the€value€should€be€considered.€€Ð ,| ÐÌÓ  Óò òòòB.€€Factors€Bearing€on€ValueÐ T Ðóóó óÌÓϯÓà  àThe€potential€for€generating€income€is€a€factor€affecting€value.€€ò òó óArticle€II,€ðð€28€classifies€realÐ Ü, Ðproperty€into€four€categories.€€Residentialò ò€ó óreal€property€containing€two€or€more€rental€units€isÐ È Ðclassified€as€industrial€and€commercial€property.€òòIdóó.;€Tenn.€Code€Ann.€ðð€67„5„501(4).€€TheÐ ¸ Ðclassification€is€based€upon€the€recognition€of€the€use€of€such€rental€property€as€income„producing,Ð ¤ô Ðthereby€justifying€a€different€tax€treatment€from€that€afforded€owner„occupied€residential€property.€Ð à ÐòòCastlewood€v.€Anderson€Countyóó,€969€S.W.2d€908,€910€(Tenn.€1998);€òòSnow€v.€City€of€Memphisóó,€527Ð |Ì ÐS.W.2d€55,€66€(Tenn.€1975).ò ò€€ó óIn€the€valuation€of€income„producing€real€property,€it€is€customary€toÐ h ¸ Ðinclude€that€potential€or€projected€€income.€€Taxpayers€do€not€contend€otherwise.Ð X!¨ ÐÌà  àAlthough€the€appraisals€at€issue€herein€discuss€three€approaches€to€appraisals€of€real€property,Ð 0#€! Ðonly€two€are€relevant:€the€cost€approach€and€the€income€approach.׃2×Ý ƒ#ÃÝòòÚ  Ú17Ú  ÚóóÝ  Ý×  ×€€Mr.€Lewis€calculated€theÐ $l" Ðimprovement€value,€adjusted€for€local€market€values,€to€arrive€at€a€value€based€on€the€cost€approach.€Ð %X # ÐThen,€applying€the€income€(or€income€capitalization)€approach,€which€determines€market€value€basedÐ ô%D!$ Ðupon€the€propertiesðð€ability€to€generate€revenue,€the€future€benefits€of€the€property€were€convertedÐ à&0"% Ðinto€present€worth.€€After€correlating€the€values€determined€by€each€method,€Mr.€Lewis€recommendedÐ Ì'#& Ða€final€value€for€each€property.€€According€to€the€Boardððs€brief,€he€gave€ð ðconsiderable€weightðð€to€theÐ ¸($' Ðincome€capitalization€approach€but€also€gave€ð ðheavy€weightðð€to€the€cost€approach.Ð ° ÐÌà  àThe€law€does€not€require€that€any€particular€appraisal€methodology€be€used,€and€courts€willÐ ˆØ Ðnot€substitute€their€judgment€for€that€of€the€agency€regarding€which€appraisal€method€is€mostÐ tÄ Ðappropriate.€€òòWillametteóó,€11€S.W.3d€at€149.€€Ô#†XçÔXXXçÔ[Ÿ#ÔAny€recognized€method€whose€use€is€supported€byÐ `° Ðsubstantial€and€material€evidence€and€that€results€in€valuation€of€the€propertyððs€immediate€intrinsicÐ L œ Ðvalue€is€sufficient.€€òòIdóó.;€òòWestvaco€Corp.€v.€Tenn.€Assessment€Appeals€Commissionóó,€No.€M1999„Ð 8 ˆ Ð01206„COA„R3„CV,€1999€WL€1072586€(Tenn.€Ct.€App.€Nov.€30,€1999)€(no€Tenn.€R.€App.€P€11Ð $ t Ðapplication€filed).€€The€income€capitalization€method€is€commonly€used€and€appropriate€to€valueÐ  ` Ðincome„producing€real€property.€€òòSee€Seaton€v.€Tenn.€Bd.€of€Equalizationóó,€No.€E1998„00880„COA„Ð ü L  ÐR3„CV,€2000€WL€852123€(Tenn.€Ct.€App.€Jun.€28,€2000)€(Tenn.€R.€App.€P€11€application€denied€Feb.Ð è 8  Ð20,€2001Ô‡XçÔXXXçÔÔ).€€Taxpayers€maintain€that€they€are€not€challenging€the€appraisal€methodology€used.Ð Ô$  ÐÌà  àObviously,€many€of€the€statutory€factors€to€be€considered€in€determining€value€are€intangible.€Ð ¬ü  ÐThe€legislature€clearly€envisioned€that€intangible€aspects€of€the€property€would€be€included€inÐ ˜è  Ðvaluation.€€The€potential€to€produce€income€in€the€future€is€itself€an€intangible.€This€court€has€heldÐ „Ô  Ðthat€the€statutes€on€valuation€of€property€established€as€taxing€policy€the€practice€of€appraisersÐ pÀ Ðconsidering€the€use€of€that€property€and€the€income€produced€by€it.€€òòNatððl€Life€&€Accident€Insur.€Co.Ð \¬ Ðv.€Keatonóó,€No.€85„326„II,€1986€WL€4846,€at€*2€(Tenn.€Ct.€App.€April€23,€1986)€(no€Tenn.€R.€App.Ð H˜ ÐP.€11€application€filed).€€In€that€case,€the€taxpayers€argued€that€a€lease€for€computer€equipment€andÐ 4„ Ðthe€income€from€that€lease€were€intangible€personal€property,€similar€to€the€argument€herein,€and€theÐ  p Ðcourt€found€that€fact€did€not€prevent€considering€that€lease€and€income€therefrom€to€enhance€the€valueÐ  \ Ðof€the€property.€€òòIdóó.€at€*3.€€The€court€concluded€that€ð ð[a]n€assured€substantial€income€from€propertyÐ øH Ðis€a€major€element€of€its€value.ðð€€òòIdóó.,€at€*5.׃(×Ý ƒ#ÃÝòòÚ  Ú18Ú  ÚóóÝ  Ý×  ×€€The€court€quoted€with€approval€cases€from€other€statesÐ ä4 Ðto€the€effect€that€present€and€reasonably€anticipated€income€are€relevant€to€the€price€a€willing€buyerÐ Ð  Ðwould€pay€for€income„producing€property.€€òòIdóó.,€at€*3„4.€€Ð ¼  ÐÌà  àThe€valuation€herein€took€into€account€the€value„decreasing€effect€on€the€property€of€variousÐ ”ä Ðintangibles,€specifically€the€restrictions€on€its€use€imposed€as€part€of€the€LITHC€program.€€AÐ €Ð Ðrestriction€on€the€use€of€land€is€properly€considered€in€determination€of€value.€€Tenn.€Code€Ann.€ððÐ l¼ Ð67„5„602(b);€òòMarion€Countyóó,€710€S.W.2d€at€523.€€Where€a€property€owner€voluntarily€restricts€theÐ X ¨ Ðuse€of€his€or€her€property,€ð ðthat€restriction€affects€the€propertyððs€value.ðð€€òòIdóó.€€Because€the€subject€ofÐ D!” Ðthe€tax€is€the€real€property,€not€a€particular€owner€or€possessorððs€interest€in€the€property,€restrictionsÐ 0"€  Ðaffecting€valuation€for€tax€purposes€are€those€that€run€with€the€land€rather€than€those€that€are€personalÐ #l! Ðto€the€parties€in€possession.€€òòHoover€v.€State€Bd.€of€Equalizationóó,€579€S.W.2d€192,€195„96€(Tenn.€Ct.Ð $X" ÐApp.€1978).Ð ô$D # ÐÌà  àThe€Board€contends€that€intangible€factors€that€enhance€the€value€of€the€properties€at€issueÐ Ì&"% Ðshould€be€considered€along€with€those€that€decrease€the€value.€€Or,€as€the€appraiser€stated,€the€ð ðfullÐ ¸'#& Ðbundle€of€rights,ðð€both€value„enhancing€and€value„decreasing,€must€be€factored€into€the€valuation.€Ð ° ÐThe€Board€has€historically€maintained€that€an€assessment€of€income„producing€real€property€shouldÐ œì Ðinclude€intangibles€that€are€directly€related€to€the€use€of€the€real€property.€€This€position€is€alsoÐ ˆØ Ðsupported€by€courts€in€numerous€jurisdictions.€òò€See,€e.g.óó,€òòMerle€Hay€Mall€v.€City€of€Des€Moines€Bd.Ð tÄ Ðof€Rev.óó,€564€N.W.2d€419€(Iowa€1997)€(holding€intangible€ð ðbusiness€enterprise€valueðð€may€beÐ `° Ðconsidered€by€assessor);òòóó€òòE.óó€òòLiverpool€Landfill€Inc.€v.€Columbiana€Cty.€Bd.€Of€Revisionóó,€690€N.E.2dÐ L œ Ð1371€(7òòthóó€Dist.€Columbiana€County€OH€1997)€(holding€business€value€as€a€landfill€was€inseparableÐ 8 ˆ Ðfrom€the€real€estate€and€should€be€used€in€determining€real€property€taxable€value)Ô#†XçÔXXXçÔp¼#ÔÔ‡XçÔXXXçÔÔ;€òòHumble€Oil€&Ð $ t ÐRefining€Co.€v.€Borough€of€Englewood€Cliffsóó,€342€A.2d€560€(N.J.€App.€Div.€1975)€(holding€validÐ  ` Ðnonconforming€use€that€allowed€the€real€property€to€be€operated€as€a€gasoline€service€station€wasÐ ü L  Ðproperly€considered€in€the€assessment€property);òòóó€€òòWaste€Management€of€Wisconsin,€Inc.€v.€KenoshaÐ è 8  ÐCounty€Bd.€Of€Reviewóó,€516€N.W.2d€695€(WI.€1994)€(holding€ð ðtransferable€income„producingÐ Ô$  Ðcapacityðð€of€real€estate€properly€considered€by€assessor);òò€€State€ex€rel.€N/S€Associates€by€JMB€GroupÐ À  ÐTrust€IV€v.€Board€of€Review€of€Village€of€Greendaleóó,€164€Wis.€2d€31,€473€N.W.2d€554€(Ct.€App.Ð ¬ü  Ð1991)€(finding€assessor€properly€included€the€value€of€shopping€mallððs€transferable€income„producingÐ ˜è  Ðcapacity,€ð ðinextricably€intertwinedðð€with€real€estate);Ô#†XçÔXXXçÔ^Ì#ÔòòÔ‡XçÔXXXçÔÔsee€generally€óó€James€A.€Amdur,òò€Inclusion€ofÐ „Ô  ÐIntangible€Asset€ValuesÔ#†XçÔXXXçÔSÐ#ÔÔ‡XçÔXXXçÔÔ€in€Tangible€Property€Tax€Assessmentsóó,€90€òòALR€5thóó€547€(2001)Ô#†XçÔXXXçÔòÐ#ÔÔ‡XçÔXXXçÔÔ.Ô#†XçÔXXXçÔyÑ#ÔÔ‡XçÔXXXçÔÔ׃×Ý ƒ#ÃÝòòÚ  Ú19Ú  ÚóóÝ  Ý×  ×Ô#†XçÔXXXçÔ¼Ñ#ÔÔ‡XçÔXXXçÔÔ€Ô#†XçÔXXXçÔRÒ#ÔÔ‡XçÔXXXçÔÔÐ pÀ ÐÌà  àThis€view,€expressed€in€the€Boardððs€administrative€decision€in€òòAppeal€of€Troy€PlaceÐ H˜ ÐApartmentsóó,òò€óóObion€County,€1992€Tax€Year€(Assessment€Appeals€Commission),òò€óóhas€formed€theÐ 4„ ÐBoardððs€longstanding€policy€of€including€the€value€of€government€incentives€that€make€projectsÐ  p Ðeconomically€feasible,€such€as€rent€subsidies,€mortgage€interest€subsidies,€and€government€insuredÐ  \ Ðlow„interest€mortgages,€as€a€factor€in€determining€fair€marketÔ#†XçÔXXXçÔ•Ò#Ô€value€of€real€property.׃n(×Ý ƒ#ÃÝòòÚ  Ú20Ú  ÚóóÝ  Ý×  ×€€Indeed,€theÐ øH Ðdecision€in€òòTroy€Placeóó€served€as€the€precedent€for€the€Boardððs€decision€in€òòCP€Associatesóó,€òòinfraóó,òò€óóandÐ ° Ðthe€appeals€now€before€this€court.€Ð œì ÐÌà  àIn€òòTroy€Placeóó,€the€taxpayer€received€a€federal€subsidy€in€the€form€of€a€low„interest€loan€toÐ tÄ Ðdevelop€property€that,€in€exchange€for€the€federal€subsidy,€was€subject€to€restricted€rents.€€InÐ `° Ðdetermining€the€value€of€the€property,€the€Board€approved€the€assessorððs€inclusion€of€the€debt€subsidyÐ L œ Ðin€the€determination€of€market€value.€€The€reason€underlying€the€decision€to€use€the€debt€subsidy€inÐ 8 ˆ ÐòòTroy€Placeóó€is€exactly€the€reasoning€underlying€the€assessorððs€decision€to€factor€in€the€Tax€CreditsÐ $ t Ðhere,€òòi.e.óó,the€real€economic€benefit€caused€by€these€federal€subsidies€has€a€significant€impact€on€theÐ  ` Ðvalue€of€the€property€and€must,€therefore,€be€analyzed€when€determining€the€fair€value€of€the€property.€Ð ü L  ÐThe€Commission€stated€in€òòTroy€Placeóó,€ð ðany€prospective€purchaser€would€look€at€the€rent€and€theÐ è 8  Ðinterest€subsidy€together€in€estimating€income.ððòò€óó€Ð Ô$  ÐÌà  àAs€discussed€earlier,€the€appraisal€in€òòCP€Associatesóó€involved€the€same€LIHTC€credits€at€issueÐ ¬ü  Ðin€the€case€before€us,€the€ALJ€stayed€her€ruling€on€the€appraisals€herein€pending€the€AssessmentÐ ˜è  ÐAppeals€Commission€(ð ðAACðð)€decision€in€òòCP€Associatesóó,€and€the€decision€herein€was€based€uponÐ „Ô  Ðthe€òòCP€Associatesóó€ruling.€€The€taxpayer€in€òòCP€Associatesóó€did€not€argue€that€the€underlying€reasoningÐ pÀ Ðof€òòTroy€Place€óówas€incorrect,€but€instead€argued€that€syndication€of€the€Tax€Credits€was€sufficient€toÐ \¬ Ðdistinguish€the€cases.€€The€AAC€was€not€persuaded€that€a€true€distinction€existed€and€found€thatÐ H˜ Ðalthough€the€owner€of€the€property€had,€by€the€limited€partnerships,€internally€allocated€the€right€toÐ 4„ Ðreceive€the€Tax€Credits€to€limited€partners€in€exchange€for€a€discounted€lump€sum€payment€byÐ  p Ðinvestors,€the€assignment€of€this€right€is€the€equivalent€of€any€number€of€other€financing€toolsÐ  \ Ðavailable.€€The€AAC€found€that€if€the€Tax€Credits€were€excluded€from€the€appraisal,€one€of€the€mostÐ øH Ðvaluable€benefits€of€ownership€of€the€property€would€result€in€a€gross€understatement€of€actual€value:€Ð ä4 ÐÌà8  àà ` àÔ‡XçÔXXXçÔÔWe€have€generally€considered€actual€rental€income€for€an€apartment€propertyÐ ¼  Ða€reasonable€starting€point€for€projecting€future€benefits,€except€in€the€case€ofÐ ¨ø Ðproperties€which€legally€restrict€rent€in€return€for€other€benefits€to€the€owners.€ThusÐ ”ä Ðin€valuing€apartments€financed€under€a€federal€program€obligating€the€owner€to€rentÐ €Ð Ðat€below€market€rates€to€low„income€persons,€we€declined€to€limit€value€to€aÐ ° Ðcapitalization€of€actual€rents€where€the€owner€also€received€an€interest€„subsidizedÐ œì Ðloan€to€over€the€cost€of€construction€(Appeal€of€Troy€Place€Apartments,€anÐ ˆØ ÐAssessment€Appeals€Commission€decision€from€Obion€County€for€tax€year€1992).€Ð tÄ ÐThe€difference€in€the€partiesðð€estimates€of€value€in€this€case€owes€to€the€assessorððsÐ `° Ðattempt€to€account€for€anticipated€benefits€of€ownership€that€go€beyond€the€restrictedÐ L œ Ðrents.€€Here€the€assessor€performed€a€variation€of€income€capitalization€method,Ð 8 ˆ Ðdiscounted€cash€flow€analysis€(DCF),€that€utilized€actual€property€rents€but€includedÐ $ t Ðan€increment€of€value€attributable€to€the€LIHTC€Program€tax€credits.€€The€resultingÐ  ` Ðcontention€of€value€($6,5000,000)€significantly€exceeds€the€assessorððs€originalÐ ü L  Ðappraisal€of€the€property.€Ðè 8 !! ÐÌÔ#†XçÔXXXçÔà#Ôà8  àà ` àTaxpayerððs€agent€argues€this€case€should€be€distinguished€from€òòTroy€PlaceóóÐ À  Ðbecause€the€tax€credits€in€this€case€will€not€transfer€with€the€property€on€sale€the€wayÐ ¬ü  Ðthe€interest€subsidy€in€òòTroy€Placeóó€would,€because€the€owner€in€this€case€has€alreadyÐ ˜è  Ðsold€the€credits.€€The€LIHTC€Program€allows€the€original€developer€to€retain€theÐ „Ô  Ðcredits€for€gradual€use€over€time€or€the€developer€may€sell€the€credits€at€present€valueÐ pÀ Ð(to€others€for€gradual€use€over€time)€and€use€the€proceeds€to€help€finance€construction.€Ð \¬ ÐIn€this€case€the€developer€and€present€owner€of€Trails€of€Dickson€sold€the€creditsÐ H˜ Ð($5,376.106€to€be€taken€over€ten€years)€for€a€lump€sum€of€$3,010.600.€€This€advanceÐ 4„ Ðuse€of€one€of€the€attributes€of€the€property€does€not€diminish€the€value€of€the€property,Ð  p Ðhowever,€any€more€than€if,€as€Judge€Loesch€[the€ALJ]€suggested,€the€owner/seller€hadÐ  \ Ðpreviously€assigned€to€a€third€party€the€right€to€receive€a€portion€of€the€rents€(citationÐ øH Ðomitted)€or€if€the€owner/seller€had€received€prepayments€of€rent€to€be€adjusted€out€ofÐ ä4 Ðthe€selling€price.Ô‡XçÔXXXçÔÔÐÐ !! ÐÌà8  àà ` àThe€actual€benefits€and€burdens€associated€with€ownership€of€the€real€property,Ð ¨ø Ðthe€burden€of€below„market€contract€rents€or€the€benefit€of€interest€avoided€or€taxÐ ”ä Ðcredits€received,€reveal€how€transactions€involving€the€property€relate€to€marketÐ €Ð Ðrealities.€€The€tax€credits€here€illustrate€why€the€below€market€rents€are€not€theÐ l¼ Ðcomplete€picture€vis„a„vis€Ô#†XçÔXXXçÔIë#ÔÔ‡XçÔXXXçÔÔthe€real€property,€why€net€operating€income€or€an€incomeÐ X ¨ Ðapproach€limited€to€these€rents€alone€is€not€reflective€of€the€real€property€value.Ô#†XçÔXXXçÔwí#ÔÔ‡XçÔXXXçÔÔ׃×Ý ƒ#ÃÝòòÚ  Ú21Ú  ÚóóÝ  Ý×  ×ÐD!”!! ÐÔ#†XçÔXXXçÔYî#ÔÔ‡XçÔXXXçÔÔÐ 0"€  ÐÓ  Óò òòòC.€AnalysisÐ ° Ðóóó óÓBïÓÌà  àAlthough€this€is€a€question€of€first€impression€in€Tennessee,€a€number€of€other€states€haveÐ ˆØ Ðexamined€the€LIHTC€Program.€€While€some€have€found€that€the€Tax€Credits€should€not€constituteÐ tÄ Ða€factor€in€assessing€the€value€of€real€property,׃×Ý ƒ#ÃÝòòÚ  Ú22Ú  ÚóóÝ  Ý×  ×€the€majority€take€the€position€that,€absent€legislationÐ `° Ðto€the€contrary,€the€Tax€Credits€should€be€used€as€a€factor€in€determining€the€fair€market€value€of€theÐ L œ Ðreal€property€upon€which€they€were€awarded.€€We€find€these€cases€the€more€persuasive€because€ofÐ 8 ˆ Ðthe€similarity€between€the€tax€statutes€and€valuation€standards€involved€therein€and€those€applicableÐ $ t Ðin€Tennessee.Ð  ` ÐÔ#†XçÔXXXçÔï#ÔÌà  àUnder€state€law€making€the€purpose€of€a€valuation€the€determination€of€fair€cash€value,€basedÐ è 8  Ðupon€the€willing€buyer„willing€seller€concept,€and€income„producing€capacity€the€most€significantÐ Ô$  Ðelement€in€arriving€at€fair€cash€value,€an€Illinois€appellate€court€held€that€LIHTC€credits€are€to€beÐ À  Ðincluded€in€the€valuation.€€The€court€held€that€both€the€positive€and€negative€impacts€on€value€of€theÐ ¬ü  Ðarrangement€must€be€considered€in€order€to€accurately€reflect€the€value.€€Because€the€restricted€rentsÐ ˜è  Ðwere€also€considered,€ð ð[i]gnoring€the€effect€of€the€tax€credits€would€distort€the€earning€capacity,€andÐ „Ô  Ðthus€the€fair€€cash€value,€of€the€property€as€low„income€housing.ðð€€òòRainbow€Apartments€v.€IllinoisÐ pÀ ÐProperty€Tax€Appeal€Bd.óó,€762€N.E.2d€534,€536€(Ill.€App.€2001).€€The€court€specifically€held€that€aÐ \¬ Ðwilling€buyer€would€most€certainly€consider€the€availability€of€the€credits€when€determining€the€fairÐ H˜ Ðcash€value€of€the€property.€€òòIdóó.€at€537.Ð 4„ ÐÌà  àSimilarly,€the€Court€of€Appeals€of€Georgia€considered€inclusion€of€LIHTC€credits€in€valuation€Ð  \ Ðunder€state€law€requiring€that€property€be€taxed€at€its€fair€market€value,€defined€again€as€the€amountÐ øH Ða€knowledgeable€buyer€would€pay€and€a€willing€seller€would€accept€for€the€property.€€òòPine€PointeÐ ä4 ÐHousing,€L.P.€v.€Lowndes€County€Bd.€of€Tax€Assessorsóó,€561€S.E.2d€860,€863€(Ga.€App.€2002).€€StateÐ Ð  Ðlaw€required€consideration€of€a€number€of€factors€in€determining€fair€market€value,€including€zoning,Ð ¼  Ðuse€restrictions,€and€ð ðany€other€factors€deemed€pertinent.ðð€€òòIdóó.€€The€court€determined€that€the€LIHTCÐ ¨ø Ðcredits€were€pertinent€because:Ð ”ä ÐÌà8  àthe€credits€have€value€to€a€taxpayer€with€federal€income€tax€liability€and€can€beÐ l¼ Ðððpassed€throughðð€a€partnership€structure€to€those€taxpayers.€€Because€Section€42€taxÐ X ¨ Ðcredits€are€generated€by€a€designated€property,€a€third€party€would€pay€for€the€valueÐ D!” Ðas€part€of€that€propertyððs€sale€price€in€a€bona€fide,€armððs€length€transaction.€Ð 0"€  ÐFurthermore,€the€tax€credits€go€hand€in€hand€with€the€restrictive€covenants€that€requireÐ #l! Ðthe€property€to€charge€below€market€rent.Ð$X"!! ÐÐ ô$D # ÐòòIdóó.€at€863.€€The€court€found€that€state€law€required€consideration€of€the€restricted€rents,€and,Ð ° Ðconsequently,€ð ðif€viewed€in€isolation,€the€rental€restrictions€would€artificially€depress€the€value€of€theÐ œì Ðproperty€for€tax€valuation€purposes.ðð€€òòIdóó.Ð ˆØ ÐÌà  àRelying€on€an€earlier€holding€that€rent€restrictions€as€well€as€tax€shelter€benefits€inherent€inÐ `° Ðanother€federally€subsidized€housing€arrangement€must€be€considered€in€valuation,€the€court€inÐ L œ ÐòòParkside€Townhomes€Associates€v.€Bd.€of€Assessment€Appeals€of€York€Countyóó,€711€A.2d€607Ð 8 ˆ Ð(Cmnwlth€Ct.€Penn.€1998),€held€that€ðð€42€LIHTC€credits€were€properly€included€in€valuation€becauseÐ $ t Ðthe€effect€of€the€tax€credits€was€ð ðpart€of€the€economic€reality.ðð€€òòIdóó.€at€611.€€ð ðTax€related€benefitsÐ  ` Ðassociated€with€investment€property€ownership€inherently€affect€value€and€the€court€is€not€constrainedÐ ü L  Ðto€determine€FMV€[fair€market€value]€as€though€the€property€lacked€tax€shelter€features.ðð€€òòIdóó.,€citingÐ è 8  ÐòòIn€re€Johnstown€Associatesóó,€431€A.2d€932,€935€(Pa.€1981).Ð Ô$  ÐÌà  àIn€these€cases,€the€courts€determined€that€only€consideration€of€both€the€value„decreasingÐ ¬ü  Ðfactor€of€restricted€rents€along€with€the€value„increasing€factor€of€the€Tax€Credits€provides€a€full€andÐ ˜è  Ðaccurate€picture€of€the€propertyððs€worth.€€òòÔ‡XçÔXXXçÔÔSee€also€Greenfield€Village€Apts.€v.€Ada€Countyóó,€938€P.2dÐ „Ô  Ð1245€(Idaho€1997)€(McDevitt,€J.,€concurring)€(noting€that€Tax€Credits€must€be€considered€if€rent„Ð pÀ Ðrestriction€considered.)Ô#†XçÔXXXçÔ_#Ô€€We€agree.€€Whether€the€issue€is€consideration€of€the€propriety€of€reducingÐ \¬ Ðvaluation€due€to€restricted€rents€or€of€including€investment€or€tax€benefits,€the€better€and€more€widelyÐ H˜ Ðaccepted€approach€is€that€both€or€all€aspects€of€the€arrangement€should€be€considered.€€òòSee€In€reÐ 4„ ÐOttawa€Housing€Assoc.,€L.P.óó,€10€P.3d€777€(Kan.€Ct.€App.€2000)€(considering€rent€restrictions€inÐ  p ÐLIHTC€properties€and€discussing€various€cases€on€low„income€housing€subsidy€arrangements).€€InÐ  \ Ðthat€case,€the€court€concluded:Ð øH ÐÌà8  àThese€cases€apply€the€general€theory€that€a€low€income€housing€contract€is€anÐ Ð  Ðinvestment€tool€for€maximizing€an€investment€in€real€estate.€€Buyers€and€sellers€of€realÐ ¼  Ðestate€consider€these€tools€in€determining€the€market€value€of€real€estate.Шø!! ÐÌòòIdóó.€at€780.€€Because€Kansas€defined€fair€market€value€in€terms€of€the€willing€buyer€„€willing€sellerÐ €Ð Ðconcept,€the€court€concluded€the€stated€investment€principles€were€consistent€with€that€definition.€Ð l¼ ÐTherefore,€both€benefits€and€burdens€of€the€ðð€42€housing€arrangement€should€be€considered.Ð X ¨ ÐÌà  àIn€òòDeerfield€95€Investor€Associates,€L.L.C.€v.€Town€of€East€Lymeóó,€25€Comm.€L.€Rptr.€51,€1999Ð 0"€  ÐWL€391099€(Conn.€Super.€1999),€the€court€found€that€the€ð ðfour€principal€component€benefits€of€an€Ð #l! ÐLIHTC€project€are€(1)€low„income€housing€tax€credits;€(2)€cash€flow;€(3)€depreciation€losses,€.€.€.€€andÐ $X" Ð(4)€residual€value,ðð€citing€R.€Polton,€òòValuing€Property€Developed€with€Low„Income€Housing€Tax€Ð ô$D # ÐCreditsóó,€òòThe€Appraisal€Journalóó,€July€1994,€p.€450.€€The€court€found€that€just€like€other€intangiblesÐ à%0!$ Ðsuch€as€zoning€and€location,€subsidized€financing€and€subsidized€rent€affect€the€value€of€the€propertyÐ Ì&"% Ðand,€consequently,Ð ¸'#& ÐÌà8  à.€.€.€LIHTCs,€although€intangibles,€do€have€an€effect€on€the€valuation€of€real€estate€forÐ )à$( Ðassessment€purposes€and€should€be€a€factor€in€determining€the€fair€market€value€.€.€.Ð|*Ì%)!! ÐÐ h+¸&* ÐòòId.óó,€at€*6.€Ð ° ÐÌòòóóòòóóÔ‡XçÔXXXçÔÔà  àWe€conclude€that€the€approach€used€by€the€appraiser€herein€is€consistent€with€the€statutes€onÐ ˆØ Ðvaluation€of€property€for€property€tax€purposes.€€Ô#†XçÔXXXçÔõ #ÔÔ‡XçÔXXXçÔÔAs€the€trial€court€herein€correctly€recognized,€theÐ tÄ Ðissue€is€ð ðwhether€the€price€that€a€willing€buyer€and€seller€would€agree€upon€would€take€into€accountÐ `° Ðthe€tax€credits.ðð€€Stated€another€way,€do€the€Tax€Credits€bear€on€the€intrinsic€value€of€the€property€toÐ L œ Ðwhich€they€relate?€€Ô#†XçÔXXXçÔç#ÔÔ‡XçÔXXXçÔÔIntangible€factors€should€be€considered€when€they€affect€the€value,€either€upwardÐ 8 ˆ Ðor€downward.€€We€find€nothing€inconsistent€with€the€relevant€statutes€or€Constitutional€provisionsÐ $ t Ðin€considering€these€factors.€€Ô#†XçÔXXXçÔ#ÔÔ‡XçÔXXXçÔÔThe€valuation€herein€considered€both€the€restricted€rents€and€the€TaxÐ  ` ÐCredits.€€Ð ü L  ÐÌÓ  Óò òòòD.€Taxpayersðð€ArgumentsÐ Ô$  Ðóóó óÓXÓÌà  àTaxpayers€have€the€burden€to€show€that€the€valuation€does€not€conform€to€legal€requirements.Ð ¬ü  ÐÔ#†XçÔXXXçÔ¿#ÔÔ‡XçÔXXXçÔÔAs€stated€above,€Taxpayers€argue€that€the€credits€are€intangible€property€and€their€inclusion€inÐ ˜è  Ðvaluation€of€the€real€property€is€an€unauthorized€tax€on€that€intangible€property.€€Taxpayers€alsoÐ „Ô  Ðargue,€however,€that€inclusion€of€the€Tax€Credits€in€this€case€is€improper€because€those€credits€haveÐ pÀ Ðbeen€sold.€€Thus,€they€assert,€a€willing€buyer€would€not€include€the€credits€in€his€or€her€purchase€priceÐ \¬ Ðbecause€he€or€she€would€not€receive€any€remaining€credits€as€part€of€the€purchase€of€the€real€property.€Ð H˜ ÐTaxpayers€also€assert€that€LIHTC€credits€are€fundamentally€different€from€other€government€subsidiesÐ 4„ Ðand€that€cases€and€principles€relating€to€those€subsidies€should€not€be€applied€to€the€LIHTC€programÐ  p Ðbenefits.€€In€particular,€Taxpayers€assert,€with€government€programs€that€subsidize€the€operating€costsÐ  \ Ðof€restricted„rent€housing€(through€decreased€interest€or€subsidized€rents)€the€subsidy€directly€affectsÐ øH Ðthe€projected€income€stream.€€The€Tax€Credits€involved€herein,€they€argue,€are€essentiallyÐ ä4 Ðreimbursements€of€construction€costs€and€are€not€used€to€decrease€future€operating€costs€and€increaseÐ Ð  Ðfuture€profits.Ð ¼  ÐÔ#†XçÔXXXçÔP#ÔÔ‡XçÔXXXçÔÔÌÔ#†XçÔXXXçÔë#ÔòòóóÔ‡XçÔXXXçÔÔà  àÔ#†XçÔXXXçÔ4#ÔòòóóÔ‡XçÔXXXçÔÔWe€have€fully€considered€these€arguments.€€So€have€other€courts,€as€discussed€herein.€€For€theÐ ”ä Ðreasons€set€out€earlier,€we€have€concluded€that€the€inclusion€of€the€Tax€Credits€is€consistent€withÐ €Ð ÐTennessee€law€on€real€property€valuation.€€Consequently,€the€Tax€Credits€are€not€being€taxed€asÐ l¼ Ðintangible€property.€€While€the€credits€may€be€characterized€as€intangibles€that€affect€the€value€of€theÐ X ¨ Ðproperty,€they€are€not€severable€from€it.€€Ownership€of€the€property€and€agreement€to€restrict€its€useÐ D!” Ðare€the€criteria€for€award€of€the€credits.€€Tennessee€law€allows€and€has€long€allowed€inclusion€ofÐ 0"€  Ðvalue„affecting€intangible€factors€in€the€valuation€of€property.€€Such€inclusion€does€not€constitute€aÐ #l! Ðtax€on€those€intangibles.€€€Ð $X" ÐÌà  àTaxpayersðð€arguments€€that€the€Tax€Credits€represent€an€intangible€property€right€that€doesÐ à%0!$ Ðnot€attach€to€the€property,€and€that€the€credits€in€the€case€before€us€should€not€be€considered€becauseÐ Ì&"% Ðthe€right€to€future€credits€has€been€syndicated€to€the€limited€partners€overlook€the€fundamentalÐ ¸'#& Ðstructure€and€intent€of€the€LIHTC€Program€as€well€as€the€practicalities€of€the€arrangement.Ð ¤(ô#' ÐÌà  àÔ#†XçÔXXXçÔˆ#ÔÔ‡XçÔXXXçÔÔThe€Tax€Credits€are€irrevocably€attached€to€the€real€property.Ô#†XçÔXXXçÔ2#ÔÔ‡XçÔXXXçÔÔ€€An€owner€who€receives€TaxÐ |*Ì%) ÐCredits€must€agree€to€maintain€the€projectððs€low„income€status€for€at€least€fifteen€years.€€I.R.C.€ððÐ h+¸&* Ð42(h)(6).€€Here,€Taxpayers€entered€into€a€thirty€year€agreement.€€Taxpayers€and€THDA€entered€intoÐ ° Ða€Declaration€of€Land€Use€Restrictive€Covenants€for€the€€LIHTCs.€€The€agreements€containing€theÐ œì Ðrestrictive€covenants€are€recorded€with€the€Register€of€Deeds.€€Taxpayers€agreed€that€all€provisionsÐ ˆØ Ðof€the€LIHTC€contract€are€covenants€running€with€the€land.׃×Ý ƒ#ÃÝòòÚ  Ú23Ú  ÚóóÝ  Ý×  ×€€Ô#†XçÔXXXçÔ²#ÔÔ‡XçÔXXXçÔÔThe€Tax€Credits€will€be€reduced€orÐ tÄ Ðrevoked,€and€Tax€Credits€awarded€for€previous€years€are€subject€to€recapture€by€the€federalÐ `° Ðgovernment,€if€the€owner€of€the€property€defaults€under€the€restrictive€covenants€relating€to€theÐ L œ Ðproperty.€€I.R.C.€ðð€42(j).Ô#†XçÔXXXçÔ–"#ÔÔ‡XçÔXXXçÔÔÐ 8 ˆ ÐÌÔ#†XçÔXXXçÔ$#ÔÔ‡XçÔXXXçÔÔà  àThe€Tax€Credits€are€paid€to€the€registered€owner€of€the€property€on€an€annual€basis€for€so€longÐ  ` Ðas€the€owner€has€not€breached€the€restrictive€covenants.€€The€owners€of€the€developments€herein€areÐ ü L  Ðthe€limited€partnerships.€Ô#†XçÔXXXçÔj$#ÔÔ‡XçÔXXXçÔÔThe€Tax€Credits€were€allocated€to€the€limited€partnerships€as€the€owners.€Ô#†XçÔXXXçÔ¾%#ÔÔ‡XçÔXXXçÔÔÐ è 8  ÐThe€limited€partnerships€are€the€Taxpayers.Ô#†XçÔXXXçÔJ&#ÔÔ‡XçÔXXXçÔÔÐ Ô$  ÐÔ#†XçÔXXXçÔÌ&#ÔÔ‡XçÔXXXçÔÔÌà  àThe€federal€government€and€THDA€are€indifferent€as€to€whether€or€not€the€owner€of€theÐ ¬ü  Ðproperty€syndicates€the€right€to€use€the€Tax€Credits€to€limited€partners€in€the€limited€partnership€soÐ ˜è  Ðlong€as€the€owner€does€not€default€in€the€obligation€to€perform€under€the€restrictive€covenants.Ð „Ô  ÐLikewise,€the€federal€government€and€the€THDA€are€indifferent€as€to€whether€€or€not€the€building€isÐ pÀ Ðsold€to€a€third€party€so€long€as€the€third€party€ð ðsteps€in€the€shoesðð€of€the€seller€and€performs€under€theÐ \¬ Ðrestrictive€covenants.׃,×Ý ƒ#ÃÝòòÚ  Ú24Ú  ÚóóÝ  Ý×  ×€Ô#†XçÔXXXçÔ#'#ÔÔ‡XçÔXXXçÔÔÐ H˜ ÐÌÔ#†XçÔXXXçÔ4*#Ôà  àThe€court€in€òòRainbow€Apartmentsóó,€762€N.E.2d€at€534,€considered€the€same€argument€as€thatÐ  p Ðmade€herein:€that€the€LIHTC€credits€are€not€part€of€the€real€property€because€they€are€unrelatedÐ  \ Ðintangible€assets€and€are€sold€prior€to€the€propertyððs€development.€€The€court€held:Ð øH ÐÌà8  àWe€disagree€with€the€characterization€of€the€tax€credits€as€intangible€property€sold€andÐ Ð  Ðexisting€apart€from€the€real€estate.€€Section€42€tax€credits€are€not€intangible€propertyÐ ¼  Ðbecause€they€do€not€constitute€a€right€to€a€payment€of€money,€have€no€independentÐ ¨ø Ðvalue,€and€are€not€freely€transferable€upon€receipt.€€A€limited€partnership€does€notÐ ”ä Ðð ðsellðð€the€tax€credits€to€investors;€they€remain€in€the€limited€partnership.€€The€benefitÐ €Ð Ðof€a€tax€credit€to€a€limited€partner€is€entirely€incidental€to€that€investment.Ðl¼!! ЇòòIdóó.€at€537€(citation€omitted).Ô‡XçÔXXXçÔÔÐ ° ÐÌÔ#†XçÔXXXçÔ©.#Ôà  àThe€North€Carolina€Supreme€Court€recently€considered€whether€the€lower€rents€mandated€byÐ ˆØ Ða€ðð€42€arrangement€must€be€used€in€valuation,€in€the€context€of€determining€whether€the€assessingÐ tÄ Ðauthority€used€a€legal€methodology.€€òòIn€re€Greens€of€Pine€Glen€Ltd.óó,€576€S.E.2d€316€(N.C.€1997).€Ð `° ÐThe€court€determined€the€restricted€rents€need€not€be€considered,€but€in€so€doing€discussed€the€natureÐ L œ Ðof€the€LIHTC€arrangement,€noting€that€the€taxpayerððs€contractual€agreement€under€ðð€42€resulted€inÐ 8 ˆ Ðrents€below€market.€€However,€the€court€found€that€the€taxpayer€decided€to€participate€in€the€LIHTCÐ $ t Ðprogram€as€opposed€to€building€and€renting€apartments€on€the€open€market,€in€order€to€take€advantageÐ  ` Ðof€the€incentives.€€ð ðIts€participation€in€the€section€42€program€created€another€way€to€financeÐ ü L  Ðtaxpayerððs€building€project€because€the€sale€of€the€tax€credits€generated€funds€that€taxpayers€used€toÐ è 8  Ðconstruct€[the€project.]€€Therefore,€the€taxpayerððs€participation€in€section€42€housing€represented€aÐ Ô$  Ðbusiness€and€economic€decision.€.€.€.ðð€€òòIdóó.€at€321.€€Section€42€restrictions€balance€tax€credits€allowedÐ À  Ðto€the€developer€against€rent€restrictions€imposed€on€the€developer.€€òòIdóó.€at€322.Ð ¬ü  ÐÔ‡XçÔXXXçÔÔÌÔ#†XçÔXXXçÔ»4#Ôà  àÔ‡XçÔXXXçÔÔIn€the€context€of€the€treatment€of€ðð€42€Tax€Credits€under€Article€9€of€the€Uniform€CommercialÐ „Ô  ÐCodeòòóó€the€court€in€òòCity€of€Chicago€v.€Michigan€Beach€Housing€Coopóó.,€609€N.E.2d€877€(App.€Ct.€Ill.Ð pÀ Ð1993),Ô#†XçÔXXXçÔ 5#ÔÔ‡XçÔXXXçÔÔ€found€ð ðtax€credits€cannot€be€intangible€personal€property€subject€to€a€security€interest€underÐ \¬ ÐArticle€9.ðð€€òòId.óó€at€885.€€The€court€quoted€the€United€States€Supreme€Court€decision€in€òòRandall€v.Ð H˜ ÐLoftsgardenóó,€478€U.S.€647,€106€S.€Ct.€3143,€92€L.Ed2d€525€(1986)€which€addressed€the€nature€of€theÐ 4„ Ðtax€credits€in€the€context€of€whether€they€were€income€for€purposes€of€ðð€12(2)€of€the€Securities€ActÐ  p Ðof€1933:Ð  \ ÐÌà8  àUÔ#†XçÔXXXçÔH6#ÔÔ‡XçÔXXXçÔÔnlike€payments€in€cash€or€property€received€by€virtue€of€ownership€of€aÐ ä4 Ðsecurityð!ðsuch€as€distributions€or€dividends€in€stock,€interest€on€bonds,€or€a€limitedÐ Ð  Ðpartnerððs€distributed€share€of€the€partnershipððs€capital€gains€or€profitsð!ð€the€ððreceiptððÐ ¼  Ðof€tax€deductions€or€credits€is€not€itself€a€taxable€event,€for€the€investor€has€receivedÐ ¨ø Ðno€money€or€other€ððincomeðð€within€the€meaning€of€the€Internal€Revenue€Code.Ô#†XçÔXXXçÔ¤8#ÔÔ‡XçÔXXXçÔÔДä!! ÐÌà  àThe€òòMichigan€Beachóó€court€further€observed€that:Ð l¼ ÐÌà8  àRespondents€essentially€ask€us€to€treat€tax€benefits€as€a€separate€asset€that€is€acquiredÐ D!” Ðwhen€a€limited€partner€purchases€a€share€in€tax€shelter€partnership.€€But€the€legal€formÐ 0"€  Ðof€the€transaction€does€not€reflect€this€treatment.€.€.€.For€obvious€reasons,€taxÐ #l! Ðdeductions€and€tax€credits€are€not,€in€the€absence€of€a€statutory€provision€to€theÐ $X" Ðcontrary,€freely€transferable€from€one€person€to€another€if€wholly€separated€from€theÐ ô$D # Ðproperty€to€which€they€relate.€.€.€.€Tax€credits,€as€òòRandallóó€instructs€us,€have€noÐ à%0!$ Ðindependent€value€in€and€of€themselves;€.€.€.€.€..Tax€credits€do€not€constitute€a€right€toÐ Ì&"% Ðpayment€of€money,€have€no€independent€value,€and€are€not€freely€transferable€uponÐ ¸'#& Ðreceipt.Ô#†XçÔXXXçÔê:#ÔФ(ô#'!! ÐÌòòId.óóÔ‡XçÔXXXçÔÔÐ |*Ì%) ÐÐ h+¸&* ЇÌà  àThe€trial€court€herein€found:Ð œì ÐÌà8  à[Taxpayersðð€argument]€turn[s]€on€the€severability€of€the€tax€credits€from€the€subjectÐ tÄ Ðproperty.€.€.€.[and]€under€Internal€Revenue€Code€regulations,€tax€credits€inure€to€theÐ `° Ðbenefit€of€a€propertyððs€owner.€.€.€.€a€purchaser€ððsteps€into€the€shoesðð€of€a€former€ownerÐ L œ Ðfor€purposes€of€the€credits.€€Internal€Revenue€Code€ðð€42(d)(7).€€Therefore,€logicÐ 8 ˆ Ðdictates€that€they€should€be€treated€as€income€affecting€the€propertyððs€value.Ô#†XçÔXXXçÔ4?#ÔÔ‡XçÔXXXçÔÔÐ$ t!! ÐÔ#†XçÔXXXçÔöA#ÔÔ‡XçÔXXXçÔÔÌà  àWe€conclude€that€the€trial€court€correctly€found€the€Tax€Credits€relate€directly€to€the€realÐ ü L  Ðproperty€and€are€not€an€intangible€benefit€severable€and€sold€to€third€parties€and€that€they€wereÐ è 8  Ðproperly€included€in€the€valuation.€Ô#†XçÔXXXçÔWB#ÔThe€Board€has€properly€balanced€both€the€value€enhancing€factorÐ Ô$  Ðof€the€Tax€Credits€and€the€value€reducing€effect€of€the€restricted€rents€with€respect€to€the€propertiesÐ À  Ðin€dispute€and€has€arrived€at€a€value€that€reflects€the€propertyððs€sound,€intrinsic,€and€immediate€value.€Ð ¬ü  ÐÔ‡XçÔXXXçÔÔAccordingly,€we€affirm€the€decision€of€the€trial€court€Ô#†XçÔXXXçÔE#Ôwith€respect€to€the€Boardððs€consideration€of€theÐ ˜è  ÐTax€Credits€in€the€1998€assessments€of€Spring€Hill,€Greentree,€and€Acorn.׃×Ý ƒ#ÃÝòòÚ  Ú25Ú  ÚóóÝ  Ý×  ×Ð „Ô  ÐÌÓ  Óò òòòIV.€€Reclassification€of€Acorn€Hills€Ð \¬ Ðóóó óÓwFÓÔ‡XçÔXXXçÔÔÌà  àTaxpayer€Acorn€complains€that€the€trial€court€erroneously€affirmed€the€BoardððsÐ 4„ Ðreclassification€of€its€development€from€residential€to€commercial€property€for€tax€assessmentÐ  p Ðpurposes.׃dt×Ý ƒ#ÃÝòòÚ  Ú26Ú  ÚóóÝ  Ý×  ×€€Taxpayer€argues€that€the€trial€court€relied€too€heavily€on€the€fact€that€the€units€wereÐ  \ Ðincome€producing€and€failed€to€distinguish€between€multi„unit€buildings€and€single€family€homes.€Ð øH ÐTaxpayer€maintains€that€the€trial€court€should€have€sub„classified€the€44€single€family€homes€onÐ ä4 Ðseparately€parceled€lots€as€residential€property.€€Ð Ð  ÐÌà  àArticle€II,€ðð€28€of€the€Tennessee€Constitution€classifies€real€property€into€four€categories:Ð ¨ø Ðpublic€utility,€industrial€and€commercial,€residential,€and€farm:Ð ”ä Ðà8  àÐ ÐÔ#†XçÔXXXçÔÙF#ÔÔ‡XçÔXXXçÔÔ(a)€Public€Utility€Property,€to€be€assessed€at€fifty„five€(55%)€percent€of€its€value;Ð l¼ ÐÔ#†XçÔXXXçÔñJ#ÔÔ‡XçÔXXXçÔÔ(b)€Industrial€and€Commercial€Property,€to€be€assessed€at€forty€(40%)€percent€of€itsÐ X ¨ Ðvalue;Ð D!” ÐÔ#†XçÔXXXçÔžK#ÔÔ‡XçÔXXXçÔÔ(c)€Residential€Property,€to€be€assessed€at€twenty„five€(25%)€percent€of€its€value,Ð ° Ðprovided€that€residential€property€containing€two€(2)€or€more€rental€units€is€herebyÐ œì Ðdefined€as€industrial€and€commercial€property;€andЈØ!! Ðà  àÔ#†XçÔXXXçÔeL#ÔÔ‡XçÔXXXçÔÔ(d)€Farm€Property,€to€be€assessed€at€twenty„five€(25%)€percent€of€its€value.Ô#†XçÔXXXçÔÕM#ÔÔ‡XçÔXXXçÔÔÔ‡ôòXXçÔÔÐ tÄ ÐÌà  àÔ#†XçÔXòô‚N#ÔTenn.€Code€Ann.€ðð€67„5„501€provides:Ð $ t Ðà  àÌà8  àà ` à(4).€.€.€.All€real€property€which€is€used,€or€held€for€use,€for€dwelling€purposesÐ ü L Ðwhich€contains€two€(2)€or€more€rental€units€is€hereby€defined€and€shall€be€classifiedÐ è 8 Ðas€ððindustrial€and€commercial€property;ððÐÔ $ !! ÐÌÓ  Ó*****Ð ¬ü  ÐÌÓePÓà8  àà ` à(10)ððResidential€propertyðð€includes€all€real€property€which€is€used,€or€held€forÐ „Ô  Ðuse,€for€dwelling€purposes€and€which€contains€not€more€than€one€(1)€rental€unit.€€€AllÐ pÀ  Ðreal€property€which€is€used,€or€held€for€use,€for€dwelling€purposes€but€which€containsÐ \¬  Ðtwo€(2)€or€more€rental€units€is€hereby€defined€and€shall€be€classified€as€ððindustrial€andÐ H˜ Ðcommercial€property.ððÐ4„!! ÐÌà  àThe€Tennessee€Supreme€Court€addressed€a€very€similar€situation€in€òòCastlewoodóó,€òòInc.€v.Ð  \ ÐAnderson€Countyóó,€969€S.W.2d€908€(Tenn.€1998),€òòcert.€deniedóó,€525€U.S.€949,€119€S.€Ct.€375€(1998).Ð øH ÐIn€òòCastlewoodóó,€the€Board€ruled€that€rented€condominiums,€in€the€same€building€and€under€commonÐ ä4 Ðownership,€should€be€sub„classified€commercial€under€the€Tennessee€Constitution€and€statutes€asÐ Ð  Ðinterpreted€in€òòSnow€€v.€City€of€Memphisóó,€527€S.W.2d€55€(Tenn.€1975).׃h×Ý ƒ#ÃÝòòÚ  Ú27Ú  ÚóóÝ  Ý×  ×€€The€òòCastlewoodóó€Court€notedÐ ¼  Ðthat€ð ðthe€purpose€and€objective€of€the€[amendment€to€òòóóArt.€II,€ðð€28]€is€to€tax€income„producingÐ ¨ø Ðproperty€at€a€higher€rate€than€owner„occupied€residences€and€farms.ðð€€òòCastlewoodóó,€969€S.W.2d€at€910Ð ”ä Ð(quoting€òòSnowóó,€527€S.W.€2d€at€66).Ð €Ð ÐÌÔ#†XçÔXXXçÔcN#ÔÔ‡XçÔXXXçÔÔà  àHere,€the€evidence€adduced€at€the€administrative€hearing€revealed€that€the€owner€submittedÐ X¨ Ðone€application€to€THDA€for€low„income€housing€Tax€Credits€to€construct€the€44„unit€Acorn€HillsÐ D” Ðproject.€€The€property€was€covered€by€one€warranty€deed€and€one€deed€of€trust€and€was€managed€asÐ 0 € Ðone€property.€€In€addition,€there€was€a€restrictive€covenant€on€the€land€prohibiting€the€sale€of€anyÐ !l Ðsingle€unit.€€The€A.L.J.€found€these€facts€supported€the€assessorððs€position€that€the€units€were€notÐ "X  Ðseparate€residential€properties,€but€instead€commercial€rental€units.Ð ô"D! Ðà  àÌà  àThe€trial€court€agreed,€finding:Ð Ì$ # ÐÌà8  àà ` àIn€the€present€case,€the€owner€of€Acorn€Hills€treats€the€44€single„familyÐ ¤&ô!% Ðresidences€as€one€multi„unit€subdivision.€€The€development€was€created€forÐ 'à"& Ðcommercial€purposes,€that€is,€to€generate€rental€income,€garner€tax€credits€and€thusÐ |(Ì#' Ðproduce€a€profit.€€Petitioners€elevate€form€over€substance€in€arguing€that€theÐ ° Ðdeterminative€factor€is€whether€the€residences€are€physically€conjoined.€€TheÐ œì ÐConstitution€and€the€statutes€classify€property€based€on€its€use€and€purpose.€€The€taxÐ ˆØ Ðassessor€properly€determined€that€the€use€and€purpose€of€the€development€was€incomeÐ tÄ Ðproducing,€commercial€property€and€should€be€taxed€at€a€higher€rate€than€ownerÐ `° Ðoccupied€residences€and€farms.€€In€keeping€with€the€rationale€underlying€theÐ L œ ÐòòCastlewoodóó€decision,€this€court€holds€that€a€favored€tax€classification€does€not€extendÐ 8 ˆ Ðto€the€owner€of€44€single€family€rental€units€which€are,€to€the€owner„taxpayer,€incomeÐ $ t Ðproducing€property.€€The€Boardððs€decision€as€to€the€classification€of€the€Acorn€HillsÐ  ` Ðproperty€is€upheld.€Ðü L !! ÐÌà  àWe€agree€with€the€trial€courtððs€rationale€and€affirm€its€upholding€the€Boardððs€sub„Ð Ô$  Ðclassification€of€Acorn€as€commercial€property.Ð À  ÐÌà@àò òòòV.€€Evidentiary€IssuesˆÐ ˜è  Ðóóó óÌò òòòà@i i àA.€€Exclusion€of€Comparison€of€Property€Taxes€PaidˆÐ pÀ Ðóóó óÌà  àÔ#†XçÔXXXçÔ¾V#ÔÔ‡XçÔXXXçÔÔTaxpayers€argue€that€the€trial€court€erred€in€excluding€testimony€comparing€the€property€taxesÐ H˜ Ðpaid€by€LIHTC€properties€and€the€property€taxes€paid€by€similar,€non„LIHTC€rental€properties.€€TheÐ 4„ Ðpurpose€of€the€comparison€was€to€demonstrate€a€large€disparity€between€the€percentage€of€grossÐ  p Ðrevenue€the€LIHTC€properties€were€paying€in€property€taxes,€as€opposed€to€non„LIHTC€properties.€Ð  \ ÐThe€trial€court€sustained€the€Boardððs€objection€on€relevancy€grounds,€finding€that€LIHTC€and€nonÐ øH ÐLIHTC€rental€properties€are€not€the€same:€.€.€.€.ð ðÔ#†XçÔXXXçÔ—`#ÔÔ‡XçÔXXXçÔÔI€canððt€compare€apples€to€oranges.€€I€have€to€have€theÐ ä4 Ðsame€factual€situation.ððÐ Ð  ÐÌà  àGenerally,€a€trial€court's€ruling€on€the€Ô#†XçÔXXXçÔXc#ÔÔ‡XçÔXXXçÔÔadmissibility€of€Ô#†XçÔXXXçÔNd#ÔÔ‡XçÔXXXçÔÔevidence€is€within€the€sound€discretionÐ ¨ø Ðof€the€trial€judge.€€Trial€courts€are€accorded€a€wide€degree€of€latitude€in€their€determination€of€whetherÐ ”ä Ðto€admit€or€exclude€evidenceÔ#†XçÔXXXçÔ¡d#Ô,€and€will€be€overturned€on€appeal€only€upon€a€showing€of€abuse€ofÐ €Ð Ðdiscretion.€€òòRothstein€v.€Orange€Grove€Center,€Inc.óó,€60€S.W.3d€807,€811€(Tenn.€2001);€òòOtis€v.Ð l¼ ÐCambridge€Mut.€Fire€Ins.€Co.óó,€850€S.W.2d€439,€442€(Tenn.€1992).€€Ô‡XçÔXXXçÔÔUpon€review€of€the€record€in€thisÐ X ¨ Ðcase,€we€cannot€say€that€the€tax€comparison€was€improperly€excluded€from€evidence€by€the€trial€court.Ð D!” ÐÔ#†XçÔXXXçÔÐf#ÔòòóóÔ‡XçÔXXXçÔÔÌà@ àò òòòB.€€Exclusion€of€State€Senatorððs€Testimony€&€Legislative€HistoryˆÐ #l! Ðóóó óÌà  àTaxpayers€argue€that€the€trial€court€erred€in€excluding€its€proffered€testimony€of€Senator€JoeÐ ô$D # ÐHaynes€and€transcripts€and€audio€tapes€of€legislative€history€surrounding€proposed€legislation€SBÐ à%0!$ Ð2491/HB2584Ô#†XçÔXXXçÔÈg#ÔÔ‡XçÔXXXçÔÔ.€€Taxpayers€were€attempting€to€rebut€the€Boardððs€argument€as€why€the€proposedÐ Ì&"% Ðâ âlegislation,€which€would€have€prohibited€tax€assessors€from€considering€the€value€of€LIHTCððs€whenÐ ¸'#& Ðvaluing€real€property,€failed.׃|×Ý ƒ#ÃÝòòÚ  Ú28Ú  ÚóóÝ  Ý×  ׀Р° Ðâ âÌà  àThe€trial€court€declined€to€admit€the€evidence€but€did€permit€Taxpayers€the€opportunity€toÐ ˆØ Ðproffer€their€proof.€€She€explained€her€ruling€as€follows:Ð tÄ Ðà  àÌà8  àà ` àI€find€that€the€reason€why€the€legislature€didnððt€pass€the€act€in€its€original€formÐ L œ Ðas€appears€on€these€tapes€is€not€relevant€to€the€issue€of€what€actually€passed.€€BecauseÐ 8 ˆ Ðargument€in€counselððs€[Boardððs]€brief€is€only€whatever€persuasive€import€I€give€it.€Ð $ t ÐAnd€I€may€give€it€none€or€I€may€be€so€persuaded€that€I€just€decide€thatððs€the€whole€ballÐ  ` Ðgame.€€But€I€donððt€consider€the€briefs€to€be€substantive€evidence.€.€.€.And€if€I€feel€evenÐ ü L  Ðslightly€persuaded€by€whatððs€in€the€Stateððs€brief,€I€might€read€the€transcript€.€€But€myÐ è 8  Ðinitial€approach€to€this€is€that€Iððm€dealing€with€a€piece€of€legislation€that€has€beenÐ Ô$  Ðpassed.€€I€donððt€believe€that€I€get€into€looking€about€why€they€didnððt€pass€some€otherÐ À  Ðpiece€of€legislation.Ьü !! ÐÌà  àUltimately,€the€trial€court€did€not€rely€upon€the€Boardððs€argument€in€its€brief€about€the€nonÐ „Ô  Ðpassage€of€the€proposed€legislation€to€which€Taxpayer€objected.€€Consequently,€Taxpayers€were€notÐ pÀ Ðharmed€by€the€courtððs€€decision€not€to€consider€Taxpayersðð€evidence€regarding€the€reason€for€theÐ \¬ Ðnonpassage€of€the€bill.€€Ð H˜ ÐÌà  àFurther,€we€find€that€Taxpayers€failed€to€demonstrate€the€trial€court€abused€its€discretion.€Ð  p ÐIndeed,€to€the€contrary,€the€trial€courtððs€€ruling€was€correct.€€Ð  \ ÐÌà  àLegislative€inaction,€or€failure€to€amend,€is€generally€considered€irrelevant€to€the€interpretationÐ ä4 Ðof€existing€statutes.€òò€Ô#†XçÔXXXçÔƒi#ÔSeeóó€òòForman€v.€Nat.€Council€on€Comp.€Insóó.,€13€S.W.3d€365,€373€(Tenn.€Ct.€App.Ð Ð  Ð1999)€(discussing€the€majority€view€of€the€effect€of€legislative€inaction);€òòÔ‡XçÔXXXçÔÔBlake€v.€Abbott€Labs.,€Inc.óó,Ð ¼  ÐNo.€03A01„9509„CV„00307,€1996€WL€134947,€at€*3€(Tenn.€Ct.€App.€Mar.€27,€1996)€(no€Tenn.€R.Ð ¨ø ÐApp.€P.€11€application€filed)Ô#†XçÔXXXçÔ°s#Ô€(ð ðproposed€legislation,€not€enacted,€has€no€consequence€whatever€uponÐ ”ä Ðthe€interpretation€of€an€existing€statuteðð).€€òòóóÔ‡XçÔXXXçÔÔWhile€in€Tennessee€Ô#†XçÔXXXçÔGu#Ôfailure€of€the€legislature€to€expressÐ €Ð Ðdisapproval€of€a€judicial€construction€of€a€statute€is€persuasive€evidence€of€legislative€adoption€of€theÐ l¼ Ðjudicial€construction,€€òòStorey€v.€Nicholsóó,€27€S.W.3d€886€(Tenn.€2000);€òòHamby€v.€McDanielóó,€559Ð X ¨ ÐS.W.2d€774,€776€(Tenn.€1977),€that€is€not€the€situation€in€the€case€before€us.€€Ô‡XçÔXXXçÔÔWith€respect€to€the€legalÐ D!” Ðeffect€of€legislative€inaction,€Judge€Koch€cautioned€in€his€concurrence€in€òòSherwood€v.€MicrosoftÐ 0"€  ÐCorp.óó,€No.€M2002„01850„COA„R9„CV,€2003€WL€21780975,€at€*35€(Tenn.€Ct.€App.€July€31,Ð #l! Ð2003)(Tenn.€R.€App.€P.€11€permit€filed),€to€attach€little€significance,€in€part€because€of€the€inabilityÐ $X" Ðto€identify€which€of€several€possible€reasons€motivated€the€body€as€a€whole.€€Ð ô$D # ÐÔ#†XçÔXXXçÔ"w#Ôà8  àÐ !! Ðà  àWe€affirm€the€trial€courtððs€evidentiary€rulings€and€also€find€that€Taxpayers€failed€to€show€howÐ Ì&"% Ðthey€were€harmed€by€the€trial€courtððs€decision€not€to€consider€arguments€or€testimony€regarding€theÐ ° Ðimport€of€the€legislatureððs€failure€to€enact€a€particular€piece€of€proposed€legislation.Ð œì ÐÌÓ  Óà@@åå%àò òòòConclusionÐ tÄ Ðóóó óÓçzÓÌà  àWe€affirm€the€trial€courtððs€judgment€and€remand€the€case€to€the€trial€court€for€whatever€furtherÐ L œ Ðproceedings€may€be€required.€€Costs€of€the€appeal€are€taxed€to€the€appellants.Ð 8 ˆ ÐÌÌÌà  àà ` àà ¸ àà  àà h àà À àà  à_____________________________________Ð è 8  Ðà  àà ` àà ¸ àà  àà h àà À àà  àPATRICIA€J.€COTTRELL