Photo by George Lauby One of several apartment buildings in the 'Village at North Platte'. In all, there are 80 apartments in the housing complex.

A long-running dispute over the taxes for low-income housing projects appears to be coming to an end.

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County officials agreed July 7 to make an offer to the owners of The Village of North Platte, a modern, low-income apartment complex on West Second.

And they followed that Monday with an offer for two similar projects.

In its offer to “The Village”, the county appraised the property at $1.5 million, $500,000 less than its last offer of $2 million.

The Lincoln County Board of Commissioners, also know as the board of tax equalization, will continue to consider tax valuation protests during July. The protests had to be filed in June. The board meets inside the east end of the courthouse.

A total of 310 property valuation protests were filed, mostly for recently reappraised commercial property. There were 270 tax protests a year ago, and nearly 700 in 2006 after residential property was reappraised, Lincoln County Assessor Mary Ann Long said.

The dispute began shortly after the Village at North Platte complex was built in 2004. Chief county appraiser Bill Thornburg appraised the property at nearly $4 million based on construction costs. The owners protested.

The dispute could not be resolved locally, so it headed toward arbitration through the Nebraska Tax Equalization and Review Commission. Due to a series of complications and delays, TERC never ruled in the dispute, but Thornburg and county appraisers used the time to study related disputes from elsewhere in the state.

County officials agreed to reduce the appraisal to $2 million, arriving at that figure by considering not only the construction costs but also the income that owners received from tenants, which was indicated considerably less value than the full costs of construction.

But the owners still thought $2 million was too high.

The county reconsidered once again.

“We think we know where they are heading,” Thornburg told the Bulletin. “We think they (TERC) were going to ignore the cost approach and go with the income approach.”

The newest offer to the Village at North Platte has led to similar offers of other low income housing projects -- the “West Park” complex that adjoins the Village at North Platte and the Pacific Place apartments, owned by Housing Partners, LLC.

On july 14, the commissioners agreed to offer $2.13 million to West Park and $2.1 million to Housing Partners.

The three settlements reduce the county tax base by about $1.5 million from the previously adjusted offers.

Federal tax subsidy

Such low-income housing projects were built with tax credits, a process relatively new to North Platte, but which began in the 1980s in other parts of the country.

“In the ’80s, the federal government decided it wanted more affordable, low-income housing,” Thornburg said.

So, the government devised a plan to pay 60-70 percent of the construction cost of such housing projects though federal tax credits.

The process works like this: The government issues certificates for tax credits to credible construction developers. In turn, the developers raise money to pay for construction by selling the credits to investors.

The investors typically send the credits to the IRS or state tax departments in lieu of their income tax payments, taking it right off the taxes they owe.

Long noted that a lot of tax breaks are involved. Thornburg agreed.

Since the housing projects were built with tax money, it was difficult to believe they were also entitled to a lower property tax appraisal after they were built, Thornburg said.