Local governments could replace property taxes on eligible affordable housing

Local leaders could pass a rule exempting eligible properties from property taxes. This covers housing financed with federal low-income housing tax credits while rent and tenant-income limits still apply. The owner must follow all program rules and apply as other owners do for exemptions. An exempt owner must pay 5% of reported annual revenue, including rent and other income. The payment uses revenue from the property's most recent fiscal year and is collected when property taxes are collected.

School districts would exclude locally exempt properties from school taxes, and local taxing bodies would divide the replacement payments. The school tax exclusion covers only properties exempted under a county, city, or town rule. Each taxing body's share would follow its tax rate on the property's land and buildings.

Tax collectors would collect required payments, and counties could penalize unpaid balances. These rules apply to payments owed by owners of properties using the local exemption. A county must set the penalty's rate and method in a local rule. It may also set rules for reducing or canceling the penalty. Collectors would collect the payments at the same time as property taxes.