In the Supreme Court of Georgia
Decided: August 26, 2026
S25G0196. GATEWAY PINES HAHIRA, LP v. LOWNDES COUNTY BOARD OF TAX ASSESSORS.
COLVIN, Justice.
We granted certiorari in this case to determine whether
property tax assessors seeking to determine the fair market value of
“Section 42 properties” — that is, affordable housing properties that
qualify for low-income housing income tax credits under Section 42
of the Internal Revenue Code (“Section 42 tax credits”)1 — may use
a specific method of estimating the fair market value of real property
known as the “income approach.”2 Applying the Court of Appeals’
1 See 26 USC § 42. As we have explained, “Section 42 of the Internal
Revenue Code allows property owners to agree to rent to low-income tenants for below-market rates in exchange for the right to claim federal income tax credits each year for ten years.” Heron Lake II Apartments, LP v. Lowndes County Board of Tax Assessors, 306 Ga. 816, 816 n.1 (2019). 2 Under the income approach, a tax assessor estimates the fair market
value of property based on “the present value of the projected income stream from the use of the subject property in the future.” Ga. Comp. R. & Regs., r. 560-11-10-.09(4)(c). precedent established in Freedom Heights, LP v. Lowndes County
Board of Tax Assessors, 369 Ga. App. 725 (2023), the Court of
Appeals in this case concluded that our precedent regarding
OCGA § 48-5-2(3)(B)(vii)(II) (a statute that addresses how Section
42 tax credits may be considered under the income approach)3
compelled it to conclude that, “as [Section 42 tax credits] are
currently structured, tax assessors may not use the income approach
in determining the fair market value of Section 42 properties.”
Gateway Pines Hahira, LP v. Lowndes County Bd. of Tax Assessors,
372 Ga. App. 705, 709, 711 (2024). As explained below, however, the
Court of Appeals has misinterpreted our precedent and reached a
conclusion that is inconsistent with the plain language of the
statute. We therefore overrule Freedom Heights, reverse the
judgment of the Court of Appeals in this case, and hold, consistent
with our precedent and the plain language of OCGA § 48-5-
3 OCGA § 48-5-2(3)(B)(vii)(II) provides that Section 42 tax credits “may
be considered in determining the fair market value of [a Section 42 property]” under the income approach “provided that such income tax credits generate actual income to the record holder of title to the property.” 2 2(3)(B)(vii)(II), that tax assessors may use the income approach
when determining the fair market value of Section 42 properties,
even though Section 42 tax credits, as currently structured, may not
be treated as “income” under that approach.
1. By way of background, the Georgia Public Revenue Code
provides that, as a general matter, “[a]ll property shall be returned
for taxation at its fair market value.” OCGA § 48-5-6. And the Code
defines “[f]air market value of property” as “the amount a
knowledgeable buyer would pay for the property and a willing seller
would accept for the property at an arm’s length, bona fide sale.”
OCGA § 48-5-2(3).
Under OCGA § 48-5-2(3)(B), tax assessors are required to
consider several criteria in assessing the fair market value of real
property. These criteria include, among other things, “[r]ent
limitations, higher operating costs resulting from regulatory
requirements imposed on the property, and any other restrictions
imposed upon the property in connection with the property being
eligible for [Section 42] income tax credits,” OCGA § 48-5-2(3)(B)(vi),
3 as well as “[a]ny other existing factors provided by law or by rule
and regulation of the [revenue] commissioner deemed pertinent in
arriving at fair market value,” OCGA § 48-5-2(3)(B)(viii).
Pursuant to the Public Revenue Code, the revenue
commissioner has adopted a “procedural manual for use by county
property appraisal staff in appraising tangible real and personal
property for ad valorem tax purposes.” OCGA § 48-5-269.1(a). See
also Ga. Comp. R. & Regs., r. 560-11-10-.01(1) (noting that the
“appraisal procedures manual” was developed pursuant to OCGA
§ 45-5-269.1). That manual, which is referred to as the “Appraisal
Procedures Manual” and is published in Georgia’s Administrative
Code, explains that the “specific procedures [set out in the Manual]
are designed to provide fair market value under normal
circumstances,” but that appraisal staff should “consider[ ]” any
“unusual circumstances [that] affect[ ] value” and should “make any
further valuation adjustments necessary to arrive at the fair market
values” by “apply[ing] . . . generally accepted appraisal practices to
the basic appraisal values required by this manual.” Ga. Comp. R.
4 & Regs. 560-11-10-.01(2). And as to the appraisal of real property in
particular, the Appraisal Procedures Manual requires tax assessors
to follow specific guidelines set out in Rule 560-11-10-.09. See Ga.
Comp. R. & Regs., r. 560-11-10-.09(1) (“The appraisal staff shall
follow the provisions of this Rule when performing their appraisals
of real property.”).
Rule 560-11-10-.09 provides guidelines for appraising different
aspects of real property, including the land itself and improvements
on the land. See Ga. Comp. R. & Regs., r. 560-11-10-.09(3) (“Land
valuation”); Ga. Comp. R. & Regs., r. 560-11-10-.09(4)
(“Improvement valuation”). And the Rule acknowledges that tax
assessors may need to use different approaches or a combination of
approaches in order to ensure that “the result of any appraisal of
real property . . . conform[s] to the definition of fair market value.”
Ga. Comp. R. & Regs., r. 560-11-10-.09(1). See Ga. Comp. R. & Regs.,
r. 560-11-10-.09(1)(a) (“The degree of dependence on any one
approach will change with the availability of reliable data and type
of property being appraised.”); Ga. Comp. R. & Regs., r. 560-11-10-
5 .09(4) (“In determining the reliability and representativeness of
each approach or combination of approaches, the appraisal staff
shall consider those factors most likely to influence buyers and
sellers when those buyers and sellers are determining exchange
prices in the market place, and the sufficiency of available sales,
cost, income and expense information to reliably quantify those
factors. However, irrespective of the valuation approach used, the
final results of any appraisal of real property by the appraisal staff
shall in all instances comply with the definition of fair market value
in Code section 48-5-2.”); Ga. Comp. R. & Regs., r. 560-11-10-.09(5)
(“Final estimate of fair market value[:] After completing all
calculations, considering the information supplied by the property
owner, and considering the reliability of sales, cost, income and
expense information, the appraisal staff will correlate any values
indicated by those approaches to value that are deemed to have been
appropriate for the subject property and form their opinion of the
fair market value.”).
Rule 560-11-10-.09 identifies three primary approaches to
6 appraising real property, “the sales comparison, cost, and income
approaches.” Ga. Comp. R. & Regs., r. 560-11-10-.09(1)(a). Under the
“sales comparison approach,” a tax assessor “estimate[s] value by
comparing the subject property to similar properties that have
recently sold.” Ga. Comp. R. & Regs., r. 560-11-10-.09(4)(b). Under
the “cost approach,” a tax assessor estimates value by “[e]stimat[ing]
the cost new of the improvements, subtract[ing] accrued
depreciation, and add[ing] the value of the land.” Ga. Comp. R. &
Regs., r. 560-11-10-.09(4)(a). Finally, under the “income approach,”
a tax assessor “estimate[s] value by determining the present value
of the projected income stream from the use of the subject property
in the future.” Ga. Comp. R. & Regs., r. 560-11-10-.09(4)(c).
In addition to Rule 560-11-10-.09’s guidelines, there are also
statutory provisions that place limitations on how tax assessors may
go about determining the fair market value of real property. See,
e.g., OCGA § 48-5-2(3) (requiring tax assessors who are
“determining the fair market value of income-producing property” to
“consider[ ]” the “income approach, if data are available”). And as
7 relevant here, we addressed two such limitations in Heron Lake II
Apartments, L.P. v. Lowndes County Board of Tax Assessors, 299 Ga.
598 (2016) (“Heron Lake One”), and Heron Lake II Apartments, LP
v. Lowndes County Board of Tax Assessors, 306 Ga. 816 (2019)
(“Heron Lake Two”), both of which concerned ad valorem taxation of
Section 42 properties.
In Heron Lake One, we addressed the constitutionality of
OCGA § 48-5-2(3)(B.1), which expressly prohibited tax assessors
from considering Section 42 tax credits in determining the fair
market value of Section 42 properties.4 See Heron Lake One, 299 Ga.
at 598. We held that the statute violated Article VII, Section I,
Paragraph III(a) of Georgia’s 1983 Constitution (“the taxation
uniformity provision”) 5 because Section 42 tax credits “are part and
4 See OCGA § 48-5-2(3)(B.1) (“The tax assessor shall not consider any
income tax credits with respect to real property which are claimed and granted pursuant to either Section 42 of the Internal Revenue Code of 1986, as amended, or Chapter 7 of this title in determining the fair market value of real property.”). 5 That provision states: “Except as otherwise provided in subparagraphs
(b), (c), (d), (e), (f), and (h) of this Paragraph, all taxation shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax.” Ga. Const. of 1983, Art. VII, Sec. I, Par. III(a). See also Ga. Const. of
8 parcel of the tangible real estate [that] may properly contribute to
an assessment of fair market value,” and, thus, by entirely
prohibiting tax assessors from considering such tax credits, the
statute created an unconstitutional subclass of tangible property
subject to preferential treatment for ad valorem tax purposes. Id. at
609–10 (quotation marks omitted). 6
Following Heron Lake One, the General Assembly amended
OCGA § 48-5-2 to include limitations on tax assessors’ use of certain
methods for determining the fair market value of Section 42
properties. See Heron Lake Two, 306 Ga. at 818, 821. As relevant
here, the General Assembly imposed a new limitation on how tax
assessors could use the income approach when determining the fair
market value of Section 42 properties. See id. Specifically, the
General Assembly passed a new statutory provision, OCGA § 48-5-
1983, Art. VII, Sec. I, Par. III(b)(1) (“Except as otherwise provided in this subparagraph (b), classes of subjects for taxation of property shall consist of tangible property and one or more classes of intangible personal property including money[.]”). 6 Although Heron Lake One declared “OCGA § 48-5-2(3)(B.1)
unconstitutional for violating the Georgia Constitution’s taxation uniformity provision[,] . . . subsection (B.1) still appears in the Georgia Code.” Heron Lake Two, 306 Ga. at 817 n.3. 9 2(3)(B)(vii)(II), which provides:
In establishing the value of any property subject to rent restrictions under the income approach, any income tax credits described in division (vi) of this subparagraph that are attributable to property [including Section 42 tax credits] may be considered in determining the fair market value of the property, provided that such income tax credits generate actual income to the record holder of title to the property[.]
In Heron Lake Two, we interpreted this provision and held that
it does not violate the Georgia Constitution’s taxation uniformity
provision. See Heron Lake Two, 306 Ga. at 821–28. And as explained
below, our interpretation of OCGA § 48-5-2(3)(B)(vii)(II) in Heron
Lake Two is the genesis of the dispute giving rise to this appeal.
2. In this case, Gateway Pines Hahira, LP (“Taxpayer”), which
owns a Section 42 affordable housing apartment complex in
Lowndes County, challenges a tax assessment notice issued by the
Lowndes County Board of Tax Assessors (“the Assessors”). The
notice stated that the fair market value of Taxpayer’s Section 42
property for the 2018 tax year was $5,363,682. Although Taxpayer
challenged the Assessors’ fair-market-value determination, the
10 Assessors made no change to that determination. Taxpayer then
appealed the assessment directly to the superior court, under OCGA
§ 48-5-311(g).
As relevant here, the Assessors filed a motion for partial
summary judgment in the trial court, and the trial court granted the
motion, concluding in relevant part that, under Heron Lake Two,
“the income approach is inapplicable and may not be used based on
the current structure of the tax credits[,] which does not provide any
actual income to the taxpayer.” 7
The Court of Appeals affirmed, concluding that the case was
controlled by its prior decision in Freedom Heights, 369 Ga. App.
725, which had “considered the same issue.” Gateway Pines Hahira,
372 Ga. App. at 709. See White v. State, 305 Ga. 111, 121 (2019)
(holding that panels of the Court of Appeals are bound to follow
earlier decisions of that court “until such time as the older law was
properly overruled by that court or reversed or overruled by this
7 Although the Assessors filed two summary judgment motions, seeking
partial summary judgment on a number of issues, the trial court’s rulings as to the other grounds for partial summary judgment are not at issue here. 11 Court”). Specifically, as in Freedom Heights, the Court of Appeals in
this case concluded that,
[a]s construed by the Supreme Court [in Heron Lake Two] in favor of its constitutionality, OCGA § 48-5- 2(3)(B)(vii)(II) limits the applicability of the income approach to circumstances where a tax assessor could show that [Section 42 tax credits] generate actual income. And, as currently structured, [Section 42 tax credits] do not constitute actual income for the purposes of OCGA § 48-5-2(3)(B)(vii)(II). Consequently, as [Section 42 tax credits] are currently structured, tax assessors may not use the income approach in determining the fair market value of Section 42 properties.
Gateway Pines Hahira, 372 Ga. App. at 711 (citations and
punctuation omitted). See Freedom Heights, 369 Ga. App. at 730
(same). We granted certiorari to determine whether “tax assessors
[are] permitted to use the income approach to determine the fair
market value of a property with low-income housing tax credits,” in
light of OCGA § 48-5-2(3)(B)(vii)(II) and Heron Lake Two.
3. We answer the certiorari question in the affirmative: in
accordance with OCGA § 48-5-2(3)(B)(vii)(II) and Heron Lake Two,
tax assessors may use the income approach to determine the fair
market value of Section 42 properties, although OCGA § 48-5-
12 2(3)(B)(vii)(II) imposes a limitation on how tax assessors may do so.
As explained below, contrary to the Court of Appeals’ opinion in this
case and the precedent on which it relied, Heron Lake Two did not
construe OCGA § 48-5-2(3)(B)(vii)(II) as prohibiting tax assessors
from using the income approach when determining the fair market
value of Section 42 properties but instead as prohibiting tax
assessors from treating Section 42 tax credits as income (unless they
lead to actual income) when using the income approach to assess the
fair market value of Section 42 properties. And the plain language
of OCGA § 48-5-2(3)(B)(vii)(II) permits use of the income approach
even when Section 42 tax credits cannot be considered under that
approach.
In Heron Lake Two, the trial court concluded that OCGA § 48-
5-2(3)(B)(vii)(II) would violate the Georgia Constitution’s taxation
uniformity provision unless it permitted tax assessors to consider
Section 42 tax credits as “actual income” under the income approach.
See Heron Lake Two, 306 Ga. at 819. And the trial court therefore
applied the doctrine of constitutional avoidance to construe the
13 statute as permitting “[Section 42 tax credits to] be considered
‘actual income’ under OCGA § 48-5-2(3)(B)(vii)(II)’s income
approach.” Id. On appeal, we reversed, concluding that the statute
could not be so construed, and that the statute did not violate the
taxation uniformity provision when properly construed. See id. at
816.
As we explained, OCGA § 48-5-2(3)(B)(vii)(II) “define[s] the
contours” of “the income approach” by “tell[ing] tax assessors how
they can use the . . . income approach[ ] in determining the fair
market value of Section 42 properties.” Heron Lake Two, 306 Ga. at
821, 824 (emphasis added). Relying on the statute’s “plain text,” we
explained that OCGA § 48-5-2(3)(B)(vii)(II) provides that, “when
establishing the fair market value of Section 42 properties under the
income approach, tax assessors may consider [Section 42 tax credits]
attributable to those properties” only if “the [Section 42 tax credits]
‘generate actual income to the record holder of title.’” Id. at 821
(emphasis added; citation omitted). And we held that, “as currently
structured,” “[Section 42 tax credits] cannot be counted as ‘actual
14 income’ under the income approach” because they do not generate
“more money” for recipients of the tax credits — that is, Section 42
tax credits “do not constitute ‘income’” or “provide recipients of those
credits with ‘actual income’” — but “merely reduce [the recipient’s]
overall tax burden” by allowing the recipient to “pay less in taxes to
the government.” Id. at 821–22, 827 (citations and emphasis
omitted).
Turning to the constitutional question, we concluded that
OCGA § 48-5-2(3)(B)(vii)(II) does not “place[ ] [Section 42] properties
in a distinct subclass of property for taxation purposes” and
therefore does not violate the Georgia Constitution’s taxation
uniformity provision. Heron Lake Two, 306 Ga. at 824–25. This is
so, we explained, “because [the statutory provision] does not
altogether preclude tax assessors from considering [Section 42 tax
credits] as part of the fair market value of Section 42 properties.”
Id. at 825. Instead, we explained, OCGA § 48-5-2(3)(B)(vii)(II)
“simply limit[s] the applicability of the . . . income approach[ ]” by
prohibiting tax assessors from “count[ing] [Section 42 tax credits] as
15 ‘actual income’ under the income approach” unless “a tax assessor
c[an] show that [Section 42 tax credits] ‘generate actual income.’” Id.
at 827. We noted that the statutory “method” of counting Section 42
tax credits as “actual income” under the income approach “has a
narrow range of potential applications” because “today’s [Section 42
tax credits]” do not constitute “actual income” or “generate actual
income.” Id. But we concluded that the General Assembly had
reasonably imposed such a limitation on use of the income approach
because the income approach, which focuses on the projected income
stream from use of the property, could only “be accurately and fairly
applied” to Section 42 tax credits “based on reliable data” in
“situations” where “a tax assessor could show that [Section 42 tax
credits in fact] ‘generate actual income.’” Id. And we noted that
OCGA § 48-5-2(3)(B)(vii)(II)’s prohibition on considering Section 42
tax credits, as currently structured, when applying the income
approach did not prohibit tax assessors from considering Section 42
tax credits as contributing to the fair market value of Section 42
properties. See id. at 827–28. We explained that this is because “tax
16 assessors are not limited to using” a specific valuation approach and
are instead “direct[ed] . . . to consider” a variety of different
approaches, some of which may account for any value added to a
property by Section 42 tax credits better than others; and because,
“irrespective of the valuation approach used,” tax assessors are
directed to take steps to account for any “unusual circumstances”
affecting fair market value that remain unaccounted for under those
approaches (e.g., Section 42 tax credits) to ensure that “the result of
any appraisal of real property . . . conform[s] to the definition of fair
market value.” Id. (citations and punctuation omitted).
As this description of Heron Lake Two shows, the Court of
Appeals in Freedom Heights erred in concluding that we “construed”
OCGA § 48-5-2(3)(B)(vii)(II) “in favor of its constitutionality” to
“limit[ ] the applicability of the income approach to circumstances
where a tax assessor could show that [Section 42 tax credits]
generate actual income.” Freedom Heights, 369 Ga. App. at 730
(quotation marks omitted). See also Gateway Pines Hahira, 372 Ga.
App. at 711 (same). The Court of Appeals’ interpretation of Heron
17 Lake Two in Freedom Heights was incorrect in two respects.
First, although the Court of Appeals accurately observed that
Heron Lake Two referenced the doctrine of constitutional avoidance
as a general principle of law, see Heron Lake Two, 306 Ga. at 825
(“[W]e have long held that if the language of an act is susceptible of
a construction that is constitutional, and another that would be
unconstitutional, that meaning or construction will be applied which
will sustain the act.” (quotation marks omitted)), we did not rely on
that legal principle when construing OCGA § 48-5-2(3)(B)(vii)(II).
Instead, we construed OCGA § 48-5-2(3)(B)(vii)(II) according to its
“plain text.” Heron Lake Two, 306 Ga. at 821–22. By its plain terms,
OCGA § 48-5-2(3)(B)(vii)(II) does not address the circumstances
under which the income approach may be considered in determining
the fair market value of Section 42 properties but instead the
circumstances under which Section 42 “income tax credits . . . may
be considered in determining the fair market value” of Section 42
properties “under the income approach.” OCGA § 48-5-
2(3)(B)(vii)(II) (emphasis added). That is precisely what we said in
18 Heron Lake Two. See Heron Lake Two, 306 Ga. at 821 (stating, based
on the plain language of the statute, that “OCGA § 48-5-
2(3)(B)(vii)(II) provides that, when establishing the fair market
value of Section 42 properties under the income approach, tax
assessors may consider [Section 42 tax credits] attributable to those
properties, ‘provided that’ the LIHTCs ‘generate actual income to
the record holder of title.’” (punctuation omitted)).
Moreover, we had no occasion to apply the doctrine of
constitutional avoidance because the “plain text” of OCGA § 48-5-
2(3)(B)(vii)(II) did not violate the Georgia Constitution. Heron Lake
Two, 306 Ga. at 819, 821, 825 (rejecting the trial court’s application
of the doctrine of constitutional avoidance when interpreting the
statute). As we explained, the plain language of OCGA § 48-5-
2(3)(B)(vii)(II) merely places a limitation on when Section 42 tax
credits can be counted as income under the income approach, while
allowing tax assessors to consider any contribution Section 42 tax
credits make to the fair market value of a particular property in
other ways. See id. at 827–28. And because OCGA § 48-5-
19 2(3)(B)(vii)(II) does not “completely exempt [Section 42 tax credits]
from an assessor’s consideration,” like the statute at issue in Heron
Lake One, we concluded that OCGA § 48-5-2(3)(B)(vii)(II) does not
violate the Georgia Constitution’s taxation uniformity provision. Id.
at 824–25.
Second, in concluding that Heron Lake Two prevented any use
of the income approach to determine the fair market value of Section
42 properties, Freedom Heights placed undue emphasis on isolated
statements from our opinion, which only appear ambiguous when
divorced from the context in which they appear. Specifically, the
Court of Appeals appears to have focused on our statements that
OCGA § 48-5-2(3)(B)(vii)(II) “limit[s] the applicability of the . . .
income approach[ ],” and that OCGA § 48-5-2(3)(B)(vii)(II)’s “method
has a narrow range of potential applications.” Heron Lake Two, 306
Ga. at 827. But when read in the context of the opinion as a whole,
as outlined above, it is clear that we did not hold that OCGA § 48-5-
2(3)(B)(vii)(II) places a limitation on whether tax assessors can use
the income approach to determine the fair market value of Section
20 42 properties, but instead that the statute places a limitation on
“how” tax assessors can use the income approach “when establishing
the fair market value of Section 42 properties under the income
approach.” Id. at 821 (emphasis added). As described above, we
concluded that OCGA § 48-5-2(3)(B)(vii)(II) “limit[s] the
applicability” of the income approach by providing that, “when
establishing the fair market value of Section 42 properties under the
income approach,” “[Section 42 tax credits] can[ ] be counted as
‘actual income’” only “in circumstances where a tax assessor c[an]
show that [Section 42 tax credits] ‘generate actual income.’” Id. at
821, 827 (emphasis added). And we said that the “method” of
counting Section 42 tax credits as actual income has “a narrow range
of potential applications” because Section 42 tax credits generally do
not constitute “actual income” or “generate actual income,” and
because Section 42 tax credits do not constitute “actual income” or
“generate actual income” “as currently structured.” Id. at 827.
The Court of Appeals in Freedom Heights therefore erred in
concluding that, “as [Section 42 tax credits] are currently structured,
21 tax assessors may not use the income approach in determining the
fair market value of Section 42 properties.” Freedom Heights, 369
Ga. App. at 730. And as a result, the Court of Appeals in this case,
which followed Freedom Heights as it was bound to do, likewise
erred. See Gateway Pines Hahira, 372 Ga. App. at 711. Accordingly,
we overrule Freedom Heights, reverse the judgment of the Court of
Appeals in this case, and remand the case for further proceedings
consistent with this opinion.
Judgment reversed and case remanded. All the Justices concur.