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ENGROSSED HOUSE
BILL NO. 4305 By: Blair of the House
and
Frix of the Senate
[ revenue and taxation – real property – terms –
method – fair cash value – credits – rates – audit
– codification – effective date ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 2865.1 of Title 68, unless there
is created a duplication in numbering, reads as follows:
A. As used in this act:
1. "Active construction" means any property that is being
constructed or renovated that has yet to place in service all of its
buildings;
2. "Audit" means an audit of the financial operations of the
property provided by a third-party certified public accountant or
financial statements certified by the organization to be true and
accurate;
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3. "Lease-up" means any property that has an actual occupancy
of less than ninety percent (90%), that is under or has been under
active construction, and is in the process of leasing units;
4. "Net operating income" means gross restricted rent income
from the property minus operating expenses and replacement reserve
deposits, before debt service, depreciation, amortization, capital
expenditures, and income taxes;
5. "Organization" means a property owner meeting the
requirements under subsection B of this section; and
6. "Restricted rent" means the actual rental rates that are
restricted by the programs described in subsection B of this
section.
B. This act shall only apply to real property owned by an
organization:
1. For the purpose of renting the property to a low income or
moderate income individual or family who satisfies the
organization's income eligibility requirements;
2. That was financed in whole or in part through allocation of
the federal low-income housing tax credit authorized pursuant to
Section 43 of the Internal Revenue Code, 26 U.S.C., Section 42, and
is subject to a land use agreement or regulatory agreement that has
not expired or been terminated;
3. That does not receive exempt treatment under Section 2887 of
this title; and
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4. The owner of which has not entered into any agreement with
any taxing unit to make payments to the taxing unit instead of taxes
on the property.
C. In determining the fair cash value of a property described
in subsection B of this section, the county assessor shall determine
the fair cash value of property that is under active construction or
lease-up on January 1 of the current tax year in the manner provided
by Section 8 of Article X of the Oklahoma Constitution using the
restricted rent income approach method, provided that the county
assessor shall estimate the property's net operating income based on
the organization's projected restricted rent income and expenses for
the first full year of operation, as adjusted to reflect the average
occupancy during the lease-up period.
D. In determining the fair cash value for a property for any
subsequent tax year, the county assessor shall determine the fair
cash value of the property based upon the restricted rent income
approach method utilizing the property's net operating income from
the audit provided by the organization.
E. In determining the fair cash value of property described in
subsection B of this section, the county assessor shall not consider
the value or any amount of any federal or state low-income housing
tax credits as a component of the fair cash value or income
attributable to the property.
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F. The county assessor shall determine a formal process for
determining market-derived capitalization rates to be applied to the
property's net operating income based on project and investor data
for comparable properties with restricted rents.
G. Not later than May 1 of each year, the organization shall
deliver to the county assessor the audit for the preceding year.
The county assessor may extend the deadline for good cause shown.
SECTION 2. This act shall become effective January 1, 2027.
Passed the House of Representatives the 24th day of March, 2026.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of __________, 2026.
Presiding Officer of the Senate