To Amend The Law Concerning The Assessment Of Property; To Amend The Law Concerning Substantial Improvements To Real Property; And To Amend The Method Of Valuation For Real Property Under Arkansas Constitution, Article 16, § 5.
Summary
HB1386 amends Arkansas property assessment law in three main ways. First, it adds a statutory definition of “substantial improvement” for purposes of Amendment 79-related property assessment rules: an improvement qualifies if it increases assessed value by at least 25%. It also clarifies that repairs made after a natural disaster are not treated as substantial improvements unless the repairs use higher-quality or higher-value materials than those that were damaged.
Second, the bill changes how real property is valued for tax assessment. It states that each parcel must be valued at its true market value in money, but for residential property only in-state real property may be considered in that valuation. For commercial property, out-of-state real property may be considered only if there is no comparable commercial property in Arkansas. The bill applies these changes to assessment years beginning on or after January 1, 2025.
Impact
The bill directly affects Arkansas property tax administration by narrowing and clarifying when improvements trigger reassessment and by limiting the property factors that may be used to determine true market value. It amends Arkansas Code §§ 26-26-1122 and 26-26-1202, and it ties the changes to the constitutional framework of Arkansas Constitution, Article 16, § 5, and Amendment 79. Assessors, the Assessment Coordination Division, homeowners, commercial property owners, and county tax officials are the primary parties affected.
Sentiment
The available voting history suggests broad support for the bill. It passed the House 99-0 and the Senate 27-1, indicating strong bipartisan approval and little recorded opposition. No committee transcript is available, but the floor votes show the measure was generally viewed favorably.
Contention
The main policy issues appear to be how aggressively property should be reassessed after improvements and what property may be considered in market-value comparisons. Supporters likely favored clearer rules for substantial improvements and disaster-related repairs, while any opposition would most likely have centered on the restriction that residential valuation consider only in-state property and the limited circumstances under which out-of-state commercial property may be used as a comparison. The near-unanimous votes suggest these concerns did not generate significant legislative conflict.