County Nixes Building Tax – For Now

Contributed by: Ann Hinch on 8/11/2006

A proposed county school facilities tax never took flight at the Aug. 7 Loudon County commission meeting, for lack of motion to vote on it or a related rezoning moratorium.

As county population grows, so does school enrollment. According to Tennessee Dept. of Education, in 1991 county schools had 3,885 students and Lenoir City had 1,831; in 2005, both had risen to 4,925 and 2,159, respectively. From 1999 to 2005, each system showed an increase of more than 200 students.

Signed by Gov. Phil Bredesen as Public Chapter 953, the facilities tax which passed General Assembly this spring may be enacted by counties meeting certain growth criteria. It allows a government to collect up to $1 per square foot on each new residence permitted after enactment, to fund new school facilities.

In addition, commission suggested a moratorium on residential rezoning in crowded districts until it adopts a facilities and funding plan.

"We've outgrown our county," resident Bill Campbell, Jr. told commission at the meeting. He was one of several speakers and one of few in favor of the tax.

"A wheel tax would be better," countered Nathan Simpson, who is getting ready to build a house. He added it would spread the burden instead of placing it all on homeowners. "Even Mexicans have cars. And most people I know have three or four (vehicles)."

Other suggestions included a real estate transfer fee on all homes. By and large, developers opposed a facilities tax. More than one talked about the softening housing market in response to higher interest rates, and that someone who can build a 4,000 square-foot home can more easily afford $4,000 than someone building only 1,800 square feet can $1,800.

In that vein, resident Mark White talked about visiting a village outside Chicago in which even a hotel manager he polled couldn't afford to live. "It really cuts the poor people out of your county," he admonished.

On the other hand, Ned MacDonald said, "I don't believe if you're spending $75 a square foot ... that you're going to stop because it goes up to $76 a square foot."

Commissioner Van Shaver, who suggested a building moratorium last year "and got snickered at," couldn't support this one because it did not apply to the cities in Loudon County. "Too vague and open-ended" is how Commissioner Chuck Jenkins described the proposal, though he urged county planning commission to keep trying.

"There's not any rush to judgment to do this tonight," Doyle Arp, who will take over as county mayor in September, said. The legislation is untested, and Arp said if commission passes it without proper information and is sued, "I'm going to throw up my hands and say 'I told you so.'"

Arp explained once in office, he is going to ask the Board of Education to hire an outside consultant to opine on needed school facilities, rather than rely on local politics to decide them.

County Director of Schools Edward Headlee said the board is working on a long-term facilities (and funding) plan; a rough preliminary estimate of how much it would take to buy land and build everything right now is perhaps $130 million.