|If you're a developer that is. This Monday, September
17th, 5:30 at City Hall, the Lenoir City Industrial Board will hold a
public hearing to discuss the possibility of the establishment of a
property tax freeze (TIF) zone for certain property located within the city
In plain language, the city wants to give a property tax break to several developers and land owners. The plan know as Tax Increment Financing (TIF) would freeze the the tax rate on all properties located within the TIF boundary for twenty years at the current assessment. Any increases in the property assessments in the twenty year period would go to the developers to pay for their roads, sewers and water lines etc.
The focal point of the tax give away is the Overholt property now known as the Creekwood Development, formerly known as the Eldridge farm. But it doesn't stop there. The TIF boundary will also include developer, Tracy Roy's property on Adessa Boulevard, all the existing businesses along Hwy. 321 from the interstate to the Highland Park Ruritan Club. The Waffle House, two motels, Adessa Auto Auction and other vacant properties are included in the proposed TIF boundary. All proprieties within the proposed boundary will enjoy the same tax freeze as the Overholt property.
The logic used by the developers to convince city officials that a tax freeze plan is good for the city is terribly flawed. It goes like this. The developer buys the land. The tax payer pays for the roads and other infrastructure on the developers land. The developer then has prime road front land to develop or more likely sell. The developer maintains that with the roads and other infrastructure in place, the development will build out in three to five years or less. This, according to the developers, means that many businesses will now be located in the development generating untold amounts of sales tax that will more than cover the lost property tax revenues given to the developer by the city.
The developers say their project will be a 300 million dollar development when completed in five years or less. That 300 million dollar development would generate 1.6 million in annual property taxes for the city. Lenoir City's sales tax rate is 2%. This means that the development would need to generate 80 million dollars in annual sales to compensate for the lost property taxes just to break even. That's nearly two-thirds of Lenoir City's current retail sales. Unless the new development plans to have two more Walmarts and two Home Depots, 80 million dollars in annual sales is not realistic. A large portion of the Overholt development is designated as residential and professional offices which pay no sales tax. Add the fact that Lenoir City's general fund only receives 25% of sales tax revenues, the city stands to lose a great deal of revenue from lost property taxes over the next twenty years.
On the county side, things would be even bleaker. The county stands to lose about 2.2 million in property tax revenues per year with no or very little increase in sales tax revenues.
None of the figures above even start to address the increased costs to local governments a development of this proposed scale will create. Schools, fire protection, police etc.
There's no doubt Lenoir City city officials will buy into this tax give away at the expense of the tax payers only to realize after it is too late that it was no deal at all except for the developers. Lenoir City officials have continuously prostituted the natural resources of their community till they have all but destroyed what once made Lenoir City a beautiful place.