published Thursday, February 10th, 2011

City of Chattanooga and Hamilton County will lose money on building deals

by Dan Whisenhunt

Hamilton County and Chattanooga officials are facing more than $1 million each in lost property tax revenue after three downtown buildings were sold within the last six months for less than their appraised value.

Combined with the possible end to the county and city sales tax agreement, the county could be putting together next year's budget with $11 million less revenue.

The Tennessee Valley Authority repurchased its Chattanooga office complex for $22 million, which means the building is now exempt from taxes. When it was owned by a Chicago-based private company, the building generated about $1 million each in property taxes for Hamilton County and the city of Chattanooga.

The sale of the former BlueCross BlueShield of Tennessee headquarters on Pine Street and the Chestnut Tower at Sixth and Chestnut streets for less than their appraised value also could reduce tax collections, Hamilton County Assessor Bill Bennett said.

Chattanooga officials said the city collected $175,561 in property taxes from the Gold Building and $59,385 from the Chestnut Tower.

Developers Ken and Byron DeFoor bought the BlueCross BlueShield building in December for $6.15 million -- less than a third of its $19.8 million appraised value -- and Republic Parking System President Jim Berry bought Chestnut Tower for $4 million -- 38 percent below the $6.4 million appraised value by the county.

Bennett said the assessment of the two buildings isn't settled.

County Commissioner Tim Boyd raised the issue Tuesday night during Hamilton County Mayor Jim Coppinger's "County Conversations" forum at East Ridge Middle School.

"It takes 1,500 homes to make up $2 million in property tax that we lost on three commercial real estate transactions," Boyd told the audience.

As mayor, Coppinger will prepare the upcoming budget.

"Anytime there's a revenue decrease or you lose a source of revenue then obviously it creates additional challenges and we'll just have to address them," Coppinger said.

Coppinger is also facing the possibility that the sales tax agreement with the county will expire and cost the county $10 million. The sales tax agreement regulates distribution of sales taxes collected throughout the county to a variety of social service and other agencies.

Coppinger has repeatedly emphasized he wants to create a budget that does not increase taxes. The county's current budget is $638 million.

Richard Beeland, spokesman for Chattanooga Mayor Ron Littlefield, said the city would have to wait and see how the building sales would impact the city's budget.

"The overall base probably will not be materially affected," he said.

As a government-owned utility, TVA does not pay property taxes to local governments. It makes payments in lieu of taxes based upon sales and facilities in each area.

TVA spokesman Scott Brooks said TVA is still considering what, if any, additional payments it could make to the city and county based upon its purchase of its downtown office complex.

"As the property was purchased in January, TVA is still reviewing the situation," Brooks said. "Any such payments to Hamilton County or the city would also require approval from the TVA board."

about Dan Whisenhunt...

Dan Whisenhunt covers Hamilton County government for the Times Free Press. A native of Mobile, Ala., Dan earned a degree in broadcast journalism from the University of Alabama. He won first place for best in-depth news coverage in the 2010 Alabama Press Association contest; the FOI-First Amendment Award in the 2007 Alabama Press Association contest; first place for best public service story in the Alabama AP Managing Editors contest in 2009 for economic coverage; and ...

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jpo3136 said...

Of course "the overall base will not be materially affected." The City does not collect those taxes, do they?

In other words, the Littlefield administration doesn't care.

You know who cares? The people who used to work in those, and many other, downtown buildings. Massive layoffs over the past few years have put hundreds of people out of work. Early retirement firings, no comparable re-employment sources, a general downturn in the economy: all indicators that taxes aren't going to be collected.

That's when the real losses occurred. When employers go bankrupt, when they can't hire employees, or when they ship jobs to China to take a payoff, whatever: that's when the losses occurred. Until those same businessmen buckle down and understand that their role is to do something other than hide, we'll be stuck like this.

Running away from the economic problems, not hiring people, not lending to start up businesses, and not cultivating success on a massive scale: all not going to get this problem solved.

The Bank building.
Retail storefronts from Alton Park to Signal Mountain Boulevard. The empty offices at Suntrust.
The Volunteer building.
The empty offices in Chestnut. Warehouse Row. Eastgate Mall. A struggling, but not strong, Northgate Mall. I won't ask where Southgate and Four Square Malls are. Let's assume, "Not thriving." Row after row of closed retail businesses on Hixson Pike. That Jet Stream Grill thing. That strange semi-indoor just off-Main Street office park/mall next to Blue Orleans.
That defunct art gallery Brabson house or whatever, where the old election commission used to be. Whoever owns that riverside dock, now tagged by "Renik" across from Ross' Landing.
Eyesore Towers, next to the stadium.

Empty and defunct commercial properties.

Businesses that look like businesses, but seem to do business with nobody. Many probably owned by people who want to do better but can't, so far.

Who's profiting? Walmart. CBL, with its own Interstate off-ramp. Another corporate glowing sign. Even some of those retailers look rough.

And the answer we get from our leaders on this is, "I'll take my ball and bat and go home."

Amoral business policies, taken to irrational and sociopathic extremes, are what got us into this financial crisis. We need to turn back towards more ethical conduct in order to get back out.

Which will include unity, not disorganized and selfish withdrawal, in the face of this problem. We can do this, but not if the Mayors run away in fear.

February 10, 2011 at 12:44 a.m.
docspop said...

Chattanooga is rapidly becoming like a movie set. Lots of buildings but nothing on the inside.But that's no problem let's just raise taxes and build a new park or buy a new piece of eyesore artwork.

February 10, 2011 at 8:20 a.m.

Coppinger is not elected by the people, whereas Littleton is an elected offical who rarely, if ever, shows compassion or concern for the middle class Chattanooga voters. Real estate values are lower simply because of the economic conditions folks. Anyone who has lived on this Earth for more than a few decades should understand the cycles. All I can say is adjust accordingly however don't penalize those who may not be a community mover and/or shaker.

February 10, 2011 at 3:05 p.m.
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