Trina Baughn
Note: This story was updated at 11:38 p.m.
Oak Ridge City Council member Trina Baughn has proposed that the city sell Centennial Golf Course, and terminate the lease agreement with the Chamber of Commerce and sell the property.
Those proposals would convert city-owned assets into taxable properties, Baughn said.
Baughn has also asked the seven-member Council to consider setting up a team that could negotiate voluntary payment-in-lieu-of-taxes agreements with tax-exempt organizations that “are most able to afford paying for city services that are currently paid for by the taxpayer.” Those organizations could include Methodist Medical Center of Oak Ridge, Oak Ridge Utility District, Tech 2020, Roane State Community College, and the University of Tennessee, Baughn said in a May 5 e-mail to Oak Ridge City Manager Mark Watson and City Clerk Diana Stanley.
The Oak Ridge City Council could consider Baughn’s request during a Monday evening meeting. Baughn discussed her proposals in a guest column this past Monday.
She has also asked city officials to sell a Commerce Park building located next to Tech 2020 and set up a policy to return blighted properties acquired by the city to a taxable status as quickly as possible. Both of those proposals would help convert city-owned assets into taxable properties, Baughn said.
Baughn also wants the city to ask the Oak Ridge Industrial Development Board to prove that the payment-in-lieu-of-taxes, or PILT, program “has provided a return on investment great enough to justify the abatements provided.”
She said the voluntary payments from tax-exempt organizations could be negotiated by a team of representatives from Oak Ridge, Anderson County, and Roane County, along with their respective property assessors.
In her column, Baughn said the city borrowed $7.3 million to build the golf course on Edgemoor Road in east Oak Ridge in 1998 and still owes more than $4 million.
“Even if we had to sell it at a loss, we’d realize an immediate annual savings of $500,000 of debt service payments that we would otherwise continue paying through 2021,” she said.
She said the property used by the Chamber in front of the Oak Ridge High School on Oak Ridge Turnpike is a prime piece of real estate, and the Chamber pays the city roughly $600 per year to lease the land.
In its own guest column, the Chamber said it owns the building and leases the land.
“The original lease was negotiated and signed in the 1960s and has been renewed and amended several times since then,” said Chamber President Parker Hardy and Board Chair Stephen Whitson. “The lease contains a clause through which our lease rate is adjusted annually based on the Consumer Price Index. While the Chamber does certainly benefit from certain favorable terms of the lease, it is important to note that the building will become the city’s should the lease not be renewed.”
Regarding tax-exempt organizations, Baughn said those property owners, their employees, and their patrons receive many of the same services as their non-exempt contemporaries. She said cities across the country have successfully negotiated voluntary PILTs from exempt entities such as hospitals, universities, and cultural nonprofits.
“The notion of collecting PILTs from nonprofits is likely not without precedent in Tennessee since our laws specifically address such agreements,” Baughn said.
She said conservative estimates indicate that there are hundreds of millions of dollars’ worth of untaxed property whose nonprofit owners may be both able and agreeable to similar arrangements.
“Given their benevolent missions, wouldn’t they want to pay their fair share?” Baughn said. “We won’t know if we never ask.”
The agenda for Monday’s meeting, which includes Baughn’s request, is available here. The meeting starts at 7 p.m. in the Municipal Building Courtroom.
Ck Kelsey says
“She said conservative estimates indicate that there are hundreds of millions of dollars’ worth of untaxed property whose nonprofit owners may be both able and agreeable to similar arrangements.”
The key word is UN-Taxed . That is the problem with County and City governments holding on to properties instead of letting the Free-Market function normally. The properties are more of a benefit when they are on the Tax Rolls and not in the category of Non-Performing assets.
Keith Hyatt says
What about increasing the DOE PILT? If I am not mistaken, it is pretty low, about the same as it was in 1960. Never hear anyone talk about that, seems with all their employees and managers living in Knoxville, it should be fair game…just curious!!
John Huotari says
The topic of DOE PILTs comes up occasionally at Council meetings. I recall Charlie Hensley, in particular, raising it. I don’t know if there has been an organized effort recently to discuss the issue with DOE. I would guess current federal funding issues would make it a difficult issue now. But I can’t say that for certain.
Ellen Smith says
DOE policy, department-wide, is that payments in lieu of property tax are based on the land use that existed when the government acquired the property. Accordingly, their PILT payments to the city and counties are based on our current tax rates and the assessed value of agricultural property in this area. They aren’t willing to budge on that policy, so there’s not much of a payoff in fighting for more PILT. PILT is not the only route for getting more money from DOE, though. Laws passed in the 1950s allow host communities of atomic energy sites to receive payments for the “special burdens” of being a DOE host community. About 10 years ago, there was a concerted effort (including the hiring of the Baker Donaldson law firm) to get DOE to pay Oak Ridge for “special burdens”, but the effort was abandoned for a variety of reasons (not all of which were good reasons), In recent years, the city and counties have benefited from property tax on private sector buildings at Y-12 and ORNL. DOE had several reasons for using the private sector to build new buildings that could be leased back to the government; one of their reasons was that it makes it possible to pay some tax to the local governments. Of course, the tax on a few buildings isn’t nearly what the governments would get if the entire Y-12 and ORNL sites were private property. At this point, I believe there’s a fear that rattling DOE’s cage over “special burdens” could jeopardize the tax arrangements for private-sector buildings.
Interestingly, because PILT is based on property tax, when property tax rates increase, DOE’s PILT payments also increase.
Dave Smith says
Does this mean that if Trina Baughn lowers the property tax rate we’ll actually get less PILT from DOE?
Ellen Smith says
Yep!
David A. Vudragovich says
WOW! Good question!
Sam Hopwood says
Using that argument why not raise the tax rate and receive that PILT windfall. As several here have opined, few are really complaining about OR’s tax rate and some would not mind paying more. Perhaps they might voluntarily add ten percent to the tax bill you will receive shortly. What do you think?
Ellen Smith says
City officials (meaning senior staff and at least some Council members — I can’t speak for all of them) are well aware that the tax rate influences the DOE PILT. Unfortunately, the DOE PILT is low enough that even a 10% increase in it would not create a big windfall from DOE. However, the effect on DOE PILT is definitely something that is considered when possible tax rate changes are discussed.
johnhuotari says
Thanks for the additional info. I forgot about the private buildings.
Andrew Howe says
Go Trina!
Let’s quit the horribly unfair practice of taxing the heck out of the people who live here while organizations slide by with free passes.
I thought we all learned during the last presidential election that ‘corporations are people.” So tax them as such. All those business use the same govt resources as the people of the city – roads, police, legal, etc – so let them pay their share for it.
If prices increase, so be it. In the long run, if this methodology is applied across the board, the home owners in town *should* see a DEcrease in their property taxes.
That said, our entire property tax institution is outdated and we need a more fair way of supporting local govt than even that.
Again, I’m on the small govt / fair govt bandwagon. There’s room for all on this wagon.
Rick Hasbrouck says
Has there been an accounting on Centennial Golf Course? Is the place losing money? What is the overall cost to the City to maintain ownership of this place?
Andrew Howe says
You can find the city budget on the city site, and it shows the expenses for the golf course. It’s a large chunk, IF I recall correctly.
Mayor Tom told me last summer that it’s not really any kind of money pit (not his words), but when you buy something like a gold course in hopes of drawing people to buy big homes that will then create prop tax revenue, there is, of course, room for a bit of statistical wiggling.
I think my main idea is this: the less the govt gets involved in things like community growth, the more the people who own homes and businesses here have to invest in improvements that will then achieve the goal of drawing people to live/shop here, etc.
Obviously, it could go the other way, too, if we don’t enforce code laws (if all business look like a wreck, nobody will come – but that’s not usually how businesses run). so some level of govt intrusion is always good.
It’s a balance. I just think that if the city is allowed to prosper on it’s own, it will prosper. I think the businesses WILL go out and do due-diligence, for their own good, which will help the whole town be better.
I.E. I don’t think it’s needed for our govt to be in the business of ‘business.’ Just provide the resources and the free market *should* take care of the rest.
Sam Hopwood says
My understanding is that after all these years the golf course is finally breaking even on operating costs. No income from the golf course has ever been applied to the indebtedness.
John Huotari says
Former Council member Ellen Smith said last night that the golf course is making money, with revenues exceeding expenses. I didn’t record all of her comments, so I’m not sure if she was including debt service in that calculation. She agreed with other current council members that now would not be a good time to sell it. Based on what Trina said above, I assume the current debt payments are about $500,000 per year. I don’t have a total of other expenses.
Ellen Smith says
The debt service (principal and interest) from building the golf course
is about $500,000 per year. That’s a lot of money. Unfortunately, there
aren’t a lot of prospective buyers wanting to spend big money on golf
courses these days. If the city were to sell the golf course, the bonds
would have to be paid off immediately, and the proceeds from the sale
likely wouldn’t be enough to pay off the remaining bonds.
Fortunately,
operating revenues from the golf course have been running ahead of
operating expenses (including the costs of major maintenance projects)
pretty much every year, and there’s a healthy reserve in the city “golf
course” fund. That money isn’t going toward paying for the bonds to
build the course in the first place, but at least the golf course
operations are in the black.
johnhuotari says
Thank you for the additional info.
bill says
does the city finance anything at the centennial? agree with trina about the collecting taxes from the non-profits (MMC as well as CofC on their facilities, buildings and holding) and especially cutting the watse spending to the CofC and Visitor’s as they should be paying their own way from the business community.