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.