An aerial view of Anderson County north of Oak Ridge.
Anderson County property values are decreasing to less than about 85 percent of their appraised values, and Oak Ridge appears to have several types of property that are selling for much less than their state appraisals, including older, low-priced homes and high-priced, high-quality homes, officials said.
All land tracts in the county also appear to be selling for much less than their state appraisals, the Anderson County Board of Equalization told Anderson County Mayor Terry Frank and county commissioners in a July 15 letter.
The board said the Oak Ridge properties selling for much less than their appraised values include low-priced homes built during the Manhattan Project era in World War II and high-priced, high-quality homes that are now unaffordable for most working-class employees. The Oak Ridge properties, as well as land tracts in Anderson County, appear to be selling at about 70 to 85 percent of the state appraised values.
“Because of the apparent decreasing value of our Anderson County and Oak Ridge residential homes as determined by actual sales, we may see a general reduction in the total appraised value for all of Oak Ridge at our next general appraisal adjustment in 2015,” the board said. “This would be an unprecedented event that would create a certified tax rate which results in higher individual tax bills.”
The July 15 letter to the county mayor and commissioners said the Anderson County Board of Equalization has completed its appraisal hearings for 2013 and has submitted its report to the Tennessee State Appraisal Office.
“The median reduction for all cases heard this year was -38 percent,” said the board. “This is the largest general reduction for this board ever.”
The board is chaired by Don Butler and the other members are James Ferguson, Larry Disney, Leonard Abbatiello, and Jack Rains.
“The Equalization Board has issued some sobering news,” Frank said in a Wednesday morning press release. “However, it is an excellent reminder that we need to stay focused on prudent financial management and pro-growth policies. With expansions like Omega Plastics in April 2013 and SL Tennessee in January of this year, as well as new developments in Oak Ridge and the movement on the Uranium Processing Facility project, I’m optimistic if we work extra hard focusing on growth, we can get through this challenge.”
She said she thinks the reductions are the expected fallout from the national economic downturn.
“However, I’m optimistic future growth in Anderson County will help us offset the loss of assessed value,†Frank said.
The Equalization Board’s purpose is to provide a due process for oversight, review and adjustment of property appraisals for property owners in Anderson County. Board members hold detailed hearings, assemble case histories and make adjustments as indicated, and the Board serves as a conduit between the Tennessee administrative judge and Chancery Court which can further review individual cases.
The board said Oak Ridge has had a total of 10 new residential building permits issued in the past year, while Anderson County has had a total of 58 new permits.
“Both are some of the fewest ever annually issued,” the board said. “The Anderson County total appraisal base has grown only 0.944 of 1 percent during the last year, and this is one of the lowest growth rates ever.”
The board said individual property appraisals are intended to reflect 100 percent of a property’s value in their appraisal year, but the same value is used for about five years and actual values change during that period.
“Appraisals serve the more important function of determining everyone’s fraction of the total property base and are the basis on which we share our revenue needs,” the board said. “In recent years, appraisal reviews have become much more demanding as the appraisal targets meet or even exceed 100 percent of the current sales value. We believe that property values are in most cases decreasing to less than about 85 percent of the listed Tennessee appraisal. A survey of area MLS sales indicate that these sales are closing within a range of 92 to 95 percent of the MLS listing price and most listings are below the Tennessee appraisals.”
The letter said the Anderson County Tax Freeze Program covers 1,092 properties, while Oak Ridge has 174 properties. The income base has risen to $38,800, which makes more people eligible.
“The lower family incomes and higher qualifying income level is making this program available to more individuals,” the board said.
About 38 percent of the value of Anderson County is in Oak Ridge, the board said. The county has 31,579 residential properties and 2,387 business properties.
Note: This story was updated at 1:20 p.m.
Andrew Howe says
I get the feeling this quote is slightly out of context, or missing some qualifiers: “This would be an unprecedented event that would create a certified tax rate which results in higher individual tax bills.”
If I’m understanding things correctly, that’s only true if the people re-setting the tax rate choose it to be. I don’t think a ‘certified tax rate’ is mandated by law, and if if it is, it needn’t be set so high that it results in higher tax bills.
I believe they could choose to let appraised values drop and leave the tax rate alone. That would mean less taxes for everyone, and less money for the govt to operate on. Typically, as appraised values drop, the tax rates go up, so ultimately the govt is getting about the same income (or a bit more if we adjust for inflation).
The problem I have with this model is it assumes the govt can get money from it’s people even though the market may have turned down. If the economy is bad, it can lead to poor housing markets. So lower home values may indicate that people have less money in general in their accounts.
The “let’s always get what we got before, or better” paradigm of hiking tax rates to counter lower appraisals values can at times be putting the ‘belt tightening’ burden fully on the shoulders of property owners.
I think it’s a much more fair model to split the difference. The property owners should pay a little less (not as much as if tax rates were never adjusted, but less than if they were raised to completely counter the dropped appraisal values), and the govt would cut it’s budget a little.
Let’s face it, although it may be many things at different times, when it all comes out in the wash govt is a commodity that residents and businesses pay for with various taxes. If times are tougher, people generally buy less goods and services. In that regard, it makes sense for the govt to lose a bit of income during more difficult economies – as we the people who pay for it simply have less money to spend.
For example, in prosperous times I may be able to afford a trip to Hawaii each year. In less prosperous times, I don’t get to take one that often. So can the govt behave. As much as I love the many philanthropic but less than vital endeavours our taxes pay for, maybe instead of always looking to get the same or more from the people, the govt can look into spending less for a while.
Residents first.
Johnny Beck says
Wouldn’t it be more accurate to compare recent selling prices to past selling prices in the same areas for comparable properties? Comparing selling prices to state appraisals doesn’t show a drop in values, it shows the result of raising appraisals during an economic downturn. Roane County did the same thing.
Carol Donath says
Yes, Roane County raised our assessment 34% even though nothing in our neighborhood was sold at that time. I thought then and now, that it was not an accurate assessment, but appeal got me no where. That’s why houses are selling below assessment. It was inflated and the City just goes along with whatever the county does.
Ellen Smith says
FYI to Carol D: The City has no part in assessing property. That’s a county function, done under the direction of the elected county assessor. A city has to use the assessments provided by the county.
Johnny Beck says
Ellen: I wasn’t questioning the appraisals. I was questioning the logic used to get to the conclusions quoted in this article. Blanket statements based on one part of the available data makes a case that could be erroneous. And do Anderson County and Oak Ridge really need more bad publicity, especially based on incomplete data? It’s like saying that Oak Ridge is almost a ghost town just because of the mall.
Carol Donath says
Thanks Ellen,
Denny Phillips says
Johnny, I’m not sure that would not paint an even grimmer picture.
Consider the recent sales of condominiums in Castlewood. Many of these units sold for just $15 k or less for what were originally $45-60 k units.
It’s hard to imagine that during a time of high foreclosure and economic downturn that existing home sales made in the last five years would not reflect an even larger retraction in home values, as many homes have been sold under duress.
Johnny Beck says
Denny,
http://www.trulia.com/real_estate/Oak_Ridge-Tennessee/market-trends/
Take the analysis on the page linked above with a grain of salt. They say “Sales prices have depreciated 22.5% over the last 5 years in Oak Ridge.”, but that’s compared to a spike upward 5 years ago and the current brief slump that we’re recovering from and not the averages. We just came off of another spike in part of 2012, and as I said are recovering from a sharp but fortunately brief slump. Because of the low volume of sales in Oak Ridge year to year, one or 2 high or low value properties can skew the data too. Look at the Median Sale Price and Number of Sales in the middle of 2010 using the 5 year view for an example.
I’d rather have our local leaders and representatives give all of the facts when they say things are good OR bad, not just one subset that may or may not represent the total picture. If it’s worse than what they say, then they will be accused of lying to hide the truth, or of being ignorant of the facts. If it’s not as bad as they say, then they are hurting our public perception based on falsehoods and misunderstandings.
Helen Standifer says
This is surprising because….Welcome to the rest of the country Oak Ridge.
Denny Phillips says
As has been discussed ad nauseum in the past, this doesn’t necessarily effect current homeowners’ tax bills. As Ms. Smith has expertly explained before, the effective property tax rate vacillates to remain revenue neutral.
What this does mean, however, is with accurate property values in place, Anderson County and COR property tax rates are far higher than previously asserted.
“So what?” you say? Well the problem is new construction and development will have to assessed at the new effective tax rate, which is a major drawback for the area. Given that COR combined taxes already dwarf Knox County rates in areas like Solway, Karns, Harden Valley and Farragut, a further spike in tax rates will certainly hinder growth and continue the reputation of those areas as “bargains” compared with our county.
This is likely a contributing factor to the fact that a paltry ten homes were built in the last year in Oak Ridge, while the lower taxed areas of Anderson County outpaced COR nearly 5 to 1, despite only comprising only 60 % of the population.
Expect further tax flight until such time as COR can enact cost saving policies to reduce the tax burden, no easy task given that the COR faces large infrastructure problems with sewer renovations and the promise to provide assistance for major retail projects.
Perhaps it is time to sit down and listen to Trina Baughn’s fiscal policy suggestions again.
Denny Phillips says
A question for anyone out there just out of curiosity:
Is it possible that with just ten new homes being built and the demolition of many houses for the Kroger development, the condemning of properties, and the loss of homes to fires and natural disaster that COR may actually have a contraction in residences?