Note: This is a copy of a letter from Leonard A. Abbatiello, Anderson County/Oak Ridge Equalization Board representative, to Oak Ridge Mayor Warren Gooch and City CouncilÂ regarding the 2015 Board of Equalization results.
Dear Honorable Mayor Gooch and Members of City Council:
I currently serve as the Oak Ridge representative on the Anderson County Board of Equalization.
The Anderson County Board of Equalization has completed its task of appraisal hearings for 2015. Attached is our report which has been sent to the Tennessee State Appraisal Office. It is the first year ever when there has been a decrease in the total appraisal base, Anderson County’s first in history.
This is also the lightest Board workload in recent history. This year, we evaluated 208 cases totaling $125,886,000 of appraised value, reducing their total to $95,781,000. Commercial appeals are now dominating Anderson County appeals, with the requests for changes in commercial exceeding residential values by 5.6 times. Some commercial cases are expected to also appeal to the state for additional relief.
The purpose of this Board is to provide a due process for oversight, review, and adjustment of property appraisals. The Board holds detailed hearings, assembles case histories, makes adjustments as indicated, and provides a conduit for further appeals to the Tennessee state administrative judge and the three appeals levels above him who can further review all property appraisals.
One individualâ€™s property appraisal is intended to reflect 100 percent of the propertyâ€™s value. This is the general appraisal year when every county property is reappraised, and the appraisal value should fall within a 5 percent tolerance of the current actual sales price.
Appraisals also serve the more important function of determining each owner’s fraction of the total property base and (this) is the basis which distributes the cost of local government operation. It is also the year when the collective reappraisals trigger the computation of a new certified tax rate for every government. This is the tax rate that produces the same annual revenue as the previous year property taxes, and it becomes the basis for the baseline tax base adjustment before taxing bodies consider any new government needs. This is the first time in history that our certified tax rates have numerically increased due to property devaluation.
Within Anderson County, the pre-hearing overall assessment base had decreased to 96.17 percent of the 2014 assessment base. The post-hearing rate was further reduced to 95.43 percent. This is the only known assessment base decrease in our taxing history.
But not all properties decreased in value. Some categories actually increased in value, while others decreased based upon actual current sales records. Property categories that increased in value include lakefront lots and many greenbelt agricultural properties. Greenbelt properties have increased because farm crops and cattle are currently commanding unusually high prices and the demand for these tracts continues to grow. This will place additional taxation burdens on these properties.
All Anderson County communities have decreased in assessed value during this period. This is an unprecedented event, which may result in some higher individual tax bills because of the higher certified tax rates resulting from the reappraisal.
All greenbelt appraisals values are state-computed, with all new greenbelt values controlled by the State Board of Equalization. The greenbelt values are determined from: 1) potential crop income value, 2) capitalization rates, 3) market land value, and 4) a statutory cap value increase. Greenbelt values have been increasing because of increasing crop and cattle values and increasing farming land values.
The assessment base decreases since our last 2014 appraisal for each of our Anderson County governments is as follows:
|Government||2015 Assessment||2015/2014 Percent Change|
|Rocky Topâ€”Anderson County||$20,680,445||97.06|
|Oak Ridgeâ€”Anderson County||$587,318,310||97.02|
|Oliver Springsâ€”Anderson County||$33,463,835||96.19|
These are the assessments that impact the calculation of the certified tax rates. Today, there are no state-provided certified tax rates yet available for these government units. Oak Ridge and Oliver Springs are unique as both contain Roane County properties. About 20 percent of the Oak Ridge properties lie within Roane County and the State of Tennessee has taken over the complete Roane County appraisal process, delaying Roane Countyâ€™s re-evaluation. Consequently, no new certified tax rate can be determined until the Roane County reappraisals are completed.
A sampling of property values is determined every year even when it is not a general reappraisal year like 2015. Anderson County plans to reappraise about 9,000 or about 1/4 of its 39,056 properties annually each year from 2016 through 2019 prior to its next 2020 general reappraisal.
Oak Ridge constitutes about 38 percent of the value of Anderson County. Anderson County has 31,595 residential properties and 2,367 business properties. There have been no major residential subdivisions constructed for several years. Even with the inclusion of a significant number of new commercial properties, such as the new Kroger complex, it has not arrested devaluation.
New residential building in Oak Ridge and Anderson County is minimal. The number of new Oak Ridge residential single-family dwelling permits issued during this year is 20 permits as compared to 17 last year.Â Anderson County new permits indicate that approximately an additional 30 new single-family dwellings have been built. Both governmentsâ€™ new residential structures permitting rates remain historically low, reflecting a continuing stagnant residential development environment.
Oak Ridge continues to be burdened by large pieces of untaxable or undervalued pieces of property. The Industrial Development Board holds roughly 1,000 acres in Roane County worth $6 million which yields no taxes. The city and has granted 50 percent tax reductions to another $60 million in properties. Federal property totaling about 32,000 acres within Oak Ridge is appraised as low value, undeveloped agricultural land by the AECA of 1955. About 20 percent of this land is within Anderson County, the remainder in Roane County. Today, there appears to be little possibility that Oak Ridge will add anymore leased taxable buildings on federal property within the foreseeable future. Additionally, 64 acres of Mall property remain undervalued and fallow. Property tax-exempt properties are increasing at a rate five times the growth rate of taxable properties.
The Anderson County assessment base grew an average of 1.56 percent real growth during the last five-year period. Oak Ridge’s assessment base rate remains virtually unchanged during this period. Both rates of growth are either at, or well below, this periodâ€™s measured CPI inflation rate of 1.57 percent annually.
Oak Ridge appears to have several classes of property that continue to sell for much less than their Tennessee appraisal. These are:
- Low-priced, low-quality, Manhattan Project-era homes.
- High-quality homes costing more than $400,000 whose sales have numbered less than eight annually for several years. These high-priced, high-quality homes are now unaffordable for most working-class employees.
Oak Ridge is also plagued with low-quality, landlord-owned residential homes that are selling at roughly 50 percent below the expected market price of comparably sized well-maintained homes. The Roane County portion of Oak Ridge has about 4,000 of near shovel-ready residential lots that are selling poorly. Anderson County hosts about 1,000 similar undeveloped residential lots. A substantial change in the pace of residential development is not anticipated in our immediate future.
The Equalization Board is composed of five diverse, concerned Anderson County residents who know appraisal methods, this city and county, and are committed to fair equalization. The activities of this Board this year will collectively save its applicants in excess of $550,000 annually in future tax payments while achieving fairness and equality.
It has been my pleasure to serve on this Board and help to inform our citizens about the state’s property appraisal process.
Leonard A.Â Abbatiello
Anderson County/Oak Ridge Equalization Board Representative
cc: John K. Alley, Anderson County Assessor of Property
Janice McGinnis, Budget Director, City of Oak Ridge
Editor’s note: Abbatiello is also a former Oak Ridge City Council member.