Mar 22 2007
03:14 pm

An open letter to Mayor Larry Waters and the Sevier County Commission.

Several articles have been written in the past couple of years regarding the lack of funding for infrastructure needs in Sevier County. A TACIR report states that Sevier County is short by approximately $300 million. A bond issuance was recently passed. Schools lack needed funds. A new hospital needs to be built.

I have attended commission meetings, planning commission meetings and have hosted Mayor Waters at a Friends of Wears Valley meeting. Citizens have repeatedly been told by county leaders that development / developers projects do not create additional burdens on infrastructure because 1. Rental cabins are not used full time. 2. Renters do not send their children to our schools. 3. Additional tax moneys collected on sales to tourists more than offset the burden they place on our system.

More after the jump...

Why then are Sevier County citizens now being told that a property tax increase is possible? Why is there a shortfall?

The state of Tennessee passed legislation that allows local governments to collect “impact” fees (fees paid by new construction for additional infrastructure needs – roads, schools, sewer, county oversight of wastewater, storm water, roadside trash collection, etc.). During one planning commission meeting, a developer stated that his sales would be negatively affected if addition fees were added to the construction cost of his rental cabins. Zoning, building permitting and assessment opponents routinely claim that adding a couple of thousand dollars to their $300,000 plus investment/rental cabin commercial business projects would stifle sales. I believe that if an additional few thousand dollars makes or breaks a deal on a $300,000 building then, developers, real estate brokers and those involved in project pricing need to go back to school for a pricing theory refresher course.

I have a solution to the budget shortfalls that face Sevier County citizens: Charge an assessment fee on all new development. A dollar per square foot per new commercial cabin rental / new building should offset the current lack of funds. If priced correctly, this could be a tremendous revenue stream that would benefit all county residents. How much income do you want to generate? Whatever the price, it certainly should pay for all additional demands created by the mountaintop building that’s taking place in Sevier County. It could even be used to create a surplus for future needs or projects (parks, libraries, etc.)

Why should I watch all of the mountains in Sevier County be clear cut, developed, scarred and ruined and then have my taxes raised to pay for that damage? I think those that cause this destruction should at the very least pay for the additional strain they are placing on my roads, sewers, schools and services.

Many people are moving here from communities all over the United States. There is a vast pool of knowledge brought by these newcomers. Ask for public input. Ask for public buy in. Use the experience of this “new” group of residents.

Meeting state legislators is a great step in addressing shortfalls in Sevier County. Using ideas already implemented by other communities instead of reinventing the wheel could set us on a path that other communities will emulate. Leadership and proactive thinking and policy making can move us into and beyond the 21st century.

R. Neal's picture

The state of Tennessee

The state of Tennessee passed legislation that allows local governments to collect “impact” fees

A., I'm puzzled about this. I thought this was the case, too. Bill Lyons, a senior official with the City of Knoxville, said here in a comment on another topic that the state had banned such impact fees last year.

Now I'm confused. But I agree, impact fees seem to be a good way to go.

Bill Lyons's picture

Change in State Law - Adequate Facilities Fees / Impact Fees

It is a confusing situation. The law was changed last year to eliminate any further creation of what had been called "impact fees" that cities and counties had begun to establish and to substitute "adequate facilities taxes." The legislation is more constraining, allowing these taxes only in certain counties labeled as "growth counties" and limiting the tax revenue stream to education-related capital expenditure. This legislation requires a super majority. I have printed a good summary of this change below.

From CTAS County Government Handbook- 2006 Supplement (p143)
UT County Technical Assistance Service

Development Taxes and Infrastructure Funding. Adequate Facilities Taxes.
… Before 2006, some counties had levied adequate facilities taxes on the privilege of development under authority granted by private act. In 2006, the General Assembly authorized counties qualifying as “growth counties” to levy a county school facilities tax on residential development. A county may meet the criteria to be a growth county by one of two ways: (1) the county experienced a 20 percent or greater increase in population between the last two federal decennial censuses (or the county experiences that level of growth between any subsequent federal censuses); or (2) the county experienced a 9 percent or greater increase in population over the period from 2000 to 2004 (or over any subsequent four year period). Before the tax may be levied, the county is required to have adopted a capital improvement program. The tax can then be levied by a resolution adopted by a 2/3 vote of the entire membership of the county legislative body at two consecutive, regularly scheduled meetings. The tax may be levied initially at a rate not to exceed $1.00 per square foot. Square footage is determined based on the total heated or air-conditioned residential living space. Once adopted, the rate of the tax cannot be increased for four years. Once the four year period has run, the county legislative body may increase the rate, but by no more than 10 percent. After any increase, the rate is again frozen for a four year period. Public buildings, places of worship, barns and agricultural buildings, replacement buildings for structures damaged by disaster, buildings owned by 501(c)(3) nonprofit corporations, and buildings constructed in an area designated by the federal government as a blighted, distressed, or urban renewal zone are exempt from the tax. All revenue from this tax is turned over to the county trustee for deposit. The revenue is required by law to be used exclusively for funding growth-related capital expenditures for education, including the retirement of bonded indebtedness. The act establishes this law as the exclusive authority for local governments to adopt any new or additional adequate facilities taxes on development. The act prohibits counties from enacting any impact fees or local real estate transfer taxes in the future by either public or private act. The act preserves existing development taxes and impact fees to the extent authorized by any private acts in effect when the act became a law. The act allows a city or county to revise the dedicated use and purpose of the tax levied by a pre-existing tax from public facilities to public school facilities. Counties that levy a development tax or impact fee by private act under prior law may not levy the school facilities tax authorized by this act so long as they are levying and collecting development taxes or impact fees under the authority of the private act. The act includes language that requires the General Assembly, in the 2010 legislative session, to review the provisions of the act to ascertain the effect on and the needs of those counties which did not qualify to levy the tax under the act.

R. Neal's picture

Thanks once again, Bill. So

Thanks once again, Bill.

So the question would be, is Sevier Co. a "growth county"?

And if so, the way I understand it is that the adquate facilities tax could only be used for capital projects or debt retirement related to schools.

Blount Co. could certainly use this in some areas. I note that the 'real estate transfer' tax proposed by some as an alternative during the last election cycle was apparently outlawed prior to the election cycle.

Bill Lyons's picture

Growth Threshold for Adequate Facilities Tax

Randy, Based on a quick glance at 1990 - 2000 census data it appears that Blount, Loudon and Sevier Counties would meet the growth threshold for consideration of this and that Knox and Anderson Counties do not. And it sure looks to me that this tax is for school capital projects only.

R. Neal's picture

Bill, thanks again for

Bill, thanks again for looking it up. (You make us lazy!)

Tamara Shepherd's picture

Problem in Knox is population *shift*, not *growth*

Drat--I posted a question for Bill on this thread an hour ago, just as my Comcast service went down...

I was recently confused, too, Randy, when I received an invitation from the League of Women Voters to attend a forum on this topic. I couldn't attend the event this week, but our own Knoxnative was a primary organizer. Knoxnative, could you (or Rachel or Leslie) maybe fill us in on what we missed?

Personally, I'm frustrated that the new legislation appears to focus on *county* growth, rather than on *census zone* growth, because the new law's emphasis affords us too little help in combatting problems related to population *shift* (like sprawl and elementary schools serving 1100 kids).

For instance, I made an appeal to Knox County Commission a couple of years ago for school capital funding in my Powell community, citing census data to the effect that although Knox County population growth had been only 13.8% from 1990 to 2000 (too little to trigger KC's status as a "growth county"), two census zones in my community had grown by about 30%, and a third census zone had grown by 72% (causing it to rank as the fastest growing zone in TN, per Gretchen Beal at MPC)! Here, we have housed about 450 students in trailers for nearly 20 years!

My question for Bill, then, is this: Might there be an opportunity in the future to amend this law to focus on census zone growth, not county growth? There's the "urban sprawl" rub...

Bill Lyons's picture

State Govt and Local Tax Policy

Tamara, the general assembly has incredibly wide latitude in regard to the tax policies of cities and counties and home rule on these matters is thus quite limited. After all counties are really extensions of the state government while cities are municipal corporations and creatures of the state. Cities and counties can decide about the property tax rate through the local political process, can set the sales tax rate through local referendum (but with a state prescribed ceiling) and can enact various fees, but the general assembly is the source of authority for all of this down to details such as a specified growth requirement and super majority for the adequate facilities tax.

Your suggestion in re: census zone growth is interesting but leads me to infer that the tax or fee would then apply only within rapidly growing census tracts. I guess you would have to tie the spending to capital improvements necessitated for those areas. That kind of differential tax in a jurisdiction might well run in to constitutional issues. Regardless, for what it is worth, I don't see anything close to the array of political forces at the state level to support such an approach.

Ennui's picture

Does Sevier Co not benefit

Does Sevier Co not benefit from some sales tax exemption thingie? Or is that just Pigeon Forge and Gatlinburg?

Mello's picture

School Facilities Tax

Watch for a great deal of talk regarding this right here in Blount County after the Plain Talk Conference on March 30.


Part of this conference is open to the public.


Plain Talk on Quality Growth
March 29, 2007
Daniel Williams, architect, F.A.I.A, A.P.A
Thursday, March 29, 2007 6:30 p.m.
University Center Auditorium
1502 W. Cumberland Avenue
Free and open to the public

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