Largest Loudon taxpayers contesting property assessments

Appeal of property tax assessments could cost $1M in revenue

By Hugh G. Willett knoxnews.com

Kimberly Clark and DuPont Tate & Lyle, two of the biggest corporate taxpayers in Loudon County, are contesting their property tax assessments with the State Equalization Board.

The move means that municipalities, including Loudon County and the city of Loudon, could face a big hit in revenue if the board sides with the two companies, which are asking to have the appraised value of their property cut by more than half. DuPont Tate & Lyle is seeking a reduction from about $72 million of appraised value to about $30 million. Kimberly-Clark is seeking a reduction from about $50 million to about $20 million.

According to Jane Smith, Loudon County's deputy property assessor, the county won't know how much it stands to lose until the board of equalization makes its decision on the appeal.

Some estimates provided at County Commission budget meetings indicate the county could lose as much as $800,000 in annual tax revenue.

County Commissioner Don Miller, who sits on the panel's budget committee, said he wasn't sure about the $800,000 estimate but termed the financial impact to the county budget as "significant."

The city of Loudon is already feeling the pinch, according to City Manager Lynn Mills.

"It was right at the last minute of our budget process that they decided to appeal their property tax assessment," Mills said.

The city had passed its 2011-12 budget on first reading, but the filing of an appeal by the two companies on the Aug. 1 deadline caught the city in the middle of the process.

If the state appeals board sides with the two companies, the city stands to lose about $200,000 in revenue per year. The Loudon City Council will be faced with decisions about cuts in jobs or services or raising property tax rates to balance the budget, Mills said.

What makes the situation even more complicated for the city is that the outcome of the appeals process may not be known for six months to a year. That means the City Council will have to make budget decisions without the benefit of knowing how much money will be available, he said.

Mills said that he has recommended to council members that they increase the property tax rate by 3 cents from $1.0287 to $1.06. On a $100,000 home the increase would amount to about $7.50 per year, he said.

Both companies faced the county board of equalization in June and had their property values lowered by $10 million each, Mills said. That reduction cost the city about $85,000 in tax revenue, he said.

The decision to appeal is part of an ongoing property tax review at Kimberly-Clark facilities all around the country, according to Bob Brands, director of external affairs for the paper products manufacturer that also has offices in downtown Knoxville.

"We certainly believe in paying our fair share," Brands said. "Right now we don't believe the current assessments reflect the true value of the property."

DuPont Tate & Lyle is faced with the similar competitive issues. The appeal of the assessment is part of a companywide effort to lower the cost of doing business, said Chris Olsen, vice president of community and government relations.

The company, a joint venture between DuPont and Tate & Lyle to produce glycol products from corn, is trying to "balance the needs of local government with the need to be competitive in global industry," Olsen said.

Olsen said the appeals process is designed to determine the fair market value of the property.

"We hope the process meets the needs of local government and Tate & Lyle," he said.

The appeals process starts with the county equalization board and moves to the State Board of Equalization, said Kelsie Jones, executive secretary to the state board. The party making the appeal must show reasonable cause for appeal, he said.

At the state level the appeals process has three stages.

The first stage involves a hearing before a judge where both sides may present evidence. About 90 percent of the cases are concluded after the first stage.

If either party wants to dispute the judge's decision they may appeal to the appeals commission for a written decision that is usually considered final. A third review may be conducted at the discretion of the board of equalization, Jones said.

While the normal time to receive a decision at the judicial review stage used to be 60 to 90 days, in the past few years appeals have increased dramatically as a result of the declining real estate market.

In 2009 the number of appeals jumped from 2,000 to 8,000. In 2010 the number of appeals increased to 10,000, he said.

These days, it's not unusual for the first stage of the appeals process to take up to six months. If either side appeals, the process will take more time, he said.

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8/17/11