Staff recommended rounding up the state’s calculated equalized rates to the the next full penny, according to city documents, resulting in increases of 31/100, 25/100 and 66/100 of a penny for city residents of Washington, Carter and Sullivan counties respectively.
This change comes after Washington County went through a re-appraisal process earlier this year. In a re-appraisal year, the state board of equalization calculates rates designed to the keep property tax revenue raised by the city the same as the revenues generated in the previous year, staff wrote in the agenda packet. Johnson City did not increase the property tax rate in the FY 2020 budget.
Rounding up to the nearest penny, said City Manager Pete Peterson, should help offset any loss in property tax revenue that could occur as residents appeal their property appraisals to the local or state appeal board.
“As the local board or the state uphold the appeals, some of the value that the state determined will be eroded,” Peterson told commissioners. “Therefore there is a probability based on past history that we will lose revenue as a result of the reappraisal and the appeals process.”
Finance Director Janet Jennings told commissioners that revenue loss typically isn’t “terribly significant,” but that the city does lose some ground during this process.
These changes would bring the rounded up rate to $1.71 for Washington County, $1.83 for Carter County and $1.95 for Sullivan County. The state’s equalized rates for Washington, Carter and Sullivan counties were $1.7069, $1.8275 and $1.9434 respectively.
Staff said rounding down instead of up would result in a loss of $143,735 in budgeted property tax revenues for the city.
In an agenda summery, staff said rounding up would keep the city’s tax billing in line with last year’s billing and prevent a budget shortfall.
These new rates would replace the ones included in the city’s FY 2020 budget and are designed to be revenue-neutral.
Commissioners also voted to extend the due diligence period for the sale of the city-owned “Hands On” Buildings at 309, 313, 319 and 323 E. Main St. to AC Commercial Properties GP. Johnson City and AC Commercial Properties entered into a commercial purchase and sale agreement on May 2. This will extend the due diligence period to Sept. 2.
“This is necessary as the option expires July 31, and we don’t think we’re going to get it closed by then so we’re looking for a 30-day extension,” Peterson said.
In May, the company offered the city $600,000 for all four buildings with the intention of repurposing the properties for retail and residential use, according to city documents.
Johnson City commissioners also approved a $147,000 agreement to commission the creation of a piece of public art called “Legacy Circle,” which will be produced by artists Jeffrey Reed and Jennifer Madden. The artists have agreed to install the artwork on or before Nov. 30 at King Commons Park.
The $147,000 includes a $29,400 “honorarium,” which will be forfeited if the artwork is not installed by Nov. 30.
“That is our incentive to ensure the project is completed in time for the celebration,” Peterson told commissioners.
Commissioner Todd Fowler voted against the project.