Hamilton County: Commercial property also likely to rise in value

Owners of commercial property in Hamilton County likely will see their property values increase just as much as residential property owners have this year, an official in the assessor’s office said.

“It may even be a little higher,” said Roy Rumfelt, chief deputy to Assessor Bill Bennett.

Commercial property accounts for about 6 percent of the total property in the county, Mr. Rumfelt said. But commercial property tax revenue, according to Assistant Trustee Dawn Patton, makes up about 39 percent of the county operating budget revenue.

Mr. Rumfelt said some commercial property owners could see a decrease in their appraised values, depending on how the property has changed in the past four years.

Notices of commercial property reappraisals should start going out soon to the owners of the county’s 8,000 pieces of commercial property, Mr. Rumfelt said. Reappraisal notices for all 149,000 or so commercial and residential parcels in the county should be out by the end of March.

Jimmy Hudson, a developer who founded Hudson Cos., said commercial property values should “follow script of residential” and rise. Increases are especially likely downtown and in the eastern part of Chattanooga, where the VW plant under construction is expected to fuel residential and commercial growth.

David Devaney, president of Chattanooga-based NAI Charter Real Estate, which specializes in commercial property, said he and his customers have had a hard time understanding the appraised rise in residential property values. He said he is sure many commercial property owners would be surprised by new appraised value.

“It’s going to be a bad time for (notices) to be going out,” Mr. Devaney said.

A number of commercial property owners are dealing with devalued property and decreasing income, according to Mr. Devaney. Decreases in commercial property value have only started recently, though, and have not been of the same magnitude as in the residential market, he added.

Income is the measure the assessor’s office uses to measure the value of commercial properties, Mr. Rumfelt said. Staff members in the assessor’s office look at the income a property has brought in and estimate its potential income, he said.

For residential property, the assessor’s office uses sales data to estimate value.

Whatever the metric, the reappraisal is, by state law, not supposed to bring in any new revenue. Whatever the average increase in property values is, the County Commission must lower the tax rate accordingly.

Not all commercial property owners have to pay their full property tax bills.

A number of companies of varying sizes, such as RiverCity Co., Coca-Cola Bottling Co./United Packers and Alstom Power, have received tax breaks from local governments in the last several years. City and county officials often give special tax benefits to companies that are planning expansions or new projects. Under those programs, companies pay an increasing portion of their taxes over several years.