Chattanooga studies income-based tax freeze for senior homeowners

Maylor Andy Berke explains some of the issues seniors face about their property taxes, while Councilman Ken Smith looks on.  Mayor Andy Berke and District 3 Councilman Ken Smith heard from older citizens concerning the effect of property taxes on Seniors at the North River Civic Center on July 26, 2017.
Maylor Andy Berke explains some of the issues seniors face about their property taxes, while Councilman Ken Smith looks on. Mayor Andy Berke and District 3 Councilman Ken Smith heard from older citizens concerning the effect of property taxes on Seniors at the North River Civic Center on July 26, 2017.

A decade after Tennessee voters first authorized local governments to freeze property taxes for low- and moderate-income seniors, the city of Chattanooga may soon adopt such a freeze to help elderly homeowners on fixed incomes cope with rising property values and taxes.

Chattanooga City Councilman Ken Smith said the city needs to freeze its property taxes for senior citizens living on modest incomes to help them stay in their homes as costs rise and their incomes are often fixed.

"We just went through the latest round of reappraisals, and I think a lot of people had their assessments increase more than they expected, so that has really brought this issue to the forefront," Smith said Wednesday during a roundtable discussion with seniors about the city implementing a tax freeze for many senior homeowners. "I'm willing to introduce such a freeze, and I hope a majority of the council will support it."

Chattanooga Mayor Andy Berke, who plans to unveil to the council on Tuesday his budget recommendations that will likely mean a tax increase for most property owners, said he is studying the idea of the property tax freeze for seniors. Berke voiced support for the concept of protecting senior homeowners on fixed incomes struggling to cope with rising prices.

"Our goal is to tear down the barriers that stop people from living the life that they want in our city," Berke told a group of senior citizens during a roundtable discussion Wednesday about whether the city should adopt a property tax freeze for eligible seniors. "The costs for the city and for consumers continues to go up, and we recognize that many seniors face the double-barreled problem of rising prices without rising income. The point of a senior citizen tax freeze is to try to counteract the impact of rising prices for those on fixed incomes."

Berke said Chattanooga has successfully cut its jobless rate to the lowest level in nearly two decades and attracted billions of dollars of investments in Chattanooga over the past decade. But that growth has helped boost the value of existing homes and, in some popular parts of town, boosted property values and tax rates for longtime residents, including many retired seniors who are living on fixed or limited pensions.

"We don't want our seniors who have lived in their homes for years and who helped build our city to be forced to sell their home or move because of rising property taxes," Smith said.

The tax freeze would allow those 65 and older who own their home and have an annual household income of $38,720 or less to freeze their current property tax bill on their primary residences as long as they live and stay in their homes. The freeze would not apply to home additions or other houses owned by seniors, and the stormwater fees would be exempt from the freeze. Wealthier seniors also would not qualify for the tax freeze.

Homeowners qualifying for the program will have the property taxes on their principal residence frozen at a base tax amount, which is the amount of taxes owed in the year they first qualify for the program. Thereafter, as long as the owner continues to qualify for the program, the amount of property taxes owed for that property will not change, even if there is a property tax rate increase.

If adopted, Chattanooga will be the first city in Hamilton County to implement such a tax freeze, although 31 other cities and 23 other counties in Tennessee have adopted measures to freeze property tax bills for eligible seniors. In Southeast Tennessee, Bledsoe, Bradley, Franklin and Coffee counties and the cities of Crossville, Manchester and Tullahoma have implemented senior tax freezes.

Seniors said they would welcome the property tax freeze to help them cope with rising expenses in their retirement years.

"I think a senior tax freeze would be great - an answer to prayer," said Jean Warren, one of a couple dozen seniors who met Wednesday with Smith and Berke during the roundtable discussion Wednesday at the North River Civic Center in Hixson.

In Chattanooga, the census bureau estimates 15.2 percent of the city's population, or 26,483 residents, are 65 years old or older. But many of those seniors live in rental units or earn more than $38,720 and would not be eligible for the property tax freeze. To get the tax break, seniors would be required to apply for the tax break and prove their income and residential status each year.

Initially, the cost of such a freeze would be fairly minimal, but it would grow over time as property taxes grow because of higher property valuations or tax hikes while seniors in the program continue to pay the same amount as when they entered the program.

Chattanooga derives a majority of its property tax income from commercial and industrial properties, which would not be eligible for any property tax freeze for seniors. Most residential properties in the city also would not qualify because they are either owned by those under age 65 or are owned by wealthier seniors with incomes above $38,720 a year.

The ability for cities and counties to offer a property tax freeze for seniors was adopted by Tennessee voters in November 2006 when state residents voted overwhelmingly to amend the state constitution so the Legislature could authorize counties and municipalities to freeze property taxes for taxpayers aged 65 or older. In 2007, the Tennessee General Assembly approved an authorization act that included income limits, which vary by county.

Contact staff writer Dave Flessner at or at 423-757-6340.

Who qualifies for a senior tax freeze?

If adopted by the city, the senior property tax freeze would prevent future increases in property tax bills for senior who file an application each year and must:* Be 65 years of age or older by the end of the year in which the application is filed* Make no more than $38,720 a year (adjusted for inflation in future years)* Own their principal place of residence, which is the only property that qualifies for the freezeSource: Tennessee Office of Comptroller