Property valuations could affect tax abatement programs

The 2005 property valuations on Downtown property could affect the City's use of property tax abatements as a tool for economic development.

In an October meeting of the Finance Committee, Councilmember Roxanne Qualls requested information about whether the Hamilton County Auditor's Office had increased the value of the land while decreasing the value of the improvements.

County valuations are based on a total of both values.

According to the auditor's office, there has been no change in valuation methodology.

However, there have been some increases in land values and decreases in improvement values due to the sale of Downtown parking lots, which (property sales) is one factor used in the valuation process.

This change has implications for property owners with tax abatements. Property tax abatements are generally only applicable to improvement value, so a rise in land value--even without a corresponding rise in total property value--could increase those owners' tax liability significantly.

It could also be damaging to tax abatement programs in general, because rising land values and falling improvement values could result in less property eligible for exemption, and therefore fewer opportunities for redevelopment.

The City is closely monitoring the effects of the 2005 valuations on its economic development programs but has no current plans to make changes.