NEW HARMONY COMMISSIONER CLAIMS COUNTY COULD LOSE TAX
by Dan Barton, Publisher of the New Harmony Gazette January 28, 2018
At a recent New Harmony Town Council Meeting the subject of county real estate taxes was brought up by Plan Commission member Annette Buckland. It appears that Commissioner Buckland is of the belief that if properties in the Business Historic District remain eligible for mixed use, especially allowing first-floor residence as is now allowed, then it will eventually cause a dramatic downturn in tax revenue for Posey County. Not necessarily so! This is yet another unsubstantiated non-fact claim by a supporter of an attempt to change the reliable old Chapter 17 of the Town Ordinance.
As has been brought up many times in the New Harmony Gazette, there is a false fear that some Commission members have of the commercial downtown being taken over by first floor residences. Verifiable facts surrounding this claim have never been borne out.
Now, Tax Fears! Here’s what I learned concerning taxes. Commissioner Buckland’s argument orbits around the belief that these residences will cause a reduction in the tax rate on buildings, from the commercial rate to residential rates, thus causing a revenue loss to the County. She mistakenly asserted that they would drop from 3% to 2%. That is incorrect. The rate would drop from 2.0574% to 2%, but only for the portion of the building that is being used as a residence.
There are currently only two buildings, identified by the Commission, in the Business Historic District out of 25 that reflect any residential use now or in the history of our town. One reported example, on Church Street, was said to be used part-time in that manner. Only one-third of the entire square footage of the building in question is being used. A little over 500 square feet is being applied to residential use.
To satisfy my curiosity about the accuracy of Commissioner Buckland’s claim, I took a trip down to the County Assessors office in Mt. Vernon. As I indicated above, I found that the rate change is marginal at best. Also when a building is converted from straight commercial to mixed-use, commercial/residential, the building can be reassessed by the County. That reassessment would note any improvements to the building for residential use and could likely increase the buildings assessed value, increasing the total tax on the property.
A mock-up of a property such as the one on Church Street, one that the Commission has brought up several times, was done. As it turned out, not counting any improvements, the assessment value as mixed-use would go up a total of $3,700. Even so, the County, according to the mock-up calculations, would only take a loss of $50 per year. However, if there were a surge in properties being sold or used as residential/commercial, then the county would make up the tax loss by reassessments. As the market pushes up the price of these buildings due to greater residential demand, so the assessed value would increase. Making up any small losses, like is shown above.
The other surprise, that I learned, was that these small losses taken by Posey County on the mixed-use downtown property do not compare to the larger losses they take due to the many non- profit, off the tax roll properties, held in New Harmony and in the Business Historic District.
I certainly have not done a survey of these properties or calculated what the entire county loss might be, but one building at 520 Main Street, that’s counted among them, was researched. The 520 Main Street building is a non-taxed property being used as a museum, not a retail storefront. This building, according to the Assessor’s Office and County Treasurer’s Office, creates a loss of $1492 per year to the County. It’s off the tax rolls completely. A far greater loss than $50 per year on the mixed-use commercial/residential property on Church Street. Nearly 30 times greater. This gives you some idea of the real comparative losses in the county regarding these different types of property. Now I’m all for non-profit entities. But we need to keep our arguments about tax losses and building uses in perspective, and above all, accurate.
The other property type that was brought to my attention, during the County Office visit, was a special type of property that we have seen on the increase over the last few years: Bed and Breakfasts. These businesses not only function as business properties but also as personal residences of the owners in many cases. At the same time, though fulfilling a commercial use, the County tells me that they are taxed at a residential rate. The lower 2% rate that was pointed out by Commissioner Buckland.
Why compare all of these different kinds of properties, their tax rates, and tax exemptions, you might be asking? Because each property – Non-Profit Tax Exempt, Bed and Breakfast and First Floor Residential – all contribute something to the economy of New Harmony, each in a different way. Supporting restrictive laws on any one type of property, such as first-floor residential, in the New Harmony Business Historic District is no more needed than laws that would bar Non- Profit Tax Exempt properties from Main Street or advocating higher taxes or a moratorium on Bed and Breakfasts. It would not make good business sense for New Harmony. Let the market decide these issues – not bureaucrats.
There is no residential takeover of the commercial district by residential properties and the tax loss remark sounds like just another mistaken claim by another misguided supporter of an unneeded amendment.
One avid reader of the New Harmony Gazette wrote recently: “I guess I am confused as to the harm that First Floor residences have on business districts. Any residences on any floor improve downtown businesses, as can be seen in any European City. Duuuhh… the more people who live downtown, the more business they bring…. regardless of whether they live on the first floor or second… or third! Why limit where they can live?†Signed: Doc
I take comfort in knowing that there’s at least one person reading the Gazette who sees my point. Thanks, Doc!
