DeKalb County could stand to lose thousands of tax dollars each year if legislation is approved by the Tennessee General Assembly next year calling for a tax exemption for marina owners operating on federal property.
The legislation as introduced this year, exempts from property taxes, any property owned by the federal government and leased to marina owners or operators who lease the federally owned property and make in lieu of tax payments on such property. The bill, sponsored in the Tennessee House of Representatives (HB 1038) by Republican Cameron Sexton of Crossville and in the State Senate (SB 0938) by Republican Bo Watson of Hixson stalled in committee this year.
“I would urge you to contact your representatives and Charles Curtiss , Executive Director of the Tennessee County Commissioners Association, to put some pressure on these guys (state lawmakers),” said county attorney Hilton Conger during Monday night’s county commission meeting. This could be huge if we lose this (tax) money from here on out,” he said.
“I’ve talked to Senator Mae Beavers and State Representatives Terri Lynn Weaver and Mark Pody several times about it and they’re the ones who told me it got put off until 2016. We need to stay on top of it,” said County Mayor Tim Stribling.
Under the legislation, “If any federally owned property is leased to any taxpayer that owns or operates a marina, yacht club, dock, or similar property located on the federally owned property, and the taxpayer has entered into a payment in lieu of tax agreement with the United States or an agency of the United States, then the federally owned property, the taxpayer’s marina or similar property, and any leasehold interest in these properties, shall be exempt from taxation”.
“Payment in lieu of tax agreement” means an agreement requiring that the taxing authorities receive payments or other charges directly from a lessee of the property or from any other sources on account of the property”.
“The exemption shall be provided in the same manner as exemptions from taxation for property owned by this state or political subdivisions and leased by private lessees making in lieu of tax payments”.
This proposed legislation arises as the county tries to collect back taxes from the owners of Cookeville Boat Dock who have refused to pay their ad valorem (property) taxes since 1998. Their total tax bill now exceeds $200,000 including interest and penalties.
As WJLE first reported last month, Circuit Court Judge Amy V. Hollers recently found the boat dock’s claims that such a tax was a violation of the U.S. Constitution’s Supremacy Clause and was discriminatory under Tennessee’s Constitution are not valid. In her ruling, Judge Hollars wrote “neither the Supremacy Clause nor any principle of state law prevents DeKalb County from assessing Cookeville Boat Dock for its ownership interest in the boat dock facilities. The court must reject Cookeville Boat Dock’s constitutional challenge to the assessment of ad valorem taxes on its property.”
The boat dock had argued such a tax could be characterized as “double taxation” since it pays fees to the United States Army Corps of Engineers which are used, in part, to pay DeKalb County a sum in lieu of taxes. The owners of the dock further argued a section of Tennessee’s Constitution “violates the Supremacy Clause of the Constitution of the United States by discriminating against a lessee of the United States in favor of lessees of the State of Tennessee.
The judge said the boat dock’s attempt to “raise a ‘double taxation’ argument fails because the amount received by DeKalb County from the lease payments to the federal government is not a tax by the county.”
She went on to rule that “it is well-established that the Supremacy Clause does not prevent a state or local government from imposing a tax on an individual or a corporation ‘using government property in connection with a business conducted for its own private gain.’”
In conclusion, Judge Hollars ordered that the boat dock “pay the unpaid ad valorem taxes assessed for all years in question, together with all applicable penalties and interest.”
The owners of Cookeville Boat Dock could still appeal the judge’s ruling. “I checked with the (county) tax attorney Friday and he said he had talked with the boat dock’s attorney and they haven’t made up their mind whether they are going to appeal it. Their appeal time hasn’t run yet,” said County Attorney Conger.
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