Finance Committee

CITY OF HENDERSONVILLE FINANCE COMMITTEE November 28th, 2023, at 6:00 p.m. 101 Maple Drive North, Hendersonville, TN 37075 I. Call to Order by the Chairman II. Acceptance of agenda III. Minutes A. Approval of October 24th, 2023, meeting minutes 2-4 IV. Public Comments V. Ordinances and Resolutions Sasse 1. Reading of Resolution 2023-53, a resolution to the General Assembly requesting 5-13 statutory/constitutional authority to adopt new property tax freeze program from increased real property taxes for residential homeowners Clary 2. Reading of Resolution 2023-52, a resolution authorizing the Mayor to enter into a development agreement with Repurpose Sustainable Waste Solutions, LLC for the operation of a solid waste reclamation facility within the City (to be provided under separate cover) VI. Other Agenda Items 3. Discussion with County Commissioner Jeremy Mansfield regarding the Hendersonville Library (verbal update) 4. Sales Tax Analysis Report (to be provided under separate cover) 5. Hotel-Motel Tax Report (to be provided under separate cover) 6. Investment Earnings Analysis (to be provided under separate cover) 7. Stormwater Report (to be provided under separate cover) 8. Other Business VII. Adjournment Anyone needing accommodations due to disabilities, please contact the ADA Coordinator at 615-822-1016 at least 24 hours prior to the meeting. 1  FINANCE COMMITTEE MEETING MINUTES October 24, 2023 CONFERENCE ROOM 2 @ 6:00 pm Present: Karen Dixon, Jeffrey Sasse Absent: Mark Burgdorf Others Present: Mayor Jamie Clary, Jesse Eckenroth, Tamara Ingersoll, Andy Gilley, Rachel Collins, Terri Goodwin, Janna Garton, Mike Cook Called to order at 6:00 pm Motion to Accept the October 24, 2023, Finance Committee Agenda Motion: Jeffrey Sasse Second: Karen Dixon Vote: Unanimous Approval 2-0 Motion to Approve the September 26, 2023, Finance Committee Meeting Minutes Motion: Jeffrey Sasse Second: Karen Dixon Vote: Unanimous Approval 2-0 Citizens’ Comments None Ordinances Reading of Ordinance 2023-25, an ordinance amending Budget Ordinance 2023-11 by appropriating General Funds in the amount of $86,615 for the arts festival and approving the Mayor to effectuate festival agreements Discussion: Good Neighbor Festivals is coordinating the event, including the collection of fees and obtaining sponsorships. Any funds received from this festival will go back into the General Fund. The hope is to be able to appropriate these funds for future year’s festivals; this would be determined during the annual budget process. The FY24 annual budget had $19,500 allocated for the Arts Council that is being used for phase 1 of the arts festival. They have commitments of sponsorships for roughly $34,000 and continue to look for more. The appropriation of the $86,615 would allow the City to contract with Good Neighbor Festivals for phase 2 of the arts festival which includes the actual festival. 2 Motion to recommend Ordinance to BOMA with the addition of Jeffrey Sasse and Karen Dixon as sponsors: Jeffrey Sasse Second: Karen Dixon Vote: Unanimous Approval 2-0 Other Agenda Items Sales Tax Analysis State Sales Tax Analysis – Sales tax for the month of September 2023 totaled $613,204. This represents a $21,244 increase compared to September 2022, and a $34,228 increase compared to this point in FY2023. Local Sales Tax Analysis – As of the date of this meeting, the tax revenues for September have not been received. This analysis remains as it was from the prior meeting. Hotel-Motel Tax Analysis Hotel Motel Tax Analysis – Tax collections for the month of September 2023 totaled $38,880.44. This represents a $ 6,207.44 increase compared to September 2022, and a $20,860.25 increase compared to this point in FY 2023. The Hotel-Motel Occupancy tax rate increased from 2.75% to 4.00% effective August 2023. Investment Activity Discussion: The City of Hendersonville’s interest earnings for the month of September 2023 was $122,624. The total investment earnings year-to-date for FY24 is $410,860. Stormwater Fund Report The current balance in the Stormwater Fund is $924,712.90. Limited revenues come in the first four months of the fiscal year as Stormwater fees are billed and paid with property taxes. Other Business Mayor Jamie Clary spoke regarding not doing withholdings from employees paycheck for items that are outside of City functions. The City already stopped doing withholdings for United Way and employees can choose to make contributions on their own if they desire. In the coming months, the City will be encouraging the police union (Hendersonville Fraternal Order of Police) and the fire union (Hendersonville Fire Fighters Association) to work with a bank to set up automatic withdrawals from employees accounts so they are paid directly from the employees for union dues instead of the dues being withheld from paychecks and then paid by the City. 3 Motion to Adjourn Motion: Jeffrey Sasse Second: Karen Dixon Vote: Unanimous 2-0 Adjourned 6:22 pm ______________________________ Karen Dixon, Chairwoman 4  RESOLUTION 2023-53 Sponsor: Sasse A RESOLUTION TO THE GENERAL ASSEMBLY REQUESTING STATUTORY/CONSTITUTIONAL AUTHORITY TO ADOPT NEW PROPERTY TAX FREEZE PROGRAM FROM INCREASED REAL PROPERTY TAXES FOR RESIDENTIAL HOMEOWNERS WHEREAS, taxes imposed and collected on property for municipal purposes are defined and determined under State law, and a municipal governing body may not enact any laws in conflict with, or are an addition to, the authority that currently exists under State law; WHEREAS, Tennessee Code Annotated, § 67-5-705, Property Tax Freeze Act, currently provides for such a “property tax freeze” only to those that qualify by age and income level. This Resolution is seeking statutory/constitutional authority to extend the program to all residential property homeowners, such that residential property taxes and assessed values are “frozen” until such time as the property is sold, transferred or improved (as defined herein); WHEREAS, the qualifications, calculations and administration of this property tax freeze program are intended to be the same as with that as provided under the current Property Tax Freeze Act; WHEREAS, this tax freeze program would apply only to owner occupied homes that are also their principal place of residence; WHEREAS, the City desires the statutory, and if necessary, the Constitutional authority to enact this property tax freeze program: NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF MAYOR AND ALDERMEN OF THE CITY OF HENDERSONVILLE, TENNESSEE, as follows: Section One: The Tennessee General Assembly is hereby requested to amend State law, and if necessary, seek an amendment to the Constitution, to allow the City of Hendersonville to enact a property tax freeze program such as that provided currently by the Property Freeze Act, but that is extended to all residential real properties that are owner-occupied and principal places of residences, such that the total dollar tax amount the homeowner pays at the time of a City Ordinance enacting a property tax freeze program shall not change until such time as the property is sold, transferred or improved (as defined herein), at which time the property shall then be taxed at any new rate of taxation and assessed value then existing. Section Two: This property tax program, including its qualifications, calculations and administration, shall be governed the same as that which is provided currently under state law for the Property Freeze Act, except that there are no age or income qualifications. The provisions of the Act under Tennessee Code Annotated, § 67-5-705, not otherwise inconsistent with the provisions herein, or with other State law, shall be incorporated herein by reference. Section Three: (1) Under no condition shall any taxpayer receive tax relief for property taxes paid on more than one place of residence for any tax year. 5  R23-53 Page 2 (2) Tax relief shall be provided to only one (1) recipient for a given property for any tax year. (3) (A) “Transferred” as contemplated herein means that as defined in T.C.A. §13-7-602, which are transfers other than sales that are: (1) By the conveyance from one (1) spouse to the other; (2) Are domestic settlement decrees and/or domestic decrees and/or deeds that are an adjustment of property rights between divorcing parties; (3) Are deeds executed by the trustee of a revocable living trust to implement a testamentary devise by the trustor of the trust. (B) “Improvement” means any change to a dwelling or dwelling lot that would properly warrant a change by the assessor in the assessed value of the property for the year or portion of the year in which the improvement is made; and BE IT FURTHER RESOLVED BY THE BOARD OF MAYOR AND ALDERMEN OF THE CITY OF HENDERSONVILLE, TENNESSEE, that this Resolution shall be forwarded to the State delegates for the City for passage by the Tennessee General Assembly; and Adopted this the _____ day of __________, 2023. APPROVED: ____________________________________ JAMIE CLARY, Mayor ATTEST: _________________________________________ TAMARA INGERSOLL, City Recorder APPROVED AS TO FORM AND LEGALITY: _____________________________________ LANCE A. WRAY, City Attorney 6  R23-53 Page 3 LEGISLATIVE HISTORY Resolution 2023-53 Sponsors: Sasse Committee: Finance Date of Committee Meeting: November 28th, 2023 Committee Recommendation: 7 DATE: November 28th, 2023 ORDINANCE/RESOLUTION # Resolution 2023-53 That BOMA considers a resolution to the general assembly SPECIFIC REQUEST/ requesting statutory/constitutional authority to adopt a RECOMMENDATION: new property tax freeze program from increased real STAFF property taxes for residential homeowners. REPORT REPORT PREPARED BY: Jesse Eckenroth – Chief of Operations BACKGROUND: 1 Taxes imposed and collected on property, e.g. property taxes, for municipal purposes are defined and determined under State law, and a municipal governing body may not enact any laws in conflict with, or in addition to, the authority that exists under State law. Programs exist, under State law, that restrict the residential property tax burden, one such program is the Property Freeze Act, Tennessee Code Annotated § 67- 5-705. The Property Freeze Act has ownership, age and income restrictions; age restriction for the program is 65 and income is generally limited at $60,000, such limit is revised from time to time. DISCUSSION: 2 The proposed resolution mimics the Property Freeze Act, with two exceptions: 1. Elimination of age requirement 2. Elimination of income limit Under the proposed legislation only owner-occupied residential homes are eligible for a freeze. If a property is sold, transferred, or improved in such a manner that triggers a reassessment the property is unfrozen and assumes the current tax rate. Owners would have to apply on an annual basis to continue enrollment in the freeze program. Sumner County administers the freeze program on behalf of the City of Hendersonville. It is important to note that the proposed program freezes the dollar amount of the tax liability and does not freeze the tax rate, the current city tax rate is .9187. Property taxes within the city limits are composed of two rates, a city rate of .9187 and a county rate of 2.252, subject to change at the direction of the governing boards. This proposal would not impact an owner’s liability for county property tax, it would only be applicable to the city property tax liability. Note, the resolution is not asking BOMA to approve a freeze program, it is asking BOMA to seek approval from the state regarding the proposed program. 8  2 FISCAL IMPACT: 3 The fiscal impact is undetermined and would depend on future tax rate increases. If tax rate increases are approved by BOMA, owner-occupied residential homes would be shielded from such increases if enrolled in the program. Commercial and all other non-owner-occupied dwelling units would not qualify for the freeze program and would be subject to the impacts of tax rate increases. ADDITIONAL INFORMATION / PHOTOS: 4 N/A ATTACHMENTS: 5 TCA 67-5-705 9  Tenn. Code 67-5-705 [Effective 7/1/2023] Property Tax Freeze Act (Tennessee Code (2023 Edition)) 67-5-705 [Effective 7/1/2023] Property Tax Freeze Act 67-5-705. [Effective 7/1/2023] Property Tax Freeze Act (a) This section shall be known and may be cited as the "Property Tax Freeze Act." (b) The purpose of this section is to provide for uniform and orderly administration of the property tax freeze program for eligible taxpayers in those jurisdictions adopting it. This section is not intended to displace other forms of property tax relief available at the time of its passage except as expressly provided in this section. (c) As used in this section, unless the context otherwise requires: (1) "Base tax" means the property tax due on the principal residence of a qualifying taxpayer at the time the jurisdiction levying the tax adopts a resolution or ordinance approving the property tax freeze under this section. If the taxpayer did not qualify or did not own an eligible residence when the freeze was adopted, "base tax" means the maximum property tax due on the taxpayer's eligible residence for the year in which the taxpayer became eligible on the basis of an approved application. If a taxpayer reapplies after acquiring a new residence or after a period of ineligibility, the base tax shall be recalculated for the year of reapplication and reestablishment of eligibility; (2) "Collecting official" means the county trustee or, in the case of taxes due a municipality, the county trustee or other official responsible for collection of property taxes; (3) "Improvement" means any change to a dwelling or dwelling lot that would properly warrant a change by the assessor in the assessed value of the property for the year or portion of the year in which the improvement is made; and (4) "Principal residence" means the dwelling owned by the taxpayer and eligible as the taxpayer's legal residence for voting purposes. Program rules shall establish the maximum size limits for land that may qualify as a taxpayer's principal residence. The rules shall take into consideration lot size requirements under applicable zoning, as well as property actually used to support residential structures; provided, however, that the size limit shall not exceed five (5) acres. The tax freeze granted by this section shall only apply to the residence and no more than the maximum limit for land established by the rules. (d) (1) The legislative body of a county or municipality may by resolution or ordinance adopt the property tax freeze program provided in this section. The county or municipality may thereafter terminate the freeze program by resolution or ordinance; provided, however, that the resolution or ordinance terminating the program must not have the effect of terminating the program until the following tax year. -1- 10  Tenn. Code 67-5-705 [Effective 7/1/2023] Property Tax Freeze Act (Tennessee Code (2023 Edition)) (2) A municipality that is located in a county that has already adopted the tax freeze program must use the same income limit adopted by the county if the municipality also adopts the tax freeze program and the county has adopted the income limit as set forth in subdivision (f)(3)(A)(iii). (3) A municipality that adopts or has adopted the tax freeze program must use the income limit adopted by the county if the county trustee is accepting tax freeze applications on behalf of the municipality, or is acting as the collecting official on behalf of the municipality, and the county has adopted the income limit as set forth in subdivision (f)(3)(A)(iii). (e) (1) Taxpayers seeking the property tax freeze shall apply annually to the collecting official by the deadline established in program rules, and applicants must qualify on the basis of age, income and ownership of eligible property. The collecting official shall determine whether requirements for eligibility have been met, and the collecting official's determination shall be final, subject to audit and recovery of taxes, including interest at the rates otherwise provided for delinquent taxes under §67-5-2010, if the applicant is later determined to have not been eligible. Any taxpayer who knowingly provides false information concerning the taxpayer's income or other information relative to eligibility for the program, commits a Class A misdemeanor. (2) If the collecting official approves the application, property taxes due on the applicant's principal residence shall be the lesser of: (A) The actual tax due; or (B) The base tax; provided, that the base tax shall be adjusted to reflect any percentage increase in the value of the property determined by the assessor to be attributed to improvements made or discovered after the time the base tax was established. The base tax shall be recalculated in any year in which the actual tax due is less than the previously established base tax for the property, and the recalculated base tax shall apply until further recalculated pursuant to this part. (f) (1) To qualify for the property tax freeze, the applicant shall be sixty-five (65) years of age by the end of the year in which the application is filed. The applicant shall further own and use the property as the applicant's principal residence for which the freeze is sought in the year of application or reapplication and through the deadline date for application or reapplication. (2) In addition to the qualifications stated in subdivision (f)(1), the applicant's income, combined with the income of any other owners of the property, the income of applicant's spouse and the income of any owner of a remainder or reversion in the property if the property constituted the person's legal residence at any time during the year, may not exceed -2- 11  Tenn. Code 67-5-705 [Effective 7/1/2023] Property Tax Freeze Act (Tennessee Code (2023 Edition)) the limit stated in subdivision (f)(3). Income for purposes of qualification means income from all sources as defined by program rules. (3) (A) Subject to subdivision (f)(3)(B), the income limit for the property tax freeze program is the greater of: (i) The weighted average of the median household income for age groups sixty-five (65) years of age to seventy-four (74) years of age and seventy-five (75) years of age or over who resided within the county as determined in the most recent federal decennial census; (ii) The applicable state tax relief income limit established under §67-5-702; or (iii) Sixty thousand dollars ($60,000) if approved by the local legislative body in accordance with subsection (d). Such income limit, if adopted by the local legislative body, shall not take effect until the tax year following adoption by the local legislative body. (B) The income limits in subdivision (f)(3)(A)(i)-(iii) must be adjusted by the comptroller of the treasury to reflect the cost-of-living adjustment for social security recipients as determined by the social security administration and must be rounded to the nearest ten dollars ($10.00). The adjusted weighted average median household income level for each county must be published annually by the comptroller of the treasury. (g) (1) The comptroller of the treasury is authorized to perform income verification or other related services or assistance at the request of a county or municipality, if the county or municipality agrees to pay fees sufficient to reimburse the actual costs to the comptroller of the treasury in providing such services or assistance, unless or to the extent not appropriated by the general assembly. (2) Financial records filed for purposes of income verification shall be confidential and shall not be subject to inspection under the Tennessee public records law, compiled in title 10, chapter 7, but shall be available to local or state officials who administer, enforce, or audit the tax freeze program or requirements imposed under this section. (h) The property tax freeze program shall conform to any uniform definitions, application forms and requirements, income verification procedures and other necessary or desirable rules, regulations, policies and procedures not in conflict with this section, as may be adopted by the state board of equalization through the division of property assessments. History: Amended by 2023 Tenn. Acts, ch. 271,s 2, eff. 7/1/2023. Amended by 2023 Tenn. Acts, ch. 271,s 1, eff. 7/1/2023. Amended by 2017 Tenn. Acts, ch. 299, s 2, eff. 7/1/2017. Amended by -3- 12  Tenn. Code 67-5-705 [Effective 7/1/2023] Property Tax Freeze Act (Tennessee Code (2023 Edition)) 2014 Tenn. Acts, ch. 938,s 1, eff. 5/19/2014. Amended by 2013 Tenn. Acts, ch. 63, s 4, eff. 8/11/2017. Acts 1979, ch. 407, §§ 1, 2; T.C.A., §§ 67-649, 67-674; Acts 2007, ch. 581, § 1; 2009, ch. 68, § 3. SSOT: This section is set out more than once due to postponed, multiple, or conflicting amendments. -4- 13