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Commissioners discuss raising adequate facilities tax for new construction to $1.50 per square foot
Summary
Commissioners reviewed a recently passed statewide law that allows counties to increase the adequate facilities tax on new construction. Supporters said the change would boost school debt funding and reduce subsidy of new development; commissioners agreed to move the item to old business for further study.
Sumner County commissioners discussed a new state law that permits counties to increase the adequate facilities tax on new construction from the amounts set in 1999 to as much as $1.50 per square foot for residential and for commercial/industrial construction.
Commissioner David Klein (committee presentation) said the increase would raise revenue dedicated to school debt and could help slow the county’s need for future property tax increases for school construction. “We’re basically subsidizing all new construction probably to the tune of about 95%,” Klein told the committee, arguing the change would rebalance costs between new development and existing taxpayers.
Why it matters: The adequate facilities tax is levied once at permit time on new construction; by state law the revenue can go to either the county general fund or to school debt but not both. Commissioners noted Sumner County currently dedicates the revenue toward school debt and that raising the tax could roughly double current receipts from the fee (from about $2.8 million a year to an estimated $5.86 million at the higher rate, per figures discussed by commissioners). Commissioners also noted the change is irrevocable for four years after adoption at the county level.
Committee discussion and concerns: Commissioners raised how the revenue would be treated by the school system and whether schools might budget with the expectation of higher receipts. One commissioner asked, “Does it trigger the schools to ask for even more because now there’s going to be more available?” Committee members discussed regional comparisons: neighboring counties’ combined impact/fee structures vary widely (examples cited: Robertson, Rutherford, Williamson and Wilson counties) and Sumner County’s current combined fees are lower than some neighbors.
Procedure and next steps: Commissioners did not adopt an increase at the committee meeting. The item was moved to old business for July so staff and commissioners can analyze fee schedules, legal limits, and potential revenue impacts and to allow further discussion on the optimal rate and fee structure.
Ending: The committee scheduled continued review and directed staff to prepare detailed comparisons and revenue estimates before any final vote.
