City budget hit by tax refund to Tennova

Posted 2/17/19

The Cleveland City Council voted to refund more than $225,000 in overpaid taxes to Tennova-Cleveland after the Tennessee State Board of Equalization determined the healthcare provider overpaid its …

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City budget hit by tax refund to Tennova


The Cleveland City Council voted to refund more than $225,000 in overpaid taxes to Tennova-Cleveland after the Tennessee State Board of Equalization determined the healthcare provider overpaid its 2017 real property taxes.

In addition, the state board ruled that Tennova’s 2018 real property taxes will decrease by $230,250.

The 2017 refund, which is $225,543, has already been paid back to Tennova.

On Monday, the Cleveland City Council voted to approve the the refund, but with some displeasure.

City Manager Joe Fivas said the refund, as well as the lowered assessed value, will have an impact on the city budget.

“This will create about a $450,000 hole in our current year budget for 2017 and 2018,” Fivas said. 

Fivas said the city will need to make adjustments to absorb the shortfall caused by the state board’s change in Tennova’s improved value.

“We are taking some actions for the rest of this year to limit the number of unbudgeted items,” Fivas said. “You get faced with some of these events that cause damage to your budget, but then we just will have to tighten our belts and make it work.”

Mayor Kevin Brooks asked Fivas describe “how we got to this point.”

Fivas explained that Tennova, which is listed as Ocoee Hospital Corporation on the State Board of Equalization documents, appealed an assessment to the state, which ruled in their favor.

“The tax equalization board found the [assessment] was higher than it should have been and said we needed to fix it for 2017 and 2018,” Fivas said.

Councilman Ken Webb asked if the state board identified what the error was.

“Was it an arithmetic error of a judgment error?” Webb asked.

Fivas responded that the city will discuss the matter the county officials.

“We will have a conversation with the county,” Fivas said.

According to documents that were reviewed by city council members, the original payable amount determined by the Bradley County Assessor’s Office was $596,343. After examining the documents, the state board lowered the amount to $370,800 for 2017, prompting the refund.

For 2018, the BCAO determined that taxes were $601,050, which the state board lowered to $370,800. As a result, Tennova’s tax bill will decrease by $230,250.

The county assessor listed the Tennova’s land value at $2,002,200 and its improvement value at $70,940,800. The assessed value was $29,177,200.

The new assessment will consist of the same land value amount, but will lower the improvement value to $42,997,800, with an $18,000.000 assessment – an $11,177,200 decrease.

Tennova-Cleveland is located on 2305 Chambliss Drive in Cleveland.

Bradley County Mayor D. Gary Davis told the Cleveland Daily Banner that while the county will have a $187,000 shortfall in its budget, he is confident the county's conservative budgeting process will mitigate the loss.

Davis said the county trustee has already refunded the money to Tennova.

He said the county always expects revisions to assessed values; however, most result a lower dollar amounts. However, he is hopeful the Tennova tax refund will not significantly affect the county budget due to conservative projections regarding property tax receipts.

"It's a concern," Davis said. "But I'm still hopeful it will not impact the budget.

Davis explained that the county does not expect a 100 percent return on property tax receipts due to similar situations related to property tax assessment challenges, which occur frequently.

He said he is confident the county will meet or exceed the expected tax receipts as expected for its budget.

Bradley County Tax Assessor Stanley Thompson told the Cleveland Daily Banner that 2017 was a reappraisal year, which resulted in the disputed assessed value. He said reappraisal years are on a four-year cycle.

Thompson said Tennova had a market appraisal done which determined that hospital’s appraised value at $36,700,000. However, the local equalization board did not adjust the amount, prompting Tennova to appeal to the state board.

“They went to the next level,” Thompson said.

Tennova’s appraised value for 2016 was $65,646,000, which was a $7,297,000 lower than the original 2017 assessment.

Thompson said reappraisal years can be affected by improvements such as remodels or additions to structures.

Webb asked Cleveland City Attorney John Kimball during the city council meeting if there was a possibility for an appeal of the state board’s decision. 

“It is final,” Kimball said.

Councilman Estes then motioned for the council to vote.

“Holding my nose, so moved,” Estes said.

In other business the city council approved:

•Change Order - Change Order No. 3 with Baseline Sports Construction for Tinsley

Park Tennis Courts ($3,900) 

•Resolution No: 2019-17 -A resolution urging the Tennessee Legislature and Governor Lee to adopt a State Historic Tax Incentive titled The Main Street Historic Rehabilitation and Tourism Revitalization Act 

•Appointment - Wrecker Board - Tisha Hitson for a 5-year term to expire October, 2023 

•Final Passage - Ordinance No: 2019-07 - Amending Sections 8-316 and 8-318 ofthe Municipal Code relative to the number of allowed local liquor store privilege licenses in the City of Cleveland 

•Resolution No: 2019-15 - Extending sewer service to 1617 Lauderdale Memorial Highway

•Resolution No: 2019-16 - Authorizing the Mayor to sign an agreement with TOOT for the installation of a left turn lane into the entrance of Candy's Creek Elementary School off SR60

City offices will be closed on Monday, Feb. 18th in observance of President's Day.

A ribbon cutting for the new Tinsley Park Tennis Complex will be held at 12:15 p.m. Monday, March 25.

The next regularly scheduled city council meeting will be at 3 p.m. Monday, March 25 at the Municipal Building, which will be preceded by its 1 p..m. work session.


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