Overview of Proposed
Metro Property Tax Referendum &
"Nashville Taxpayer Protection Act"
- On February 28, Greater Nashville REALTORS® and Nashville Area Chamber of Commerce released an independent Metro Finance Study to educate our members and the public on Metro Nashville’s budgeting and financial condition.
- On April 28, Mayor Cooper submitted FY21 Operating Budget, including a 32% property tax increase.
- On June 15, Greater Nashville REALTORS® sent a letter to Metro Council on Budget Proposals.
- On June 17, Metro Council adopted an FY21 operating budget, which increases Metro’s property tax rate by 34%. With this increase, Nashville still has a lower property tax rate than Knoxville, Memphis, Chattanooga, and other peer cities across the country. Nashville’s current rate of $4.22 remains below Nashville’s 25-year average of $4.30. The most recent rate of $3.155, before this increase in 2020, was the historic low of Nashville’s tax rate since becoming a metropolitan government.
- On August 26, 4 Good Government filed a petition for a referendum to repeal the property tax rate increase and limit sale/lease of metro land, bonds, sports teams and open records. (Details provided under Five Key Components and potential Impacts section below)
- On September 14, Mayor John Cooper’s office released a list of expenses and service cuts Metro would be required to undertake if the referendum passes. The proposed amendment would immediately move the budget out of balance and create a $332 million shortfall for the current fiscal year. As a result, Metro would be compelled to take immediate corrective actions to comply with state law and the Metro Charter’s balanced budget requirement. Few parts of Metro Government, including emergency services and schools, could be spared significant reductions or eliminations, and nearly all capital projects would be required to be halted.
- On September 15, Mayor Cooper and State Comptroller Justin Wilson addressed the Metro Council, outlining the impact to the city of the passage of the referendum, up to and including a state takeover of Metro’s finances, if Metro cannot balance its budget.
- On September 15, Metro Council approved (33-4) a resolution by Council Member At-Large Bob Mendes, using the Council route to propose a charter amendment to go to referendum. This resolution was created to oppose the 4 Good Government referendum. Mendes’ charter amendment will only go on the ballot if the 4 Good Government charter amendment is on the referendum. If passed, Mendes’ charter amendment would retain the charter as it is written and works today, essentially nullifying the 4 Good Government charter amendments.
- On September 17, Greater Nashville REALTORS® Board of Directors and Legislative Committee met with Metro Finance Director Kevin Crumbo to get details about Nashville’s budget and the effect of the referendum on the city if passed.
- On September 25, Metro Election Commission met and voted (3-2) to seek a declaratory judgment from the Chancery Court to decide the legal merits of the 4 Good Government referendum/petition. If the Court rules that it should be on the ballot, the election would be Tuesday, December 15. The Metro Election Commission voted unanimously to put Council Member At-Large Bob Mendes’ proposed charter amendment on referendum if the 4 Good Government charter amendments are on the ballot.
- On October 9, the Davidson County Election Commission filed a lawsuit to seek guidance on the petition by 4 Good Government for a referendum. The election commission is asking for an expedited decision from the court on whether or not the petition satisfies the legal requirements for a ballot measure. After the commission’s meeting on September 25, in which they allowed public comments from both opposition and supporters of the referendum, members of the commission decided they should seek judicial guidance and clarity from the courts before voting on whether to approve placing the referendum on the ballot. Part of their concerns is that spending $800,000 on a special, referendum election only to have it challenged and held up in court benefits no one. A hearing date before Chancellor Ellen Hobbs Lyle has not been set.
- On October 16, Chancellor Ellen Hobbs Lyle held a preliminary meeting with all parties named in the lawsuit to discuss some administrative issues and set some framework to begin the process of bringing this case to trial. The trial dates of Monday, October 26, through Wednesday, October 28, have officially been set, which barring any major delays would still allow for an outcome to be decided with enough time in advance for the Election Commission to prepare for the proposed December 15, date for the vote on the referendum.
FIVE KEY COMPONENTS OF THE
"NASHVILLE TAXPAYER PROTECTION ACT"
PETITION AND POTENTIAL IMPACTS
On September 17, the Greater Nashville REALTORS® Board of Directors and Legislative Committee met with Metro Finance Director Kevin Crumbo to get details about Nashville’s budget and the effect of the referendum on the city if passed. The details of that meeting and additional information provided from the Mayor’s office is detailed below.
1. PROPERTY TAX RATE
If passed, the referendum would limit property tax rate increases to no more than 2 percent per year after January 1, 2020. Larger property tax increases could be approved via referendum. This may not keep pace with inflation alone.
- The referendum would nullify the 34 percent increase adopted by Metro Council in June 2020.
- The Mayor’s Office has indicated that nullifying the property tax increase results in an immediate loss of $332m in property tax revenue for the city.
- The Mayor’s Office has indicated that if the FY21 property tax increase is rolled back, the city will face a $332m shortfall resulting in this list of proposed cuts (including schools, public works, fire, police, parks, libraries, permits, licensing and inspections).
- Impact on Metro’s budget:
- Property tax bills are mailed from Metro to property owners starting October 1. Roughly one-third of property owners pay their taxes ahead of the February deadline, generally by December, representing up to $500m in revenue. If these property owners delay payment in an attempt to wait and see the outcome of the referendum, Metro could face even more immediate cash flow issues.
- To address cash flow issues and an unbalanced budget, Metro may begin making changes to its budget – spending freezes, cuts to non-essential services, etc. – as early as October.
- With the introduction of this referendum, Metro’s bond agencies and creditors are left to question if Metro can pay its bills. Which in turn, makes any borrowing by Metro even more costly due to an increase in interest rates.
- Metro’s Director of Finance had sought to refinance over $500m in Metro debt in early FY21. This refinancing would have resulted in $9m in savings in FY21 and over $40m over a 15-year period. This refinancing was delayed at the recommendation of the bond agencies, who suggested that Metro’s rating would be downgraded due to the uncertainty created by the referendum.
- The State Comptroller could determine that the State needs to take over Metro’s finances if Metro doesn’t have a balanced budget and some money in reserve for emergencies. Budget/policy priorities could be established and implemented by the state rather than retaining local control by Metro government.
- Damage to Metro’s bond rating and ability to borrow money at lower interest rates for needed investments.
2. SALE OR LEASE OF METRO PROPERTY
If passed, the referendum would require a supermajority of Metro Council Members approval (31 out of 40 members) of sale or lease of Metro real property (parks, greenways, public land). For sale of real properties valued over $5m and for leases exceeding 20 years, decisions would be made by voter referendum; to be applied to transactions after January 1, 2020.
- Current sales and leases that would be impacted include:
- Belmont University lease of Metro property at Rose Park for ball fields used by Belmont and the Edgehill neighborhood (approved at Council on September 15, 2020). If the petition were law already, this lease to Belmont for a batting cage facility would have required a countywide referendum election.
- Upcoming lease of land for North Nashville transit hub at 26th Ave. N. and Clarksville Hwy.
If passed, the referendum would require approval through voter referendum for all bonds issued or guaranteed after January 1, 2020, exceeding $15m for a specific project (excluding construction of educational classrooms, public libraries, public healthcare buildings, and police and fire stations, and Charter protected facilities).
- Per Metro Finance, this provision could impact the $200m in Metro Water bonds approved in the spring; it is unclear how such bonds would be recalled.
- With the exceptions listed above, this provision would also impact bonds needed for significant developments akin to convention centers, sports facilities, and transit investments.
4. SPORTS TEAMS
Requires termination of contracts if any professional sports team leaves Nashville or ceases playing professional games for more than twenty-four (24) months and requires all related facilities and commercial development to revert to the people. The referendum language specifically sites land leased from the Nashville Fairgrounds.
- While clearly targeting the Nashville Soccer Club, this provision is written broadly enough to impact the Titans and the Predators.
5. OPEN RECORDS
Extends Tennessee Open Records Act’s protections (§10-7-501, et seq). Per the petition, “Public instrumentalities under Title 7 receiving more than $250,000 yearly in Metro taxpayer funds or benefits agree to be bound by this Amendment, and such entities refusing to provide public records shall be barred from receiving public funds and liable for treble the Citizen’s damages, including attorney fees.”
- “Instrumentalities under Title 7” refers to port authorities, sports authorities, metro hospitals, electrical plants, and similar entities.
ALTERNATE CHARTER AMENDMENT PROPOSAL
Council Member At-Large Bob Mendes proposed a second item to be placed on the ballot in December. On Tuesday, September 15, the Metro Council voted 33-4 to recommend to the Metro Election Commission that a second item be placed on the December ballot if the property tax referendum pushed by 4 Good Government is placed on the ballot.
Council Member Mendes argued that the 4 Good Government amendments to the Metro Charter create several internal conflicts in the Metro Charter. Mendes’ proposal, as amended, seeks to remedy those conflicts in favor of how the Charter is written and operates today. In effect, Mendes’ Charter amendment, if approved, would retain the status quo and nullify the 4 Good Government proposal.
NEWS AND RESOURCES
What’s Next With The Petition Referendum?
By Council Member Bob Mendes on September 26, 2020
Comptroller warns Nashville about takeover, again, as Metro faces potential shortfall if property tax hike repealed
By Tennessean on September 15, 2020
MAYOR COOPER SEPTEMBER 14 PRESS RELEASE
PROPOSED CHARTER AMENDMENT WOULD BE A SELF-INFLICTED DISASTER FOR NASHVILLE. Would cause massive cuts to city services including layoffs to first responders.
Mayor Cooper: Petition to roll back property tax hike would 'gut' Nashville, create $322M deficit
By Tennessean on September 14, 2020
INDEPENDENT STUDY OF METRO NASHVILLE'S FINANCES
Greater Nashville REALTORS® & Nashville Area Chamber of Commerce Independent Study of Metro Nashville’s Budget and Finances
On February 28, 2020, the Greater Nashville REALTORS® & Nashville Area Chamber of Commerce released an independent study that was commissioned in 2019 to provide information for our respective boards to shape board strategy and policy in response to budgeting and financial decisions of Nashville. You can read about this study here.