Saturday, June 04, 2016

Auto Dealership Proposed For Oconee County Won’t Generate Big Tax Gains

Sales Tax Eliminated

Because of the way Georgia tax laws are written, Oconee County will gain only modest amounts of revenue from the auto dealerships proposed for SR 316 at Virgil Langford Road that will be the subject of a rezone hearing before the Board of Commissioners on Tuesday night.

The three key pieces or property that are at the center of the rezone are currently assessed at $648,682, and their value will certainly go up if the rezone for commercial use is approved.

That will result in an increase in property taxes for the county’s government and schools.

State law dictates, however, that the title ad valorem tax the purchaser of an automobile pays goes to the county where the purchaser lives, not to the county where the sale is made.

State law also excludes from taxation the new and used car inventory held by the dealerships.

Services, such as repair of autos, also are exempt from state sales tax.

Rezone Request

The Board of Commissioners will hear four rezone requests on Tuesday night, including one from Elaine Duckett Crane of Mineral Bluff in north Georgia who is seeking a zoning change for three parcels totaling 30 acres on the south side of SR 316 just west of Virgil Langford Road.

From Rezone Narrative

Crane is being joined in the request by Lela Mae Moore Slaton, who owns just less than 3 acres at 1050 Jimmy Daniell Road.

Slaton, according to the rezone narrative, will sell part of her acreage to the future developers of the auto dealership complex to give the project access to Jimmy Daniell Road. Another access will be on Virgil Langford Road itself.

According to the narrative, lots within the development will be for sale to individual new car dealerships or others interested in related businesses.

Project Details

The complex will have multiple buildings totally 160,767 square feet in size and will be built in phases.

A single lot and related infrastructure will make up the first phase. Construction on that initial part of the project is expected to begin in early 2017.

Mercedes-Benz of Athens was identified at the Planning Commission meeting on May 16 as the planned occupant of the first lot in the complex to be developed.

Mercedes-Benz of Athens currently is located at 4735 Atlanta Highway.

Tax Law

According to Oconee County Tax Commissioner Jennifer Riddle, the dealerships would pay normal taxes on the land and buildings, called real property, and on any furniture, fixtures, and equipment, called personal property.

Vehicle inventory that is owned or held in inventory by a licensed auto dealer for sale or resale is not taxed until time of transfer to an entity other than a licensed dealer, Riddle told me in an email message on May 25.

Since March 1, 2013, there is no longer sales tax on vehicle sales, Riddle said.

Sales tax was replaced by title ad valorem tax (TAVT). The rate of TAVT is currently 7 percent, and that rate is set annually by the state Department of Revenue.

The TAVT is paid to the county of the purchaser’s legal residence at the time of title application, Riddle said.

Itemized charges made for repair labor or installation labor are not subject to sales tax, according to the Georgia Department of Revenue web site.

Planning Commission Vote

The Planning Commission voted 5 to 3 at the meeting on May 16 to recommend to the Board of Commissioners that it deny the request to rezone the land from agricultural use to business use, according to the draft minutes of the meeting.

Voting in favor of the motion to deny were Planning Commission members John Laster, Maria Caudill, Chuck Hunt, David Camp, and George Rodrigues.

Voting against the motion were Bill Yarbrough, Chuck Steen and Bruce MacPherson. Brad Tucker abstained.

I was not able to attend the meeting or review the video before I wrote an earlier story on the Planning Commission vote, and I relied on the report of the vote from two people who were present. They said the vote was 7 to 2.

Both had indicated that there was confusion at the meeting on the final vote.

Opposition Voiced

The minutes indicate that 11 people spoke in opposition to the rezone at the Planning Commission meeting, many raising concerns about traffic.

The piece of property owned by Slaton will be joined to that of Crane to give the proposed dealership complex access to both Jimmy Daniell Road and Virgil Langford Road.

Those two roads join and then intersect with Mars Hill Road at what the county has identified as a dangerous intersection with Rocky Branch Road.

Concerns also were raised about water and sewer services being provided to the complex.

Revenue Estimates

The report of the county’s Planning Department staff recognizes that the project makes demands on county services.

“The relative benefit to the public by maintaining the current A-1 zoning on the property includes less demand for County services and utilities, and less demand for additional road maintenance,” that report states.

It isn’t possible to know exactly how much revenue the project will generate above the estimated $6,159 in property taxes paid on the current assessed value. That $6,159 figure comes from the county’s online tax estimator, using current assessed property value.

The rezone narrative states that the total value of the project on completion will be $40 million, but how that will translate into revenue for the county isn’t stated.

Other Zoning Issues

The Board of Commissioners on Tuesday night also is scheduled to vote on three additional zoning requests.

One of those is by Extreme Fireworks of Alpharetta to allow operation of a year-round retail fireworks store in Manders Crossing shopping center at Cliff Dawson Road and Mars Hill Road.

A second request is by Vintage Oak Farm at 6305 Hog Mountain Road to bring an existing operation of a reception hall on agricultural land into compliance with county ordinances by rezoning the land for commercial use.

Faye C. Kellar, is asking the BOC to rezone 1 acre at 1991 Mars Hill Road from agricultural and residential use to office use to convert an existing residental dwelling into an office.

The Kellar rezone request has been before the Board of Commissioners since late last year, but action had been delayed pending approval of the Mars Hill Road Overlay District.

The Board approved the overlay district on April 5.


Dark Horse said...

Hi Lee,
Great article, as usual :-) One thing though, your sixth line states "Services, such as repair of autos, also are exempt from state sales tax.", is a little misleading. Repair of autos always includes the use of parts, which can often be very expensive and are in fact taxed.
Thanks for the great job you do in keeping things real in Oconee County!

Anonymous said...

I'd agree with Dark Horse: taxes are charges on parts used in the repair of vehicles while labor is not. For a Mercedes Benz dealership, parts can run as high as $500 per repair session. That's $15 in sales tax per car, and if 1,000 cars per year are serviced, that's $15,000 per year in sales tax. I'm sure my numbers are on the low side.

Also, you forgot to mention that the "pieces or property" are currently in conservation, meaning they aren't taxed at their full value; your $6,159 property tax estimate is more like $3,000 in property taxes. If the dealership buys the property and sinks $10 million into its building, the property will come out of conservation and will be charged just shy of $95,000 per year in property tax. Using the rezone narrative's estimate of $40 million for full build-out, the development would translate to about $380,000 in property tax per year (you used the tax calculator for the current value, but not for the anticipated value. Hmmm....)

So on a conservative estimate, if the Mercedes Benz dealership is allowed to go forward, the county/school will receive about $110,000 in additional taxes per year. On the high end, the county may collect around $400,000 per year once the property is built out. That means this single development will pay for at least 8 kids' education (or 24 kids on the high end) rather than residential tax payers. Overall, it sounds like a good deal to me!

In good journalistic fashion (and because you strive to be accurate), I hope you'll amend your article and/or publish my post to reflect these facts.

rightway1974 said...

obviously a developer or affiliated with such. The full cost to the tax payers are severely underestimated.

Lee Becker said...

I thank everyone for the comments.

The story says that services are not taxed, and that is correct. As Dark Horse and anonymous state, parts are taxed.

Anonymous notes that the Crane parcels are in conservation easements. Two of the three are, and that does reduce their current tax payments. It isn't possible to make those adjustments via the tax calculator. Anonymous is correct in saying the estimate of taxes paid used here is high. I should have acknowledged that.

Anonymous says that the story should include the estimated tax for the project when it is completed.

The project narrative says only this about the value of the project: "Proposed estimated total value of the project at completion: $40,000,000.00."

It does not explain that estimate or indicate that the property will be assessed at $40 million on completion.

The existing Mercedes Benz property at 4735 Atlanta Highway is assessed at just less than $4 million. This is for 6 acres of land and the improvements on the land.

If a new Mercedes Benz dealership would be assessed at $10 million, it would generate the $95,000 in property taxes that anonymous estimates.


Anonymous said...

Just out of curiosity,right of way, what is the full cost to the tax payer?

Anonymous said...

has there been any discussion about this potential site being used for the move of the epps bridge fire station? i know a few months ago they were looking somewhere in the jimmy daniel rd. area due to access of 316. i could see a similar agreement like they did to approve parkside community between oconee high school and briarwood baptist church by including property for school or fire station to help get it approved.