Since his election in September of 2019, Mayor John Cooper has been threatening a raise in taxes in an attempt to pull Nashville out of its fiscal downward spiral.
This week, that raise in Nashville’s property taxes became a reality.
With his recommended 2021 budget, Mayor Cooper has proposed a near 32% increase in property taxes.
Now - it’s important to note that Nashville will still have the lowest property tax rate of all of the major cities in Tennessee and hasn’t had an increase in property taxes since 2012.
We’re not here to argue that the property tax raise should or shouldn’t happen - we’re here to discuss the timing and devastation this increase will have on small business owners right now.
We’ve just been hit by a tornado. We’ve been shut down by COVID-19. Why does this increase have to happen now?
What Your Property Taxes Are Intended to Cover
Property taxes are levied upon real estate owners in order to cover services provided by local governments.
For most municipalities, these services include:
Public Parks and Facilities
Public Safety
Sanitation and Trash Services
School Systems
Streets and Thoroughfares
Why It’s Devastating for Nashville’s Small Businesses
For most small businesses, this tax raise will significantly increase their rents.
But why?
If business owners are simply leasing the commercial real estate and don’t own the property, they shouldn’t be worried about property taxes.
Unfortunately for the small business community, that’s just not true.
Most leases are structured on a triple net (NNN) or modified gross (MG) basis. And while we won’t dive into the overwhelming details of commercial real estate leases, both of these lease structures either pass on total or partial responsibility for taxes to the tenants.
That means that any increase in property taxes passes right by the ownership of the property and is billed to the small business owners.
Not only will these businesses be seeing an increase in expenses at a time where it’s already costly to open, operate, and sustain a small business in Nashville, but we’re in the wake of a crippling tornado and shut down by Coronavirus.
There are many small businesses in Nashville that simply won’t survive this hike.
Where is the money from property taxes actually going?
Nashville seems to have an issue with properly allocating its tax dollars.
In 2018, Alex Apple of Fox News 17 and I discussed why Nashville was short on money if it had more tax payers than ever before. After all, we’ve been in the largest economic upswing that Nashville has ever seen - we should be thriving.
The question “Where is the money going?” has been asked for years, but we can’t seem to either figure that out or force a change in our city policies.
Anecdotally, you’ll also hear locals complaining about the school systems, public safety, and streets (no, not 440, that’s on the State) all the time. “They’re underfunded and understaffed,” we’ll often hear - but how?
Where is the money going?
Property Taxes Have Already Increased
Property taxes in recent years, in fact, have increased.
While the city hasn’t increased the tax rate since 2012, property values have been reassessed. With Nashville’s unprecedented economic gains over the last decade, those properties have significantly increased in value and, therefore, the amount paid in property taxes.
In fact, in a post to his business’ Facebook page, Peg Leg Porker owner Carey Bringle states that his property taxes have increased 1100% since he bought the building in 2013. This tax rate increase would bring that increase up to 1600% in less than 8 years.
Why We Need to Help the Small Business Community (And How to Do It)
Small businesses are the backbone of Nashville’s community, economy, and soul.
If we don’t fight to protect the businesses that have made Nashville the “It” city, we will lose them and we will fall right back down the mountain that we’ve fought so hard to climb.
These small businesses are a part of our community’s identity - they are an integral part of what shapes us and our daily lives.
I don’t know about you, but I certainly don’t want to live in a Nashville without Peg Leg Porker and the countless other small businesses just like it that have made our city great.
Here’s How You Can Help
Email or call your local councilperson. Many of them are also highly active on Twitter.
And be kind to them. They work tirelessly to fight for their constituents and their constituents’ needs, an often-thankless job.
Let them all know that you do not support these tax rate increases and that we need to work together to find other ways to solve our city’s fiscal issues without punishing small businesses.
Share This Article:
Featured
Mastering Industrial Real Estate Analysis: Key Metrics and Valuation Methods
Whether you’re a beginner or seasoned investor, industrial real estate offers unique and profitable opportunities, but understanding how to evaluate deals effectively is essential for success in this sector.
Read More →
Industrial Real Estate Trends to Watch in 2024
Over recent years, industrial real estate has undergone significant growth and transformation, fueled by a myriad of factors that are shaping its trajectory both now and in the future. Today we are going to dig into a few of the trends in the industrial real estate market and discuss some tips for how to navigate these trends.
Read More →
Nick Johnson Joins The Cauble Group as Associate Broker
The Cauble Group, a leading Nashville-based commercial real estate firm, is proud to announce the addition of Nick Johnson to our elite team of brokers. Bringing over 7 years of invaluable industry experience, Nick will take on the role of Associate Broker.
Read More →
The Rise and Fall of WeWork (5 Takeaways for CRE Investors)
The story of WeWork captured imaginations with its vision of revolutionizing office spaces for startups and entrepreneurs. Backed by billions of investment capital, enigmatic co-founder Adam Neumann aggressively expanded their co-working locations across the globe at a breakneck pace.
Read More →
Everbowl To Expand With Four New Locations In Greater Nashville
The Cauble Group, a leading Nashville-based commercial real estate firm, today announced it has been retained as the exclusive broker for up-and-coming acai bowl purveyor everbowl, to secure retail spaces for four new locations coming soon to the greater Nashville area.
Read More →
How to Decide Whether to Own Or Rent Commercial Property
Commercial real estate is a cornerstone of the business world, offering opportunities for investors to secure their financial future. One of the most critical decisions you'll face in the realm of commercial real estate is whether to own or rent a property. In this exploration, we will break down the complexities, allowing even beginners to grasp the key factors that differentiate these two options.
Read More →
What Is Industrial Outdoor Storage (IOS)?
Let’s breakdown the concept of industrial outdoor storage, explore the significance of industrial outdoor storage within the broader context of commercial real estate, and shed light on why it's a trending topic in the world of commercial real estate investing.
Read More →
How to Start a Self Storage Business
Having a self-storage business can be a top money-maker in the real estate industry.
In fact, it had the lowest default rate of any commercial property during the pandemic of 2020, making it not only a potentially lucrative investment, but also relatively stable.
This step-by-step guide will walk you through the process of launching your own self-storage facility, from planning and securing financing to construction and management.
Read More →
Everything You Need to Know about Tenant Improvement Allowances (TIA)
If you have ever started a search for commercial real estate, you likely know that it is almost guaranteed your new space will require some form of build-out. Although looming construction costs can be intimidating, tenants have the option to push for a tenant improvement allowance in order to help mitigate the costs associated with a build-out.
Read More →
The Ultimate Guide to Industrial Real Estate
Industrial Real Estate can be broadly defined as all land and buildings which accommodate industrial activities including production, manufacturing, assembly, warehousing, research, storage, and distribution. Here’s everything you need to know about industrial real estate.
Read More →
About The Author:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors as a board member for the Real Estate Investors of Nashville. Learn more at www.TylerCauble.com