If granted, the housing units for people in a state program would be subject to annual payments that are two-fifths of what's being paid in property taxes, according to City Manager Eddie Fuller.
"State law allows those types of facilities to apply for that type of tax abatement," Fuller said, referring detailed questions to Bob Binkley, the attorney who's been counseling Lewisburg's Industrial Development Board on agreements that lead to Payment in Lieu of Taxes contracts.
An independent calculation indicates that payments by Centerstone of Tennessee to the city and the county under a proposed agreement would be less than $4,700, down from a current property tax bill of nearly $11,750 for Marshall Place at 1481 New Columbia Highway.
The "independent living" apartments are for "mentally and physically disabled people who may live alone," Binkley said, citing one of the reasons the facility qualifies for the tax break. "There is a special exemption for that type of housing."
As prepared last week, the tax abatement is based on a calculation of municipal services that are not used by the residents of the facility, Binkley said. Fuller and City Treasurer Connie Edde calculated city services that won't be used by Marshall Place residents.
However, that 60 percent reduction is on the city's property taxes and residents of Marshall Place won't ever use public education. That one part of the county budget consumes about 55.5 percent of all county spending.
"Cornerstone applied for the tax exemption with the State Board of Equalization," the attorney explained. "The requirement is that there be a PILOT (Payment In Lieu Of Taxes) program with the city and the county...
"The PILOT Program requires Cornerstone to pay a percentage that would be approximately equal to the services that they (the residents of Marshall Place) would receive," Binkley said. "None of the residents would need public education."
Binkley's explanation indicated that Marshall Place residents' use of county services would be less than that of municipal services.
"I don't know how they're going to do it," Binkley said of how Marshall leaders might calculate what county services that aren't used by Cornerstone clients.
However, the attorney consulted with County Mayor Joe Boyd Liggett and County Commission Chairwoman Mary Ann Neill last month to alert them of the then-pending decision facing Lewisburg's City Council. The property tax break request was to have been considered by the Council on Oct. 14. That meeting was rescheduled for Oct. 28, a day after the County Commission's monthly meeting.
For the PILOT to be effective during the next tax year, the lawyer explained, it must be approved before Jan. 1, 2009.
Cornerstone of Tennessee owns two parcels of property on State Route 50 (New Columbia Highway) across from the Exxon gas station and its On The Run convenience store at Franklin Pike. Both tracts are 2.01 acres. One is vacant. The other has the several buildings, driveway, parking lot and personal property, all of which is taxable.
Together, the properties are valued at nearly $660,000 and currently subject to the city and county property tax rates of $1.36 and $3.09 per $100 of assessed value. As commercial property, it's assessed at 40 percent.