tennessean.com
Sunday, 12/24/06
Big houses crush value of little ones
Tear-down trend makes many lots worth more than dwellings
By JENNIFER BROOKS
Staff Writer
A house in Belle Meade isn't worth what it used to be.
Marie and J.V. Cowan learned that last year, when they opened their property tax bill and discovered that the home they'd shared since 1965 was now worth $4,300 on the county's books.
That would have been confusing enough, but at the same time their house value dropped to near nothing, the assessed value of the 1.3 acres around it nearly tripled. It added up to a 90 percent tax increase for an elderly couple on a fixed income.
Up and down their street and other streets of Belle Meade that still have large numbers of smaller, older homes, the story is the same: A stone cottage on Lynnwood, built in 1910, valued at $8,000. A $14,000 brick Colonial on Westview. A cozy log cabin on Westview, worth $8,900 as far as the Davidson County assessor's office is concerned.
Because the real value of a home in Belle Meade isn't the house. It's the land beneath the house, in a trend fueled by widespread tear-downs.
That $8,000 house? It sits on two acres with an assessed value of $936,000 — more than double the 2001 property tax estimate.
Almost everyone in Belle Meade is paying higher property taxes these days. They're just not paying them the way most of the rest of us do.
"The dirt under my house is worth less than the dirt under my neighbors' house — because they live closer to Belle Meade," said Metro Council member Emily Evans, who lives on a street that borders Belle Meade. Her neighbors eventually appealed the higher tax value, arguing that "close only counts in horseshoes."
Lots sold, houses razed
Before the 2005 reassessment of county property for taxes, county assessors studied home sales in every neighborhood in town, looking for patterns that would tell them whether homes had gone up or down in value. In Belle Meade, they noticed a curious trend.
Some homes were selling for the same amount of money as a vacant lot.
"Those homes added nothing to the value of the property," said Davidson County Chief Deputy Assessor George L. Rooker.
"People were going in and buying, then turning around and tearing the house down."
The smaller and older the home, the more likely it was to be knocked down so the homeowner could build a large new home on the property instead.
Trend is spreading
Assessments on new construction or refurbished homes bring a much heftier tax bill. For every $4,000 bungalow, there are dozens of million-dollar home appraisals on the same block. The house next door to the Cowan home was "scraped," or demolished, and the new home on that lot is worth more than a million dollars on the tax roll.
And Belle Meade isn't the only place where 2,000-square-foot homes are an endangered species.
"The trend seems to be spreading," said Belle Meade City Manager Beth Reardon said. "If you look at Forest Hills and Oak Hill, you see a huge number of scrape-offs. A huge amount of money being spent."
Rooker agreed. His office is already taking a hard look at home demolition rates in the affluent neighborhoods in southwest Nashville.
If enough homes go down, the land value could go up. After the next property reappraisal in 2009, homeowners in Oak Hill and Forest Hills could be in for a shock on their tax bills.
"The way most people have their property taxes assessed, you have 25 percent of the value in the land and 75 percent in the building. In Belle Meade, it's the other way around," Rooker said.
Mansions affected, too
Even the massive mansions of the rich and famous are losing their value — in some cases, by millions of dollars.
Of the 100 most expensive homes in town — and most of them are in Belle Meade — 51 are worth less today on paper than they were before the 2005 mass re-evaluation of Davidson County's property. The most expensive house in town, owned by health-care magnate Thomas Frist, was valued at $15 million in 2003 but dropped to $7.4 million this year.
The 37-acre Frist estate saw the assessed value of its land jump from $2.9 million in 2003 to $5.1 million this year.
Scrapes are so commonplace in Belle Meade that the city had to hire a full-time building official to keep pace with all the building permits being filed, and it is thinking about hiring a part-time assistant to help.
Scrape-offs multiply
Even homes that aren't knocked down are likely to be gutted and refurbished when a new owner moves in.
"It's mind-boggling," said Reardon, who has seen permits filed to gut a kitchen that a previous owner just refurbished for six figures. "This has always been an affluent community, but over the last 10 or 12 years, the number of scrape-offs has gone up and up."
County assessors watched the trend and began collecting lists of scraped-off homes. Randy Ward, the county appraiser who does the assessments for Belle Meade, collected lists of demolished homes including:
A 1,989-square-foot home on Royal Oaks Drive, demolished in 2003 and replaced by a 9,168-square-foot home with an estimated value of $1.5 million. A 1,648-square-foot ranch home on Westview, scraped the same year and replaced by a 6,576-square-foot home worth $1.17 million.
"As the size of the building goes down, the likelihood that it's going to get scraped goes up," Rooker said. "It gets to the point where if the house is under 5,000 square feet, right away it's suspect."
Appeal did little
The Cowans appealed to the Metro Board of Equalization but only managed to knock their tax assessment down to an 88 percent increase.
"You know what he had the gall to say? He told us, 'Anybody who's going to buy your house is just going to knock it down,' " Marie Cowan said. "I said to him, 'So what you're saying is, you want me out of this house, so somebody can come in and build a $2 million house and bring in more tax revenue for the city? What
y'all are doing with all this extra taxation is, you're trying to run the old people off their land.' "
Her husband passed away this summer at the age of 90, but Marie Cowan, now 87, says she has no intention of selling her lovely little $4,000 home to make way for someone else's mega-mansion.
"We don't want to move," she said. "We plan to stay here."
Taxes sting all over
Architect Mark Harrison, who has lived in Belle Meade and whose firm has been designing homes in the city for the past 25 years, also bristles at the idea that small homes have no value to the community. Belle Meade, he said, has taken pains to preserve a mix of homes, large and small, and has tough zoning codes to prevent overbuilding.
He said his firm has seen plenty of Belle Meade clients who can live happily in a few thousand square feet and other clients who spend years preserving and restoring their existing older homes.
"It's all based on what the clients want and what the property can bear," he said.
And once he moved out of Belle Meade, Harrison found out the rest of the Metro area has its own property-tax headaches.
"I moved from Belle Meade to Woodlawn and added 1,000 square feet to my house. My property taxes went from $4,000 a year to $13,000 a year," he said.
There's a reason, Harrison said, why there's always a line outside the Board of Equalization office, where homeowners can appeal their tax assessments.
"No matter where you live, they're going to get you."
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