Franklin, Macon County debate taxes on old town hall
When a property tax bill for the old town hall building showed up in the Town of Franklin’s mail, John Henning, the town’s attorney, was surprised. The bill called for a payment of $2,872.22 on a property that Henning said, as a piece of public property, should be exempt from property tax.
“If they’re right and it is taxable, then the town theoretically is responsible to collect taxes against its own property, which I have a hard time making any sense of,” Henning said.
It’s true that public property is exempt from taxation, but no government offices inhabit the old town hall building. And, as of July 1, it’s been under lease to a private business, Lazy Hiker Brewing Company. The lease requires the company to put at least $185,000 in improvements to the building and includes an option to buy the property for $325,000.
“It is taxable because it’s not used for a public usage, and the town has leased it out with an option to buy, so it’s their surplus property,” said Richard Lightner, tax director for Macon County.
Lightner brought up numerous examples of instances in which properties owned by typically non-taxable entities could be taxed. For instance, a campground in a national park operated by a private company, the half of the Veterans of Foreign Wars building that serves as a for-profit restaurant or a for-profit daycare run out of a church.
“The daycare is run by an individual or corporation or something. It’s not a church function,” Lightner said. “Well, that is taxable under the law because it’s not a charitable purpose. It’s not a church purpose.”
But Henning isn’t on board with that conclusion.
“We disagree that it is taxable and we’re going to explore what administrative process there might be to resolve that before taking any further steps,” he said.
As the taxing authority, Lightner’s office has the authority to assess all properties in the county for taxation. If it is determined that the building is taxable, the town would likely have to levy its own taxes as well. If aldermen voted to exempt the building after the county had determined it taxable, they could open themselves up to legal action.
“If I was a business owner, I would say, ‘Look, Mr. Brewery Company has an advantage over me because he’s not paying city taxes and I am,’” Lightner said.
But if the building is taxed, the town will lose out due to a line in the lease agreement stipulating that no property taxes would be levied and, if they were, that amount would be taken out of the lease payment.
“We agreed to [that] because even though this property is leased, it is owned by a unit of North Carolina government and as such is not taxable,” Henning said.