Knowledgebase-Setting Differential Tax Rates Favoring Greenbelt Property


Information Product

Title:Setting Differential Tax Rates Favoring Greenbelt Property
Summary:MTAS was asked whether the city can set differential tax rates favoring greenbelt property.
Original Author:Hemsley, Sid
Co-Author:
Product Create Date:06/02/95
Last Reviewed on::10/24/2016
Subject:Tax rates; Tax equity; Tax rates--Differential rates
Type:Legal Opinion
Legal Opinion:

Reference Documents:

Text of Document: June 2, 1995

Your question is, can the city set differential tax rates favoring greenbelt property? Except within the Tennessee constitutional and statutory limits described below, the answer is no.

Article 2, sec. 28 of the Tennessee Constitution establishes land classifications for property taxation purposes. Property taxes have to be equal and uniform in governmental units within those classifications. [For the most recent cases upholding the constitutionality of the classifications established by Article 2, sec. 28, see Federal Express Corp. v. Tenn. State Board of Equalization, 717 S.W.2d 873 (Tenn. 1986); Albert v. Williamson County, 798 S.W. 758 (Tenn. 1990). Those cases also speak of the necessity that such taxes be equal and uniform.] One of the classifications contained in Art. 2, sec. 28 is farm property, which is assessed at 25% of its value.

The Greenbelt Law [Tennessee Code Annotated, section 67-5-1005] permits land meeting certain qualifications to be designated agricultural or forest land, or open space, and to be classified and assessed as farm land [based on its present value under rules prescribed in the statute] by the county property tax assessor.

All property is assessed by the county property tax assessor; municipalities no longer have any control over such assessments (with certain limited exceptions that do not apply to your city), and municipalities are bound by such assessments. [See Tennessee Code Annotated, section 67-5-103.] Under the Greenbelt law a municipality has no control over the designation of land as agricultural or forest. Theoretically, it does have control over the designation of land as open space [See Tennessee Code Annotated, section 676-5-1007], but there are obvious limits to that control where a property owner is resistant to such a designation.

In support of my answer respecting the equality and uniformity of taxes within classifications here are the following cases, Tennessee Attorney General's Opinions, and other materials:

- Jones v. Memphis, 101 Tenn.117 (1898)

- Bell v. Town of Pulaski, 184 S.W.2d 384 (1945)

- Corporation of Sevierville v. King, 184 S.W.2d 381 (1939)

- American Bemburg Corp. et al. v. City of Elizabethton et al., 175 S.W.2d 535 (1943)

- Graham v. Spivey, 133 S.W.2d 460 (1939)

- City of Elizabethton v. Carter County, Civil Action No. 13701, Oct. 1, 1976 (Chancery Court for Carter County)

- OAG 92-29

- OAG 84-106

- My letter of March 4, 1992

Let me know if I can help you further in this or any other matter.

Sincerely,

Sidney D. Hemsley
Senior Law Consultant

SDH/

Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.