Good morning, Memphis and IHeart listeners you’re on the Real Estate Mortgage Shoppe program with me Jo Garner, mortgage professional with Evolve Bank and Trust. In our studio again this week we have Tom King, Shelby County Real Estate Property Tax Appeal Expert with King and Vaughan Consulting.
Tom and I have been deep in conversation with our program producer Sherry Hardiman about the revenue deficit we have in Shelby County/Memphis. Our Memphis leaders are trying to find a solution for this challenge, and since our show, The Real Estate Mortgage Shoppe program, is on a mission to help our listeners find solutions to their real estate and financing challenges, we thought we would continue our conversation right here on the air and get some ideas for solutions from you, our listeners, on how can we cover the revenue deficit and at the same time, minimize the tax rate increase on businesses and homeowners. We are putting together a Memphis Letter To Our Leaders to give you a chance to share your ideas on the best way to handle our revenue shortfall. Just go to www.mortgageloansblog.com and click on the “Letter To Leaders” tab or give us a call on the air at <901 535-WREC or 901 535 9732.>
Tom says, “Rising mortgage rates have been causing a few challenges –what’s going on with that?”
• Rates have been up and down and all over the board over the last few days and even though these rates might drop a little more, there is also a good chance the mortgage rates will increase even more. . The 30 year fixed rate is about 4.50% with no points and the FHA /VA rates on the 30 yr fixed rate is around 4.25%. The 15 yr fixed rate conventional is around 3.5% to 3.625% with no points. So the good news is the mortgage rates are still relative low and the value on real estate is going up. That sounds like a profitable outcome to me. If you’re thinking about buying a house or refinancing a home, IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY! My very experienced assistant, Susan Belew and I would like very much to talk with you and work on some numbers for you for your planned home purchase or refinance. Just call me off the air at (901) 482-035. That number again is (901) 482 0354 or catch our blog mortgageloansblog.com and let’s talk! I like what our caller Pam said last week “Break through the fear and seek a reputable realtor, a reputable lender or financial advisor to determine how to achieve your real estate goals. Part of determining where you are and where you want to go, is to formulate a budget or get help formulating your budget.
• Tom talks about the fact that property taxes affect your budget and the less you pay for taxes, the more money you have available to build more wealth or enjoy life
Jo shares a quote from Jim Rohn:” You must take personal responsibility. You cannot change the circumstances, the seasons, or the wind, but you can change yourself. That is something you have charge of.”
Tom, since we really don’t have the power as individual homeowners to decide where to set our property tax rates, what CAN we do to take care of ourselves and our families to keep the tax bill on our home as low as possible
Our leaders are working on raising the money we need to cover a shortfall in revenue. The property tax hike from 4.02 to 4.38% got voted down a few days ago and will be voted on again Monday morning.
The Real Estate Mortgage Shoppe program offers solutions for your real estate and financing challenges. Today we want to hear from you. What solutions do YOU propose to cure our shortfall? Call us on the air at 901 535 WREC or post on my blog at www.mortgageloansblog.com under the Letter To Our Leaders tab. We will send your comments to our Memphis and Shelby County leaders so that your voice will be heard.
“Sherry and Tom and I have been discussing possible solutions to the revenue deficit and it seems to me that it comes down to either cutting the budget, raising the tax rate or finding other sources of revenue. Maybe a combination of all three. Sherry, what are your thoughts?”
Some points Sherry made about an alternative revenue source with the PILOT program:
1) Can you give us the formula tbat is used to calculate the frozen and asessed amount in the PILOT PROGRAM? and is this a standard formula?
Answer: The formula to calculate an EDGE PILOT is a standard formula that uses capital investment, jobs, salaries, location of the project among other categories to determine the PILOT term.
EDGE has received national recognition for being “the most transparent economic development agency in the country” this year. For a full break down on how each PILOT is calculated and to get details of every PILOT EDGE approves, go to our website, growth-engine.org.
2) In doing research, we came upon an article about CCRFC Pilot program’s formula that included an additional
25% from county home owners that went to the schools? Can you explain this and talk a little bit about the difference?
I assume by CCRFC you are referring to the Center City Revenue Finance Corporation. This is a different PILOT program that Downtown Memphis Commission runs. I can’t speak to their program. All EDGE approved PILOTs can only receive a maximum abatement of 90% City and 75% County taxes for the term of the PILOT (maximum term is 15 years). Not all PILOT recipients receive the maximum abatement. The taxes that are paid during the PILOT, like they are after the PILOT, are administered by the City and County governments respectively.
3) Is renewal of the process automatic or is it dependent upon an improvement-enhancement to their business?
And what is the time fram of the renewal?
PILOTs are not renewed by any means. There are a very few companies that receive multiple PILOTs over the span of many years, but these typically are for new projects and new investment. For example, FedEx received a PILOT last year, but that was only for their NEW Flight Simulator Training facility that they were looking to put at many different locations across the country.
4) How many different PILOT PROGRAMS are there in Shelby County? EDGE, Center City Revenue Finance Corporation and the Health and ED Board. Arlington, Bartlett, Collierville, Germantown and Millington also all grant PILOTs for their respective municipalities.
5) There are many concerned home owners in the city and county who feel that the program should be
streamlined in time and scope to benefit the city better in this economic climate. Have those sentiments reached your office? And what are your thoughts about that? Also, is there an avenue where those sentiments and other ideas to generate revenue, can be collected and considered?
EDGE PILOT projects provide a substantial amount of revenue and benefit to Memphis and Shelby County. Since EDGE was created, EDGE projects have created $1.1 billion in new capital investment, created/retained 6,524 jobs and generated $476 million in new tax revenue for Memphis and Shelby County.
EDGE PILOT projects are designed to provide the minimal amount of public incentive possible to attract or retain business in Shelby County. Every project goes through an analysis to ensure the benefit of the new investment and jobs surpasses the amount of tax benefit provided.
Companies that receive a PILOT are required to pay a competitive wage, provide benefits, commit to spending at least 25% of their new capital investment with minority and locally-owned businesses and submit to EDGE’s compliance program.
The EDGE diversity program alone has provided a substantial economic impact to both minority and locally owned businesses.
The International Paper and Nike projects alone account for almost $200 million in commitments to locally and minority-owned firms in Memphis and Shelby County.
7) How much weight does the PILOT PROGRAM carry in the presentation to potential business that the city want to relocate here? And can you give a general view what is offered) of the presentation?
Answer: I can’t speak to the presentation however the PILOT program is the main, local tool used to recruit and retain business in Memphis and Shelby County and is similar to many other programs found in most major cities.
8) What are the pros and cons of this program, in its present state, for the City (in terms of revenue)? The pros are clear in that PILOT projects provide much needed jobs to our community while generating significant new tax revenue. It’s important to understand that not only are PILOT projects generating significantly more new revenue than is being abated, PILOTs are limited over a term. This means when the term has expired, those companies go back to paying full taxes on on all their assets. Take for example Nike which located to a long vacant industrial area in North Memphis. Not only will the City and County earn significantly more tax revenue on the property during the PILOT term because the once vacant land is now developed, but once the PILOT expires and Nike begins paying full taxes, our community will go on to earn millions in new property tax revenue because the PILOT drastically increased the value of the property.
Answer: Or take the Mitsubishi project for example. Just look at how this project will positively impact revenue in Memphis and Shelby County:
**Project Profile**
Capital Investment $197,071,224
Direct New Jobs 281
Indirect Jobs 498
Average Wage $49,790
Total Wages $42,138,519
**Economic Impact**
Property taxes prior to project
$43,525
Property Taxes with PILOT
$701,942
***Net Gain Annually Now***
*** $658,417***
Property Taxes After PILOT
$3,823,883
Total Economic Impact $361,445,081
**Largest minority contract every issued by the city, approximately $9.0 million, for sewer line relocation for the Mistubishi site.
**The ongoing annual spending by the company will likely be millions with local businesses for supplies, materials and services.
Questions answered by Tom King
1. Even if the tax assessment value is less than 2012 but the tax rate goes up about 10%, what would the difference be in what someone in Cordova pay in real estate property taxes?
2. When is the deadline to appeal your tax assessment value?
3. What is the process to appeal your tax assessment value?
Questions answered by Jo Garner
1. How does the higher mortgage rate from May 2013 to July 2013 affect the homebuyer or the customer wanting to refinance their home?
2. What are the common denominators shared with very successful business owners vs business owners who are not experiencing success besides the ratio of income to debt?
3. How are you as a loan officer able to find income to qualify self-employed borrowers that other mortgage officers miss?
Real Estate Tip of the Week (Tom King reminding everyone of the tax appeal deadline and the steps they need to take)
Jo has two announcements:
1. Talk Shoppe offers free networking and information to anyone interested in real estate or business. This Wednesday 9A to 10A at DeVry University 6401 Poplar Ave 6th floor in Memphis, Latosha Dexter, Employment Law Litigation Attorney will be talking about “The Dirty Dozen—12 Ways Small Businesses Violate Employment Laws” For more information go to www.Talkshoppe.Biz
2. Next Wednesday on the Real Estate Mortgage Shoppe program, Attorney Ron Cohen of Premium Title Group will be talking about real estate legal matters. Do you have a legal challenge? Give us a call next Saturday 9A right here on News Radio 600 WREC.
Tom King, Appraiser and certified Shelby County Real Estate Property Tax Appeal Expert with King and Vaughan Consulting (901) 487-6989 www.golowertax.com
Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business for over 20 years. She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 17 years. Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.BIZ She was also the editor of Power Shoppe, a free weekly ezine designed for real estate professionals and others indirectly connected to the real estate industry and currently publishes on her blog www.MortgageLoansBlog.com .
For real estate financing solutions, plug into the Real Estate Mortgage Shoppe program. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, refinancing options, home purchase loan programs, answers and real estate, money-saving tips and more.