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Editor’s Note: Following is the second in a series on Lincoln County’s booming real estate market, recently reduced property tax rates, and the outlook ahead as growth is expected to continue across the region for some time to come.



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While Lincoln County’s real estate market, particularly in regard to housing and land sales, may be booming right now, commercial properties here generally aren’t seeing a lot of movement – still, good things are happening, says Paul Braden, the county’s assessor of property.

In April of 2018, the Lincoln County Commission gave its approval to rezoning 126.75 acres on the Lynchburg Highway from agricultural to commercial property, clearing the way for Jack Daniel’s Distillery to begin building warehouses for storage of its distilled product.

Now, a little more than a year later, the first of those warehouses has been completed and filled with 60,000-plus barrels of whiskey – with the warehouse now in use, it will mean $55,000 a year in property tax revenue to the county.

“We’ve already picked up the first one and prorated it for the year,” said Braden in a recent interview with The Times, noting that one of the warehouses is worth about $6.5 million. “Another one is under construction ... Each one of those warehouses is worth $55,000 a year to us – that number was $60,000 before the tax rate fell.”

When the rezoning was sought a year ago, initial plans called for seven warehouses to ultimately be constructed here in Lincoln County. Doing the math, if those seven are completed, Lincoln County could see $385,000 in additional property tax revenues annually from Jack Daniel’s at some point in time down the road.


Possible barrel tax

That revenue, however, has the potential to just about double, depending on the outcome of a recent hearing before an administrative judge at the Division of Property Assessments (DPA) in Murfreesboro, said Braden, referring to ongoing case involving Moore County’s property assessor and Jack Daniel’s.

“Two weeks ago, I went to a hearing on that front ... All the evidence was presented, and Judge [Mark] Aaron said he would make a ruling within 90 days,” Braden said. The Moore County assessor had determined back in 2017 that the company’s barrels are part of the manufacturing process and, therefore, taxable. “According to testimony, those barrels are valued at around $150 a piece I believe ... Considering that each of the warehouses hold 60,000-plus, you’ve got another $6 million worth of barrels.

“That goes in at a 30-percent rate and depreciates pretty quickly over the life of them,” he continued, adding that the barrels roll over, on average, on a four-year cycle. “From the standpoint of personal property, it’s no different than if you’re a contractor and you’ve got a bulldozer – that dozer is part of what you do; it’s on a personal property schedule.

“Case law supports it so far, and it will be interesting to see where it goes,” he said. “As to what we do here, I’ll be bound by the law. I don’t want to get into litigation with Jack Daniel’s – it’s not something we would do.

“But there’s no question if out of that case they find that those barrels are supposed to be taxed, then we’ll tax them. That’s what we’re required to do. If they say they’re not, then we won’t. It’s that clear cut for us.”

Considering how many barrels are housed in Moore County, that county has a lot riding on the case — “The back-assessment I think is around $2.7 million,” Braden said. “That’s huge for them, because their total budget, they generate approximately $5 million in their property taxes.”

Early in 2018 Tennessee’s attorney general rendered an opinion that the state constitution doesn’t exempt whiskey barrels from property taxes. That opinion came as Jack Daniel’s and others pushed for barrel exemption legislation.

If the court determines that the barrels should be taxed, it would also impact other distilleries here in Lincoln County, he said, adding that while the number of barrels here would be substantially lower by comparison, he would still have to add them to the county’s tax roll.

Of course, depending on the case’s outcome, there’s also a good chance for an extended period of litigation.

“The whiskey in those barrels is being taxed, by way of the sales tax, based on fluid ounces,” said the local property assessor. “I’m glad they’re building warehouses here, and if we don’t do anything on the barrels, I’m okay, because I would love to see them build more ... They own, I think, three farms in Lincoln County, and they didn’t buy them to do any reason other than commercial use.”

It’s a tough situation, he added, saying he’ll do what he must but noting, too, that Jack Daniel’s is a good corporate member of the community and affords a lot of people from across the area good paying jobs.

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