Nov. 29—Selling prices of commercial properties outpacing fair market values has prompted Hall County's Tax Assessor's Office to reevaluate commercial lots in midtown and downtown Gainesville — the first of what's likely to be a more sweeping reappraisal of property countywide.

Chief Appraiser Steve Watson described the move as an "equalization project," stating the reassessment of commercial property throughout the county is necessary to ensure fair market values are an accurate reflection of selling prices amid upward trends in residential, industrial and commercial real estate.

"We've seen some sales that prove, to us, that the evaluations we have are not equitable with how we're assessing them, and that we need to make some adjustments there," Watson said. "...we're starting to see development on that end of Gainesville, and in the midtown area, which is exciting for a lot of different reasons. It's starting to spur more interest for investors, and just other people in general that might want to locate a business in that area."

In recent discussions between county and Gainesville city officials, Watson identified Gainesville as a natural starting point for reevaluating commercial property in Hall, specifically for its position as a prime destination for new business in the region.

"(Location) is what's generating the interest in this area," Watson said. "We see a lot of cranes going up...a lot of changes in the square. Inner city living is becoming a more desirable component. (Gainesville) is becoming a more contemporary, vibrant place."

Watson cited an array of factors including new business establishments, more development and greater pedestrian walkability offered by the Highlands to Islands Trail — a planned 35-mile corridor connecting the Rock Creek Greenway to the Gainesville Square — as grounds for an upward adjustment of commercial property values.

"Doors (opening) in the next year or two are going to be a lot more people up and down through there," Watson said. "...what we're finding out is the evaluations we have on a lot of those properties in that area are inferior to what they're actually selling for."

Watson said owners of commercial lots could see higher taxes next year when values increase, depending on where municipalities set millage rates.

"It most likely will be that property taxes on those types of properties will go up, simply because the amount that we increase values can't be completely offset by the amount they roll back the millage rate," Watson said. "...our role is not to increase taxes. Our role is to have fair market value on the property."

With property values set to increase next year, commercial property owners in Hall County have expressed skepticism regarding a potential move to reevaluate those lots in the current market.

Bill Turk, an owner of commercial property by Jaemor Farms in Hall County, said he's still reeling from higher taxes he paid on property last year, and that a move to drive taxes higher through reappraisals could have a negative impact on his business operations.

"I really don't want to pay any more taxes," Turk said. "They hit me pretty hard this last time...I think development's coming but it's not here yet."

Turk said he fears higher property values — and potentially taxes — on commercial lots could dissuade developers who otherwise might look to locate a business in Hall County. If the value of commercial property climbs, Turk said he could instead buy property for commercial use outside of Hall.

"I think (businesses) will find other locations, no question. It's really hard to project your business, especially if you've got leases with your customers, to be able to handle ongoing increases — it makes business difficult," Turk said, adding that he's still in negotiations with tenants leasing his various properties, and he hasn't determined whether he'd have to push additional costs from higher taxes onto them.

Scott Dixon, owner of Scott's Downtown, said that while commercial property he owns in Gainesville could gain value, tax increases amid economic uncertainty and nationwide inflation could also hamper business.

"Of course, I'm never for an increase — everything seems to be increasing...that probably wouldn't be one of the better things to help businesses out at this point," Dixon said. "Any time values go up, there are going to be increases. I think it's smart to not necessarily chase a bubble."

As developers continue to flock to Gainesville and selling prices climb higher across the region, Watson argued that property appraisal isn't arbitrary, but more-so a market driven process. According to Watson, the tax assessor's office must consider a number of real estate elements — including location, square footage, selling price, zoning, topography, accessibility and recent improvements on structures — to achieve fair market value and uniformity between comparable properties.

"The sellers and the buyers are what determine fair market value," Watson said. "We don't determine fair market value — that's determined by the actual market. What we're supposed to do is distribute those values properly among similarly positioned properties."

Watson said he doesn't believe higher reappraised values on commercial property would discourage business activity in the area, expressing confidence that Gainesville will remain a primary destination for entrepreneurs, citing the city's continued investment in downtown development.

"I do not think (higher values) will discourage anyone from coming to Gainesville, Georgia...Gainesville is enjoying a niche that not many people do in Hall County," Watson said, referencing various incentives the city has for aiding development like tax allocation districts.

"People aren't going to not do business (in Gainesville) just because (we) increase property values," he said.

Watson also cited higher prices and outdated building and cost tables, which he said will now be reexamined for the first time since 2015, as additional market changes he believes warrant a reassessment of property values. Those tables, he said, serve as tools for reassessing both land and building values.

"They're stale to say the least, and we all know building costs have increased substantially over the last several years, so the evaluations we have on those improvements probably don't reflect fair market value," Watson said. "...not only will land values be adjusted but so will building values."

Dixon again stressed that now isn't the time to reappraise commercial property at higher values, given ongoing changes in the U.S. economy and the prospect of continued interest rate hikes.

"I think that now we're getting ready to see that there was a good reason for a lot of those rates and increases in taxes and evaluations — to not have followed them — because I think we're getting some normalization of those values with those interest rates going up and all the other inflation that we have," he said.

While there's no definitive timeline when values could rise, or by how much, until land and structures undergo reappraisal, Watson said he expects fair market values in Hall County to move higher after assessments notices are sent to property owners May 5 and that process is underway.