At one time the NCR Corp. manufacturing complex here - employer of 20,000 workers - was one of the nation's largest.The 30-building complex, spread out over more than 100 acres, made a sizable contribution to the city's tax base.
In 1972 it was [WORD ILLEGIBLE] million. But the buildings, where cash registers and aditing machines were made, were old and hardly the kind of plants desired for modern manufacturing.
Moreover, as the company (formerly known as National Cash Register) moved into an age of electronic business machines and computers, many of the buildings became obsolete. Eleven have already been demolished.
NCR told the state that its complex was valued too high for tax purposes, and last year it won a sizable victory. The State Board of Tax Appeals said the complex had market value of only $17.65 million, less than a third of what it was worth five years before, and $12.5 million less than local county auditors think its worth.
NCR's experience is a large example of what is happening to taxable real estate in the nation's aging cities.
Moody's Municipal and Government Manual, an investor's reference book, shows that New York City had a growing real estate tax base from 1971 through 1975-76. In 1977, however, the figures dipped from $33.2 billion to $32.2 billion.
Overall, some cities' tax bases were shrinking because the value of taxable new construction was being offset by owner-sought reductions in assessments. Another factor was demolition, which pulled buildings off the tax rolls entirely.
A case in point is Dayton. In 1976 taxable new construction added $2.3 million to the tax rolls. But demolition dropped those rolls by some $900,000, while lower assessments won by property owners dropped it another $2.75 million.
It was the second successive year in which the total tax base would shrink in Dayton. Among other things, such drops mean that city revenues are pinched by inflationary pressures on school system budgets.
To keep up, school districts require higher property tax rates, or more help from the states. Higher tax rates tend to discourage new investment in cities and in the long run they only compound their problems.
There is a smaller impact on city governments because many they depend more on income tax revenues and federal aid than they do on property taxes. In Dayton, for example, taxes on buildings and land yield about $5 million out of a $130 million dollar city budget. The income tax yields $39 million.
Dayton schools, which run on a budget of $74 million, get $29 million of that from taxes on buildings and land. The two most recent attempts to get voters to hike the school tax rate were defeated, and officials have warned that this lack of funds may lead to school closings.
The situation has been such that the tax base of the Dayton school district was reduced by $14 million between 1974 and last year. In a small-scale reversal, the tax base for the school district, which encompasses a slightly different area than the city, grew by just over $100,000 last year.
Not every city appears to face diminishing property tax bases though. Houston, which has boosted its tax base through large-scale construction and an aggressive program of annexing its suburbs, has had rapid growth in its tax rolls. From 1969 through 1975 the tax base jumped from roughly $2.6 billion to nearly $5.3 billion.
No such miracles are likely in northern industrial cities though, even though Dayton, for one, has pursued a policy of suburban annexation and has had a continuing building boom downtown.
One reason is that some cities are granting tax breaks for new construction in some cases are wiping out potential gains. In Michigan, for example, industries may gain up to a 12 per cent respite from new taxes on improvements to existing plants.
Detroit has given numerous breaks to encourage the modernization of its industrial facilities, which like Dayton's NCR complex, are growing obsolete.
Dayton has used similar breaks to encourage the rebuilding of its downtown. A case in point is the recently complete 28-story headquarters for the Mead Corp., a diversified industrial company ranked on Fortune Magazine's list of the 500 largest industrial corporations.
Mead, at one point, said it was considering moving from rented downtown office space to a suburb where it owned land. Instead it now occupies a $26.5 million tower. But it pays taxes only on the value of what used to occupy the site, not on the value of its new building.
The tax savings for Mead and the owners of four other downtown structures given tax breaks at the same time was put at about $18 million over the 20-year period these abatements would remain in effect.
Morever, even new buildings that did not get tax breaks may not yield as much in property taxes as might be expected. These buildings are entitled to have their assessments lowered for a variety of reasons. Sometimes owners of newer buildings argue that their properties do not produce enough income to justify the assessments.
Because tax assessments can be lowered on such grounds, newer suburbs are not immune from attacks on their tax bases. In 1976, the most recent year for which complete figures are available, there were 166 requests for lower tax assessments in Dayton's county. Of these, 61 were in the surburbs.
In one case involving a large shopping mall near Cleveland, the most successful mall in its part of the state, the local school district called in an expert property assessor and fought successfully against a request for reduction property taxes.