Commercial government puts citizens in the unenviable position of having elected officials and their appointees and friends manage economic growth apart from the free market that rightly belongs to the people themselves. The citizenry is the best mechanism by which to create a general prosperity. The marketplace most smartly allocates resources among the people if it operates with the least interference from taxing authority. Given some level of taxation to support the Sheriff’s Department and county schools, the question becomes how far should tax authority go to favor one player or another. Should tax pains and rewards be used to favor one investor or developer, but not another? Helen Burns Sharp of Chattanooga, who led a long career as a civil planner, takes apart the system in which civil authority is competitor, capitalist and secret partner to the well heeled. In 2014, she says, Hamilton County forgave F$26.2 million in tax obligation. — DJT
By Helen Burns Sharp
In 2013 I filed a lawsuit challenging the tax increment financing (TIF) granted to developers for a road in a golf course subdivision known as Black Creek Mountain. This TIF is an enormous ($9 million plus interest), an improper and an illegal gift of taxpayer funds to developers who already have plenty of money. In 2014 a Hamilton County judge declared this TIF null and void.
Shortly after the judge issued his opinion based on violations of the Tennessee Sunshine Law, the City Industrial Development Board — with no discussion or deliberation in public — put a band-aid on the project and re-approved it. My original lawsuit is on appeal. I filed a new lawsuit in September 2014 because I was appalled at how the city went about re-approving the TIF. Open meetings, open records, and ethics issues again surfaced. Rather than returning the case to the elected officials since new policy issues had emerged, “someone” decided to send it back to the IDB, which typically acts as a rubber stamp.
As the Black Creek lawsuits were working their way through the court system, I began to study the payment in-lieu of tax (PILOT) agreements currently in effect in Hamilton County. (All but one are in the City of Chattanooga.) While we have only one TIF at present, PILOT agreements covering 63 parcels were in effect in 2014. Most last about 10 years; some last up to 30 years.
It is very difficult to get complete information on the total amount of property tax being forgiven and the specifics of individual PILOT agreements. Our local governments have not adopted policies and procedures to guide them. It is unclear how decisions are made on which companies get tax breaks. The agreements contain weak language spelling out the obligations of the business recipients. Enforcement is discretionary.
We have in effect privatized our economic development program. The Chamber of Commerce and the River City Company are very effective lobbyists for private interests. Our elected officials also need to hear about the public interest dimension of property tax breaks. The city and county could begin to charge a PILOT application fee and use part of the money to hire an independent professional (such as a CPA or attorney) to do a detailed analysis of the costs and benefits of a PILOT to the City and taxpayers.