Black Creek Developers Say They "Followed The Rules" On $9 Million TIF: To Continue Project

Thursday, July 24, 2014

The developers of the Black Creek project at Aetna Mountain said Thursday they "complied precisely by the rules when we applied for and received approval of the TIF district."

Doug Stein said the group plans to continue on with the project, which he said earlier would include the creation of a small town on a huge undeveloped tract on the mountain above Black Creek (formerly Cummings Cove) in Lookout Valley.

Chancellor Frank Brown recently ruled the TIF invalid after citizen Helen Burns Sharp filed suit. He said the group violated the Sunshine Law and he said it was a conflict of interest that the group's attorney was the one giving a favorable opinion that it met the TIF rules.

The group purchased the bonds and spent some of the money. The developers said the $9 million was needed to build a road and sewer line up the mountain.

The City Industrial Development Board, which had approved the TIF, discussed the matter in a private session with the bond board attorney on Thursday morning.

The board is expected to make a decision on whether to re-issue the TIF at an upcoming meeting.

Ms. Sharp said in prepared remarks for the IDB, "I am speaking for myself and representing a number of citizens in this room and throughout the community.

"We ask that the Board not appeal Chancellor’s Brown’s recent order voiding the Black Creek TIF.  Respect the judge’s ruling. The board, city and county have spent too much taxpayer money on this case already.

"We ask that the board not let your attorneys convince you to be part of a band-aid procedural fix. You should not agree to consider this case until the city and county request your consideration. Were they to make this request, I hope it would be after they establish approval criteria to assist you in your reconsideration. The criteria would include such things as--
• Demonstrating that this is an eligible project under the state TIF statute;
• Demonstrating that the proposed development would not happen without TIF funding (the “but-for” test);
• Providing assurances that the project will be completed, the permanent jobs created and the public interest protected, and 
• Providing detail on how the money will be spent, (e.g., Is over $250,000 in legal fees OK?).

"We request the board have the upcoming discussion with your attorney(s) in this public meeting rather than in private.  

"The public is interested in transparency. Your attorneys have called for another secret meeting in a case where the chancellor found a sunshine law violation.  Just because it may be 'legal' to have an attorney-client conversation in private doesn’t make it appropriate here.  If their advice to you is anything other than “don’t appeal,” we ask that you not take action until you have heard from others and have reviewed all court documents pertaining to the recent litigation. 

"This situation presents an opportunity for the IDB to signal that it is not a rubber stamp but rather has an important role in our system of checks and balances."

Mr. Stein and the other developers issued this statement:

"These are the facts:

  • •          We have an approved project that is in line with state law.
  • •          The city, the county and the IDB approved the project.
  • •          We retained the best lawyers who have handled similar projects and they clearly showed that Black Creek qualifies for a TIF.
  •           No taxpayer in Chattanooga or Hamilton County that lives outside of the project will pay even a penny for the TIF. 
  •           The only money is incremental tax revenue from  those who purchase in Black Creek.
"The original use of TIF financing was to assist projects that redeveloped blighted areas (in California), but the Tennessee statute provides for other projects as well. The statement that 'blight' is the requirement for a TIF is not accurate.

"TIFs have been used hundreds of times in Tennessee, especially in Nashville and Knoxville.

"The Industrial Development Board asked for a legal opinion confirming that our project met the requirements of the TIF statute in Tennessee, which is the customary practice. The IDB attorney and our attorney worked on that opinion together. Our attorney provided that opinion, and it was accepted by the IDB. The fact that the two attorneys didn’t have their conversations in an open meeting is what Chancellor Brown ruled last week did not meet the Open Meetings law.

"The TIF for the Black Creek development can be viewed as a “growth accelerator,” meaning that higher-end growth benefits all of the taxpayers in the city and county.

"And how?

"It doesn’t cost any more to provide fire protection, police protection, garbage pickup or any other municipal service to a home regardless of the appraised value. But the taxes paid based on the value of the homes means additional revenue that benefits all taxpayers in the city and the county.

"Have we done all that would can to ensure our development succeeds? Yes we have.

"Have we done all that we could within the rules and the law? Yes we have.

  • •          We have an approved project that complies with state law.
  • •          The city, the county and the IDB approved the project.
  • •          We retained the best lawyers who have handled similar projects and they clearly showed that Black Creek qualifies for a TIF.
  • •          No taxpayer in Chattanooga or Hamilton County that lives outside of the project will pay even a penny for the TIF. 
  •           The only money is incremental tax revenue from those who purchase in Black Creek.

"A little clarity based on the facts is important.

"Black Creek is moving ahead. It is vibrant and energized and we remain committed to delivering the best community in this area."

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