Black Creek TIF Decision-Who Guards The Hen House? - And Response

Wednesday, August 20, 2014

Citizens of Chattanooga were invited to give public comment before their own Industrial Development Board Aug. 15. They arrived to find foxes guarding their hen house. 

Many thought the meeting was their opportunity to seek redress in the ill-conceived Black Creek Tax Increment Financing plan. However, they learned it was a sham orchestrated by both the past and present city attorneys to circumvent Judge Frank Brown’s ruling in a lawsuit filed by retired widow Helen Burns Sharp.  Ms. Sharp filed suit against the Chattanooga IDB, city of Chattanooga, and the County Commission early 2013 to stop $9 million in city bonds from being issued to finance construction of a dead end road to service a private development.  

Though Ms. Sharp filed suit, she has not been allowed to go to trial yet. The judge determined two of her complaints were obviously valid without a trial. He voided the decision that led to the issuance of bonds to build the road. She argued the approval process took place in secret, thereby violating the Sunshine Law. The judge agreed. She argued the IDB made their decision contingent upon receipt of an “unqualified” legal opinion attesting to the project’s eligibility per state law. It seems the “unqualified” legal opinion that the past city attorney procured came from an attorney who just happened to have been employed by the developer/investors promoting the project. The judge agreed with Ms. Sharp; the author of the “unqualified” legal opinion had a conflict of interest. 

Aug. 11, the public learned about the unilateral decision by the past city attorney to approve the “unqualified” opinion required by the board. Many wondered why someone so well versed in the Sunshine Law failed to advise the board of its obligation to meet with the public to finalize the TIF bonds. Did he and the developers not want to listen to public objections about the public financing of a road for a private project? Former IDB Vice-Chair Ric Ebersole stated he saw the opinion, but did not think it a proper “unqualified” opinion. Citizens wondered, if the board didn’t meet to finalize the TIF and the IBD chair objected to the legal opinion, who decided to go ahead and issue the $9 million in bonds? It appeared the bonds were gift wrapped and sold at the direction of the former city attorney.   

Hens and roosters sat transfixed at Friday’s public meeting. They wondered who is guarding our house? They also wondered who would finally be picked to offer an unbiased “unqualified” opinion attesting to the project’s compliance with state law. The mystery was solved. The former city attorney, who is now acting as the IDB’s legal counsel, walked to the podium armed with a legal opinion he penned and a long resolution document. The IDB immediately voted to accept the former city attorney’s new “unqualified” opinion with no discussion and no debate. 

The former city attorney then distributed a typed resolution he authored. It was read aloud. In summary, the resolution said the IDB considered, discussed and debated the project and officially voted to accept the project and the bond issuance.  Interestingly, the resolution was written before the IDB had a public meeting to vote to approve the project and long after the bonds were issued. At no time did the public witness an IDB “debate” or IBD “discussion.” The flock wondered how the former city attorney was confident enough to write a resolution that spelled out in advance the outcome of meeting events before the meeting occurred. The flock clucked in disbelief. When it seemed nothing could top the performance, the former city attorney poured gravy over the matter by sharing his personal feelings about the Black Creek TIF with the board. At this point Ric Ebersole and Ms. Sharp’s attorney, John Konvalinka, objected to the former city attorney’s decision to simultaneously act as an attorney and witness before the board. Alas, the current city attorney came to his defense proclaiming that the former city attorney’s actions, while not acceptable for use in a real trial, were fine for government work. 

Those attending the meeting initially thought the IDB was perplexed by past events, but open to public input. The IDB’s stony silence and votes proved otherwise. Ray Adkins was the only board member to vote against adoption of the new legal opinion. He was the only member to vote “no” on the resolution giving legal cover to the former city attorney's actions in issuing the bonds. Both IDB votes were approved 4:1. Many wondered if Mr. Adkins was the only board member who read the state law, legal filings and the TIF documents.  

Finally the staged show ended. Most left the meeting feeling betrayed. They felt betrayed by the board members appointed to protect. They felt betrayed by the city attorneys who performed in lock step with the developers/investors and their army of Miller & Martin attorneys. The flock wondered how will the chickens survive when so many legal eagles and vultures are feeding from the same public trough?  

Black Creek developers say they will invest millions in the project. Strangely, they can’t proceed if the public won’t ante up $9 million plus interest. Fact: All other developers build their own roads. The city is now obligated to sequester future tax dollars to repay the bonds to pay construction costs for a dead end road accessing private property.  The bonds will pay a fixed interest rate of 2 percent (added to a floating prime rate) for up to 20 years. Keep in mind the prime rate currently is 3.25 percent. The interest rate now pays 5.25 percent on the bonds and the floating prime rate can go up. The bonds were not sold on the open market as most government bonds are sold. One predetermined hedge fund, linked to the developers, sought and bought all the bonds.  

Note to non-TIF dwelling Chattanooga taxpayers: While the increased taxes collected on the improved TIF land will be sequestered for loan repayment, the taxes of those living outside of the TIF district land (this means your property taxes) will pay the cost of city services provided within the new 2,000-acre development.  

Many hoped city government had “turned the corner” to bring accountability and transparency. Apparently not. Meanwhile, the hens cluck and run about while the foxes protect them.

Deborah Scott

Chattanooga

* * *

There is a game that many children have played. It is called marbles.

When one of the players starts losing even when all of the rules are being observed, there is a saying about “picking up your marbles and going home.”

It has nothing to do with following the rules. It has everything to do with not liking the outcome.

With some of the recent comments by a former member of the Chattanooga City Council, one is left with the feeling of the “child who picks up the marbles” because of the outcome of the game.

You would expect someone who was elected to serve the people of Chattanooga would have a better sense of fairness but apparently winning, regardless of the facts, trumps the responsibility that comes with having been a public servant for people of divergent points of view.

For example, she likes the lawyers for the side she is on and dislikes those who represent the other side.

She relies on a court ruling that is based on not complying with the Open Meetings Law, but when steps are taken to correct that procedural error, she disagrees.

She selectively decides which legal statement is acceptable for providing an “unqualified” opinion on an issue and, when it goes against her pre-determined position, it is wrong.

She decides to accept the opinion of the former vice chairman of the Industrial Development Board, a non-lawyer, and his interpretation of the law but refuses to acknowledge that the IDB’s lawyer might have a better understanding of the law.

When the same string of people that spoke to the IDB on two previous publicly noticed meetings do not repeat the same points once more for emphasis, and then she raises a question of fairness and lack of deliberation.

The process worked, but not to her liking, so it is biased. If the decision had gone the other way, there is no doubt that she would be praising the diligent, studied work of the IDB.

There is a sad commentary being spread across this country by people who belittle those who disagree with their point of view and who use accusatory language of those who serve but disagree with her opinion.

It is past time for more civil discourse so we do not follow the path that has been charted in Washington. Civility and respect for differing opinions used to be the way that Chattanoogans and Americans treated each other. You can agree to disagree and still be friends at the end of the day.

Some in our community, including those who have been elected in the past to serve others, need to have a refresher course in civility.

Bob Chazen


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