This month the River City Company will present an application for another housing property tax break, the fourth such application in 2015. This one would be for an upscale, 200-unit apartment complex on Chestnut Street. If approved, it would be the largest housing PILOT in our history, with some $4 million in taxes waived until 2030. Our local governments approved three previous applications earlier this year.
Here's hoping that the City Council and County Commission will not approve this request. It is not fair to those of us who pay our fair share of taxes, it suggests misplaced community priorities, and it demonstrates once again why we need written criteria governing the use of PILOTs and TIFs.
The resolution the City Council will be asked to pass on June 9 states that the Council finds that the project is in the best interest of the city. It does not provide a single specific reason why this project is in the public interest. If this resolution passes, I guess it means that our elected officials have concluded that this project should be subsidized at the expense of other taxpayer-funded projects in the city, such as street maintenance, the Wilcox Tunnel, and fire and police services.
State law only allows housing PILOTs for projects that benefit low and moderate income, elderly or handicapped. Our local program may meet the letter of the law by saying that 20 percent of the units must be leased to tenants who make less than 80 percent of the county annual median income, which is about $2,600 per month for one person.
However, our local program violates the spirit of state law by using the (higher) county rather than the city AMI; by allowing the developer to set the rent at the maximum possible (30 percent of income of the most wealthy "low-mod" person or about $772 per month); by requiring any tenant who makes less than $2,600 to pay more than 30 percent in rent, and by designating only very small units, which are not conducive to families. The in-lieu agreement does not address who will verify income and monitor compliance with the 20 percent requirement. Apparently it is the developer, in a classic case of the fox guarding the hen house.
The current program seems much more oriented to increasing developer profits than to helping citizens who are struggling with housing costs.
Sometimes it seems like our city and county officials are addicted to PILOTs. The cure is simple. They can adopt sound policies and procedures to make sure that proposed projects represent significant public benefit and would likely not happen without the subsidy. They can put teeth in the claw-back language to require companies to either meet their commitments or lose the tax break.
Chattanooga's Southside is a dynamic, happening place. Either this developer could decide to do this project without a tax break or another developer will likely appear in the future. Pulitzer-Prize winning journalist David Cay Johnston puts it this way. If it is a sound investment, the market will make it. If the investment is unsound, he asks why taxpayers should be forced to subsidize it.
Helen Burns Sharp
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I do not have all the education or expertise that Helen Burns Sharp has about the PILOT program, however she has made several good points.
1. All businesses and foundations have policies and procedures and so should this PILOT program or any arm of the local government for that matter. There should be criteria that all developers must meet to reap the benefits of no taxes amounting to $4 million. The documentation of all that goes into awarding a Pilot Program should be public knowledge and open to the public for discussion.
2. Developers are supposed to help create areas that everyone would want to live and thusly this would help our tax base. As it is we cannot pave our streets, maintain our parks and the list goes on. And we want to give away more taxes?
3. If the development is something that is good for all then why should it have the benefit of no taxes until 2030?
4. If Chattanooga is such a wonderful city to move to or to bring development then we should find ways to keep our tax dollars so the city can perpetuate a great place to live.
5. Why is the calculation so high for the less fortunate to be able to live in this development on Chestnut Street?
These are just a few of the items that Helen discusses in her article. Perhaps we as citizens need to learn more and not depend on one person to educate us on where our tax dollars are going.
Kudos, Helen, for all you are doing for the city of Chattanooga.
Brooke Bradley-King
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Property taxpayers need information about what non-taxpaying PILOT recipients are doing. Before approving the next housing PILOT, elected officials should ask for a complete review on the past PILOT housing projects. If an independent review has been completed, please publicly disseminate it now.
Citizens want to know the answers to these questions:
How many low income people are currently being helped by PILOT housing projects? How many have been helped since its inception? What income levels derive the most help? Is it low income or moderate income? What is the cost benefit ratio? Who is vetting the incomes of those housed? Are they using HUD standards or something else? Please explain how people with distressed income situations qualify for housing subsidized by a PILOT project and then suddenly acquire the income to purchase all the units the same housing complex? How come some housing projects are deemed undoable without a subsidized PILOT and then jettisoned immediately after construction to be sold on the open market at high prices? When HUD funds construction of low income units, HUD places long-term restrictions to cap the rents which can be charged. Do the PILOTs have the same restrictions? If not, why not? If not, what maintains the value of the public investment for low income housing?
Is the Chattanooga/Hamilton County PILOT program (which operates without audit oversight) operating properly? If so, residential and commercial property taxpayers would like to see proof before another housing PILOT is approved.
Deborah Scott
Chattanooga