Chattanooga City Council members Tuesday heard a presentation prepared by James Weaver of the Waller Landsden Dortch & Davis law firm on Tax Increment Financing options and what benefits a program like that might provide for the city’s continued development.
TIFs would essentially be another economic development tool available for city use and would monetize incremental increases in property taxes after development occurs, freeing up funding for target companies interested in building in Chattanooga.
Developers interested in investing could apply for TIF and be afforded a certain loan based on the expected value of the property and owed taxes after development. This would be a non-recourse option for the city, meaning that there would be zero risk involved for the public since the company would assume full financial responsibility for repayment on that loan.
Waller Landsden, which is also the firm that was instrumental in coordinating the Volkswagen plant in Chattanooga, has developed similar incentive programs in a number of other Tennessee municipalities such as Nashville, Knoxville and Memphis. He said that large developments like a $15 million Nissan plant outside Nashville can be attributed largely to funding provided through TIF.
This program would also differ slightly from the ongoing PILOT program, even though the two could easily work in concert. The primary difference between the two though is that TIFs create an upfront cash infusion for projects that can be used immediately, whereas the PILOT program only functions as a reduction of taxes otherwise due.
Mr. Weaver said that the program would be a good and necessary “tool in the toolbox” for the city to have, especially in an increasingly competitive global investment market.
He said that if Chattanooga were to move ahead on providing TIF options, a variety of city goals such as job creation or neighborhood development should be outlined so that appropriate projects that then meet those goals could be funded appropriately.
He also said that Chattanooga is in a perfect position to be highly competitive in attracting target companies to come in and invest, just as the city did with Volkswagen. He credited the high quality of life enjoyed by citizens, the beauty of the city itself, and close access to essential elements like the Chattanooga airport and the Atlanta airport as reasons for why the city would be so attractive.
The TIF program would primarily be oriented for large-scale products rather than small businesses since the costs of setting up such an arrangement would be too prohibitive to make sense in a small scenario, but Mr. Weaver said they’ve worked exceedingly well for other communities.
There is not presently any motion underway to adopt TIFs in the near future, but the presentation today marks the beginning of discussion on the topic that could easily lead to such a resolution in coming months, officials indicated.