Over $26 million in property tax revenue was apparently "forgiven" (abated) in 2014 because of tax breaks to businesses approved by Chattanooga and Hamilton County governments under the PILOT program (payment in-lieu of tax), according to figures compiled by citizen activist Helen Burns Sharp.
She said, "Most PILOT agreements last at least 10 years; some last as long as 30 years. This dollar number is one of my findings after spending several months gathering fragments of information on property tax breaks in Hamilton County."
Here are other findings:
· 63 parcels are under PILOT agreements.
· 14 companies have multiple PILOT parcels.
· 1 company made no in-lieu payments or paid any school tax.
"I hope this information gets the attention of our elected officials," said Ms. Sharp. "They may never have seen it pulled together in one place. Tax incentives need to be reserved for projects involving significant public benefit where the incentive really makes a difference in a company’s location or expansion decision. We have lots of needs in our community, and we are seriously eroding our revenue base with the number and magnitude of PILOT agreements.”
Ms. Sharp said she also believes that PILOT agreements should contain language spelling out the company’s obligations and requiring mandatory action by local government if they fail to meet their commitments. “The developers of one apartment complex under a PILOT originally represented that they would rent to low and moderate income persons and build a parking structure. They did neither.”
She noted that they were later able to sell the complex for a reported $3 million profit and transfer the tax break to the new owner because the in-lieu agreement has no language prohibiting “flipping.”
The City Council and County Commission recently authorized a 14-year PILOT for apartments on Lindsay Street. Soon they will consider a request for a 16-year PILOT to convert 97 hotel rooms to efficiency apartments in Building 2 at the Chattanooga Choo Choo.
PILOTs by the Numbers—2014(a)
Hamilton County, Tennessee (b)
$ “Forgiven” in 2014 $26,204,196*
# Parcels under PILOT Agreements 63
# Companies with Multiple PILOT Parcels 14 (c)
# Companies Paying No In-Lieu Taxes 1 (d)
# PILOTs already approved to start in 2015 5 (e)
a) This number is for one year (2014). Most PILOT agreements last at least 10 years and some as long as 30 years.
b) All except McKee Foods are located in the City of Chattanooga. The amount “forgiven” number reflects city/county/school taxes. See spreadsheet.
c) Alstom, Amazon, Astec/Heatec/Roadtec, Blue Cross, Chattem, Chit Chat, LJT/Steel Warehouse, Provident/Unum, US Xpress, United Packers (Coca Cola), UTC Two, VW, Westinghouse, Wrigley
d) Walnut Commons Apartments
e) Coca Cola Distribution, Chattem, Southern Champion Tray, Van de Wiele, UTC Five
*Based on public information on spreadsheet provided by the Office of the Hamilton County Trustee (IN LIEU OF--Pilot Listing 2014 Levy--Sharp 02.12.15 xls)
Interpreted by Helen Burns Sharp, who is responsible if there are errors. She added the total for real assessment (land & buildings) to the total for personalty assessment (movable property) and divided by 100. She then multiplied that number by the combined city/county/schools tax rate ($5.0742 for Chattanooga and $4.1365 for the one parcel in Collegedale). From the combined total of what the companies would have paid in property taxes if no PILOT, she subtracted the amount the spreadsheet indicated that the companies did pay in 2014 to obtain the amount abated or “forgiven.
Ms. Sharp described herself as "a public interest advocate and reluctant citizen activist in Chattanooga." She has degrees from the University of Tennessee (Knoxville) and the University of Texas (Austin) and 37 years of experience in state, county, and city governments of Tennessee, Georgia, and Oregon. She was involved in land use planning, community development, and economic development in her professional career. She is a board member of the Tennessee Coalition for Open Government.
For more information, see www.helenburnssharp.com.