City IDB Sends Controversial TIF For Extension Of MLK Boulevard On To The City Council Despite Last-Minute Changes

Monday, February 12, 2018
Charles Wood
Charles Wood

The city's Industrial Development Board on Monday sent a controversial TIF (Tax Increment Financing) proposal to extend MLK Boulevard on to the City Council - despite some last-minute changes.

Just prior to the meeting at City Hall, the economic impact plan for the project changed, attorney John Konvalinka told the board.

He said the project went from $3.5 million-$4.5 million to $5.2 million while leaving out a designated $500,000 that was to have gone toward part of an adjacent development to the roadway.

It also pulls out a section that would have required the developer - Evergreen of Nashville - to set aside certain housing units at workforce rates.

Attorney Konvalinka said with the changes that "soft costs" now make up some 40 percent of the spending.

Charles Wood, Chamber of Commerce vice president, praised the project, saying cities all over are using TIFs to avoid current-day capital spending and pay it off later through improved taxes in the designated district.

He said extending MLK Boulevard across Riverfront Parkway to the Blue Goose Hollow Trailhead "is a critical strategy the city has been looking at for a long time."

He said use of TIFs is "a very smart, fiscally sound practice where the long-term debt payment is guaranteed."

Jelena Butler, member of the board, said she liked the proposal saying it will give residents better access to the river, including those nearby at Boynton Terrace.

Mayor Andy Berke said, “Today’s affirmative vote by the Industrial Development Board is a strong statement that the Chattanooga region continues to be a vibrant and welcoming market for capital investment, great jobs, and smart, strategic real estate development.

"The Blue Goose Hollow Trailhead on the Tennessee Riverwalk is one of this community’s most popular and pristine amenities. Extending ML King Boulevard across the Riverfront Parkway to this trailhead will make it more accessible to more families from all parts of Chattanooga. This piece of public infrastructure will also unlock more than $50 million of private-sector investment to create additional housing and retail options along our riverfront. This project is poised to become another iconic destination and a major long-term asset to our economy.

"Our administration is glad to partner with developers that share our vision of helping Chattanooga and Hamilton County grow in ways that benefit all of our citizens. Tax increment financing allows us to do that transparently, equitably, and with maximum protections for taxpayers. We look forward to working with the Chattanooga City Council and Hamilton County Commission over the next few weeks to move this important project forward.”

Jermaine Freeman of city economic development said the new approach calculates the total interest on the project at $1.7 million.

He said the change was necessary because the developer noted that only 47 percent of the tax from the district will be available to pay off the debt. He said other amounts will go to the city and county, and the school taxes will be taken out.

Attorney Konvalinka, who represents the citizen advocacy group "Accountability for Taxpayer Money," questioned whether the project fits the legal definition of what TIF funds can be used for.

He said city policies call for TIFs to be used in blighted areas, not in a riverfront development.

He also noted that portions of the project are already underway.

Helen Burns Sharp of ATM said the last-minute change was "a transparency yellow flag."

Cora Lanier of Boyce Station said she believes TIFs should be reserved for blighted areas, such as boosting the development of the former Harriet Tubman site.

She said if this project goes forward and meets obstacles, it may make it harder for one to be used later in a blighted area.

The plan includes a $2 million payment to the developer for the block-long strip of property directly across from the current end of MLK Boulevard and for "lost income" from the land.

Franklin McCallie said, "Before I present several questions, I want to describe what I see in order to understand if we are looking at the same proposition. Often two people vote differently based on how they see a situation. In this case, you have been given a proposal for a TIF, and I’m not sure whether we have all the information we both need to make a wise decision for all our citizens.

"Here’s the background I used to approach this issue. Mayor Berke’s second inaugural address was very impressive. I copied some words verbatim: “The real Chattanooga is the Chattanooga we build together…. We cannot succeed as a community with extraordinary wealth at one extreme and deep poverty at the other.” I was greatly moved, and the audience applauded loudly. Here was an exhortation recognizing our responsibility to bring less fortunate citizens to an economic and social condition, which, while admittedly never equaling our richest citizens, would still mean that Chattanooga had not left them behind in favor of giving all our riches to already wealthy citizens. 

 

"Mayor Berke’s other speech which so impressed me was delivered several months ago at the “Peak Academy” where city employees present speeches on making their jobs more efficient. Mayor Berke congratulated them with these words: “If you can save $5,000 by making your job more efficient, that’s $5,000 we can use for our citizens elsewhere.”

 

"But today, we see by the work of Helen Burns Sharp and her ATM organization that the proposed TIF in question, would not only NOT save that $5,000, it would expend several millions of dollars over the period of 15 to 20 years in extra gifts to already wealthy citizens, and take away tax dollars that could be used to serve our less fortunate and under-served citizens. I get excited when we save tax dollars for worthy projects. I am perplexed when we give away tax dollars for a project which would cost us far less if we chose a more economical method of funding, thus saving money for housing needs, job needs, education and training needs for our citizens.

 

"Our needs are many, but let me cite one critical example. Councilman Anthony Byrd chaired a meeting last Thursday concerning our Violence Reduction Initiative. He asked the audience how to intercept gang membership among our young men of color before they succumb. He noted that there is only $300,000 a year allotted for this critical project for the next two years. That $600,000 is supposed to put an army of professionals on the streets, in our schools, and in our communities to work with our younger citizens to keep them from being swallowed up by drugs, gangs, and violence. Councilman Byrd sees that army as insufficient to the task. He called for an increase to at least several million dollars. Is this cause worth it to Chattanooga? I think so. But it takes significant financial resources.  

 

"Might you envision this? Were we to take money for this very lovely entrance to the waterfront at Blue Goose Hollow from the hotel/motel fund, cited for such work in 2002, that could be the vote which would make it possible to do more for our vulnerable young men. And that’s only one critical project which we are not funding at a critical level because we do not see the resources available.

 

"My last question is obvious. Can you address Mayor Berke with these statements: “We agree with what you said in your inaugural address about wealth and poverty. We agree that we must save money when we can. Let’s build this waterfront project without a TIF, and give those saved funds to other projects critical to our citizens.”


  


John Konvalinka
John Konvalinka

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