A PILOT (payment in lieu of taxes) tax break for Steam Logistics that will save it $502,000 in property taxes over a nine-year period was approved on Monday morning by the city Industrial Development Board.
There were six members present on the nine-member board and chairman Jimmy Rodgers recused himself because he is friends with two company owners. The remaining five board members voted in favor.
The logistics firm is remodeling the former John Ross Building at Fourth and Market in an $11 million project.
The long-vacant property currently pays $29,353 in city taxes per year and, with payments of the school tax on the improvements, it will be around $45,000 the first year of the PILOT. The property taxes will be around $90,000 per year at the end of the PILOT.
Jermaine Freeman, city economic development administrator, said Steam had opportunities to expand to other cities where it has offices so the incentive was necessary.
Charles Wood of the Chamber of Commerce said Steam is another component of a growing logistics business cluster in Chattanooga.
Mr. Rodgers said Kathy Jones has gone off the board, citing other commitments. He said Councilwoman Carol Berz will be choosing her replacement.
The chairman said he wanted a continued focus on urging companies that get tax breaks to use local workers on their projects.
He also questioned if fees are being charged to developers. Mr. Freeman said they are, and they go into a fund that helps small businesses among other purposes.
Mr. Freeman said there is a $1,500 fee for those applying for Tax Increment Financing. He said that is "probably nowhere near high enough."
He said the city has had three TIFs and would consider doing more, including both for blighted areas and for under-developed sections.
Those in the past include Black Creek in 2012, the extension of MLK Boulevard in 2018 and the East Chattanooga RISING project involving a road extension to the new Nippon paint plant in 2019.
TIFs allow public infrastructure and other improvements to be financed up-front and repaid later with tax revenues.