Large Tax Increment Financing (TIF) District Eyed For Westside Stretching To The Bend

  • Tuesday, August 30, 2022
A sizable Tax Increment Financing (TIF) district is being envisioned for the Westside stretching to the Tennessee River at the major development known as The Bend.
 
A resolution on the agenda for the Chattanooga Housing Authority indicates that the city of Chattanooga may be the applicant for the TIF for the section where CHA has several housing developments and the area across Riverfront Parkway now known as The Bend (formerly Alstom/Combustion).
 
The TIF would be "in support of the Westside Evolves development plan and redevelopment of adjacent and related areas that would include the CHA's existing properties in the area of Riverfront Parkway and MLK Boulevard near downtown Chattanooga and adjacent properties expected to be developed by private developers or the CHA that will enhance the development of the CHA's properties, together with the property located at The Bend development between Riverfront Parkway and the Tennessee River."
 
 The resolution says the CHA "desires to cooperate with the city of Chattanooga in a tax increment financing arrangement that would benefit the city, the CHA's Westside Evolves Project, and The Bend project."
 
It says, "Under this approach, the normal application process/approvals would not necessarily be required."
 
The city and county just approved a 470-acre TIF at the former U.S.
Pipe/Wheland Foundry site where a new Lookouts stadium is planned.
Helen Burns Sharp, an analyst of PILOT tax breaks and TIFs and citizen watchdog, said it would be a good pairing of the Westside and The Bend for a TIF. But she noted that the large section to the south was just put into a TIF.
 
Ms. Sharp gave these observations:
 
1) Including the Westside in the TIF District helps meet the TIF concept of slum and blight and helps with the "but/for" test. Needed infrastructure improvement in the Westside might not happen without new taxes generated on the Bend site.

2) The Bend site has excellent potential for generating new taxes from future development. A large number of jobs have been created over the past few years and the owner/developers apparently have other prospects lined up.

3) TIF projects are typically for public infrastructure. This project would likely be for streets, such as improving West Main Street to the River and creating connectivity like to the Convention Center. 

5) The Bend master plan calls for public access to the river, new canals, and green spaces.

Concerns:

1) This would be the 3rd TIF application submitted in 2022, the most recent being for a big financial chunk of the $80 million baseball stadium off South Broad Street.

2) Chattanooga/Hamilton County already abates/does not collect about $25 million in property taxes each year due to another financial incentive called Payments-in-lieu-of Taxes (PILOTs).

3) The City rarely mentions the "opportunity" costs of TIFs. During the time a TIF District is in place, new property tax dollars (the increment) are collected and then diverted to the TIF area, meaning that they do not go for city and county general fund services such as fire, police, streets, affordable housing, parks, courts, etc. While the City's TIF policies say the maximum TIF term is 15 years, all five TIFs have been 20 or 30 years. Basic services cost money and are important. The tax burden falls on others due to incentives like TIF and PILOTs.

4) The City writing its own rules. As former City Councilwoman Deborah Scott wrote in this paper in 2015, "city desired/initiated TIFs should meet the same standards as all other TIF proposals. Exempting these creates a gaping hole for corruption. It's well known that the city cannot tax its own property, so to have a policy saying the city may use its best judgment on city-initiated TIF only provides a loophole for a politically well-connected entity to write its own TIF rules under the guise of a city initiated TIF."

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