The city Industrial Development Board on Monday morning accepted the application by Urban Story Ventures for a $115 million TIF (Tax Increment Financing) at The Bend (former Alstom property).
Jermaine Freeman, chief of staff to Mayor Tim Kelly, called it a rare economic development opportunity for the city.
Jimmy White, chief developer on the development, termed it "a huge project."
He said when his group acquired the property there were only three workers at the site. He said there are now several hundred in over 100,000 square feet of space.
Under a TIF, tax proceeds from the site are set aside to cover infrastructure and certain other items.
This TIF is to involve both property and sales tax for city and county governments. There are to be presentations next week to the City Council and County Commission on the TIF.
The application says there is a separate Brownfields TIF.
The TIFs are for 20 years.
Some of the proceeds are to go toward infrastructure for the Westside Evolves project where the Westside public housing is to eventually be torn down and replaced with new housing that is to include affordable units.
Kerry Hayes was chosen as the new chairman of the IDB, taking the place of Jimmy Rodgers.
Althea Jones and Gordon Parker, IDB board members, will serve on a panel evaluating the TIF.
Helen Burns Sharp on behalf of Accountability for Taxpayer Money opened the meeting with these remarks:
ATM is a public interest advocacy group focused on tax incentives and government transparency.
I have a few brief comments/questions about the application materials on the Bend/Westside TIF in your agenda packet. Likely most of these questions will be addressed in the presentations by the applicant and city staff later in this meeting.
1) How much is the applicant requesting in TIF property and sales tax assistance?
Question 11 in the Application (Exhibit A) asks for the total amount of TIF assistance requested. The applicant references Schedule 10 and the pro forma in Exhibit D. The master summary prepared by Younger Associates (Schedule 10) shows $275 million as the total designated to TIF, with $192 million from property taxes and $83 million in sales taxes dedicated to a brownfield TIF.
The pro forma shows the TIF Increment as $115 million.
2) Is this a debt service TIF where the city issues a bond or is it a 'pay-as-you-go" TIF where the TIF increment is used to reimburse the applicant for deliverables?
3) If a TIF bond is contemplated, what is the projected cost of the capitalized interest that would be paid over the life of the TIF?
4) Other than for public infrastructure at the Bend, what else will TIF funds go towards?
A May 27th Times Free Press article following the announcement of the TIF says that 53 percent of the extra property tax revenues generated by the development will be used the help the Chattanooga Housing Authority fund its Westside redevelopment, along with providing funding for some of the cost of a new downtown school, fire hall, and stormwater and sidewalk upgrades downtown." Sounds wonderful as "public benefit." What is the definition of "extra." When and by whom would the amount be determined? Does the State require some specificity on all elements of TIFs? The applicant is very specific about the infrastructure at the Bend site to be financed with TIF funds but these other items are general and are not mentioned or located in any of the attachments to the application.
5) Please explain more about the term of the TIF.
Question 12 on the Application (Exhibit A) asks the number of years TIF assistance is requested. The applicant's response is "20 years upon completion of each phase of construction." There are 3 phases. As each phase ends, will the property for that phase go back on the tax rolls? Are there estimates on when each phase will likely be completed?
6) Was a third-party review done on this application by "an independent consulting firm with experience in public finance and real estate development, at the expense of the Applicant, to evaluate the Applicant’s financial projections for the Applicant’s Project to assist in evaluating whether the amount and allocation period of Tax Increment Incentive requested by the Applicant is required for Applicant to receive a commercially reasonable return on investment with respect to the Applicant’s Project?"
This wording is from the TIF policy adopted by the IDB on April 17, 2023. It calls for a BUT FOR analysis, which is different from the Younger Economic Impact Analysis. The application includes the Younger tables but does not reference a review done by a firm with experience in public finance.
7) As part of addressing the Public Infrastructure Need (Schedule 5), was there a discussion about the need for and the funding of a new connecting road for the several "block" area between the Bend TIF at West 19th and the Stadium TIF?
Just curious. Not the responsibility of this applicant.
8) Will the July IDB agenda include the appointment of two members to the Application Review Committee for this TIF project?
Thanks to the Board, as always, for your time and dedication.