The city Industrial Development Board has again delayed action on a policy on PILOTs (tax breaks).
Chairman Kerry Hayes on Monday said the board would get a revised presentation by staff at their Sept. 11 meeting and then would vote in October on what to recommend to City Council.
One section of the policy would take the City Council and County Commission out of the approval process on PILOTs if the term is for 10 years or less.
Charles Wood of the Chamber is the primary author of the document, Jermaine Freeman of the mayor's office said.
While a document has been on the IDB agenda for three public hearings (June, July, and August), the board has yet to discuss the policies and procedures in the document they will be making a recommendation on.
Helen Burns Sharp, of Accountability for Taxpayer Money, told the board, "The City IDB is holding its third public hearing on the important question of what the city’s first written polices and procedures should be when a private company asks for property tax breaks under the Payment-in-Lieu-of-Tax (PILOT) program.
"The document on the IDB agenda references an economic development matrix and refers you to the matrix, Appendix A. There is no appendix. This is a critical omission in that the policies say that the terms and conditions of the incentive are based on the final score the matrix produces.
"A matrix can be a useful tool in providing clear and objective standards. But what will be in the matrix when it sees the light of day? This concept has been around for a while. It has been referred to as the Chamber's “black box."
"How different will the new matrix be from its predecessor, one that apparently endorsed PILOTs for a call center, downtown movie theater, office parking garages, etc.? There is more to economic development decisions than just adding a bunch of numbers together.
"I hope that we want to become more strategic in granting PILOTs, given that we are currently not collecting about $25 million in property taxes each year due to PILOTs. This money could go to things like public safety, infrastructure, and protection of natural resources, all of which relate to economic development.
"Let’s look seriously at questions like "Is the project a game-changer? Is it a catalyst? Is it in a strategic industry sector? Do we really believe that the location or expansion would not happen without the tax break" (the but-for test)?
"The document on the IDB agenda contains wording that would eliminate the voices of City Councilors in the review process for most PILOTs. The proposed wording changed from fall 2022 when PILOT policies first appeared on the IDB agenda. Last year’s draft echoed current practice by providing a role for Council to review a proposed PILOT and make a finding that it is the best interest of the city. Why the change?
"The Kordsa PILOT was the only one approved between fall and spring. That review process showed the value of the perspective of elected officials. Check out the YouTube video of the City Council April 18th committee meeting. Excellent questions on "but for," the greenway, apprentice programs, etc.
"In a recent newspaper article about today’s IDB meeting, city staff commented that “we have the same conversations over and over again on these PILOTs, and it almost turns into theater where the same people are asking the same questions.”
"Whose conversations was he referring to? It couldn’t have been the public conversation. The IDB has never held public hearings on PILOTs. Kordsa was the first ever City Council PILOT public hearing. One person spoke for less than a minute in support of the PILOT and another thanked the Council for holding the hearing.
"ATM believes ALL PILOTs should go to the City Council and County Commission for consideration. They are elected officials and thus accountable. They are knowledgeable about projects in their districts. They vote on budgets. PILOTs relate to the budget in that they result in reduced revenues.
"This draft document calls for a public hearing before the IDB and no review by Council or Commission if the proposed project does not exceed 10 years and meets the matrix and other policies.
"No one wants local government to be unnecessarily bureaucratic. But the current Chattanooga (and City of Knoxville) process where the City Councils consider PILOT requests is not bureaucratic. It is good government.
"At the close of today’s public hearing, ATM respectfully requests that the IDB postpone discussion of PILOT policies and procedures until staff provides a matrix and a red-lined version showing the changes since originally proposed and explaining why they recommend excluding the City Council from the review process for many PILOTs.
"These PILOT policies and procedures need more time in the oven. We are making progress. The three PILOTs approved since Mayor Kelly has been in office are better than many previous PILOTs, some of which appeared to be more of a gift than an incentive."
Also, officials said the Southeast Development District will be paid $15,000 per year to go through applications submitted by small business for grants up to $10,000.
The contract is for four years.
The IDB will continue to have the final sayso on the grant recipients.
Officials said only about three or four companies that have gotten grants have gone out of business since the program started in 2014 during the Berke administration.