Each day we read of another downtown building with existing residential rental units or with plans to remodel rental units, and rich corporations being granted expansive property tax exemptions under the Payments in Lieu of Taxes (PILOT).
The impact of continually expanding municipal service demands with no additional revenue for years or decades under PILOT is not sustainable. Municipal property and sales tax revenue is relatively flat considering the windfall of property tax exemptions issued under the umbrella of economic growth incentive.
Someone will pay for municipal services, but it certainly will not be the 80 or so corporations that do not fund their share of municipal services by paying property taxes.
Each time a PILOT is issued, the rest of us gain a tax increase without the benefit of a public hearing, review, or a voice in the matter.
Our city of Chattanooga Council and Hamilton County Commission have each passed resolutions granting the Chamber of Commerce and River City Company with government authority to administer the PILOT programs for two general sectors, industrial/manufacturing and residential.
River City Company also brokers PILOTs for commercial, and that has included a movie theatre and bread baking facility. More about those commercial PILOTs later. The notion that River City Company is creating affordable housing under their PILOT program is completely false.
Many refer to PILOTs as, “Profits in Lieu of Taxes,” because that is what a PILOT accomplishes for the recipient.
The Chamber of Commerce is authorized to negotiate property tax exemptions in terms of amount and duration for the industrial and manufacturing sectors and grants preliminary approval, without the benefit of public participation.
Sadly, the Chamber of Commerce does not deem themselves as subject to open records, even though they are conducting the people’s business by written agreement, and are compensated $1.2 million annually by the taxpayers in Hamilton County and the city of Chattanooga for administering the PILOT program. The Chamber of Commerce was also compensated for the VW PILOT deal and memorandum of understanding with VW, and received a taxpayer funded consulting fee of $900,000 annually for at least five consecutive years.
It was raining VW tax money at the Chamber. That was then.
I attempted on at least three separate open records requests to review PILOT calculations, applications, and criteria to arrive at these decade long property tax exemptions. However, the Chamber of Commerce is unwilling to share their criteria and calculations to arrive at property tax exemptions for their industrial membership, and notified me that they are not subject to open records. Yet, the Chamber is developing PILOTs to increase my property tax liability, by removing their membership’s responsibility to pay property taxes that fund municipal services.
The Chamber of Commerce is contracted by the city and county government by resolution, and receives taxpayer compensation of $1.2 million annually for their PILOT work. That is called taxpayer owned work product.
The Chamber of Commerce develops work product funded by the taxpayers, and we the people are not allowed us to view how the Chamber arrived at property tax exemptions, applications or any work product we funded, really?
The other aspect of the Chamber’s PILOT program that concerns me is their posted minimum eligibility to acquire a property tax exemption under PILOT. It discriminates against an entire class of small business.
This is the Chambers minimum eligibility to participate in PILOT verbatim from their website,
“Property Tax Abatement
Local incentives are offered by the Chattanooga and Hamilton County governments in the form of a payment in lieu of tax (PILOT) program for new & expanding businesses. This incentive allows qualified businesses to substantially reduce their local real and/or personal property taxes for new investments in real and personal property. Typically, projects must have an investment value of at least $5 million in new real and personal property and create 50 or more new jobs with wages equal to or greater than the average wage in Hamilton County as reported by the U. S. Department of Labor.
Once a client is able to share information on the type of project, proposed capital investment, new jobs, and payroll, the Chattanooga Chamber can readily provide a preliminary commitment with regard to tax abatement and land cost. The city and county are prepared to offer some form of tax abatement in combination with a competitive land cost for manufacturing companies interested in locating in Chattanooga.”
It is clear that the Chamber of Commerce and local governments are excluding a class of businesses called small to medium from the PILOT program. Small business does not start with $5 million in assets and 50 employees; the intent is to exclude an entire class of local small business who are rendered barred from financial benefits available to another class of business. That is financial discrimination with public resources, it stinks.
The Chamber of Commerce by their own admission is vested with authority to issue a “preliminary commitment” on behalf of the local governments. The Chamber’s preliminary commitments are an action to remove property tax liability from rich corporations to a local small business class that is being excluded from participation in the PILOT program.
Finally, the taxpayers and residents have absolutely no opportunity to review or consider these PILOT proposals. In fact, there are no public hearings in advance of the vote to seal these PILOT deals by county or city government.
Local groups that monitor the PILOTs generally learn of a new PILOT after the Chamber has already calculated amounts and duration, and issued a preliminary commitment with records the public cannot access, and executed a lobby of our elected officials.
We need to have public hearings for these PILOT agreements, and end financial discrimination against small business by changing PILOT criteria. Or better yet, eliminate the PILOT program and everyone pay their fair share of municipal services.
In the meantime, Chamber of Commerce open the PILOT records for public review.
April Eidson