Don't Exempt Stadium TIF From TIF Rules - And Response (2)

Tuesday, July 19, 2022

The City Council will soon consider a resolution to exempt the city-initiated stadium/South Broad TIF from "certain procedures" private developers must follow when they are the applicant. When the City Council debated TIF policies and procedures in 2015, former City Councilwoman Deborah Scott advised against such an exemption: "Make city desired/initiated TIFs 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. The last approved TIF did exactly that."

The likely impetus for this resolution is the urgency the city and county mayors seem to feel to establish a tax increment financing district for a 30-year, $80 million project. The perceived "benefit" of this resolution is to save time; the "costs" include transparency and erosion of public trust. The details of this project were announced at a press conference less than a month ago. We've only recently learned that the TIF project includes an "Alton Park" greenway connector and infrastructure. No details have been provided on the infrastructure, so we do not know which properties in the large South Broad area will benefit.

Our city and county leaders need to press the pause button. Following TIF procedures would provide more time. While a new Lookouts stadium may indeed be a great catalyst for redevelopment of the foundry site, we need answers to questions citizens have raised. For example, the minor league stadium in Columbia, SC is held out as a model for Chattanooga. Let's look at its funding arrangement, both the source and the contribution of the team owner. Could we consider a different approach for repaying the bonds, shifting from local property taxes (TIF) to hotel-motel taxes from visitors? This is how bond debt repayment is structured in Columbia where the Lookouts owner — Hardball Capital — also owns a minor league team. Could we negotiate a greater contribution from the owner of the Lookouts? In the current proposal, the team owner would not provide any upfront money. In Columbia, the same owner provided 17% of the cost for stadium construction.

The stadium project could be a catalyst for revitalizing a blighted area. A master developer with a great track record seems interested. Both are big positives. But the funding package as currently proposed seems like an unusually advantageous (sweetheart) deal for the Lookouts owner at the expense of property taxpayers. I hope our leaders will slow down and negotiate a more equitable agreement and that the stadium is a big success.

Bonus for TIF students: Here are other observations in Deborah Scott's 2015 opinion piece for this newspaper:

1. "The City Council should be required to hold a 'public hearing' before voting to approve a TIF. (As it stands now, only a council vote is required for approval. A 'public hearing' would allow the pro and con TIF sides to be publicly presented and sufficient time for public comment.)

2. Before a TIF is approved, a cost/benefit analysis of the project should be completed by an independent CPA.

3. Any bonds issued by the Industrial Development Board to the TIF development recipient shall be an "arms-length transaction." (In the last approved TIF, bonds were purchased with a loan from the same people who were promoting the TIF development. Bottom line based on the last city/county TIF: The city borrowed money from the developer/investors and gave the same money back to them to build infrastructure on their private land. Then, the city will pay back the developer/investors loan plus 5 1/2% interest to the same private development/investors from sequestered property tax. Is that a legitimate city plan to protect city tax dollars or save money?

4. Every TIF should include language that will protect the city from financial loss related to TIF failures caused by developer/investor failure to perform as specified in the agreement. (The previous TIF included no such protection.)

5. TIF plans should clearly and specifically outline what the developers and investors are required to build and the specific timeframe that must be met. (For example, A road one mile long, meeting city code standards will be completed on or before ______date. NOT: Developer ABC 'may elect to build a road.' In other words, if taxes are abated or redirected for a TIF development, then developers MUST build what they promise within the timeframe promised. If they don't, there should be serious financial consequences favoring the city."

Ms. Scott concluded: "Fellow citizens if you think the TIF and PILOT tax policies don't matter, please think again. When many of the largest commercial properties are already exempted from property taxes for 10-30 years, the remaining residential and commercial property owners must take up the slack. When the next property tax increase occurs, it will be because we vote for politicians who approve insider corporate PILOT and TIF tax breaks based on inept decisions."

Helen Burns Sharp

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Having three grown children and their families that live in Hamilton County keeps me interested in their local governments' actions. It is my understanding that of the TIF's Hamilton County has been involved in, one group of folks have been, or are about to be, on the receiving end of half or more of those TIF's, including the Black Creek TIF.

I suppose that is legal. But it's the "certain procedures" that some are asking to be excused from that needs to be put under scrutiny and asked "why"? This is a giant venture and one must remember it takes time to bake a cake in the manner that it is not ruined. Haste makes waste.

Joey Blevins

Guild, Tn.

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Thank you again, Helen Burns Sharp, for doing the hard work for all of us.

What I know, without reservation, is that HBS is the master expert on TIF’s and PILOT’s in this town and if she has questions about this project then our elected officials should be taking notes and taking action. In fact, our city is incredibly lucky to have a resident with so much knowledge and experience on these types of projects. The City Council should have her on retainer as a resident consultant anytime these projects come up. She would always assure that we, the taxpayers, are making the best deals (or walking away from the bad ones).

Our city leaders have heard from her and recognized (but mostly ignored) her expert advice for years. And, HBS is correct, Deborah Scott was also ringing alarm bells on TIF and PILOT policies as far back as 2015. Why then, are we still making decisions that are not in line with expert advice? It is obvious from past experience, as with the current project, that it boils down to the same old tired answer…Those individuals with the most to gain personally are the ones who continue to push these projects past public opinion right into their own bank accounts. The rest of the taxpayers are left on the hook with huge debt, responsibility to continue to maintain infrastructure, and holding the bag for broken promises. It is a shame.

My hat's off to you Helen. You have continued to raise the warning flags time and time again. You have continued to sacrifice your own time and talent for the taxpaying citizens even though, more often than not, our city leaders pretend not to hear you. I'm hoping that this stadium project is an exception to that rule. City leaders: Slow down, listen to Helen, and get this one right.

Lynn Ashton