published Thursday, July 17th, 2014

Details of liquor tax settlement nailed down for Chattanooga, Hamilton County Schools


The Hamilton County Board of Education is expected to vote on the agreement at tonight’s meeting, and the Chattanooga City Council on Tuesday. Then the Hamilton County Commission must agree to the terms, and both Mayor Andy Berke and schools Superintendent Rick Smith have to sign off on the agreement. The last step is for Hamilton County Chancellor Jeffrey Atherton to agree to the terms.

Incentives package
Incentives package

An offer that Mayor Andy Berke's office scoffed at months ago now mirrors a proposed settlement giving Hamilton County Schools nearly everything it asked for in the ongoing dispute over millions in delinquent liquor taxes.

If all governing bodies involved give the settlement their stamp of approval, Hamilton County Schools will get $11.7 million in six payments from the city of Chattanooga over the next five years -- the first $1.9 million check will be cut Aug. 1. The school system also will get the 19.9-acre former Maurice Poss Homes property and the North River YMCA swimming pool.

The school system has agreed to pay the city $1.5 million in past-due stormwater fees -- also over five years -- that school officials had argued were waived under the previous administration.

"We believed our requests are very reasonable and ultimately the city has agreed with that," said Scott Bennett, the school system's attorney.

Berke's spokeswoman, Lacie Stone said, the city will make this year's payment from city reserves; thereafter, the payment amounts will be included in the city budget. She said the mayor's office doesn't anticipate a tax increase because of the settlement. City officials declined to comment further until the deal is complete.

But Councilman Ken Smith said he is glad to put this disagreement in the past.

"I look forward to that money being paid to the school system and that money directly making a positive impact on improving education for our kids," Smith said.

The $1.9 million payment coupled with the recent sale of the old Ooltewah Elementary facility for $2.1 million means the school board will have $4 million to decide how to disburse, school board Chairman Mike Evatt said. But the $2.1 million from the sale can be spent only on a short list of capital school projects, he said.

School officials will have to decide the fairest way to divide that money among the many needs across the county, Evatt said.

"You're talking about a lot of money and ... there are so many needs," he said. "Athletics? Technology? Classrooms? Facilities? Think about roofs and things like that? Big decision right there."

Hamilton County isn't alone in this debate over unpaid liquor-by-the-drink taxes. It's a quagmire that cities and school boards across Tennessee have been grappling with since the state attorney general said cities had to pay the back taxes in full.

The local debate over the $11.7 million Chattanooga owes the school system has been in the court system since mid-April, when schools officials said talks with Berke were getting nowhere.

Berke then offered to pay nearly $12 million over the next five years with multiple conditions, including that the money would be funneled only to schools within the city limits.

But the city balked when the school system asked for funds spanning more than three decades and offered to offset an additional $3.5 million by transferring the former Poss Homes public housing site -- a place long eyed as the spot for a new Howard School athletic field and tracks -- and the swimming pool.

Staff writer Kevin Hardy contributed to this story.

Contact staff writer Joy Lukachick at or 423-757-6659.

about Joy Lukachick Smith...

Joy Lukachick Smith is the city government reporter for the Chattanooga Times Free Press. Since 2009, she's covered crime and court systems in North Georgia and rural Tennessee, landed an exclusive in-prison interview with a former cop convicted of killing his wife, exposed impropriety in an FBI-led, child-sex online sting and exposed corruption in government agencies. Earlier this year, Smith won the Malcolm Law Memorial Award for Investigative Reporting. She also won first place in ...

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