published Thursday, July 24th, 2014

Chattanooga board plans secret meeting today to discuss appeal on tax break for developers

New houses are being constructed in the Black Creek Mountain community.
New houses are being constructed in the Black Creek Mountain community.
Photo by Staff File Photo.

A Chattanooga board faces a decision on whether to appeal a judge's ruling that chastised the city for awarding taxpayer dollars to developers during secret meetings.

That decision could itself rest on yet another secret meeting to be held today between members of the Chattanooga Industrial Development Board and attorneys for the city.

The group of citizens who fought to strike down the board's previous decision say that today's meeting of the Industrial Development Board, parts of which will be closed to the public because of attorney-client privilege, should be open to the public as long as millions of dollars in taxpayer money is on the table.

"This whole notion that attorney client privilege as a license to cut back room deals with public money is corrupt," said April Eidson, part of a group that has bridged ideological boundaries in order to block taxpayer support for the Black Creek Mountain development.

"The public's business needs to be done in public, not with backrooms and fat cigars."

Chancellor Frank Brown said on June 10 that there was something "fundamentally wrong" with the way the Industrial Development Board handled a 2013 decision to award $9 million in tax increment financing to developers of a golf course community, money which was earmarked to build a road up Aetna Mountain.

The case came before Brown as a result of a lawsuit by Helen Burns Sharp, a retired city planner who has sharply criticized the use of taxpayer money to fund private projects. She alleged that a letter from attorney George Masterson to the board stating that the project was legal was itself a flawed document, as well a conflict of interest for Masterson, who was being paid by the developers while advising the board.

"Ms. Sharp has accused IDB of secret meetings in its consideration of two opinion letters from Mr. Masterson and alleged such violated the open meeting law, which meant its actions would be declared null, void and of no effect, and the court agrees with her," Brown wrote.

Brown voided the board's decision to allow taxpayer financing of the development, based on violations of Tennessee's Open Meetings Act as well as conflicts of interest, leaving the city, county and project developers with the option to either appeal the ruling or restart the process of securing the $9 million.

A group comprised of tea party members, left-leaning social justice supporters and good-government activists today will ask the Industrial Development Board to refrain from appealing Brown's ruling, which they say would spend more taxpayer money on a golf course project they define as "corporate welfare."

The new group, formed after Sharp's victory in Brown's courtroom, calls itself ATM, short for accountability for taxpayer money.

"We want to believe that the IDB has learned that the public is interested in transparency," said Sharp, who paid more than $50,000 out of her retirement for the lawsuit to stop Black Creek Mountain's tax increment financing. "Why can't this discussion take place in an open meeting?"

City attorney Wade Hinton offered assurances that today's meeting won't veer into illegal territory, though he noted that he "inherited the case."

Hinton and others have noted on other occasions that private meetings with clients, though they may be public bodies, allow attorneys to report on cases and suggest strategy that, were it to leak into the public sphere, could compromise legal cases in which the city is involved. That's why such a privilege exists, according to attorneys.

Attorneys Sam Elliott, Mike McMahan and Phil Noblett are directly involved in helping the Industrial Development Board and city on the case, while attorney John Konvalinka has opposed the project for what he says are a number of legal violations.

"The IDB has to make a decision over whether to [appeal the case], and any discussion over that has to be done publicly, but the legal aspect and providing of information can be discussed in an attorney client privileged meeting," Hinton said. "When that discussion gets there, tomorrow, we will be very sensitive to that point and make sure those items are discussed publicly. We'll provide some clear instruction to members as we go into that session."

Contact staff writer Ellis Smith at 423-757-6315 or esmith@timesfreepress.com with tips and documents.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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