A Chattanooga panel delayed action Thursday on the transfer of property for a downtown apartment complex after a citizen taxpayer group raised questions about tax incentives tied to the housing units.
Citing needs in the public schools, members of Accountability for Taxpayer Money renewed calls to end tax breaks for Walnut Commons apartments located at Walnut Street and Aquarium Way.
Bruce Stewart of Chattanooga said he's stunned by what he has seen in the city in regards to public education since he moved here, and he questioned taking resources away from schools by exempting some property from city and Hamilton County taxes.
"It's an absolute tragedy. It's pathetic," the former educator told the Chattanooga Downtown Redevelopment Corp. (CDRC). "You're just ensuring the future of uneducated people, unemployed people ."
Stacy Richardson, chief of staff to Mayor Andy Berke and a member of the CDRC board, said the newer tax agreements for downtown housing projects require school taxes to be paid.
"We know how important that is," she said.
The CDRC had met to consider approving a special warranty deed conveying Walnut Commons property to another city panel, the Chattanooga Health, Educational and Housing Facility Board, which earlier granted tax breaks to the development.
A Nebraska company that in 2014 bought the apartments from a Chattanooga group now wants to buy the property on which the rental units were built and needs the CDRC to help facilitate the transaction.
However, the taxpayer's group has questioned continuing the tax breaks for the 100-unit apartment complex. The Accountability for Taxpayer Money said the property tax incentives are worth $2.4 million from 2012 to 2025.
Franklin McCallie, a former Chattanooga educator, said local public schools need that money. He said an elementary school teacher told him of a highly qualified colleague who was taking a job in Walker County, Ga., for $9,000 a year more.
"We can't afford that," he said. "We respectfully request that the CDRC do all you can to get this attractive, market rate property back on the tax rolls so that it will contribute its fair share for needs such as public education, job training and public safety."
Helen Burns Sharp, who helped organize Accountability for Taxpayer Money, said the Nebraska company that bought Walnut Commons "reopened a Pandora's box" and the question of continuing the tax incentives when it sought to exercise its option on the property.
"Let's get it back on the tax rolls," she said.
The city agreed to lease property it owned on Walnut Street and granted the original developers of Walnut Commons a break on property taxes normally charged for such a development to help induce the developer to build downtown apartments.
Two years ago, the original developers sold Walnut Commons for $15 million to the Nebraska company that is keeping the property tax breaks on the apartments through 2025 and is seeking now to buy the city land on which the apartments were built.
Among questions the taxpayers group raised were:
- Can the Nebraska company, operating as Walnut Commons LLC, provide documentation that at least 20 percent of units are and have been rented to persons with incomes of less than 80 percent of the area median income or elderly or handicapped?
- Does the CDRC believe that Health and Education Board is obligated to take title to the property to facilitate the continuation of the property tax breaks? The taxpayer group said its attorney believes the city has a choice and could cut off the tax breaks promised when the apartment deal was put together by the original owner.
- If title is to remain in the name of the city's Health and Education Board, does that relieve Walnut Commons LLC from the payment of real estate taxes?
- What public policy purposes would be served for the continuation of any exemption from property taxes?
In February, the Chattanooga Downtown Redevelopment Corp. agreed to sell its interest in Walnut Commons for at least $761,000.
Richardson and other CDRC members indicated Thursday they'd like more time to consider the questions and what the panel is being asked to do.
"I'd like more time to understand what we're doing," she said.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.