A taxpayer group is raising questions about tax breaks for GE Power's Alstom plant in Chattanooga, where an auction to sell millions of dollars of equipment is set this week as manufacturing at the factory shuts down.
While the online auction is slated for Wednesday and Thursday, the Accountability for Taxpayer Money (ATM) group is asking if equipment already has been assigned back to GE after Chattanooga and Hamilton County took title when the tax breaks were granted in 2008.
Also, the group is questioning if the city and county are using the re-conveyance of the equipment and the property back to GE as "a bargaining chip" in negotiations with the company.
"When Dell left North Carolina 'prematurely' a few years ago, the media reported that the company agreed to give back about $26 million in subsidies," said ATM founder Helen Burns Sharp.
City Attorney Wade Hinton didn't return phone calls seeking comment. He previously said there were negotiations with the company about resolving "outstanding obligations" related to the tax breaks.
City Industrial Development Board Chairman James Miller, who heads the panel that approved the payment-in-lieu-of-tax (PILOT) agreement with then Alstom, said Monday he preferred to speak at a board meeting slated for today.
GE did not return an email seeking comment.
In June, GE Power announced it was closing the steam turbine plant and two other adjacent facilities located off Riverfront Parkway, eliminating 235 jobs. About a year ago, U.S.-based GE completed a $10.6 billion acquisition of the power and transmission division of France-based Alstom, including the Chattanooga facilities. GE plans to keep about 50 people in Chattanooga.
GE said last summer the shutdown of manufacturing at the site "while extremely difficult, is viewed as necessary to allow GE to manage costs and capacity in a very competitive market."
Sharp said the action is "sad" not only due to the loss of well-paying jobs but because the city and county granted Alstom "a very large 15-year tax break, based on their projected number of new jobs and investment."
She said ATM "hopes that the Alstom [PILOT] experience will be a wake-up call to our elected officials about needed changes to the local process for reviewing tax break requests and enforcing the terms of agreements."
Under the PILOT, the IDB took ownership of about 100 acres and the steam turbine manufacturing plant's equipment and then leased them back to the company, Sharp said.
"ATM does not question that the agreements allow the company to terminate the leases and purchase the property for $1," she said. "The Alstom story shows why the city and county need policies and procedures for jobs PILOTs. It reveals flaws in vetting, monitoring and enforcement."
Andrew Duncan, a vice president of auction company The Branford Group, said he didn't know what sort of arrangement was worked out related to the equipment and the PILOT. He said an inspection of the equipment by potential bidders on Monday was going well.
Sharp said Alstom might have expanded here without the tax breaks in the PILOT agreement. The company announced its expansion in 2007, a year before the PILOT agreement was signed.
The PILOT agreement references at least 300 new jobs and an investment of at least $265 million, with about $200 million in equipment. But Alstom began laying off workers in 2013 when demand for its power generating equipment declined as electricity stalled.
Sharp said the language in the original agreement, while weak, gave the city and county the ability to put the company back on the tax rolls in 2015. Instead, the agreement was renegotiated.
The 2015 agreement came after news in late 2014 from the U.S. Department of Justice that Alstom as a company pleaded guilty and agreed to pay a $772 million criminal penalty to resolve foreign bribery charges, Sharp said.
"The company apparently will find the money to pay DOJ but our leaders chose not to require them to pay their fair share of property taxes, knowing the company had not met their 'new jobs' commitment. Why?," she asked.
The Alstom plant was expected to benefit from a nuclear renaissance, but an earthquake and tsunami hit Japan in 2011 and its Fukushima plant. Also, the energy market saw more demand for natural-gas-fired plants.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.