Lawsuit demands Chattanooga answer questions about the Black Creek Mountain development tax deal

Lawsuit demands Chattanooga answer questions about the Black Creek Mountain development tax deal

July 22nd, 2013 by Louie Brogdon in Local Regional News

Chattanooga City Hall

Photo by Jake Daniels /Times Free Press.

Chattanooga has until today to answer a few questions for Helen Burns Sharp, who is suing the city, its Industrial Development Board and Hamilton County over what she calls an improper $9 million tax financing deal.

That's according to one of two orders made last week by Chancellor Frank Brown.

Sharp is suing because she says a tax increment financing deal approved by the city, the industrial board and the county for the Black Creek Mountain development at the foot of Aetna Mountain in October 2012 was done behind closed doors. And she says the project doesn't qualify for public money.

Tax increment financing uses tax dollars gained from expected growth in an area's property value to pay developers for commercial improvements.

Brown's ruling orders former City Council members to answer a list of Sharp's questions about how the tax agreement came about.

Sharp said Friday she has received answers to similar questions from Hamilton County and the industrial board, but the city has not yet responded.

Only council members who were on the board in 2012 need respond, she said.

"This goes back to a very particular point in time. ... Those would be the people we would want answers from," Sharp said.

That group includes current council members Russell Gilbert and Carol Berz, and former members Deborah Scott, Sally Robinson, Pam Ladd, Jack Benson, Manny Rico, Andraé McGary and Peter Murphy.

Deputy City Attorney Phil Noblett did not respond to telephone calls last week seeking comment.

Attorney Michael McMahan is representing the industrial board in the case. McMahan was city attorney when the tax agreement was made but left office when Mayor Andy Berke was sworn in.

In another order, Brown struck a city motion to have the developer join the lawsuit.

The city and the industrial board filed a third-party complaint in June to have the developer of Black Creek Mountain included in the case. The city argued that the developer could lose $9 million if Brown rules in favor of Sharp, so it should have a voice in the case.

But Sharp's attorney, John Konvalinka, filed a motion to kill that effort early this month.

Konvalinka argued in a supporting filing that despite Black Creek Mountain's possible monetary benefit or loss from the case, Sharp's fight was with the government agencies. The heart of the lawsuit claims the city, county and industrial board broke rules -- not the developer.

"There is nothing [Black Creek Mountain] can say or do at this point that will alter or change the nature of Defendants' conduct," according to Konvalinka's filing.

That's in line with what Sharp said Friday, too.

"The reason we're in court is we think this was an unlawful use of public funds. In that case, we are interested in dealing with the people who approved it," Sharp said.

Doug Stein, a minority owner and developer of Black Creek Mountain, declined to comment on the case Thursday and referred questions to Noblett.

Brown gave the city and industrial board until July 30 to amend and restate its third party complaint to have the developer included.

Contact staff writer Louie Brogdon at 423-757-6481 or Follow him on Twitter at @glbrogdoniv.