A Chancery Court filing has trimmed and focused a lawsuit against Chattanooga, Hamilton County and the Industrial Development Board that alleges the three inappropriately agreed to pay $9 million in public money to the developer of Black Creek Mountain as part of a tax increment financing deal.
In an order and opinion filed Wednesday, Chancellor W. Frank Brown dismissed claims by Helen Burns Sharp that the city illegally allowed a zoning change on behalf of York Capital, the developer, at the base of the mountain. Brown wrote that Sharp had no standing to challenge zoning decisions in court.
But the dismissal did not specifically clear the city of allegations related to the passing of the tax financing agreement, which required the council to accept the developer's economic impact plan.
All that's left of the lawsuit is its heart -- Sharp's claim that the tax agreement was crafted and pushed along behind closed doors, and that the project involved doesn't qualify for a tax subsidy under state law.
Tax increment funding funnels tax revenue gained from expected property value in an area to reimburse developers for commercial improvements over time.
Sharp alleges in her complaint that the Industrial Development Board met secretly with the developer and other officials to craft the tax agreement, which would pay the developer $9 million for building a road and sewage lines up Aetna Mountain. Further, she says the development is largely residential and the road and sewage aren't enough to qualify the development for taxpayer subsidies.
According to court records, the developer says more commercial space will be built on the top of the mountain, but Sharp claims plans supplied to city and county officials don't show clearly such spaces.
Wednesday dismissals were not the first.
Previously dismissed by Brown were allegations that the industrial board was withholding emails among former Chattanooga City Attorney Michael McMahan and board members. Brown ruled in March the emails were protected under attorney-client privilege.
Deputy City Attorney Phil Noblett will represent the city in the filing.
What remains unclear is who will represent the industrial development board, which is appointed by the City Council.
McMahan had been representing the city and the board. But Mayor Andy Berke fired McMahan and other city employees when he took office.
Noblett said until incoming City Attorney Wade Hinton takes office on June 17, he would keep track of the case.
"The representation of the Industrial Development Board is what we'll have to resolve," he said.
Lacie Stone, spokeswoman for Berke's office, also said in an email Wednesday that Noblett would oversee the case for the industrial board until Hinton started work.
Asked Thursday for comment on Brown's most recent ruling, Sharp and her attorney, John Konvalinka, said only that they are pleased the core of Sharp's complaint is still on the table.
"I'm very pleased that the court is going to consider our petition on TIF approval," Sharp said.
Brown's recent ruling did not address the county's involvement in the lawsuit. But commissioners retired to executive session Wednesday during a regular commission meeting to discuss the litigation.
So far, County Attorney Rheubin Taylor has filed responses to the complaint saying the county denies all allegations.
Contact staff writer Louie Brogdon at 423-757-6481 or firstname.lastname@example.org. Follow him on Twitter at @glbrogdoniv.