Chattanooga/Hamilton County Schools liquor tax settlement imminent

Chattanooga/Hamilton County Schools liquor tax settlement imminent

July 15th, 2014 by Joy Lukachick Smith in Local Regional News

Rick Smith and Andy Berke are seen in this composite photo.

Rick Smith and Andy Berke are seen in...

Mike Evatt, Chairman of the Hamilton County School Board

Mike Evatt, Chairman of the Hamilton County School...

Photo by Alex Washburn /Times Free Press.

The blame-shifting and bickering between Chattanooga and Hamilton County Schools officials over millions of dollars in delinquent liquor-by-the-drink taxes could end Friday with a settlement that gives school officials most of what they asked for.

A tentative settlement agreement will require the city to pay the school system more than $11 million along with the former Maurice Poss Homes site and the North River YMCA swimming pool, said Council Chairman Chip Henderson. In exchange, the school system will pay its $1.7 million in past-due storm water fees.

Terms are still being finalized, and the deal has to be agreed on by both governing bodies before it's official.

School board attorney Scott Bennett was writing the settlement Monday, and officials said the details will be discussed in executive session at Thursday's school board meeting. Henderson said he wasn't aware whether a date had been set to discuss the settlement with the City Council.

Assistant City Attorney Phil Noblett said the school system was working on the details of the property transfers, but he hoped the agreement could be signed by the end of the week.

The schools and the city have argued about the taxes owed since Mayor Andy Berke took office in April 2013 and his administration sought to repay only part of the debt using property and some cash.

A year later, the school system sued after leaders said talks with Berke's administration over more than $11.7 million in past-due, state-mandated liquor taxes were getting nowhere. Berke then offered to pay nearly $12 million over the next five years with multiple conditions, including that the money would be funneled only to schools within the city limits.

The mayor's administration later balked when the school system asked for a deal that acknowledged back taxes spanning more than three decades.

After Hamilton County Chancellor Jeffrey Atherton denied several of the city's motions, school officials asked for a summary judgment of $15.2 million in unpaid taxes dating to 1980.

Neither side explained what led to this week's agreement to settle.

The mayor's office declined to comment, citing pending litigation.

But school board Chairman Mike Evatt said it was better for both sides to settle outside of court.

"Anytime you can settle something outside of court without drowning in legal fees and publicity, we're talking about our community," he said. "It's just unfortunate we had to take it that far."

Evatt, who said he couldn't talk about the specifics of the agreement until it is finalized, wants to see the former Poss Homes public housing site in the schools' hands to finally build Howard School a much-needed athletic field and stadium.

City Councilman Larry Grohn agrees that things never should have gone this far.

"If we owe them money, then we owe it," he said. "I'm very happy we have stopped bickering."

Contact staff writer Joy Lukachick at or 423-757-6659.