When it comes to deciding whether a tax break should be granted in Chattanooga, our elected officials seem to allow a select (and talented) group to make the informal decisions.
This group consists of the Chamber of Commerce, River City Co. and the Miller & Martin law firm. Many of our elected and appointed officials appear content to rubber stamp whatever this select group negotiates and sends to them. Both of our development agencies and this law firm do an excellent job of representing private interests. But when our local governments merely rubber stamp what is brought to them, no one is looking out for the common good.
That's what needs to change. We need policies and procedures to protect the public interest. The public also needs to become more aware of the very close relationships -- perhaps even conflicts of interests -- surrounding these deals.
The chamber is governed by a board of directors, whose current members include 10 individuals employed by companies which have benefited from a property tax break under the PILOT program. (BlueCross BlueShield of Tennessee, CBL, McKee Foods, Vision Hospitality, Unum, Astec, Kenco, EMJ, Komatsu and US Xpress).
One chamber board member serves on a city bond board that considers PILOT agreements. The city and county mayors are board members. The president/CEO of River City is on the chamber board, as are two members of Miller & Martin. Our city and county governments provide the chamber with over $1.2 million a year in taxpayer dollars for the economic development program. Members of the River City board of directors include the city and county mayors and a member of the City Council and County Commission. Two River City directors also serve on city bond boards that consider PILOT agreements. A member of Miller & Martin is on the River City board. When River City staff pitches the downtown housing program to elected officials, they are usually accompanied by a Miller & Martin attorney.
Miller & Martin attorneys also frequently draft PILOT agreements for their business clients. They apparently don't see it as part of their job to include strong language to protect the public if something goes awry. An article on its website from Southern Business and Development magazine references the firm's "outside the box thinking, which is critical when a project fails to meet the criteria of statutory incentives ... ." Maybe this kind of thinking explains how they were able to convince our officials that a road in the Black Creek Mountain golf course development deserved a huge tax subsidy using tax increment financing (TIF).
Mayor Andy Berke's chief of staff and city attorney once worked at Miller & Martin. During the re-do of the TIF approval by the City's Industrial Development Board last summer, several observers wondered who was orchestrating the re-approval process. Was it the city attorney's office for the entire community or was it Miller & Martin for their client? Someone made the call that the case would go back to the IDB to be rubber stamped rather than to our elected officials for debate.
It's time to give the public a seat at the table by adopting policies that make us more judicious about the use of tax incentives. It seems many PILOTs are rewards based upon relationships rather than inducements that really make a difference in a company's location or expansion decision. We have lots of needs in our community, and we are seriously eroding our revenue base with the number and magnitude of PILOT agreements.
The chamber and River City bring a lot of energy, enthusiasm and expertise to the table. We need them. What is missing is direction from our elected officials on policies about how to evaluate TIF and PILOT applications.
However we achieve it, we need procedures that make this murky world more transparent and more sensitive to the perception of conflicts. We also need meaningful clawback language to protect the public when a company does not meet its written obligations under a PILOT or TIF agreement.
Helen Burns Sharp is a retired community development director and public interest advocate.