Staff Photo by Dan Henry / The Chattanooga Times Free Press- 10/27/14. Walnut Commons in downtown Chattanooga.Why would reputable local developers and a recognized attorney from a highly regarded law firm have been willing to cut the school children out of their due taxes in a deal that went down in 2010 in Chattanooga?
This is a crucial question about the "deal" that the City's Health, Education and Housing Board approved as part of the Walnut Commons housing PILOT (payment in lieu of taxes). This "deal" also ignored the Tennessee State law mandate for an HEB tax break that a percentage of units be set aside for moderate-to-low income residents. Further, the developers' pledge to build a parking garage was not kept. The affordability component and the parking garage were the only public benefit justifications for a $2.4 million tax break over a 14-year period. Almost one-third of this amount would have gone to the public schools.
Within a year of occupancy, the original developers sold the Walnut Commons to another company - in Nebraska - with a profit reportedly in the neighborhood of $4 million. The new owners were allowed to keep the tax break. Now in 2016 the Nebraska company wants to alter the "deal," and the members of the Chattanooga housing board have to decide whether or not to accept the company's request.
If the board votes "no," Walnut Commons will be mandated to pay the remaining city and county taxes - $1.4 million over the next nine years - with almost one-third of those funds being allocated to our public school children. The remainder of that tax revenue would go to fire and police, roads and bridges, employment training programs, etc.
The attorney for the Walnut Commons developers said in an open meeting: "A deal is a deal!" The attorney for the citizens' group ATM (Accountability for Taxpayers' Money) said that the attorney for Walnut Commons apparently believes that only the housing board is bound by these documents, but that Walnut Commons seems not bound by any pledge it made. The ATM attorney believes that what the company is seeking is a "new deal" and that the housing board is not obligated to approve it. The board has a choice.
Who will stand up for our children and our schools? Will the housing board do the right thing for the public? Or will board members listen if city attorneys warn them the city might get sued and that they should thus perpetuate this terrible new deal? Do the mayor's city attorneys believe that any time there is a threat of litigation, we should decide solely based on that, even if a company has clearly breached an agreement?
Possibly the National Association of Counties said it best for all of us: "The wisdom to know and the courage to defend the public interest."
The words in that motto are what we are asking of Mayor Andy Berke, the members of the city's Health, Education and Housing Board, the city attorney of Chattanooga, the attorney for the Walnut Commons, and the second developer who now holds the contract on this project.
The vote is expected to be taken at noon on Wednesday in the City Council chambers at City Hall. I am encouraging all citizens to attend to see and hear the official proceedings on this vote for our public school children and our city and county services.
Franklin McCallie is a retired educator.