Chattanooga Mayor Andy Berke and Hamilton County Mayor Jim Coppinger just drew a bright red line in the sand on tax incentive programs known as PILOTs.
On Thursday, they announced that the city and county had reached a $6 million settlement with the new owner of Alstom to reimburse half of the tax breaks the defunct manufacturer received in a 2008 payment-in-lieu-of-tax agreement.
The settlement was actually with GE, which purchased Alstom's power operations just over a year ago and later announced the steam turbine manufacturing plant and two other adjacent facilities would be closed, eliminating nearly 235 jobs through the year's end while offering benefit and severance packages.
Some may view the settlement as a glass half empty since the city and county had initially maintained they were owed $13 million because while the France-based Alstom had fulfilled the required $265 million in new facility investments, it had fallen far short of the promised 300 new jobs pledged in the 2008 deal.
On the other hand, the PILOT agreement contained no specific provision for city and county payback if and when the goals were not met. Further, GE had maintained that the PILOT was not its commitment, but rather Alstom's.
And, in fairness, for the better part of eight years, Alstom had employed between 100 and 250 Chattanoogans after building its new facility on the carcass site of Combustion Engineering, a manufacturer that once employed 6,000 workers and was Chattanooga's largest employer.
When Combustion was long gone, Alstom - and later GE - had worked to build fossil fuel and nuclear steam generating equipment. But those aspirations were dealt a death blow from market and natural forces. An earthquake and tsunami in Japan sent the Fukushima nuclear plant into meltdown in 2011 - largely sealing the coffin on any expected nuclear renaissance. Likewise, the energy market continues to lean away from expensive fossil fuel generation and toward natural gas-powered plants. Not only did Alstom's Chattanooga facility on Riverfront Parkway never reach its employment goal, it pretty much went bust. GE still employs about 50 people here.
Yes, it would have been nice to get the full $13 million sought. But without clawback language in the original deal, $6 million is gravy - especially since Alstom and GE had, despite other tax breaks, continued to pay their share toward schools. Additionally, this week's settlement requires GE to pay the city and county legal fees.
Perhaps most importantly, this settlement sets a strong precedent - especially now that under Berke and Coppinger, our PILOT agreements do carry clawback language specifying city and county payback when companies that receive tax incentives don't live up to their promises.
The message of this to companies with or seeking tax incentives going forward, Berke says, is that the city and county are serious when they say that our taxpayers must see gains for their extra investment in jobs.
Berke, who is seeking re-election next month, said the settlement in this first reimbursement case is "a clear win for the city." Coppinger termed the settlement "a good deal for us."
GE is slated to pay $3.3 million to the city and $2.7 million to the county.
Berke said the city will use some of its share to set up a new office of workforce development. Coppinger said the county's share will go into the county's general fund.
Kudos to Berke and Coppinger.
But thanks also is owed to taxpayer watchdogs - especially Helen Burns Sharp, a retired city planner transplanted here from Oregon who put up her own money to sue the city's Industrial Development Board over a different tax incentive some years ago.
Sharp, founder of the citizens group Accountability for Taxpayer Money, said the city and county should be reimbursed the entire $13 million from the Alstom/GE PILOT.
"If homeowners and small businesses get behind on our property taxes, we can't cut a deal to pay just a portion of what we owe," Sharp told a Times Free Press reporter on Thursday.
True enough, but even Sharp must agree that this week's settlement marks a new beginning. Her persistence through the years - along with the rally cries of others in the community and in this paper - forced government leaders in 2013 to rethink how they write these tax incentive agreements. Now that persistence also has prompted government leaders to finally hold companies accountable.
It's about time.