Chattanooga City HallThe Government Accounting Standards Board, which sets national accounting standards, is considering adding new rules to require governments to track how much they are forgiving in taxes each year and report it as lost income.
That would mean Hamilton County and the city of Chattanooga would have to disclose in annual financial reports how many tax dollars were not collected from payment-in-lieu-of-tax agreements they have with industries such as Volkswagen, Coca-Cola Bottling, Southern Champion Tray and nearly 20 others.
As of July 6, 2014, there were $285 million in current commercial tax agreements in the city, according to Chattanooga Area Chamber of Commerce figures. But critics have said no one's really keeping close track -- and current numbers are very difficult to find.
Dean Mead, the Government Accounting Standards Board's research manager, said the board is trying to change that trend. But the rule isn't about good government -- it's about good accounting.
"What we are trying to do is ensure that citizens and other people who are interested in government have some information about how these types of agreements impact a government's ability to raise revenue," Mead said. "The government that has to implement [the rules] ends up benefiting from collecting the information, because they become more aware of the situation."
That sounds great to Helen Burns Sharp, a retired city planner and local tax-break watchdog. Sharp won a lawsuit against the city's Industrial Development Board for holding secret meetings during which members discussed a tax increment financing plan for a controversial golf course development on Aetna Mountain. If the new rules are adopted, it would be a "huge step in the right direction," Sharp said. But it might not be huge enough.
"My understanding was it was going to require local governments to disclose the total amount of taxes they forgave, but they are not going to require a breakdown by the different businesses," Sharp said.
Still, she will take what she can get. Sharp has researched tax incentives in the city and county for the past year. She says there are a lot more PILOT agreements active than the 20 the chamber acknowledges.
After researching tax records, city and county documents and Chamber of Commerce material, Sharp said there are 63 commercial or residential PILOTs for nearly 50 entities countywide.
Charles Wood, the chamber's vice president of economic development, said the chamber is involved in only some of the local tax agreements.
"The difference is we are only focused on projects that are kind of job-creation projects," Wood said.
Large manufacturers, export companies and others that create "permanent, full-time work" are on the chamber's radar. Wood said the chamber is not involved with -- or even made aware of -- tax agreements for housing developments or other businesses.
One non-chamber tax agreement would include the 16-year housing PILOT the Chattanooga Choo Choo Hotel is seeking as part of its $8 million renovation. The Choo Choo plans to build 97 rooms in its hotel to be rented as affordable apartments.
"These agreements are already in effect, and we can't change them. But we have been so lax in putting clawback provision in the agreements. And we have been lax in monitoring these things for performance," Sharp said.
County Finance Administrator Albert Kiser said the new rules would only add transparency to the process. The county's books and its three AAA bond ratings wouldn't be affected.
"I can't imagine this additional requirement having any impact on Hamilton County's credit rating. Governments across the country do tax abatement arrangements. They do PILOT agreements, and every rating agency knows and understands this. All it would do is require disclosure of these PILOT agreements in our financial statements," Kiser said.
Daisy Madison, chief financial officer for Chattanooga, said the change would benefit residents, the business community and others who want to deal with the city.
"It won't really make any difference to the city as far as finances go. What it does do is, it will increase transparency, which is what GASB is trying to do," Madison said.
Wood said the new rules wouldn't affect the work the chamber does for the city and county. But the it would continue to help the governments however it can.
"From our perspective, it's important for us that when we are working with the city and county that we are providing the information they need," Wood said.
Contact staff writer Louie Brogdon at lbrogdon@timesfreepress.com, @glbrogdoniv on Twitter or at 423-757-6481.