Chattanooga City Council accepts $6 million tax settlement with Alstom

Chattanooga City Council accepts $6 million tax settlement with Alstom

March 15th, 2017 by Steve Johnson in Politics Local

The Alstom plant is seen from Point Park on Thursday, Dec. 31, 2015, in Lookout Mountain, Tenn.

Photo by Doug Strickland /Times Free Press.

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The Chattanooga City Council approved a $6 million settlement with Alstom Tuesday to refund tax breaks the city and Hamilton County had granted the company for job creation after the firm announced it was instead laying off all of its workers.

The city had granted Alstom's Riverfront Parkway steam turbine manufacturing plant the tax breaks in a 2008 agreement. But Alstom failed to reach hiring and expansion goals set out in the deal, and GE closed the plant late last year after purchasing it in 2015.

Under the settlement, the city and county's legal bills will be paid, the city will receive $3.5 million and the county $2.5 million, city attorney Wade Hinton said.

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While the city had initially asked for $13 million, Hinton argued that the lower number was a good deal given the uncertainty about the outcome of a lawsuit. He also said it was in the city's interest to allow General Electric to move forward in either putting something else on the property or selling it to another company that might bring jobs to the city. GE will also resume paying full taxes on the property as of last November, Hinton said.

The settlement was approved by a 6-2 vote, with council members Larry Grohn and Ken Smith voting no.

The council also again confronted the issue of what to do about short-term rental property, approved almost $5 million in sewer improvements, and asked the county elections board to change the location of an early voting site.

The council ended up having to delay making a decision on whether to rezone a plot of land on the North Shore for use as a short-term rental property. Eda and Nathan Walldorf asked the council to rezone their property at 225 Baker St. from its current R-2 zoning to R-3, which would allow the short-term rental. But the Baker Hilltop Neighborhood Association opposed the move, arguing that R-3 also allows multifamily housing, something the neighborhood opposes.

The council ended up delaying a vote for 60 days, hoping in the interim to pass its own legislation regulating short-term rentals or to get some guidance from the state Legislature, where lawmakers have been trying to find their own solutions to the issue.

On the one hand, many homeowners appreciate being able to use services such as Airbnb and VRBO to earn extra income, while consumers seem to like the more personal experience of renting from people who live in a neighborhood instead of staying in a hotel or motel. But some neighbors oppose the idea, particularly where the owners do not live in the housing, such as the Walldorfs are proposing.

The council has previously tried to resolve the issue with its own ordinance, but has stumbled on how to differentiate short-term rentals from boarding houses, and how to regulate the rentals without creating too much bureaucracy.

Councilman Chip Henderson said he has asked city attorney Wade Hinton to draft an ordinance, which Hinton said he could likely have ready in 60 days, so the Walldorfs could perhaps apply for a permit for a short-term rental instead of seeking a much broader re-zoning.

Eda Walldorf noted that there are now some 500 short-term rental properties being advertised in Chattanooga, while only about 20 people have come forward to ask for permission from the city to operate the sites legally.

After the council voted to delay a decision, the Walldorfs and neighbors all moved into the hallway, where the neighborhood group agreed that it would not object if the Walldorfs went ahead with their short-term rental, without city permission, without getting rezoned.

Contact reporter Steve Johnson at 423-757-6673,, on Twitter @stevejohnsonTFP, and on Facebook,

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