State Rep. Gerald McCormick said he is dropping efforts to require non-binding public referendum votes before local governments can commit to using tax dollars to help pay for professional sports team stadiums.
Instead, the Chattanooga Republican is amending his legislation to set up a review process involving the state Comptroller's office before cities and counties can agree to use future property and sales tax revenues to service bonds issued for the projects.
"We've amended it, still amending it, with input from various interested parties that generally own ball teams to make it where there is a process where the comptroller is involved and basically oversees the process," McCormick said last week.
He said the intent is aimed at ensuring that whatever public obligations are made on such deals will result in taxpayers "getting a fair shake."
The lawmaker introduced the bill and a companion measure this year amid public discussion involving the possible relocation of the Chattanooga Lookouts to the 141-acre U.S. Pipe/Wheland Foundry site located in the South Broad District.
Property owners are eyeing the site as a sports and entertainment venue, and Chattanooga Lookouts baseball team owners are interested in relocating there. They are likely to seek government assistance.
With other Tennessee cities having made similar deals in the last few decades - including a recent partnership between a group of businessmen and Nashville to lure a Major League Soccer franchise team to the city - McCormick filed two bills. Sen. Todd Gardenhire, R-Chattanooga, agreed to carry them in the Senate.
One was the non- binding public referendum bill, a proposal that created considerable heartburn for proponents of the Lookouts relocation. The other was defining and restricting what types of public infrastructure tax proceeds could pay for. Prohibited items included actual stadiums, although sewers, roads, lighting and other infrastructure was allowed.
Regarding the second bill providing definitions on infrastructure, McCormick said a recent report issued by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) tackled that issue. McCormick said he's looking at tweaking that.
The lawmaker, who is chairman of the House Finance Subcommittee, also said he's looking at "clawback provisions" to protect Tennessee government interests when it comes to committing future sales taxes that can be generated by such developments with public aid.
Chattanooga Mayor Andy Berke said in a statement that "taxpayers of course deserve reasonable protections when public resources are going to be used for economic and community development activities."
The mayor said his administration "has put in strong 'clawback provisions' for private entities that request incentives for developments. We have also pursued legal action against entities when promised jobs and wages do not materialize, such as with Alstom in 2015, which resulted in a multi-million dollar settlement with the City of Chattanooga and Hamilton County Government."
Moving forward, the mayor said, "we believe that the continued involvement of public and private partners will be needed to deliver projects that create good jobs and support the Chattanooga region's positive economic trajectory."
The mayor also said that "figuring out how to effectively protect taxpayers' interests is a matter best left to local governments and their constituents, although of course we look forward to collaborating with members of the General Assembly as we work to sustain our positive economic growth in a way that is rational and responsible for all concerned."
The Chattanooga Lookouts is a minor league team and Double-A affiliate of the Minnesota Twins. The team now plays in AT&T Field, located near the Olgiatti Bridge.
Back in December, Lookouts operator Jason Freier told the Times Free Press that while no decision had been made on relocating the ball park or seeking public financial support, he had issues with a referendum, be it binding or non-binding. He said his experience in other cities was "it has always been something proposed by people who are against the project."
McCormick said last week he got "feedback from several pro sports people who own teams who said it would make it very difficult when they're in competition with another city in another state if they had to go in and say we got to go in and do a referendum."
Among them was Bill Hagerty, a former state economic and development commissioner and current U.S. ambassador to Japan. Hagerty is one of the principals in Nashville's new pro soccer team. The overall deal includes construction of a stadium with public support.
"He said one of his selling points when he went to Major League Soccer was to tell them a referendum was not going to be required. He said that was a major selling point," noted McCormick, adding Hagerty said it couldn't have been done otherwise.
Nashville's successful efforts in luring NFL and NHL teams have helped transform its downtown.
With regard to how these type public financial support agreements can be constructed, Mike Mallen, part of the foundry ownership group, said last month the Wheland/U.S. Pipe site qualifies for brownfield tax increment financing (TIF), a tool that could be used to help spur development in the area.
In TIF districts, the city and county use increases in taxes generated by new development to repay investments in streets, parks and other such improvements. Mallen said the next step is to work with Lookouts owners and come up with "a budget proforma" and a development plan, and to involve the city and Hamilton County.
Citing McCormick's comments about ensuring that taxpayers get a "fair shake" in these types of deals, Helen Burns Sharp, a retired professional planner and founder of the local watchdog group Accountability for Taxpayer Money in Chattanooga (ATM), said she's "glad he is championing this concept.
"Too often in Chattanooga/Hamilton County, agreements have been one-sided in favor of development interests," she said in email. "No one seems to be at the negotiating table representing taxpayers when these deals are struck."
There are several ways to improve the agreements, she added, "such as by adding meaningful clawback language to make sure the company meets its commitments and by adding community benefits provisions."
Sharp said Accountability for Taxpayer Money is a big believer in requiring a test on the public/private partnership agreements, noting the approach "requires an objective analysis of whether a company we want to attract or retain really is likely to go elsewhere if they are not given a tax break."
For example, she said, "local governments can require companies to sign an affidavit saying that the tax break is the determining factor."
The amended version of McCormick's non-binding referendum bill, HB 1465, is scheduled to be heard Wednesday in the House Local Government Subcommittee.
Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1. Contact Judy Walton at jwalton@timesfreepress.com or 423-757-6416.