Chattanooga hit over failure to join Hamilton County in Southern Champion Tray tax breaks

Staff file photo / Roland Jones works on the production line at Southern Champion Tray in Chattanooga in 2017.

Hamilton County Commissioner Tim Boyd on Wednesday slammed the city of Chattanooga for not participating in tax incentives for Southern Champion Tray's planned $85 million expansion.

"I want this commission to vividly remember this day," Boyd said. "The next time the city brings a real estate development project ... I advise we throw it back in their face."

County Mayor Jim Coppinger said he didn't know why the city isn't participating, which was believed to have been the first time Chattanooga didn't join in offering tax incentives.

"I didn't speak with Mayor Berke specifically," he said. "I don't know what the reluctance was."

Commissioner Greg Martin said he was "disappointed" with the city's not taking part with the county.

"I found that curious," he said at an agenda session. The PILOT will be taken up again by the county next week.

Chattanooga-based Southern Champion Tray plans to invest nearly $85 million in a new manufacturing plant at Centre South Riverport where it will create more than 120 jobs, officials said Tuesday.

The 93-year-old company, which makes paperboard packaging products including food sleeves, trays, window boxes, and cupcake inserts, already employs more than 750 people, including more than 500 in Chattanooga.

Brian Hunt, the company's chief operations officer, said SCT made multiple requests to the city over a three-month period.

"We had a difficult time getting a response," he said.

Then, having received a 'no' from the city related to a payment-in-lieu-of-tax agreement, or PILOT, SCT sought infrastructure help from the city, Hunt said.

"They declined," he said.

Steve Hiatt, the Chattanooga Area Chamber of Commerce's director of existing business development, told the County Commission that he "shared your curiosity."

"We were told 'no' is all I can say at this point," he said. Hiatt said that there's no other PILOT in Chattanooga he can recall that the city didn't participate in with the county.

City spokeswoman Richel Albright said after the county meeting that the SCT project did not meet its criteria for tax abatement, but officials look forward to its continued success.

"The city welcomes economic growth and we're thrilled that Southern Champion Tray wants to expand their operations here," she said. "They've proven to be a terrific corporate citizen and we are particularly grateful for their work in providing PPE during the pandemic."

As presented to the County Commission, the PILOT would cover five years and SCT would pay the school tax portion of its property taxes for the project over the period and an economic development fee. Otherwise, SCT would pay zero taxes the first year and then 25% in the second, 40% in the third and 50% in the fourth and fifth years.

Helen Burns Sharp, founder of Accountability for Taxpayer Money, said that while the COVID-19 pandemic has changed almost everything, one exception is how easy it still is for a company to get a PILOT from Hamilton County.

"Hamilton County already leads the state in the amount of non-collected tax revenue due to PILOTs," she said. "Do our leaders know this? Do they care?"

For 2019, the amount of tax revenue abated was $25 million - $15 million city of Chattanooga and $10 million from Hamilton County, Sharp said.

"This money, if collected, could go towards public safety, streets, parks, workforce development, etc." she said. "Because of the virus, county tax revenues have taken a big hit, especially sales tax and hotel-motel tax."

She said ATM officials believe that tax breaks should be reserved for projects which have significant public benefit and would not happen without the incentive.

SCT's new manufacturing facility will convert paperboard into packaging products, the company said. Construction will begin in early 2021 with completion by early 2022.

John Zeiser, SCT president and chief executive officer, said the company is purchasing a 56.4-acre tract in Centre South off Amnicola Highway.

"It will support continued expansion of our manufacturing operation here in town," he said. "We are bursting at the seams where we are, so we have to expand. We're blessed to be able to continue to grow in Hamilton County."

Contact Mike Pare at [email protected]. Follow him on Twitter @MikePareTFP.

photo Staff Photo by Robin Rudd / Tim Boyd is commissioner of District 8.