Proposed Chattanooga tax incentive policies hit a delay until next year

Staff File Photo by Matt Hamilton / The Novonix plant in Chattanooga, shown in November 2021, received tax incentives for the redevelopment of the facility to make materials used in batteries for electric vehicles.

Amid concerns raised by citizen groups, Chattanooga officials Monday agreed to wait until January to consider a new draft policy for how some tax incentives for businesses are crafted and approved.

The delay will allow the city to continue talks with the groups and Hamilton County, said Jermaine Freeman, interim chief of staff for Chattanooga Mayor Tim Kelly, at a meeting of the city's Industrial Development Board.

"We ask that instead of adopting a policy today, we ask you to give us more time to engage with community members and bring back a policy in 90 days to consider," Freeman said.

At least one sticking point is a provision in the draft policy that would allow payment-in-lieu-of-tax agreements, or PILOTs, that don't exceed 10 years and meet certain criteria to go directly to the development board to be voted on and not to the City Council.

(READ MORE: Proposed policy may speed up tax incentive deals in Hamilton County)

Chattanoogans in Action for Love, Equality and Benevolence, or CALEB, wants to make sure there's transparency in the process, Janice Gooden, who represents the group, said in an interview after the meeting.

"That's a main concern," she said. "I feel like we're making progress, but we're not quite there yet."

Joe Paden, also with CALEB, said in an interview the group is considering options and the deferral gives them more time.

"There are a number of different routes we could take," he said.

Helen Burns Sharp, founder of Accountability for Taxpayer Money, said the groups have been meeting off and on with the city.

"We feel like we're making some progress," she said in an interview. "We all kind of felt a little bit longer to talk about some of these issues will be good and end up with a better result."

Freeman said at the meeting that while there are concerns about the 10-year threshold, that's where the administration wants to go in partnership with the Chattanooga Area Chamber of Commerce.

"Typically we don't do a lot of PILOTs that extend longer than 10 years," he said.

(READ MORE: Chattanooga official defends proposed tax incentive policy)

Freeman said business incentive tax expert Mark Mamantov, of Knoxville law firm Bass, Berry & Sims, has recently joined the discussion. He said area homebuilders and the Associated General Contractors are joining as well.

Kerry Hayes, the development board's chair, asked the city to clarify and update the average wage levels for jobs provided by companies seeking a tax incentive as part of the draft policy.

Provided the board receives the latest draft in December, a vote could be taken in January with the policy then going to the City Council for its consideration, officials said.

Currently, the tax incentive deals come before the City Council, which votes on whether to approve them, and then they're forwarded to the Industrial Development Board.

But other Tennessee cities such as Memphis, Knoxville, Clarksville and Nashville offer faster processes for businesses, with policies set by elected leaders and enforced by development boards, according to the chamber.

The change envisioned by the draft "allows communities to define the types of projects they want and then streamline the process so they can be more competitive when working to attract and retain jobs and investment," Chamber Chief Executive Charles Wood said in an email.

The draft policy protects school taxes and stormwater fees, and it requires an economic development analysis, Adam Myers, the chamber's new vice president for economic development, told the board.

He said the draft also mandates an affidavit from the company seeking the tax deal stating that the project wouldn't happen in Chattanooga if not for the incentives.

Contact Mike Pare at or 423-757-6318.