Chattanooga’s latest TIF application allows the city to demonstrate that it realizes the importance of negotiating an agreement that is fair to taxpayers when providing an economic incentive.
When the city approves tax deals like Payments-In-Lieu-of-Taxes (PILOT) or Tax Increment Financing (TIF), millions in public dollars never reach basic services like police, fire, parks or affordable housing. Last year alone, $30 million in city and county property taxes were diverted or abated. These arrangements can last decades.
TIFs can be powerful tools when used wisely. However, they must be negotiated with the public interest front and center. When used carelessly, they saddle taxpayers with costs while developers reap the rewards. In the rush to appear “pro-business,” it has sometimes seemed like we have given away the store.
Here’s a funding snapshot for the Lookouts’ new baseball stadium. It was (fairly) pitched as a catalyst for redevelopment in a blighted area, a classic TIF scenario. The financial deal cut with the team owner and surrounding landholders placed about 75% of the $115 million cost on taxpayers. The team contributed $3 million upfront, the site owner paid nothing upfront, the state declined to help, and no hotel-motel tax revenue was tapped.
The site owner ($10 million) and the team ($16 million) purchased tax increment financing that will not be repaid in full if Wheland Foundry/U.S. Pipe isn’t redeveloped so as to generate adequate tax increment revenues.