City panel OKs Alstom tax break despite worries

City panel OKs Alstom tax break despite worries

September 2nd, 2015 by Mike Pare in Business Around the Region

The Alstom logo is stamped onto the door of a turbine test facility inside the Alstom Power Turbines factory on Riverfront Parkway in Chattanooga on August 15, 2012.

Photo by Alyson Wright /Times Free Press.

A city panel Tuesday OK'd a revised property tax break for Alstom in which the company has agreed to pay more in the future.

But the plan drew fire from a taxpayer group.

Chattanooga's Industrial Development Board approved the amended payment-in-lieu-of-taxes (PILOT) pact that was hammered out in talks with the city and Hamilton County mayors.

The move comes amid reports that General Electric is likely to win European Commission approval in the coming days for its $14 billion deal to buy Alstom's energy assets.

City Attorney Wade Hinton said the hope is that Alstom will remain in the city and create more jobs.

He said the revised PILOT calls for revisiting the tax breaks in March of next year. By that time, officials believe the company's proposed purchase will be clarified.

"We'll have a better idea of who is the management team at that point," Hinton said.

France-based Alstom, which built a turbomachinery production plant off Riverfront Parkway in 2010, will pay more than $630,000 a year in new city and county taxes for the remaining eight years of the tax incentive agreement, officials have said. Also, Alstom will prepay $250,000 toward its 2016 tax payments to the city and county.

The PILOT was amended after Alstom created only 140 of the 300 jobs it originally promised to add in Chattanooga at its new plant.

Helen Burns Sharp, representing the tax watchdog group Accountability for Taxpayer Money, told the IDB that the city and county had the right to terminate the PILOT and put the plant back on the tax rolls this year.

"I think this is a great deal for Alstom," she said. "I'm a little perplexed about how good it is for the public. [Alstom] didn't live up to their end of the commitment."

Sharp said Alstom as a company last year pleaded guilty in the U.S. to a bribery scheme and agreed to pay a $772 million criminal penalty.

"It's interesting to me that if they can find a way to pay a $772 million fine, they can pay all of their fair share of property taxes in Chattanooga and Hamilton County," she said.

Hinton said the City Council has approved the revised PILOT and the County Commission is expected to take up the revised tax plan later this month. He said Alstom exceeded the amount of money it planned to invest in the turbomachiney plant.

Contact Mike Pare at or 423-757-6318.