Chattanooga and Hamilton County are trying to recoup about $13 million from General Electric related to tax breaks given to its Alstom manufacturing operations nearly a decade ago for jobs that are being eliminated with the planned shut- down of the Alstom plant by year's end.
"The city and county can and should recoup the full amount of taxes abated on the real and personal property subject to the [payment in lieu of tax, or PILOT] agreement and owed to them from the inception of the PILOT agreement," reads a letter sent to GE late last week.
The letter, presented at a meeting of the city's Industrial Development Board on Tuesday, also said the city and county would like to have an agreement on the $13 million before the release of equipment at the company's Chattanooga steam turbine manufacturing facility on Riverfront Parkway. A two-day online auction for the equipment is set for today and Thursday.
The letter said that if GE agrees with the city and county calculations and accepts the $13 million liability, it could promptly pay that amount. The city and county would immediately release the property.
Or, the letter said, GE could agree in writing that the $13 million owed is correct and allow the IDB to retain ownership of the equipment valued at the equivalent amount.
Nick Wilkinson, the city's deputy administrator for economic development, told the IDB that while the city is disappointed the plant is closing, its No. 1 concern is to "take care of the taxpayers."
He said the negotiation with GE is "a fluid situation. There's still a lot of pieces to fall into place."
Wilkinson termed the GE property "an incredibly important site."
"We have to continue our momentum, whether it's GE or whoever," he said about the location. "We want to see jobs, good living wages."
Helen Burns Sharp, founder of the citizen taxpayer group Accountability for Taxpayer Money (ATM), said she's pleased the city and county appear to be taking action and that $13 million seems like a justified amount.
"We hope there have been measures taken to ensure that monies realized by the sale of property, by auction or otherwise, are not disbursed to GE or Alstom until the issue of repayment of taxes has been resolved," she said.
Under the 2008 PILOT, the IDB took ownership of about 100 acres of land as well as the steam turbine manufacturing plant's equipment and then leased them back to the company in exchange for new Alstom investment and jobs.
But board attorney Phil Noblett said the city recently had received a request for a bill of sale from GE related to the equipment. He said that bill of sale was tendered to GE along with the letter.
"We're still waiting for a response to that Nov. 30 letter," he said. Noblett said the board didn't have an opportunity to vote on the bill of sale related to the equipment.
"It's already written in the escrow agreement so it's an automatic thing," he said, so long as there's a notification request. Noblett added that the bill of sale did not involve the land but just the equipment.
GE said in a statement that it's currently reviewing the letter from the city and county and it's committed to working through the matter.
Franklin McCallie, an ATM member, said he was heartened that the city and county are trying to recoup the $13 million from GE.
He said the money could be used for local schools and infrastructure needs.
In June, GE Power announced it was closing the steam turbine plant and two other adjacent facilities, eliminating 235 jobs. About a year ago, U.S.-based GE completed a $10.6 billion acquisition of the power and transmission division of France-based Alstom, including the Chattanooga facilities. GE plans to keep about 50 people in Chattanooga.
ATM had raised questions relating to the PILOT agreement for GE's Alstom plant and has been critical of the pact.
Sharp said ATM "hopes that the Alstom [PILOT] experience will be a wake-up call to our elected officials about needed changes to the local process for reviewing tax break requests and enforcing the terms of agreements."
Sharp said the Alstom PILOT "shows why the city and county need policies and procedures for jobs PILOTs. It reveals flaws in vetting, monitoring and enforcement."
Contact Mike Pare at email@example.com or 423-757-6318.
This story was updated Dec. 6 at 11:35 p.m. with more information.