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Staff file photo by Robin Rudd/ Chattanooga Mayor Andy Berke welcomes Nippon Paint USA, Inc. to Chattanooga in this file photo. Standing in front of the Harriet Tubman site and behind Burke from left are, Hiroyuki Kobayashi, consulate-general of Japan in Nashville and Tetsuro Fujita, president and CEO of Nippon Paint USA Inc.

Neighborhoods surrounding the 44 acres that once housed the Harriet Tubman public housing development should be included in a proposed tax increment financing district, said local residents during a public hearing on the issue Thursday.

"The boundaries could be much more expansive," said Eric Atkins from the Unity Group during a meeting of city's Industrial Development Board. "That could be a catalyst to spark more development in the future."

Nippon Paint is expected to build a 270,000-square-foot facility on 29 acres of the 44-acre site beginning in the first quarter of 2020, bringing 150 jobs to East Chattanooga over the next 5-7 years. The proposed tax increment financing (TIF) district includes the site where Nippon will build, as well as the remaining 15 acres around it.

Within the district, a portion of taxes paid on the property are invested in infrastructure improvements to attract development to the area. Eligible improvements include elements such as roads, sidewalks, landscaping and lighting, which create a more attractive site for further development. Over the next 20 years, Nippon will pay $11.4 million in taxes, with about $4 million going to improvements to the zone, according to estimates from the city.

But the proposed 44-acre tax increment financing zone leaves a lot of people behind, said Everlena Holmes, a Glenwood neighborhood advocate and executive director of Enroll the Region, a volunteer organization that helps vulnerable people get access to health care.

"East Chattanooga will rise if the neighborhoods around it rise," she said during the meeting Thursday. "There's a lot that needs to be done in East Chattanooga. What's the rush for the TIF?"

What’s a TIF?

In a Tax Increment Financing district, all property tax revenue beyond a base amount is invested in infrastructure improvements within the zone. The district is in effect for 20 years, and improvements include elements such as roads, sidewalks, landscaping and lighting that make the area more attractive for further investment. TIF dollars cannot be used to invest in housing, but housing may be permitted in TIF zones.

Source: City of Chattanooga

But options for expanding the zone are limited, in part because of the type of TIF the city has applied to create, said Charita Allen, Chattanooga's administrator for economic development.

"We believe those that have raised this issue are referring to what can be done with a redevelopment TIF, not an industrial TIF, which is what we have applied for," she said. "It's important to note that this type of TIF only allows us to use the funding for infrastructure improvement, i.e., roadways, sidewalks, lighting, and landscaping, that would impact the anchor project itself and adjacent and immediately nearby properties that will see an impact."

Expanding the zone would also dilute the funds available for improvements, she said. If the district outperforms expectations, and there are additional projects nearby that could be added to the current district, there may be an option to expand later, Allen said.

The Industrial Development Board must authorize the creation of the zone, and the City Council and Hamilton County Commission also need to approve it before it can take effect. The board didn't have a quorum on Thursday, and could not act to put the proposed TIF boundaries before the City Council. There will be another public meeting on the topic on Dec. 2.

Helen Burns Sharp, who leads Accountability for Taxpayer Money, said in a written statement that she supports the creation of the zone, but also believes it should be expanded.

"Currently, it's narrowly drawn to include only the former Tubman site and residential properties along Southern Street," she said. "However, it seems short-sighted not to include within the TIF boundary other properties that may redevelop over the 20-year life of the TIF."

Contact Mary Fortune at mfortune@timesfreepress.com or 423-757-6653. Follow her on Twitter at @maryfortune.

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