Chattanooga Mayor Andy Berke gives a preview of his State of the City address at the Chattanooga Rotary Club on Thursday, Apr. 7, 2016, in Chattanooga, Tenn. The Chattanooga Economic Development Office has announced plans to use a tax rebate program to spur reinvestment in parts of the city that have been neglected by businesses.
Mayor Andy Berke said the proposed Neighborhood Economic Development Tax Rebate program "is a way for government to encourage small businesses as well as incentivize the biggest employers in our city."
Nick Wilkinson, deputy administrator for the economic development office, described highlights of the program he said will be rolled out in the near future. The City Council must approve it.
Councilman Chris Anderson said he looked forward to the plan.
"Mayor Berke and Nick Wilkinson have worked hard to support reinvestment in our low-income neighborhoods," Anderson said. "This program is an extension of those efforts."
Wilkinson said the tax rebate plan makes financial sense as a tool for addressing inequalities and seeks to encourage dramatic results by getting businesses to "double down on their neighborhoods."
Under the proposal, business owners would get back a share of additional taxes they pay for making certain improvements. The rebate would be based on construction costs and last for a set period of time, Wilkinson said.
The rebate program is not a payment-in-lieu-of taxes, or PILOT, arrangement, in which governments use tax abatements or other incentives to boost business investments, he said.
However, it is in the same family, Wilkinson said.
"The Neighborhood Economic Development Tax Rebate program is an opportunity to privatize revitalization through investments that are not otherwise happening," he said.
Wilkinson said the economic development office will thoroughly evaluate potential program areas before the proposal is implemented. The office also will create general eligibility requirements and develop an application, policies and procedures for the program, he said.
"By encouraging businesses to locate in commercial corridors that have experienced neglect, this program will provide another tool for small businesses to continue their growth and expansion," Wilkinson said.
Contact staff writer Paul Leach at 423-757-6481 or pleach@timesfreepress.com. Follow on Twitter @pleach_tfp.