The Chattanooga City Council decides today if it will accept a $6 million settlement from GE Power in connection to a broken tax break agreement with the former Alstom manufacturing operation on Riverfront Parkway.
GE purchased Alstom in November 2015, well after the France-based company had failed to meet job goal requirements set out in a 2008 payment-in-lieu-of-taxes agreement to expand its steam turbine manufacturing facilities. GE then closed the plant late last year.
The deal - a big step down from the $13 million initially sought by the city's outside legal counsel in a Nov. 30 letter to GE - has drawn scrutiny from council members and Accountability for Taxpayer Money, a local public policy advocacy group. Hamilton County, which also gave tax breaks to Alstom, would receive $2.7 million of the settlement.
Last week, council members questioned Deputy City Attorney Phil Noblett about GE's settlement proposal.
"Can you give us your assessment as to why you feel like the city has to settle for less than $13 million if that was the amount that is owed?" Councilman Ken Smith asked.
It comes down to the "legal prospects of winning," Noblett said, citing the fact GE was not the entity that entered into the tax break agreement on the front end.
"I have to always look at the possibilities of whether you could go through litigation over a long period of time and get zero dollars versus the aspect of settling and getting a specific amount of money," Noblett said. "We have been advised by our legal representatives in this case that this is a reasonable settlement at this point in time."
Smith asked if the $6 million offer was the first amount pitched by GE.
"This is definitely the result of many negotiations," Noblet replied. "The offers, at least on the front end, were considerably less than the $6 million number. I believe there were numbers starting around $2 million to $3 million."
Councilman Chip Henderson asked Noblett to provide a breakdown of what hiring benchmarks Alstom had achieved before the council votes.
Councilwoman Carol Berz praised the settlement and described the Alstom PILOT agreement as "very faulty" in its ability to recoup abated property tax dollars if the manufacturer failed to live up to its end of the bargain.
"I just don't want it to sound like we've given up this money," Berz said. "That's illusory."
Chattanooga Mayor Andy Berke and Hamilton County Mayor Jim Coppinger also praised the agreement when it was announced early this month.
Berke said the the PILOT didn't have strong "clawback" language defining what Alstom had to repay if it did not meet hiring and expansion goals.
Accountability for Taxpayer Money member Helen Burns Sharp challenged the idea of the PILOT having weak clawback language, remarking its citation by the city's counsel in the Nov. 30 letter to GE.
She urged the council to reconsider settlement language relinquishing GE of any future claims, pointing out claims could arise over chemical spills or other matters and not just property taxes owed.
Burns also asked if the settlement agreement would determine whether the city's Industrial Development Board actually owned manufacturing equipment auctioned by GE late last year.
The Hamilton County Commission is expected to consider the settlement on Wednesday, according to an announcement made by County Attorney Rheubin Taylor last week.
GE has "an urgency" to get the matter resolved, Noblett said.
Contact staff writer Paul Leach at 423-757-6481 or pleach@timesfreepress.com. Follow him on Twitter @pleach_tfp.