The Chattanooga City Council approved Tuesday a property tax break for a Chattanooga-based logistics company with the expectation it will in turn create hundreds of jobs and bolster the local economy.
Six council members voted to approve a nine-year deal for Steam Logistics, which will move into the John Ross Building in downtown Chattanooga at Fourth and Broad streets. Under the agreement, the company would save $500,000 in property taxes during that time period.
Council chair Chip Henderson of Lookout Valley and Councilman Anthony Byrd of Orchard Knob were absent. Councilwoman Demetrus Coonrod of Ridgeside abstained from the vote because she said she has personal ties with someone at the company. She declined to elaborate.
"It is a great increase in wages, it's going to redevelop the area, and it will increase foot traffic downtown, which is what we want to see as we begin to recover from COVID and the economic downturn," said Councilwoman Raquetta Dotley, an East Lake resident whose district includes the area around the building.
The company is currently headquartered at 325 Market St., and CEO Jason Provonsha last week said the company may keep that office space if the pace of hiring continues.
The company would bring 400 jobs with an average annual pay of $56,000. In addition, it would create $11 million in investments in the community and provide more than $114 million in economic impact, said Jermaine Freeman, senior adviser to Mayor Tim Kelly for economic opportunity.
In addition, despite the fact the company would see tax relief over the nine-year period, the city would actually bring in significantly more property tax revenue from the property than it currently does.
The city would receive nearly $600,000 in property taxes over the time period, including fees paid under the tax deal with Steam. The fees can be used to fund small business development, Freeman said.
If the tax deal had not been approved, the city would have collected about $264,000 in property taxes during the period, Freeman said. The reason for the expected increase is that Chattanooga developer Noon Development plans to renovate the building beginning next year, which would increase its property value.
"They'll go in and fix the building up to create a higher property value, which then will generate taxes," said council vice chair Ken Smith of Hixson.
The Hamilton County Commission also must approve of the tax agreement. Its members will vote on the resolution Wednesday, and during an agenda session last week they indicated they, too, approve of the deal.
Contact Logan Hullinger at 814-319-5158 or email@example.com. Follow him on Twitter @LoganHullinger.