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Staff Photo by Robin Rudd / If plans for the new stadium are realized this view, from inside the old Wheland Foundry, would be what The Lookouts's right fielder would see looking toward home plate. Hamilton County and City of Chattanooga officials announced the plans to develop the former Wheland Foundry site, with a new baseball stadium being the anchor. The event took place at the Wheland Foundry site on June 30, 2022.

In 2008, the city and county approved a very large payment in lieu of taxes agreement to lure Volkswagen. The VW location was perceived (correctly) as a game changer that would create thousands of jobs and be a catalyst to attract other companies.

While a PILOT tax incentive was appropriate, perhaps we could have negotiated a 20-year rather than a 30-year property tax abatement, like Huntsville recently did for the Toyota- Mazda plant. Under that scenario, we would have started collecting general fund property taxes in 2030 rather than 2040. We are not collecting about $17 million in VW property taxes each year.

Also, had VW been required, like every other property owner, to pay its annual stormwater fee in addition to its education taxes, the schools would receive more tax money each year. In 2021, the amount of the stormwater fee deducted from school taxes was $867,000. This is a 30-year PILOT.

The takeaway? The way these deals are structured can have a major impact on future property tax revenue for services like fire, police, streets, schools, parks and affordable housing.

A new Lookouts baseball stadium is proposed on the former Wheland Foundry and U.S. Pipe sites on South Broad Street. The current plan calls for it to be paid for primarily by diversion of new property taxes in the area through a 30-year tax incentive known as tax increment financing (TIF).

Let's take a little time this time to make sure taxpayers are protected. Our leaders could:

— Pursue funding from the Tennessee General Assembly in January. Our request for $13.5 million for stadium construction was not approved in the last session. But there is the Knoxville Smokies precedent, and the local delegation might view a request more favorably if the team owner had more skin in the game. The addition of state money could reduce the amount of a stadium bond from $79.5 million to $66 million.

— Consider a different approach for repaying the bonds, shifting from local property taxes (TIF) to hotel-motel taxes from visitors. This is how bond debt repayment is structured in Columbia, S.C., where the Lookouts owner — Hardball Capital — also owns a minor league team. Since the stadium in Columbia is held out as a model for Chattanooga, let's look at its funding arrangement, both the source and the contribution of the team owner.

— Negotiate a greater contribution from the owners of the Lookouts. In the current proposal, the team owner would not provide any upfront money. In Columbia, the same owner provided 17% of the cost for stadium construction. Our stadium site and the entire area will be prime beneficiaries of a new $35 million I-24 interchange that the state is paying for. The county designated this site as an "opportunity zone," which provides tax benefits to investors. The public sector is doing its part to revitalize this area.

— Prepare a Memorandum of Understanding (MOU) with the team owner. Taxpayers need to be protected if something unforeseen happens in the baseball world if we agree to pay debt service on an $80 million stadium for 30 years. The city finance officer recently told city council members that the city and county would have to step in if things do not go as planned and there is a gap in debt service. Why should taxpayers assume this risk?

I worked on a TIF project in which PepsiCo planned a Gatorade facility. After work had begun, the company made a business decision because double-digit sales growth for Gatorade had slowed. They decided to breach the agreement with the city. Because the city attorney had put strong claw-back language in the agreement, the company wrote the city a check for $25 million to settle.

— Prepare a MOU with Core Development. This Nashville-based company has discussed investing $150 million in apartments and commercial space next to the proposed new stadium. The Chattanooga Area Chamber of Commerce told the city council that capturing the increment from this new investment is the reason they are promoting a very accelerated approval process. Their financial commitment and aggressive time frame need to be spelled out in an MOU.

Make clear in these MOUs that this TIF is limited to debt repayment on the stadium. Most TIFs are set up to pay for infrastructure, like streets and water and sewer lines in the TIF district. This TIF is set up to pay back debt on a stadium. Be clear in the MOUs that infrastructure is not an eligible project cost. Nor is brownfield remediation.

The stadium project could be a catalyst for revitalizing a blighted area. A master developer with a great track record seems interested. Both are big positives. But the funding package as currently proposed seems like an unusually advantageous (sweetheart) deal for the Lookouts owner at the expense of property taxpayers.

I hope our leaders will negotiate a more equitable agreement and that the stadium is a big success.

Helen Burns Sharp is founder of Accountability for Taxpayer Money, a public interest advocacy group focused on tax incentives and government transparency. Contact her at untiedlaces@gmail.com

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