In 2013 I filed a lawsuit challenging the tax increment financing (TIF) granted to developers for a road in a golf course subdivision known as Black Creek Mountain. This TIF is an enormous ($9 million plus interest), an improper and an illegal gift of taxpayer funds to developers who already have plenty of money. In 2014 a Hamilton County judge declared this TIF null and void.

Shortly after the judge issued his opinion based on violations of the Tennessee Sunshine Law, the City Industrial Development Board--with no discussion or deliberation in public--put a band-aid on the project and re-approved it. My original lawsuit is on appeal. I filed a new lawsuit in September 2014 because I was appalled at how the city went about re-approving the TIF. Open meetings, open records, and ethics issues again surfaced. Rather than returning the case to the elected officials since new policy issues had emerged, "someone" decided to send it back to the IDB, which typically acts as a rubber stamp. 

Please click on the Q&A tab at the top for more information on the TIF.


As the Black Creek lawsuits were working their way through the court system, I began to study the payment in-lieu of tax (PILOT) agreements currently in effect in Hamilton County. (All but one are in the City of Chattanooga.) While we have only one TIF at present, PILOT agreements covering 63 parcels were in effect in 2014. Most last about 10 years; some last up to 30 years.

It is very difficult to get complete information on the total amount of property tax being forgiven and the specifics of individual PILOT agreements. Our local governments have not adopted policies and procedures to guide them. It is unclear how decisions are made on which companies get tax breaks. The agreements contain weak language spelling out the obligations of the business recipients. Enforcement is discretionary.

We have in effect privatized our economic development program. The Chamber of Commerce and the River City Company are very effective lobbyists for private interests. Our elected officials also need to hear about the public interest dimension of property tax breaks. The city and county could begin to charge a PILOT application fee and use part of the money to hire an independent professional (such as a CPA or attorney) to do a detailed analysis of the costs and benefits of a PILOT to the City and taxpayers.

Please click on the PILOTs tab at the top for more information.

TIFs and PILOTs can be appropriate tools in our economic development tool box. However, we need to establish policies which target incentives to companies that will make a significant commitment to investment and quality jobs and can demonstrate that they wouldn't be here without the incentive. We need policies to make sure that companies are held accountable for their commitments. We need procedures to create transparency so that information on tax subsidies becomes accessible to the public.

We need to realize how truly special Chattanooga has become and that it is not necessary to give away the farm. Out tax break "program" seems geared to 50 years ago when we were desperate to get new development. Companies choose to locate or expand here because of business and quality of life considerations. Greg LeRoy, founder of the non-profit Good Jobs First, cites IRS statistics showing that state and local taxes make up less than two percent of a typical company's cost of doing business. Tax incentives are the icing on the cake.  

It takes money to run a city and a county. This money has to come from somewhere, and the majority comes from property taxes. We assume all taxpayers pay their fair share. When certain companies are given special consideration, this arrangement impacts other property owners by reducing the amount of revenue collected. It can lead to a tax increase or a reduced level of service. It means there is less money available for high priority community projects. Let's use tax abatements judiciously. Let's make sure the PUBLIC INTEREST has a seat at the negotiating table.

Thanks for reading. I hope you will get involved in this important public policy issue. We can make a difference.

~Helen Burns Sharp