Hamilton Herald Masthead

Editorial


Front Page - Friday, May 8, 2015

Certain principles should guide use of a PILOT programs


Realtor Association President's Message



Travis Close

As experts on the local real estate market, Realtors are an invaluable resource to our city and county leadership as they explore economic development opportunities. Recently, the Association was asked to weigh in on Payment In Lieu Of Taxes (PILOT) programs. In determining our position on PILOTs, it’s important to note that Realtor and County Commissioner Sabrena Turner-Smedley currently serves on the Association’s Board of Directors. However, Commissioner Turner-Smedley abstained from voting on the Association’s PILOT position statement, as outlined below.

As defined by the Hamilton County Board of Commissioners and Chattanooga City Council, PILOTs are sound, acceptable, and positive instruments of tax policy when used for the purpose of economic development in a thoughtful and judicious manner, and in accordance with principles which are accountable, transparent in their terms, transferable, fairly and consistently granted to all qualifying and eligible applicants, and readily explainable to the public. The Association approves of the use of PILOTS, subject to certain principles, including the following:

Defined, disclosed and justified: Governmental bodies should follow a thorough analysis process to vet a project’s benefits to the community in terms that are clear and meaningful. This process should be fair and balanced, and elected officials should use all means at their disposal to ensure that the public is fully informed about the process, including the guidelines for application; the qualifications of the applicants; individual application details; and the dates, places, and times in which public comment will be heard, oral or written. All of this should be available on the Web.

Accountability: Successful PILOT applications should be carried out with strict adherence to the reporting requirements established by local governments. PILOT recipients should be held to a high standard of reporting periodic performance results on each item within their application process. Government must assure the performance of the applicants by use of a “claw back” process, which imposes appropriate and proportional sanctions against PILOT recipients who fail to achieve and maintain the level of accountability reporting and measureable satisfactory performance agreed to within the granting process.

Transparency: All terms of PILOT programs should be stated in advance in a specific manner, and as a matter of public record. These terms include: financial investment reporting; expectations of employment generation; measurable, affordable housing goals; and possible conflict of interest reporting. Applicants should be required to produce specific statistical data where applicable, as opposed to vague suppositions that might be difficult to support.

Transferability: Transferability of a PILOT is essential to development financing, and making a PILOT non-transferable greatly restricts the effectiveness of the program. Because of the risk and uncertainty that typically accompany property development – including the economy and catastrophic events beyond control of an applicant – the government should determine at the outset policies generally allowing transfer of the PILOT benefits, upon sale of the property, to a new owner or developer, as long as the new owner adheres to the requirements imposed on the original developer.

Fairness: Applicants should be assured of a fair and impartial hearing of a PILOT request before all governmental bodies. Because it is a fundamental necessity to maintain public trust in the program, there cannot be any suggestion of favoritism, partiality, or inside dealing in the granting process. PILOT programs must be consistently approved and governed on a basis of even-handed treatment given to each applicant regardless of the size of the application, as long as each application meets the standards of appropriateness, clarity of purpose, and use.

The Greater Chattanooga Association of Realtors is “The Voice of Real Estate in Greater Chattanooga.” The Association is a regional organization with more than 1,500 members, and is one of more than 1,400 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. The Greater Chattanooga Association of Realtors services Hamilton and Sequatchie counties in southeast Tennessee, and Catoosa, Dade, and Walker counties in northwest Georgia. For more information, visit www.gcar.net.

As experts on the local real estate market, Realtors are an invaluable resource to our city and county leadership as they explore economic development opportunities. Recently, the Association was asked to weigh in on Payment In Lieu Of Taxes (PILOT) programs. In determining our position on PILOTs, it’s important to note that Realtor and County Commissioner Sabrena Turner-Smedley currently serves on the Association’s Board of Directors. However, Commissioner Turner-Smedley abstained from voting on the Association’s PILOT position statement, as outlined below.

As defined by the Hamilton County Board of Commissioners and Chattanooga City Council, PILOTs are sound, acceptable, and positive instruments of tax policy when used for the purpose of economic development in a thoughtful and judicious manner, and in accordance with principles which are accountable, transparent in their terms, transferable, fairly and consistently granted to all qualifying and eligible applicants, and readily explainable to the public. The Association approves of the use of PILOTS, subject to certain principles, including the following:

Defined, disclosed and justified: Governmental bodies should follow a thorough analysis process to vet a project’s benefits to the community in terms that are clear and meaningful. This process should be fair and balanced, and elected officials should use all means at their disposal to ensure that the public is fully informed about the process, including the guidelines for application; the qualifications of the applicants; individual application details; and the dates, places, and times in which public comment will be heard, oral or written. All of this should be available on the Web.

Accountability: Successful PILOT applications should be carried out with strict adherence to the reporting requirements established by local governments. PILOT recipients should be held to a high standard of reporting periodic performance results on each item within their application process. Government must assure the performance of the applicants by use of a “claw back” process, which imposes appropriate and proportional sanctions against PILOT recipients who fail to achieve and maintain the level of accountability reporting and measureable satisfactory performance agreed to within the granting process.

Transparency: All terms of PILOT programs should be stated in advance in a specific manner, and as a matter of public record. These terms include: financial investment reporting; expectations of employment generation; measurable, affordable housing goals; and possible conflict of interest reporting. Applicants should be required to produce specific statistical data where applicable, as opposed to vague suppositions that might be difficult to support.

Transferability: Transferability of a PILOT is essential to development financing, and making a PILOT non-transferable greatly restricts the effectiveness of the program. Because of the risk and uncertainty that typically accompany property development – including the economy and catastrophic events beyond control of an applicant – the government should determine at the outset policies generally allowing transfer of the PILOT benefits, upon sale of the property, to a new owner or developer, as long as the new owner adheres to the requirements imposed on the original developer.

Fairness: Applicants should be assured of a fair and impartial hearing of a PILOT request before all governmental bodies. Because it is a fundamental necessity to maintain public trust in the program, there cannot be any suggestion of favoritism, partiality, or inside dealing in the granting process. PILOT programs must be consistently approved and governed on a basis of even-handed treatment given to each applicant regardless of the size of the application, as long as each application meets the standards of appropriateness, clarity of purpose, and use.

The Greater Chattanooga Association of Realtors is “The Voice of Real Estate in Greater Chattanooga.” The Association is a regional organization with more than 1,500 members, and is one of more than 1,400 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. The Greater Chattanooga Association of Realtors services Hamilton and Sequatchie counties in southeast Tennessee, and Catoosa, Dade, and Walker counties in northwest Georgia. For more information, visit www.gcar.net. v