CLARKSVILLE, TN (CLARKSVILLE NOW) – A question about how much Hankook Tire should pay Montgomery County in taxes under its PILOT agreement came back to the Industrial Development Board on Wednesday, and they gave an opinion siding with state and local governments.

Hankook produces about 4 million tires a year at the Clarksville plant and are on track to produce 12 million. As of now, they have about 1 million tons of raw material on site. The question is whether all of that “consumable” material falls under their 20-year payment-in-lieu-of-taxes (PILOT) agreement, said Josh Ward, IDB executive director.

How Hankook PILOT works

As part of their Phase 1 PILOT agreement, Hankook, which broke ground in 2014 and opened in 2017, didn’t pay taxes on its “real property” – land and buildings – until 2021, starting at 50%, then rising to 60% in 2029, according to documents shared at the meeting.

Under the same PILOT, Hankook’s “tangible personal property” (TTP), or equipment, went from 0% to 100% taxable in 2021. At Hankook, TTP includes items like forklifts and machinery.

In 2027, Hankook will enter Year 3 of Phase 2, and Year 1 of Phase 3. That means that its TTP for these phases is not yet taxable. Those kick in at 50% in 2028 and 2030, respectively.

What are TTP Group 8 materials?

Hankook contends that its consumable, raw materials fall under the PILOT agreement as TTP, and they are therefore not yet taxable.

However, the Tennessee Comptroller’s Office has issued guidance on what’s referred to as Group 8 TTP, “raw materials and supplies.” These include materials on site that are awaiting production, or otherwise being held on site. Group 8 materials at Hankook are consumables like natural rubber, synthetic rubber, and carbon black silica, Ward said.

The Comptroller’s Office guidance is that these materials are not allowed to be tax-exempted by PILOTs, so they are fully taxable, Montgomery County Property Assessor Erinne Hester said.

Because the same issue has come up in other parts of the state, some agencies have begun spelling out in their PILOT agreements that Group 8 TTP is not included in PILOTs. Locally, the IDB included that provision in the recently approved Korea Zinc/Crucible Metals PILOT.

Part of the reason Group 8 materials cannot be included is that items in a PILOT must be “conveyed” to the IDB as depreciable property, and there is no reasonable way to convey raw materials to the IDB or to depreciate them, Ward said.

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Tax revenue over $200,000 per phase

The Montgomery County Property Assessor’s Office has begun including Group 8 TTP in its Hankook assessments, and Hankook has questioned that assessment. Hester said they’ve been working with Hankook on this issue since February 2025.

Ward told Clarksville Now there’s no ill intent on either side – Hankook is trying to manage its business interests, and the property assessor is responsible for ensuring appropriate tax revenue for the community. “Both sides are trying to do the right thing,” Ward said.

Taxing Hankook’s millions of dollars worth of Group 8 materials results in about $200,000 to $250,000 in Montgomery County tax revenue for each phase. Hankook is on Phase 2, which means a total of $500,000 to $600,000 in tax revenue, according to Economic Development Council CEO Buck Dellinger. When Phase 3 is added in 2027, that total could rise to $800,000. We are past the “period of recapture,” he said, so there’s no going back to assess on prior years.

IDB agrees with state on PILOT terms

The matter went to the IDB this week for the IDB to issue an opinion on what it had in mind when it established the Hankook PILOT.

After some discussion and clarification, the IDB approved an opinion that Group 8 TTP is not included in the Hankook PILOT and therefore is fully taxable.

Hester said that as with all taxpayers, Hankook can appeal the classification and assessment to the State Board of Equalization.

Correction: Hankook produces about 4 million tires a year and is on track to produce 12 million. The article has been updated.

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