CLARKSVILLE, TN (CLARKSVILLE NOW) – During the development of the Miller Town Apartments, the city wasn’t notified of a tax agreement the owners made with the Clarksville-Montgomery County Industrial Development Board, resulting in a loss in city tax revenue.
To prevent similar incidents going forward, the City Finance Committee on Monday approved sending forward a measure that would require city approval and involvement in local PILOT negotiations.
The incident occurred when the IDB made an agreement with Miller Town for a PILOT, or payment in lieu of taxes. According to the Tennessee Comptroller of the Treasury, these PILOT agreements are used to incentivize development by “allowing businesses to rent from a government-owned property and pay an alternative amount such as the costs of development or additional jobs in lieu of a typical property tax.”
However, since the mayor’s office was never notified of this agreement, it wasn’t included when the tax rate was calculated, causing a loss of expected tax revenue.
The resolution will require that the city’s chief financial officer or the mayor be involved in decisions regarding the acceptance of PILOTs. According to Mayor Joe Pitts, the 1995 City Council passed a resolution to delegate their authority to the IDB to arrange PILOTs on their behalf. Usually, the businesses involved contact the city after these agreements, but there is no formal process, so something was bound to slip through.
Pitts said that by formalizing the process of communication, the city hopes to prevent further lost revenue. “We don’t want to hinder negotiations,” he said, “we just want to make sure our tax dollars are negotiated with us at the table.”
During public comment, Economic Development Council CEO Buck Dellinger said he supported the resolution because it would formalize the process. According to Dellinger, the Comptroller’s Office said it’s the responsibility of the business who receives the PILOT to contact the city, while other departments said it’s the EDC or the IDB’s responsibility.
The measure now goes to the City Council, which meets for executive session on Tuesday, Dec. 3, at 4:30 p.m. in Council Chambers.
Correction: Dellinger was misidentified in a previous version of this report.
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