Image Credit: Canva
The Tennessee Conservative [By Paula Gomes] –
City council members in Chattanooga, Tennessee, are questioning the effectiveness of corporate tax incentives after one deal in particular seems to have been ineffective as far as job growth goes.
Charita Allen, Senior Advisor for Economic and Workforce Development, presented a report to city council during their meeting last week. The report highlighted discrepancies with a Steam Logistics PILOT program that the council passed almost four years ago which promised to bring four hundred jobs to downtown Chattanooga, with an annual salary of $56,000.
At the time, Mayor Tim Kelly said that the proposal ensured “public accountability with clear clawback requirements.”
Steam Logistics, big on Diversity, Equity, and Inclusion initiatives, said that they would prioritize the hiring of local college students while maintaining their focus on diversity. In 2021, they claimed that 30 percent of their workforce was female, with another 20 percent being people of color, and an additional 10 percent multi-lingual.
Kelly called the deal a “clear win” for locals and the City of Chattanooga and said that it was “a model of what effective, responsible, and equitable economic development looks like.”
The signed tax agreement with Steam Logistics and the city, valued at over $500,000, required the company to invest around $11 million and create 360 jobs.
As of February, the integrated logistics solutions company has retained approximately one sixth of the jobs it promised, although its investments are up to $12 million.
Chattanooga City Council member for District 2, Jenny Hill, said that the city has spent “a lot of money” for just 59 jobs in total.
While Allen acknowledged the shortfall, trade issues were blamed for Steam Logistics losing positions due to being a sales organization.
Likewise, other projects have failed to net expected growth.
The Bend, a riverfront development of $115 million, has no finished buildings or tax revenue, while the East Chattanooga tax district, approved early in 2020, has faced delays due to the pandemic.
Allen spoke about the nature of such projects being long-term investments, taking “decades to come to fruition.”
The city has agreed to review these types of incentive deals. Such agreements which use public funds to bankroll corporate projects are not immune to risks as Hill pointed out. “Clawbacks” may be considered for agreements that ultimately fail to live up to expectations.
About the Author: Paula Gomes is a Tennessee resident and reporter for The Tennessee Conservative. You can reach Paula at paula@tennesseeconservativenews.com.
