GE to pay Chattanooga, Hamilton County back for Alstom tax breaks

UPDATE: The Hamilton County Commission and the Chattanooga City Council will vote on the $6 million settlement next week.

General Electric (G.E.) has announced it plans to pay back Hamilton County and the city of Chattanooga a portion of the tax breaks they offered to Alstom in order to set up shop here.

On Friday morning, NewsChannel 9 learned that G.E. will pay the city of Chattanooga $3.3 million, and the county $2.7 million (a total of $6 million).

Alstom operates worldwide in rail transport, passenger transportation, signalling and locomotives. Its Chattanooga plant built turbines for nuclear plants that were shipped down or up the Tennessee River.

Alstom received the tax incentives from Chattanooga and Hamilton County after guaranteeing they would create 300 jobs.

But Alstom fell short of that goal, and in June of last year, G.E., which had since acquired the company, announced it would be closing the Chattanooga plant down.

That immediately raised the issue of what would happen to all those tax incentives, $13 million in all.

At a news conference on Friday, Chattanooga Mayor Andy and Hamilton County Mayor Jim Coppinger said although the government is recovering less than half of the total amount waived, the deal is good for the community.

"Our attorneys thought that this was a really positive outcome given how much uncertainty there was about if we would recover anything," said Berke.

When the agreement was struck with Alstom, it didn't spell out what would happen if the company didn't reach its job target. Both mayors say this settlement ended up working out nicely for taxpayers, saying it was better to end up with $6 million and zero attorney's fees than the potential of years of litigation and zero return.

Not everyone agrees, however, that this is a win.

Bruce Roberts and Dominique Hash worked at Alstom as welders for over a decade.

They thought their employment would survive the GE takeover, but they were wrong.

235 people lost their jobs, despite the tax breaks.

"I just believe pay what you owe. I have to," Hash told NewsChannel 9. "I have to now since I got laid off."

Roberts and Hash do not blame local government though.

"This is on GE. This is big business. This is corporate America. This is how corporate welfare works," said Roberts.

Mayors Berke and Coppinger say future tax agreements will include provisions that prevent situations like this one.

Read more about all of the city of Chattanooga's PILOT agreements here.

Update: here is the full news release from the city of Chattanooga about the agreement, written by Lacie Stone, spokeswoman for Mayor Andy Berke:

"Hamilton County Mayor Jim Coppinger and Chattanooga Mayor Andy Berke released details today of a negotiated settlement that includes a $6 Million dollar payment to the City and County, resolving a lengthy dispute with manufacturing company Alstom Power stemming from a 2008 Payment in Lieu of Taxes (PILOT) Agreement.

Under the original 2008 agreement, Alstom Power was required to invest $265 million in capital and create 300 new jobs. As of January 1, 2015, Alstom Power had exceeded the investment required in property but had failed to meet their jobs target. In November 2015, GE Power acquired Alstom Power and quickly committed to continuing to work with both the City and County to find a solution to the shortfall from Alstom Power’s PILOT agreement.

“We are pleased to have resolution on this matter. Time, effort and money that could have been spent in litigation can now be focused on developing future business on this site,” said Hamilton County Mayor Jim Coppinger.

“After months of negotiations, we have come to a solution that will not only recoup funds back for our taxpayers but clears the way for this valuable property to once again be used for creating jobs,” said Chattanooga Mayor Andy Berke. “This is a huge win -- not only because of the very real dollars that help the city and county provide vital services, but for the reforms we made over two years ago, in large part due to this 2008 Alstom Power PILOT, which added more accountability to all PILOT agreements moving forward.”

In 2014, Mayor Berke and Mayor Coppinger engaged in a collective effort to reform the PILOT process to add stricter provisions and clearer accountability measures as well as changes to the abatement schedule to provide for more frequent checks and balances. In addition to these reforms, companies would be required to pay an economic development lease payment at 15% of the company’s property taxes due. The economic development payment is in addition to payment of the school portion of taxes due, a requirement that resulted from early PILOT reforms instituted by the County.

“Hamilton County taxpayers can be assured the financial clawbacks put in place in 2014 for all future PILOTs will safeguard the people’s money as we continue our everyday efforts to create new, family wage jobs for the people of Hamilton County,” said Mayor Coppinger.

Although Alstom Power did not meet its target number of jobs, the company exceeded its capital requirement, with over $364 million in capital improvements since 2008, and paid over $5 million to the public school system prior to its acquisition by GE Power. Throughout negotiations, all parties prioritized the return of this parcel to a usable site for future economic development.

“We appreciate the strong commitment shown by City and County officials to work together and arrive at a solution that is agreed upon by all parties,” said Karen Simons, Senior Counsel, GE Global Operations - Properties. “We value our ongoing relationships in Chattanooga and are actively focused on working across the community and beyond to look for opportunities to put the property back in use.”

For more information about the PILOT process, existing agreements, and investments enabled through PILOT investments, citizens can visit the open data portal which contains data on every agreement. The City and County released the information to increase transparency regarding PILOT agreements."

close video ad
Unmutetoggle ad audio on off