Last week, Ivetoed a PILOT for a proposed townhome development in South Knoxville. It was the first mayoral veto in Knox County in quite some time, and it generated plenty of discussion.
During the campaign, I promised to focus on smart growth, protect taxpayers and make sure we are getting value for every dollar. After reviewing this project, I did not believe it met that test.
The numbers are pretty simple.
The developer would receive a 50% property tax abatement. In exchange, half of the units would be offered at an affordable rate.
But the renter would only save about 8.5%. A townhome expected to rent for approximately $2,448 at market rate would rent for about $2,240 under the affordable housing requirement.
A 50% tax break for an 8.5% reduction
in rent is not a good enough deal for taxpayers or renters.
Supporters have also pointed out that the property generates only $884 a year in property taxes today and would generate approximately $57,918 annually for Knox County under the PILOT.
But residential growth also creates costs. Eighty new rental townhouses mean additional demand on our community. We have to consider both sides of the equation.
This is also a larger question about how Knox County uses economic incentives.
Government does not need to subsidize a project simply because its labeled affordable. If a family is still paying more than $2,200 a month in rent, we should ask whether we are actually addressing the affordability problem.
My goal is to focus our economic development efforts on projects that create jobs, strengthen our tax base, and help pay for the services our growing community needs.
That is particularly important in Knox County.
Approximately 55% of our population lives outside the city of Knoxville and the town of Farragut, but the unincorporated county generates only about 25% of local sales tax revenue. Knoxville has roughly 39% of the population and generates approximately 68% of local sales tax revenue.
That matters because, outside of the portion dedicated to schools, sales taxes collected inside Knoxville goes to the city, not to Knox County.
For decades, aggressive annexation allowed the city to capture many of our major commercial corridors and much of our retail base. As a result, county residents drive on county roads into the city, spend their money there, which generates no sales tax revenue to help Knox County pay for roads, parks, public safety, and other services.
We need to change that equation.
I want Knox County to pursue commercial development in the county where it fits the community. We should help existing businesses expand, recruit new employers, create good jobs and encourage projects that generate both property tax and sales tax revenue.
Those are the kinds of projects where incentives can make sense because taxpayers receive something meaningful in return.
My philosophy is simple. If taxpayers are going to invest in a project, there needs to be a clear benefit to the people paying the bill.
Knox means business.
I want Knox County to be the friendliest county in Tennessee for businesses to start, expand and relocate. We will focus government on its core responsibilities: good roads, strong schools, public safety and reliable services. Then get government out of the way so businesses and families can thrive.
This is one of the ways to build a stronger Knox County without asking taxpayers for more.
Betsy Henderson is the Knox County mayor.
This article originally appeared on Knoxville News Sentinel: Knox County means business, says Mayor Betsy Henderson | Opinion
