Tax deal could resolve long-running feud between county, city and company
Hugh G. Willett knoxnews.com
LOUDON — A 10-year tax deal could resolve a long-running feud between Loudon County, the city of Loudon and Tate & Lyle, the county's largest single employer and taxpayer.
In 2011 Tate and Lyle contested its tax assessment, requesting a reduction in valuation from $72 million to $30 million. The county won the initial case but the company has been appealing.
The payment in lieu of taxes (PILOT) proposal, which must be approved by both the county commission and the city of Loudon, was presented to the Loudon City Council Monday by Loudon County Economic Development Agency President Pat Phillips.
The PILOT would allow Tate & Lyle to pay the city and county a combined $2 million a year for 10 years. The company currently pays about $2.2 million per year in taxes.
The proposal is not just about taxes, Phillips said. The program is an economic investment project that would offer multiple benefits to the county, he said.
Under the deal Tate and Lyle would withdraw the tax appeal and agree not to appeal for the next 10 years. The back taxes held in escrow during litigation would be released to the municipalities.
"This is a way to settle this and get it out of the court's hands," said City Manager Lynn Mills.
The deal would assure that Tate & Lyle and associated businesses, which now employ about 550 at the Blair Bend site, remain in the county for at least 10 more years during which time continued investment could lead to more good-paying jobs, Phillips said.
"They are huge to this community," Phillips said.
Any new investment by the company would continue to be taxed at the current rate until the 10-year period expired.
Tate & Lyle is considering investing about $66 million in a 50-megawatt combined heat-and-power system, according to plant manager Gerry Schlueter.
The CHP system would not only allow the company to get off the TVA power grid but would also have significant environmental benefits, taking 10,000 tons of pollutants out of the air every year, he said.
Getting off the TVA grid makes the plant more competitive, Schlueter said. A plant that is more competitive is more likely to be the site of future investment and less likely to be shut down, he said.
City councilor Lynn Millsaps said he was concerned the decision would affect the tax rates of the city and county for the next 10 years. With a constantly increasing school budget and a new jail under consideration, the county needs more tax revenue, not less, he said.
Millsaps also said he was not ready to concede that the city and county wouldn't prevail if the litigation continued.
"I think we should let the appeals process continue," he said.
Local businessman Tommy Nicholson told the council he was concerned about every business paying its fair share of taxes. He said his family has operated a store in the county since 1950 and always paid its taxes, "in good times and bad."
After a short discussion about waiting for the county commission's reaction to the proposal, council voted 3-2 to approve the resolution.
The approval puts the fate of the project in the hands of county commission.
County Mayor Buddy Bradshaw told the council that the commission would review the proposal in July. He said he thought the commission would support the proposal based on the importance of Tate & Lyle to the county and the prospects of creating new jobs in the future.
The combination of multiple additional benefits, including the opportunity to escape continuing tax litigation and the improvements to air quality, would be important factors in considering the decision, he said.