Metro Council members are questioning a bill introduced by Mayor Karl Dean and his administration that critics say would give too much power to the mayor’s office in determining what companies receive tax incentives in return for creating jobs.
But Metro Finance Director Richard Riebeling contends the proposal has been clouded by “misinformation,” while acknowledging the administration hasn’t “done a good job explaining the reasons behind it.” The real goal, he said, is to give Metro another tool to boost economic and community development in Davidson County.
Either way, the bill is set for a deferral at Tuesday’s council meeting at the request of Dean’s administration. The council had been slated to consider the bill on the second of three votes Tuesday. Riebeling, attending Monday’s meeting of the council’s Budget and Finance Committee meeting, said the ordinance would be reintroduced in January.
At issue is the way Metro offers economic and community development incentive grants for companies willing to relocate to or expand in Nashville. The incentive program, enacted by Metro in 1999 to lure Dell Computer Corp. to the area, is available to corporate headquarters that would bring 1,000 jobs within five years or a technology firm that would bring 2,000 jobs during that same timeframe, according to a legal analysis supplied by council attorney Jon Cooper. The grant’s dollar figure is capped at $500 annually per each full-time equivalent employee of the company.
Currently these types of grants, Cooper’s analysis reads, are paid to Metro’s Industrial Development Board, which uses the funds to “acquire, improve [and] maintain” property to benefit a private company. The board administers the grants, and the council must sign off on the agreements.
The new bill, however, would charge the mayor’s office of economic development, instead of the Industrial Development Board, with administering such grants. Alexia Poe currently leads the office. The council would still be required to authorize grants.
“In my opinion, this is like writing a blank check and giving it to the administration so they can hand out this money at will,” Metro Councilman Michael Craddock said. “We need checks and balances.”
But the scope of the bill goes further. It would also increase the number of companies eligible for the grant by lowering the job creation requirement to 500 jobs. Moreover, the ordinance would tweak how Metro signs off on payment-in-lieu-of tax agreements that typically allow companies to enjoy property tax freezes or reductions. Right now, these “PILOT” agreements require three separate votes via an ordinance, but the bill would change the requirement to a single resolution vote.
Councilman Rip Ryman has asked the administration to provide an explanation for the bill prior to its second reading.
Riebeling rejects the notion the ordinance would strip power away from the Industrial Development Board.
“There’s just a misinterpretation of what the bill does,” Riebeling told The City Paper. “We’ll just clarify it and go back to the beginning and give everybody an understanding of what we’re doing and who’s behind it.
“The focus is all about creating jobs,” he added. “That’s the only purpose behind it. We think this gives us some more tools to help us recruit businesses to our community. That’s the only purpose behind it. It’s not trying to take any power away from anybody. It’s been completely misrepresented that way.”
Asked for a response to Craddock’s claim that the proposal gives too much power to the mayor’s office, Riebeling said, “That’s just not right.”
“It all has to come to the council for approval,” he said. “I mean, read the bill. It’s real simple. [The bill] doesn’t say that the mayor can decide to give money to people. It says that we come up with a recommendation, and it comes to the council for approval. The mayor has a role. The council has a role. That’s all it does.”
A handful of Industrial Development Board members showed up at Monday’s Budget and Finance Committee meeting to watch from the gallery. Their position seems pretty clear.
“I’m very much opposed to it,” board chair Nick Bailey said afterwards. “What’s accomplished by this bill is reducing the checks and balances and transparency that go into a project of this nature … And after all, we’re talking about giving away tax dollars for companies to come here.
“I have no idea what the reasons for this proposed change are,” he said. “I just think it’s a bad bill. I haven’t heard anybody on the council so far say they think it’s a good bill.”