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Farragut incentives to businesses few
EDC nixes touting incentives the Town does not offer to prospective businesses


What incentives does Farragut offer to prospective businesses?

That’s the question Farragut’s Economic Development Committee asked itself during its meeting Wednesday, April 6.

Town Administrator David Smoak said the Town’s biggest asset, development wise, is that property owners do not have to pay a property tax.

“That is our greatest incentive,” he told the EDC members.

But the EDC asked Jim Nixon, with First Commercial Realty, to run down the list of “normal” incentives other cities could and do offer to developers or large businesses seeking to locate there.

Leading the list are TIFs, or tax increment financing — basically a temporary relief from paying property taxes. PILOTs, or payments-in-lieu-of-taxes, are another popular incentive for developers.

But neither applies in Farragut because Farragut does not have a property tax, Nixon said.

In fact, none of the traditional incentives apply in Farragut, including utility enhancements or special assessment zones.

“I can’t imagine what we would discuss that would work here,” Nixon said.

Other cities offer incentives that delay payments on property taxes, but Farragut doesn’t have one to begin with. Incentives based on sales tax wouldn’t be easily established, Nixon added, because sales tax is collected by the state, not local municipalities like Farragut.

Pamela Treacy said developers or large tenants who wish to locate in Farragut could still apply for incentives from Knox County Commission, and that Farragut could “back” them.


Treacy asked that a description of the incentives discussed at the meeting be typed up into a one-page handout and included in the packet that members of the EDC will be distributing at the International Convention of Shopping Centers conference in May.

“No,” Knick Myers, of Myers Bros. Holdings, said.

“They’re going to expect that and we won’t be able to deliver,” he said.

Farragut should not hand out descriptions of incentives they do not offer, do not have the capability to offer, and can not guarantee will be granted by any other entity, he added.

Rather than tout incentives the Town does not have, Myers said, the EDC should focus on incentives it could develop.

Farragut could offer grants to developers, Nixon said.

Or perhaps Farragut could “kick back” a portion of sales tax receipts from an incoming business as a “direct return,” Myers added.

The amount doesn’t have to be large, Myers said: “It’s still a percentage and it still helps.”

Even a small amount of incentive would help change the perception of the Town as business un-friendly, and “one of our objectives is to change the perception of the Town,” he added.

Alderman Bob Markli, a homebuilder, liked that idea.

The Town could tell a developer or a future tenant that Farragut would fund that entity’s permitting fees out of future tax receipts from that entity.

“That’s huge, and it wouldn’t cost the Town anything,” Markli said.

Further pursuit of possible development incentives was relegated to the EDC recruitment subcommittee.

 

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