Metro Councilman Josh Stites wished we weren’t having this conversation to begin with.
“My preference would be that we not get involved in that at all,” he told The City Paper. “That Metro not be involved in giving tax breaks for certain businesses. But if we’re going to do that, I think there are two things that are important. One is based upon number of jobs created, and solely based upon that, so it doesn’t matter what size headquarters you build or where your headquarters is, it’s based upon the number of jobs you create. And two, I think it needs to be available to everybody.”
Days ahead of a final council vote on one of the largest economic incentives packages in Nashville’s history, an offer to Nashville-based HCA estimated to total $66 million over 20 years in tax abatements and cash grants, Stites said that if the city is going to be in the business of handing out tax breaks, the process should be more open and equitable.
“That means a standard or matrix by which any job creator can look at our standard and determine, ‘If I bring this number of jobs to Nashville, these are the incentives available to me,’ ” he said. “That way it’s transparent, fair and available to everybody. It’s on the open market, so everybody knows what the rules are.”
Toward that end, Stites is mulling legislation that would give small businesses greater access to the kinds of tax breaks and other incentives used to entice corporate expansions or relocations in Davidson County. The details of such a proposal still need to be worked out, and Stites said he plans on filing the legislation early in the new year. For him, it’s an effort to make the best of a practice that he opposes in principle, but one that has become increasingly common in recent years.
Under Mayor Karl Dean’s administration, with the support of the council, tax breaks have become a more prominent feature of the city’s economic development efforts. Since Dean took office in 2007, the city has entered into 12 such arrangements with businesses, offering over $120 million in incentives (not including the HCA deal, which had not been finalized as of this writing).
The practice is certainly not unique to Nashville. In fact, it’s often driven by competition among various cities offering similar offers. Many times, Nashville has put tax breaks on the table in an effort to keep companies from relocating south to Williamson County. But that effort is often futile, Stites said, and even counterproductive — just one of the reasons he has consistently voted against such offers.
“From 1999 to 2007, we didn’t offer a dollar in these incentives,” he said, referring to the lack of incentives proposals during former Mayor Bill Purcell’s time in office. “And surprisingly, Nashville was doing OK. Did we lose some companies to Williamson County? Yeah, we did, but we still are. Often these incentives do not stop the bleeding in that respect, but I think the bigger point is we can recruit companies to Nashville by having a favorable tax environment, and good schools. And each one of these deals makes it harder for us to achieve those goals that all of us want.”
But if tax breaks and other incentives are a reality that’s here to stay, Stites said, he and others would like to see the process brought out from behind closed doors and made available to smaller businesses as well. According to the mayor’s Office of Economic and Community Development, requests for such incentives “are considered on a case-by-case basis” — a consideration that occurs beyond the public view — and, Stites reiterated, has consistently resulted in deals for “well-connected” and “well-to-do” companies.
“There are other council members who have said that they want to be involved in something that is available to small businesses,” he said. “That they see the same thing that everyone else sees, and that is that these deals are only available to a small number of businesses.”
One of those members is At-Large Councilman Charlie Tygard, who told The City Paper he’d like to work with Stites toward their shared goal of “leveling the playing field.”
“To give opportunities for small businesses,” Tygard said, “Give them incentives to expand both the footprint of their buildings, to increase the property tax base, but also to encourage the purchase of more updated equipment, and the hiring of new employees, especially if we can figure out how to make them Davidson County employees.”
Less than a week before the final vote on a significant tax break for the largest private health care facilities operator in the world, Stites said he’s surprised there aren’t more who see it his way.
“I’m shocked, really, that more of my colleagues on the council are not opposed to something that is so one-sided,” he said.