This fuss over buy/leaseback arrangements with the Jefferson County IDA is not without a solution that would preserve the currently used method of providing a tax break while still providing some share of the economic activity to remain with those entities who by statute should be compensated.
Currently, on deals with no PILOT, the IDA will execute an ownership transfer to allow the actual owner to avoid sales and mortgage tax. It's a ruse, but one we are told is common practice and considered OK.
The mortgage tax could be on something as simple as a refinancing. Anyone who owns a home knows the drill. The mortgage tax is one of the annoying "closing costs" we all love. Normally it is split between the municipality and the state.
Sales tax on construction materials amounts to 7.75% of which 4 points are the state's and the 3.75 points are local and are split according to a formula agreed to in 2004.
On non-property tax abatement deals the IDA charges a fee equal to 25% of what the tax would have been. So the developer is actually paying a tax, just not as much.
That 25% can stay local, while the state gets none of their normal share, as I understand it.
There is some logic in dividing the 25% fee according to the existing sales tax formula, thus the developer gets the break some argue is needed to compete in a hostile state and municipalities and the county get a significant portion of what they normally get off these taxes.
As for payment in lieu of tax deals on property tax, they should be approved by the relevant taxing jurisdictions.
Simple. Power remains with the people, Developers get relief from a hostile business envirnment, jobs are created and the county agency charged with the task serves as the facilitator.
This was suggested to me yesterday. I merely pass along.