athens tn acfr fy2020

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CITY OF ATHENS, TENNESSEE
NOTES TO FINANCIAL STATEMENTS
June 30, 2020

Deferred Compensation

The City and the Utilities Board offer their employees deferred compensation plans created in
accordance with Internal Revenue Code Section 457. The plans, available to all employees, permit
them to defer a portion of their salary until future years. The deferred compensation is not available
to employees until termination, retirement, death or an unforeseeable emergency.

Tax Abatements

The City of Athens has an agreement with McMinn County and the Industrial Development Board
of McMinn County for a Payment in Lieu of Taxes (PILOT) program, as authorized under

Tennessee Code Annotated 7-53. The program offers real and personal property tax abatements to
entice new and expanding companies to select Athens as the target of their investment for purposes

of economic development.

The criteria for eligibility includes providing new capital investment and job growth in Athens.
There are also provisions for retained jobs if certain criteria are met. Projects eligible for the
abatement program include manufacturing companies, distribution centers, data center and service
projects, research and development projects, and pollution control projects. The program provides
for a 50% reduction in the real and personal property assessed values for a certain number of years
depending on the level of investment and/or jobs created. There is also an option for a declining
balance abatement for up to six years based on the same criteria, which provides for an abatement of
80% in year one, 60% in year two, 40% in year three, and 20% in years four through six.

Abatements may be recaptured in any year whereby the criteria are not met. Each agreement
contains the methodology for calculating the percentage of repayment. The recovery payment 1S
due with the annual report of the abatement.

The City has tax abatement agreements with two entities as of June 30, 2020:

Percentage of Taxes Amount of Taxes
Abated during Abated during
the Year the Year
E&E Manufacturing 60% $ 47,540
Denso Tennessee, Inc. 50 104,771

Commitments and Contingencies

The City Council has approved issuing debt up to $35,000,000 for the construction of a new school
building. The invitation to bid was issued in November 2020, and bids will be opened in December.
Bid approval and beginning construction are expected in December also. The new building is

scheduled to be completed by August 2022.

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