athens tn acfr fy2023

Machine-read OCR text; verify every number, name, and layout against the original page.

Note 12.

Note 13.

CITY OF ATHENS, TENNESSEE
NOTES TO FINANCIAL STATEMENTS
June 30, 2023

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 is
due with the annual report of the abatement.

The City has a tax abatement agreement with one entity as of June 30, 2023:

Percentage of Taxes Amount of Taxes
Abated during Abated during
the Year the Year
Denso Tennessee, Inc. 50% $ 73,255

Consolidation of Schools - Building Program

The Athens City Board of Education (Board) has undertaken a school Building Program to reduce
and consolidate the number of school facilities operated by the Board. Accordingly, the Board
entered into a construction contract to construct a Pre-K-5 facility and perform other renovations.
Construction was substantially complete in August 2023 and the five schools were consolidated into
the middle school and the new Pre-K-5 facility.

The City of Athens has approved debt of $40,000,000 to fund the Building Program. An agreement
between the City and the Board requires the City to provide $1,000,000 of annual debt payments
from the 2019 increase in local option sales tax. The Board is to provide $700,000 annually to the
City based on anticipated savings from operating fewer facilities. These payments begin after
certain construction is complete. During 2023, the Board transferred $500,000 to the City to assist
with the construction cost. The construction costs are being accounted for in the Education Capital
Projects Fund. At June 30, 2023, the City’s government-wide financial statements reflect
construction in progress of $37,923,191 related to the Building Program. Once the Building
Program is complete, the Board will own the property.

-93-