In Knoxville and Knox County, the Payment-In-Lieu-Of-Taxes (PILOT) program is targeted at development of property for either jobs-creating economic development projects or economic-catalyst projects. In both cases, the goal is to appropriately incent business owners or developers to create economic activity where there was none before. Under the PILOT program, a property's current property taxes are frozen for a number of years. In some cases, certain items of personal property are included, as well. However, the owner and project still pay all other taxes, including the mainstay of the Tennessee economy, sales taxes.
PILOTs are administered through the County and City IDBs. The IDB owns the property and leases it back to the owner/developer through a leasehold agreement during the term of the PILOT. If the leaseholder defaults on any of the terms of the lease, then the project is returned to the tax roles at its improved, fully appraised value.
Under a County IDB PILOT, a potential project must provide particular economic development information, including number of jobs created, average wages, amount of investment and air quality information, in order for the County IDB to determine the term length of the PILOT (up to a maximum of 15 years). Typically, the amount of taxes paid in the current year becomes the future amount to be paid as the PILOT. Under a City IDB PILOT, they are usually more oriented towards catalyst-type developments, aimed at redevelopment districts and significantly underutilized properties. The City IDB works with the City staff to determine the amount and length of the PILOT (up to a maximum of 20 years).
PILOT Application Procedures
Knox County PILOT Procedures
City of Knoxville PILOT Procedures
Program administered by:
The Development Corporation of Knox County
Todd Napier, Executive Vice President
17 Market Square, #201
Knoxville, TN 37902