City of Knoxville PILOT Financing Procedures

Residential or Commercial process
1. Applicant makes initial inquiry to City staff or IDB staff
2. Applicant submits draft application to City staff
3. City staff meets with IDB staff and the applicant to review the draft application
4. City staff meets with IDB staff to prepare a recommendation for length of the PILOT term, amount of the PILOT payment, and any terms of the PILOT lease
5. City staff communicates the results of this meeting to applicant
6. Applicant submits official application to City staff
7. City staff briefs City & County Finance Directors on project
8. City staff submits application to independent 3rd party for review
9. City staff prepares a Resolution for inclusion on City Council Agenda; City Council acts
9.1. City Council approves PILOT terms, as presented; City Mayor signs resolution; City staff forwards resolution to IDB staff
9.2. City Council approves PILOT terms, with modifications; City Mayor signs resolution; City staff forwards resolution to IDB staff; IDB staff determines if modifications require review by IDB
9.3. City Council denies PILOT terms; applicant may modify application and resubmit
10. Applicant submits official application and application fee to IDB
Estimated Project Investment
at the Time of Application Application Fee
$1,000,000 – $2,500,000
$2,500,001 – $5,000,000
$5,000,000 – and greater $2,000
11. IDB staff meets with City IDB Chair to discuss and review
12. IDB Board
12.1. If applicant requests special called meeting, then applicant must remit a $2,500.00 agenda fee
12.2. IDB staff sends notice of meeting to media to publish 7-days in advance of meeting
12.3. IDB staff and IDB attorney prepare a resolution that includes agreed to terms of approval
12.4. IDB staff includes PILOT application (completed application form, City Council Resolution, draft IDB resolution) to the IDB Board with meeting agenda package; IDB staff presents proof of payment of application fee
12.5. IDB Board acts on item
12.5.1. IDB approves the PILOT terms, as presented; IDB Chair signs the resolution approving the PILOT
12.5.2. IDB approves PILOT terms, with modification; IDB Chair signs the resolution approving the PILOT
12.5.3. IDB denies PILOT terms; applicant may modify application and resubmit
1. Approved Projects
13. IDB attorney and IDB staff prepare PILOT Lease Agreement and send to applicant, including terms of IDB and City Council approval; applicant and IDB negotiate content
14. Closing
14.1. IDB attorney prepares closing documents (Lease Memo, Special Warranty Deed)
14.2. IDB Staff and IDB attorney determine the closing fee amount and communicates fee to applicant. The Board will consider refunding or crediting the application fee in the event Lessee shall execute a Lease with thirty (30) days after delivery of Lease Documents by the IDB’s counsel (or soon thereafter based upon reasonable conditions for the project related to the securing of financing, obtaining historic tax credits and similar project requirements).
14.3. Closing Fees for payment-in-lieu-of-tax transactions are based on the projected total Project investment. A Closing Fee equal to 0.75% of the Projected Capital Expenditure will be paid to the Board prior to, or at, the closing of the Lease, subject to the following limitations:
‘ The minimum Closing Fee shall be no less than $15,000
‘ The maximum Closing Fee shall be no greater than $37,500
‘ The Applicant receiving the property tax incentive will also be responsible for paying any additional expenses related to the transaction including, but not limited to, the following: fees of Board counsel; title attorney fees; title insurance premiums; fees incurred relating to third-party evaluations including third-party consultant fees, KCDC facilitator fees, and fees of KCDC counsel; copies; postage; and long distance telephone calls.
14.4. Applicant must close on the PILOT Lease Agreement by the date specified by the IDB Board or 120 days after distribution by IDB attorney; closing must occur prior to December 31st (end of year)
14.5. IDB attorney distributes recorded Closing Documents and signed Lease Agreement to applicant, IDB staff, and Property Assessor’s office
14.6. Lessee (FKA Applicant) distributes recorded documents to State Comptroller
14.7. IDB attorney distributes any remaining closing fees, less invoiced IDB attorney’s fees, to IDB staff for deposit
15. Lessee constructs improvements
16. IDB staff sends request to Lessee for Fiscal Summary of IDB Property; Lessee provides appropriate information to staff
17. Knox County Property Assessor appraises property or certifies current appraisal
18. IDB staff sends to Lessee the PILOT invoice, Fiscal Summary form for Annual Report to the State Board of Equalization, and PILOT checklist on or about September 1;
18.1. Lessee has from October 1 until February 28 to make PILOT payment & Base Rent payment to IDB
18.2. Lessee must remit Fiscal Summary information to IDB staff prior to October 1; IDB staff files the Annual Report with the State Board of Equalization by October 1
18.3. Lessee must remit any other pertinent information itemized on checklist, by the appropriate dates
19. IDB staff disburses PILOT payment to City and County
20. IDB staff includes City staff in all correspondence and assists City staff with efforts to confirm compliance
21. IDB staff provides all appropriate documentation for annual IDB audit
22. Lessee may modify the PILOT Lease Agreement, under the following conditions
22.1. Lessee must submit a request and a $1000.00 fee to the IDB staff to amend the Lease Agreement
22.2. Parties seeking a transfer of an existing PILOT shall confer with the IDB staff to determine the proper procedure; the IDB staff will recommend to the IDB Board that the transfer be approved or that a new application be filed; no fee shall be assessed on any assignment of a related party transaction; if an assignment or sub-lease to a non-related party is approved, the transfer fees for such assignment will be as follows:
22.2.1. 1% of the tax savings up to $1,000,000 with a minimum fee of $4,000
22.2.2. 1/2% of such savings over $1,000,000 with a maximum fee of $25,000
22.2.3. All attorney fees incurred by the IDB in processing the application