Could The Bridgestone Tower’s Tax Break Make The Playing Field Uneven In Office Rental Market?

Metro’s Industrial Development Board asked Bridgestone representatives about its planned 30-story tower on Wednesday. Credit: Bobby Allyn/WPLN

Bridgestone says it expects to be the lone tenant in its planned 30-story downtown tower, a project now moving through the city’s approval process. City and state officials are offering Bridgestone a $100 million tax incentive package, which includes a 20-year property tax break.

But one member of a city real estate board that reviews incentive deals is worried that if Bridgestone subleases part of its tax-exempt space, it would create an unfair market advantage.

Richard Fulton Jr., one of the nine members of Metro’s Industrial Development Board, which met on Wednesday, asked officials from the city and Bridgestone if subleasing some of the 514,000 square feet of office space is possible.

The answer: it is.

Fulton is pushing for the subleasing option to be taken out of the agreement. Matt Wiltshire, who heads the Mayor’s Office of Economic and Community Development, told Fulton during the meeting that the subleasing issue is part of an ongoing discussion and that Wiltshire would soon have an answer for Fulton.

Meanwhile, Fulton, a real estate broker at Colliers International, is concerned about what kind of precedent the arrangement sets. It’s an issue Fulton has raised several times before in other tax abatement deals.

“If a portion of the building is not being occupied by Bridgestone, but another company, then they should not receive the tax benefits that were given to Bridgestone,” Fulton said after the meeting. “It puts the owner of the property in a very advantageous position by being able to offer lower rates.”

About 7,600 square feet of ground-level retail space will pay property taxes under the deal, but the vast bulk, more than 500,000 square feet of office space, will go property tax-free for two decades.

Around $100 million of the project will be publicly-financed, with city and state taxpayers splitting the bill, according to the Tennessean. That represents a third of a total project cost.

During the IDB meeting, Wiltshire said: “I would have loved to have Bridgestone stay here without any incentives,” noting that, given the stiff competition from other cities, the incentive package was the only way to lure them.