Hamilton County Commission considers tax break for Chestnut Flats

Hamilton County Mayor Jim Coppinger
Hamilton County Mayor Jim Coppinger
photo Commissioner Randy Fairbanks

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The Hamilton County Commission votes on the Chestnut Flats PILOT on Wednesday at 9:30 a.m.

The Hamilton County Commission will decide next week whether it wants to join the Chattanooga City Council in giving a 17-year affordable housing tax break to a $20 million Southside apartment development.

The payment-in-lieu-of-taxes (PILOT) proposal calls for Elmington Capital Group of Nashville to build a 174-unit complex on a vacant, 3-acre lot located at 2108 Chestnut St. The development will offer a mixture of one- and two-bedroom spaces, each renting for $600-$750 a month.

"We're confident that [Elmington] cannot do this project without the PILOT agreement," Mayor Jim Coppinger told commissioners. "We've looked at this extensively with the finance team, and we're very comfortable with that comment."

Developer John Shepard assured commissioners Chestnut Flats could not happen without tax breaks from the county and city, even though the project also receives support through federal tax credits.

Except for paying property tax allocations for the county school system, the agreement does not require the developer to pay property taxes on the increased value of the site for 10 years following a two-year construction period. A five-year phase-in period follows in which the developer ramps up to paying the full property tax value.

Shepard said all units will be affordable to households earning no more than 60 percent of the area median income (AMI) for Hamilton County. According to Housing and Urban Development figures, the AMI for a family of four in Hamilton County is $61,300.

To qualify at the 60 percent AMI threshold, a household of one cannot earn more than $25,740, while a family of four could not earn more than $36,720, according to 2016 HUD income limits.

Commissioner Joe Graham said he plans to oppose the PILOT.

"If we were to allow this 17-year PILOT to go there, we might miss an opportunity with all the development that's going on there for a bigger and better development with no public agreement," Graham said.

He said the apartment complex would not need a PILOT if it incorporated more stories, and therefore, more units, since it targets "a prime piece of real estate."

Graham also said the commission had already met its goal of creating more than 2,000 units of affordable housing through a previous PILOT program, which had higher income thresholds. The city recently adopted a new tax incentive housing development program focusing on lower-income tenants.

If Elmington decides to turn the apartment complex into a six- or seven-story project to meet market demand, then the commission has missed the "whole deal about affordable housing," Commissioner Tim Boyd said.

"This is a decision we have to make," Boyd said. "Do we want affordable housing in Chattanooga and do we want to sacrifice the properties that are available for development to allow affordable housing?"

Commission Vice Chairman Randy Fairbanks said the commission needs to decide how it will encourage affordable housing development if it will not support PILOT agreements intended to do just that.

Contact staff writer Paul Leach at 423-757-6481 or pleach@timesfreepress.com. Follow on Twitter @pleach_tfp.

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