DOWNTOWN APARTMENTSWalnut Commons* Location: Walnut and Second streets* Investment: $11 million* Number of apartments: 100* Rental range: $740 to $1,100 a month* Other elements: Little Miss Mag Child Care Center will double to 100 children and add a new downtown playground* Schedule: Pending final approvals, 19-month construction schedule could begin in 90 daysMission on Main* Location: Main and Market streets* Investment: $9 million* Number of apartments: 48* Rental range: Under $700 to $1,150 a month* Other elements: 18,000 square feet of first-floor retail space and 50-car underground garage* Schedule: Target completion in first quarter 2012
The two biggest apartment complexes built in downtown Chattanooga in a generation could begin to take shape next year.
The construction reverses more than three decades of decline in the number of residential rental units available in the central city.
Despite the slowdown in new downtown condominiums – or perhaps because of it – developers told the Chattanooga City Council on Tuesday that there is a growing demand for downtown apartments.
Pending approval Friday of proposed city property tax breaks for the projects, construction could begin by year end on the long-delayed 100-unit apartment complex to be built above Little Miss Mag child care on Walnut Street and a 48-unit apartment complex and retail center at the entrance to downtown at Main and Market streets.
“Both developers have spent a lot of time and money to get these projects ready to move forward,” said Kim White, president of the RiverCity Co., a nonprofit agency that promotes downtown Chattanooga. “There is such a pent-up demand for apartments downtown that I think these developments will be a tremendous asset.”
The two projects represent $20 million in new investment downtown and will be the biggest apartment complexes built in the central city since the 364-unit Cameron Hill Apartments was erected in 1974.
John Clark, a developer of the proposed $11 million Walnut Commons at Walnut and Second streets, said his group hopes to break ground in 90 days if details of the loan package, insured by the U.S. Department of Housing and Urban Development, are completed.
The Chattanooga Downtown Development Corp., which acquired land along Walnut Street following the narrowing of the Riverfront Parkway, selected the developers of the Walnut Commons to develop the site more than four years ago. But Clark said working out the details of the project has taken time, especially in a challenging credit market.
“It’s been a long and complicated project to get to this point, but we think this will be a great addition to our downtown,” he said.
As proposed, Walnut Commons will double the size of the Little Miss Mag Child Development Center, add a new downtown playground and feature 100 apartment units on the upper floors of the 3-story complex.
Twelve blocks to the south at Main and Market, another development group – a Chattanooga real estate partnership known as Paper Street Associates – is planning to build 48 one- and two-bedroom apartments atop 18,000 square feet of retail development along Main Street.
The $9 million development will be built on the site of the former Union Gospel Mission across from Battle Academy.
Eric Cummings, one of the developers of the project, said more apartments are needed downtown, especially since Cameron Hill Apartments were torn down two years ago to make room for the $300 million corporate campus of BlueCross BlueShield of Tennessee.
Although the city adopted property tax incentives for downtown housing in 2002, the projects that have capitalized on those breaks all were condos or single-family homes.
“The condo market may have slowed down, but that has just created even more demand for apartments downtown,” Clark said. “Our rental rates, starting around $700 a month, should be attractive to a lot of renters.”
Mission on Main will have a 50-space underground garage to provide parking for apartment tenants, according to Gavin Thomas, another partner in Paper Street Associates. Thomas said the development group also still is working on building a nearby grocery store on Main Street.
The city is helping such projects by freezing existing property tax rates for up to 12 years. The Health and Educational Facilities Board will consider such tax breaks on Friday, according to City Council Member Sally Robinson.
“We have more than 55,000 jobs in the downtown area and these type of projects will help fill an important need in our community,” she said.
City Councilman Peter Murphy said such incentives help spur needed downtown housing despite higher costs for land, building and environmental remediation.
“Building downtown creates some additional challenges for developers that they wouldn’t have by going out into the suburbs and buying and clearing 14 acres to build a new apartment complex,” he said.
Downtown supporters insist the cost of such incentives is offset by lower city expenses for road extensions, school expansions and utility additions required for new greenfield development.