A new city panel on Wednesday recommended approval of a draft agreement to extend M.L. King Boulevard to Chattanooga's riverfront using a $4.5 million tax-increment financing plan.
The proposal would spur an estimated $40 million mixed-use development at M.L. King and Riverfront Parkway including 180 apartments, 20 percent of which would be set aside for "workforce housing," officials said.
The recommendation by the new TIF Application Review Committee now sends the proposed agreement between the city and Nashville developer Evergreen Real Estate to Chattanooga's Industrial Development Board. Evergreen is the developer of the Cameron Harbor project, and the new apartments will be part of its next phase.
Next Tuesday, the Industrial Development Board is slated to check out the agreement and an economic development overview and determine if the project should go before the city council later next month for its final approval.
Charita Allen, the city's deputy administrator for economic development, said that in addition to extending M.L. King to the riverfront and tying into the Riverwalk, the plan would spur the apartments and some housing at "a workforce rate."
Charles Wood, the Chattanooga Area Chamber of Commerce's vice president of economic development and the panel's chairman, said the use of tax-increment financing, or a TIF, is another tool for development.
The extra property taxes generated by the planned apartments and other developments would be used to pay the cost of the new road, parking lot and other physical improvements to the site, which is adjacent to the Riverwalk's Blue Goose Hollow trailhead, officials have said.
Chattanooga Mayor Andy Berke has advocated for the TIF, a tax-incentive plan that has been rarely used in Chattanooga.
"We'll get a new amazing connection that was in the initial plan for the street grid of the city more than 100 years ago," he said about the project.
But a public advocacy group, Accountability for Taxpayer Money, has raised questions about the TIF plan, suggesting the city could use some of the money paid from its settlement with Alstom to build the new road and other improvements and use the extra property tax payments from Cameron Harbor for city services.
Also, ATM members have questioned why the city would ask taxpayers to subsidize apartments in an area where the housing market is "sizzling."
The tax increment financing of the M.L. King project could be up to 15 years.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.