A previous version of this story incorrectly stated Belveron Real Estate Partners are committed to bringing back Bingo's Market to the Edney Building. Bingo's Market will return to Patten Towers. This story was updated Thursday, Jan. 10, 2019, at 2:29 p.m.
Hamilton County Commissioner Tim Boyd cranked up his buzzsaw Wednesday against a property tax break for a $10 million renovation of the Patten Towers low-income housing project.
Belveron Real Estate Partners of San Francisco bought the 221-unit former hotel for $14.2 million last year. It is working with Nashville-based Elmington Capital to upgrade the 110-year-old building.
Elmington official John Shepherd told commissioners Wednesday the payment-in-lieu-of-taxes agreement is necessary to finance the renovation.
Patten Towers hasn't had a renovation since it was turned from a hotel into public housing in 1978. The building is teeming with pests, the mechanical systems are worn out, the common areas need sprinklers and the fire suppression system is "barely there," one reason the city spent $250,000 dispatching firetrucks to the building in a single year, Shepherd said.
Elmington has been working on safety, health and code problems since it began managing the building in August.
"My issue is, would you be comfortable with your family member there? No," Shepherd said, adding that Patten Towers houses "the most vulnerable people in our city."
"I don't want to be a part of that program if I can't provide adequate, decent, sanitary housing for those folks," he said.
He said the company will continue to pay the current Chattanooga and county property taxes of nearly $146,668 per year. It also will pay school taxes, which are $34,700 now and will rise over time.
All told, Shepherd said, the county would forgive about $47,000 a year for 25 years, or $1.3 million. The building upgrade would contribute to improved property values, and the partners are committed to bringing back Bingo's Market to Patten Towers.
Several commissioners seemed supportive once they were assured the company would continue paying current general fund taxes and keep up with the county schools portion.
David Sharpe noted the local shortage of affordable housing and said the math of the proposal seemed to work.
Katherlyn Geter said she has spent time in Patten Towers working with residents and has heard many "horror stories." If the PILOT agreement isn't granted, she asked, what will happen?
If the building continues to decline, the U.S. Department of Housing and Urban Development could drop its rent subsidies, Shepherd said.
"Any of the outcomes are not good and will likely result in displacing a bunch of people who don't have alternatives," he added.
Boyd seized on those rent subsidies to deride the PILOT request as "corporate welfare at its finest."
Boyd said he didn't believe Shepherd's statement that the renovation won't happen without the PILOT.
"So you spent $14 million on the property and now you're not willing to invest a dime to improve resident health and safety? That is a shameful statement and I'm glad you made it in public. You just told the public you don't really care about the health and safety of those 245 people unless we give you a subsidy. That's shameful."
He said the partners should raise money from Opportunity Zone investors, who under a new federal law can get capital gains tax forgiveness for money put into areas needing redevelopment.
His voice rising, Boyd added, "This has got to stop. No more PILOTs for residents. The message needs to be sent: We don't need developers coming in here and asking for PILOTS and claiming they're doing it for the poor."
Commissioners will vote Wednesday whether to grant the PILOT.
The Chattanooga City Council approved it in December. It would forgive about $1.6 million over the 25-year span of the agreement.
Contact staff writer Judy Walton at email@example.com or 423-757-6416.