A 10-year tax break for Walk2Campus' proposed Lindsay Street apartments was given a thumbs up Friday by the city Health, Educational and Housing Facility Board.
The payment-in-lieu-of-tax agreement PILOT must now be approved by city leaders.
The South Carolina-based Walk2Campus is proposing two new, four-story apartment buildings at the corner of Lindsay and Fifth streets.
Walk2Campus already owns and operates eight properties in Chattanooga and, according to central city development agency River City Co., has invested over $10 million in downtown housing.
Walk2Campus has proposed one larger, 42,000-square-foot apartment building at the corner of the .7-acre property, and one smaller, 16,000-square-foot building with a 28-space parking lot between the two.
The buildings will provide a combined 64 new rental units, available to both University of Tennessee at Chattanooga students and working professionals.
The apartments will vary among three floor plans: one-bedroom, two-bedroom and efficiency units.
Rent will range between $750 a month and $1,200 a month.
The company is investing about $7.9 million.
Walk2Campus most recently bought and renovated the old women's hospital building at 863 McCallie Ave.
The new Lindsay Street development is eligible for the city's residential PILOT because 20 percent of the units are considered affordable to low- and moderate-income earners.
According to the residential PILOT bill -- passed by city leaders in August -- affordable units are considered within reach of people who make 80 percent or less of the median Hamilton County income.
According to the U.S. Census Bureau, the average personal income in the county is $27,000, and an individual earning 80 percent of that wage would make $21,600.
Kim White, CEO of River City Co., championed the new Walk2Campus PILOT and another residential agreement on the table for the Chattanooga Choo Choo.
"I think it's been almost two years since I've been here and presented anything on housing," she said. "We're really excited about both of these."
White said River City leaders "think with all the work with UTC and Unum on Vine Street," the Walk2Campus project "fits right in."
The Walk2Campus PILOT freezes property taxes on 500 Lindsay St. where they are now, and Walk2Campus will pay a portion of those predevelopment taxes to the city over the next 10 years.
Under residential PILOTs, developers pay full school taxes for the length of the agreement.
When the proposed Walk2Campus PILOT expires in 10 years, a four-year, phase-in period will go into effect, and Walk2Campus will pay 20 percent of the new, post-improvement property tax on its 500 Lindsay St. property.
"This allows the developers to do something they couldn't do otherwise," said White of the PILOT.
White said of the previous eight Walk2Campus developments in Chattanooga, two received PILOTs.
Roe Elam, marketing manager for Walk2Campus, was present at Friday's meeting but didn't speak.
HEB members unanimously recommended City Council members approve the PILOT when it comes before them.
Meanwhile, the residential PILOT agreement on the table for the renovation of 97 rooms at the Chattanooga Choo Choo for new small-footprint apartments will remain undecided until a follow-up Jan. 5 meeting.
The HEB only had four members in attendance Friday, which is just enough to form a voting quorum from the seven-member body.
The Choo Choo project is going through Capital Mark Bank for the project's financing, and one of the HEB members present Friday -- Stefanie Crowe -- works for Capital Mark.
To avoid potential legal issues, the board decided to delay action and hold a special Jan. 5 meeting.
Contact staff writer Alex Green at firstname.lastname@example.org or 423-757-6480.