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Developer to lower rent at Chattanooga complexCompany gets pressure from housing board member
A South Carolina developer agreed Wednesday to set aside five units of a Chattanooga apartment building for low- to moderate-income renters following pressure from a city housing panel member.
"We don't want to be branded the evil out-of-town developer," said Paul Aiesi of Greenville, S.C.-based Graycliff Capital Partners.
Graycliff, which plans to buy the Bread Factory Loft apartments on Cowart Street, will make 20 percent of the units in the complex rent for no more than $858 monthly for a one-bedroom flat. Also, renters of the units will be able to earn no more than $34,300 a year.
Lloyd Longnion, a member of the city's Health, Educational and Housing Facility Board, said Graycliff had no legal reason to make the move. But he had asked the developer to do so as "good corporate citizenship."
Longnion said he would abstain from voting for a new deed of trust in connection with a refinancing of the property, which the developer sought, if Graycliff didn't lower the rents on the five apartments. He did abstain, and the measure initially failed to gain the needed four votes from the city panel.
Alfred Smith, an attorney for Graycliff, said the developer would be willing to lower the rent on the units. After a revote, Longnion voted for the measure, which was then adopted by the entire panel.
The Bread Factory Lofts, at 1615 Cowart St., was the first housing project of its type to receive tax breaks from the city in 2002. The deal exempted the complex from property taxes for 14 years, though the owners are paying some now. The tax breaks are to end in December 2018, officials said.
Helen Burns Sharp, founder of the Accountability for Taxpayer Money group, said at the board's meeting that she understood the panel wants to be business friendly. But, she said, there's no evidence the Bread Factory Lofts had provided any benefit to low- and moderate-income people.
Sharp said the board wasn't obligated to approve Graycliff's new deed of trust.
Chattanoogan Garnet Chapin said there was "no public benefit whatsoever" from the Bread Factory Lofts tax breaks. He said that if the board voted for Graycliff, he would seek emails and other public records from board members that show "who has been talking to who about what."
Panel member Gregg Gentry said he'd welcome anyone to ask for public documents
Graycliff attorney Smith said the tax breaks were originally approved because of an extreme lack of housing downtown at the time. While there's a requirement now related to low- and moderate-income apartments, that wasn't the case in the Bread Factory Lofts agreement, he said.
"You can't impose a 2017 requirement on a 2002 project," Smith said. "It's unfair. It's illegal."
He said an Omaha, Neb., ownership group plans to sells its interest in Bread Factory Lofts to Graycliff, with the deal slated to close next week.
"Everything has been negotiated," Smith said.
But, Longnion told Smith he's not seeing "the honor of corporate citizenship" of dropping the rent for the five apartments.
Board member Richard Johnson said the 2002 tax agreement was "on the table. I'm not sure we can go back and change it."
Board Vice Chairwoman Dana Perry said "a deal is a deal." To go back on such a deal would have "effects we don't want to be saddled with," she said
After the 3-to-1 vote for Graycliff's deed of trust, board attorney Phil Noblett said the measure would be tabled because four affirmative votes were needed and the board just had a quorum.
Smith initially wanted to adjourn the meeting until after the closing of the sale of the apartments.
However, the board balked at that idea, Smith talked with his client, and Graycliff indicated it was willing to lower the rent for five units to no more than $858 a month. The Bread Factory Lofts website says that one-bedroom units rent for $925 a month.
Aiesi said Graycliff officials like what's happening in Chattanooga and they are looking at investing more money in the city.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.