Housing included in funding for M.L. King Boulevard extension

A proposal to offer a developer tax incentives to extend M.L. King Boulevard to Chattanooga's riverfront also includes plans for 180 apartments with 20 percent set aside as "affordable" units.

Evergreen Real Estate, seeking $4 million in tax-increment financing from the city and Hamilton County to build the new road and its amenities, would raise the apartments as part of its Cameron Harbor project going up off Riverfront Parkway.

Aaron White, a principal for the Nashville developer, said the tax-increment financing, or TIFs, it has done in Nashville typically require 20 percent of the housing units be reserved for those earning 80 percent of average median income.

"We also liked this because it allows us to market units to a wider range of people," he said.

Vehicles turn at the intersection of Martin Luther King Jr. Boulevard and Riverfront Parkway on Thursday, Nov. 2, 2017, in Chattanooga, Tenn. A proposal could extend MLK Blvd. across Riverfront to straighten an existing route which accesses a new Tennessee Riverpark entrance.

Workers construct a town home basement in the Cameron Harbor development on Riverfront Parkway on Thursday, July 6, 2017, in Chattanooga, Tenn.

Marissa Bell, a city of Chattanooga spokeswoman, said the idea of including new housing in the TIF came up as a part of negotiations with Evergreen.

"It's foremost important to the city to have this street extended to offer access to the public, and it's an added gain that more Chattanoogans will have an option to live on the waterfront," she said.

White said the affordable units likely would rent for between $800 and $850 a month. He said the units are not small studios, but rather one-bedroom apartments which would otherwise rent for $200 to $350 more if they were not subsidized.

But the public advocacy group Accountability for Taxpayer Money has has raised questions about the proposed housing development and the TIF.

"Why require taxpayers to pay to subsidize apartment units in an area where the housing market is sizzling?" asked ATM in a statement. "If 20 percent of the units [36] are reserved for persons who make 80 percent of median income, developers can charge $850 per month in rent. Chattanooga has a very real affordable housing problem. Many citizens might question whether $850 is truly affordable and if the riverfront is an appropriate location."

If approved by the Chattanooga Industrial Development Board and the City Commission, the M.L. King extension would be only the second tax increment financing deal in the city's history and the first under the latest guidelines.

Chattanooga Mayor Andy Berke and County Mayor Jim Coppinger have backed the proposed TIF, which still must be approved by city and county legislative bodies.

Under the proposed deal, Evergreen would obtain a bank loan and construct the street and apartments using the $4 million TIF. The loan would be repaid, with interest at 5.5 percent, from future property taxes from a newly designated TIF area roughly consisting of the Cameron Harbor development. The street would be deeded over to the city, according to the city.

Berke said TIFs are designed to build infrastructure around property that's increasing in value.

"We'll use tax dollars from this development to pay for a road used by everybody," he said. "By doing this, we reduce the burden on taxpayers."

The term of the TIF could be as long as 15 years, according to ATM. While property tax collections from the new development are being used to repay the development loan, the tax collection would not go into the city and county general funds for law enforcement, fire protection, streets, parks, and workforce development, ATM said.

The proposed improvements to the road include extending, straightening and widening M.L. King across Riverfront Parkway to the Blue Goose Hollow trailhead at the Riverwalk.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.