A proposal to extend M.L. King Boulevard to the riverfront and spur new nearby apartments — helped by a tax-incentive plan rarely used in Chattanooga — has cleared its first hurdle.
The city's Industrial Development Board on Tuesday approved an application for the project that includes a $4 million tax-increment financing proposal to build the road extension and make other public improvements, sending it on to the City Council for its initial review.
"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," Chattanooga Mayor Andy Berke said about the project.
Berke said that all the extra property taxes generated by the planned apartments and other developments would go toward paying 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.relatedarticlethumb
Aaron White, a principal in the Cameron Harbor development going up along the Tennessee River, said the proposed road is taking up its best property on the site.
"It's overlooking the park, a beautiful view of the mountains, a beautiful view of the river," he said.
But White said the city indicated it "really wanted that real estate" so M.L. King could go to the waterfront.
White said his Nashville-based development company plans to put up 180 new apartments nearby, and 20 percent of the units will be set aside as "affordable" with rents of $800 to $850 a month as part of the deal with the city.
He said the latest phase of development at Cameron Harbor, which started about four years ago, will come to about $50 million, including new office space by another developer on Riverfront Parkway and M.L. King. A restaurant also is slated for the site.
A public advocacy group, Accountability for Taxpayer Money, has raised questions about the tax increment financing 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 wondered why the city would ask taxpayers to subsidize apartments in an area where the housing market is "sizzling," as well as doing the same to improve Fulton Street within Cameron Harbor.
Berke has said the Alstom settlement is slated for workforce development projects. He also said the affordable apartments are designated under federal guidelines to reserve 20 percent of the units for people earning 80 percent of the average medium income.
"It's affordable for people," he said. "It doesn't mean it's affordable for everyone."relatedarticlethumb
The mayor said rents for the same units typically could be $300 or so more per month in apartments not designated as "affordable."
White said the city has indicated it wants Cameron Harbor to be "built like a city grid, an extension of downtown" where roads can go through the site and are open to the public and future development. He termed Fulton Street an unimproved city road.
Cherita Allen, the city's deputy administrator for economic development, said the IDB approval Tuesday is the first of four steps of review.
Next, the City Council will look at the "but for" test of whether the project would happen without the city's help, she said.
The city council's economic development committee got its first look at the TIF proposal Tuesday and the full council will look at the plan next week.
Then, the proposal will go back to the IDB, which will conduct an economic impact analysis and hold a public hearing, Allen said. The last step would be a City Council final vote, she said.
Only one other tax-increment (TIF) financing project has received city approval, and the current proposal is under the latest guidelines.
The tax increment financing of the M.L. King project could be up to 15 years. Under the proposed deal, Evergreen would obtain a bank loan and construct the street, amenities such as sidewalks and parking, and the apartments with the help of the TIF. The loan would be repaid with interest from future property taxes from a newly designated TIF area roughly consisting of the Cameron Harbor development.
Contact Mike Pare at email@example.com or 423-757-6318.