More affordable housing is coming to Chattanooga as a Memphis company plans a multimillion-dollar makeover to a half-century-old apartment complex.
Alco Management expects to spend $5.5 million renovating the 142-unit Battery Heights Apartments on Campbell Street in East Chattanooga, said Berkeley Burbank, the company's chief executive, on Wednesday.
The city's Health, Educational, and Housing Facility Board approved a 14-year payment-in-lieu-of-taxes (PILOT) agreement for Alco company APP Battery Partners for the project. The panel earlier agreed to the issuance of up to $10.5 million in multi-family housing revenue bonds to help finance the revamp.
"Getting approval from the city and county for the PILOT was critical for the whole financing package," Burbank said.
Under the PILOT, Alco will continue to pay property taxes at the current level for 10 years, he said. The payments will ramp up gradually over the following four years until reaching full taxes for the renovated value of the property, Burbank said.
Hicks Armor, the board's chairman, noted that Alco plans to do the renovations while the existing residents remain in their apartments.
"It sounds real good, but I'm not the one they're coming in to rip out countertops or pull out the bathroom," he said.
Burbank said the company has a lot of experience making such improvements.
"We're not saying it's not inconvenient," he said. "We try to communicate before it happens so residents can be ready."
Burbank said the company expects to start the makeover next summer with the work taking about a year.
Thomas Robinson of Alco said rents will average from $250 to $350 per month based on the renter's income for about 60% of the units. He said the other "workforce housing" units will go for about $650 monthly for one-bedroom units, $800 for apartments with two bedrooms and $875 for three-bedroom units, also depending on the renter's income.
Robinson said that, in addition to inside work that will include appliances and plumbing, roofs, windows and siding also will be touched.
"Typically every apartment will have the same scope of work," he said. "It will be safe, clean and nice for a long time."
Alco manages 61 similar affordable properties including several in the Chattanooga area, Robinson said.
In 2016, the company was involved in refurbishing the Bayberry Apartments on Wilson Street in the city, he said. Today, those apartments are 99% occupied and "100% affordable," Robinson said.
He said there's a waiting list that would take an estimated two years to turn over.
"We like Chattanooga a lot," Robinson said. "We're excited to bring another property into the fold in Chattanooga."
Contact Mike Pare at mpare@timesfreepress.com. Follow him on Twitter @MikePareTFP.