Hamilton County Commission approves Chestnut Flats tax break

Hamilton County Commission approves Chestnut Flats tax break

November 3rd, 2016 by Paul Leach in Local Regional News

Sabrena Smedley

Sabrena Smedley

Photo by Contributed Photo /Times Free Press.

Tim Boyd

Tim Boyd

Photo by Angela Lewis /Times Free Press.

The Hamilton County Commission has narrowly approved a 17-year tax break for a $20 million affordable housing development on Chattanooga's Southside.

A few weeks ago, the City Council approved the same payment-in-lieu-of-taxes agreement with Elmington Group of Nashville, which plans to build a 174-unit complex on a vacant 3-acre lot at 2108 Chestnut St. The Chestnut Flats facility will offer a mixture of one- and two-bedroom apartments, each renting for $600-$750 month.

In return for the tax break, the developer promises to restrict tenants to households that earn no more than 60 percent of the average median income. That income in Hamilton County is $61,300 for a family of four, according to 2016 Housing and Urban Development figures. The 60 percent average median income threshold tops out at $36,720 for a family of four.

On Wednesday, commissioners voted 5-3 in favor of the PILOT agreement. Commission Chairman Chester Bankston and Commissioners Sabrena Smedley and Joe Graham opposed the measure.

"My problem with this [agreement] is I'm not convinced this is the right location and the highest, best use of this property," Smedley said. "The other problem I have is the duration" of it.

Last week, Graham said he could not support the agreement for similar reasons.

The PILOT agreement does not require the developer to pay property taxes on the increased value of the site for 10 years after a two-year construction period. The developer then benefits from a five-year phase-in period in which it pays a portion of the full taxation until they reach 100 percent in the fifth year.

The developer will pay all taxes normally allotted to the Hamilton County school system for the entire period.

Even though the project benefits from federal tax credits, Chestnut Flats cannot happen without tax breaks from both Chattanooga and Hamilton County, developer John Shepard has said.

Several of the agreement's supporters also voiced concerns with the duration of the agreement, even though they said they believed it provided a public benefit.

Commissioner Tim Boyd praised the agreement for providing "truly affordable" housing and cited City Council approval and an analysis by the county mayor's office as reasons to support it. He also noted the burden of public services for the development primarily falls upon Chattanooga and not Hamilton County.

Contact staff writer Paul Leach at 423-757-6481 or pleach@times freepress.com. Follow on Twitter @pleach_tfp.