Tax incentives for apartment project raise question

Taxpayer group eyes review of tax breaks for apartment complex owned by mayor’s father

A Memphis company is slated to seek tax breaks today to buy and revamp a couple of Chattanooga apartment complexes, but a citizens group is raising a question because Mayor Andy Berke’s father is a partner in the ownership group of one of the properties.

Alco Properties is to seek approval from the city’s Health, Educational and Housing Facility Board for a payment-in-lieu-of-tax (PILOT) agreement, as well as the issuance of $7.5 million in revenue bonds involving the Woodlawn Apartments and Windsor Terrace.

Robert Hyde, Alco’s president, said the group is planning to spend $6.4 million to renovate the exterior and interior of the 163 apartment units located at 2300 Wilson St.

Hyde said 100 percent of the units would be rented as “affordable” to low- and medium-income residents with incomes at or below 60 percent of the area median gross income. Alco is seeking property tax breaks for 10 years and a five-year phase-in period thereafter to raise the taxes paid on the apartments from 20 percent to 100 percent by year five.

“There is a need for these in Chattanooga,” Hyde said.

Marvin Berke, the mayor’s father, is listed in documents as a partner in the ownership group of the

Woodlawn Apartments — Woodlawn Apartments Co. and Woodlawn Apartments Co. 2, which have an address of 420 Frazier Ave. That’s the address of the Berke, Berke and Berke law firm.

Accountability for Taxpayer Money founder Helen Burns Sharp said the group would like to see an independent review of complicated projects seeking tax incentives, such as the Woodlawn Apartments and another project, the Jaycee Tower PILOT.

Sharp noted the Woodlawn project involves revenue bonds and the use of the federal Low-Income Housing Tax Credit program.

“The fact that Mayor Berke’s family currently owns the Woodlawn Apartments is another reason that the city might want to seek a third-party review,” she said. “The review would be a safeguard to address any appearance of impropriety.”

During the mayoral campaign in 2013, opponents of Berke took issue with his family’s land holdings, including Woodlawn Apartments, which they said had been the site of drug deals and occasional violence.

Berke’s campaign at the time said, “As one can see from examining property records, Andy Berke has no ownership in the Woodlawn Apartment Complex, either through a partnership or personally. He has no decision-making or management authority and has no personal connection to the property.”

A Berke spokesman on Tuesday had no comment.

Sharp said an independent review of complicated PILOTs should become standard practice.

“This might take six to eight weeks and would likely be done by an out-of-town nonprofit specializing in public finance or complicated housing projects,” she said.