Tax break approved for Highway 58 apartments

The Chattanooga City Council has given the green light to a 15-year tax break for the Flats at Fifty-Eight, a proposed $17 million affordable housing development on Highway 58.

Developer Alex Trent recently told the council the tenants of the 120-unit apartment complex will be restricted to families earning less than $40,000 a year. The development, located in the 5900 block of Highway 58, is well situated as family oriented workforce housing for nearby employers such as Volkswagen, he said.

On Tuesday, the council voted 7-2 in favor of the payment-in-lieu-of-taxes (PILOT) agreement, with Council Vice Chairman Jerry Mitchell and Councilman

Chip Henderson voting against the measure.

After the meeting, Henderson cited his record for opposing affordable housing tax breaks involving new construction.

“I prefer a more targeted approach for our PILOTs, and I think they are more effective when they redevelop existing structures,” Henderson said.

Councilman Chris Anderson praised the proposal in an email.

“Access to affordable housing is a challenge across our entire city,” he said. “This development will put a significant dent in the problem. I will continue to support measures like this, especially outside of the downtown area.”

The agreement calls for Chattanooga to forfeit property taxes due for improvements made to the property for the first 10 years of the PILOT period, from 2019 to 2028. The developer ramps up to full taxation in 20 percent increments over the last five years of the agreement, paying 20 percent of the full tax bill in 2029 and 100 percent in 2033.

Without the PILOT,

“I prefer a more targeted approach for our PILOTs, and I think they are more effective when they redevelop existing structures.” — COUNCILMAN CHIP HENDERSON

the affordable housing development cannot happen, Trent said.

The Flats at Fifty-Eight will restrict 24 of its apartments to tenant families who earn no more than 50 percent of the area’s average median income; the rest of the units will be rented to those earning no more than 60 percent of the average median income. For a family of four, that comes out to $30,600 and $36,720, respectively, according to 2016 Housing and Urban Development figures.

The market rate monthly rent for the complex’s two- and three-bedroom apartments is $864 and $1,176, respectively, Trent said. The proposed rent for those apartments is $595 and $680 for tenants at the 50 percent AMI cap, and $735 and $835 for the tenants at the 60 percent AMI cap.

Each apartment will have free internet access and an energy efficient washer and dryer, Trent said.

For children, the complex will provide a playground, a shelter for school bus riders and a learning center for afterschool programs and tutoring. Other amenities include a fitness room in the site’s clubhouse, a saltwater pool and an outdoor event space with a gazebo.

Michael Gilliland, board chairman of Chattanooga Organized for Action, praised the PILOT agreement and the developer’s commitment to affordable housing and residential amenities.

“I think this is a great development, and an example of how much the PILOT program has fundamentally changed,” he said. “This is so remarkably different from the previous program subsidizing downtown luxury developers.”

Gilliland called for Chattanooga to set a citywide goal of 500 similarly income-restricted units a year over the next 10 years. Such a move would be “a major step in addressing Chattanooga’s affordable housing crisis,” he said.