Commissioner balks at affordable housing tax break
The Hamilton County Commission has offered little assurance it will back a 15-year tax break for a proposed $17 million affordable housing development on the 5900 block of Highway 58.
Last month, the Chattanooga City Council approved a payment-in-lieu-of-taxes agreement for the Flats at Fifty-Eight, a 120unit apartment complex restricted to tenants earning less than $40,000. The project site, located in Hamilton County Commission District 9, sits across from Linda’s Produce and up the road from Central High School.
Developer Alex Trent has described the project as a workforce housing solution ideal for tenants employed at Volkswagen, Gestamp and other industrial or commercial businesses nearby. Rents will range between $595 and $835 for the two- and three-bedroom units at the Flats at Fifty-Eight, according to the PILOT proposal. The complex design includes a school bus shelter, an outdoor event space and a saltwater pool.
On Wednesday, Commissioner Tim Boyd voiced outright opposition to the project after Trent and his attorney, Michael Mallen, presented the proposal to commissioners.
“I just can’t see that this one needs our help,” Boyd said. “This looks like a great project to go at full market rate and full tax burden.”
Trent told commissioners the project would die without the PILOT agreement. In return for offering income-restrictive housing, the developer asks the county to give his company a 10-year period within which it will not pay property taxes based on improvements it makes to the site, starting in 2019. Starting in 2029, the developer would pay 20 percent of the property’s full tax bill, building up to 100 percent in 2033.
Boyd objected to giving a tax break to the project because it neither rehabilitated an existing property nor added value to a blighted urban area. He said he believed the Highway 58 property would appeal to a market-rate developer willing to pay a full tax bill.
The county needs every
penny it can get for upcoming capital projects such as new schools and a jail, Boyd said.
Trent said area tenants are “overburdened by rent,”citing a market study.
Before announcing his opposition, Boyd grilled Mallen in a rapid-fire series of questions, shutting him down whenever he tried to elaborate on his answers.
At one point, Boyd said he could only conclude the developer thought the nearby industrial enterprises did not pay their employees enough for them to afford market-rate rents.
“If you want to make those observations, then I respect your right to do so, commissioner,” Mallen fired back. “But at the same time, I’m not going to sit up here and opine on what the payroll range is for the multiple companies that are up there.”
Mallen pointed at the difference between starting wages and executive wages, noting the project offered starting-level employees the opportunity to live close to work, reducing their commute time and improving their quality of life.
Commission Vice Chairman Greg Beck later gave Mallen the opportunity to give more in-depth responses to Boyd’s questions.
The PILOT proposal still calls for the developer to pay $52,000 annually in property taxes dedicated to the county school system, Mallen said. Right now, the property generates only $11,000 in annual property tax revenues for schools.
“I think that’s a point that shouldn’t have been excused or glossed over,” he said. “The schools are going to see an incremental difference.”
Mallen also questioned the existence of “this theoretical full-market developer,” when nobody was aware of anyone else willing to invest in the property.
“There’s nobody on the other side of that door,” Mallen said. “Right now, it’s vacant land. It’s a former barrow pit.”