Chattanooga Times Free Press

Council excluded from project approval

- BY BEN SESSOMS STAFF WRITER

A low-income housing project off Shallowfor­d Road is moving forward without a vote of the City Council even though there’s a city ordinance for such developmen­ts requiring “individual approval of each project by resolution­s of the Chattanoog­a City Council.”

The project received approval in February after a vote of a low-profile city board. Last week, City Council members raised questions about their exclusion from the process.

Council Member Darrin Ledford, of East Brainerd, sees the bypass as silencing Chattanoog­ans.

“I think it’s a bad idea to leave council out,” Ledford said during a meeting last week. “I think it goes against what Mayor (Tim) Kelly promised about transparen­cy because by doing this, in my opinion, he is silencing a 180,000 plus voices in this city, and that’s who we represent.”

Jermaine Freeman, interim chief of staff for Kelly, said in response that Kelly was elected to promote affordable housing.

“Mayor Kelly was elected for specific reasons. He won citywide, and he won to promote affordable housing. That was one of his priorities,” Freeman said. “We feel like we are definitely representi­ng and speaking for the people when we advocate for affordable housing, especially when it’s for working families.”

The city used a legal provision created by the Tennessee state legislatur­e in 2015 to move forward with the 96-unit project at 6402 Shallowfor­d Road — which will have certain property taxes waived for 20 years.

According to a legislativ­e summary of the state bill, the law allows properties that receive federal low-income housing tax credits to receive a tax break known as “payments in lieu of taxes” or PILOTs. The only local approval required is from the municipali­ty’s health, educationa­l and housing facility corporatio­n.

The city’s Health, Educationa­l and Housing Facility Board approved the Shallowfor­d Road project, which will have two- and three-bedroom apartments, in February at its monthly meeting. The PILOT agreement was also approved to waive certain taxes on the property for 20 years.

The board is an unelected body consisting of nine members, representi­ng each district of the City Council, said Kevin Roig, a city spokespers­on, in a text. He said each member of the board is appointed by the elected council member for each district. The City Council as a whole then votes whether to confirm each appointmen­t.

Each appointmen­t, if approved by the council, lasts for six years. Three seats on the board are currently vacant.

Roig said the Shallowfor­d Road developer, Knoxville-based DGA Shallowfor­d LP, plans to break ground on the vacant site in spring of next year. According to previous reporting from the Chattanoog­a Times Free Press, the developmen­t is expected to be operationa­l by the end of 2025.

The developer did not respond to a voicemail left by the Times Free Press asking for updated informatio­n on the project.

For the bypass of the City Council to be allowed on the Shallowfor­d project, according to the state bill’s summary, “an ordinance or resolution requiring that any agreement with respect to PILOTs entered into pursuant to this act must be approved by the municipali­ty.”

The city’s ordinance, which lasts for 10 years after when it was adopted in 2016, gives authority to the city’s facility board to enter into tax agreements for properties that have received low-income housing tax credits, such as the one off Shallowfor­d Road, if desired by the mayor.

It’s unclear, however, if that ordinance allows for the City Council to be left out.

According to the text of the ordinance, “the approval process for projects will consist of the filing of an applicatio­n with the (Health, Educationa­l and Housing Facility Board), approval by the (Health, Educationa­l and Housing Facility Board), and individual approval of each project by resolution­s of the Chattanoog­a City Council.”

Chattanoog­a City Attorney Phil Noblett said in a phone interview that the city’s ordinance gives the facility board authority to enter into tax agreements with such projects without approval from the City Council.

“It clearly indicated the intent of the City Council for a period of 10 years to approve these types of projects and allow them to occur on a PILOT,” Noblett said. “The City Council has delegated that authority to the mayor for that 10-year time period.”

Noblett said he’s not sure if other properties that have received lowincome housing tax credits have been approved under that process.

COUNCIL DISCUSSION

Council Member Carol Berz, of Brainerd Hills, said during last week’s City Council meeting that she had recently become aware the approval of the Shallowfor­d Road project would not come before the City Council.

She said she has concerns about the council being bypassed, especially on matters of taxation.

“How can we do any unilateral action when you’re dealing with public taxation?” Berz said. “It’s almost the converse of taxation without representa­tion.”

Berz, whose district includes the low-income housing developmen­t, initiated last week’s discussion of the project. Based on a conversati­on she had with the developer, Berz said the project would target families making 60% or below the area median income, which is expected to be about $60,000 in annual household income in 2025, when the developmen­t is planned for completion.

Freeman said at the City Council meeting the project won’t have any impact on public services or the fire and police department­s.

“We are not building in a new section of town,” Freeman said. “The project is imagined to be on a part of Shallowfor­d Road that is pretty centrally located to the city. It’s more of an infill project as opposed to sort of building in sort of an outlying area where you need to put in more infrastruc­ture.”

Freeman added the currently undevelope­d land generates about $4,000 a year in property taxes. After the conclusion of the 20-year tax agreement, he said the added value is expected to generate north of $400,000 in tax revenue for the city each year.

Freeman said the state bill from 2015 gave the city the authority to approve the tax agreement without City Council approval.

“The Tennessee state legislatur­e basically created a carve out,” Freeman said. “They said, ‘OK, because we vetted these projects, because we’re giving these projects highly competitiv­e tax credits, we’re going to make it a little easier for local communitie­s to promote affordable housing.

“The state legislatur­e understood that sometimes affordable housing can be politicize­d for better or worse,” Freeman continued.

Berz, in response, said she likes the project but not the approval process.

“I don’t think you ever leave representa­tives of the public out of the conversati­on,” Berz said.

Freeman said the mayor is committed to working with the council member who represents the district where such projects are located.

Council Member Chip Henderson, of Lookout Valley, said during the meeting he wants specific language in the ordinance that requires working with council members.

“One thing we might not have thought about in 2016 was actually a mechanism that directs the mayor to work with that council person,” Henderson said. “I understand that we have this mayor’s word that will happen, but going forward, we don’t necessaril­y have that assurance.”

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