Council excluded from project approval
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.”