Johnson City businessmen, lawyers urge city to delay vote on Boones Creek incentive district

David Floyd • Jan 14, 2020 at 6:46 PM

Arguing that the district could apply to other interstate exits in Johnson City, four businessmen and lawyers are urging Johnson City commissioners to delay their final vote on the boundaries of an incentive district in Boones Creek.

“It doesn’t appear that there’s been any public input on this,” said Brent Long, a local developer and member of the Johnson City Development Authority who signed his name to a letter sent to Mayor Jenny Brock on Monday. “From the outset, we’ve been told the Boones Creek exit is the only exit that qualifies when in fact most if not all of the exits in Johnson City qualify to be considered for this tax incentive development.”

The Johnson City Commission is scheduled Thursday to cast their third and final vote on the boundaries of a roughly 950-acre incentive zone, which was authorized by a state law approved in May. The district, which would be located around Interstate 26’s Exit 17, would allow developers to apply for incentive money to offset cost such as property acquisition, design, engineering or construction on properties in the zone.

The incentives would be funded entirely through a portion of the state sales tax revenue generated in the district, but would be distributed by the city through agreements with individual developers. If approved by the City Commission, the district boundaries would then move to the state for final approval.

In the letter, Long, developer Greg Cox and Johnson City attorneys Donald Spurrell and John Wood said questions about the allowable location complicate “the public representation made by the city and validity of the commission’s votes on this proposed ordinance.”

They also expressed concern about Vice Mayor Joe Wise’s ownership of an office near the Boones Creek exit, “which raises the specter of a conflict of interest with him participating in votes in this matter.” They asked the city commission to defer their final vote until the described issues can be addressed.

“I think some time needs to be given for developers and would-be developers that are interested in putting together a plan for this,” Long said of the need for a delay.

State Rep. Matthew Hill, R-Jonesborough, who co-sponsored the legislation, denied Monday that the law, which contains language specifying the allowable location, could apply to other places. He said state officials reviewed that element of the legislation about a dozen times when they were in Nashville last year.

“There’s no way it applies to anywhere else but right there,” he said. “The geographic parameters lock it in to where that’s the only place that it can be applicable.”

In part, the legislation says some boundary of the district must be “no more than one-half mile from an existing federally designated interstate exit, is no more than twenty miles from the state border of two neighboring states as measured by a straight line.”

Brock said the Monday letter has been turned over to the city’s legal counsel, Sunny Sandos. She said Tuesday she hasn’t heard back from Sandos and didn’t have a response to the concerns expressed in the letter, but she did wonder why the authors didn’t approach officials earlier. Gov. Bill Lee signed the bill into law in May.

“Nobody’s been hiding this,” she said. “It’s been quite public. We’re just trying to deal with the legislation right now that has been presented to us. We really weren’t a part of designing it or anything like that.”

Wise said Tuesday that he owns an office condo in the footprint of the incentive district, where he operates the property management company Wise Property Solutions, 119 Boone Ridge Drive. He said the office does not generate sales tax revenue.

Wise said he asked the city’s legal department if his ownership of the office would be a problem during the vote. He was told that, because the property is already built up and doesn’t have the capacity to generate sales tax revenue, it would not be an issue. Wise said he owns 12% of the already-developed property and isn’t in a position to benefit financially from the incentive district.

“I’m not going to tear down my office so I can rebuild something that generates sales tax,” he said. “That wouldn’t make any sense.”

According to Wise, city staff believe there are about four exits in Johnson City that could meet the state border requirements in the legislation. Only one, Exit 17, is in a position to produce a meaningful increase in incremental sales tax revenue, he said.

Wise said at this time, commissioners are simply defining the parameters of the district, but he noted that he’s sympathetic to the argument that the district would harm existing retailers in other parts of town.

“This vote isn’t where that argument is as compelling,” he said. “Fast forward to the next vote where somebody comes in and says, ‘I’ve got a letter of intent and I’ve got these tenants and they’re promising to come and do X,Y and Z,’ well then that’s when we’re going to have to make the more difficult assessments about the value of actually employing this tool.”

Long said Tuesday that officials should “hit the reset button” on the incentive district and have a thoughtful, public discussion about how the city can most effectively use the economic development tool.

“If we discuss this and decide that the Boones Creek site makes the most sense, then I’m all for it,” Long said. “I’ll support it 100%. But that has not happened.”

Long also questioned whether the incentive district contributes to the efforts to produce a more cooperative regional identity.

“If we’re going to put in ‘Pinnacle Part Two’ in Boones Creek and slight our neighbors 30-40% of their traffic that’s coming to the Pinnacle, how is that regionalism?” he asked.

Pointing to the recent efforts to foster a local economic identity centered around outdoor recreation opportunities, Long added that officials should consider using the tool to contribute to that vision.

“Imagine, if you will, a mixed use development close to some of our outdoor amenities on the south side of town,” he said.