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Commissioners to consider TIF for John Sevier Center

Robert Houk • Dec 5, 2018 at 11:33 PM

Washington County’s Budget Committee voted Wednesday to send a resolution to the full County Commission on Dec. 17 allowing the use of tax increment financing to buy the John Sevier Center.

The $4.6 million TIF project includes the Johnson City Development Authority’s purchase of the low-income apartment building at 141 E. Market St., as well as covering closing costs and work to make necessary improvements to the former hotel. The JCDA is asking county commissioners to amend portions of the 2008 redevelopment and urban renewal plan to bring it up to date with a state TIF law passed in 2012.

Commissioners are also being asked by the JCDA to remove the TIF district’s current debt ceiling of $11 million and replace it with a figure based on 10 percent of the real property value in the downtown area.

The JCDA voted in September to buy the 10-story John Sevier Center. Recent inspections by the U.S. Department of Housing and Urban Development found residents in the building’s 150 units living in unsafe conditions, and current owner East Tennessee Limited Partnership was in jeopardy of losing its contract with HUD to receive subsidies for the rents of its residents.

JCDA officials plan to bring the units up to acceptable conditions, help transition residents to new housing facilities elsewhere in the city and then sell the Sevier Center to a commercial developer.

In other action Monday, the Budget Committee voted to recommend county commissioners approve a payment-in-lieu-of-taxes agreement for the redevelopment of a vacant warehouse in Gray. Johnson City developer Mitch Cox is in the process of buying a 90,000-square-foot building with an appraised tax value of $2,056,100 on 16 acres at 149 Old Gray Station Road.

The $3.5 million project calls for Cox to redevelop half the space as a distribution warehouse for Ashley Furniture, with the remaining square footage renovated for other potential retail clients.

The PILOT calls for the owner to pay no county property taxes for the building during the first two years of the redevelopment. The warehouse, which was built in 1974, currently has an annual property tax bill of $19,572. Beginning in year three, Cox will begin begin paying 20 percent of the property taxes annually until the bill is increased to the full amount in the sixth year.

If the building remains undeveloped, Washington County would receive $137,007 in property taxes for the period. Under the PILOT project, Cox told committee members “the county would almost double its existing property tax collections” at the site.

Commissioner Freddie Malone told his fellow Budget Committee members that the PILOT agreement should not be misconstrued as simply “taking money out of the county’s accounts and giving it to a developer.”

The Budget Committee also recommended the County Commission extend an option to buy 15 acres next to Jonesborough Elementary School by another 90 days while officials deal with legal restrictions placed on the sale.

Commissioners voted In January 2017 to authorize the county mayor to buy the property for $777,900. The purchase option has been extended several times with the latest set to expire at the end of this month.

A meeting will be held today between representatives for McCoy and the nearby Lowe’s Home Improvement store to discuss the removal of restrictions that Lowe’s asked to be attached to purchase of the remaining tract when it bought its land from McCoy several years ago.

Under those restrictions, Lowe’s has the right to pre-approve any construction — be it for a building or a road — on the tract. No such plan could be reviewed by Lowe’s until the county Board of Education finally voted in early October to approve Scheme 6, which calls for renovating the current Jonesborough Middle School and adding about 64,000 square feet to the building.

School officials say the McCoy property is key to Scheme 6 because it will be used to create a new road for a bus loading and unloading zone with access to Main Street in Jonesborough.

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