City Considering Allowing Housing Board To Give Tax Breaks To Encourage Downtown Housing

Saturday, August 2, 2014

The City Council is set to consider a resolution on Tuesday that would give the city's Health, Educational Housing Facility Board authority to approve tax breaks to promote downtown housing.

The resolution would authorize the mayor to enter into agreements for payments in lieu of ad valorem taxes (PILOTs).

The incentive program would expire after 10 years.

The resolution says, "WHEREAS, the City wishes to encourage the development of housing in the downtown Chattanooga area; and

"WHEREAS, the City has determined that PILOTS from developers of downtown housing would be in furtherance of the HEB’s respective public purposes as set forth within Part 3 of Chapter 101 of Title 48 of the Tennessee Code Annotated; and

"WHEREAS, the City wishes to set forth the criteria that must be met by developers of downtown housing facilities in order for them to qualify for PILOT treatment at various levels; and

"WHEREAS, the City also would like to encourage the development of single family housing in the downtown Chattanooga area; and

"WHEREAS, a Program for Downtown Housing Development adopted by the City of Chattanooga and Hamilton County in 2002 expired by its terms in January of 2012;


"1. That we do hereby find that the development of all types of downtown housing is
in the best interest of the City of Chattanooga and Hamilton County, and that PILOTS derived
therefrom would be in furtherance of the respective public purposes of each of the HEB; and,
2. That, having made such findings, we do hereby delegate to the HEB the authority
to negotiate and accept PILOTS from developers of housing in downtown Chattanooga pursuant
to the terms of the attached Program for Downtown Housing Development (the “Program”); and,
3. That the Mayor of the City of Chattanooga is hereby authorized to enter into
Agreements for Payments In Lieu Of Ad Valorem Taxes that meet the criteria of the Program;
4. That this Resolution shall be effective for only ten (10) years from its passage, at
which time it shall terminate and be of no further force or effect, unless extended by action of this Council."

The program is for projects for low and/or moderate income individuals or those who are handicapped or elderly.

It includes new construction or rehab of older property.

The value of the new construction or rehab must be at least 60 percent of the original value.

The incentive is for 10 years, or an additional two years for a rehab, and two more years if an historic property.

Qualifying projects can also receive a PILOT phase-in period of four years of incentives. The rate is 20 percent the first year, 40 percent the second year, 60 percent the third year, and 80 percent the fourth year.

Applications for the incentives will go through the private River City Company, which will charge a $500 application fee for administration and processing.

River City officials will monitor whether builders are following terms of the PILOT.

The Health, Educational Housing Facility Board will hold title to the property during the incentive period.

To read the resolution, click here.

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