Jon Kinsey talks to City Council on tax abatement
City Attorney Wade Hinton said, in response to concerns expressed by the City Council and County Commission, some tighter provisions are being placed on a tax abatement for the Chattanooga Choo Choo.
The City Council approved the Payment in Lieu of Taxes (PILOT) on a $4 million project to convert hotel rooms to 97 apartments.
City Attorney Hinton said, 'We have heard a number of the concerns and made a number of changes that I think are significant improvements."
He said the Choo Choo owners would not be allowed to pass on the tax breaks to a new owner unless permission was given by the City Council and County Commission. That comes after developers of the Walnut Commons apartments sold the complex for a $3 million profit and passed on the tax abatement to the new out-of-town owners.
City Attorney Hinton said the Choo Choo owners would be required to make annual reports on the rental performance.
There would be tighter requirements on the clawback provision (pay back if the developer does not live up to the contract).
Jon Kinsey, Choo Choo principal partner, said 95 of the 97 apartments would meet the requirements for low to moderate income. He said rents would be $800 per month with a $90 charge for utilities.
He said, "We've been ready to go on the project for months."
Councilman Jerry Mitchell denied that the project has been "on a fast track." He said it was long delayed by the fact that the city Health, Education and Housing Facility Board could not get a quorum, then had to have new members appointed.
Mr. Kinsey said there will be an additional $8 million in development at the Choo Choo as a number of entertainment venues will open along 14th Street.
Officials said the amount of the tax abatement for the city (lost taxes) will be $16,000 per year. Mr. Kinsey said for the last housing PILOT it was $55,000.
Kim White of the Rivercity Company said the city will still get $42,000 in taxes on the property, plus a new $10,000 in school taxes.
The project is set to go before the County Commission on Thursday.