The Hamilton County Commission debated the pros and cons of approving a PILOT tax break program for a renovation of the Battery Heights Apartments during their meeting on Wednesday.
“Battery Heights is a mixed-income 142 unit apartment community in District 5,” Thomas Robinson of Alco Management said. “There are 16 one-bedroom units, 112 two-bedroom units, and 14 three-bedroom units. We were proposing to preserve the property and commit to affordable housing for the next 30 years in Hamilton County.”
He told the commission the project is seeking support for a PILOT, and said the program qualifies for a 10-year fixed PILOT with a four year ramp-up PILOT. He asked to freeze the city and county taxes at the pre-development level, but pay the full amount for the school tax.
Mr. Robinson said the tax payment is $35,000 now, with it going up to $60,000 in the future. He said Alco Building Community manages 61 affordable properties, including six within an hour of Battery Heights. He said the company has redeveloped or is in the process of redeveloping 48 properties. He said 88 of their units will be priced at 30 percent of the renter's income. He said the other 54 units will be around $675 a month.
Mr. Robinson then told the commission about the serious renovations required at Battery Heights. The project would cost around $5.5 million, as the units need new kitchen and bathroom systems, new roofs, windows, and siding, and energy efficient lights and appliances.
“I believe we are a resident-focused company, and this is a resident-focused project,” Mr. Robinson said. “A resident that doesn’t have to move and be uprooted from their social network and school system, is one that can be more stable and can stay home.” He said work will be done in the units with residents still living in their own units. No moves will be necessary.
Commissioner Tim Boyd wondered why a company would buy such an old building that has had no major renovations and upkeep for years. Mr. Robinson said utilizing that particular building makes it possible for residents to access rental assistance, and he argued that renovating an old property is cheaper than building a new one from scratch.
“Explain why my constituents, who pay city and county taxes, should subsidize improvement and investment in this property when you’re just going to get your money back from the federal government anyways,” asked Commissioner Boyd. “Tell me how to answer that question to my constituents.”
Mr. Robinson responded by saying that he can’t do the project without a PILOT. Commissioner Boyd came back to say the city will probably support the project, but he said this still does not add jobs to the district. He said he could not support a PILOT when the federal government and city will also help subsidize it.
Commissioner Warren Mackey said affordable housing is difficult to find in the county, and that he would support it. But he also said the project will take place on a significant Civil War site, and wondered if any experts have come in to make sure there are any significant remains of the battle. Mr. Robinson said they have not yet, but that would happen later in the process, if approved.
Berkeley Burbank, CEO of the Memphis-based firm, said, “Alco is committed to providing quality housing for the families and communities where we operate, and I would argue good quality affordable housing benefits all members of the community. Everybody has varying levels of income, and we need to make sure everyone has access to quality housing.”
Commissioner Boyd said he understood that affordable housing was critical, but he still wanted to know why “this is so critical, this $17,000 a year, to put this over the top of your pro forma on your piece of property?” Mr. Robinson said the PILOT has to be approved by both the city and county, and he said the project will not be financially feasible without the PILOT.
County Attorney Rheubin Taylor said the city is able to participate in a PILOT program without the county, but it may not be feasibly for Alco. Commissioner Boyd said he believed the county does a better job of allocating money than the city does.
Commissioner Greg Martin asked what the occupancy of Battery Heights has been over the last few years, and Mr. Robinson said it has been 90 percent.
“It would be hard for someone to leave Battery Heights and go into a new apartment. Many of the Section 8 apartments in Hamilton County have long waiting lists,” Mr. Robinson said. He said the non-Section 8 housing market is extremely competitive and has high occupancy rates.
“What I’m hearing is you want the taxpayers to pay this $17,000, and here’s what’s going to happen,” Commissioner Martin said. “The people in Battery Heights are going to get a better quality of living, you guys are going to make money, and the federal government is going to help you make even more money. Am I missing anything?”
“We are also providing the county with 54 new affordable and restricted apartment units, which will be beneficial for the families that live there now, and also families that will live there over the next 30 years,” Mr. Robinson said.
Commissioner Martin asked if there was anything ALCO could cut out of the renovation in order to save the county taxpayers from paying $17,000. Mr. Burbank said the company is preserving items such as the wall structure and foundation of Battery Heights, which is saving money.
Commission Chairman Chip Baker said the topic will be taken up next Wednesday.
A similar presentation was made Tuesday night to the City Council.