|$20M in tax breaks requested
Public hearing Sept. 17 for Town Creek development
HUGH G. WILLETT
Friday, September 7, 2007
Developers of the Town Creek retail, medical office and residential project in Lenoir City are asking local government to support a $20 million tax subsidy for infrastructure improvements.
The development group led by Knoxville physician and television personality Dr. Robert Overholt has filed a plan with the Lenoir City Industrial Development Board that would provide the developer tax breaks based on a program called tax increment financing.
A public hearing on the TIF proposal will be at 6:30 p.m. Sept. 17 at Lenoir City Hall.
“TIF programs have been used very successfully in Knoxville,” said Lee Kribbs, project planner and consultant to Overholt. “It’s a better way to go than some of the bond deals that have been used in the past.”
The developers would borrow $20 million from a private lender. The loan would be repaid by money set aside from property taxes generated by the Town Creek project. After the loan is paid off, all of the property taxes generated by the Town Creek project would go into city coffers.
TIFs relieve the municipality of the risk of carrying loans to promote development, Kribbs said.
“This only affects property tax revenue,” Kribbs said. ”The development of this property is expected to provide substantial tax revenue from retail sales.”
The money will be used to construct a parkway through the development connecting Highway 321 with Highway 95 and for grading of the land, parking spaces, a bicycle trail and other infrastructure improvements.
The current lack of sewer capacity at the site is preventing the city from issuing new building permits in the area, Kribbs said. A new sewer line to service the area would cost about $3 million.
Overholt has promised to provide $1 million toward the sewer line upgrades, which are separate from and not contingent upon the acceptance of the TIF plan, Kribbs said.
The industrial board is evaluating the Town Creek proposal and will make its findings known to the city council after the public hearing, said Tim Grindstaff, industrial board chairman.
“This is a new process for this city and this county,” Grindstaff said. “We’re excited to hear of the success these programs have had in other parts of the country and in Knoxville, but we’re still learning.”
Earlier this year, Lenoir City agreed to provide $5 million to build a road running through the Creekwood retail and residential development also planned for near the intersection of Highway 321 and I-75.
Former Loudon County commissioner and Lenoir City resident Van Shaver said he is concerned about giving away tax dollars to promote private development.
The TIF proposal, while promoting development that ultimately will produce tax revenue, does not take into account the “opportunity cost” of not having the land improved by a developer who would shoulder the entire cost of development.
“If the Town Creek opportunity is going to be profitable, private developers should be willing to invest their own money,” Shaver said.