The Sullivan County Commission voted last week to approve the use of TIF for redevelopment of the E.W. King Building, which owner Joseph Gregory plans to spend about $2.8 million to upgrade and lease to a private business which will employ 25 people — who might also choose to live in the downtown area, according to the TIF proposal presented to county commissioners.
The Bristol Tennessee City Council voted in favor of the project last month.
According to the presentation:
• Currently, the old warehouse has a tax assessment of about $120,000. That results in current property taxes of about $2,700 to the city and an about $3,100 to the county.
• The redevelopment project will increase the tax assessment to $1.2 million. Based on current property tax rates, that would result in annual payments of about $27,000 to the city and about $31,000 to the county (or ten-fold what is being collected today).
• To fund the 15-year TIF plan, the city and county were asked and have agreed to allow a portion of that growth in property taxes to help the developer pay off the cost of redevelopment. Of the $27,000 in annual taxes paid to the city, post redevelopment, about $22,900 will go toward the TIF payback, while of the $31,000 in annual taxes paid to the county, post redevelopment, about $24,717 will go toward the TIF payback. Combined, the city and county will make available up to $46,471 per year, over 15 years, to grant the developer’s request for up to $475,000 toward the redevelopment project’s costs.
• Approximately 20 total jobs could be created during the construction phase of the redevelopment, with payroll exceeding $1 million.
• Once completed, the business expected to locate in the redeveloped building will bring about 25 jobs with a total annual payroll of almost $1 million.
• “ ... the end result of the redevelopment project is that a long underutilized building will be redeveloped, jobs will be created and the city and county will receive a substantial economic boost.”
• Proposed improvements include new windows, a new sprinkler system, new elevators, stairwells and restrooms, upgrades to the electrical system, the exterior facade and brickwork — an d build out of one or more floors to meet the needs of the potential tenants.
Prior to the commission’s vote, some commissioners questioned the developer’s need for TIF — but some of that doubt seemed to be based on mistaken, or at least differing, understandings of how much money was involved. Commissioner Mark Bowery sought to amend the amount of the TIF by having the county’s contribution decrease by 5 percent per year until it reached only 35 percent of the annual growth in property taxes resulting from the redevelopment. That effort,which would have cut nearly $100,000 from the amount TIF would contribute to the redevelopment’s cost over the 15 years, ultimately failed.
Commissioner Mark Vance said this project is the very epitome of the original concept of tax increment financing, as it is truly a redevelopment that will revitalize not only an existing building, but will also help the surrounding area to continue to flourish by bringing in a new business with new employees — who will likely eat and shop in other downtown businesses.
“I think it’s a great investment for the county,” Vance said.
Tracie Coppedge, director of operations for Gregory Management Co., told commissioners the full TIF was needed or the redevelopment simply wouldn’t work.
Coppedge said even with the up to $475,000 in TIF from the city and the county, the redevelopment is projected to show only a .6 percent — six-tenths of one percent — rate of return for the developer at the end of the 15 years.
“We’re doing this because it has been a historic building downtown,” Coppedge said. “And as a developer we only have three options. That’s redevelop the building, let it sit there and deteriorate, or knock it down and make a parking lot. We want to redevelop and revitalize it. But it has to make sense.”