Commission approves IDB authority for $30M rehab of Section 8 apartments under 15-year PILOT

Mayor Greg Cox and the Johnson City Commission voted to delegate authority to the Industrial Development Board to enter a pilot payment-in-lieu-of-taxes agreement with DGA Residential for a major rehabilitation of a Section 8 housing complex.

Assistant City Manager Alicia Summers told the commission that the project will be a $30,000,000 investment to renovate 105 existing units built in 1978 on Squadley Road. The renovations will include additional handicap-accessible units, three units equipped for audio/visual impairments, free laundry and internet, a playground, covered mailboxes, bike racks, a gazebo and an upgraded basketball court.

Under the pilot proposed by the Industrial Development Board, property taxes would be frozen at the 2025 rate for 15 years, with a 3% increase applied annually. The IDB would retain 2% of the annual increases as a fee to review and monitor required annual reports. Summers said the IDB approved the pilot yesterday pending approval by the commission.

The agreement includes a compliance requirement: the developer must provide proof of compliance with HUD rules and with low-income housing tax credit program conditions annually. Summers said that "in the event they fail to provide us with that annual report for that particular year, they'll be required to pay 100% of the property taxes" for that year.

Commissioners moved and seconded approval; the motion passed by roll call.

The IDB is a statutory 10-member board that can facilitate PILOTs and tax-increment financing, Summers said. Construction is projected to be complete in April 2027, according to the staff presentation.

The commission's action delegates execution of the pilot agreement to the IDB; the IDB will be responsible for monitoring annual compliance and enforcing the tax restoration provision if reports are not submitted.