JADC Approves Development Agreement for Sevier Center Replacement | News

A complicated, years-long process to develop new housing for residents of a subsidized housing complex in downtown Johnson City has taken another step forward.

On Monday, the Johnson City Development Authority unanimously approved a deal with LHP Development, a Knoxville real estate company that proposed to build a new 145-unit housing project at 2162 S. Roan St. The development would replace aging housing from the John Sevier Center, 141 E. Market St.

“There’s been an awful lot of effort to get us to this point today,” said JADC President Hank Carr, “to make a decision about what we think is best for the residents of John Sevier, for the city and its investment in the John Sevier, and ultimately its redevelopment one day.

Johnson City executives are considering approving a $5.9 million loan to LHP, which would fill a financing gap in the project of about $31 million. If the project goes over budget, LHP will absorb the additional costs.

The JADC purchased the Sevier Center in September 2019 and LHP has been its property manager since last April.

The contract also includes a 20-year payment-in-lieu-tax agreement that would reduce the property taxes LHP pays on new homes. Once the project is completed, LHP will pay the city $30,000 per year, an amount that would increase by 2% annually.

With the JCDA signing the agreement, the Municipal Board will now hear the proposal at its regular meeting on Thursday. If approved, it will go to the Johnson City Industrial Development Board, which will work out the finer details.

One of the crucial pillars of the project is an upcoming inspection from the U.S. Department of Housing and Urban Development — an inspection that the Sevier Center previously failed in 2015 and 2017. Carr said the 98-year-old building has at least 10 years of deferred maintenance.

The JADC has invested nearly $400,000 in repairs to prepare for this inspection, which will decide whether HUD allows the city to transfer the housing assistance payment contract from the Sevier Center to the newly identified site on South Roan Street.

Given that the transfer of Sevier Center’s Housing Assistance Payments contract to a new property freezes rents for five years, it’s likely the city wouldn’t begin receiving loan payments from LHP until then or later. late. Rent increases would not affect residents.

Among other challenges, JADC members pointed to the recent growth in construction costs, which Carr said jumped 19% in the past 12 months.

“What reassures me is that we have found the right partner in LHP,” said board member Robert Williams. “…They are the premier housing development company in the state of Tennessee and are historically ranked among the best in the nation. They have 44 years of experience, more than 100 projects they have completed.

“It’s not the first time they’ve probably had to deal with increased costs,” he said. “I am convinced that we have the right partner who will carry out this project.”

Deputy City Manager Randy Trivette said the $5.9 million loan is a necessary part of that development plan, and the deal includes safeguards to ensure the city is at little risk.

“There are a lot of mechanisms in there that really protect the city and the taxpayers of the city…and on top of that it’s going to provide safe, affordable, secure housing for a number of people inside the city” , said Trivette.

Carr said the deal is an investment in downtown and the people who live there.

“I decided early on that I wasn’t going to support this project unless it was the right thing for the residents of John Sevier,” Carr said, “and I believe it is.”

Where are the locals going?

The proposed site for new housing on South Roan Street is 1.5 miles from the existing Sevier Center location on East Market Street.

It is next to a Food City, which includes a pharmacy, and a short distance from a bus stop, a shopping area and the Haven of Mercy thrift store. Unlike a single 10-story structure, LHP will distribute units across a few smaller buildings.

Nance said the complex will also include green space and consist of one-bedroom apartments larger than most units available at Sevier Center. The agreement states that LHP is targeting a project completion date of December 31, 2025.

Margie D. Carlisle