Knoxville’s North Waterfront plan moves into tax-increment financing review
Knoxville’s proposed North Waterfront redevelopment plan moved into formal review of possible tax-increment financing at a July 29 public hearing conducted by the Knoxville Community Development Corporation.
The hearing followed Knoxville City Council’s July 7 authorization for KCDC to prepare the plan. It did not, by itself, finalize the redevelopment plan, authorize construction or approve a tax-increment financing package.
What area is covered
The proposed redevelopment area runs along the north bank of the Tennessee River from the Henley Bridge to Third Creek. The City of Knoxville’s description includes World’s Fair Park, Maplehurst and Neyland Drive, along with the North Waterfront and proposed Maplehurst Innovation District. The corridor also includes the north landing of the planned pedestrian bridge.
The accessible KCDC draft plan describes the area more specifically as land along Neyland Drive extending to its intersection with Kingston Pike and the Henley Street Bridge, plus the area bordering Second Creek between Neyland Drive and Cumberland Avenue that includes Maplehurst.
The stated goals are to reuse vacant or underused land, improve public infrastructure and riverfront access, and strengthen pedestrian, bicycle and other connections among the University of Tennessee, downtown Knoxville, World’s Fair Park and the Tennessee River.
What City Council authorized
On July 7, City Council authorized the city to request that KCDC create the North Waterfront Redevelopment Plan. The city said the planning work could proceed through existing city funding for KCDC, without additional funding for the plan itself.
That action began the redevelopment-planning process. It did not approve a specific building project, private development, property acquisition or final financing structure.
What KCDC is reviewing
KCDC’s review addresses whether the area qualifies for redevelopment and whether future property-tax growth could help pay for eligible public improvements and other redevelopment costs. The draft plan identifies a potential mixed-use district that could include entertainment, hospitality, residential, office, research and recreational uses, but it does not authorize any particular project.
The financial questions include projected redevelopment costs, revenue sources, the estimated tax increment, debt maturity and the effects on the City of Knoxville and Knox County. The draft plan estimates total redevelopment-project costs above $250 million, excluding the actual cost of buildings expected to be developed in the area.
The draft plan says revenue sources could include private investor equity, loans, grants and, in some cases, tax-increment financing. It sets a maximum of $80 million in TIF principal. Interest associated with that amount is estimated at approximately $75 million based on current interest rates, although the final amount would depend on the financing actually issued and market conditions.
What tax-increment financing could mean
Under the draft plan, the existing real-property tax amount for each parcel would remain the base amount paid to the City and Knox County. After approval, future real-property taxes above that base, after any applicable dedicated taxes, could be directed to a KCDC fund for debt service, reserves, permitted administrative expenses and eligible redevelopment purposes.
The draft plan says the City and County would retain the base tax amount and dedicated taxes. It also says tax-increment revenues beyond amounts needed for debt service, reserves and permitted administrative expenses would revert to the City and County. Up to 5% of tax-increment revenues could be set aside for administrative purposes.
The proposal could affect the timing of when some future tax growth is available for general City or County uses. The draft plan estimates that the effect could generally be no more than approximately $3 million per year for the City and approximately $3 million per year for the County, although the amount would vary with interest rates, issuance timing and other financial conditions.
The draft plan caps the allocation period at no more than 30 tax years for any parcel. It also says KCDC-issued obligations would not be considered a debt or obligation of the City or Knox County; repayment would come from tax-increment revenues and any other pledged sources identified in the financing.
What happens next
The July 29 hearing was part of the review process, not the final approval. The draft plan states that tax allocation would begin only after the plan is approved by both the City and Knox County and subject to applicable law.
The plan also states that amendments would be adopted by Knoxville City Council after another public hearing, with Knox County approval requested when required by state law. Any later action would need to establish the operative boundaries, costs, financing terms, debt obligations and public commitments.
What residents and businesses should watch
Residents, property owners and businesses near the proposed corridor should watch for the final redevelopment documents, parcel-level tax information, financing terms, public comments and later City or County action. The draft plan says relocations are not anticipated as a result of the plan, but it also preserves authority for KCDC to acquire property when necessary and in compliance with applicable law.
For commuters and nearby businesses, the practical stakes include potential future changes to pedestrian and bicycle routes, utilities, stormwater, public spaces, parking and traffic circulation. For taxpayers, the central question is how much future property-tax growth would be committed, for how long and to which public improvements. None of those potential changes should be treated as final until the required approvals and financing decisions occur.
Sources
- City Council Approves North Waterfront Plan, Data Center Moratorium
- KCDC Redevelopment Program
- KCDC asked to draft plan for underutilized land along Neyland Drive before major development arrives
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