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Kingsport approves financing framework and 25-year TIF for Dobyns Taylor warehouse redevelopment
Summary
The Board of Mayor and Aldermen approved a contribution agreement and a tax-increment financing amendment to back a proposed redevelopment of the Dobyns Taylor Warehouse into a 60-room boutique hotel, parking and event space. City leaders and KEDB emphasized developer guarantees and market analysis to limit city exposure.
Kingsport’s Board of Mayor and Aldermen on Nov. 18 approved a financial-contribution agreement and a tax-increment financing amendment to support a planned redevelopment of the Dobyns Taylor Warehouse at 435 Press Street.
Economic development director Steven Bauer told the board the project envisions a 60-room boutique hotel with a restaurant, bar, event venue and public parking. The Kingsport Economic Development Board recommended two financing loans: one not to exceed $3,000,000 (staff expects to borrow $2.5 million) for demolition, site work and a $1,000,000 incentive to the developer; and a second loan not to exceed $6,250,000 (staff expects $5.5 million) to act as the construction lender. KEDB expects occupancy taxes to cover debt service on the first loan and projects an estimated $160,000 a year in new occupancy tax revenue.
Bauer said the KEDB package includes protections: personal guarantees, an interlocking set of agreements where a default under any agreement triggers default under all, and other development agreements and guarantees approved by KEDB.
Board members pressed staff on city exposure and market overlap with MediView convention space. Chris (city staff) said the primary exposure lies with the developer and that the agreements include personal guarantees and covenants intended to mitigate risk. Staff cited market analysis showing continued demand for hotel rooms in Kingsport and differentiated the boutique hotel’s smaller event space from MediView’s larger convention facilities.
The board voted to approve a contribution agreement, with the item to proceed to the county commission for its approval. The board then approved an amendment to the Downtown Kingsport Redevelopment District authorizing a tax increment financing package for the project: a TIF request of $1,300,000 over 25 years with a 5% holdback. Both measures passed unanimously.
The city and KEDB estimate the full private investment at about $10 million, with approximately 40 temporary construction jobs and 50 permanent jobs tied to the project. Staff said the project is expected to relieve vacancy, generate sales and property tax revenue, and include a public parking lot intended to benefit downtown businesses.
Next steps: the contribution agreement will go to the county commission for consideration; staff will continue finalizing loan documents and oversight protections outlined in KEDB’s approvals.
