Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Economic Development topic
No spam. Unsubscribe anytime.
Kingsport approves financial support and 25-year TIF for Dobyns Taylor warehouse redevelopment
Summary
The Board of Mayor and Aldermen authorized a contribution agreement and a tax-increment financing amendment to support a proposed 60-room boutique hotel and public parking at the Dobyns Taylor warehouse site at 435 Press Street; city and KEDB outlined loan structures and risk mitigations.
The Board of Mayor and Aldermen on Nov. 18 approved a resolution authorizing the city to contribute funds, if needed, to the Industrial Development Board (Kingsport Economic Development Board) to support the proposed Dobyns Taylor warehouse redevelopment at 435 Press Street and separately approved an amendment to the Downtown Kingsport redevelopment district to provide tax-increment financing (TIF).
Economic development director Steven Bauer outlined the redevelopment as a 60-room boutique hotel with an attached restaurant, bar and small event venue, plus a public parking lot. He said KEDB pursued two loan packages: Loan 1 not to exceed $3,000,000 (staff expects to borrow about $2.5 million) to cover demolition, civil site work and a $1,000,000 incentive to the developer; Loan 2 not to exceed $6,250,000 (staff expects to borrow about $5.5 million) to act as construction financing that KEDB would in turn loan to the developer.
Bauer described the loan terms as 10-year loans with a 25-year amortization and a roughly 4% interest rate on the KEDB borrowings; the KEDB construction loan to the developer was described at about 6.5% interest. He said KEDB has protections in the development agreement and loan documents, including personal guarantees and cross-default provisions: "Under that, a default under one agreement is a default under all the agreements," Bauer said.
On TIF, Bauer said the request is $1,300,000 spread over 25 years with a 5% holdback; existing property tax base would remain in place and new incremental taxes were expected to support the TIF payments. Staff estimated the project would represent about a $10,000,000 investment, create roughly 40 temporary construction jobs and about 50 permanent jobs, and generate an estimated $160,000 in annual occupancy tax revenue.
Board members pressed staff on city exposure if the developer underperforms. City staff and counsel pointed to contractual protections and said the primary risk lies with the developer; staff also noted occupancy-tax assumptions underlie loan coverage. Alderman Baker and others repeated that every development carries risk and that KEDB and staff had sought to mitigate it with loan covenants and guarantees.
Multiple members said the hotel market analysis shows demand in Kingsport and that convention-space concerns at nearby MediView are distinct from the boutique hotel project. After discussion, the board voted to approve the contribution agreement resolution and the TIF amendment; roll-call votes and record indicate the motions carried as read.
The council’s approval means the related agreements will move to the county commission for its consideration as required by procedure. Staff said additional agreements (loan documents, sublease, demolition and design-build contracts) will follow and that preconstruction work and renderings will be refined as the project proceeds.
The action taken Nov. 18 reflects the city’s role in enabling public-private redevelopment through KEDB and TIF mechanisms; staff emphasized contractual protections and ongoing oversight but also noted potential city contingent exposure if occupancy and revenue projections are not met.
