Board approves assignment of Heritage McClellan pilot to ClearBlue, staff say affordability commitments will be preserved

The Health Education Housing Facilities Board voted to approve an assignment and assumption agreement for the Heritage McClellan apartment pilot, allowing a new operator to assume the project's existing loan and payment-in-lieu-of-taxes (PILOT) benefits without extending the pilot term.

Brooks Brasfield, who identified himself as representing the proposed assignee ClearBlue, told the board his client has been under contract roughly a month and will assume the existing loan and operate the property "as is" through the remainder of the pilot term. Brasfield said the transaction is an assignment of PILOT interests, not a request to extend the pilot, and any extension would require a separate board approval and substantive justification.

Board members asked whether residents would be protected against displacement. Brasfield said ClearBlue will take over landlord responsibilities and intends to renew existing leases; Joe Kelly of the Chattanooga Housing Authority and Invest Chattanooga said the nonprofit financing partner will add an additional layer of affordability requirements tied to their investment. Kelly said the developers and partners aim, over time as units turnover, to achieve a target in which 20% of units would be at 50% of area median income (AMI).

Board counsel and staff explained the PILOT mechanics to members: the assignee would receive the tax benefit at the existing rate during the remaining pilot period; at term end the property's valuation would "step up" and taxes would revert. Counsel clarified that refinancing or requests for a longer pilot term would require the board's separate approval.

After discussion the board moved, seconded and approved the resolution by voice vote. The board recorded no opposition and the chair announced the resolution approved.