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Developer seeks PILOT and board approves recommendation for Heritage Towers rehab
Summary
Rebuild America representative Mark Kemp asked the board to support a PILOT to make Heritage Towers financially viable for a $20M acquisition and $9M rehab; City Attorney said the Industrial Development Board must process any PILOT. The board approved a motion allocating a $10,000 annual PILOT pool split 75% city/25% county for 20 years.
Mark Kemp of Rebuild America, Inc., told the board the company wants to acquire and renovate Heritage Towers, which houses about 75 low‑income or disabled residents and is subsidized by HUD. He said the project has a $20 million development budget and would invest about $9 million in improvements to apartments and common areas.
Kemp described specific upgrades planned for the building: “extending the fire sprinklers into each apartment (currently only in the hallways), new HVAC units in each apartment, new flooring, new appliances, new sinks and fixtures, new counter tops and cabinets, new windows, add WIFI throughout the building and expanding common areas,” and an elevator cab upgrade he estimated at roughly $400,000. He said the renovation could take “18 months to 24 months” and that a typical PILOT structure would be “two years for construction, then 18 years (20 years total).”
City Attorney Jerry Spore advised the board that Tennessee law vests PILOT authority with Industrial Development Boards (IDB), not directly with the city or county. He explained the likely structure: the IDB would take title to the property and lease it back so the project is treated as tax‑exempt while providing a PILOT payment. The proposal includes a $10,000 per‑year PILOT pool to calculate payments.
Ald. Keith Smith proposed splitting the $10,000 pool 75% to the city and 25% to the county to reflect that the city provides the majority of services to the property. The board voted to accept the PILOT arrangement with that split and a 20‑year term; the motion was made by Ald. Smith and seconded by Ald. Butler and was carried by the board.
Next steps the board discussed include referring the request to the city’s Industrial Development Board for formal consideration and final structuring of the PILOT and lease‑back.
