Dominion Group is abandoning its proposed South Knox County townhome project after Mayor Betsy Henderson vetoed a tax incentive for it.
Henderson's veto of the tax break paused the development because its finances relied on a payment in lieu of taxes that was approved by the Knox County Commission. A PILOT is an incentive that freezes a property's tax value for a set period in exchange for something that adds value to the community. In this case, the developer agreed to limit rental prices for qualifying middle class families.
Commissioners were preparing to discuss their votes on an effort from Commission Chair Terry Hill to override Henderson's veto on Sept. 21, but Hill withdrew her motion after Dominion walked away.
"It's unfortunate the decision
(to veto the PILOT) was made so quickly," Hill said. "If people would have been talked with ahead of time, I would say he would've withdrawn it before we went through all this.
"In the future, I would just really urge any time this is going to happen, and our mayor made very clear we are going to have vetoes to come, I would encourage in the future that there is more openness and transparency and discussion between the mayor's office and the parties that are directly involved, in this case, the developer."
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The county's charter requires the mayor to issue vetoes within 10 days of receiving a copy of ordinances and resolutions from the county clerk.
Henderson has not said what factors she'll use to determine whether to allow tax breaks for other projects like the one planned by Dominion Group.
Her spokesperson, Jenna Triplett, said "the (deal with Dominion) is simply not a good business deal. With the 50% abatements, the tax revenue generated from the development would not be enough to cover the cost of essential services offered by the county. Not to mention, the area currently does not have the infrastructure to support it.”
Commissioner Commissioner Andy Fox, who represents South Knox County, expressed strong opposition to the townhomes and said neighbors were against it, though neither he nor Henderson quantified the number of opponents. Fox said Sept. 21 he had not communicated with Dominion outside of county commission meetings.
The PILOT would have given a financial incentive for Dominion Group to build 40 more affordable rental units as part of the 80-unit development along one of Knox County's busiest corridors. The county's deal allowed Dominion to pay 50% of the property taxes it owes over 20 years in exchange for making half of the townhomes available to people who make 80% to 120% of the Knoxville metro median income. That's $103,700 for a family of four, which comes out to a range of $82,960-$124,440.
The PILOT was negotiated by former Mayor Glenn Jacobs' administration and approved 7-4 by the commission. Three of the seven commissioners who supported the PILOT are no longer on the commission, so it's not clear whether Hill would have the seven votes needed to override Henderson's veto had Dominion not walked away. Henderson as a candidate for mayor promised to take a conservative approach to the county's growth and to be judicious about pubic-private partnerships with developers.
Allie Feinberg is the politics reporter for Knox News. Email: allie.feinberg@knoxnews.com; Reddit: u/KnoxNewsAllie
This article originally appeared on Knoxville News Sentinel: Developer walks away from Knox County townhouses after mayor's tax break veto
