MEMPHIS, TN - Downtown development officials approved tax breaks Tuesday for Grand Island apartments, a gated, 204-unit complex outside the north gate of Mud Island River Park. The Center City Revenue Finance Corp. waived a policy against property tax freezes for new apartments on Mud Island after representatives of Grand Island LLC said the project wouldn't be feasible without one.
The 10-year freeze will save developers of the $19 million project nearly $2.5 million in taxes, said Grant & Co. owner Keith Grant, one of the developers.
Developers expect to start construction in November and finish in two years.
Grand Island continues a recent trend toward more rental apartments in Downtown, said Andy Kitsinger, Center City Commission vice president of planning and development.
The Horizon, a high-rise condominium project on Riverside, is attempting an apartment conversion because of the area's battered condominium market. And Main Street projects including Court Square Center and Barboro Flats are adding to the apartment inventory.
Apartment occupancy stood at 93 percent in January, up slightly from six months earlier. The increase reflected a drop in apartment inventory as rentals were converted to condos during better economic times, Kitsinger said.
Center City enacted a policy in 2003 against granting tax freezes for multifamily residential developments south of Auction on Mud Island. The policy prevented former owner Rusty Hyneman from putting together a deal that included apartments on the land, site of a 2002 landslide that temporarily closed the Wolf River Harbor. Hyneman later sold to Grant & Co.
"I think we're in a completely different environment now than we were two or three years ago when we acquired the property," said Grant.
Officials also touted Grand Island as a way of salvaging an investment in RiverTown on the Island, a condominium project that has struggled to sell units.
Grant said 13 of 39 units have sold since the condominiums on Island Drive came on the market a year ago. The developer planned to build 200 condominiums in multiple phases, but will instead cap that at 86 units.
"By letting us go forward with Grand Island, it will make this more sustainable and allow us to complete the final units," Grant said.
The tax freeze was approved on a 5-1 vote after the board declined a Riverfront Development Corp. recommendation to require developers to contribute $400,000 toward improvements of park land across Island Drive from the site.
The RDC board suggested the payment. RDC officials said the tax freeze will reduce the amount of revenue going into a tax-increment financing district, a potential source of money for park improvements.
In another action Tuesday, the board voted to charge owners of The Horizon $362,225 over 10 years for Center City to waive a requirement for affordable rents on at least 20 percent of the units.
Horizon developers argued that because it was built as a luxury residential community, they can't afford to lower rents enough to meet the affordability standard.
Source: CommercialAppeal.com