Committee gives initial OK to incentives for downtown developer


By Jeff Keeling

Representatives for Yee-Haw Brewing Co. co-founder Joe Baker, who has renovated two former downtown Johnson City railroad depots, received initial approval Monday for tax increment financing (TIF) totaling slightly less than $500,000 on two of Baker’s other downtown buildings. They also tied the TIF request in with Baker’s desire to purchase and renovate the Model Mill just west of downtown that is owned by the Chamber of Commerce Foundation.

Gary Baker and Terry Hummel in front of the former Faircloth Chevrolet building, which is slated to house a restaurant and music venue. Photo by Jeff Keeling

Gary Baker and Terry Hummel in front of the former Faircloth Chevrolet building, which is slated to house a restaurant and music venue. Photo by Jeff Keeling

The Johnson City Development Authority’s (JCDA) TIF advisory committee unanimously approved the initial TIF plan for the group. It would involve the former Free Service Tire office building at 126 Buffalo St. and the former Faircloth Chevrolet building at the corner of Wilson and Commerce streets.

Next, the plan’s concept goes Friday for approval to the JCDA. It would then be tweaked and finalized, numbers-wise, before going back through the TIF committee, the JCDA again, and finally the Washington County Commission – possibly in November.

The 14-year TIF plan would be in the form of a development agreement with Baker that includes performance measures and restrictions designed to protect the local governments’ investment. It would still net Washington County more than $125,000 in new property tax revenue over the 14 years, and it was a county commissioner, Mark Larkey, who enthusiastically moved for its approval Monday.

Baker has purchased both buildings within the past year and has begun renovations on the Free Service building. His father, Gary Baker, said Monday that building could be ready for occupancy within six months, while the Chevrolet building could be ready in a year.

The TIF plan, simply put, calls for JCDA to buy the buildings from Baker at his purchase price, then sell them back to him at lower prices taking into account 14 years’ worth of amortized, incremental increased property tax value.

Plans for the buildings – including a music venue, a restaurant, office space and a retail store – all are part of Joe Baker’s ongoing vision for the revitalization of Johnson City’s historic downtown, Baker associate Terry Hummel told the committee. The vision includes the already completed renovations of the former CC&O and ET&WNC depots, now home to Tupelo Honey Cafe and Yee-Haw Brewing.

And that vision, Gary Baker told the group, includes other properties not yet owned by Baker – including the former Model Mill, which Joe Baker expressed interest in buying from the Chamber of Commerce earlier this year.

Joe Baker

Joe Baker

“This will allow us to acquire additional properties and keep doing what we’ve been doing downtown,” Baker said. “That’s the whole reason for the TIF.”

“We’re anticipating developing the Model Mill,” Hummel added later in the meeting.

The TIF application for the Free Service building states that approval: “will also encourage the developer to continue to invest in historical properties in Johnson City that might otherwise be unrestored or, worse yet, leveled as has happened to other historic structures in the City.”

But the focus Monday was on the Free Service and Chevrolet dealership buildings, which Baker has bought within the past year for $325,000 and $609,000, respectively. The TIF plan as calculated Monday would create lump sum incentives of $226,253 for the Free Service building and $269,128 for the Chevrolet building – lowering Baker’s buyback prices to around $90,000 for Free Service and $340,000 for the Chevrolet building.

Those incentive amounts are far less than the estimated renovation costs Baker expects to incur, of $1.5 million for the Free Service building and $2 million for the Chevrolet building. Hummel said that investment, along with more than $4 million Baker has invested in the ET&WNC depot, and
$2 million or so in the CC&O, speak to Baker’s interest in the economic growth and historic revitalization of downtown.

“They see in this town what you all obviously see, which is an incredible Southern town situated in the heart of the mountains, with these beautiful old buildings, with water running through the middle of town that you all have had the foresight to uncover,” Hummel said of the Bakers.

“What you’ve done with Founders Park and the pavilion and the things that are happening here, coupled with this vision to save these old buildings and repurpose them in a way that is for the public’s benefit as well as private partnerships that can enhance the overall redevelopment of downtown Johnson City, that’s exciting stuff.”

Yee-Haw and White Duck Taco, also in the ET&WNC depot, have created about 60 jobs with a $1 million annual payroll, Hummel said. The two buildings eligible for TIF are expected to create another 75 or more.

Hummel, who has been a Rolling Stone publisher and retains close ties to the music industry, said the 10,000-square-foot second floor of the Chevrolet building is slated to become a music venue, and very possibly the main performance space for the 40 or so bands affiliated with East Tennessee State University’s Bluegrass and Old Time music program. Each band must play at least three live shows per year.

“This is a space we would commit to ETSU to use at no charge,” Hummel said. He added that he and the Bakers have had numerous conversations about that prospect with ETSU President Brian Noland, other administrators and people from the Appalachian Studies and bluegrass programs. When not in use by ETSU, Hummel said, the space is envisioned to be a venue somewhat like Asheville’s Orange Peel, with capacity for 600-800 for national touring acts that play venues of that size.

“The vision is to create the best acoustic room in the country,” Hummel said – complete with views of Buffalo Mountain and most of downtown from the large windows covering nearly the entire perimeter of the building.

The first floor, also 10,000 square feet, would be a restaurant, and Hummel said Baker’s group is very close to signing a letter of intent with a regional chain.

The Free Service building’s 3,800-square-foot first floor – if all goes according to plan – will become an outdoor-oriented retailer. The upper floors, at 3,200 square feet each, will be leased for commercial use.

Washington County Economic Development Council CEO Mitch Miller told the committee a partner from the JCDA’s TIF attorney’s office has reviewed the TIF plan and that it passes legal muster. Current numbers are close estimates, but the plan will be sent to legal counsel to be finalized if the full JCDA board approves it Friday.

The Free Service building’s current tax appraisal of $271,524 is expected to rise to $2 million after renovation. After county tax revenues related to debt service and schools are removed from the equation – those stay with the county – the new value would create an annual available “increment” of $20,829. Amortized over 14 years at about 3.6 percent interest, that would make a lump sum of $226,253.92 available.

The Chevrolet building’s current appraisal ($443,984) is expected to rise to $2.5 million, for an available increment of $24,776 per year and a lump sum available of $269,128. Committee Chairman Craig Torbett said he sees the “project-based” TIF being considered as incentivizing projects that will spur further growth and investment in the areas around them. That, he said, will help increase JCDA’s overall TIF revenue available for other more general enhancements to downtown.

Hummel, who called the TIF “a great incentive for us,” said he sees the projects as one key to ETSU’s stated desire to grow its enrollment to 18,000 from the current 15,000 by the end of the decade.

“When you talk about the things that are magnets to college-age students, music, entertainment – and your outdoor experiences are already here – those are things that become linchpins as families make those decisions,” Hummel said. “These projects enhance those in the downtown area, where probably not too long ago as parents and prospective students were visiting you were routing them around downtown Johnson City.”



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