Past is prologue: Board recommends TIF plan as project to restore Model Mill takes shape

Architect Tom Weems’ rendering shows the renovated mill from Walnut Street.

Architect Tom Weems’ rendering shows the renovated mill from Walnut Street.

By Jeff Keeling

A similar view to the one at left from the mill’s heyday.

A similar view to the one at left from the mill’s heyday.

Restoration of Johnson City’s historic Model Mill took a step forward Thursday when the Johnson City Development Authority’s TIF Advisory Committee recommended an agreement that will allow the developer to offset about $1.2 million of the project’s estimated $7 million-plus cost.

Summers-Taylor Inc. President Grant Summers, who is leading the 107-year-old mill’s renovation, hopes to carve the mill building and the property it sits on into a new parcel, then develop outparcels with the remainder of the mill property’s 4.8 acres. Summers told committee members Thursday he also has a letter of intent to purchase the adjacent 1.9-acre Mize property, which would be included in the outparcels slated for a second phase of the project and the TIF. Summers said the mill renovation, which will house Summers-Taylor’s corporate offices, some East Tennessee State University arts-related functions and other office and “mixed use” space, could be complete by late 2018 or early 2019.

“When you sandblast, get all that paint off, expose the wood columns, expose the wood ceilings and you refinish the floors … it would be a very special office environment for somebody,” Summers said. He showed committee members current photos of the building’s interior as well as others showing renovated spaces similar to what the mill will look like inside.

“It’ll have to be Class A office space to recoup the cost. You can build new, but I don’t think you can create the character in new spaces that you can with some of these old restored ones.”

Ceiling and beams awaiting restoration.

Ceiling and beams awaiting restoration.

The plan’s first phase is pending a loan agreement, which would then require approval from the full JCDA board and the Washington County Commission. The JCDA would borrow $1.211 million, using 100 percent of the anticipated incremental property tax revenue increase as collateral, and use that money in two ways: to pay for most of the mill’s $570,000 cost, and to reimburse R&G Ventures (Summers and his father, Rab) for environmental, demo and cleanup work at the site. Summers has estimated the cost of that work at $800,000 to $1 million, and said banks would require its completion before loaning funds to cover the actual renovation.

The second phase would govern the outparcels, with TIF funding available to R&G for that phase at 50 percent of the increment. Even in the first phase, Washington County would see its annual property tax revenues from the mill site quintuple, to $26,052 from $5,324 because the county’s TIF agreement leaves roughly 40 percent of county taxes ineligible for TIF.

“If you look at the enhanced criteria, one could argue they meet nine out of 10,” the committee’s Robert Williams said of the mill renovation, referring to a recent overhaul of JCDA’s TIF policy and guidelines. “We’ve been talking about this project for some time, but it really is going to be transformative.”

A renovated space in Toronto from a similar era.

A renovated space in Toronto from a similar era.

R&G Ventures is in a contract to purchase the mill from the Chamber of Commerce, which bought it in 2008 for $400,000. The first phase will see renovation of the mill building and two smaller buildings into what Summers said will be roughly 37,000 square feet of finished space.


JCDA to buy, immediately sell the property: How it will work

R&G would receive TIF money in a front-loaded fashion for the first phase, and the TIF would be 100 percent of the property tax increment for 20 years after backing out the county’s non-TIF share. With the expected increment of $89,144 annually – based on estimates that the mill parcel’s value increases from $223,000 to $7 million – the JCDA would borrow $1,211,504.

The JCDA would use $570,000 of that money to buy the mill from the Chamber, then sell it to Summers for $70,000 – thus knocking out $500,000 of the $1.2 million incentive in one fell swoop. (The JCDA’s TIF attorney has reviewed and given a thumbs up to the entire proposal’s legality.) If the new assessed value of phase I doesn’t yield at least the $89,144 increment, any agreement would require R&G to make up the difference in the JCDA’s loan payments.

The committee recommended allowing up to five years for R&G to request TIF funding for the planned outparcels, each of which is anticipated to be one-half to three-quarters of an acre. Summers said he anticipates promoting the parcels facing State of Franklin Road, with its high visibility, to “middle to upper level restaurant operators” in a way that fills gaps in the central city’s current offerings. The Walnut Street parcels would abut closer to the street.

Summers said he thinks the value increase in those parcels could exceed $7 million. TIF borrowing for phase two parcels would be at the 50 percent level, bringing the total TIF incentive in line with the advisory committee’s new recommendation that maximum allocation not exceed 70 percent of the increment.


More than two dozen old mills connected to a central crank shaft remain in the building.

More than two dozen old mills connected to a central crank shaft remain in the building.

Structural, cleanup challenges: The “but for”

Summers described a litany of challenges that will make renovation an expensive proposition, ranging from exterior cleanup and environmental remediation to equipment that will have to be removed from the mill or worked around and some floors and roof sections that will have to be replaced.

The costs those add to the project, and which aren’t typically present when building on a raw piece of land, can be prohibitive to any developer  breaking even. That is where TIF comes in, and committee members seemed more than comfortable Thursday that “but for” the availability of a public incentive, the mill restoration would be a non-starter for any developer.

In meetings with the Tennessee Department of Environment and Conservation Summers has learned the project will have to cap contaminated soils with a couple feet of impermeable clay, and no surface water on the site should be able to reach groundwater. “It’s all doable; we can manage that, but there’s a significant amount of demo and environmental remediation that has to occur before a bank would even consider financing,” Summers said. “That’s kind of the crux of the ‘but for.’

“The bones are good, but there’s a lot of stuff in there that needs to be dealt with.”


What it will look like

Summers showed a photo illustrating the extent of paint removal that lies ahead, but added, “I think the ceilings, wood columns, really neat cast wood column toppers will be very cool once it’s done.”

He said the renovated buildings will mix in, “a little bit of new with the old,” for instance with glass exterior elevator shafts and stairwells. Mostly, though, any tenants who join Summers-Taylor and ETSU will see exposed brick, massive refinished woodwork and floors and period windows.

Summers-Taylor will occupy 14,000 square feet on the main building’s east (Sevier Street) end, which is a two-story section. The remaining area is four stories high, and the exposed wall above the two-story section could see a replica of the huge black and white painted “Model Mill” sign that graced it in its heyday.

Summers said he anticipates restaurant and retail tenants being interested in some of the space inside the mill. Traffic flow-wise, Summers said the plan is to take Ashe Street where it dead ends into the property at Sevier, and bring it through part of the property, past the buildings, before wrapping the interior road south to Walnut where it would leave the property directly across from Southwest Avenue. “We’re trying to return a lot of connectivity through the site with the existing roads,” he said. “There may be another entrance going out toward Watauga if everything can work out with Mize.”

The vision is a far cry from a previous plan for both the mill and Mize properties that was the subject of a contract for more than a year. Evolve Development, LLC, planned to put an $18 million student-oriented apartment complex on the property after razing the mill. That plan drew the ire of numerous neighbors, and was the subject of several lawsuits, before falling through in mid-2015.

City Commissioner Ralph Van Brocklin, who sits on the TIF advisory committee and was among three commissioners in a 3-2 vote to approve a rezoning that would have allowed the Evolve project, had this to say about the R&G plan: “I have to say I like (R&G architect) Tom Weems’ renderings a lot more than I liked the Evolve renderings.”


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