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City approves 938-acre, Boones Creek incentive district on first reading

David Floyd • Updated Dec 19, 2019 at 10:21 PM

Johnson City gave an initial thumbs-up Thursday to a 938-acre incentive district in Boones Creek, which officials hope will jumpstart a project with an economic impact similar to The Pinnacle in Bristol.

“There’s no cost to us, the state pays 100% of the incentive,” said City Manager Pete Peterson, “and what we gain from that will be increased sales and property taxes and new jobs as a result of the new development and the new economic activity that will happen in that zone.”

Commissioners approved on first reading Thursday evening the boundaries of a proposed retail and tourism development district, which was authorized through legislation passed this year by the Tennessee General Assembly. The legislation requires that the district be located around Exit 17 of Interstate 26.

Developers planning projects in the zone will be able to apply for incentives, which will come from state sales tax revenue generated in the district. The incentives will be available for a 30-year period.

Peterson said the state will keep two-sevenths of the 7% state sales tax generated in the district, determine what portion of the remaining revenues has been generated beyond the district’s current, baseline tax revenues, and send that money back to the city to use as incentives. The law will not impact the city’s 2.5% local option sales tax.

The proposed boundaries requires two more votes from the City Commission — scheduled for Jan. 2 and Jan. 16 — and Peterson said it will then move to the Commissioner of the Tennessee Department of Revenue in Nashville for final approval. The Tennessee Department of Economic and Community Development must also approve the boundaries, but Peterson said the Department of Revenue has final say.

Although there are properties within the tourism district’s boundaries that are outside the city’s corporate limits, the district applies only to properties in the city. Outside property would have to be annexed into the city to benefit from incentives.

Peterson said the entire district must require $20 million in capital investment, attract one million visitors a year and generate $2 million a year in state sales tax revenue.

Peterson anticipates the majority of the incentive money will end up going to developers. He said the funds can be used for property acquisition, design, construction, infrastructure projects and cash incentives to encourage businesses to locate in the area.

Peterson hopes the new projects that occur in the district will be unique compared to the other offerings in the region, spurring additional retail activity and encouraging people to move to Johnson City.

“This development could be hotels, it could be big box retail, it could be specialty retail, it could be grocery stores, it could be a bowling alley, a theater, a theme park,” he said. “I mean, since recreation is included in the title of this thing, it’s not necessarily limited to a mall or just a big strip center.

Although he’s not sure if their projects will reach fruition, Peterson said he has talked to at least three or four different people who have expressed interest in developing property in that area.

Earlier this year, Mark Larkey, Joe Wilson, Bryan Sangid, Bucky Mabe and Clarence Mabe revealed plans to build a mixed-use development in the district. The plans indicated the project would have room for multiple restaurants, a 150,000-square-foot wholesale retail space, a minimum of one hotel and 212,000 square feet of residential space.

The proposed development would stretch across 100 acres of property sandwiched between Boones Creek Road and Bart Green Drive.

Peterson said that project has not yet been considered by the city.

Johnson City Mayor Jenny Brock said after the meeting that she hopes the district will bring something new to Johnson City.

“People like to come to places where they see energy and things moving forward,” Brock said, “and so I think it’s just a catalyst for us when people look at Johnson City and they see, ‘Oh, well this is happening here and this is happening here.’ ... It paints a great picture of us that there’s a lot of momentum going, and they can have confidence in our community.”

Vice Mayor Joe Wise disclosed that he owns property in the footprint of the proposed zone, but he said the property would not benefit from the incentive district. Commissioners Todd Fowler and John Hunter were absent.

In other business, Johnson City commissioners also approved a $1 increase in the stormwater fee.

City officials have said the increase will help pay for millions in upcoming stormwater projects while also allowing the city to keep its aging infrastructure up to date. A $1 increase equates to about $800,000 in additional revenue for the city.

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