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Hearing support and concern, city passes incentive district boundaries on second reading

David Floyd • Jan 2, 2020 at 10:54 PM

While some residents are urging commissioners to push forward, others want to see Johnson City take more careful and deliberate steps as it considers the boundaries of a roughly 940-acre retail and tourism development district in Boones Creek.

“As the chairman of the (Johnson City) Historic Zoning Commission, I deeply appreciate the need for speed bumps in processes like these,” Nathan Brand, who also owns the restaurant Timber! on West Walnut Street, told Johnson City commissioners during their meeting on Thursday. “Watching the tape for the first reading of this ordinance, I’m afraid that I don’t see any of those speed bumps here.”

After about an hour of public comment and discussion, Johnson City commissioners unanimously approved on second reading the boundaries of the incentive district, which officials hope will jumpstart development off Interstate-26’s Exit 17. The district was authorized by legislation approved by the General Assembly and signed into law by Gov. Bill Lee earlier this year.

The boundaries still require one more vote from the City Commission, which will likely occur on Jan. 16. The proposed district will then move to the state for final approval.

Developers planning to build a project in the district would be able to apply for incentives from the city, which would be funded through state sales tax revenue. Developers would be able to use the funding to offset the cost of tasks like property acquisition, design, engineering or construction. They would have to enter into development agreements with the city in order to receive funding. The city can also use the money to pay for infrastructure improvements like roads, bridges or water and sewer services.

Properties must be in the city limits to be eligible for incentives.

City Manager Pete Peterson said there are provisions in the legislation that require existing businesses to increase their footprint by at least 35% if they’re planning on relocating to the district.

“I think we all have a real concern about relocating businesses,” Peterson said. “That doesn’t help anybody. All that does is just create problems. We want to be very judicious in the agreements that we come to with the developers that do projects here to ensure that it’s good development, it’s not relocating something and creating an empty box somewhere else.” 

Benjamin Whitfield, a member of the Johnson City Regional Planning Commission, indicated the district has the potential to “critically injure” The Mall at Johnson City, the downtown area and the West Walnut Street project by pulling existing economic activity toward Boones Creek.

“When the city council decided in 1970 to build the mall that helped devastate our downtown, they did not have the benefit of hindsight that you have today,” he said.

He urged commissioners to delay their vote on the district boundaries until the city could receive more feedback from the public and conduct an economic impact study on the incentive district.

Washington County Commissioner Jodi Jones said she’s heard numerous concerns about the economic viability of the project and its impact on the The Mall at Johnson City and the downtown area.

“I want to make sure and say, though, I also heard many positive comments about the district’s possibility,” she said. “In fairness, there are many who are interested in retail and entertainment opportunities outside of our city’s center, and I think it’s worth a look.”

When local officials hear about a project that has the potential to produce a strong economic impact, Jones said they face huge pressure to say yes.

“It’s very hard to find a place to call a timeout and do a deep dive,” she said. “I do wonder if there is a time when you could take a deep dive and if that time is now.”

Mark Larkey, who’s part of a development team that hopes to bring a roughly 100-acre mixed use development to the incentive district, said growth in Johnson City shouldn’t be isolated to one area. He was one of six people who spoke in favor of the district. Eleven people spoke during public comment in total.

“The economics that certain retailers that are interested in Boones Creek require in today’s environment just don’t honestly work without the incentive,” he said. “Johnson City can only compete for these retailers and experiences if this is passed.”

He also noted the additional sales tax revenue and potential job creation in the district will significantly benefit Johnson City and Washington County.

Former Washington County Commissioner Lynn Hodge told commissioners that any delay on the district could jeopardize the opportunity to grow the city’s tax base.

“That’s what all this is about,” he said. “If we don’t develop ways to grow this tax base, then the only other way you have to service the debt in the city and see the growth you want to come about is raising property taxes. ... I would much rather see the development.”

Even if the city does nothing to incentivize it, Mayor Jenny Brock anticipates the Boones Creek area will still eventually develop.

“I think the Boones Creek area will take on a tone and culture of its own,” she said. “It’s going to become a developed area. Whether we want it to or not, it’s going to happen, but I think we can help mold it into something everyone’s going to be very, very proud of.”

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