Boones Creek incentive district headed to court

David Floyd • Jan 21, 2020 at 8:00 PM

Washington County Chancery Court will review a complaint against Johnson City early next month that argues the City Commission did not follow the correct procedure when it approved the boundaries of an incentive district in Boones Creek.

A court date is scheduled for 9 a.m. Feb. 3.

The plaintiff, Johnson City attorney John Wood of Wood Patent Law, argues in court documents filed on Jan. 16 — the same day commissioners were scheduled to cast their final vote on the boundaries — that the city violated its ordinance adoption rules.

In the filing, he claims the commission approved an incomplete first reading of the district boundaries and that the city altered the ordinance between second and third reading. He also writes that there has been “ongoing confusion” about the geographic parameters in the legislation that authorized the district, which Gov. Bill Lee signed into law in May.

Wood’s filing was submitted as a complaint and request for injunctive relief, which asks that the court defer the City Commission’s vote on Jan. 16. But, now that the ordinance has been approved, Wood said Tuesday the question at hand is whether or not the ordinance is valid.

“My general end goal is that this group of city officials and the ones that follow will think twice next time before violating our city charter,” Wood said.

City Manager Pete Peterson said Friday he has no doubt that the ordinance was approved in the appropriate fashion.

“And there’s case law out there that backs up that position,” he said.

Peterson said Tuesday the city hasn’t been served with any paperwork.

Johnson City Commissioners gave final approval to the boundaries of a roughly 947-acre incentive district around Interstate 26’s Exit 17 in Boones Creek on Jan. 16. The boundaries must now receive final certification from the commissioner of the Tennessee Department of Revenue before they go into effect.

The district would allow developers to apply for incentives to offset the cost of tasks like property acquisition, design, engineering or construction. Money for the incentives would come from state sales tax revenue generated in the district, which the city would award through individual agreements with developers.

Officials have said Exit 17 in Boones Creek is the only location that met all the criteria of the legislation, but local four developers and attorneys argued in a letter to the city last week that the district could actually apply to multiple exits in Johnson City along the interstate.

The legislation says some boundary of the district must be “no more than one-half mile from an existing federally designated interstate exit” and be “no more than twenty miles from the state border of two neighboring states as measured by a straight line.”

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

Peterson said Friday that five exits meet the location requirements of the law.

“The Boones Creek interchange is the only qualifying interchange that has large amounts of undeveloped property,” he said. “The other four are surrounded almost entirely by residential or commercial properties that would require acquisition or assembly of large tracts before you could redevelop that into a tourism, recreation, retail district.”

Peterson said the cost to developers of acquiring that land would be expensive, and in order for a developer to assemble a large enough tract to build on, he said there would have to be many landowners around those exits willing to sell their property.

“It really becomes difficult financially and logistically to go in and assemble enough property to create one of these large tracts,” he said.

Wood said he would’ve liked to see the city take more deliberate, proactive steps, perhaps by conducting a study on the applicable exits, to ensure Boones Creek would be the ideal location to put the district.

“It’s my belief that this legislation could be a gold mine for our city if done properly,” he said. “I don’t see the hesitation ... to make sure we get it right.”

If the district meets its minimum requirements, Peterson said the city could expect to see $750,000 per year in additional revenue to the city’s general fund plus $180,000 per year to the city school system. The county would also see an increase in annual revenue.

“It allows the city commission to have a revenue stream increase that’s very substantial that they can use to reinvest in the community wherever they choose to reinvest,” Peterson said.

Complaint and Request for Injunctive Relief by David Floyd on Scribd

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