City To Consider Pilot Structure For Major Public Housing Project

Cookeville officials need to approve a PILOT agreement in order for a major public housing project to move forward.

The project involves refurbishing Walnut Village and using $3.8 million in equity to build Oak Tree Towers, a three story 50 unit mid rise off of Buffalo Valley Road.

Highlands Residential Services Executive Director Dow Harris said a bond allocation for the Walnut Village project needs to be secured with the Tennessee Housing Development Authority.

“We are approaching a point in time where that bond allocation is running out,” Harris said. “It’s imperative that we get the application to THDA and we have to have a PILOT agreement to get that to THDA. Everything has kind of been snowballing in March, April, and May.”

Harris said the rush in requesting the new agreement is due to a delay in getting a contract negotiated with a developer assisting with the renovations and bond deal with THDA.

The Cookeville City Council heard the idea Monday during a work session, but several council members wondered about the quick turnaround.

That payment in lieu of taxes structure needs to be approved by the 17th of May or the project risks being delayed by at least a year. Cookeville City Council members will consider approving the agreement during the May 17th meeting.

To generate the equity to donate to the Oak Tree Towers, Harris said HRS needs to do an identity sale and create a new non profit that will be controlled by the housing authority.

“We have to sell Walnut Village to the new non profit to get the 4-percent tax credits and generate the equity,” Harris said. “If we don’t do that then we can’t generate the equity and the cash that we need to. In doing so, we are changing ownership documents, so the law requires us to have a new PILOT agreement to secure the bond allocation with THDA.”

A PILOT agreement with Cookeville has existed since 1979 at $52.17 per unit. HRS is asking the city to allow the PILOT to continue as it has for the past 40 years.

“The development process for public housing is very complicated There’s a lot of moving parts,” Harris said. “Getting those moving parts to function and fall into place creates some additional time as well.”

Harris said he hopes some grant assistance through the state and federal level will help out with the project.

“If we are able to receive some of this grant assistance that we are applying for, we won’t have to use all of that equity and it can be preserved.” Harris said.

The Walnut Village refurbishing project will cost about $3.2 million and be paid for with the bond allocation and 4-percent tax credits. Walnut Village consists of 80 units.

The Oak Tree Towers project will cost $7 million. The funding will come from the $3.8 million in equity from Walnut Village and $3.2 million generated from the sale of property on Hargis Drive. 50 units used to be located on that property and the Oak Tree Towers project will replace those demolished units.

The goal is to begin the Walnut Village refurbishing project by November. Harris hopes to begin the Oak Tree Towers project by April of 2019.

“This is one of the biggest deals that the housing authority has ever attempted to undertake,” Harris said. “We’re looking at a really big deal for the housing authority and our community.”