Developers with the Minvilla Manor homeless housing project secured one more piece in its complicated funding formula Tuesday as Knoxville City Council members gave initial approval to a 20-year tax incentive for the initiative.

The project's developer, David Arning, with the Southeastern Housing Foundation, estimated that the payment-in-lieuof-taxes, or PILOT incentive, should defer some $50,000 in annual Knoxville and Knox County property taxes, based on an approximately $2.3 million post-redevelopment appraised value of the site.

The PILOT's specifics still must be negotiated between the city Industrial Development Board and the property's owner, the Volunteer Ministry Center.

Councilwoman Marilyn Roddy voiced her concern that the tax freeze could carry over, should the redeveloped property outlive its new intended use as supportive, permanent housing for chronically homeless people. And she called for an amendment to the incentive, specifying that the PILOT be contingent on the building's use as part of the city-county Ten-Year Plan to End Chronic Homelessness.

"I'd be much more comfortable if I knew these foregone tax dollars were specifi c to this project," she said.

In so many words, however, the developer indicated that such a change of use prior to the expiration of the PILOT term is unlikely.

"The strong likelihood is that it will remain in this use or as low-income housing for as much as 30 years," Arning said.

Still, Roddy said low-income housing can be a "different animal" than what's

envisioned now, and she asked that the amendment's language be as specific as possible.

National increases in construction costs have only hurt the project's budget and timeline, which now is expected to be completed by November 2009 at a cost of about $6 million. Before the Broadway building was condemned in 2002, it operated as the notorious Fifth Avenue Motel, although it was originally built in 1913 as an upscale row of townhouses called Minvilla.

Its myriad funding sources include both historic and low-income housing tax credits. In addition to the tax incentive, the capital project also is expected to receive $450,000 in various grant money through the city's Community Development Division, as well as another $250,000 in federal Community Development Block Grant funds from Knox County.

Residents of the 57-unit apartment building, who will be assisted by case managers and social workers, are expected to pay rent primarily through Section 8 vouchers.

The Ten-Year plan advocates a "housing first" approach with the long-term goal of reducing social service costs to the public by using fewer resources such as jails, emergency rooms and detox facilities.

Hayes Hickman may be

reached at 865-342-6323.

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