Matthew Lane

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KHRA

KINGSPORT — The Kingsport Housing and Redevelopment Authority has not scrapped plans to redevelop the Midtown neighborhood and the Lee Apartment site, but rather the authority has tweaked the plan some, changed the demolition schedule and chosen a different type of tax credits to help fund the overall project.

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The KHRA recently gave an update on the Midtown plan to the Board of Mayor and Aldermen and Kingsport officials and last week, sat down with the Times-News to further go over the details of the two-and-a-half year plan.

The project began back in 2012, when the KHRA received a $300,000 Choice Neighborhoods Initiative planning grant from the federal government to develop a transformation plan for the Midtown Neighborhood — roughly from Myrtle to Dale and Tennessee to Poplar. CNI essentially replaced the HOPE VI initiative with a broader scope.

Last year, the KHRA applied for $11 million in federal housing tax credits (called nine percent credits) to cover approximately 80 percent of the first phase of the plan — the redevelopment of a 4.5 acre site between Myrtle and East Sevier into 59 mixed income housing units.

However, the KHRA did not make the cut for those credits.

In that time, the KHRA has gone back to the plan and made a few changes, choosing to go with four percent non-competitive tax credits rather than the nine percent competitive ones. Another change has been with what’s going to be done first.

Originally, the KHRA planned to redevelop the Cora Cox Academy property into 59 mixed income housing units, use the housing to relocate the residents of Lee Apartments, then demolish and redevelop the Lee site.

Since Kingsport City Schools have expressed interest in keeping Cora Cox, the KHRA is now leading off with replacing Lee Apartments with 51 units, most likely duplexes and town houses. While construction is taking place, the residents of Lee will be relocated to other public housing units or other rentals with a voucher, KHRA officials said.

“In an effort to keep the momentum going with the transformation plan, we’re partnering with a rental assistance demonstration grant. It has a very aggressive time line,” said Maria Catron, deputy director of the KHRA. “With the grant and a commitment from HUD to apply for housing assistance payments. Once we get that, we’ll have about six months to come forward with a financing plan.”

In addition to redeveloping the Lee Apartments property, the KHRA will also be redeveloping its other housing properties, including Cloud Apartments, Dogwood Terrace, Holly Hills and Tiffany Court — 378 apartments in all.

The KHRA last year purchased a small apartment building at the corner of Charlemont and Broad, one clearly not up to code. The plan is to also rehab the building in the Midtown plan and replace the existing 22 units with 15 renovated units.

And just last week, the building at the corner of Sullivan and Mission was demolished, and the KHRA plans to replace it with rental apartments, Catron said, which is also part of the Midtown plan.

The total value of the Midtown Redevelopment Plan is just over $50 million, including money from the tax credits, the value of the property and $1 million from the KHRA, along with state and federal grants and loans. The KHRA estimates the economic impact of 51 new units on the Lee site will be $9.3 million, while the rehabilitation of 378 apartments is more than $12.3 million.

As it stands now, the funding for the overall project has about a $3 million gap, which KHRA officials have pitched to the city of Kingsport to fill sometime during the course of the project. The demolition of Lee Apartments is expected to take place before the end of the year

“Once we submit the application and receive the credits, the time window when all of the project has to be completed, the demolition of Lee, all of the rehab and rebuild … it’s a two-and-a-half year window,” said Terry Cunningham, executive director of the KHRA. “Any time within that time frame, the city could help fill that gap.”

KHRA officials are hoping construction will begin later this year. Lee Apartments has 128 units and under the Midtown plan, 51 will be built back. Cunningham said the KHRA is going to try and capture those 70 units under a second phase with a nine percent tax credit application.

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