In Kingsport, Tennessee, the Board of Mayor and Aldermen has greenlit financial backing for the ambitious redevelopment of the Dobyns-Taylor warehouse located in the heart of downtown.
During their meeting on Tuesday evening, the board passed two key resolutions. The first greenlit a funding contribution to the Kingsport Economic Development Board (KEDB), capped at $9.25 million. The second resolution set up tax increment financing to support the project’s financial framework.
A developer is set to transform the historic, presently unused property into a vibrant 60-room boutique hotel, complete with a restaurant and event venue, injecting new life into the area.
“This project is crucial not only for boosting tourism in our downtown area but also for preserving a piece of our city’s history,” noted Steven Bower, the city’s economic development director. “This building, over a century old, is part of our heritage. We’ve been working towards its preservation for many years, and now we have a chance to revitalize it in a way that enhances our downtown district.”
According to the city, the project would be a $10 million investment in downtown that would create 40 temporary construction jobs and 50 permanent jobs. It would generate an estimated $14,145 in new tax revenue for the city and $12,136 for the county during the TIF period. After the TIF matures, it is expected that those numbers will increase to $81,399 and $78,274, respectively.
Currently, the KEDB has a 25-year lease on the property and the annual expenses for rent, insurance, and taxes are around $130,000, not including maintenance costs.
The project would involve two loans by the KEDB. A $2.5 million loan will go toward demolition and civil site work for the parking lot, with $1 million going to the developer in the form of a redevelopment grant for the project. The city expects the occupancy tax generated by the project to equal the yearly loan payment.
A second loan of around $5.5 million will go to the developer, who will be responsible for the debt service of the loan. The accrued interest is expected to cover the Economic Development Board’s lease payment to the property owner, the Dobyns-Taylor Corporation.
Bower said research shows there is a need for a hotel downtown.
“You know, the hotels, we have two more going out in the Meadowview corridor,” Bower said. “So we know there’s a need for more hotel rooms, but we also know that we don’t have one downtown. And we did a study in 2018 that showed we could support one. And we found that study to still be true today.”
The tax increment financing proposal will also have to be approved by the Sullivan County Commission. It is on the agenda for the commission’s meeting this Thursday.
