Tuesday night, City Council authorized a 10-year Payment-in-Lieu-of-Tax (PILOT) agreement in support of a $22 million 127-room hotel in the Old City, to be constructed between Barley’s Taproom & Pizzeria and the site where a publicly-owned multi-use stadium will be built.
The project will create 100 construction jobs as the hotel is built and 30 permanent jobs after it opens, according to Nick Patel, President of Old City Ventures.
City and County property taxes on the hotel location, 210 E. Jackson Ave., now a surface parking lot, will be frozen at $4,521 for a decade. But once the PILOT ends, the SpringHill Suites hotel will be generating $285,618 in property taxes, plus hotel-motel tax revenues, while its guests support neighborhood businesses and boost sales tax revenues.
“This is the first hotel to open in this part of downtown, which is exciting,” Mayor Indya Kincannon said. “But more importantly, we’re seeing major new investment in and around the Old City – apartments, restaurants, entertainment venues and shops. This trend started several years ago, but now, with the stadium coming, it’s really taking off.”
Tim Hill, co-owner of Hatcher-Hill Properties, is investing $3.5 million and renovating what had been the former NV and Bowery nightclubs at 125 E. Jackson Ave. The 19,000-square-foot property will feature two restaurants and two office suites, with a courtyard and an entertainment patio.
“I wouldn’t be surprised to see $500 million in private development here,” Hill said. “That estimate may be too conservative. We’re talking about a part of town, to the east of the Old City, that has seen nothing but disinvestment for many decades. It’s exciting that it’s now East Knoxville’s time to shine.”
Patel sees “a lot of potential” for the Old City to become a destination district – much like historic sections of Savannah or Charleston. (His Turkey Creek Hospitality owns seven hotels in Knox and Sevier counties, including one next to Smokies Stadium in Kodak.)
The concept is “not just about baseball – that’s more of a coincidence,” Patel said. More important is the overall mix of surrounding businesses, and walkability, and a stadium “adds good entertainment to that mix.”
“I like the growth that’s going to happen in the Old City,” he said. “The Old City has its own identity, its own vibrancy, and it’s exciting to be a part of that and to help grow the momentum.”
The SpringHill Suites by Marriott will be an all-suite hotel with a swimming pool, business and fitness center, and 1,600 square feet of meeting and event space. It is expected to open in 2023.
Just around the block from these Jackson Avenue projects is Stockyard Lofts, a six-story 152-apartment building at 215 Willow Avenue, with 5,000 square feet of street-level retail or restaurant space.
Stockyard Lofts represents a $34 million private investment, assisted with a 12-year PILOT agreement. The property generates $37,600 in taxes now, but that increases to $570,000 or more once the PILOT expires.
The first apartments are expected to open next month, with a full opening by the end of April.
Daniel Smith, Stockyard Lofts co-owner and co-developer with Leigh Burch, said the coming stadium – a venue for baseball, soccer, concerts and festivals – is an important factor to developers. But it’s not the sole factor.
“The Old City is a cool old neighborhood – it’s got great restaurants and coffee shops,” said Smith, whose Legacy Capital also built the Crozier building next to Stockyard Lofts. “There’s a lot of character.
“I’m excited, because the Old City is just in the center of everything. It’s walkable to everywhere – Depot Avenue, Gay Street and Market Square.”