Incentives help ease shortage of Sevier County affordable housing

Before November 2016, it was hard enough for the thousands of people who work at Sevier County's attractions, hotels and restaurants to find affordable housing.

The Gatlinburg wildfire, which destroyed nearly 2,500 residential buildings that month, only made things worse.

But since a mid-2017 report found Sevier County needed up to 2,000 more rental units, state and local officials haven’t been idle. Now several developments are underway — all private, but backed with tax credits or tax abatements, promising more than half the needed number of apartments. And most of them are geared for lower-income families.

Jefferson City developer David Hayes broke ground on Watson Glade in Gatlinburg, which is expected to have 80 rental units. Like several others, that project is financed partly by low-income tax credits from the Tennessee Housing Development Agency — in Watson Glade’s case, nearly $850,000 in two increments.

All together, THDA is helping fund 536 units so far. To qualify for the tax credits, developers must price apartments at no more than 35 percent of income for families making 60 percent of the county’s median income.

According to THDA figures, 60 percent of the Sevier County median for a one-person household is $24,600; it goes up in increments of about $3,000 to $4,000 for each additional person. For those income levels, the rent limit on a 2-bedroom apartment is $790, and $912 on a 3-bedroom.

Rents have to stay below market rates for 14 to 20 years, said Wes Bunch, THDA communications coordinator for East Tennessee.

State-level tax credits aren’t the only public funding mechanism for affordable housing in Sevier County.

Sevierville’s Industrial Development Board approved PILOT (payment in lieu of taxes) agreements abating “some or all” of the taxes on three projects, said Pam Caskie, Sevierville development director.

One of those projects, Douglas Greene, is also getting THDA tax credits.

“Their site plan has been approved and they’re ready to break ground,” Caskie said.

The other PILOT projects — one on State Route 66, the other on Kyker Ferry Road — will be the work of Johnson City developer Mitch Cox, according to Caskie. They will have a total of 440 units.

Rent at Cox’s developments will vary with amenities, and they don’t have the same limits as THDA tax credit projects; but the least expensive units in those two complexes will still be no more than 30 percent of income for families at 80 percent of the county’s median, Caskie said.

Local officials are negotiating with another developer, talking about help in acquiring land for another complex on Veterans Boulevard, she said. That complex, combined with the THDA and PILOT-funded developments, should add about 1,200 new rental units in Sevierville alone, Caskie said.

“We’re also looking at how to provide affordable home ownership,” she said. That could be small houses or condominiums, but whatever the form, Sevier County officials recognize the need to keep encouraging housing. Without it, there won’t be enough employees to serve the tourists on whom the county depends, Caskie said.

“We see it not just as a community development issue but as an economic development issue,” she said.

The 2017 housing study by Knoxville real estate appraiser Nelson Pratt of Hodges & Pratt Co. found Sevier County’s rental housing was “at capacity.” Someone working for minimum wage would have to work 74 hours per week to afford a two-bedroom apartment, Pratt found. Someone earning the average wage among renters in Sevier County would have to work 63 hours per week to afford the same.

“We are aware that there are many in the workforce that are working double shifts or working two jobs,” Pratt wrote.

Twenty existing apartment complexes all had waiting lists, and at the time not much was under construction. Only a fraction of those qualified as “affordable” under THDA standards.

More than one-third of Sevier County renters qualified as “rent-overburdened,” paying more than 35 percent of income for housing.

More than 18,000 Sevier County households were renters in 2016, and that was expected to grow by about 1 percent a year, according to the study.

While there are more than 35,000 hotel rooms, cabins and other lodgings in Sevier County, those are designed and priced for tourists, not long-term residents. Even so, many workers had no choice but to rent motel rooms, Pratt found.

Since the fire destroyed many lower-income rental units, THDA increased its focus on Sevier County, Bunch said. The agency raised its cap on how many tax credits could be allocated there; and last year, $2 million in credits unused in other parts of the state were redirected to Sevier.

Together, those moves resulted in recent awards or recommendations for seven projects, Bunch said.

“This has been a more concentrated effort to get them into Sevier County and address the problems,” he said.

In addition to credits for Hayes to build Watson Glade at Glades Road and Watson Drive in Gatlinburg, THDA also awarded $1.1 million in tax credits in 2017 to the Woda Group to build the 80-unit Douglas Greene on Snyder Road in Sevierville, according to agency documents.

So far this year, THDA has awarded $1 million in credits to NonProfit Housing for 96 units called Pickens Way Apartments on Veterans Boulevard in Sevierville; $1 million to DPKY Development for 96 units called Forest Cove on New Era Road in Sevierville; and more than $800,000 to Wabuck Navigo Development to build 56 units called Matthew Manor on Douglas Dam Road in Kodak.

Recommended but not yet approved are $1 million in tax credits for Vaughn Development to build 96 units called Gateview Ridge Apartments on Avery Lane in Sevierville, and nearly $500,000 for Waypoint Housing Insights to build 32 units called Riverside Village on East Hardin Lane in Sevierville.

The developments awarded credits in 2017 are expected to be finished in late 2019, while the latest five should open in 2020, according to THDA.

There’s a popular perception that apartments built with tax credit financing are stereotypical “projects,” Bunch said, but that’s not the case.

“It’s not public housing,” he said. All of them are private developments that look and operate like any other apartment complex, Bunch said.

Source: Knoxville News Sentinel, by Jim Gaines

The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit


Published August 9, 2018