JOHNSON CITY, Tenn. (WJHL) — The Johnson City Development Authority’s (JCDA) last meeting of 2022 on Tuesday was one of its most positive in many months as commissioners learned the John Sevier Center (JSC) is officially bringing in about 65% more rent revenue than it was just a few months ago.

That income is coming almost exclusively from the U.S. Department of Housing and Urban Development (HUD), which approved a “mark up to market” increase in JSC rent. HUD now values apartments there at more than $1,000 a month, but that doesn’t affect residents, whose rent is based on income.

It does mean JCDA will collect about $750,000 more a year for the apartments.

“That revenue is important to the financial stability of the organization, but it will also give us a platform to build a team around the strategic plan for the organization,” JCDA Chairman Hank Carr told News Channel 11 following the meeting.

The nearly century-old former hotel has been an expensive proposition for JCDA since the agency bought it in 2019 with two goals in mind: building new housing for the 150-odd low-income tenants and then finding a private buyer to convert the once-grand 11-story building into a downtown centerpiece again.

Even without significant payments on the $4.6 million mortgage, JSC has run far in the red as major repairs have come up time and again. Some of the difference Johnson City has made up, while the JCDA itself has loaned the JSC account nearly $400,000 and seen its own savings dwindle to nearly nothing.

“We accepted a huge project in the John Sevier without really understanding what that meant,” Chairman Hank Carr said during a review of director Tish Oldham’s first 10 months on the job. That review saw Oldham get high marks for what Carr called “one challenging transition” following former director Dianna Cantler — with much of that complexity tied up in the multimillion-dollar JSC project.

Commissioners voted to begin paying back the line of credit from JCDA and also building a cash reserve for the JSC fund. Staff estimated the line of credit will be paid off and cash reserves reach a three-month level (about $330,000) before the end of June.

Having that done allows JCDA to focus more closely on other aspects of its mission that have taken a back seat to the John Sevier’s challenges.

He said in addition to new housing for JSC residents was one of four main “legs” of JCDA’s strategic plan.

Another is the redevelopment of the Downtown Centre either through a new lease with Northeast State Community College — presumably at a much higher rate than the current amount — or some other tenant. The current lease is up in a year.

“Above all we need that parking from that deck for downtown and for the John Sevier (after it’s sold),” Carr said.

Sale of the JSC to a developer “who will develop the property in a way that meets the vision of the city” is the third leg, Carr said.

“That’s what we now have to start to work on. What is our vision for the John Sevier. And the market will help determine some of that.”

The fourth leg, he said, is tax increment financing (TIF), which uses plows what would be increased tax bills for redeveloped properties into downtown project incentives.

“We need to figure out how to do a better job of leveraging TIF.”

Carr said the JCDA would have a difficult time addressing any of those without the HUD rent adjustment.

“It would have been a lot harder on the staff, it would have been a lot harder on the JCDA, and we now can move forward,” Carr said.

As if to put a point on the difficulties at JSC, commissioners learned that despite months of effort, no one has been able to trace the source of water leaks that have put the monthly water/sewer bills for the center at many thousands of dollars over what they should be.

“It is eluding the local experts to the point where they had an expert from out of town come in and look at it, and he can’t figure it out,” Carr said.

The problem has also resulted in several leaks that have impacted residents.

“We’ve got to find a solution here, and this is all linked to repairs and things that were done at some point in the past,” Carr said. “Something’s not right.”