Nashville East Bank Board Approves tax Break for Apartments

The first residential project slated to rise next to Nashville’s new Nissan Stadium secured a critical financing tool, though not without sparking a philosophical fight over who holds the purse strings on the East Bank.

The East Bank Development Authority voted 6-2 Tuesday to approve a payment in lieu of taxes agreement for Elmington Capital Group’s planned East Bank Flats, a 323-unit affordable housing project at 501 South Second Street. The Nashville Business Journal reported that the agreement, a common incentive used to make below-market projects pencil out, will allow Elmington to pay reduced property taxes for 15 years, contingent on securing federal Low-Income Housing Tax Credits.

Without the board’s blessing, the project likely would have missed its planned spring groundbreaking — or stalled entirely, according to the publication.

Elmington’s 2.25-acre development will include 80 affordable units at 30 percent of area median income, 136 units at 60 percent AMI and 107 units at 80 percent AMI, plus 12,700 square feet of ground-floor retail and a daycare. The firm signed a 49-year ground lease and agreed to pay Metro a one-time $500,000 fee in lieu of rent.

The vote sets an early tone for the Fallon Company’s sweeping 550-acre East Bank master plan, a riverfront overhaul envisioned as a second downtown anchored by the new stadium. As the first vertical project in the district, East Bank Flats is widely seen as precedent-setting, especially when it comes to how aggressively the authority will deploy incentives.

That prospect gave some board members pause.

Tennessee House Speaker Cameron Sexton, one of two dissenting votes alongside H.G. Hill Realty CEO Jimmy Granbery, questioned whether the authority was ceding leverage too quickly. Sexton argued the board lacked clarity on the financial trade-offs and warned that granting tax relief now could limit future rent revenue from publicly controlled land.

Other members acknowledged the tension between safeguarding long-term revenue and jump-starting development. Kaitlin Dastugue called it “a tough spot,” noting the authority must balance precedent with the need to build cash flow over time.

Supporters countered that affordable housing should lead the charge. Board member Scott Tift said Metro’s willingness to forgo rent was justified to get a proven affordable developer on site early. Mona Hodge argued that seeding the district with housing would strengthen the authority’s hand when negotiating with future hotel and commercial tenants.

— Eric Weilbacher