'Some people are going to lose their property,' Plans for Klondike neighborhood spark worry

The view south from Friendship Baptist Church at the corner of Vollintine Avenue and Randle Street shows the change on the horizon. The lit-up tower of Crosstown Concourse, which Klondike residents still call the Sears building, looms just one mile to the south.

Coming change brought 50-plus residents to the church Thursday night. How that change is going to affect them lingered in their minds.

The residents came to hear about the plan for a tax-increment-financing district in Klondike. The TIF district is part of the plans from the Klondike Partnership – a group of nonprofit development partners that includes The Works, Neighborhood Preservation, Inc and Urban Renaissance Partners.

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Together, the partnership, by its own accounting, has – through a maze of different general partnerships and other means – purchased more than 400 properties in Klondike and invested more than $13 million. The Works plans to start work on redeveloping Northside High School – a $76 million project by itself.

All of that investment, which comes with broad plans to redevelop the housing stock through a mixture of single-family homes that will be for sale and for rent, is the change on the horizon. The TIF district would make that change easier.

The partnership is seeking permission through the Memphis Community Redevelopment Agency to create the TIF District. The TIF also needs Memphis City Council and Shelby County Commission approval. Whether that approval comes is in flux, particularly after what transpired inside Friendship Baptist Church.

The comments from the community Thursday conveyed a broad distrust of what is happening in the neighborhood. Residents also voiced fear of losing their way of life without saying the word gentrification.

One resident, Kevin Jenkins, stood up Thursday and, in a few moments, summed up many of the neighborhood's concerns. He said residents who had wanted to buy neighboring lots for redevelopment had found it tough to buy them, but the partnership had swallowed them up with ease.

He said his taxes had gone up since Crosstown Concourse had opened and the development planned for the community would cause taxes to go higher still as the land around became more valuable. That increase could be too much for some to bear, he said.

“Some people are going to lose their property,” Jenkins said as he questioned Corey Davis, an attorney for The Works and the partnership.

Davis did not dispute that taxes would go up as he faced question after question throughout the evening. He said the partnership would help existing residents who qualify to enter the city and county's tax freeze program.

"I'm not denying that taxes will go up," Davis said. "Some homes won't be as affordable as they are now."

In fact, that's the point of a TIF.

How a TIF works

Tax-increment financing districts, or TIFs, are tax incentives. TIFs, proponents throughout the country have argued, help facilitate private development by capturing the growth in tax revenue that development generates and redirecting it toward the project or the neighborhood.

In Klondike, the TIF would cover the area bounded by Watkins Street, I-240, Chelsea and Jackson Avenues. It would capture all of the increased taxes property owners pay within the TIF boundaries.

Think about it like this: If the total taxes paid within a TIF are $5,000 today when it is formed, that is the baseline. That means the TIF will only pay local governments $5,000 total throughout the life of the TIF.

But, as the property values rise in the neighborhood and the TIF, residents and property owners pay more taxes. Instead of that money going to the local government, they go into an account at the Community Redevelopment Agency. The CRA's board decides how they are spent.

Fear of the increased taxes that come with development percolated throughout the church Thursday. Representatives of the Klondike Partnership and CRA faced a hostile crowd. Davis and Andrew Murray, the head of the CRA, outlined how the TIF would increase investment in the neighborhood.

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The neighborhood seemed to understand the TIF and that the neighborhood is changing. Some, such as Lawrence Black, asked whether homeowners would be able to receive loans from the TIF to fix up their homes. He noted that he and others would be paying into it.

"Y'all are going to make us responsible for paying into this thing," Black said.

The reason anyone was at the church at all was because of Kathy Gray, whose impassioned speeches before the County Commission and City Council prompted the meeting in the first place.

Development 'with' versus development 'to'

Gray, a Klondike resident for the past 15 years who has been involved in the neighborhood even longer, first learned of the proposed TIF when she tried to purchase a Klondike property off the county land bank.

The property, she learned, was on hold. Since then, it has been purchased by one of the general partnerships.

In 2019, she also applied to have work done on her current home through The Works. At first, she was told renovations were stalled because of COVID. In 2022, The Works had someone come look at her home, but she never received a formal follow-up.

Gray began to dig, learning about the general partnerships, looking over the plan for the Klondike TIF and checking with neighbors to see if they were informed about the plans for Klondike.

On one weekend, she walked the area and spoke to about 40 neighbors, getting their signatures. Just two knew about the TIF, and those two were residents of housing owned by The Works, Gray said. One of the two was an employee of The Works.

Residents aren't opposed to the idea of a TIF itself, Gray said, they just want to be part of the process and want land and resources set aside for the people who already live in Klondike. They don't want development done "to" them, she says, but "with" them.

By The Works' own accounting, legacy Klondike homeowners have a median income of just $15,000. The median household income for renters is just $9,000.

Gray asks: How will those residents be able to pay the increased taxes unless there are also plans for their incomes to rise?

In the master plan for the TIF, out of 10 "sub-areas," only two mention improvements for legacy homeowners out of a list of activities. And one of those included sub-areas is Randle Street, where Gray says there are no legacy homeowners, just people living in properties owned by The Works.

“They’re not doing any help for the community. They’re just helping themselves," Gray said. “At this point they’re just taking Klondike and Steve Barlow, Roshun Austin and Archie Willis are going to own the whole neighborhood. It’s really not fair to the residents.”

Barlow is vice president and general counsel for The Works (and former president of Neighborhood Preservation Inc. before it merged with The Works). Austin is president and CEO of The Works, treasurer of the Klondike Community Land Trust and vice chair of Northside Renaissance Inc. Willis is the head of Urban Renaissance Partners, which controls the general partnerships for The Works.

"At the end of the day, they own Klondike," Gray said.

County could make it easier for nonprofits to buy land bank properties

In a way, it is about control, Willis said during a commission meeting Wednesday.

Out of 1,300 parcels of property in Klondike, the nonprofit owns about 400, he said. And being in control means they can keep housing costs for those properties affordable.

“We have absolutely no control about what happens to those 900 units (we don’t own),” Willis said. “We can’t control what outside investors do in Klondike. What we can control is the property we own and the assets we have access to.”

On Monday, commissioners will also consider the first reading of an ordinance that would make it easier for nonprofits to purchase large quantities of property from the county land bank. Instead of putting those properties up for competitive bid, the ordinance would allow multiple properties to be conveyed to a nonprofit “in furtherance of creating, rehabilitation, or otherwise establishing quality affordable housing in Shelby County.”

The ordinance was proposed after an evaluation of the landbank by the county assessor’s office found “the County Land Bank has become the primary promulgator of blight in several inner-city communities.”

Klondike's future could be decided this week

As the meeting wound down Thursday night, the hearty helping of elected officials who had attended spoke up. Shelby County Commission Chairman Mickell Lowery said he had heard a need for more community conversation.

The commission is scheduled to vote on Monday. The Memphis City Council is scheduled to vote on Tuesday.

Memphis City Councilwoman Michalyn Easter-Thomas, who represents Klondike and Smokey City, did not say whether she would vote for the project.

"We just need to make sure government and organizations ... ensure that they educate citizens and they consider all folks who will be involved with this," Easter-Thomas said. "We also need to make sure renters feel comfortable and protected. I would like to see more community engagement around TIF so the neighbors can feel comfortable."

Katherine Burgess covers county government and religion. She can be reached at katherine.burgess@commercialappeal.com or followed on Twitter @kathsburgess.

Samuel Hardiman covers Memphis city government and politics for The Commercial Appeal. He can be reached by email at samuel.hardiman@commercialappeal.com or followed on Twitter at @samhardiman.

This article originally appeared on Memphis Commercial Appeal: Plans for Klondike neighborhood spark worry