Note: This story was updated at 11:16 p.m.
An Oak Ridge board has endorsed a 90 percent, 10-year tax break for a project to convert the vacant, run-down Alexander Inn into an assisted living center.
The Oak Ridge Industrial Development Board recommended the tax break, officially known as a payment-in-lieu-of-taxes agreement, in a 6-0 vote during a special meeting Thursday. It will now be considered by Oak Ridge City Council on Oct. 22.
Even with the temporary tax break, Oak Ridge and Anderson County will continue to receive at least as much in property taxes as they do now, said Ray Evans, an economic development consultant for the city.
The project to redevelop the two-story hotel on three acres in Jackson Square has been proposed by Family Pride Corp. of Loudon and InSite Development Corp. of Knoxville.
Construction of the $4.5 million, 60-unit assisted living center could take roughly a year.
The payment-in-lieu-of-taxes agreement, or PILOT, could help with public improvements that include a new road for cars that now drive through the Alexander Inn property, relocation of a storm sewer under the building, environmental remediation, building stabilization, and code compliance. Family Pride has said the project is not economically feasible without the tax break.
The environmental work would include the removal of lead paint, asbestos, and mold, Family Pride General Manager Rick Dover told IDB members Thursday. The ballroom and kitchen would be demolished and rebuilt.
“All of these things make this a fairly pricy project,” Dover said. The total construction cost has been estimated at about $5.5 million.
Dover said he’s been looking at the property “off and on” for 10 years, but redevelopment hasn’t been financially feasible.
A $500,000 grant from the U.S. Department of Energy and encouragement from the East Tennessee Preservation Alliance played key roles in making the project possible now, Dover said. The DOE grant, which will help buy the property and remediate it, was awarded as part of a recent agreement that allows the complete demolition of the former uranium-enriching K-25 Building in west Oak Ridge.
“It’s a pretty elegant resolution,” Dover said.
The Alexander Inn is now owned by the Oak Ridge Revitalization Effort and could be purchased for $350,000. The assisted living center that could be built there would be called Alexander Senior Living of Oak Ridge, and it would include a wing for patients with Alzheimer’s and dementia.
Dover and the ETPA’s Ethiel Garlington said the hotel is on the National Historic Register, and the redevelopment will have to comply with U.S. Department of Interior guidelines. It will have historic easements and will have to be restored to its original condition.
Family Pride has converted two hospitals and one school in Loudon and Lenoir City into assisted living centers. InSite has mostly focused on adapting historic buildings in downtown Knoxville, including the Mast General Store, into mixed-use commercial and residential facilities.
The companies have said they are ready to buy the Alexander Inn and immediately start remediation and rehabilitation work if City Council approves the PILOT.
Historic preservationists have worked for a decade or more to save the hotel, which was built during World War II as part of the top-secret Manhattan Project.
Also known as The Guest House, the hotel once hosted such dignitaries as physicists J. Robert Oppenheimer and Enrico Fermi, and Secretary of War Henry Stimson. It’s been shut down for about two decades.