A new state law, coupled with Knox County’s shortage of infrastructure funds, could have a chilling effect on development throughout the county.

Knox County doesn't have the financial resources to pay for infrastructure improvements needed to accommodate new developments.

The law requires counties to proportionately share the costs of road improvements associated with new developments. Currently, Knox County requires that developers pay 100 percent of those costs.

The ramifications of the law became apparent during discussion of a proposed East Knox subdivision during the Knoxville-Knox County Planning Commission’s agenda-review meeting on Tuesday.

Planning staff recommended denying a development plan for a 121-lot subdivision on Carter Mill Drive because the road west of the subdivision entrance is too narrow to handle more traffic. 

The road east of the proposed Carter Valley subdivision entrance in front of an adjacent subdivision, Carter Ridge, is 20 feet wide; west of the entrance, however, the roadway narrows to an average of 15.7 feet wide, with some sections as narrow as 13.6 feet. 

“Road improvements are needed; problem is, new state-law changes have made this complicated,” staff planner Mike Reynolds told planning commissioners. “These improvements cannot be guaranteed because of the cost-sharing requirements imposed by recent changes to state law.”

That law requires that counties, cities or utilities pay a proportionate cost of the improvements. The share would vary based on the relative benefits that fall to the developer. For example, if the developer would receive a quarter of the benefits from the improvements, the developer would only have to pay a quarter of the cost. If the developer and the county can’t come to an agreement, the Tennessee Board of Utility Regulation would set the terms.

The developer, Carter Mill LLC (which also developed Carter Ridge), has not agreed to pay for widening the road to at least 18 feet as recommended by a traffic study. Jim Snowden, Knox County’s senior director of engineering and public works, said the work isn’t in the department’s capital budget and there’s no cash available from the department’s operating funds. A widening project for the one mile or so to McCubbins Road would cost in the neighborhood of $1 million. That means that the county would not be able to shoulder any of the cost as required by state law.

“It puts us in a unique spot to where we don’t want to make this denial, but we feel like we need to to protect the county’s long-term interest,” Snowden said.

Snowden said in an interview on Wednesday that the county would rely on metrics, such as traffic counts, to determine its share of the cost on such projects. 

According to the traffic study for the Carter Valley project, for example, the additional traffic from the subdivision would increase the total volume to about 1,415 trips per day along the western section of Carter Mill Drive, up from the current 540 trips. The county’s share of the estimated $1 million cost would be 38 percent (540 of 1,415 trips), or around $380,000.

“The way to avoid that is to deny the development based on the lack of transportation resources,” Snowden said.

At Tuesday’s meeting, planning commissioners wrestled with how to address the new landscape.

“This is going to stop a lot of development because the county isn’t going to have any more money anytime soon,” Planning Commissioner Wala Habiby said. “We’ve got to find a solution for that.”

Planning Commissioner Tim Hill suggested a policy for using tax-increment financing, which would use increased property-tax revenues from the development to pay for related infrastructure, to cover the costs. Knox County Commission would have to approve any tax-increment financing arrangement.

Planning Commissioner Nick Gill wondered if the Planning Commission had the authority to approve a development that would compel the county to spend money that had not been approved through its budget process. He also asked if the developer could volunteer to pay the entire cost.

Planning Commission Chair John Huber said that his understanding was that that the county would be on the hook no matter what.

“Even if you have a developer who is willing to pay for it … it can’t be done right now unless the county would kick in, which the county unfortunately doesn’t have the money for,” Huber said. 

Approving a subdivision without improving inadequate roads is not an option, Snowden said. Even if the Planning Commission approved a development without a cost-sharing agreement, he said, the county would withhold approvals needed to begin construction.

The new state law came from a pair of Republican Shelby County legislators — state Rep. Kevin Vaughan of Collierville and state Sen. Brent Taylor of Memphis — and passed both houses overwhelmingly in this year’s session. With the exception of Democratic state Rep. Gloria Johnson, the entire Knox County legislation voted in favor of the bill.

Snowden said the bill flew under the county’s radar. The bill’s caption indicated it dealt with utility infrastructure, which it did, but the definition of infrastructure also included roads. Snowden said he and Knox County Mayor Glenn Jacobs found out about it and tried to get Vaughan to withdraw the bill on the day of the vote in the House, to no avail.

The law doesn’t apply to state and federal highways that fall under the purview of the Tennessee Department of Transportation. In Knox County, those would include Maryville Pike, Emory Road, Rutledge Pike, Asheville Highway and other thoroughfares. 

The Carter Valley plan goes before the Planning Commission at today’s meeting, which will be held at 1:30 p.m. in the Main Assembly Room of the City County Building. Snowden said the developer intends to ask for a 30-day postponement, though that was not reflected in the agenda as posted on Wednesday evening.