Hutcheson Property Market Study and 2023 EXECUTIVE SUMMARY
The Catoosa County Public Facilities Authority (PFA) engaged researchers from the University of Georgia’s Carl Vinson Institute of Government to evaluate the feasibility of alternative uses for the Hutcheson Building property. Institute researchers assisted the PFA in identifying potential uses for the site that would be compatible with the local vision for the surrounding community, likely to be sustainable over the long term, and supportive of additional economic opportunity.
The Hutcheson Building site is located at 100 Gross Crescent Circle in the city of Fort Oglethorpe. The current facilities include 8 primary buildings, several storage outbuildings, two large parking areas, and some undeveloped greenspace. The current facilities total just under 300,000 square feet. At the time of the report, the site is owned by the county and leased to the CHI Memorial Hospital until a new hospital is constructed, beginning within the next few years.
Two alternative uses for repurposing the Hutcheson Building were identified: (1) a senior adult living community and (2) a continuous care retirement community (CCRC). The primary distinction between the two options is that CCRCs provide residents with all levels of aging care and memory care, but senior retirement communities cater only to active senior adults. The research team estimated renovation costs, along with revenues and operating expenses, for the Hutcheson Building with and without an aging care or memory unit, assuming debt service payments at the current 8.25% prime rate.
ESTIMATING RENOVATION COSTS
WITH AGING CARE WITHOUT AGING CARE
Renovation costs of converting the current facility to a CCRC were estimated at $114 per square foot, including renovation of Building 2 with 50 hospital-grade aging care units. Renovation costs of converting the current facility to senior living with 165 units was estimated at $93 per square foot. Annual operating expenses of a CCRC were projected to be over twice as high as a senior living facility due to increased costs of nursing staff and medical supplies. The senior living–only option was projected to generate positive cash flow; the CCRC option was projected to have negative cash flow due to higher renovation and operating costs.
Estimated renovation costs for the CCRC option with an aging care wing Estimated renovation costs for a 55+ senior living facility without a CCRC wing $114 SQUARE FOOT $93 SQUARE FOOT Building # Projected Renovation Costs Building #1 $5,247,527 Building #2 $11,016,577 Building #3 $6,008,783 Building #4,5,8 $10,742,256 Building #6 Demolish Building #7 $210,814 Total Renovation $33,225,957 Building # Projected Renovation Costs Building #1 $5,247,527 Building #2 $4,838,576 Building #3 $6,008,783 Building #4,5,8 $10,742,256 Building #6 Demolish Building #7 $210,814 Total Renovation $27,047,956
The Hutcheson Building occupies approximately half of the site’s total acreage. Researchers evaluated two alternative uses for the undeveloped half of the property: a mixed-use multifamily housing development and a high-density single-family housing development. Either, or both, of these developments could conceivably be built on the undeveloped property. Under the mixed-use residential alternative, Institute researchers modeled both higher- and lower-end mixed-use multifamily residential housing. The 200-home single-family option was modeled as a high-density development of homes valued at an average of $320K. About half of those homes would be in Catoosa County, and the other half in neighboring Walker County.
Estimated costs, economic impact, and fiscal impact
The research team calculated the economic impact of each use. Economic impact includes direct output— or capital investment into the project—as well as indirect and induced impact. Indirect output totals the secondary effects in the supply chain, such as the jobs and incomes of suppliers of the project. Finally, induced output includes the multiplier effect of the dollars as the workers spend their income in the local economy. Based on economic impact and fiscal impact (tax collections) estimates, the Catoosa County PFA may choose to go forward with one or more of the site uses analyzed by the research team. A single-family development of 200 homes would produce the largest estimated total economic output at $73.4 million. A higher-end mixed-use multifamily development would produce the second-largest economic output,
estimated at $56.7 million. A lower-end mixed-use multifamily development would produce $49.8 million in economic output, followed by senior living with aging care at $44.3 million and senior living without aging care at $36 million.
Total economic impact is primarily determined by the direct output of, or initial capital investment in, the project. All three types of new residential construction on previously undeveloped parts of the property are projected to be more expensive than renovating the existing Hutcheson Building. Although senior living with aging care was estimated to have a larger direct output and total economic impact than the senior living–only option, projected cash flows were insufficient to meet operating expenses and debt obligations at current interest rate levels.
1. Multifamily Residential Mixed Use
2. Single-Family Development
Mixed-Use Multifamily Development Higher-end Lower-end Construction Cost $53.2 million $47 million Direct Output $53.2 million $47 million Indirect Output $2.7 million $2.4 million Induced Impact $757K $391K Total Economic Impact $56.5 million $49.8 million Estimated Annual Fiscal Impact $614K $541K County Tax Collections $156K $138K School Taxes $321K $283K City Taxes $136K $120K
Higher-end and Lower-end TWO OPTIONS:
At current interest rates, many large-scale development projects are less attractive than they would have been in recent decades. In terms of renovating the Hutcheson Building, senior living only, without aging care, was the only option projected to be feasible at current interest rates. The increased cost associated with the renovation and staffing necessary for aging/memory care were projected to make annual operations cashflow negative in the current environment. Senior living with aging care would be more economically feasible at interest rates less than or equal to 5%.
The research team also calculated annual fiscal impacts of each alternative use, which is the total of county, school, and city tax collections each year. A 200-home single-family development had the largest total fiscal impact at $662K, followed by senior living with or without aging care at $639K. A higher-end mixed-use multifamily development had a total fiscal impact of $614K. A lower-end mixed-use multifamily development had the lowest total fiscal impact at $541K.
Estimated costs, economic impact, and fiscal impact
Affordability is one of the primary concerns when developing housing. Institute researchers determined that 1,600-square-foot homes built on the site would sell for approximately $320K, which would be affordable for households earning $90K annually—25% higher than the median household income in the Chattanooga metropolitan statistical area (MSA). A higher-end multifamily development would need to charge $2,200 per month in rent for a 1,000-square-foot unit, also targeting household earning $90K. The lower-end multifamily development was the most affordable option, charging monthly rent of $1,960 and targeting households earning $80K, only 11% higher than the median household income in the Chattanooga MSA.
The Institute of Government provided estimates of affordability, revenues and expenses, and economic and fiscal impacts to aid the Catoosa County Public Facilities Authority in its decision of how to redevelop the Hutcheson Building site. Any renovation of the existing facility is likely to be on hold for the foreseeable future, as the current tenant of the property, CHI Memorial Hospital, has yet to break ground on its new site. The Hutcheson Building site is expansive, with space for division into multiple parcels. The Catoosa County Public Facilities Authority could choose one or more developers to renovate the Hutcheson Building, build single-family homes, and/ or construct a mixed-use multifamily development in order to diversify economic opportunity in the area.
Single-family development expenditure Total Expenditure $60.8 million Land Premiums Not included in economic impact estimates Direct economic impact of the single-family development Direct Economic Impact (Total Expenditure minus Land Premiums) $52.8 million Indirect Output $11.9 million Induced Output $8.7 million Total Economic Impact $73.4 million Fiscal impact of the single-family housing development Estimated Annual Fiscal Impact $662K County Tax Collections $184K annually School Tax Collections $318K annually City Tax Collections $160K annually
200 homes at 1,600 sq. ft and appraised/sold at $320K
Credits
PRINCIPAL INVESTIGATORS, CARL VINSON INSTITUTE OF GOVERNMENT
Alexandra Hill, UGA, CVIOG, Fiscal and Economic Analyst
Tommie Shepherd, UGA, CVIOG, Economist and Public Service Associate
CATOOSA COUNTY
Larry Black, Catoosa County Commission Chairman; Public Facilities Authority Board Member
Jeff Long, Catoosa County Commissioner, District 1; Public Facilities Authority Vice Chairman
Chuck Harris, Catoosa County Commissioner, District 2; Public Facilities Authority Chairman
Vanita Hullander, Catoosa County Commissioner, District 3
Charlie Stephens, Catoosa County Commissioner, District 4
Ronnie Davis, Catoosa County Public Facilities Authority Board Member
Derek Rogers, Catoosa County Public Facilities Authority Board Member
Dan Wright, Catoosa County Manager
Meghan Trusley, Executive Administrative Assistant to the County Manager
Rachel Clark, Catoosa County Chief Financial Officer
Chad Young, Catoosa County Attorney
THE LYNDHURST FOUNDATION
Macon C. Toledano, Associate Director
THE UNIVERSITY OF GEORGIA CARL VINSON INSTITUTE OF GOVERNMENT
Danny Bivins, Senior Public Service Associate
Alexandra Hill, Fiscal and Economic Analyst
Tommie Shepherd, Economist and Public Service Associate
Greg Wilson, Assistant Director
Eleonora Machado, Creative Designer
Karen DeVivo, Editor
CATOOSA COUNTY MANAGER’S OFFICE
Special thanks to Dan Wright and Meghan Trusley.
SPECIAL THANKS: This project was made possible by the generous support of the Lyndhurst Foundation. We extend our deep appreciation and gratitude to the Lyndhurst Foundation for its commitment to improving communities across the metropolitan Chattanooga region.
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