Uncovering the Mystery of Project Phoenix: What's Really Going On?
- Pascal
- Apr 24
- 11 min read
Now that the initiative known as Project Phoenix is out in the open and sparking interest among residents, let's explore what Project Phoenix is about and what it means for the future of Gallatin.
The Origins of Project Phoenix
During the first week of June 2023, Council members (except for myself as I took this as a potential breach of the TN Sunshine laws) went to downtown Franklin on a field trip paid by tax dollars and organized by the Gallatin Economic Development Agency. Later, we learned that the day following that field trip, James Fenton, Director of the Gallatin EDA at that time, contacted the Boyle Investment agency in Nashville to have them start working on a proposal, code name Project Phoenix. We learned of Project Phoenix when it was presented to us almost a year later in 2024 during the March 12 Council meeting. I originally voted to proceed because I was intrigued to see how this proposal could harness the charm of Gallatin while incorporating modern improvements. The project was presented to us with the intent to promote sustainable growth, attract businesses, and improve residents' quality of life. A significant part of this project is supposed to ensure that Gallatin’s unique character is preserved while it embraces the future.
Please note that I requested an amendment to the MOU so that the ENTIRE City Council would be required to vote on approving steps as the process went forward (Originally, the Mayor was given full control of approvals). I also requested that the City would conduct its own due diligence while the developer did theirs.
Community Reactions to Project Phoenix
The reaction from our Gallatin community has been mixed, balancing between excitement and skepticism. For some residents, Project Phoenix represents a chance for a vibrant downtown filled with new shops and attractions. Others, however, worry about gentrification, the risk of losing the community's essence, and the cost to residents.
Key Features of Project Phoenix
The Concept
A major focus of Project Phoenix is to kickstart the renewal of Gallatin's downtown by transferring city owned land for a developer to build. The initial plan includes tearing down the City Hall, the Police Station, Fire Station 1, and the Farmer's Market. All that to be replaced with a new City Hall, a Mixed-Use development including a hotel, parking structures, retail shops and 250 multi-family units (apartments). This would be done in 2 phases.
Green Spaces and Infrastructure
Plans include adding more green spaces, pocket parks, and community gardens, which will promote environmental health.
No traffic study or infrastructure study has been presented to the City Council or the public to show how the addition of the 250 apartments and the traffic brought by the retail spaces will be handled.
Mixed-Use Developments
These spaces will blend residential, commercial, and recreational areas including some area that will be featuring apartments above storefronts.
Future Prospects and Implications
Project Phoenix's impact could extend well into the future, but it also brings potential financial challenges.
The main question everybody is asking is: "how much this will cost and how much money will this bring to Gallatin?".
Moving Fire station #1 is necessary and would have probably happened with or without Phoenix, so we will keep that cost out of the equation.
The cost for moving the Police Station and the Farmers Market is unknown. The cost for rebuilding the City Hall (from scratch or not) is known per a study made by an outside agency and I will get to that later.
The logistical costs of keeping the city administration operational, including finding and renting a temporary location for all departments and moving them, are unknown. It looks like that number is taboo as I get shut down every time I ask about it - including the now infamous motion "not to answer the question" existing only in the FRONR (the Fennell's Rules of Order Never Revised).
Quick look at the costs and the study.
On March 12, 2024, during City Council, the interim Director (who has since become Director) of the EDA did a presentation of Project Phoenix where numbers and drawings were shared with the public.
A lot of information was put on the screen including blatantly inaccurate information.
First, let's look at the lies regarding the state of the City Hall building. Approximately 13 minutes into the presentation, a slide shows that it is "Economically not feasible to retrofit the existing building", and that "Retrofitting might add 8-10 years of life".
These statements do not align with the recommendations from the City hired study.
In the study assessing the state of the City Hall, page 8, two recommendations are given.
One option is to operate the building "as is" with an operational "10+ additional year".
The other option is to renovate the building and get "a useful life of 25-30 years".
25-30 years is a lot different than 8-10 years as presented to the council and the public.
If you are interested, you can see the full "Gallatin City Hall Assessment report" here.
Second, let's look at the economics, basically how much money will the City get out of this deal.
Again, when you study the numbers, you get a different story than the fairytale presented to us by the EDA.
First, let's look at the property taxes. Here is the slide from the EDA presentation.
Per the presentation, the city would get $488,933 of yearly property tax from Phoenix. But the Economic Impact Analysis of the project shows differently.
"Phase One" includes a 125-room hotel, 27,150 sq/ft of retail space, 140 apartments, and a parking structure, finished and 100% fully operating at year two.
The way the slide is written is just misleading. Including the County revenues in the slide is just a way to make the numbers look better than what they are. Sumner County is not paying for the changes, Gallatin taxpayers are.
It is all in the details. If you look carefully at the tax rate in the Economic Impact Analysis report, the study numbers were never adjusted to the actual rate of $0.5295 per $100 assessed value. This is a $124,700 a year difference, a $2.5 Million difference over 20 years.
"Phase Two" includes 11,500 sq/ft of retail space, 110 apartments, and a parking structure, finished and 100% fully operating at year six.
Again, it is all in the details. If you use the adjusted tax rate, there is a $56,487 a year difference, a $847,318 difference over 20 years.
The total Gallatin Property Tax for both phases would be $6,471,448 over 20 years (Annually $323,572 city).
This is a little different than the "20-Year Total $37M+" the EDA slide seems to imply the revenue would be.
Someone would say than $6.5M on property tax revenues is still better than no revenue at all, but I will come back to that later.
Do not forget that if Phoenix is approved, the EDA/IDB would take control of the project and will have the opportunity to give the candy store away, with all the tools available at their disposal including TIF (Tax Increment Financing) and PILOT (Payment In Lieu of Tax) agreements. The IDB exists to facilitate these agreements. (You can read more on the FB/Meta tax break here).
Now, let's look at the sales tax revenues. Again, here is the slide from the EDA presentation.
The slide is showing a $3.9M of other taxes generated annually by Phoenix. Let's look at the reality.
Gallatin will get direct sales tax revenues generated by retail, hotel tax revenues, and some indirect local taxes.
Page 7 of the study shows a $1,399,590 of sales tax revenue from the one-time impact of the construction. For that calculation, the study implies that "it is assumed that 40% of the construction costs would be for building materials that are subject to the City of Gallatin and Sumner County local option sales tax rate of 2.25%.". This is assuming than 100% of the building materials will be bought in Gallatin. That will probably not happen so scrap that number.
Page 8 shows the indirect taxes revenues for the 140 multi-family units (phase 1) that are expected to be all occupied at year 3. Even if I think these numbers are inflated, let's keep it as it is, $52,312 per year.
Let's do the same with the revenues for the 110 multi-family units (phase 2) that are expected to be all occupied at year 6 (Page 17). Again, I think these numbers are inflated, but let's keep it as it is, $40,686 per year.
Page 13 shows the revenues for the hotel that would be built during phase 1. Ther first discrepancy here is about the occupancy rate. Per the TN Hospitality Market Report of the 3rd quarter of 2024, occupancy of midscale hotels is 65.84%. That is 13% less than the study shows. Using the same calculation than the study, the direct local sales tax generated from operations will be $91,247 yearly for a total of $1,756,492 for the 20-year period (Year 1 at 50% operation and year 2 at 75%). Using the same parameters, the City of Gallatin local hotel tax will be $121,662 yearly for a total of $2,341,994 for the 20-year period. The total of money the hotel will bring to the city would be $212,909 per year.
Now let's look at the retail side, page 14. Again, the numbers relating to the Sales per Square foot are just not matching with reality. General retail shows a $450/sqft, food and beverage show $710/sqft and Live Work Retail a $935/sqft.
The national average in the United States stands at $325/sqft, but luxury brands, big box stores, and warehouse outlets typically exhibit higher average sales per square foot.
The restaurant sector displays variability with mid end full-service restaurants averaging over $500/sqft, while quick-service restaurants are generally above $700/sqft.
If we use these metrics, Direct local sales taxes generated yearly for Phase 1 (again at full occupancy) would be $45,886 for retail, $84,713 for food and beverage (at $600 per sqft) and $144,540 for live work retail (at $450 per sqft). This will total $275,139 per year.
And we add the indirect taxes revenues of $551,427 per year.
Let's do the same with the revenues for the phase 2 retail, that are expected to be all occupied at year 6 (Page 20). we will have $113,850 per year plus the indirect tax revenues of $280,972.
The grand total per year (including property taxes) would be for year 1 to 6: $1,365,359 and $1,800,867 starting year 7.
We are for sure far from the $3.9 Million dollar of yearly revenues presented on the slide.
The city hall - to rebuild or not to rebuild, this is the question...
On December 27, 2024, Mayor Brown emailed department heads and the council the draft of a space assessment study prepared by Studio Eight Design from Nashville.
The cost of that study was $45,500.
It is interesting (and I did not know) that a same type of study was already done 5 years before.
Studio Eight Design is the same firm that is involved with the Franklin new city hall build.
You can download the full report here.
This is for sure a well-done report except for the inconsistency on page 58, "OPINION OF PROBABLE COST". I find a little interesting that the cost of construction per square foot to rebuild from scratch a new city hall is at $575 - $600 when, based on Franklin's latest cost estimate, it is around $1,153 per square foot for their 91,250 square foot city hall (without counting the park and plaza). That is almost twice the cost per square foot of what is quoted for Gallatin.
Use the same $1,153 number and the cost of construction of a new 41,455 square foot city hall will be an estimated $47.8 Million (and not the $24.9 Million in the report).
Renovations will add 25-30 years to the building. The average cost of renovation of an office building (because this is what the city hall is - an office building) is $300 per square foot. The cost for the 37,000 square foot building will be an estimated $11.1 Million (and not the $18.5 Million in the report).
It looks like the report's "probable cost" is far from the real "probable cost".
After reading the report, it is clear there is a lack of efficiency and space in the current building for growth.
Here is an idea to solve this issue and keep the history of our downtown intact.
I hear a lot of citizens upset at the idea of Fire Station #1 being torn down. When the new Fire Station #1 is built in a new location, we could renovate the existing building and make it part of the City Hall. We could move the Mayor's offices, City Attorney's offices, and the Council Chambers to the historic Fire Hall and have plenty of room for meeting rooms and conference rooms. A blank canvas of 13,000 square feet at an estimated cost of less than $4 Million.
Just imagine... How cool would it be to have the council chambers in the old engine bay.
The misinformation and the lies
Anyone can play with numbers. An email sent by the EDA director to all the council members on April 7, 2025, was written in a way to make us all think that project Phoenix will bring the city $1.5 Billion over a 20-year period, basically almost $73 Million per year.
As shown in the previous paragraph, the numbers look a lot different. We will be lucky if the city gets $2.2 Million per year at full build out. It is probable that it will be less if they are granted a TIF or PILOT agreement.
Another funny thing when you read the email is the sentence "We encourage you to look through the entire report – done by an independent firm".
May be the report was transmitted to us by an independent firm but if you read carefully on page 3, it says "Primary data regarding site development costs, construction costs, square footage to be
developed, tenant mix, operations, employment, and wages was provided by representatives of the City of Gallatin.", basically the EDA.
Any other page including numbers have a little * pointing to the sentence "Projection provided by the developer".
I don't call that independent when the major players with the most to gain with the approval of the project are the one providing all the numbers.
Again, if this was such a great project for the city, you would not have to try that hard to sell it to me, and all would be done in full public transparency. Seems like Deja Vu, the whole thing reminds me of the EDA proclaiming that FB/META was making a $750M investment in our city and would be "the biggest taxpayer in the county and the city". But guess how much the first PILOT payment brought into our city's general fund...ZERO dollars. It was supposed to be $500K, but because of EDA/IDB control, it was ZERO dollars.
Looking Ahead
While the Project Phoenix opportunities could be promising, challenges remain. We must ensure that community concerns are addressed properly while honoring the town's heritage. We need to maintain open communication and transparency to the residents we represent.
This has to make sense for the residents of Gallatin. If we give up the most valuable piece of land to a developer, it must be for significant public benefit. The developer will ensure the benefits for themselves. Who will ensure the benefit for the residents of our city?
Mayor Brown and the EDA director stated rightfully that "the property for Project Phoenix generates no direct tax revenue" so even only $2.2 Million revenues per year seems to be a good idea. Is it? It is unfortunately not that simple as we have to look at every angle before a decision is to be made.
As the mystery of Project Phoenix unwinds, I encourage you to closely watch how this project unfolds. Things are not always as they seem or as they are presented to us. Mayor Brown and the EDA wants it, so change could be on the horizon, whatever the cost to the taxpayer is. Community engagement will be essential in steering this new chapter. Total transparency and accountability will be essential.
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