East Ridge's approved Border Region district includes 950 acres in areas around Exit 1, the Interstate 75/24 interchange, the central business district along Ringgold Road, Germantown Road and the area on the north side of I-24 along Germantown Road.
East Ridge officials are heralding a special state-granted tax designation as an "economic game-changer."
On Monday the city learned that several areas within the city had been approved as a "border region retail tourism development district" by the Tennessee's commissioner of Revenue and the commissioner of Economic and Community Development.
"It's hard to quantify the impact this could have, and we probably won't be able to quantify it till about 20 years down the road," explained Mayor Brent Lambert, who said the designation could be "the single most significant event to occur in East Ridge" during his lifetime.
"This provides us with the tools to really see a makeover of the city. It allows us to really go after some big-time economic development."
Legislation passed in 2011 by the Tennessee General Assembly allows for Border Region districts to be created under several conditions: Cities must border other states and have an interstate highway running through them.
With Border Region status, the city can provide tax incentives and infrastructure improvements to accommodate large-scale retail developments. The incentives can then be repaid through a special tax status, allowing the city to net 75 percent of sales tax collected in the district over a 30-year period.
The catch: That rebate will only be activated if a "triggering event" occurs. Such an event would be a tourism or retail site that draws at least 1 million customers annually and requires a $20 million investment.
By comparison, the Tennessee Aquarium in downtown Chattanooga attracted about 650,000 visitors in 2011, and Hamilton Place mall attracts about 16 million visitors annually, according to figures from CBL & Associates.
Despite the high bar, Lambert and City Manager Tim Gobble said such development is well-within East Ridge's reach.
For several years now, the city has been in talks with Wolftever Development about building a mixed retail and restaurant site called "Jordan Crossing" on city and state-owned land near Camp Jordan.
The land deal would involve the city purchasing the state-owned land, then selling it to Wolftever. Lambert said city leaders are "edging closer" to making the deal.
However, a recent appraisal has shown that at least half of the 27-acre site cannot be developed because it is in a flood way. The other half is in a flood plain, which means the land can be developed after certain flood-prevention guidelines are met.
Gobble said he anticipates only a handful of Border Region districts will be approved in the state. One city is Kingsport, Tenn., on the Virginia state line, which has seen controversy arise over annexation measures related to its own Border Region.
In a news release, Gobble said the designation is "unlike anything done previously in the state. It will require the city of East Ridge to think differently and act anew regarding economic development."
Such different thinking may involve the creation of a city development authority and borrowing money for economic development, city officials said.