Future revitalization of the Northgate Mall in Hixson hinges on updating its aging infrastructure, which the owners of the 50-year-old property hope to fund with new tax money generated at the site, a mall official said.
Without those upgrades, the future of the mall is bleak, said Jon Meshel, senior vice president of redevelopment at CBL Properties. The property would likely be repurposed into low-value uses like self-storage, he said, that would do little to support surrounding businesses, create jobs or generate meaningful tax revenue.
(READ MORE: Northgate Mall owners seek special tax district to upgrade aging utilities)
“This is not alarmism,” he told a city board. “It’s reality as seen in other communities.”
On Monday, the Chattanooga Industrial Development Board advanced a plan that would enable CBL Properties to reimburse approximately $15 million worth of water, sewer and stormwater upgrades with new sales and property tax revenue produced at the mall’s campus.
This is an early step in an approval process that will likely continue through December or January.
Malls that lack coordinated public-private investment have become blighted and underused, Meshel said. There are numerous examples of malls being returned to lenders, he said, and public entities having to step in to purchase parcels to prevent further decline.
“Chattanooga has an opportunity to avoid a negative outcome by supporting a plan that stabilizes the tax base, protects public infrastructure and positions Northgate Mall for meaningful, community-centered development,” he said.
CBL purchased the mall in 2011 and has invested more than $40 million in and around the property, Meshel said. Tens of millions of additional dollars have been spent by others on parcels surrounding Northgate.
“However, like many aging retail centers, the campus now faces a critical challenge,” he said. “Its infrastructure, particularly the water and sewer systems, are both outdated and still privately owned.”
The mall was originally constructed in 1968 with a private sewer system that’s now 57 years old. Hixson was later annexed into the city in 1973. The aging system prevents large scale redevelopment of the property, a city official said.
Charita Allen, Chattanooga’s senior adviser for economic and workforce development, said the city has a vested interest in the project because it has public infrastructure that ties into the private system at Northgate.
Small standalone development on the perimeter of the property, such as multi-family housing or high quality office buildings, would require upgraded infrastructure, she said, adding that it’s currently not viable with the existing private system.
The appraised value of the land has also declined in recent years, dropping from $50 million in 2017 to $28 million in 2024, which results in a loss of property tax revenue for the city.
Property taxes collected at the campus have declined from their peak in 2017 by nearly 50%, plummeting from more than $1.1 million at that time to about $575,000 in 2024.
(READ MORE: Council moves Northgate Mall project forward, but with questions)
The nearby infrastructure serves Northgate and 12 additional properties owned by other entities, Meshel said. A failure of the system would disrupt all businesses currently served by the utilities, including TJ Maxx, Aubrey’s, Cava, Miller’s Ale House and many others, Meshel said.
In the years since CBL purchased Northgate, the retail industry has changed significantly, Meshel said. Anchor stores like J.C. Penney, Sears and Burlington have closed, and national retailers inside the mall like The Children’s Place, Victoria’s Secret, Kay Jewelers, GNC, Justice and Christopher & Banks have also shut down, he said.
Northgate had an occupancy rate of 72% at the end of 2024. By comparison, Hamilton Place, another CBL property, has an occupancy rate of 93%, said CBL spokesperson Stacey Keating.
“Simply put, the mall in its current format is not sustainable,” Meshel said. “The financial impact is real and detrimental to the city.”
Contact business reporter David Floyd at dfloyd@timesfreepress.com or 423-757-6249.
