A planned special tax district for a Chattanooga Lookouts stadium has swelled to 470 acres, an official said, nearly four times the 120 acres of developable land on the U.S. Pipe/Wheland Foundry site.
Talks with South Broad and Alton Park neighborhood residents were a key reason that led to enlarging the proposed boundaries of the tax district from the size in initial discussions, an official said last week.
"We drove around and walked around," said Jermaine Freeman, senior adviser for economic opportunity for Chattanooga Mayor Tim Kelly. He said officials saw that a number of parcels near the foundry property were blighted. "Why not include those? We said, 'OK, that will be in the district.'"
Through tax-increment financing, or a TIF, such districts are designed to spur development in needed areas often before such activity would typically take place. Developers and local governments often collaborate in a redevelopment project, such as the proposed stadium, and attract more economic activity and bolster property taxes within the entire district.
Chattanooga and Hamilton County officials are trying to establish the special tax district to finance the nearly $80 million Chattanooga Lookouts stadium in the South Broad area through various governmental approvals.
The tax district around the proposed stadium would pay for about 58% of the facility that is to sit on about 10 acres in the foundry site, officials said. The district would allow the city and county to capture a portion of additional property tax revenue generated by new development to pay down 30-year bonds for the stadium. Within the tax district, money could also be used for improving infrastructure such as roads and sewers.
Officials said the stadium, proposed between Interstate 24 and Broad Street, will be a catalyst for $350 million in new development initially and ultimately up to $1.5 billion of new housing, retail and commercial space in the area.
Freeman said in an interview that expanding the district will make it easier to pay off the bonds that would be issued to fund construction of the ballpark. Because of the larger district, more property tax revenue is expected to be generated.
When the city and county mayors briefed the Chattanooga Times Free Press editorial board on June 23, the original idea was the TIF district could approximately comprise the foundry site, Freeman said, and had grown to 256 acres. But, he said, as officials moved into the process and had more conversations with people in the area, that helped lead to a decision to expand the district further.
Freeman said the South Broad District Plan, developed four years ago after months of community planning and endorsed by the city council in 2018, had already called for exploring the use of the tax increment financing.
City Councilwoman Raquetta Dotley, of East Lake, said conversations she had with city officials and others about expanding the TIF district was a way to be inclusive of the neighborhoods near the stadium, which have high numbers of Black and Hispanic residents.
"Sometimes when certain areas are invested in Alton Park or East Lake adjacent to certain developments, they don't get the same investment," she said by phone. "They don't even get a second look."
The aim is to be more equitable, Dotley said.
"This is one way to do that," she said.
TIF districts tend to see higher and denser development, and there's the potential for infrastructure help, officials said. Dotley said, for example, that remaking an old rail line as a greenway connecting Alton Park and the Riverwalk in the South Broad District could benefit the area.
Helen Burns Sharp, founder of the citizens group Accountability for Taxpayer Money, said landowners in the tax district, if it's approved during the next few weeks, would still pay property taxes.
But, she said, some taxes that typically would have gone into the general fund to pay for services such as fire, police and libraries will be earmarked in the future for the stadium and expenditures defined in the tax district plan.
"That's a big deal," Sharp said in a telephone interview, citing the 30-year time frame for the special financing. "I hope it will be a priority to try to retire the stadium bonds as soon as possible and then get the taxes from the properties in the district back to the city and county general funds."
Debt service on the proposed nearly $80 million minor league baseball stadium in the South Broad District would hit about $4.5 million annually for 30 years, or $135 million, according to officials.But that’s only if the debt on the project is never refinanced or not paid off early, they said last week.Hamilton County Commissioner Tim Boyd asked the question about total debt service during a meeting of the panel last week, hearing that the $4.5 million annually is the figure needed to be covered by the various revenue streams.“Anything less falls back on the city or county,” he said, adding that looking at total debt cost is like “how much a school ultimately cost the taxpayers.”Brent Goldberg, the city’s chief financial officer, said the Lookouts are pledging at least $1 million annually in lease payments over the 30-year period and paying an estimated 22% of the stadium cost.Also, officials said that:— 58% of the stadium cost is paid by property tax on expected new private development in a special tax district.— 12% from state sales tax generated in the new stadium, most of which would otherwise go to the state.— 2% from parking revenues from stadium events.— 2% from local sales tax generated in the new stadium.— 2% from the city.— 2% from the county.
City Councilwoman Jenny Hill, of North Chattanooga, said while she's excited about the renewal of neighborhoods in the area that the stadium project could bring, she's concerned redevelopment could result in rising property values and displace current residents.
Hill said by phone she supports what she called a circuit-breaker tax credit to protect long-term residents.
"If your taxes double, you get a tax credit from the city up to a certain number of years," she said, adding that enabling legislation from the state may be required.
At the same time, Hill said, many people are renters in the neighborhoods, and they may struggle with displacement sooner than homeowners. Conversations with landlords may be needed to encourage them to participate in such a circuit-breaker program, she said.
Also, Hill said, city leaders need to think about adjusting expectations for developers in the TIF district in terms of what kinds of amenities ought to be provided for people outside the stadium, such as parks.
Sharp said a concern about the current boundary involves government transparency, noting the growth in the affected area had "a quiet roll-out."
"This lack of sunshine is likely due to the very accelerated time frame for the TIF and the workload on the good city staff trying to juggle all the pieces," she said in an email. "As the project moves forward, perhaps the city and county will commit to more transparency, such as establishing easy-to-find stadium web pages on the city and county websites. These could contain agendas and minutes whenever a public body, including the new sports authority, considers a stadium issue."
City and county officials are proposing to create a new sports authority that would issue the 30-year revenue bonds and own the stadium.
Sharp said she's not against the stadium project. But, she said, there are unanswered questions about infrastructure and environmental remediation. The foundry site is considered a brownfield - a contaminated former industrial site.
County Commissioner Tim Boyd, who has raised questions about the project in the past, expressed worries about infrastructure last week at a meeting of the panel, such as how TIF money would be spent on roads, water and sewer in the district.
He asked if developers of projects within the tax district would pay infrastructure costs.
"Who pays for infrastructure if the stadium takes all the money?" Boyd added.
Freeman said all the infrastructure needs aren't known yet. He said a master developer who will be hired if the stadium project proceeds is working on what will go on the 120-acre foundry site.
Freeman said developers with whom officials have talked have been clear that they can pay to support infrastructure.
"Is that on the record?" Boyd asked.
Freeman said there's no binding commitment.
While stadium advocates cite future development within the special tax district, already there are a number projects either underway or in the works. Here are some projects within the larger TIF district:
- Chattanooga businessmen Hiran Desai and Jimmy White three years ago unveiled plans for new developments in the Southside Gardens neighborhood.
- Earlier this year, RFM Development Co. of Nashville proposed building a seven-story apartment complex across Chestnut Street from the foundry site.
- Construction is already well underway in a neighborhood off St. Elmo Avenue.
- A bevy of new housing is going up at Broad and 33rd streets.
- Chattanooga developer Hutton plans to build 60 townhouses just south of Chattanooga Creek off Broad Street.
According to officials, the stadium is a large project that will bring attention, foot traffic and a sense of place to the area. Mixed-use buildings for residential, office, hotel, and retail space will be attracted to the area because of the activity and new views the stadium will offer, they said. That increases the value of properties for landholders within the tax district, and the city and county gain through more revenue from sales and other taxes.
Aaron Breeden, who runs Hutton's multifamily group, said TIFs generally tend to encourage denser development. But he said Hutton officials don't know enough about the TIF to determine if it's good for the company or not.
"Generally there are different requirements - you've got to do retail, affordable housing," Breeden said. "I just don't know."
Still, he's in favor of the stadium's construction given how many motorists travel by the old foundries on I-24.
"If the city does it right and it has entertainment, it will be a huge win for everyone involved," Breeden said.
Already, Nashville-based Core Development has proposed $160 million to $170 million in new development mostly on the foundry site, though some of it would spill onto a few acres of adjacent property owned by former U.S. Pipe/Wheland Foundry site owner Perimeter Properties, according to the company.
The Chattanooga Industrial Development Board on Monday is expected to consider recommending approval of a plan to help fund the proposed Chattanooga Lookouts stadium. If that happens, the proposal still needs later OK by the City Council and Hamilton County Commission.
'A vital piece'
Sharp said there's nothing inherently wrong with expanding the special tax zone, provided the additions are strategic. She said a slight expansion may be appropriate for a few parcels south of the creek west of Broad where Core has announced plans.
"City and county officials believe the new tax increment from this residential/retail development is a vital piece of the funding package for the new stadium," Sharp said.
But she questioned adding about 20 parcels on the east side of Broad and four parcels on the west side of Broad south of West 33rd Street where most of that land is already developed.
"If the reason is to connect to a proposed greenway to Alton Park along a former rail bed on West 33rd, that could be done by making Broad Street itself the stem connector," Sharp said.
City and county officials have included the former rail line into the TIF in order to support the conversion of it into a greenway that would create a bicycle and pedestrian connection between Alton Park and the Tennessee Riverwalk.
Freeman said as officials looked at adding empty or blighted parcels to the TIF District, they recognized there is already development on some adjacent tracts.
"You can't draw a TIF that has holes," he said.
Dotley said she understands there are concerns about the stadium project.
"It's a big investment," she said. "I encourage people not to be shortsighted. Long term, it will be a great investment."
Chattanoogan Mark McCraw, who owns about a half-acre at 503 W. 26th St. close to the foundry site, said last year that he has plans to build about 13 to 15, three-level townhomes.
McCraw said in a telephone interview last week that he's for the proposed stadium.
"I think it will be great for the area," he said, adding that "if it happens, it happens."
Contact Mike Pare at email@example.com or 423-757-6318. Follow him on Twitter @MikePareTFP.