The Tennessee comptroller Tuesday issued a conditional determination that a plan to finance the proposed $79.4 million Chattanooga Lookouts stadium is in "the best interest of the state."
But a letter sent to an attorney working on the project for Chattanooga and Hamilton County also calls for two requirements before a final determination is made by Jason Mumpower, Tennessee's comptroller of the treasury.
One requirement calls excess tax increment revenues to be used only for "statutorily eligible purposes," with an emphasis on a prompt return of property taxes to the city and county general funds. The letter asked for inclusion of that restriction in future bond documents.
Secondly, a final contract between the recently created city and county Sports Authority and the Lookouts should include the team's unconditional commitment to make annual lease payments of a minimum of $1 million annually for 30 years, the letter stated. It asked for a copy of the final contract lease be filed with the comptroller's office.
John Dunn, director of communications for the comptroller of the treasury, termed the letter "a conditional best interest approval."
He said in an email that there are still the two conditions which must be met before a final determination.
State Economic and Community Development Commissioner Stuart McWhorter also is reviewing the plan, and he has said he was waiting on the comptroller's review in order to make a determination.
Kirsten Yates, the city's senior advisor for communications and digital strategy, said in an email that the city looks forward to continuing to work closely with the county and the Sports Authority to move the project forward.
"We're grateful that the comptroller has offered a favorable opinion of the proposed tax increment financing (TIF) district for the South Broad revitalization project," she said. "As the comptroller outlines in his letter, a final determination will be issued after they receive a final copy of the stadium lease agreement and the bond issuance documents, which will satisfy the conditions as planned."
She said no additional action from the City Council or County Commission relative to the TIF is required.
Helen Burns Sharp, founder of the citizens group Accountability for Taxpayer Money, said she's not surprised the TIF plan conditionally won approval from the comptroller, and she lauded the two requirements.
"I think both are excellent conditions," she said in a telephone interview. "TIFs can be a good tool. We want as soon as possible, I believe, we want those dollars back into the general fund for police and fire."
In August, when the City Council approved the stadium project, it also OK'd a resolution from Councilman Chip Henderson, of Lookout Valley, designed to boost transparency and oversight of the special tax district created to pay for the project.
The resolution will require the Sports Authority to report annually to the Council on the amount of outstanding debt remaining on the stadium bonds. It also makes certain the Council is notified once all debt coverage requirements are satisfied and if there is excess TIF revenue available beyond what's needed to pay down the loan.
The Sports Authority plans to issue up to $80 million in bonds by the end of December to fund construction of the multiuse facility on the rundown former U.S. Pipe/Wheland Foundry property in the South Broad District. To help repay the bonds, the City Council and County Commission approved the special tax district to capture future property taxes around the stadium.
Brent Goldberg, the city's chief financial officer, said at the first meeting of the Sports Authority in August that breaking ground next April would allow for a planned April 2025 opening for the ballpark where the Lookouts owners would like to start the team's minor league baseball season that year.
But two members of the seven-member panel, including its chairman, have resigned. Chattanooga Mayor Tim Kelly and Hamilton County Mayor Weston Wamp are determining the board's way forward. Two Sports Authority meetings have been canceled, including one planned for Thursday.
Kelly has said the stadium and other development in the area would begin a transformation of the city's western gateway. He told the Sports Authority in August that redevelopment of the foundry site has the potential to "fundamentally shift our trajectory upward and forward."
Most of the new property tax revenue from the special district, Lookouts' lease payments, sales taxes, parking revenues and $1.4 million each from the city and county will pay for debt service on the 30-year bonds to be issued for the project, officials have said.
Through tax-increment financing, such special districts are designed to spur development in areas often before economic activity would typically take place.
Revenues from the tax district of about 470 acres around the stadium would pay for 58% of the project, officials said. The district includes not just the 120 acres of developable foundry property, but the South Broad area around it. Also included are a number of tracts south of Chattanooga Creek, including a site for a proposed greenway connecting to Alton Park.
City and county officials have said they initially expect $350 million in new development in the tax district over the 30-year period, but officials have said $1 billion or more is anticipated.
Contact Mike Pare at email@example.com or 423-757-6318. Follow him on Twitter @MikePareTFP.