NASHVILLE -- Tennessee government is placing some big bets on professional sports venues these days with legislators this year approving $500 million in taxpayer dollars for the Tennessee Titans' planned $2.1 billion domed stadium in Nashville while providing another $13.5 million in 2021 to help build a new Tennessee Smokies' minor league baseball stadium in Knoxville.
The latest effort to obtain state funding for sports venues came this month with Memphis Mayor Jim Strickland's self-described "big ask." Strickland wants $350 million in state financial support to fuel what Strickland describes as a $684 million plan to upgrade four existing stadiums and ballparks, including the FedEx Forum where the NBA's Memphis Grizzlies play.
The flow of money to other cities may leave some wondering what happened in Chattanooga, where the Lookouts baseball team, along with Chattanooga and Hamilton County governments, struggled unsuccessfully last year to get the same $13.5 million deal approved for Smokies' millionaire owner and current University of Tennessee President Randy Boyd.
Chattanooga and Hamilton County governments also sought an additional $7.3 million for environmental cleanup in the South Broad District, asking for a total of $20.8 million. The new stadium -- Lookouts owners say it's necessary for the minor league team to remain in Chattanooga due to new Major League Baseball requirements -- is a key component of a broader effort to transform the area in and around the defunct U.S. Pipe/Wheland Foundry property. Plans call for development of new dining and entertainment venues as well as retail and residential developments with officials and other proponents saying it could generate more than $1 billion in new economic activity.
THE HOME TEAM
Hamilton County's two state senators and most of the county's five House representatives opposed funding for the home team's deal. They pointed out the Lookouts and owners of nearby properties will already benefit from the state-funded $35 million rehabilitation of the Interstate 24 interchange at Broad Street.
Three of the local legislative critics happen to be among the most powerful lawmakers in the General Assembly -- Senate Finance Committee Chairman Bo Watson, R-Hixson, House Finance Chairwoman Patsy Hazlewood, R-Signal Mountain, and Senate Fiscal Review Committee Chairman Todd Gardenhire, R-Chattanooga.
This year, the Lookouts, developers and local governments finally got the nod from the legislature, including the Hamilton County delegation, to proceed on the special tax district pending final approval from state Comptroller Jason Mumpower and state Economic and Community Development Commissioner Stuart McWhorter.
While the city and county governments did not get the $7.3 million in state environmental remediation funds they sought, there is federal funding to cover some of that, according to Ellis Smith, Chattanooga Mayor Tim Kelly's director of special projects. Smith said by phone the remediation efforts don't need to occur all at once and can be spaced out over a period of years as needed.
$350 million: Memphis Mayor Jim Strickland is seeking $350 million in state financial support to upgrade four existing stadiums and ballparks, including the FedEx Forum where the Memphis Grizzlies play basketball. (AP Photo/Brandon Dill)SKIN IN THE GAME
In one of several phone interviews, Gardenhire, also a Senate Finance Committee member, said he hadn't been a big fan of the Smokies legislation. But he also noted there was a major difference between what Boyd sought and the approach taken by Kelly and former Hamilton County Mayor Jim Coppinger, who left office Sept. 1.
"He put a lot of his own personal wealth into that whole project," Gardenhire said of Boyd, adding the Lookouts are putting in nothing when it comes to stadium construction.
The Lookouts will pay $1 million in rent annually with an escalator clause. Team owners have also committed to paying $45 million in future maintenance and other operational costs as well as booking events beyond the baseball season. The Titans, meanwhile, are injecting $800 million into their new stadium.
Gardenhire said he voted against the Titans deal. A retired senior vice president of wealth management at Morgan Stanley Smith Barney, Gardenhire said he also put some "pretty stringent handcuffs" on Knoxville's bond issue for the stadium. Those will apply to the Lookouts stadium too, he said.
(READ MORE: Coalition wants benefits from Chattanooga's South Broad stadium deal)
Both the Smokies and Lookouts projects rely on special taxing districts that allow local governments to redirect certain revenue into public infrastructure and other improvements that can be financed with bonds and repaid when additional tax money is generated by development.
The Lookouts have two such financing deals, one involving sales of food, drink and other items within the stadium. The other uses anticipated growth in property tax collections generated by new development. The project is being overseen by a newly created Chattanooga Sports Authority.
Gardenhire said the restrictions he imposed mean that neither Knoxville nor Chattanooga and Hamilton County could refinance the bond for any more than the term of the original bond. So, Gardenhire said as an example, if a 30-year bond is issued and a decade later the authority wants to refinance, they could only go out 20 years and not bump it to another 30 years.
New property tax revenue from the special tax district, the Lookouts' lease payments, sales taxes, parking revenues and $1.4 million each from the city and county are to go toward paying debt service on 30-year bonds issued for the project.
The plan is to issue nearly $80 million in bonds by the end of December to fund construction of the facility.
$13.5 million: The state in 2021 granted $13.5 million to help build a new Tennessee Smokies’ minor league baseball stadium in Knoxville. (Rendering courtesy of Knox County)RED WOLVES PROJECT
Another local project, meanwhile, had a far easier time getting state dollars -- with support of the local legislative delegation. Lawmakers approved a $5 million grant to the city of East Ridge to assist with infrastructure for Chattanooga Red Wolves soccer team owner Bob Martino's planned $200 million residential and commercial development near his stadium.
Legislators noted Martino had already built the $6 million stadium at his own expense. Gardenhire and Rep. Esther Helton, an East Ridge Republican who also is on the City Council, sponsored the spending provision, which was included in the $52.8 billion budget approved by lawmakers earlier this year.
"We can go around this mulberry bush as we have several times already about who's getting what and who's not getting their fair share and all that," state House Finance Committee Chairwoman Patsy Hazlewood, R-Signal Mountain, who is also chair of the county's legislative delegation, said in a phone interview this week. "Just remember, the state put $35 million into the interchange that serves that area. I think it's a little bit disingenuous for folks to say we didn't provide anything for the stadium."
Hazlewood called the Southside area near the planned stadium prime property for development.
(READ MORE: Groundbreaking on Chattanooga Lookouts stadium planned for April)
"Again, it's not just about building a new stadium," Hazlewood said, noting that an infusion of new entertainment and dining options as well as housing and retail could take a blighted area and transform it. She said she's already hearing talk about potential development on properties that can bring in additional tax dollars.
Hazlewood, Helton and Gardenhire sponsored and passed a bill allowing the new stadium to continue receiving sales tax revenues from the sale of food, drinks, merchandise and other items at franchised baseball events to be used for the retirement of debt and maintenance on the new stadium. But the measure does something else, enabling local officials for the first time to collect sales taxes on non-baseball events such as concerts, as is the case at similar venues. The fiscal note on the bill estimates that could be 40 events a year to help retire the debt.
Gardenhire also noted that the city of Chattanooga has received a federal grant to deal with environmental issues in the South Broad area.
"So they've basically gotten almost everything, from one source or another, that they've asked for," he said.
Smith, with the city of Chattanooga, said in a phone interview this week the new interstate interchange is indeed a big help for the overall project and redevelopment.
"While everything is a negotiation, any time you're talking about large amounts of money for any type of project, we've got a new exit that's opening off of I-24 as we speak," Smith said. "In effect, very little of what we're working on today down there could or would have happened had we not had that new interstate configuration there that's unlocked that site. So we're certainly appreciative of that."
$500 million: The state has approved half a billion taxpayer dollars for the Tennessee Titans’ planned $2.1 billion domed stadium in Nashville to replace Nissan Stadium. (AP Photo/Wade Payne)FOCUS ON STADIUM
Former Hamilton County Mayor Coppinger worked with Kelly and others on the project before leaving office.
"Honestly it (criticism) was disappointing because I think everybody focused so much on the ballpark. They didn't realize the economic development opportunities around that ballpark were extremely important to the city of Chattanooga and Hamilton County," Coppinger said in a phone interview. "The focus became about the 100-plus acres or 120 acres or whatever. And the ballpark is about 8 acres of that. And the developers, both Core Development out of Nashville and New City Development down in Atlanta, have already committed to invest there. But they wouldn't do it without the stadium. And they made that very clear. I think, again, it came during a political season, and everyone wanted to hype the ball stadium."
Mark Cunningham with the Beacon Center of Tennessee, a free-market think tank and advocacy group, is panning both the Chattanooga efforts as well as funding for the Titans, Boyd's Smokies project and the Memphis proposals.
"There's a ton of issues we have," Cunningham said in a phone interview this week. "The first thing is you have to wonder why taxpayers are being forced to fund millionaires' and billionaires' pet projects -- because that's what it is. It's tax dollars. And the government will try to spin it and use their PR any way they can. But ultimately, it's hard-working Tennessee taxpayers paying money to millionaires and billionaires because they don't feel like funding their own stadium."
(READ MORE: New Chattanooga Lookouts stadium proposed in South Broad District)
That doesn't bother Wells Guthrie, program director and afternoon co-host of "Press Row" on ESPN 95.3 in Chattanooga.
"I do support the new stadium," he said by phone. "I'm also somebody who pays Hamilton County and Chattanooga city tax, and I'm OK with tax dollars being used for the new development. The bottom line is, the Lookouts were going to leave Chattanooga if a new stadium isn't built."
But Guthrie said it's not just about the Lookouts for him.
"You've got to pair that with the roughly 120 acres around that boundary development and the possibilities for additional development," he said. "And where the city's going, and where it's been. It's a very, very hot market."
Guthrie said when the project was first announced, the station fielded a lot of calls from local people on the issue with support and opposition.
"I'd say, to be honest, it was about 50/50," Guthrie said. "And everybody understands the arguments for both sides."
Those opposing the stadium were people who don't attend Lookouts games or focused more on education needs, which Guthrie said, "I think we can all agree in this market, in Hamilton County is a problem."
Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.