NASHVILLE — While the Chattanooga and Hamilton County governments plan to issue up to $80 million in bonds through their newly created Sports Authority to build a new Chattanooga Lookouts baseball stadium, it's still too early to declare a home run yet for the project.
State law requires an additional base to cover. The final say rests with the Tennessee comptroller and the state commissioner of the Department of Economic and Community Development.
The 30-day clock began running Tuesday for the two officials to make the decision, and they have asked the project's bond counsel a number of questions about financing.
Comptroller Jason Mumpower and Economic and Community Development Commissioner Stuart McWhorter are reviewing the plans and must sign off on the proposal to create a special tax district around the South Broad District to finance the project over a 30-year period. Within the boundaries, certain tax revenues that grow above a baseline amount would go to pay down the stadium bonds rather than fund local government, although schools would keep their share of the new revenue.
Mumpower spokesman John Dunn said via text this week in response to one of several Chattanooga Times Free Press questions that Mumpower and McWhorter are to review and approve the plan using a "best interest of the state" determination.
"Our office has received the request for approval and is currently awaiting some further correspondence before making a final decision," Dunn said. "This requested correspondence includes written evidence of the baseball team's 30-year financial commitment."
He said Mumpower's office is now working with the city and county industrial development boards' legal counsel, Nashville-based Bass Berry Sims. In addition to a written 30-year commitment from the minor league Lookouts on the stadium, Dunn said the comptroller's office has also asked for an explanation of how the proposal constitutes "eligible expenditures."
State officials also want to know when the tax increment revenues will revert to the city and county general funds to pay for capital improvements and/or for a capital improvements reserve fund maintained by the Sports Authority. Another question regards paying the cost of debt relating to public infrastructure improvements in the entire area, including a planned public greenway known as the Alton Park Connector.
"At this point in time, it does appear that the local governments have put together a workable plan that should meet the best interest standard, but again, our final decision has not been made as we await additional correspondence," Dunn said.
Dunn said the comptroller's role is to "make a fair determination based on the statute.
"Again, he's not approving the debt issuance," Dunn added.
The approval is necessary for the proposed 30-year tax district financing, he said.
"I am waiting on the comptroller's review of the material as discussed in order to make the determination," McWhorter said in an email Tuesday to the Times Free Press.
The special tax district financing, which has been in use for decades, allows local governments to invest in public infrastructure and other improvements on an upfront basis, enabling governments to pay them off in coming years by capturing anticipated future tax-revenue increases the project is expected to generate. Because the financing is based on tapping incremental increases in tax revenue, the method is called tax increment financing.
The stadium project sought by Chattanooga Lookouts owners has taken a series of twists and turns. The county's legislative delegation was fairly skeptical of Chattanooga Mayor Tim Kelly and then-Hamilton County Mayor Jim Coppinger's request for a $20.8 million state grant, which included $7.3 million for environmental cleanup on the former U.S. Pipe/Wheland Foundry tract in the city's South Broad District.
Local lawmakers noted owners of the Southside site where the stadium will go had previously received a $35 million highway interchange for the property, and they questioned other aspects of the deal as well. But they and their colleagues ultimately OK'd the $7.3 million for environmental remediation while inserting another provision allowing the city to keep the state share of sales taxes on items sold inside the envisioned multiuse stadium, excluding the portion directed to public education.
Both the city and county approved the deal in August. Hamilton County Mayor-elect Weston Wamp, who was elected in August, has been critical of the project's timeline and proposed funding.
When two members of the Sports Authority resigned earlier this month, including its chairman, John Shearburn, the managing director of the private equity firm Warburg Pincus, citing time constraints, the mayor said he was concerned the resignations are "the first hard evidence of a process that was rushed."