The Hamilton County and Chattanooga mayors have settled on a new proposal to cover a price increase for a minor league ballpark in the South Broad District, which officials said they now anticipate to cost approximately $115 million.
(READ MORE: Chattanooga, Hamilton County panels delay Lookouts stadium votes)
Under the revised plan, $26 million borrowed by the team and landowners would be solely paid back using the city's portion of the new property tax revenue collected in a 470-acre tax district. That revenue would come from the increased value of properties in that district, which officials expect will rise as construction occurs around the stadium.
Additionally, a sports authority created by the city and county would take on another $5 million in debt, which would be on top of $80 million the panel already intends to borrow for the project. Like the private loan, that $5 million would only be paid back with the city's portion of the new revenues generated in the tax district. Another $1 million would come from interest gained on the $80 million.
"It's not uncommon for the city to step out and do a little bit more when it comes to assets that directly affect city residents," Jermaine Freeman, Chattanooga Mayor Tim Kelly's chief of staff, said in an interview.
Because all economic development deals of that nature preserve the tax dollars that typically flow to Hamilton County Schools, Chattanooga normally spends $2 for every $1 contributed by the county, Freeman said.
The county will now also commit $15 million for public education in the South Broad District area, which would match $10 million the city plans to spend to provide basic infrastructure to the new stadium plus the extra $5 million taken on by the sports authority. That would be above and beyond what the county would normally reserve for education, officials said.
"It was kind of born from a desire to see investment into education, community-facing assets in that district at the same time development is coming online with the stadium," Cory Gearrin, Hamilton County's deputy mayor of economic and community development, said in an interview.
Of the $15 million, Gearrin said, the county is committed to spending $10 million at the Howard School. Identifying the best uses for that money would be a collaborative process involving the school system and the community, Gearrin said.
"I don't know that the county wants to be overly prescriptive," he said.
Overall, the primary funding sources for the project are sales taxes collected on tickets, concessions and other purchases in the new stadium, a $1 million annual lease paid by the team over 30 years and new property tax revenue realized through the rising value of properties in that 470-acre district. The $80 million loan would be paid back in part with new city and county property taxes collected in the tax district. Only city property taxes would cover the additional $26 million in debt.
The team will still spend $3 million up front for construction of the project, but the Lookouts will now be responsible for utilities. Under a previous version of the plan, the Lookouts would have paid the sports authority $250,000 annually for the first 12 years for parking rights. The sports authority would in turn provide up to $250,000 annually to cover utilities for the Lookouts.
Vice Chair Jenny Hill, of North Chattanooga, thanked staff for removing unnecessary complexity from the deal.
"I recognize you were trying to put every ingredient in to answer every question," she said. "It just made things a little overly confusing in a deal that is already complex."
Hill said The Howard School desperately needs new HVAC systems, and there are portions of the building uninhabitable because they are either too hot or too cold.
"It may not be a sexy community asset," Hill said, "but that may, in fact, be one of the things they need the most."
Council Member Chip Henderson, of Lookout Valley, asked Freeman if he was confident in the $115 million price tag. Freeman responded that he expects the final cost of the stadium will be around that amount.
"I want to make sure that what we build there is something that everyone in this room can be proud that it's in Chattanooga," Henderson said. "I don't want to walk into that thing and say, 'Oh my God, what have we done?'"
The Chattanooga City Council and the Hamilton County Commission will consider the new agreement on Feb. 27 and Feb. 28, respectively. On Tuesday, the City Council withdrew an older financing plan from its agenda. Plans to cover the cost increase have gone through a couple of different iterations since the stadium's approximate price tag came to light in early January.
(READ MORE: Chattanooga Lookouts stadium cost jumps to $120 million)
In late January, Kelly and Commission Chair Jeff Eversole, R-Ooltewah, unveiled a proposal that required the Lookouts and landowner Perimeter Properties to absorb any costs beyond $112 million. Under the plan, the team and landowners would borrow $32 million from a consortium of banks, which the jointly created sports authority would pay back with new property tax revenue in the 470-acre tax district.
Hamilton County Mayor Weston Wamp, however, sharply criticized Eversole for negotiating a new deal without involving him or his staff. At a subsequent meeting, some commissioners said they wanted the mayor's office involved in future talks, which have been occurring over the past few weeks. Speaking to the Chattanooga Times Free Press on Feb. 14, Wamp said he couldn't go into detail about what officials had been negotiating up to that point.
"We've worked on what I would describe as a more customized proposal that benefits the city and county and their taxpayers, respectively — treating the two entities in distinct ways (and) I think putting the city and county in proper roles in a deal of this nature," Wamp said at the time.
Contact David Floyd at dfloyd@timesfreepress.com or 423-757-6249.