After weeks of negotiations, a final plan to plug a funding gap in a proposed $115 million minor league baseball stadium in the South Broad District has cleared a crucial vote by the Chattanooga City Council.
The nine-member panel voted unanimously to approve an agreement whereby the city would take on additional debt for the project. The proposal will now go to the Hamilton County Commission on Wednesday for its blessing.
Officials expect the project will require further approvals over the next couple of weeks from the city-county sports authority, city and county industrial development boards as well as the City Council and County Commission.
As part of the deal, the city has agreed to provide funding to repay a $26 million loan to be obtained by the Chattanooga Lookouts and the landowner, Perimeter Properties, out of the city's share of the new property tax revenue created in a 470-acre district.
The city would also cover an extra $5 million in debt, which would be in addition to $80 million in bonds issued by a sports authority created for the project. The city would use property taxes gained in the 470-acre district to pay for that $5 million. It may also use hotel-motel tax dollars gathered from across the city or local option sales tax revenue collected on the former U.S. Pipe/Wheland Foundry site.
(READ MORE: Chattanooga Lookouts stadium deal tweaked again)
The county will not be on the hook for the additional cost of the project and will instead invest $15 million into schools near the new stadium, $10 million of which has been committed to The Howard School. The city also intends to set aside future sales and property tax revenue from within the tax district for affordable housing initiatives. Chattanooga would pay for $10 million of basic infrastructure for the stadium.
The team would contribute $3 million up front for construction, but it will not receive up to $250,000 per year from the sports authority for utilities, which was in a previous version of the plan. Parking revenue is no longer part of the public financing for the project, city spokesperson Eric Holl said in a text. Perimeter Properties and Hardball Capital, the team's owner, will negotiate that amongst themselves.
(READ MORE: More taxpayer money benefits pro sports owners amid 'stadium construction wave')
An additional $1 million would come from interest gained on proceeds from the $80 million bond issue by the sports authority. The team and developers would be responsible for any cost overruns beyond $115 million.
Funding plan for the $115 million stadium
— $80 million in bonds issued by city-county sports authority, to be paid back mostly by new city and county tax revenue generated by the stadium development.
— $26 million private loan obtained by team and landowner, paid back with new city property tax revenue in 470-acre tax district, but not with county revenue.
— $5 million in additional sports authority debt, also repaid from city's property tax revenue and potentially hotel motel taxes or local option sales taxes.
— $3 million up front contribution from Lookouts.
— $1 million interest earnings on $80 million bond.
Source: Hamilton County, City of Chattanooga
This version of the deal, which has gone through multiple iterations since early January, resulted from talks between Chattanooga Mayor Tim Kelly and Hamilton County Mayor Weston Wamp — a consistent, vocal critic of the deal who was not in office when the project was first approved.
Kelly had previously worked with Commission Chair Jeff Eversole, R-Ooltewah, to present an alternative funding proposal in late January, which prompted a rebuke from Wamp who said those talks had not involved members of his staff. In an interview last week, Wamp said removing the county's obligations on the private loan was a key part of the recent conversations between the two offices.
(READ MORE: Mayor Wamp: New stadium plan would save Hamilton County $25 million)
The Lookouts have been at their home at AT&T Field since 2000, but team officials say they need a new stadium to comply with facility requirements passed down by Major League Baseball.
Overall, the primary funding sources for the $115 million stadium are sales taxes collected on purchases in the new facility, 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.
Contact David Floyd at dfloyd@timesfreepress.com or 423-757-6249.