A new $120 million ballpark for the Chattanooga Lookouts will cost taxpayers less than anticipated, city and county officials said Monday.
Officials have not yet settled on a guaranteed maximum price for the multiuse stadium in the South Broad District, but they have determined any costs that exceed $112 million will be absorbed by Hardball Capital, the owner of the team, and Perimeter Properties, the owner of the 120-acre property where the stadium will occupy several acres.
In an interview Monday alongside Hamilton County Commission Chair Jeff Eversole, Chattanooga Mayor Tim Kelly said officials have reduced the public's exposure in the project from $120 million to $112 million, and the private partners will now pay any cost over $112 million. Additionally, the team will provide $3 million of cash up front to fund construction.
"We wanted to make sure that it was in fact the best deal that we could negotiate on behalf of taxpayers," Kelly said. "I'm 100% confident that it is."
Officials expect the Chattanooga City Council and the Hamilton County Commission will vote on the proposal at their respective meetings next Tuesday and Wednesday.
"My goal is, 'How do you continue to lower your exposure?'" Eversole said. "I think we were able to do that."
Relief on growth
Eversole said he called a meeting with city leaders and the project's private partners last week because he didn't feel officials were making enough progress on the deal. He represents Ooltewah, Collegedale, Georgetown and part of Apison, which he said are the fastest growing parts of Hamilton County.
"I've got constituents that live in that area that have an explosion in growth, have an explosion in school overcrowding, have an explosion in infrastructure needs," Eversole said.
He said he hopes the stadium will spur new residential projects in the city's urban core that will relieve pressure on residents in his district.
Beyond the $120 million stadium cost, the city will cover $10 million of infrastructure for the project at the former U.S. Pipe/Wheland Foundry property, Kelly said. The new stadium would replace AT&T Field on Hawk Hill, where the minor league Lookouts have played baseball since 2000. Officials were hoping to have the new stadium ready by opening day in spring 2025, but they said Monday that June or July are more likely.
"What we're trying to do is bring forth the most competitive deal structure for the public that we can," Jermaine Freeman, chief of staff to Kelly, said in an interview.
Officials intend to fund the construction of the stadium through two borrowings. One is an $80 million bond issuance by a city-county sports authority. The other is a $32 million private loan by the Lookouts and Perimeter Properties, which would be paid back by additional tax money generated by the project using a mechanism called tax increment financing.
Through tax increment financing, officials typically use new property tax revenue generated by development in a defined area to fund costs like infrastructure. It's a tool reserved for blighted areas. Locally, any new tax revenue generated for education continues to flow unabated to schools.
In this case, future taxpayer money would fund a significant portion of the Lookouts stadium cost, but it will only come from property taxes paid by property owners within the 470-acre tax district and sales taxes collected on concessions and other purchases in the new stadium.
(READ MORE: Hamilton County Mayor Wamp tells taxpayers they have 'all the leverage' in stadium deal)
Additionally, officials forecast the project will catalyze $1 billion of development on the 120-acre foundry site and another $127.5 million in the remaining 350 acres of the tax district, according to a study by Younger & Associates commissioned by the chamber of commerce. That would generate $186 million in new tax revenue for county schools and $102 million for the city and county, proponents say.
No free ride
Under a preliminary proposal, Hardball Capital and Perimeter Properties would have borrowed $40 million to help cover the additional cost of the project. Under the final deal, that loan has been reduced to $32 million, and Perimeter Properties and the Lookouts will now assume the risk for anything beyond $112 million.
"They can't come back and say, 'We need more,'" Eversole said.
There also will be no compounding interest on the $32 million debt, officials said, meaning interest will only accumulate on the principal of the loan.
The sports authority will pay down the $80 million loan through a combination of funding sources, the primary two being new property taxes in the 470-acre district plus a $1 million annual lease payment by the Chattanooga Lookouts. Those payments will increase 1.5% per year until the debt service is covered on the $80 million loan. The team owners will be contractually obligated to pay that lease over a 30-year period regardless of whether the Lookouts remain in Chattanooga, officials said. The team will cover maintenance and operation costs at the stadium, valued at $45 million over 30 years. Developers will also pay for the remaining infrastructure on the 120-acre site, which totals approximately $15 million.
(READ MORE: Chattanooga Lookouts stadium cost jumps to $120 million)
The company is donating nine acres for the stadium and previously donated 12 acres for an extension of the Tennessee Riverwalk, officials said.
"The idea that somehow we're giving these guys a free ride is just not true," Kelly said Monday.
Kelly said it was a pleasure working with Eversole on the negotiations.
"As two guys with decades of business experience, it was not personal, it wasn't political," Kelly said. "It was economic, and it was an extremely complicated negotiation and at times painful. There were times at which we thought, 'OK this thing is going to fall apart. They're walking away.' Full credit to him for seeing it through."
Hamilton County Mayor Weston Wamp, a vocal skeptic of the project, has been calling for more buy-in from the deal's private partners. Last Thursday, Wamp held a "taxpayer town hall" to outline his reservations.
Noting he works well with Wamp on workforce development and education, Kelly said Monday the recent negotiations were not a response to Wamp's concerns.
"They were not a response at all," Kelly said. "Our job is to land this plane for the benefit of this community. It's just smoke and noise as far as I'm concerned."
Alluding to the Battery in Atlanta, Kelly stressed the deal is about more than just keeping the Lookouts — it's about the development it will motivate on the surrounding foundry property.
"That's the piece of it that is more exciting to me, but without the stadium, there's no Battery," he said.
'Boondoggle'
For his part, Wamp on Monday criticized the head of the County Commission for negotiating the new deal.
"We invited Commissioner Eversole to speak at the taxpayer town hall last week about the increased costs to the South Broad stadium," Wamp said in a statement. "Instead of accepting our invitation to listen to his own constituents about a better deal, we now know Eversole was cutting a deal with the lobbyists and city mayor to barely improve this boondoggle."
Wamp said it is highly inappropriate for Eversole to represent the county in negotiations on the stadium without working with the chief financial officer, the county mayor and fellow commissioners.
(READ MORE: Hamilton County Mayor Wamp tells taxpayers they have 'all the leverage' in stadium deal)
"Unfortunately, there are still more questions than answers about the complex financing scheme for a new stadium," the statement continued. "While I'm glad other elected officials are finally acknowledging the deal needs to be improved, taxpayers should demand clawbacks if developers don't deliver on their promises, a split of naming rights revenue and significant up front cash investment from the team owners and developers, including the cost of high-end and unnecessary features.
"Unlike Eversole, I live in the city of Chattanooga, where Shelby and my property taxes went up 30% soon after the current mayor was elected. Our intention in pursuing a better stadium deal was to avoid the same happening for county taxpayers."
In September 2021, city leaders approved a new property tax rate that generated $30 million to fund pay increases for public employees like police officers and firefighters. At the time, officials said, Chattanooga was losing workers and in danger of browning out fire stations and cutting back on essential services because it was struggling to compete with other employers. They set a new minimum wage for city employees of $15 per hour.
Kelly said in an interview Monday that municipalities aren't very good at selling and monetizing naming rights. Teams are typically more effective at accomplishing that. Many companies also don't negotiate naming rights with governments because they don't want to publicize how much they paid for them, officials said.
"We felt that was better off in the totality of negotiation letting them keep that," Kelly said.
Eversole said in phone calls Monday he wants Wamp to be involved in improving the deal, noting the new arrangement isn't intended to be the "end all be all" and officials are still refining minor details. Eversole said he wanted to expedite the process. It's been a year and a half since city and county leaders first approved initial plans for the project.
"If he wants to get political, that's OK," Eversole said. "If he wants to stay on the outside, that's OK. We hope he comes to the table and helps us with some of the smaller details of the project."
Wamp said the $112 million public price tag for the stadium rolled out Monday was misleading, saying it omitted $9 million in financed interest costs that should be disclosed.
"It's just another way these guys try to round this whole thing down," Wamp said by text.
Contact David Floyd at dfloyd@timesfreepress.com or 423-757-6249.
Contributed Rendering / A new rendering shows the planned Chattanooga Lookouts stadium in the South Broad District. Also shown are envisioned potential developments and the Riverwalk, which officials say will be the ballpark's "front door."