An economic plan to renovate Northgate Mall got the official OK from Chattanooga officials Tuesday after months of review.
Hoping to spark redevelopment and curtail major property value dips, the mall’s owner, CBL Properties, asked city officials in October to help reimburse the cost of a utility renovation. The plan uses new property taxes generated in the area as a means to pay the multimillion-dollar price tag for water, sewer and stormwater upgrades.
CBL will shoulder the up-front costs and privately finance the project, according to the plans. Then the city will repay CBL over time with a portion of tax revenue generated by the mall and some of the surrounding area, with a goal to eventually pay back $8.7 million. The agreement will stay in place for up to 20 years.
The Chattanooga City Council vote on the initial economic impact plan passed unanimously, though there are still several hurdles to clear before the finances of the proposal are concrete.
The mall was constructed in 1968 with a private sewer system. Over the past two years, CBL has invested almost a million dollars to repair sinkholes, stormwater pipes and wastewater lines to ensure service for business owners in the area that rely on the private system, according to Jon Meshel, CBL’s senior vice president for redevelopment.
Over the past couple months, officials at CBL have told the city that without the upgrades, the company’s options to revitalize the area are slim to none.
The proposal has been a subject of debate among City Council members, with several voicing concerns about ensuring the use of the land after the utility renovations is best for the Hixson area. The council still has to approve a development plan, which would outline specific work to be done at the mall.
Council Chair Jenny Hill of North Chattanooga is nervous that the agreement will be different from similar tax reimbursement plans, she said during the meeting, because it’s solely focused on infrastructure.
(READ MORE: Northgate Mall ‘not sustainable’ in current form, owner says)
Past agreements the city has entered into have involved pushing reimbursement money to fresh development, allowing the city some legal control over what that development would eventually become. The Northgate Mall plans only involve new infrastructure. CBL is not tied to a vision for what the property will be used for after the sewer system is revamped.
“To me, I see a different level of risk because we don’t know what’s coming out of the ground,” Hill said.
Hill said she will be interested in what kind of language the city can use in the development plan to assure future use of the land will be in Hixson’s best interest. The City Council will have to vote to approve that plan, likely some time in January.
Residents during public meetings have expressed hopes for the property to become a community asset again after declines in its usage. The approved economic development plan emphasized a need for housing and businesses in the area after the upgrades are complete.
“The project would facilitate the redevelopment of approximately 71.43 acres … into a vibrant mixed use development,” the plans say.
Hamilton County originally was supposed to contribute to the plans, too, and reimburse property taxes it also collects from the mall, but the county opted out in early November.
County leaders did not have time to get an overview of the project, said Charita Allen, the city’s senior adviser for economic and workforce development. She takes responsibility for the lack of communication, Allen said at the time. The county would have contributed about $1.5 million in property tax revenue over a 20-year period for the improvements.
Contact city and county reporter Siena Duncan at sduncan@timesfreepress.com or 423-757-6354.