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This story was updated Monday, Sept. 9, 2019, at 6:06 p.m. with more information.

A Chattanooga developer is proposing a multimillion-dollar mixed-use project on a nearly 9-acre manufacturing site across from the historic National Cemetery near downtown.

Jerri Price, lead designer for developer Southern Spear, said Monday that the project includes the adaptive reuse of the 50,000 square feet of space at the Lucey Boiler Co. location off South Holtzclaw Avenue.

She said about 26 townhomes would be constructed, and the developer is looking at commercial space that could include a distillery, brewery, grocery store, small retail and offices.

Southern Spear won a rezoning recommendation Monday for the project that would go on the longtime Lucey Boiler property, which sits at 901 S. Holtzclaw between East Main Street and Bailey Avenue.

The area off East Main Street between Central Avenue and Missionary Ridge is seeing a variety of new, mixed-use projects. Just last month, the Austin Hatcher Foundation broke ground to anchor the commercial part of a planned $40 million redevelopment of a former manufacturing site off Holtzclaw.

The Chattanooga-Hamilton County Regional Planning Commission agreed to rezone the Lucey Boiler tract from manufacturing to Urban General Commercial Zone with some conditions. The City Council is expected to take up the rezoning on Oct. 8.

Planning Commission member Chris Mabee noted that the cemetery sits across from the proposed new development.

"The National Cemetery is one of the most special places in the area," he said. "I'm excited to see a nice project. Keep that in mind."

Craig Troxler, president of Lucey Boiler, said the company is still operating but the land is under contract. He said Lucey Boiler, which has six employees, started in 1961 though the site has had a presence on it since 1906.

Troxler said Lucey Boiler could move to another location, but that's undecided.

Price said the aim of the development group is to create a destination location on the parcel that sits at the edge of Highland Park, which itself has few townhomes. Also, vintage rail cars could hold housing, she said.

"It would showcase the cemetery," Price said.

The Regional Planning Agency staff had recommended that some of the property be rezoned to a residential townhouse zone to assure compatibility with nearby existing residences.

John Bridger, who heads the RPA, said the aim was to try to ensure there was a transition from the project to the neighborhood.

Planning Commission member Barry Payne said that, currently, existing manufacturing is butting against residential.

"UGC is the transition," he said.

Also within the East Main corridor, up to 90 new apartments are planned in the revamping of a vacant 1920s textile factory in a $17 million project. The former Dixie Mercerizing Co. facility at 1101 S. Watkins St. traces its roots to the late Chattanooga businessman and Coca-Cola bottler John T. Lupton.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.

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