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Staff photo by Mike Pare / The former East Ridge Motors site on Ringgold Road will become the new home of a Southern Honda Powersports.

Chattanooga businessman Tim Kelly is moving ahead with a $10 million project in East Ridge to house his Southern Honda Powersports dealership.

The new location on Ringgold Road not far from Interstate-75 will make it easier for customers than the current Workman Road site in Chattanooga, said Kelly.

"We're very excited about it," said Kelly. "It should allow us to have a much more retail friendly location."

Kelly has put his longtime Workman Road facility up for sale. He calls that 100,000-square-foot location the nation's largest such Honda store, which sells all-terrain vehicles, side-by-sides, motorcycles, dirt bikes and other equipment.

The new site at the former East Ridge Motors auto dealership at 5330 Ringgold Road won't be as large at 73,000 square feet, but with just-in-time delivery he doesn't need as much inventory, Kelly said. He said the new retail store will earn Honda's "level five powerhouse" designation and permit the facility to be automatically refilled.

Kelly, who also owns the Kelly Subaru auto dealership in downtown Chattanooga, said the Border Region Retail Development District state sales tax incentive is a big reason he's building in East Ridge. The district allows the city to recapture the growth in sales tax collections within the zone and then plow those funds back into repaying investments in the area.

Kelly, who recently announced he's running for mayor of Chattanooga, said he had to do "what's right for the business," citing the incentive and the new store's proximity to I-75. He said that Hamilton County still receives its share of school taxes in the deal.

Also, Kelly said, while Southern Honda Powersports has been on Workman Road for about 17 years, that part of Chattanooga off Rossville Boulevard needs help.

"If I do get elected mayor, one my priorities is to develop neglected neighborhoods like that one," he said.

Kelly said that work on the new location is expected to start next month and open within a year. He said he also bought the property next door that formerly held a buffet-style restaurant, but that tract is not in the border zone.

Last year, Bob Martino, the owner of the Chattanooga Red Wolves soccer team, won similar incentives in East Ridge for a 5,500-seat stadium. His complex is to include restaurants, apartments, hotels, condominiums and stores in an estimated $125 million project at Interstate 75 and Interstate 24.

Entertainment venue Top Golf and Bass Pro Shops also have landed in the district along with eateries and a hotel.

John Sweet, an affiliate broker for Herman Walldorf Commercial Real Estate, said the Workman Road parcel would meet the needs of a number of potential buyers. He said 60,000 square feet of the building is heated and cooled.

He cited manufacturing, warehousing, and distribution as possible uses for the property that's on 13.8 acres and has a $3.35 million sales price.

Sweet said that while the building is technically in a flood plain, Kelly never had any water in the building.

Kelly said that because the area is in a flood zone, the costs for insurance and storage of thousands of units was about $200,000 annually.

The Chattanooga businessman said he's "pretty sure" that Southern Honda Powersports is tops nationwide among Honda dealerships by sales volume. He said the store offers a one-price model and doesn't charge fees. Also, Kelly said that while most of the store's business is from Tennessee and Georgia, the site is about a day's drive from much of the country.

"The store has enjoyed huge success in spite of a less than optimal site," he said. "The new store's location will encourage even more customers to visit from throughout the region. This dealership will be designed specifically and exclusively for Honda Powersports. We're looking forward to bringing even more joy to Honda customers."

Phil Harris, Southern Honda's chief financial officer, said the project has been in the works for the last 24 months. He, too, said the new location's proximity to the interstate is good for regional customers.

Contact Mike Pare at mpare@timesfreepress.com. Follow him on Twitter @MikePareTFP.

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