Chattanooga is seeking more than $725,000 in state funds to defray costs related to a downtown riverfront tract the city's new waterfront plan counts as key to helping woo more people to the area.
Also, without the help, the city's nonprofit redevelopment group River City Co. could owe the state nearly $1 million, an official said.
Chattanooga Mayor Tim Kelly said in a letter to Gov. Bill Lee last month that the money would help pay the Tennessee Department of Transportation for easements on what is a parking lot and eventually cause the high-profile parcel to be put to "its highest and best use."
But state Sen. Todd Gardenhire, R-Chattanooga, said in a telephone interview that there's already limited parking in the waterfront area.
He said that to take the lot at Riverfront Parkway and Power Alley and potentially turn it over to a developer for building something like condominiums would be "a disservice to the tourist industry in town."
The city's new waterfront plan unveiled last summer, which envisions the biggest riverfront makeover in nearly two decades, points to possible multi-story buildings raised on the parking lot.
Darren Meyer of the planning firm MKSK, which conducted work on the plan for River City Co., said during its reveal last year that the site creates an opportunity for mixed-use affordable housing with commercial space on the ground floor, including for minority-owned businesses.
According to the mayor's letter, TDOT has an appraisal on the easements valued at about $1.45 million.
Emily Mack, president and chief executive of River City Co., said in an interview that the easements which run through the middle of the lot and take up a big chunk of the tract date back two decades.
When Chattanooga's then-mayor, Bob Corker, negotiated with the state over obtaining Riverfront Parkway, a provision was included that provided the easements, which are on what was left of old State Highway 58, she said.
Mack said there also was a deed restriction that the property be owned by a public entity or serve a public purpose because federal money was included in construction of Highway 58.
The property ended up split in three pieces owned by the city, the city-run Chattanooga Downtown Redevelopment Corp. and River City, and the site was turned into parking, she said.
But after Corker left office and there were changes in city and River City personnel over the years, the deed restriction on the lot didn't get passed down, Mack said. While CARTA had been collecting parking revenue from the site, River City began to garner its share of parking money for its use, she said.
In 2018, the restriction was brought to light and the city made River City aware of it, Mack said.
"As we thought about the future and the potential opportunity for the lot, it presented a challenge to its future development," she said.
Mack, who joined River City as CEO in mid-2o2o, said that during the public comment on the crafting of the new waterfront plan, people said they wanted more chances to live, socialize and dine downtown.
She said mixed-use development with potential retail on the bottom floor and residential above at a number of different price points is envisioned for the site. Also, if it's developed, parking should be incorporated in the project, Mack said.
But another issue for River City related to the property is that it would need to repay about $249,000 in net parking revenue it has collected over the years, Mack said. Also, River City's share of the easement cost alone would amount to more than $710,000, Mack said.
So without state help, River City could have to pay a total of about $960,000 to the state, Mack said.
"That's a lot for a nonprofit," she said.
Mack said the nonprofit has funds in savings, but the sizable figure is why it's seeking the state's help.
"It's not something we take lightly," she said.
Mack added that River City doesn't have any proposal for the redevelopment of the lot at this time, noting it hasn't even sought a request from developers yet.
Gardenhire said that while the issue goes back before existing River City leadership and the mayor, TDOT still needs to be paid.
Also, Gardenhire said, if the property is eventually sold and developed by a builder, there should be a claw-back provision "to where if a profit is made, if that developer flips it in a couple of years to make a ton of money, the state is made whole on the original amount of money."
State Sen. Bo Watson, R-Hixson, said by phone that the issue related to the mayor's request to the governor merits more study.
"We were made aware that there was an interest in that piece of property that I think TDOT has rights to," he said. "We've had a little bit of discussion on that with the River City group and the administration but not a lot. So that didn't catch us too much by surprise. We're just not sure where we're going to move on that one."
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.
Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.