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The city of East Ridge estimates that the addition of the Champy's restaurant coming to Ringgold Road will bring the city about $4.9 million in revenue over a 22-year period.

On Nov. 14, the East Ridge City Council voted unanimously to approve a border region district incentives package for the development that should help the developer break even on construction of the 267-seat restaurant. The chain's first eatery to be built from the ground up, it is expected to be a roughly $5.5 million investment and the biggest of the chain's nine locations in Tennessee, Georgia and Alabama.

Earlier this summer, developer and local franchise owner Seth Champion projected the cost to be around $3.5 million. As with many new developments, he said in a follow-up interview Nov. 15, associated costs have changed over time.

But since then, he's also nearly doubled the size of the restaurant and added a full-fledged drive-thru, the chain's first. Champion is constructing two kitchen lines, one for fast food service and the other for traditional full-service meals.

The site will be at 6515 Ringgold Road previously held a Shoney's and a fireworks store. Included in the cost to redevelop it are the property's purchase price, demolition of the old building, upgrading the grease trap, construction, renovation of the parking lot, and landscaping.

Champion estimates the restaurant will do $8.6 million in sales over a 22-year period, City Attorney Mark Litchford reported at the Nov. 14 meeting when recommending the incentive package to the council.

The city used Champion's projected earnings and the site's increase in property taxes to identify a break-even point for the developer through a border region district incentives package, which reimburses costs related to approved projects to entice new retail businesses.

The border region district designation is a "performance-based revenue generator," Litchford explained, meaning that a project's incentives are based on estimated new sales dollars. The city is granted 75% of the state's portion of the resultant increase in sales tax revenues, which it can then use to help the developer offset costs.

"Normally, that goes up to Nashville and gets dispersed throughout the state," Litchford said of the additional revenue. "In this case, for the next 22 years, the city is entitled to receive 75% of that amount."

The city estimates that in this case, that will amount to about $7.8 million.

Champion's incentive package also pulls from an increase in property taxes on the new Champy's property. He bought the property for about $1.5 million, and the city estimates an appraisal of $3.5 million once it's developed. The city anticipates this will mean around $412,000 in increased property taxes for the site over the 22-year period, Litchford said.

(Read more: Morgan Freeman spotted at Champy's in Chattanooga)

Litchford also said the city's local option sales tax of 1.125%, when applied to the restaurant's projected sales, will generate $96,750 per year, or $2.1 million over the 22-year period, another figure included in the deal.

The city's Industrial Development Board voted on a 30-70 split of the roughly $10.3 million total in new money associated with the project. The city will receive $4.9 million and Champion will earn $5.4 million, which should cover his construction costs.

There are two Champy's in Chattanooga, one downtown and one off Lee Highway. The Lee Highway location added about 80 seats over the original restaurant, and this one will be even bigger.

"That's 1.5% growth compared to Lee Highway," Litchford said of the East Ridge restaurant.

Email Sabrina Bodon at sbodon@timesfreepress.com.

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