Will the new Bass Pro Shop help turn the fortunes of East Ridge?

Will the new Bass Pro Shop help turn the fortunes of East Ridge?

February 7th, 2016 by Alex Green in Local Regional News

Construction continues on the new Bass Pro Shops site on Camp Jordan Parkway on Thursday, Feb. 4, 2016, in East Ridge, Tenn. The $25 million development is part of a 50-acre Jordan Crossing retail development.

Photo by Doug Strickland /Times Free Press.

Gallery: Will the new Bass Pro Shop help turn the fortunes of East Ridge?

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Hope is often served with a side of doubt in East Ridge.

Over the years, flea markets have replaced big-box stores and purchasing a new pair of pants has become a punchline — even in a town where the average household income is $36,000.

This is a city of bad breaks, where, in recent years, there's been a revolving door of city administrators. Where "if only" is a recurring theme.

A debate is raging in East Ridge, however, about whether the city is entering a new era.

Driving the discussion is the construction of an 85,000-square-foot, $25 million Bass Pro Shops Outdoor World off Exit 1 in the city, on a larger tract of land owned by a trio of Chattanooga businessmen who say they're going to build a 50-acre retail and commercial development they hope will change the city.

Developers of the project, John Healy and Matt and Ethan Wood, dream of a commercial compound off of busy Interstate 75 in East Ridge, a place where families stop and stay and shop during Little League soccer and softball tournaments held at Camp Jordan Park.

They see glowing hotel lights, and money — enough money to go around, so that everyone, including East Ridge, gets a hefty share.

East Ridge has already committed more than $7 million of city money to prepare a site and the road to it as well as help pay for part of the construction of the new Bass Pro Shops. The developers have committed four times that — but both parties expect to recoup their costs, and more, over the long term through the Border Region Retail Tourism Development District Act of 2011, designed to encourage development on the Tennessee side of border towns.

The border zones offered unprecedented tax incentives for three Tennessee cities and their developers before the state quit taking more applications in 2012.

The new East Ridge Bass Pro Shops is scheduled to open this summer. And plans for the larger development, called Jordan Crossing, eventually call for a hotel — maybe two — as well as another large footprint retailer and a number of smaller shops and restaurants off Exit 1.

Still, many in the city aren't buying in yet, and they won't, until the doors of the first store opens.

Because this is still East Ridge.

It's just unclear which East Ridge — the one where hope is rewarded, or the one where hope is met with disappointment.

 

About 10 years ago, prior to being elected mayor of East Ridge, Brent Lambert attended a local East Ridge Chamber of Commerce meeting, and heard something that sticks with him to this day.

"There was an item on the agenda that was a discussion of economic development," Lambert said, "and I remember the president as he got to that point on the agenda, said very curtly, 'Well, there's not much to speak of,' and moved on."

He said it was a shock.

"But I think there was some truth in that," Lambert said.

Lambert was elected mayor of East Ridge in 2010, and sticks close to a platform of economic reformation and growth. He said despite being Hamilton County's second-largest city by population and at one time having a diverse and healthy local economy, East Ridge in recent years had hit a wall.

"I think, in a lot of ways, the city's outlook may not have been terribly rosy prior to the border region, and some of the things that have happened," he said. "Certainly, it was far more limited than what that outlook is today."

Lambert has been a strong proponent of utilizing the border region legislation in East Ridge.

He, and others, have faced criticism for it, namely for voting to give $5 million of city money toward construction of Bass Pro Shops, spending $1.8 million on Camp Jordan Parkway improvements and spending $600,000 to pay off a piece of property formerly occupied by a city fire hall so the parcel could be sold to Jordan Crossing's developers.

Lambert said the city is in a good position, though. He contends costs associated with border region development will come back to the city over the course of the next 30 years under the border region act and that the monetary commitments so far have been investments in the city's future.

But not everyone is so positive about the border region program — or the use of state sales tax dollars for private development.

"You might not notice that it directly affects your local taxes, but it does," said Mark Cunningham, director of marketing and communication at the Beacon Center of Tennessee, a Nashville-based think tank. "It affects every single person in the state."

Cunningham said the use of public sales tax money to incentivize private companies in Tennessee is corporate welfare.

"It's not an incentive as much as it's just a handout," he said.

He also believes residents in nonborder region cities are burdened because of the program.

"It's completely unfair when you look at it. Somebody who lives in West Tennessee doesn't get any benefits from these tax breaks going to these businesses, but they're still paying for it," he said.

Tennessee has not traditionally used state sales tax money to incentivize retail development, and Cunningham said the state depends on its sales tax for critical public infrastructure like roads.

He also said the program is unfair to existing, and small, companies that may have been doing business for years in a city like East Ridge, but who are ineligible for tax incentives under the border region program, which provides cost reimbursements for new development.

Cunningham doesn't believe the argument that a program like the border region act is responsible for getting a retailer like Bass Pro Shops to locate in a city, and that without the tax incentives, it wouldn't have happened.

"It's a made-up argument, because you cannot say you would not have gotten that business otherwise," he said. "Let's be honest, Tennessee has a great tax structure. We're a place businesses want to come, and you can't prove it that they won't."

There have also been East Ridge residents who question the city's use of local money since the introduction of the border region program. Frances Pope, a longtime resident and political hawk, has been a steadfast voice of concern in the city's spending on the Exit 1 development.

"People are afraid to speak out, because if you stand against Bass Pro, you're standing against the future of East Ridge in many people's eyes," she said.

Pope said she worries about the perception that the border region is akin to "having a forest of money trees — which is not going to happen" because of the increased costs of public infrastructure, like fire, water and police in the developing retail park.

Things looked bleak for East Ridge, when in the years after the Great Recession, along came Healy and the Wood brothers with a dream: to make East Ridge's Exit 1 a destination. The three men, friends from high school, saw potential at the flood-prone and forested exit.

Healy, a Realtor in Chattanooga and spokesman for the trio, recalled driving his children to soccer games at Camp Jordan Park and imagining what could be. He saw lodging, dining and shopping opportunities. And a 100,000-plus daily traffic count on Interstate 75 near the Tennessee-Georgia line, right in Camp Jordan's back door.

In 2010, prior to the border region legislation's passing, Healy and the Wood brothers bought a tract of land off Exit 1 in East Ridge with intentions of someday developing it. Then came the border region legislation, created by officials in northeast Tennessee. It was seen by East Ridge officials at the time — City Attorney John Anderson in particular — as a potential solution to the city's growth woes.

Healy said East Ridge officials approached him and the Wood brothers about pushing for border region designation. A key requirement, however, would be a "triggering event," essentially a commitment from a major retailer that could draw a million visitors a year and do at least $2 million in state sales tax annually to build in the region. It also would require a commitment from builders to invest at least $20 million in a site and building.

Healy and the Wood brothers targeted the golden goose: Bass Pro Shops, the same retailer Bristol, Tenn., landed as its first major border region tenant.

Wolftever Development, Healy and the Woods' company, is small, and local.

And "we didn't know financially how we were going to develop it," Healy said.

Healy said they were able to strike the deal with Bass Pro Shops, but it required a commitment from Wolftever to take on millions in debt — four times the debt the city has taken on to build Bass Pro Shops.

He estimates the Bass Pro Shops project, site work and all, is a roughly $30 million project. The entire 50-acre Jordan Crossing project will be a $75 million to $100 million project, he said.

Healy said Wolftever's owners feel confident the incentive program, which promises to pay back all costs of development in the border region over the next 30 years, made for a calculated risk with some built-in safeguards.

But "there's no guarantee on anyone's behalf," he said. "This is not free money."

He knows there are critics of his company's deal with the city to receive state sales tax money, particularly since he successfully negotiated one of the best deals for a developer among the three border zone projects. In East Ridge, Wolftever Development is guaranteed the first $412,000 of state sales tax returns from border region sales before the city gets anything, until it gets a guaranteed $10 million to recuperate its development costs as long as there are annual sales tax increases.

The developers also get 100 percent of sales tax increases from properties in which any one of them is at least a 51-percent stakeholder, until all development costs for the property are recuperated.

Local option sales taxes, levied at the local level, are unaffected and go to the city as normal.

But Healy said there have been plenty of sleepless nights, because if something goes wrong — if the project collapses or if enough sales tax is not generated to produce reimbursements — he and his partners could be saddled with a multimillion-dollar quagmire.

"At the end of the day, that's part of the risk," he said.

Healy also said "if this legislation did not exist, Bass Pro would not be here, period."

"We're playing a small part in what we hope is the resurgence of East Ridge. This legislation has the potential to completely change that city."

Days before the start of the 2015 high school football season, East Ridge High School's football stadium was labeled a safety hazard, condemned and closed for good — the end of an era.

The football team then went on to post the first undefeated regular season in school history.

Maybe that's where East Ridge is as a city right now, Lambert said.

"I think it symbolized where East Ridge had been reaching a point of stagnation," he said. "Obviously, it wasn't a good thing to have had that happen with the stadium. But one thing that happened, the football team doing what it did, it has helped to bring together generations of East Ridge people, who are unified."

At the end of the year, the city received its first border region reimbursement, a check from the state for nearly $800,000. Sales taxes grew around 30 percent between 2012 and 2014, according to city documents.

Lambert said Bass Pro Shops is slated to open in mid- to late June of this year. He believes when the doors do open, some of the hope holdouts will come around. Maybe, Lambert said, the city's luck is changing.

And that condemned football stadium?

"You reach that point where you've got to tear down the old in order to move forward with the new," Lambert said.

And June is just around the corner.

Contact staff writer Alex Green at agreen@timesfreepress.com or 423-757-6480.


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