Staff photo by Troy Stolt / Hamilton County Mayor Jim Coppinger, left, and Chattanooga Mayor Andy Berke cut the ribbon during a ceremony opening the M.L. King Boulevard extension from Riverfront Parkway to the Tennessee River.

Chattanooga Mayor Andy Berke said Tuesday that the extension of M.L. King Boulevard to the Tennessee River exceeded his hopes and shows that the funding mechanism on the project worked.

"There are appropriate moments to use this," said Berke about tax increment financing, adding that he hoped the city would use it in the future.

He said the mechanism, dubbed a TIF, enabled a project that would have been otherwise difficult to undertake but with "high value to the city."

"We were hoping for an extension that highlighted that view from the top of Cameron Hill down to the river," Berke said. "It gives one of the best views in our city to people living in public housing in that area."

Under a TIF, developers spend the money for a project up front, then are paid back with interest over a period out of additional tax revenues generated by the development.

The city approved an economic impact plan for the M.L. King extension from Riverfront Parkway to the Riverwalk's Blue Goose Hollow Trailhead. That permitted the city to work up the $3.5 million TIF agreement with Evergreen Real Estate to finance the road work.

The Nashville firm has developed most of the Cameron Harbor housing and commercial space. The latest phase, including 180 additional apartments near the road's extension, is estimated at $50 million.

While Berke touted the TIF, Accountability for Taxpayer Money founder Helen Burns Sharp said the extension is "a good project but that tax increment financing was a bad way to finance it."

She said that funding for the street work could have come from city and Hamilton County hotel/motel tax revenues or other sources.

"Using a TIF increased the cost of the project," she said. "One-third of the funds were earmarked for soft/administrative costs rather than the actual street project."

Berke said the extension has created "tremendous value" for the city. He cited the recent $13 million sale of an office building at Riverfront Parkway and M.L. King Boulevard.

"Using a TIF, this allowed the use of the investment by a private entity to fund public infrastructure," he said. "All the money from the TIF goes to a project that can be used by everyone."

Jimmy White, whose group is redeveloping the huge former Alstom manufacturing site on the south side of the M.L. King extension, has said he's in talks with developers about the construction of new single-family homes and condominiums on the Cameron Harbor side of the tract.

Also, his group is pre-leasing space for a planned eight-story office building off West Main Street, which they're looking to extend to the river.

Berke said that, putting the idea of a TIF aside, Main needs to be a public street to the river.

"Right now, it's owned by the Alstom developers," he said. "It would be better if that were owned by the public. Once again, what's the best mechanism to make that happen? I don't know at the moment, but I feel confident it would again provide high value to the city and the developers."

The city, meanwhile, is spending about $1 million to create an enhanced five-block connector at West 26th Street for pedestrians and cyclists to better link Howard School and Broad Street. That work ends near the edge of the U.S. Pipe/Wheland Foundry site.

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Ceremony opening at Blue Goose Hollow development

The 26th Street work is providing a full makeover, offering a 12-foot sidewalk on one side of the road along with landscaping, lighting and other perks.

Mike Mallen, part of the foundry ownership group, said his 141-acre parcel already qualifies for brownfield tax increment financing, a tool that could be used to help spur development in the area by bolstering infrastructure.

"Under the state statute, brownfield sites in a blighted area would be right in the bulls-eye of what tax increment financing is intended to assist in doing — to repurpose an idle former industrial site," he said.

Mallen said that the South Broad District Plan adopted by the City Council in 2018 specifically calls for a TIF.

The plan foresees an array of new housing along with commercial and retail space, upgraded parks, streets, sidewalks and other infrastructure, including a new minor league ballpark and entertainment facility to serve as a catalyst for development.

"We want something really to be transformational there," Mallen said.

Berke said the M.L. King extension enhances the tax base around it.

"Obviously, it's good for the developer," he said. "It has a beautiful public road which is a good thing to enhance the value of the project. [The road] also is owned by the public, open to everyone and creates long-term gain."

Berke said the city is oriented around the river.

"By taking advantage of this moment and extending M.L. King to the river, we can make an area that was once little-used into a new vibrant part of the city," he said.

Sharp said that a TIF can be a valuable economic development tool if it is used to incentivize work in areas where new development is otherwise unlikely to happen.

"The downtown riverfront is prime property where development is already happening," she said. Also, Sharp said, the area is benefiting from being in an opportunity zone — in which developers see a temporary reduction or deferral in their federal income tax bill if they reinvest capital gains in the area.

She said the city "needs TIFs in our economic development toolbox. But we need to use the tool judiciously."

Contact Mike Pare at Follow him on Twitter @MikePareTFP.