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Staff photo by C.B. Schmelter / Fans enjoy the game between the Chattanooga Lookouts and the Rocket City Trash Pandas at AT&T Field on Wednesday, May 5, 2021, in Chattanooga, Tenn. Chattanooga and Hamilton County want to build a new stadium for the Lookouts, but a proposal to use a state grant to help fund project has encountered opposition from members of the local legislative delegation.

NASHVILLE — Three state legislators from Hamilton County say they are agreeable to allowing local officials to use state sales tax revenues generated within a proposed new Chattanooga Lookouts baseball stadium to help fund the South Broad area project.

But Sens. Todd Gardenhire, R-Chattanooga, and Bo Watson, R-Hixson, as well as Rep. Patsy Hazlewood, R-Signal Mountain, continue to resist also supporting a $13.5 million state grant that Chattanooga and Hamilton County officials say is needed to make the project financially feasible.

"We're willing to let them collect the TIF inside the stadium, but that's it," Gardenhire told the Times Free Press on Tuesday during an interview in his legislative office.

TIF stands for tax increment financing, a mechanism that local governments can use to pay up front for projects by issuing bonds that are paid off by future tax revenues generated by the project.

Costs for the new stadium with the Lookouts as the primary user is pegged at $86.5 million, including a donation of some land at the proposed Wheland Foundry/U.S. Pipe site, figures show.

Chattanooga Mayor Tim Kelly's chief of staff, Joda Thongnopnua, said in a statement to the Times Free Press that officials will need to look at where delegation members' most recent statements leave the effort.

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Door open to sales tax sharing for Chattanooga Lookouts stadium

"We are grateful for the delegation's efforts to secure sales tax revenue for Chattanooga's South Broad revitalization project, and we are evaluating the continued viability of the project given the requests that currently remain unfunded," Thongnopnua said.

Local officials originally sought the $13.5 million in state contribution toward the stadium project itself. There was also a $7 million request to the state for environmental clean-up.

In addition, the proposal called for the use of state and local sales tax revenue totaling $15.6 million, incremental property tax revenue of $19.4 million from anticipated adjoining development and nonproperty tax revenue from the city and county of $8.4 million in a 50/50 split.

Meanwhile, private money includes lease payments by the minor league baseball team of $19.6 million and $10 million in contributed foundry land. City and county officials have said the stadium project is transformational to the 141-acre foundry site, which now sits mostly vacant and rundown, and the South Broad District as a whole.

Gardenhire pointed to Knoxville, where multi-millionaire Randy Boyd, a former state economic and community commissioner, previously came to the legislature for a grant to help him build a new minor league baseball stadium for his team.

Boyd is also building an associated retail and residential development as Lookouts owners envision doing in Chattanooga. Boyd won approval for the project. Lookouts officials sought to get in on the deal, but Gardenhire and Senate Finance Committee chair Watson opposed it.

"If the Lookouts want to do a bond or a loan, they can pay it off with revenue from inside the stadium," said Gardenhire, who earlier this month slapped his Lookouts stadium funding bill with a negative recommendation. "The difference is, in Knoxville, Randy Boyd put up a lot of money for cash. And here, we have not seen any cash put up by individual investors."

 

Nashville deal

Watson weighed in following Tuesday's Senate Finance Committee meeting, where Gov. Bill Lee's administration unveiled the governor's proposed budget revisions to state lawmakers.

Among Lee's proposed changes is a recommendation to include a half-billion dollars in state bonds to help Tennessee Titans owners pay for a new football stadium.

"If you look at the way we fund those kind of projects, if we do fund anything around the stadium, it will be with that model where we allow the tax to be taken from within the Lookout stadium and then we do a grant for the area around it; we don't give them tax revenue around it," Watson told the Times Free Press when asked about the Lookouts in the context of what the Lee administration is seeking for the Titans. "That's still part of the conversation, the budget isn't finished, this is the governor's amendment proposal."

State participation in the Titans' new stadium rests on inclusion of a covered-roof stadium design that officials hope will make Nashville a contender for hosting Super Bowls, Final Four games and other events, Finance Commissioner Butch Eley told Senate Finance Committee members.

That's not all: Lee is also asking state lawmakers to provide another $17 million to renovate the Nashville Fairgrounds Speedway. The hope there is that will press the accelerator on an agreement in principle struck by Nashville Mayor John Cooper and the Bristol Motor Speedway to revamp the city's ancient race track and restore NASCAR Cup Series racing there.

The Titans would also be putting money into the project.

Senate Majority Leader Jack Johnson, R-Franklin, raised concerns about the Titans proposal, noting no one knows exactly what type of new facility the Titans would be building nor the amount of sales tax revenue it would generate.

Noting the state proposal calls for issuing bonds, Johnson told Eley the state would be paying about $55 million annually or probably less.

"But I view that at first blush as very possibly costing us money, meaning that we are ultimately subsidizing that," Johnson told Eley. "I know we don't know, there are a lot of assumptions laying here, but in order for me to ... contemplate this, we need to have an idea of revenue collections and expectations on what that debt service is going to be."

Eley said the general obligation bonds have the full support of the state.

"I think that's the important thing we wanted to demonstrate in this budget about being able to put the amount of debt service aside. As you point out, that's a very very conservative number because the cost of the interest on bonding would be much less than 6%."

He said it would ultimately be much less, in the $20 million range.

But he said a new stadium in a new location would be an opportunity to have much more mixed uses while also raising additional funding to cover the debt. The economic impact of the events go beyond the boundaries of the stadium and parking lot, Eley added.

"We feel the overall economic benefit to the state is far more beneficial to the state to have this covered stadium than not," he added.

During the meeting, Watson told Eley the cost of the Titans' stadium and state contribution caught members by surprise.

"We understand things change. But we could have had these discussions last year," Watson said.

With regards to the Lookouts, House Finance Committee chair Hazlewood, who also is chair of the local legislative delegation, said she can't speak for the entire delegation on the Lookouts proposal because discussions continue.

But Hazlewood, who spoke to the Times Free Press after a meeting of her committee, said she agreed with Gardenhire, who previously noted the city and the Lookouts project are already going to benefit from a $35 million interstate interchange the state is building in the area.

"We've already given with the interchange there, which we were told would allow the development, " Hazlewood said after the House Finance Committee adjourned. "There wasn't an asterisk that, well then, we'll need some more state money, too."

Meanwhile, Rep. Esther Helton, R-East Ridge, has submitted a budget amendment that seeks $13 million in state appropriations. But it's not for the Lookouts. Helton, an East Ridge City Council member, is asking for the money to assist Chattanooga Red Wolves soccer club owner and developer Bob Martino.

Martino built the $6 million soccer stadium without state aid. But he now wants government support for costs to provide public infrastructure such as sewer and water for his planned $200 million project with new housing and commercial space.

Gardenhire said he planned to introduce a similar Senate amendment to the appropriations act.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.

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