Chattanooga Times Free Press

Chattanooga City Council approves Southside stadium project

David Floyd

This story was updated at 9:30 p.m. with more information.

The Chattanooga City Council gave its unanimous OK on Tuesday for the construction of a $79.5 million stadium for the Chattanooga Lookouts at the former U.S Pipe/Wheland Foundry site in the South Broad District.

It's the final local body needed to approve the project, which city and county officials hope will spur up to $1 billion worth of development in that area and revitalize approximately 120 acres of long-blighted land at one of the city's most visible entrances.

"Tonight's vote on the stadium was a demonstration of your vision and a massive step forward for the future of this community," Chattanooga Mayor Tim Kelly told council members after the vote. "After decades of plans and studies and public meetings, transformation of Chattanooga's long-neglected western gateway will begin at long last, and together we will create a thriving community that will increase prosperity and quality of life in our city for generations to come."

Members of the Hamilton County Commission signed off on the proposal last week in an 8-1 vote. The City Council approved the project Tuesday with the addition of a resolution from Councilman Chip Henderson, of Lookout Valley, designed to boost transparency and oversight of the special tax district created to pay for the project.

(READ MORE: New Chattanooga Lookouts stadium proposed in South Broad District)

The council authorized staff to draw the 470-acre tax financing tax district around the property, which would have a 30-year lifespan and fund most of the cost of the stadium. Through a tool called tax increment financing, a portion of new property tax revenue generated by development in that zone would pay down debt issued for construction of the facility.

Beyond paying down the loan, proceeds from the tax district would also fund completion of the Alton Park Connector, a shared-use path stretching from Southside Community Park to the Wheland Foundry trailhead of the Tennessee Riverwalk.

Council members also OK'd the creation of a sports authority with a seven-member board of directors that would borrow the money for construction and ultimately own the stadium. Those members will serve a mixture of two- to six-year terms and include:

— Randy Smith, previous sports director at Local 3 News.

— Matt Patterson with the Brickyard accelerator.

— John Shearburn, managing director of Warburg Pincus.

— Local developer Mitch Patel.

— Rudolph Foster, a property owner in the South Broad Street area.

— Edna Varner, a senior adviser at the Public Education Foundation.

— Ann Weeks, South Broad Redevelopment Group's president emeritus.

(READ MORE: Tax district for proposed Chattanooga Lookouts stadium has grown to 470 acres)

Henderson's resolution will require the sports authority to report annually to the council on the amount of outstanding debt remaining on the stadium bonds. It also makes certain the council is notified once all debt coverage requirements are satisfied and if there's excess tax increment financing revenue available beyond what's needed to pay down the loan.

"Council can then decide, do we want to put that back in the general fund, or do we want to see it continue to be used in the district," Henderson said during an agenda review meeting Tuesday.

Perimeter Properties, the owner of the site, will donate approximately 8 acres for the new multiuse stadium, and Jim Irwin, president of New City LLC in Atlanta, would serve as the master developer for the project. Officials hope to finish construction in 2025, but they expect development will likely begin around the site before the facility is complete.

The $79.5 million cost of the stadium accounts for $72 million for construction and another $7.5 million for capitalized interest plus the cost of issuing the bonds. Over time, the bonds would cost about $135 million to repay, including interest, if they are not refinanced or paid down early.

(READ MORE: Chattanooga Lookouts stadium plan blasted as boondoggle)

Assuming developers invest at least $350 million in the district, new property tax revenue generated around the site would cover 58% of the project cost. An escalating $1 million annual lease paid by the Lookouts would account for another 22%.

The rest of the funding would come from state and local sales tax revenue generated in the new stadium (14%), parking revenues from events (2%) and $1.4 million apiece from the city and the county (4%), an amount that would be paid out over multiple years starting in fiscal year 2025. Funding provided by the city and county could be paid back with excess revenue generated by the tax district.

Officials have stressed that $350 million is a conservative estimate for the amount of development that could occur in the district.

Core Development in Nashville is planning an approximately $160 million project on 11 acres of land near the Wheland Foundry trailhead of the Tennessee Riverwalk. That development would consist of about 400-500 residential units and 12,000-20,000 square feet of commercial retail space.

During his remarks, Kelly also said the project would generate tens of millions of dollars in new money for schools over the next few decades and millions more in permanent tax revenue to invest in infrastructure and support workers across the city.

"This is about more than just increasing our tax base," he said. "This is about new housing, new commercial space for our small businesses, new living wage jobs and new public green spaces and trails. It's about creating a vibrant new district that will attract and retain talent in Chattanooga."

Through a pair of agreements approved Tuesday, the City Council also outlined expectations for binding contracts that would be entered into with the Chattanooga Lookouts and Perimeter Properties.

(READ MORE: Chattanooga Lookouts owner calls Wamp claims of extortion 'absurd')

Among other outcomes, the agreement with the Lookouts states that the team and the new sports authority will work with developers to maximize involvement by local and disadvantaged businesses during construction of the stadium and other associated development. They must also ensure there are "significant community benefits that accompany and flow from the construction and operation" of the facility.

Jermaine Freeman, senior adviser for economic development in the mayor's office, said the next big step for the project will be developing a community benefits agreement, which will rely heavily on resident input.

Kelly said developers and his staff will work with the community in the coming months to draft that document, which would preserve and create affordable housing, provide living wage jobs and ensure that as much of the stadium as possible is built by local contractors and local workers.

Council Vice Chairwoman Raquetta Dotley, of East Lake, who represents that part of the city, said the project will be a major boon to communities in Chattanooga that have historically seen little investment.

"The neighborhood is going to become alive," she told the Chattanooga Times Free Press. "It's going to become alive again, and you're going to see great investments there, and it's going to be for a diversity of people. It's not just for people of a certain income, but it's for everybody. That's what makes this even more exciting."

Contact David Floyd at or at 423-757-6249. Follow him on Twitter @flavid_doyd.