For the sake of clarity, transparency, and community, I want to address the redevelopment of portions of Northgate Mall that I am working on, which have been commented upon in news reports, editorial pages, and social media. Misunderstanding begets disappointment, and I want to make sure we are all on the same page. We stand on this beloved Chattanooga soil together, and when I build in this town, I do it as a fellow citizen, with the hopes of enhancing it with new amenities, experiences, and services. For example, I have been active in the Hixson market for quite some time, having developed up and down Highway 153, from medical and banking services at Winding Lane to various retail developments and redevelopments at Walmart, the former Kmart, and along the retail corridor near Northgate Mall, including a brand-new development currently being constructed at the former Firestone in front of the mall, bringing more food options to the area. In the future, I would like to continue branching out to do more.
One of those services I mentioned I would like to help provide to Chattanooga is a boost to this city’s education system, and as a developer, the best contribution I can make is by developing needed facilities. Fortunately, an opportunity has arisen in the course of my usual work to do just that. When I acquired the Firestone building, I was given the chance to also purchase the JCPenney portion of Northgate Mall, which I gladly took for future ventures. At the same time, Sears was going through bankruptcy and was looking for a buyer for their location at the mall. Since I had purchased both the Firestone property and the JCPenney property, owning the Sears property made logical sense for me, for the sake of a more integrated level of development.
Sears fielded more than three offers, but they valued our relationship, since I had worked with them when I purchased the former Kmart on Highway 153 from them to redevelop. They knew my track record of delivering, so when I put in an offer, they ultimately chose me and my team to sell to. I was intent on a number of redevelopment options more in line with the traditional work I do, but then I was made aware of the need by Hamilton County for new schools for both CSLA and a planned primary school consolidation. In fact, Hamilton County happened to be one of the other offers on the Sears property, but they came in last place in their bid, both in purchase price and time needed to sign a deal.
I cannot say that the other developers who had bid would not have worked with the county on a school development, but I can say that as a longtime local member of this community, who successfully raised three boys in public school here, I have every intention of building an even deeper relationship with this place I call home. That is why I have been moving forward with the county school board to find the best solution for their needs, while also making sure that me and my team are compensated fairly for the time, effort, and work we do to make sure this site is as build-ready and economical as possible upon sale to the county.
That’s the key thing: We want this to be feasible and realistic for the county. The facilities backlog is long and delayed, and CSLA is a prime example of how long it takes for a government-led effort to bear fruit. We initially wanted to do all the work to develop the school, which we are best suited to do, and we simply asked the county to pay for a lease, so that they could do what they were best suited to do: focus on the operation of the school. This offer was not approved, and a sale was preferred.
Even with that option taken, we wanted to do our best to get this development off on the right foot, because we did not want to see this project lost in another political quagmire, so we did all we could to establish the foundational work of ensuring autonomy from the mall, securing exclusive parking and green space for the school, and preparing the site, amongst other things. These legal, business, and engineering tasks have a cost, and performing these tasks has a value. The county would have needed to do the same and incur the same types of cost if they were on their own; our profit is just from doing this work for them, in a specialized and expedited manner, to set them up for success and make sure these schools do not stay theoretical, as they have for years.
This question of profit is where the problem seems to be with those who are upset. I understand. It is more than fair to ask what you get for what you pay, and hopefully, this is clearer now. The only “extra” cost the county is incurring here is the profit that we, the developer, make. However, in the grand scheme of the development, it is not a cost, as the county will ultimately be saving $15 million-$20 million on each building - both JCPenney and Sears - by taking advantage of the head start we have given them with this property. The site work, infrastructure, and shell alone are between $100-$130 per square foot, and there are about 339,000 square feet between the two buildings. You can do the math on the savings. Worrying about a dime when you save a dollar is like losing sight of the forest for the trees.
And remember this: our profit is exclusively from the Sears property. Should the county also want to purchase the JCPenney property for their primary school consolidation plan, that transaction would simply be break even for us - and we are happy with that. We want the best project for all stakeholders, not the best project for our wallets. If making the most money was our priority, you would be seeing more of the type of development that we traditionally do; any analysis of the market would show you that, and our record of work up and down this one stretch of road alone should be proof.
I have been here for a long time, and I have seen neighborhoods full of life, like the Brainerd of old, slowly erode over time as they are neglected with a lack of investment. I do not want Hixson to be one of those places because big business is leaving. We could chase more business, but it is time to invest in ourselves, and it is a civic responsibility to foster the community we aspire to be a part of. Nothing brings us together more than our children, and this next generation needs a home deserving of their respect. Let us build that for them, together.