The state comptroller has given conditional approval for the financial plan for the Southside Stadium plan.
Jason Mumpower said key factors were a plan to use Tax Increment Financing funds as well as having the Chattanooga Lookouts pay at least $1 million per year toward the project.
It is planned at the Wheland/U.S. Pipe site.
The comptroller said in a letter to attorney G. Mark Mamantov, who is one of the legal counsel for the stadium bonds:
RE: Request by the Industrial Development Board of the City of Chattanooga and The Industrial Development Board of the County of Hamilton, Tennessee for Best Interest Determination Relating to Allocation Period for Proposed Tax Increment Incentive
Dear Mr. Mamantov: I received your request dated August 31, 2022, for a written determination that, pursuant to Tenn. Code Ann. § 9-23-104, the Economic Impact Plans for the South Broad District (the "Plans") are in the best interest of the State of Tennessee. On September 27, 2022, I received the requested follow-up documentation to complete my review.
Pursuant to Tenn. Code Ann. § 9-23-104, no allocation of tax increment revenues shall be made with respect to any property for a period of more than twenty (20) years in the case of an economic impact plan unless both the Commissioner of the Department of Economic and Community Development and the Comptroller of the Treasury find that the use of tax increment revenues for such purposes is in the best interest of the State of Tennessee.
As you know, Tenn. Code Ann.§ 9-23-102(3)(B) defines the standard by which these determinations must be made. It states the following: "Best interest of the state" for purposes of an extended plan term means an extended plan term or term extension is reasonably required for plan completion.
The Plans state that the Industrial Development Board of the City of Chattanooga and the Industrial Development Board of the County of Hamilton (the "IDBs") will remit tax increment revenues to the jointly created county-city sports authority (the “Sports Authority”) to pay debt service on the Sports Authority Bonds that will be used to finance the stadium project (the “Project”).
To the extent the tax increment revenues exceed the amount needed to pay debt service on the Sports Authority Bonds, the usage of such excess is governed by Tenn. Code Ann. § 9-23-103(a)(2) and other contractually imposed restrictions currently listed in the Plans, the Interlocal Cooperative Agreement (the “Agreement”) between the Sports Authority, the City of Chattanooga (the “City”) and Hamilton County (the “County”), and the City’s Resolution No. 31240.
The South Broad District plan area exhibits major elements of blight, including brownfield
components, and is in an area that serves as the primary gateway to the State of Tennessee for
visitors who are evaluating our State for business locations.
Tennessee law authorizes the use of
tax increment financing for redevelopment of blighted areas for periods of up to thirty (30) years
without requiring state approval; however, since the City and County, in this instance, are utilizing
the local IDBs that have more experience administering tax increment revenues, the 20-year
limitation applies. Evaluating the Plans in substance rather than merely in form, the length of the
tax increment allocation is entirely in line with the public policy of the Uniformity in Tax
Increment Financing Law of 2012, and in many respects, exceeds the quality of typical
redevelopment plans since state approval as well as 30-year level debt service are being sought.
In addition, the City commissioned Younger Associates and CSL International (the “Studies”) to
analyze the economic impact of the Project.
The Younger Associates projected the following
breakdown of property taxes over the 30-year period:
Total Property Taxes Designated to Hamilton County Debt Service: $ 11,903,164
Total Property Taxes Designated to Schools: $ 33,007,576
Total Property Taxes Designated to City of Chattanooga Debt Service: $ 18,360,048
Total Property Taxes Designated to TIF $ 77,899,612
Net Present Value of Taxes Designated to TIF: $ 42,861,308
Total Local Taxes Generated During 30-Year TIF Period: $ 128,562,851
Benefit/Cost Ratio (Rate of Taxes Designated to TIF to Local Taxes Generated from Operations
and Taxes Designated for Schools and Debt Service) 1.65
Based on my review of your letter, the Plans, the authorizing resolutions, the Agreement, and the
Studies, it appears that the extended plan term is reasonable and therefore, in the best interest of
the State of Tennessee; however, my determination is conditioned upon the ongoing fulfillment of
the following two requirements:
1. During any triggered 30-year period of tax increment collections as described in the Plans,
the usage of excess tax increment revenues will only be used for statutorily eligible
purposes with an emphasis on the prompt return of property tax revenues to the City and
County’s general funds, as required by Tenn. Code Ann. § 9-23-103(a)(2). Please include
this restriction in any future Bond Indenture.
2. The final contract between the Sports Authority and the baseball team will include an
unconditional commitment to make annual lease payments in the minimum amount of $1
million plus any negotiated annual adjustment for at least thirty (30) consecutive years, all
as initially represented in the Memorandum of Understanding between the City and
Chattanooga Professional Baseball, LLC. Please provide evidence of compliance with this
requirement by filing a copy of the final contract lease with my office.
Once I receive evidence of compliance with these two conditions, I will issue a final determination
letter. Please feel free to reach out to me with any questions in the meantime.