Bass Pro Shop launched East Ridge's Border Region District
Big checks were just issued to developers who took part in East Ridge's Border Region District. Under a 2012 state law, the developers get a large rebate on sales tax collections in the District as an incentive to move their business there.
Exit One, LLC, which got the project off the ground by landing a Bass Pro Shop, received $2,897,899. The group includes John Healy and Matt and Ethan Wood of Wolftever development.
Southern Honda Powersports, the motorcycle shop long operated by now-Chattanooga Mayor Tim Kelly, got a check for $354,807. City officials said Mayor Kelly is not involved in management of any outside businesses at this time.
The Kelly motorcycle shop was moved from near Rossville to new facilities on Ringgold Road. The Kelly deal is at 90 percent rebate for the first six years, 80 percent for years 7-12, 70 percent for years 13-18 and 60 percent for years 19-22.
Pandora Motor Sports, which set up shop near the Kelly operation, got $130,345. Its deal is 65/35.
Each of the tax agreements was negotiated separately with business representatives dealing with the then-city manager, city attorney and city officials.
Mack Smith Properties was among those opting for a fixed annual payment ($30,000). It has the strip center that includes Firehouse Subs on Ringgold Road.
K3A Properties, that has the complex that includes Marco's Pizza, got $50,000.
Champys, the highly successful fried chicken restaurant, received a check for $220,897. Champys put up one of its ramshackle buildings across from the long-established Wally's Restaurant. Wally's was not able to participate unless the owner opted to increase the building by at least 30 percent.
Champys had a 70 percent arrangement.
A new Jack's restaurant netted a fixed $30,000 also.
Sterling Holdings (Red Wolves Soccer Stadium) received $37,649. The Red Wolves deal is at a 97 percent rebate. Much of its development is in the future.
Yogi’s Primo Promo had $17,357. It is at 60/40.
Other businesses that were recently launched in the District and not yet qualified for checks include:
East Ridge Wine & Spirits 50/50
Cork and Bottle 50.50
Food City 80/20
KAH Hospitality (Fairfield Inn 70/30
Dynamic East Ridge (Towne Place) 60/40
John Healy, of Exit One, commented, "Actually, the state of Tennessee’s check is the largest. They received over $4.2 million from the District last year alone…
"The city received $6.2 million of which they used $3.7 million to reimburse developers for their costs, per their respective agreements. I’m certain ours is currently the largest reimbursement as we entered into the first development agreement with the city back in 2014 and would assume far surpass others in costs.
"When the state of Tennessee certified the Border Region District in East Ridge in 2012, the District was generating about $90 million in annual sales. The law has been wildly successful and last year (FY2022) the District generated over $250 million in sales.
"Our project was the 'triggering event' per the law that allowed the money to begin to flow from the state to the city. Since, we have invested over $100 million in Jordan Crossing and the only way our project has been able to make it thus far is through the sales tax incentives we receive for reimbursements of our costs from the state. I can, without a doubt, say that not a single retailer would be in Jordan Crossing had the reimbursements not been available. The economics of our project simply do not work without them.
"Georgia is a formidable opponent just a mile down the road with significantly lower sales tax. Tennessee was wise to look at ways to compete in major markets that adjoin a state line where our neighbor with lower sales tax tantalize Volunteers to shop, yielding the state of Tennessee with no sales tax revenue!. The genius in the plan was, unlike many other states that have seen government unsuccessfully attempt to be developers to compete, Tennessee did it without taking on any risk to the taxpayers. The state allowed the local municipalities to put the burden of the risk on developers that they control through development agreements.
"As the developer, the risk is, without the sales tax, the project does not generate enough revenue to be sustainable. We have currently been reimbursed less than 10 percent of our costs, so we are not in the clear yet. You can bet we were very concerned when government was closing retailers for COVID. The reimbursements don’t come in until the state makes sure they get all their money they were getting before the law, then they share the new revenue keeping 41 percent and giving 59 percent to the city until the sooner of all the costs have been paid back or the law expires in 2047.
"The bright side of Jordan Crossing is it’s working. The state, city and county are all benefiting and we are getting reimbursements."
Mr. Healy said:
Last Year Alone:
The sales in the District increased from $90 million to $250 million
The state received over $4.2 million in new sales tax
The city received over $6.2 million in reimbursement money.
($3.75 million to developers and $2.45 million to the city)
Local Option Tax increased over $3.5 million
Property Tax increased over $575,000
Hotel/Motel Tax increased over $200,000.
That’s over $100 million in development generating over $14.5 million in new taxes a year.