Chattanooga council considers intent to pursue TIF-backed Northgate redevelopment; timelines and tax questions raised

The Chattanooga City Council on Oct. 14 debated a resolution expressing the council’s intent to consider an economic impact plan that would authorize tax increment financing for the Northgate redevelopment.

Councilman Davis said he would move to approve the resolution to allow the application to proceed to the Industrial Development Board’s (IDB) application review committee. “I do intend when that comes up for a vote to make a motion to approve that resolution,” Davis said, describing the vote as a step to continue review rather than final approval.

The council’s discussion focused on when construction would start, whether Hamilton County would participate, what taxes would fund reimbursement and how much the city might be obligated to reimburse. Sherry Down, senior advisor for economic development and workforce development for Chattanooga, told council members the project is anticipated to start Jan. 1, 2027. “It is anticipated … the project would start 01/01/2027,” Down said.

Council members asked whether county participation was required. Down said the project does not depend on county participation. She explained, “The way the city of Chattanooga TIF policies are written, the city cannot encumber county taxes. The county has to decide to participate through a resolution.” Councilman Henderson asked whether the project would still be viable without county participation; staff said that determination had not been made and that county participation would remove about $1,500,000 of projected increment from the district’s calculations.

Council members also pressed staff on the possibility of using sales tax rather than—or in addition to—property tax increments. Attorney Doppler (speaking as part of the city’s legal briefing) and staff said there is statutory authority to use non-ad valorem revenues in limited circumstances. Doppler referenced Tennessee Code § 7-53-315 and said the statute allows jurisdictions with a central business improvement district to utilize non–ad valorem revenues, including sales tax, for infrastructure in certain projects. He noted the law had been used in Memphis and more recently elsewhere in Tennessee.

Doppler said the IDB’s current proposal is conservative and that the suggested sales-tax component would be geographically tied to revenues generated in the Northgate area rather than drawing citywide sales tax. “It looks and smells like an increment, but it’s not,” he said, describing the draft approach of tying sales tax use to the area.

Council members sought specific dollar figures and time frames. Staff said the city’s share of the projected property tax increment is roughly $3,500,000; county participation was estimated at about $1,500,000. Councilman Henderson asked whether the city could be committed for 20 years up to $9,000,000; a staff member replied, “Correct.” Staff emphasized that the economic impact plan and later the development and financing agreement would specify the final terms and that those legal documents would return to council for approval.

Several council members said they would support advancing the application to the next step to allow the application review committee to examine the developer’s materials and draft economic impact plan. Councilwoman Burrows and Councilwoman Bryce both said they wanted more complete financial detail before the council’s final vote. Councilwoman Clark said she would vote to continue the process but pressed staff to supply more equity analysis and clarifications when the economic impact plan is returned to council.

Staff outlined the public schedule discussed in the meeting: an application review committee meeting proposed Oct. 20 to review the application and a draft economic impact plan; a public hearing proposed Nov. 3; and a final council vote currently anticipated Dec. 2. Staff also said the economic impact plan and supporting materials, including third-party financial reviews and counsel memos, would be provided to council members before the November public hearing.

No formal vote on the economic impact plan itself occurred during the Oct. 14 meeting; the item under consideration was the council’s intent to continue the review process and send the application to the IDB’s application review committee. If the council approves the subsequent economic impact plan and development and financing agreement in later meetings, those legal documents will set the specific reimbursement amounts, time frames and any conditions on development.

Next steps noted in the meeting include filling vacancies on the application review committee (three proposed appointees were on the agenda), the Oct. 20 application review committee meeting, a Nov. 3 public hearing and a Dec. 2 council vote on the final economic impact plan and any related agreements.

Ending: Council members said they want more detailed financial information, including the final structure of any sales-tax component, and urged staff to provide materials well in advance of the public hearing and final vote so members can review the proposed commitments and equity impacts.