IDB accepts Northgate Mall TIF application; staff, developer and counsel outline next legal and review steps

The Industrial Development Board of the City of Chattanooga voted to accept an application from Hixson Mall LLC and BI Developments LLC for a developer‑backed tax increment financing (TIF) plan to support redevelopment of the Northgate Mall site and authorized submission of the application to the Chattanooga City Council and Hamilton County Commission.

The board acted after a staff presentation from Sherita Allen, senior advisor for economic and workforce development, and remarks from developer CBL Properties and outside counsel. The board also set an application‑review committee meeting for Oct. 20 and appointed two IDB representatives to that committee; the city must receive an independent third‑party review and a finalized legal opinion before the IDB reviews the draft Economic Impact Plan (EIP) on Nov. 3, staff said.

Why it matters: The proposal would replace a privately owned sewer and stormwater system that now serves the mall and adjacent properties with public infrastructure built to city and Hixson Utility District standards. The developer proposes to finance construction up front and to be reimbursed from future property‑tax increment and an incremental portion of local option sales taxes tied to the redevelopment, according to public comment and staff materials. The choice to use sales tax revenue — and the legal authority for that approach — was flagged repeatedly as a question that requires a formal legal opinion and documentation.

Staff presentation and scope Sherita Allen told the board the application seeks a 20‑year allocation period and is primarily an infrastructure‑focused TIF intended to enable private redevelopment (mixed‑use, multifamily, office and other uses) by replacing an aging private sewer and stormwater system. Allen said the proposed scope includes replacement of a private sewer that currently carries public stormwater into private infrastructure and noted that new sewer and stormwater systems would be dedicated to the city and to the Hixson Utility District after completion. Allen said the city and the utility district did not have planned capital budgets to replace these lines in the next three to five years.

Developer pitch and scale A CBL Properties representative identified in the meeting as John Michelle said CBL would finance the improvements and assume 100% of the upfront financial risk; reimbursement would come from new real‑estate tax and a capped portion of local sales tax generated by retailers opening on the former Sears parcel. CBL told the board it had invested tens of millions of dollars in and around the mall since purchasing it in 2011 and said the mall campus now serves about 12 adjacent parcels and nearly 20 businesses that would benefit from public infrastructure. The developer cited a drop in campus real‑estate taxes from roughly $1.1 million in 2017 to about $575,000 in 2024 and said redevelopment without public‑private partnership was not viable.

Legal and financial review Betsy Notts Knox, outside counsel with Bass, Berry & Sims, told the board the city’s legal team has drafted an opinion relying on a statutory provision cited in the meeting as §7‑53‑315 that counsel says allows IDBs to use certain non‑ad valorem revenue sources, including local option sales tax increments, for public infrastructure in jurisdictions that have relevant enabling provisions. Knox said the draft opinion is not yet finalized and will be provided to the board. She also said the city has engaged an outside financial reviewer (the city’s TIF legal/finance team has contacted a third‑party reviewer, separate from the city’s counsel) and that reviewer is expected to complete a report before the IDB receives the draft EIP on Nov. 3.

Public comment and board action Public commenter Helen Burn Sharp asked the board specifically whether state law permits sales‑tax revenues to be used with a TIF and urged the board to secure a written legal opinion and an independent third‑party review to avoid future legal challenges. The board voted to accept the application and attachments and to submit the application to the city and county for resolutions of intent. The board also approved setting the application‑review committee meeting for Oct. 20 and appointed two IDB representatives to serve on that committee.

Votes and conditions The resolution accepting the application passed by voice vote; the record shows an affirmative vote with no recorded opposition. Board members noted an amendment to the resolution to remove a waiver of TIF policy 4.11 (the board will not waive the applicant affidavit and independent third‑party review requirement), meaning the third‑party review must be completed before the IDB reviews the draft EIP on Nov. 3.

What’s next The city will pursue a finalized written legal opinion and a third‑party financial review before the IDB’s public hearing on the EIP expected on Nov. 3. The application‑review committee will convene Oct. 20 to vet materials and question the developer and staff.

Ending note Board members emphasized that the acceptance vote advances the application for formal review and does not authorize any allocation or final incentive; the EIP and any development agreement would return to the IDB, city council and county commission for further review and votes.