Chattanooga council hears detailed pitch to use TIF and a local sales‑tax capture to rebuild Northgate Mall infrastructure

City Council members spent the bulk of their Nov. 18 meeting on a presentation and extended Q&A about a proposed tax‑increment financing package to replace aging private utilities beneath Northgate Mall in Hixson. Sherita Allen, the mayor’s senior adviser for economic development, described a developer‑backed plan to “replace and upgrade a 50‑year‑old sewer, stormwater and water infrastructure” serving the mall and adjacent properties to enable higher‑use redevelopment.

Why it matters: The developer says new underground infrastructure is necessary to attract private redevelopment. Staff said property‑tax increment alone would not cover the cost and proposed adding a local‑option sales‑tax capture to fill a gap, making the city’s reimbursement package a combination of property‑tax increment and a capped portion of future local sales taxes.

Staff summary and numbers: Allen cited a total projected construction cost of about $8,935,537 and described a third‑party review that recommended limiting public financing to the $7.7M–$8.7M range. “Based on the recommendation coming back from the third party reviewer … we’re going to ask that that be admitted down to 8.7,” Allen said. Using a 2024 base year, staff projected an initial annual incremental property‑tax amount of roughly $154,000 and estimated that property‑tax TIF receipts would generate about $3.3 million over the initial 20‑year forecast — well short of the total project cost. Staff proposed adding an interlocal sales‑tax agreement to capture a capped share of future city sales tax in a defined area to bridge the remainder.

Legal and procedural steps: Staff and bond counsel explained the steps ahead. If council approves the economic impact plan and the interlocal sales‑tax agreement (two separate votes expected on Dec. 2), the TIF would be placed and a development and financing agreement would be executed with the Industrial Development Board (IDB). Mark Memantoff, legal counsel for the TIF/bond work, said that the development agreement at the IDB is the binding contract that will set the developer’s obligations and enforcement mechanisms.

Council concerns and community vision: Members pressed staff on accountability and community protections. Several council members urged that the redevelopment reflect Hixson’s stated vision — a walkable town center with retail, green space and the possibility of a library relocation — rather than a high‑density multifamily outcome without civic amenities. Allen and counsel said aspirations and negative‑use restrictions can be discussed but that the “development agreement will be where the accountability is,” and that the IDB typically holds enforcement authority.

Base‑year, capture area and timing: Staff recommended a 2024 base year, noting legal constraints in Tennessee on how a base year is handled. The sales‑tax capture area staff described would be broader than the mall’s core because state law prevents pinpointing individual retailers; staff noted that the initial sales‑tax baseline for the proposed capture area would be about $560,000, with illustrative incremental capture projections up to roughly $540,000 in future years under optimistic scenarios.

Next steps: Councilmembers asked staff for additional detail, requested the full economic impact plan and draft interlocal agreement be circulated, and flagged community engagement and development‑agreement language as priorities. The council has tentatively scheduled votes on the economic impact plan and the interlocal sales‑tax agreement for its Dec. 2 meeting.

Quotes: Sherita Allen, mayor’s senior adviser for economic development, said the project’s purpose is to “replace and upgrade a 50‑year‑old sewer, stormwater and water infrastructure” and noted that the proposed amended public assistance figure would be $8.7 million. Allen also said a third‑party reviewer concluded a “but‑for” case for public financing. Councilman Davis, representing the Hixson area, said he supports infrastructure investment while warning that the city must secure a deal “that works for the taxpayers and that works for the people of Hixson.”

What’s unresolved: The council did not vote on the TIF or sales‑tax capture at the Nov. 18 meeting. Key open items include the final EIP amount adopted by council, precise cap and allocation language in the interlocal sales‑tax agreement, the specific enforceable commitments (if any) the city will require in the IDB development agreement, and whether separate funding will cover any water‑line work.

Procedural note: Because this is a developer‑backed TIF, the developer will finance construction up front and be reimbursed as permitted taxes are captured; staff said the total city commitment could include interest and, depending on amortization, the city’s payout could total more than the principal reimbursed if paid over the full term.