(The Center Square) – Hamilton County’s attorney notified developers around the Lookouts new stadium at the U.S. Pipe and Wheland Foundry sites off Interstate 24 that taxpayers will see a shortfall of $880,000 per year if development around the stadium is not completed on the city’s timeline.
The Lookouts are getting a new $115 million stadium that was funded mainly through tax money with a plan to have that amount repaid through tax collections at the site.
That plan was criticized by experts contacted by The Center Square in 2022 as not presenting realistic numbers before it was approved. At that point, the plan called for an $80 million stadium.
Hamilton County Attorney Janie Parks Varnell wrote a letter to developers dated Thursday saying that the private development around the stadium does not appear to be proceeding according to schedule.
“The Development Agreement was structured with the expectation that private development activity would generate incremental ad valorem tax revenues to offset public financial commitment associated with the stadium financing,” Parks wrote. “Absent timely development, the county’s taxpayers will begin bearing the financial burden of these obligations beginning next fiscal year.”
That total was estimated as a $73,300 per month shortfall amounting to $880,000 per year.
Economist J.C. Bradbury of Georgia’s Kennesaw State University told The Center Square in July 2022 that the plan was flawed.
“They’re anticipating that the property value is going to grow so much that the taxes are going to be enough to cover that,” Bradbury said. “What happens if it doesn’t, because I won’t be surprised if it falls well short? Because they always overestimate these things.”
Both Chattanooga and Hamilton County were expected to pay $1.5 million up front with an $80 million bond through the Chattanooga Sports Authority with the bonds expected to be repaid through property taxes, sales tax and parking fees at the site.
Bradbury also pointed out that spending at the site even if a development is built would likely be diverted spending from other areas of Chattanooga and not new spending, so the funds at the site would mean a reduction in tax collections elsewhere in the city and county.
“When it comes to collecting tax money for stadiums, there is no found revenue,” Bradbury warned in 2022. “When you introduce a new tax, it’s mainly local people who are paying it, so they’re just not spending it somewhere else. There’s not a free lunch.”
