The East Ridge City Council passed a resolution in a special called meeting Thursday which allows the city to borrow $5 million to "provide financial assistance and incentives" to move forward with new development along the interstate.
The unanimous vote came several hours after council members met in an executive session. Details of what was discussed are not known.
According to the resolution, the $5 million will be used "for purposes consistent with the Border Region Retail Tourism Development District Act and to delegate and allocate to the Industrial Development Board certain incremental sales tax revenues to be received from the state."
"This potentially could change the landscape of East Ridge forever," said City Manager Andrew Hyatt on Friday.
Officials said the "Border Region Act" allows the city to collaborate with private business to create new development within a defined area. If the investment in the new development exceeds $20 million and draws one million customers/ tourists a year, the city would receive 75 percent of the sales tax generated by the new businesses in the development.
The sales tax revenue would then be used to repay the borrowed money. That process would be done through a bond issue overseen by the city's newly-created Industrial Development Board, officials said.
"In today's economic development climate it is the norm for government entities to give some type of assistance to attract worthwhile businesses," Councilman Marc Gravitt said Friday. "(Those businesses) help increase the economic situation of the area, not only through direct sales but also through indirect financing by increased sales tax, increased demand for housing, and also demand for commercial real estate in the market.
"If the city of East Ridge is going to be competitive in attracting more retail development, the city must be prepared to work with developers, as evidenced by the explosive growth in Fort Oglethorpe and Chattanooga and Hamilton County and the State of Tennessee attracting Volkswagen to the area," he continued.
"The city of East Ridge must do the same," Gravitt said.
The resolution passed on Thursday puts a time frame on moving forward with plans to build on the site.
"... the delegation pursuant to Section 3 hereof shall be null and void if the Developer does not execute a development agreement with the (Industrial Development) Board agreeing to undertake the proposed project not later than eighteen (18) months from the date of adoption of this resolution," it states.
Bristol, Tenn. is the only other city in the state which qualified to receive the "Border Region" designation.
Hyatt said that he has had several meetings with Jeff Broughton, Bristol's former city manager, who now is a consultant with the Municipal Technical Advisory Service (MTAS). In addition, East Ridge's new Industrial Development Board has retained the same bond attorney that Bristol used when it started development under the "Border Region Act."
"Jeff's been a real asset to us," Hyatt said. "He said it is a lot of work and a big investment, but with big rewards. We are very fortunate to have experts in that area."
The property adjacent to the city's fire hall at Exit 1, was purchased by the city from the state of Tennessee several years ago. East Ridge then turned around and sold the 28-acre tract to Wolftever Development, a group that includes John Healy, Ethan Wood and Matthew Wood.
"The leaders within the city that had the vision to pursue this legislation and pursue this development will be responsible for the fruits of their labor over the next five to 10 years," Matt Wood said. "This project has the ability to transform the city. If you look at what this legislation has done for Bristol you can see."
In Bristol, Wood said, the city invested $25 million earmarked for "Border Region" development, and new projects "took off."
Wood said that there is a lot of work to do and that "we look forward to working with the city over the next several months to make this development a reality."
Two other items were on the agenda for Thursday's meeting.
The council passed on first reading a $10.897 million budget for fiscal year 2014-2015. Hyatt said he and city staff have projected the proposed budget to have a surplus of a little more than $4,400. Hyatt is anticipating at the end of the current fiscal year to have a budget surplus of between $600,000 and $700,000.
Hyatt said the council made no substantial changes to the budget that he and city staff proposed last month.
The final action taken during the called meeting was a resolution allowing the city to hire seasonal workers for a six-week period this summer. The cost of those salaries would be paid for by the Southeast Tennessee Development District.