Last year Exit 1 LLC submitted a whopping $63 million to the state of Tennessee for reimbursement under the Border Region Act
More than $10,278 for meeting expenses, $28,800.00 for automobile expenses, $41,114.36 for travel expenses, $50,781.07 for meals and entertainment, $224,451.52 for legal and professional services, $576,000 in leasing commissions, $960,000 in management costs, $27,428,942.40 for location assistance, $31,233,753.60 in rental assistance.
The Border Region Act was intended by its drafters to help Bristol, Tennessee attract some visitors from the other side of the Virginia border and encourage more tourism dollars to be spent inside the state of Tennessee. Thanks to some legislative wrangling on behalf of our city attorney at the time and others the cities of Kingsport and East Ridge were included in the legislation.
The legislation required you to have a “qualifying event,” simply a retail development that would draw an estimated one million people a year to its doors. Once you secured such an establishment the costs of development could be financed through bond issues up until 2021 and reimbursed for the next 20 years after. The reimbursements come by the state surrendering its portion of the sales tax by businesses in the border region on dollars above levels set in 2012.
These payments continue until the costs of development are completely reimbursed or until the 20 years are up.
In Bristol, this legislation has resulted in a major boom for the area. They have built a large Bass Pro facility complete with restaurant and bowling alley. Next to this anchor store they have built an Outback steak house, a Claires, Marshalls, Kay Jewelers, American Eagle, Carmax, Zales, Party City, Bed Bath and Beyond, Belk, a 12-screen movie theater and many others.
For Kingsport, unless something happens soon, results may be very different, as the city and developers have yet to create a “qualifying event.” There plans for retail shops and an IMax movie theater have been scrapped for what will essentially be an auto mall.
Here in East Ridge we have managed to secure a Bass Pro Shops, which is open and operating. As far as the developments to follow, we have a hotel which is replacing one that was torn down and the failed promise of a Zaxby’s.
Yet, despite our establishment of an anchor store with no additional stores tethered to it, our city and the developers continue to spend money on this project.
The problem is the road isn’t wide enough.
“We built a Bass Pro, the developers state, but the road will only hold enough traffic for Camp Jordan and Bass Pro. We need a bigger road to attract more businesses, cry the developers.
So we made it bigger.
The problem is the exit ramps are crazy. We need a northbound ramp that faces the entrance to our development. Driving 150 feet is a turn off. This is what will make the big fish bite, cry the developers.
So we are redoing it and making the northbound exit face the development and pour traffic directly into their project.
We are gonna need a hedge row going down the side of the road because shoppers don’t want to see cars. We need these cars hidden by hedges, cry the developers.
So we are bidding out the cost of building hedges.
We need more lighting on Camp Jordan Parkway and some landscaping done at the entrance. If the entrance isn’t inviting the people wont come, cry the developers.
So we work on bidding the cost of lights and landscaping to be bonded out at taxpayer expense.
We need to own a sliver of land the old road used to be on, cry the developers. We need it for additional parking to secure a potential client.
So we handed over the sliver of land without question.
We spend this money because it’s not ours. We spend and then submit to the state for reimbursement. These reimbursements are not free and while the money may not come directly from city coffers they do come from the state and are revenues generated by money spent in East Ridge. Money spent by you and I and our friends as we shop local.
Now the city is contemplating spending $3 million to put in art, landscaping, and a water feature off exit one because it will help encourage folks to get off at that ramp that faces the development.
The City will also be looking to purchase from the state the four acres next to Bass Pro made available by reworking the exit ramps. I foresee this property will most likely be sold to Exit One, LLC at whatever it costs the city to obtain it.
Of course, the windfall isn’t limited to the developers. The city of East Ridge now is able to submit some of its routine maintenance costs to the state as border region expenses. We are also working on putting in new sidewalks and paving roads all paid for eventually by state reimbursements.
Our new fire truck is being paid for by the state, we are even asking to be reimbursed for our $613,000 mistake of failing to lift the deed restriction on the fire hall property back when the city sold it to the developers. Last year we submitted costs of $21,000 for the city’s animal control for reimbursement.
As we are getting reimbursed for everyday expenses along with additional ones we will hopefully be able to continually operate the city without tax increases and be able to provide the citizens with upgrades.
Of course all of this isn’t without risk. In order to receive a reimbursement the taxes collected must be greater than the base year of 2012. Should a natural disaster similar to the one that took place a few years ago in Ringgold, Georgia befall East Ridge it would leave the city in a particularly bad spot. Of course, it would leave taxpayers in an even worse spot as the costs of bond issues would have to be paid regardless of the status of any reimbursement.
Bristol clearly has turned the Border Region Act into their “Golden Ticket.”
Kingsport has but a few years left to get their “Golden Goose” to produce before taxpayers are left holding the bag.
Here in East Ridge, I guess the product of the Border Region Act depends on where you look. For the great developers of dirt on Exit One it appears to be a solid win for a company that has little experience in large developments of this kind.
For our politicians, they will probably take the progress that has been seen and use it as a stepping stone to bigger and better things.
For the citizens of East Ridge, it appears to be a mixed bag depending on your outlook and position. Ultimately time will tell if all of this truly ends up being a major win for our city or just the most expensive “Golden Goose”on record.