On Tuesday, the East Ridge Industrial Development Board approved development agreements with the Chattanooga Red Wolves SC and the developer of a Candlewood Suites.
The development agreements would provide incentives to both organizations in the form of state tax increment money from the Border Region Act. The Border Region Act allows the City to keep 75 percent of state sales tax generated from new development over and above a baseline figure established in 2012, officials said. That money is then distributed to developers as a reimbursement for new projects.
In the case of the Red Wolves, the IDB approved a deal that would provide owner Bob Martino 97 percent of the Border Region tax money from his $125 million investment. The City of East Ridge would get three percent.
City Attorney Mark Litchford, who crafted the agreement, told IDB board members that the City would benefit from increased property tax and local option sales tax.
Litchford said that assuming a full build-out of the Red Wolves project – which includes a 5,500-seat stadium, a hotel, convention center, restaurants, condos/apartments, retail and office space – the city would reap about $670,000 a year in property taxes. A projected $35 million in retail sales in the development would bring the city almost $395,000 in sales tax revenue on a yearly basis. Adding the hotel/motel tax on 350 rooms inside the development would boost the city’s revenues by $440,000 a year.
Total amount of revenue the city would see on an annual basis would come to about $1.5 million, Litchford said.
Litchford, who characterized the agreement as “performance-based,” said Red Wolves owner Martino would receive about $1.4 million a year from the state increment tax money afforded by the Border Region Act.
“It’s close to a one-to-one ration,” Litchford said of the state tax dollars going to Martino and the dollars flowing into city coffers as a result of the project.
Board member Estes Cocke said the development was “big for East Ridge,” but noted that the site of development – East of Spring Creek Road running to Interstate 75 – was “swampland.”
Chip Scott, the Red Wolves’ project manager for the development, said the project would be done in phases with the stadium and retail being built first on the property’s higher ground. He said that Martino is closing “very soon” on the purchase of the 100 acres he is acquiring from Luken Holdings and the Fletcher Bright Company. He said that Martino has stated that he wants to have at least a portion of the Red Wolves’ 20 home games for the 2020 season played in the new stadium.
“(Martino) loves the sport of soccer,” Scott told the board. “But he also wants to build something to draw families. and to do something for youth.”
_ The Candlewood Suites development consists of a five-story, 83-room extended stay hotel at 6517 Ringgold Rd., behind the Super 8 Motel.
Jasmin Patel, the owner of the Super 8 and the developer of Candlewood, told the board that his investment in the project would amount to $10.5 million. He anticipates room rates at the Candlewood to be in the $130 to $150 per night range.
Patel’s attorney, Buddy Presley, told the board that the construction plan for the Candlewood Suites would be the latest version approved by IHG, the parent company that also has flagship hotels such as Holiday Inn Express.
“(Patel) has been a good corporate citizen in East Ridge,” Presley said.
Litchford said the development agreement would allow Patel to capture 60 percent of the Border Region tax increment, which on sales of $2 million a year would come to about $82,000 per year.
Litchford said the new Candlewood Suites would add $61,000 in new property taxes to the City’s bottom line, and an additional $66,000 in hotel/motel taxes for a total of about $127,000 a year revenue for East Ridge.
The IDB approved the deal with a unanimous vote. With the passing, both incentive agreements must now be approved by the East Ridge City Council.