The East Ridge Industrial Development Board approved a measure that would provide incentives to a new restaurant that will be built on Ringgold Road.
Officials said incentives to a Jack’s Family Restaurant that is proposed for 4209 Ringgold Road would amount to $600,000 over a 30-year period. City Manager Scott Miller said the incentives are in line with incentive packages the City has done with Marco’s Pizza and the Firehouse Subs.
Miller said Jack’s provided him with a financial proforma projecting $42.5 million in revenues for the business over the next 20 years. Based on those sales figures, the city would reap $3.35 million in Border Region tax, local option sales tax and property tax. Once the $600,000 incentive package the city’s bottom line would be $1.75 million to the better.
Miller explained that if Jack’s doesn’t meet the sales goals the City’s incentives would be adjusted downward. He noted that the city has yet to pay any of the incentives to the developers of Marco’s or Firehouse Subs as neither entity has been in business for a full year.
The board approved the incentives by unanimous vote. The incentive package will now go to a vote before the East Ridge City Council for its approval, then back to the IDB for a formal development agreement to be formulated.
The board gave its blessing to a modification of the development and allocation agreement the City has with the developers of Jordan Crossing.
City Attorney Mark Litchford explained that there may be “real or perceived ambiguities” relating to the distribution of Border Region tax money if the principals of Exit 1 LLC, Matt Wood, Ethan Wood and John Healy were to sell a parcel inside of Jordan Crossing. Litchford said he spoke with IDB attorney Mark Mamantov who said that it was clear in the development agreement that it was irrelevant who actually owned the property, Exit 1 LLC was entitled to the 4.12 percent in state sales tax generated from the operation of the business in the new development.
Healy, who attended the IDB meeting with Matt Wood, said it has been Exit 1 LLC’s preference not to sell property within Jordan Crossing. An opportunity has arisen to sell a parcel between 10 and 25 acres outright to a business. Healy said he was “not at liberty” to disclose the interested party.
Healy said that the business plan of Exit 1 LLC maintaining ownership of the property and building to suit a business has “been a stumbling block; no doubt.”
IDB member Estes Cocke, a local practicing attorney, said as far as the city is concerned the amendment clarifying the resolution would have no impact on the city.
The board voted unanimously to request the East Ridge City Council amend the resolution clarifying that Exit 1 LLC would still receive Border Region tax money regardless of who owned the property inside Jordan Crossing.
City Manager Miller said the item would be on Thursday night’s Agenda Session meeting to go before the council on Sept. 27.
The board discussed a request by Exit 1 LLC to assign lenders for collateral of the Border Region tax revenue.
Attorney Litchford said the developers had taken out $17 million in loans and the lenders want additional security. He characterized it as a “deed of trust.”
IDB Vice Chairperson Kelly Still, who is a banker, said it’s a common practice.
“If they (Exit 1 LLC) goes belly up the bank would get the money going to them,” Still said.
The measure passed 5-0, with Still abstaining, as she disclosed that her bank has done business with Exit 1 LLC.
Finally, Chairperson Ruth Braly told the board that several citizens had requested that the time the board meets be changed to accommodate people who can’t make a 5 p.m. meeting on Tuesdays.
Braly said she was not inclined to change the meeting time as the board has met for four years at its current time and none of the IDB members had a problem with the time of the meeting. She also noted the board meets sporadically.
Board member Mac Pendley said he had been approached by a citizen who requested the meetings be moved back. Pendley said he would have no problem starting the meeting at 5:30 p.m.
Braly said she had “a problem” changing the time to accommodate “one or two people.”
Braly then attempted to adjourn the meeting.
Citizen activist Lesley Bostain, who was present at the meeting, then asked if the board needed to vote on changing the time. Attorney Litchford said it wasn’t necessary but that Chairperson Braly could certainly call for a vote. She did and the board voted 5-1 to keep the meetings at 5 p.m. Pendley cast the dissenting vote.