Who is paying for what? Understanding the final stadium deal
At long last, the city and county reached a $115 million deal for the Lookouts new ballpark. Here's the final breakdown.
By William Newlin
We’ve covered the changing plans to finance a new Lookouts stadium for more than a year. This week, the City of Chattanooga and Hamilton County cemented a final deal to pay for the higher price for the ballpark.
“It is our strong belief that … we're going to see some strong economic development to generate what should be a very powerful TIF to help us pay for the stadium,” said Jermaine Freeman, a senior advisor to Mayor Tim Kelly who helped negotiate the deal.
We spoke to Freeman this week to dive into the details. Here’s the final payment plan.
4 funding sources
1. $80 million in bonds
The first source of stadium funds is the $80 million in bonds issued by the sports authority, the group jointly run by the city and county overseeing stadium construction. The bonds mature over 30 years, and the first annual payments will be due in about two years.
How will it be paid back?
Both the city and county will help pay off this bond debt. Stadium rent from the Lookouts and sales tax from the stadium and surrounding retail development will cover a portion of it. But a majority of the money for the bond payments will come via Tax Increment Financing (TIF).
Through TIF, new property taxes created by development in an area called the TIF district must be used to pay off the up-front borrowing costs.
2. $5 million sports authority loan
The second source of funds is an additional $5 million loan taken out by the sports authority.
How will it be paid back?
TIF revenues plus sales taxes and hotel/motel taxes from the developed Wheland Foundry site will go toward this added sports authority debt. However, the county will not help pay it back. The city alone is responsible for the payments.
Freeman said instead of boosting the sports authority’s bond issue to $85 million to generate more funds, the city sought to remove some of the debt burden from city taxpayers. Through the loan, tourists who shop and stay in the TIF district will contribute as well.
3. $26 million private loan
The third source of funds will come from a $26 million loan taken out by the owner of the stadium site, Perimeter Properties, and the Lookouts owners.
How will it be paid back?
Chattanooga’s Industrial Development Board will allow Perimeter and the team owner to receive city TIF revenue to cover the loan payments. And like the new $5 million sports authority debt, only city TIF revenue will go toward their loan.
But there’s a catch. There’s no risk to the city if Perimeter and the Lookouts can’t repay the $26 million.
They will only receive TIF revenues if the city can first make its payments on the other borrowed funds. And if the TIF is unsuccessful, the developer and the Lookouts won’t get repaid.
4. $3 million from the Lookouts
The fourth funding source is a $3 million up-front contribution from the Lookouts.