That’s what Northeast Tennessee lawmakers hope to induce with a bill meant to incentivize retail and tourist development along the Boones Creek corridor that quietly passed both chambers during the eleventh hour Thursday.
Almost identical to the law that spawned The Pinnacle development in Bristol several years ago, the Regional Retail Development District Act would allow the City of Johnson City to leverage future state sales tax revenues to incentivize developing up to 950 acres of land near Exit 17 in Boones Creek.
House Bill 524 was muscled through on the last day of the 111th General Assembly’s first session by Deputy House Speaker Matthew Hill, Reps. Timothy Hill and Micah Van Huss and Sen. Rusty Crowe.
Matthew Hill described the bill as a “shot of adrenaline” and a “game changer” when it comes to economic development in Washington County and Johnson City.
“It involved quite a bit of strategy and whole lot of hard work,” Hill said while driving home from Nashville Friday.
“If it is fully realized and the potential fully realized, it very well could be one of the greatest economic drivers we’ve had in memory.”
Once Gov. Bill Lee lends his signature to the bill and it becomes law, City Manager Pete Peterson said the city will begin discussing with developers what plots of land to include in the district, covering up to 950 acres. One stipulation is the land has to be within half-mile of Interstate 26.
“What has to happen at this point is the city has to adopt an ordinance asking the state to certify a location and a master plan for development,” Peterson said.
In order to qualify, the proposed development has to generate a million visitors per year, require a $20-plus million investment and generate $2 million per year in state sales and use tax. The commissioners of Revenue and Economic and Community Development will determine whether the proposed project meets that criteria.
“At this point in time, there is a group interested in doing something at the Boones Creek exit,” Peterson said. “They have, to my knowledge, one parcel identified, which is not 950 acres. We’ve got an opportunity to develop 950 acres ... It would be pretty foolish to be short-sighted and just propose something that’s going to be less than 950 acres.”
According to his understanding of the bill, Peterson said the district boundaries could only be established once, but the project can be built out in phases.
“You don’t have to build it all in one shot, but it takes another approval by the state to alter the boundaries,” he said.
Minus the portions earmarked for education, the incentive allows the city to harness 75 percent of state sales and use tax collected in the district exceeding base tax revenues, making it likely the city will select vacant properties currently generating $0 in state sales tax.
Those funds would go to the city during the next 30 years and be disbursed to developers based on individual incentive agreements, Peterson said.
“You cannot begin a new phase of the development after 20 years from the date of certification,” Peterson said. “The quicker you get this built out, the more the state shared sales tax you get to take advantage of.”
He said the incentive is intended to lure in new businesses, but existing businesses committed to expanding their footprints by more than 30 percent can also qualify.
“It does allow for the payment of any and all expenses incurred with the development. So that would cover architect and engineering fees, surveying fees and construction costs. The money can be used to offset part of the cost of public infrastructure, which would be roads, bridges, water-sewer, stormwater things. It can pretty much cover everything,” Peterson said.
The city could also issue debt for the project and use the state sales tax funds for debt service payments.
The fiscal note attached to the bill projects it will increase state revenues annually by $862,500 and local revenues by $1.98 million. Forgone annual state revenue to be used for the incentive is projected at $1.23 million.