The Bristol Tennessee City Council already had agreed to give up more than $1.3 million in city property taxes for the same redevelopment project.
It is not tax abatement.
The property owner still will pay the combined $2.42 million in taxes, but the money will be redirected to the Bristol Tennessee Housing & Redevelopment Authority (BTHRA) to help pay for the new restaurant and bank facility.
It's called tax increment financing (TIF) and for the 2006 tax year it cost Sullivan County more than $372,000 for three TIF projects already on the tax roll.
In a redevelopment district, developers can use TIF to improve blighted properties. TIF means any increase in property tax revenue that results from redevelopment can be used to fund that redevelopment. In other words, the improvements made to the property will result in a higher tax assessment - and part, or all, of the increased taxes can be redirected to help pay for those improvements.
TIF was first established as an option to fund redevelopment projects in California in the 1950s, according to a publication released in March by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR).
According to that TACIR staff research brief, the concept of TIF didn't spread quickly to other states. But today, Arizona is the only state that does not have a TIF-enabling law.
Tennessee's TIF law was passed in 1978. TIF was first approved in Sullivan County about three years ago, for East Stone Commons. Together, Sullivan County and Kingsport agreed to $2.5 million in TIF for that 275,000-square-foot retail center on 29 acres at the former Kingsport Mall site.
The Cheddar's and BB&T project in Bristol is the fifth commercial development project in the county to be approved for TIF.
•East Stone Commons, at Eastman Road and East Stone Drive in Kingsport.
•Westridge, a former Wal-Mart site on West State Street (US 11W) in Bristol, Tenn.
•A property on Volunteer Parkway in Bristol, Tenn., where a new Lowe's and a new Food City opened.
•Crown Point Shopping Center on Eastman Road in Kingsport.
The Crown Point project is under construction. A project's TIF status is added to the tax roll once construction is substantially complete.
County property taxes are collected by the county trustee's office.
When taxes are paid on a property with TIF status, Sullivan County Trustee Frances Harrell sends part of the money to whichever local redevelopment authority was involved in the project's financing.
For 2006 county property taxes, Harrell said the following taxes were redirected for TIF:
•$192,470.83 to the Kingsport Housing and Redevelopment Authority for East Stone Commons.
•$137,409.47 to the Bristol Tennessee Housing & Redevelopment Authority (BTHRA) for Lowe's/Food City on Volunteer Parkway.
•$42,566.26 to (BTHRA) for Westridge.
The Cheddar's/BB&T project approved by the County Commission last month will add another $74,898 per year to the list - for 15 years. Bristol Tennessee's City Council agreed to redirect $70,431 per year in city property taxes, for 18.5 years.
According to information from the county's accounts and budgets office:
•Countywide, the total assessment of commercial properties is $608.7 million.
•That figure includes more than $15.44 million worth of assessed value for the three TIF projects already active - more than $7.3 million worth in Bristol, and more than $8.2 million worth in Kingsport.
•For this fiscal year, properties inside the city of Kingsport will pay 43 percent of property taxes collected by the county, compared to 18 percent paid by properties inside the city of Bristol, 1 percent paid by Bluff City property owners, and 38 percent paid by property owners outside the three cities.