New TIF Deal To Bring Zaxby?s Restaurant To Bristol Tennessee

BRISTOL, Tenn. – Zaxby’s Restaurant has tentatively agreed to locate alongside a BB&T Bank as part of the city’s Green Property Redevelopment Plan – a tax increment financing project officials thought was dead a year ago.

In June last year, Cheddar’s restaurant backed out of a similar deal that would have placed the bank and restaurant on 11 parcels of land along Volunteer Parkway between Broad and Shelby streets known as the Milton Green Property.

The deal’s failure stunned many city and Sullivan County officials and delayed the reorganization of an alternate plan for the 2.78-acre site.

The Bristol Tennessee Housing and Redevelopment Authority Board voted 3-0 Wednesday to authorize the amended plan and TIF funding. BTHRA Commissioner Julie Marion was absent, and Commissioner Andrew Hanson abstained from the vote, citing a conflict of interest. He refused to elaborate on his decision after the group’s meeting at Edgemont Towers.

"Are we fairly committed here?" David Wagner, BTHRA chairman, pointedly asked members of Interstate Development, the site’s owner and developer. "Are we in the game?"

The reply came from Interstate’s Brent Roswall.

"We feel we’ve taken due diligence, and Zaxby’s has signed a letter of intent with us," Roswall said. "It’s not 100 percent. But yes, we feel good."

Attempts to reach Zaxby’s officials for comment Wednesday were unsuccessful.

The Athens, Ga.-based restaurant chain operates mainly in the Southeast and has more than 400 locations.

Larry Shaver, BB&T city executive, said after the meeting that the bank has remained interested in locating at the site.

"If the developers can get the site prepared, then we’re ready to enter into a lease agreement with them," Shaver said. "We already have preliminary building plans, but the final plans are still in the works."

The BTHRA approval is just the first step in what could result in the new bank and restaurant beginning construction at the site in September 2009. The City Council and the Sullivan County Commission must also approve the TIF financing.

Tax increment financing freezes the assessed value of a property at pre-improvement levels, then allows a developer to borrow on the difference between the tax charged before and after the construction in order to help pay for a project.

Ken Fabbri, an Interstate employee, also has acted as an agent to harness a new business for the project.

"I originally brought Cheddar’s and BB&T together," he said. "BB&T has been with us all the way and has remained steadfast in wanting to build a location there. Along the way, we found the site had some unsuitable soils that would need remediation. That means we’ll need to clean it up, so we’ll be taking a bit of a hit."

That "hit" is an estimated $850,000 in demolition and environmental cleanup costs associated with the Brownfield contamination and soil remediation. A business that was once located on the site reclaimed and recycled lead.

Should the Tennessee Department of Conservation put its stamp of approval on the site after cleanup, the bank and restaurant are expected to enter into a lease agreement with Interstate Development.

"If everything goes right, the remediation will be finished in September 2009, and you’ll see the first building supports go up soon after," Fabbri said.

The total estimated cost of the project is about $6.3 million. The sources of revenue include about $5.5 million in owner financing and tax increment financing of $835,000 – the amount saved from TIF funding that will be reinvested into the property.

The more than 10,000-square-foot bank is projected to cost $1.9 million, while the 3,200-square-foot restaurant is estimated to cost about $850,000.

Estimates for employment at the site include 22 full-time employees at the new regional bank with an annual payroll of $633,000. The restaurant would employ 20 full-time and 25 part-time workers with an estimated annual payroll of just more than $374,000 and annual sales exceeding $2 million, according to the redevelopment plan.

"The current appraised value of the property is about $380,000," said Mike Sparks, Bristol Tennessee’s deputy city manager/economic development. "Based on current property tax rates, this project would result in annual payments to the city of about $3,400 and payments to Sullivan County each year at about $3,600. But the improvements would raise that appraised value to about $5.4 million."

That’s a good indicator of why the land should be developed, Sparks added.

"Based on current rates, this would mean about $52,000 in annual payments to the city and about $54,000 to the county," he said.

In March 2007, the BTHRA Board voted in favor of allowing tax-increment financing for a project that would have brought Cheddar’s and the BB&T bank downtown.

About four months after the vote, Cheddar’s backed out of the deal. Phil Greer, owner of Lexington, Ky.-based Greer Companies, which owns 12 Cheddar’s restaurants, told the Herald Courier, "We just couldn’t get it done."

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