published Sunday, May 22nd, 2011

River City to celebrate 25 years

The leaders of the top 25 Chattanooga-area organizations at the end of March met quietly in a downtown board room for a positioning exercise, but not in the yoga or pilates sense.

They had four hours to come up with one phrase that, when uttered, would describe the entire downtown experience — what downtown means in the big scheme of things.

Joe Johnson, marketing guru and titular head of The Johnson Group, listened as attendees threw out ideas, concepts and feelings.

He kept track of words like “main stage,” “happening” and “plugged-in,” and discarded others that didn’t fit.

In the end, a list of more than 50 words was boiled down to a few concepts and a single downtown brand, which the nonprofit River City Co. will unveil on its 25th anniversary June 9.

River City will promote downtown’s new brand in advertising, on maps, with street signs and wherever else it can.

It’s the latest in a series of initiatives by the River City Co., the nonprofit development company created to help revive Chattanooga’s downtown in the early 1980s.

River City has helped brand the heart of the Scenic City into a popular tourism, entertainment and residential place, in addition to the business hub of the region.

It was funded largely by the Lyndhurst Foundation, the philanthropic arm of the late Coca-Cola bottling billionaire John T. “Jack” Lupton.

River City has lent a hand in nearly every major downtown project over the past 21⁄2 decades, from developing the Majestic 12 movie theater on Broad Street to cobbling together land to build the landmark Tennessee Aquarium and waterfront.

But the group’s role has shifted recently from developing the land near the downtown stretch of the Tennessee River to filling Chattanooga’s more than 1 million square feet of vacant office space, said Kim White, CEO.

Even if the iconic 180,000-square-foot Gold Building is transformed into a hotel as planned, dozens of buildings throughout the city core stand empty, and many storefronts still need tenants.

New Funding Sought

Funding for the traditionally private group has also become less certain.

After the death of Lupton in May 2010, his five heirs split up half of the fortune that financed the Lyndhurst Foundation and a new board of directors took over.

Additionally, River City now has little land left with which to bargain. Though it brings in enough leasing revenue to cover its expenses, the group is looking for about $850,000 to bolster its coffers.

Chief executive White sought $125,000 each from Chattanooga and Hamilton County and $100,000 from EPB to cover business recruitment activities this year. The group is also seeking $300,000 to $500,000 from private organizations to spur new efforts.

In his proposed budget for next year, Mayor Ron Littlefield is offering $80,000 of city money to River City — the first taxpayer funds ever to support River City Co. operations. Hamilton County and EPB are yet to decide on any allocations to outside agenciesto be filled in Friday with EPB budget release.

White is quick to point out that River City’s original $12 million in funding has lasted 25 years and attracted over $2 billion in private sector investment downtown so far.

“We’re still playing the same role; it’s the means to do so that have actually changed,” White said. “Sometimes it’s a good thing to reevaluate, when you don’t have much property anymore and the funding is different.”

But the goals remain the same. To attract retail businesses, White needs residents living downtown. To attract residents, she needs attractive housing stock. To get housing stock, developers want to see retail businesses in the area.

It sounds impossible, but once the cycle starts, it all begins to happen at once, she said.

20-year plan

As the group takes a look forward to determine the next step for downtown, boosters are looking backward at a long history of renewal to determine what worked and what didn’t.

In fact, many of the landmarks that newcomers to Chattanooga take for granted were developed within the past 20 years by River City Co.

The Tennessee Aquarium is the obvious monument to downtown planning efforts, but it’s only one piece of the puzzle. In fact, most of the vital attractions, stores and restaurants in the downtown core are either housed in former railroad and warehouse infrastructure, or are built on top of an industrial site.

That’s why the downtown renaissance, spurred by projects like the Tennessee Riverpark and Ross’s Landing, was a bigger turnaround than many realize, Chattanooga Mayor Ron Littlefield said.

“In the early 1980s, downtown was a very different environment,” Littlefield said. “It was a very drab sort of place and I guess you would have to say in some areas sort of dangerous, but depressing under any circumstances.”

Initial conversations about how to handle Chattanooga’s dilapidated downtown emerged from a task force that had been assigned to determine how best to develop on Moccasin Bend, he said, following “a little bit of controversy” with creating more industry there.

“That led to looking at the whole riverfront, which led to downtown and so forth,” Littlefield said.

River City Co. emerged from those conversations and began life as a developer buying property with $12 million in initial funding from Lyndhurst and local banks.

At the time, the city’s downtown department stores were closed or downsized almost out of existence, said Bill Sudderth, a former River City Co. president who later headed the Chattanooga Land Co., owned by Lupton.

“The central business district and, of course, the riverfront had really nothing going on and you were sort of suffering from what most southern cities were suffering from and that was that the exodus had begun, and there really, after 5 p.m. it was an empty town,” Sudderth said.

The Fix

To breathe new life into the central city, the board of River City Co. generated a 20-year plan to bring people back to downtown, with what is now the Tennessee Aquarium as its centerpiece.

Back then, there was still disagreement over whether a “fish tank,” as it was called at the time, was the right path forward, Sudderth said.

“Whether it was education, whether it was roadwork, whether it was whatever, there were needs in this community that it was a real leap of faith to believe that an aquarium would address any of those needs,” he said.

River City, however, amassed grassroots support from groups ranging from the Chattanooga Book Club to labor unions.

But the economic crash in 1987 almost put the plans on hold.

Groups began to protest the idea of building an aquarium. It was seen as a frivolous expense at a time of economic hardship.

So Sudderth called Jim Hall — a safety, transportation and planning expert — for advice.

“Well, you need to go down there and break ground,” Hall said at the time.

Sudderth replied that the group didn’t have the money to build, didn’t have a complete set of plans and didn’t own the property in the first place.

But Hall was adamant that Sudderth proceed with the groundbreaking, protesters or no.

“I guarantee you as soon as you break ground, everybody will now turn their attention to the next thing they think they can stop because they’ll think this one’s done,” Hall said.

Design and decisions

River City Co., wasn’t focused only on redevelopment, it had to be the right type of redevelopment, Sudderth said.

Following the completion of the Aquarium, 1.5 million visitors came David Tulis 5/19/11 in the first year to see the new structure, blowing away initial estimates of around 600,000, he said. River City had all the leverage it needed to entice development to the surrounding area.

But planners didn’t want cheap, one-off projects. They wanted projects that added, rather than subtracted from the downtown experience.

So they created the Urban Design Studio, which could make suggestions before approving a plan.

“You couldn’t buy a piece of property from River City without going through the Design Studio,” Sudderth said.

Since the nonprofit had bought much of the prime downtown real estate that was available, it could attach conditions to the property’s sale, ensuring that each shop, condo and bar added to the look of the area.

Despite the extra effort involved in redesigning plans to meet Design Studio specifications, private developers began to move downtown to capitalize on the growing number of tourists, visitors and attractions, River City says.

River City, too, stayed busy.

The group developed the Trolley Barns for Big River Grille in 1993, developed an IMAX theater in 1996, and planned Coolidge Park, which opened in 1999. In the 2000s, River City helped raise private funds to build Battle and Brown Academy downtown.

By this time, River City had developed a large chunk of the 13-mile walking path that runs parallel to the Tennessee River, and began tying its previous efforts into the 21st Century Waterfront in partnership with then-Mayor Bob Corker, who is now a U.S. senator.

“We had one sheet of paper that we all agreed to as far as how the funding was going to take place and, and again River City was the glue that, that held all of that together,” Corker said.

Housing crisis

But even though Chattanooga’s tourism industry was booming, getting residents to move downtown remained a struggle.

“I mean, a lot of the housing developments that we thought might be more successful than they are, let’s face it, I mean, you know, there’s a little bit of a pause there,” Corker said.

Still, living downtown has come a long way since the days when “you couldn’t even buy a Coca Cola on that end of town,” said Jim Bowen, who helped get River City started.

“We are now seeing an influx of new housing opportunities all over downtown and even in the downtown ring neighborhoods,” Bowen said. “This should drive downtown retail in the future.”

Downtown housing first started to show real signs of life in 2005, he said.

At first, a lot of new development was on “the very high end,” Bowen said, with condominiums on the North Shore and elsewhere going for from about $200,000 up to over $1.6 million.

Condo developments shot up throughout the city as developers rushed to outdo each other in the mid-2000s.

However, the housing crisis that hit just as some projects were nearing completion. Many condos have been left empty, leaving a glut of high-end housing while apartment stock remains in high demand.

While absorption has since started to pick back up, many projects have been put on hold and others have been abandoned because of the difficulty of getting credit or new buyers.

Demand for Apartments

Regardless, one of River City’s current goals is to attract less-expensive apartments and condo developments suitable for middle-class households, White said. Apartment housing, unlike condos, are near 100 percent occupancy throughout the city, according to the Chattanooga Apartment Association.

“We need more housing, and we need more apartments,” White said. “We don’t have a lot of options for workers and students.”

River City has been working for years to solve that problem. The main issue is that building a structure of the size necessary to hold a large number of apartment dwellers costs a lot of money, and credit is hard to come by, builders say.

Last resort

That’s why there’s still a need for River City as a “developer as last resort,” White said.

For instance, the Riverset Apartments, developed in 1993 by River City, were actually the first downtown housing built in over 20 years, according to Lisa Flint, vice president of marketing for the organization.

Billions more in private funding followed River City’s “pump-priming” developments, but some projects have turned out to be duds.

Mayfair on Market, a $16 million mixed-use project to build 58 condominiums at the 700 block of Market Street downtown, has stalled in court after another developer failed to build as promised. River City Co. gave the land to the so-called 700 Block Development Partners, a partnership between the Chattanooga Housing Authority and Trafalger Development Corp., with the understanding that the group would develop the site.

Trafalger, for its part, has blamed the Chattanooga Housing Authority, which had borrowed $3.2 million from Fannie Mae for the project but diverted $1.2 million of that to its general operations fund to cover a budget shortfall, the authority admitted.

Whatever the cause, the prime piece of real estate remains vacant, and River City’s attempts to retake the property so far have not succeeded.

Leaks in downtown waterfront

River City has also been embroiled in controversy stemming from needed repairs to the city’s showcase $120 million 21st Century Waterfront. The city has budgeted more than $11 million to repair the 1,000-foot concrete edge of Chattanooga’s river park, which was completed in May 2005 under the supervision of River City.

City government has filed lawsuits against River City, as well as the project’s designer and contractor, Hargreaves Associates and Continental Construction Co., respectively, to pay for repairs.

However, a judge in that case ruled that the city knew about the cracks and soil erosion earlier than 2007, contrary to claims made by Chattanooga officials. Problems could have been addressed in 2004, but court records show that city officials rejected a $108,000 fix proposed by Hargreaves.

White, for her part, contends that the city inspected and approved the projects, and River City is not responsible for the repairs to what is now public land.

“You can’t get the lights turned on without an inspection,” she said.

Continued support

Littlefield, who serves on River City’s board, said he will keep on supporting the organization, despite a few ongoing disagreements.

“I’ve assured Kim [White] and her staff that we’re still in their corner, and to help them with the work at hand,” he said. “We’ve got to fill up those vacancies, that is a real challenge, and we’re to be River City’s partners in making that happen.”

The mayor is also working to bring a grocery store downtown to bring perishable food supplies within walking distance of more residents.

He’s been in talks with Lakeland, Fla.-based Publix Super Markets and others to sell them on the prospects of building a store.

“I would like to see River City be very successful in current efforts to bring new life to the street,” he said.

The Chattanooga Area Chamber of Commerce, too, supports River City’s pivot from brick and mortar development to retail recruitment, said spokesman J.Ed. Marston. vice president of marketing and communication.

“I think that role will probably continue in some regards, but at the same time River City has evolved into an organization as a convener and focused strategist for how to market the downtown area,” Marston said.

He does-n’t see the new role as conflicting with the Chamber’s, because “we have a much broader focus, and there is value in River City looking specifically at their part of town.”

Far from becoming a victim of its own success, River City is needed more than ever, argued Charlie Arant, president of the Tennessee Aquarium.

“We went through that exercise a few years ago, and we truly put on the table: Is River City still relevant, or should we just fold up and say no it’s not?” Arant said. “We came away saying that it may be more important than ever. We have the ball rolling, and we don’t want to let it slow down or stop.”

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
NoMyth said...

In order to spur downtown development, the City of Chattanooga needs to adopt a vacant building/land tax. The owners of these vacant properties are extremely wealthy, yet inexplicably greedy, and will not sell or develop the properties because the city taxes are so low on the properties that it pays to wait for years and years until a sweet offer arises, likely as a result of tax-payer funded downtown development. Instead of giving more money to River City, Littlefield and his cronies should increase taxes on the wealthy vacant property owners. Of course, this will not happen because it would ruffle feathers at the local country club.

May 22, 2011 at 2:42 p.m.
7Seventeen said...

Please build more $300,000 two bedroom condos in downtown Chattanooga! I don't quite feel alienated enough from the idea of actually being able to actually live near the main stage of what is the happening and plugged-in urban lifestyle advertised downtown.

May 22, 2011 at 2:43 p.m.
7Seventeen said...

"In order to spur downtown development, the City of Chattanooga needs to adopt a vacant building/land tax. The owners of these vacant properties are extremely wealthy, yet inexplicably greedy, and will not sell or develop the properties because the city taxes are so low on the properties that it pays to wait for years and years until a sweet offer arises, likely as a result of tax-payer funded downtown development. Instead of giving more money to River City, Littlefield and his cronies should increase taxes on the wealthy vacant property owners. Of course, this will not happen because it would ruffle feathers at the local country club."

Exactly. Who owns the eyesore directly across from the Choo-Choo? It's a crying shame that developers in this town can afford to throw up expensive condos on the river but nobody wants to improve a property directly across the street from the most recognizable landmark in the city. How much money do these people have to make before they can afford a conscience?

The mayor sits on the board of a company that is being sued by the city for the Riverfront fiasco, and somehow that's not a problem. The lights got turned on without inspections and permits; city inspectors were told that they would not be looking at the Riverfront construction so obviously the lights do get turned on with anybody actually checking to see where the money has been going. Now RCDC gets a pat on the back, more cash, and best wishes for 25 more years. There's not a problem here?

May 22, 2011 at 2:53 p.m.
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