Oak Ridge North will allow a wider range of uses to operate within its I-45 frontage business district after City Council approved an update to the city’s zoning regulations and the creation of a sales tax preservation program in the highway frontage zone.

Council first approved the zoning changes for its B-2 Secondary and Highway Business District, which runs the length of the city limits along I-45, during a joint public hearing with the Oak Ridge North Planning & Zoning Commission on Dec. 16. The changes amend the district’s zoning regulations to allow only restaurants, retail stores and wholesale containing a retail component as permitted uses. Hotels and mobile food units may still apply for special exceptions in the B-2 district, while a third category—provisional uses—was added to allow for nonretail uses under the new tax preservation program.

The zoning change removes tenants such as bakeries, movie theaters, laundromats, beauty parlors, barber shops and second-floor offices from the list of previously permitted B-2 uses. Some types of nonretail tenants would still be allowed in the business district but would be required to enter an agreement under the program.

Interim City Manager Heather Neeley said city staff have worked on developing the program for months due to the city’s reliance on sales tax revenue and the remaining vacancies in some B-2 district properties. The zoning change was required to allow for the program’s implementation, officials said.

“The more we lease to office space, the more we issue SUPs [special-use permits], the less revenues that are coming in. And our services don’t get cheaper each year,” Neeley said. “This is a way that we can make it more open to our landlords and our owners who are having a hard time filling with retail. This gives them an opportunity to have office use or medical use ... while still preserving the main revenue of the city.”

Officials said the new program was not designed to replace sales tax-generating uses, and the city will still encourage retail tenants to open in Oak Ridge North. City Attorney Chris Nichols said an initial STPP agreement would be developed with the first property owner to apply for a nonretail use within the B-2 district and modified for future applicants, in a similar manner to the development of the city’s RC-1 district and permitting of the first business in that zone.

“It’s an economic development program to serve property owners that have dark spaces that for whatever reason have a problem renting to sales tax-generating businesses,” Nichols said. “The policy that is currently presented is really not the final policy; it was a way to get some bones on the table.”

Nichols also said the program may be adjusted and implemented in other city commercial districts in the future if it proves to be successful along I-45.

“B-2 has always been sort of the test district to see how this works and if it works the way that we intend it to,” Nichols said. “There are going to be different metrics; there’s going to be different needs. And so as this grows and sort of gets implemented and expanded, we’ll continue to expand that program, and each district will probably have its own sales tax preservation policy.”

After discussing the zoning change and the program's concept with city staff, council also heard comments from representatives of local commercial properties who attended the public hearing to learn about the program and the development of future agreements. City officials expressed a desire to work with the local properties in the creation of the program's policy agreements.

“Nothing is in stone, and we certainly want to work with y’all the best that we can,” Mayor Paul Bond said to the property representatives in attendance.

Council approved the amended B-2 zoning regulations in a 4-1 vote, with Council Member Alex Jones voting against the measure.

During its specially called meeting following the Dec. 16 hearing, City Council revisited the topic of the economic program and unanimously approved an ordinance to officially create the tax program—without setting any specific policy parameters.

“It does not create the policy, but it does create the economic development program,” Neeley said after the vote.

Council then tabled the creation of an exact policy for discussion at a future workshop or city meeting.