Mayor Andy Berke speaks Friday, January 6, 2017 in Lupton City about plans to clean up the former R.L. Stowe Mills site.

Chattanooga will spend as much as $1.5 million to finish demolition of an old yarn mill in the heart of Lupton City and put a clay cap on contamination there, Chattanooga Mayor Andy Berke said Friday.

Then, once the cleanup is complete, city officials will work with neighbors to figure out how to best reuse the 12-acre Dixie Yarns site.

"It makes good sense for us to take properties like this and put them back on the tax rolls," Berke said.

The cleanup work won't start until after July 1, the mayor said, because the out-of-state limited liability company that bought the mill site in 2012 has until then to pay the roughly $120,000 it owns in back taxes and reclaim the property. The city doesn't want to invest in site cleanup, Berke explained, until it's got a lock on ownership.

Berke, who is seeking a second term as mayor this year, would make the improvements at the abandoned mill site in the next city fiscal year, assuming he is re-elected in the city's March 7 election.

The mill's history dates back to 1920, when John T. Lupton bought 1,000 acres of land near the Tennessee River and built the mill town of Lupton City for his Dixie Mercerizing Co., later Dixie Yarns.

"This was a company town, and many of the homes you see built around here were built for Dixie," Berke said.

The mill later became R.L. Stowe Mills, which closed in 2009. The site was sold in 2012 for $220,000 to Lupton City LLC, which is connected to the Dockery Group, a construction company based in Peachtree City, Ga.

Lupton City LLC began demolition and reportedly hauled away valuable wood and metal. But then work abruptly stopped, leaving behind a partially demolished mill building and a towering brick smokestack amid a field of rubble along with, according to city Public Works Administrator Justin Holland, contaminated soil.

"[The Tennessee Department of Environment and Conservation] has been out here several times," Holland said at Friday's event. "For the most part, the site requires a cap, a clay cap — it's a significant cost."

Berke said city attorneys have pursued Lupton City LLC to try to recover costs to clean up the site. The mayor said grant money may be available to help with the cleanup.

The mayor and District 2 City Councilman Jerry Mitchell, who also spoke at a media event that drew about 20 people, praised each other for working to clean up the old mill.

"This is the heart of District 2," Mitchell said.

Berke said, "How could you not complain about what you see around you? It's terrible."

Berke said the land might prove to be a good investment for the city. BlueCross BlueShield of Tennessee put a 216-acre parcel of riverfront land it owns nearby for sale in 2014 for $10.25 million, although the site has yet to attract a buyer.

Tosha Kranz said she and her husband bought a two-bedroom Lupton City home in August that they're updating. They love the neighborhood, said Kranz, who called herself "cautiously optimistic" about the mayor's plans to fix up the site — though she worried that low-income, Housing Choice voucher housing (formerly knows as Setion 8) might go there.

"As much as we support Section 8, we don't want it here," Kranz said. "We don't want apartments."

Berke spokeswoman Marissa Bell said city officials don't yet have definite plans.

"The plan for the site is to clean it up and work together with the neighborhood on what will be best for the space and the vitality of the neighborhood," Bell said.

The mayor said there are literally thousands of "brownfield sites" around Chattanooga similar to Dixie Yarns, though most aren't as large.

"Our administration, over the next few years, will be doing a brownfield focus," Berke said.

City Councilman Larry Grohn is challenging Berke for mayor, along with David Crockett and Chris Long. Grohn said the mayor's announcement Friday was just campaigning.

"It's like, 'I'm going to pour out all this money, and I'm going to buy the election,'" he said.

Grohn wondered if the city would be able to sell the Dixie Yarns site, comparing it to what Grohn said was the city's investment of $7.4 million to buy and demolish the Harriet Tubman public housing complex in East Chattanooga.

"Are we going to throw $1.5 million at this site, and have the same thing at the Harriet Tubman site?" Grohn said. "We don't have any return on our money, and that's $7.4 million."

Contact staff writer Tim Omarzu at tomarzu@timesfreepress.com or www.facebook.com/MeetsForBusiness or twitter.com/meetforbusiness or 423-757-6651.

Updated Jan. 6 at 10:58 with additional details.