Look at what's successful in other similar sized towns. What is needed is both someplace that locals can go and visitors/tourists can hit and have a pleasant memory.
My vote is this.
A semi open air market similar to the Market in Charleston. Tourist wares to arts and crafts to fruits and vegetables.
There's two good locations for this. One is down the middle of Coosa Street, which is plenty wide enough. This would be a daytime/weekend morning companion to the Alley.
The other location would be on where they are planning to put the green space in front of Union Station. Imagine a row of market type buildings there along the west side of Commerce, with the green space behind them. You've just created a commercial draw for both the green space and the Riverwalk.