East Chattanooga Rising

What is a TIF?

Tax increment financing (TIF) is a tool municipal governments use to stimulate economic development in a targeted geographical area. TIF's are used to finance redevelopment projects or other investments using the anticipation of future tax revenue resulting from new development.

Groungdbreaking

Due to the Chattanooga region’s rising COVID-19 cases, the late November Groundbreaking Event for Nippon Paint Automotive Americas was postponed. Some representatives were scheduled to travel to Chattanooga from other states and countries.
Sometime in the first quarter of 2021, preferably Spring, the Economic Development staff will work with the company to select another event date. In the meantime, construction has begun on the future LEED-certified manufacturing facility.

Heavy equipment and fencing appeared on the site in December 2020 as civil engineering contractor SSOE began moving dirt and soils to level and prepare the site for construction.

Nippon Construction Phases

The project will happen in five phases beginning in December 2020 with anticipated completion in December 2021.

Phase I - Civil Engineering to survey the property, set up fences and mobilize machinery, prepare the ground soils, grade, navigate underground streams, and mitigate natural waterways to allow for the laying of building foundations and internal road structures.
Phase II - Structural Engineering to begin building the steel framing and bones of the buildings to provide structural integrity and support for internal and external equipment systems.
Phase III - Mechanical Engineering to begin installation of the building mechanical systems including electrical, natural gas systems, compressed air system, chilled water & cooling water systems, hot oil systems, and steam system.
Phase IV - Equipment installation to begin the installation and calibration of equipment and set-up plant automation system used in the formulation of automotive paint and autobody coverings.
Phase V - Proceed with mechanical punch list(s), water runs, chemical loading and trial/pilot batch run(s).

Site Acquisition, Demolition, Site Prep, and Appraisal

Chattanooga City Council approved site negotiations on August 6, 2013 and site purchase for $2,600,000 from the Chattanooga Housing Authority on March 18, 2014. The site was declared surplus on May 27, 2014.

An additional $4,697,880.75 for abatement and demolition was approved on August 5, 2014 and an associated $134,859.23 change order was approved on September 15, 2015 for site demolition, abatement, and employment for neighborhood residents.

Since acquiring the site, the City has also spent $16,650 to date on mowing, fence mending, and removal of illegal dumping from the site.

October 16, 2018, the City allocated a matching $100,000 for site development studies and sewer relocation design.

Site Development Grant and required Due Diligence Studies

On August 14, 2017, the State of Tennessee Department of Economic and Community Development issued a request for applications for Select Tennessee Site Development Grants designed to help Tennessee communities prepare to attract industrial development by providing funds to better position local industrial products. These Site Development Grants are the first step in site certification designations. On November 3, 2017, the City of Chattanooga submitted a Letter of Intent to apply for a site development grant.

The City of Chattanooga applied on December 1, 2017, for a $100,000 matching grant for Tubman site due diligence studies and infrastructure design. The City’s grant application request was awarded on March 21, 2018.

Due Diligence Studies, required for Site Certification included the following items:

Chattanooga-Hamilton County Regional Planning Agency: Area 3 Plan

Area 3 Plan:

RPA launched the Area 3 Planning process on March 19, 2018. Some of the feedback gathered included the desire for mixed-use commercial along the edges of Roanoke Avenue and Southern Street.

Rezoning from R3-R4 to M-1 with Conditions

In consideration of site certification, the City presented an application and was approved by the Planning Commission to rezone the property from R-3 and R-4 residential zoning to M-1 zoning for manufacturing. Rezoning the entire site allowed more flexibility to develop the property and attract commercial or industrial tenants. Chattanooga City Council approved the rezoning on January 22, 2019 to M-1 zoning with conditions. Additional parameters related to roads, sidewalks, street-grids, and pedestrian access were also included from the Chattanooga Department of Transportation.

Sewer Relocation Project

On February 17, 2017, a City Council resolution was presented to secure funding for the relocation of the more than 70-year old terra cotta sewer which divides the site in two places. The effort failed, but was successfully revisited on October 16, 2018, as a follow-up to the awarded Site Development Grant from the State of Tennessee.

On July 18, 2019, Public Works issued an RFP for sewer relocation services. The completion of the sewer upgrades and relocation will finalize the requirements for the Tubman site to be considered shovel-ready. Funding for the sewer comes from the Interceptor Sewer System (ISS) with a projected cost of $2,066,570.

The timeline below pertains only to the sewer.

July 18 - Advertisement for Bid
July 30 - Pre-Bid Site Visit
Aug. 8 - Deadline for Contractor Questions
Aug. 12 - Final Addendum Issued to Bidding Contractors
Aug. 15 - Bid Opening
Sept. 10 - City Council Agenda
Sept. 12 - Notice of Award
Oct. 10 - Pre-Construction Meeting
Oct. 14 - Construction Start
March 14, 2020 - Proposed Completion

The final sewer location and associated permanent easements were finalized by the Hamilton County Board of Education on October 17, 2019 and by Nippon Paint Automotive Americas on December 6, 2019.

Site Certification

On February 4, 2019, the City submitted a Letter of Intent to apply for Select Tennessee Sites Certification Program for the Tubman Site. On behalf of the City, the Chattanooga Chamber submitted Tubman for site certification on July 24, 2019.

According to Site Selection Magazine, “Site certification remains one of the most effective site marketing tools for economic development professionals desiring to create a competitive advantage in successfully locating significant manufacturing operations. For corporations desiring to locate manufacturing facilities, access to certified sites presents a unique site screening advantage that reduces overall site location risk, saves time, and reduces site development costs.” Source: “Site Certification: Now More than Ever, A Critical Tool for Successfully Locating Projects” Site Selection magazine, May 2012

Understanding the Criteria Required for a “Shovel-Ready” Site

A review of several states’ certified site programs revealed that the most common criteria for a certified industrial site were divided into four distinct categories:

1) Property Details

Ownership (public ownership or an option held by a public entity required)
Clear title
Boundary survey
Established price
Industrial zoning classification

2) Site Characteristics

Flood plain designation
Topographic survey
Aerial photography

3) Environmental Documentation

Phase I Environmental Assessment
Geotechnical investigation
Wetland and stream delineation (Some programs require mitigation; other programs only require a plan be put into place.)
Cultural resources investigation
Endangered species investigation

4) Infrastructure

Roadway accessibility
Availability of utilities (Some programs require utilities to the site; others only require a plan for bringing utilities to the site.)
Railroad accessibility (Rail access is required for some states’ certification programs; other states, including Tennessee, give an additional designation for rail-served sites.)

Sources:

Indiana Shovel Ready Program,

Development Certified Site Program

North Carolina Certified Sites Program

Georgia Ready for Accelerated Development (GRAD) Sites Program,

Select Tennessee Certified Sites Program

What is the Nippon Paint USA project?

Nippon Paint USA Inc. was established in 1990 as a wholly-owned subsidiary of Nippon Paint Holdings Co., Ltd. (NPHD) of Osaka, Japan. Nippon Paint USA is already a supplier to the Mazda/Toyota joint venture factory near Huntsville, Alabama. Their entrance into this market is a strategic move to help them develop additional customers in the automotive manufacturing sector.

Nippon Paint (NP) intends to invest approximately $61 million to establish a facility on the site. This represents the first major economic development project in this area of Chattanooga in more than 100 years. Upon completion, NP will:

create 150 jobs in Hamilton County over the next 5-7 years. These jobs will pay between $13 - $31 per hour, with the majority of them paying $16 - $22 per hour.
commit to sourcing as much labor as possible from the residential neighborhoods nearest the facility, providing good jobs in areas where unemployment exceeds the community average and public transportation is often inadequate.
construct a 270,000-square-foot facility on approximately 29 acres of the 40-acre Tubman property.

NP intends to begin construction in January 2020 and hopes to have its first employees working there by mid-2020.

Nippon Paint Automotive Americas held a press conference in partnership with the State of Tennessee, Hamilton County, and the Chattanooga Chamber of Commerce on September 23, 2019, to announce the company’s selection of Chattanooga, Tennessee for a new production facility serving North America to include Canada and Mexico. The Chattanooga City Council approved a land donation agreement with the company on October 15, 2019, for the creation of 150 jobs and $61,000,000 in capital investment. The company will occupy 28.94 acres of the site, with the remaining 14.64 acres slated for a community-led redevelopment process.

Due to the final location of the sewer project and resulting permanent sewer easement, a supplemental land donation agreement was presented to the city council for review on February 25, 2020, to move the property line an additional 20ft to provide the replacement of roughly 24,000 square feet of developable land.

Is it safe?

For the last five years, Mayor Berke has been relentlessly focused on using this opportunity to improve the fortunes and lives of individuals in Avondale and throughout East Chattanooga. ‘East Chattanooga Rising’ is about combining economic development and community development in ways that have never been done in our city. Obviously, ensuring the health, safety, and comfort of everyone in this neighborhood is critical to this vision, and we would never have pursued a relationship with a company that did not share these values.

To that point, the M-1 rezoning that we received for the site earlier this year strictly forbade uses that would result in dangerous chemicals, noxious emissions, or anything else that would negatively impact the quality of life of Chattanoogans. Moreover, the City of Chattanooga, Hamilton County Government, and the Chattanooga Area Chamber of Commerce understand better than anyone that protecting our natural environment is essential to our region’s success. Under no circumstances would we consider moving forward with any project that would harm our environment or endanger the health of our people in any way.

The facility that Nippon Paint builds will be LEED-certified to meet the highest possible standards of sustainability. As with any production facility of this kind, we will be relying on the Tennessee Department of Environment & Conservation and the Hamilton County Health Department to enforce all state and local standards related to environmental impact, material disposal, odors, and other effects. All industrial waste is hauled off of the property via Nippon Paint’s contractual arrangement with a third-party firm; no waste remains on site. The City of Chattanooga is also writing strict pollution control standards into our land donation agreement so that we can hold Nippon Paint accountable for the activities at their plant.

Nippon Paint has production facilities in other communities that adhere to very strict environmental standards, and we are glad to report that their record in this regard is spotless. Candidly, Nippon Paint understands that their success and profitability as a corporation depends on their ability to sustainably and responsibly manage the sourcing, production, and disposal of chemicals used in their facility.

East Chattanooga Rising tax Increment Financing (TIF)

The City is proposing to use the tax increment generated by the Nippon Paint Automotive Americas, Inc, investment to subsidize additional infrastructure work on the site, particularly on the acreage fronting Roanoke Avenue. The goal of this infrastructure investment would be to bring additional parcels in the area onto the tax rolls and to stabilize the market in the neighborhood as to enhance the overall livability for residents in Avondale and East Chattanooga. Specific uses and designs for this portion will be informed by the recommendations of RPA’s Area 3 plan and decided in accordance with the neighborhood’s needs and wishes.

Per City Council TIF policies, which were designed with developers in mind and adopted in 2015, below are the steps for creating the East Chattanooga rising TIF district.

STEP 1: An application is submitted to the IDB for acceptance as complete.

Economic development staff of the City of Chattanooga submitted a 79-page TIF application for tax increment financing to the Industrial Development Board (IDB) on October 7, 2019 to begin the review process for establishing an East Chattanooga Rising TIF district. The application was accepted and moved forward.

STEP 2: If application is accepted by IDB, the application is forwarded to the City Council which decides the “But For”; authorizes preparation of Economic Impact Plan; and works with Mayor’s Office to establish Application Review Committee.

Economic development staff of the City of Chattanooga provided a presentation of the East Chattanooga Rising TIF during the October 8, 2019 ECD Committee Meeting. On October 15, 2019, City Council approved the “But For” requirement and returned the TIF item to the IDB for next steps.

STEP 3: The Application Review Committee meets to discuss TIF Application and the process to date and sets the date for a Public Hearing to be held at an IDB meeting.

The application review committee met on October 30, 2019 to review the application, the Economic Impact Plan, and set the date for the Public Hearing for the community to publicly comment on the East Chattanooga Rising TIF.

STEP 4: The IDB holds a Public Hearing, then submits the Economic Impact Plan to City Council along with a summary of public comments from the Public Hearing

STEP 5: The City Council votes to approve the creation of the TIF District.

STEP 6: The County Commission votes to approve the creation of the TIF District.

STEP 7: The City’s outside TIF Counsel submits the approved Economic Impact Plan and supporting documents to the State Comptroller and the State Building Commission for approval.

STEP 8: The IDB authorizes the Mayor to enter into a Development Financing Agreement with developer(s), if applicable.