published Tuesday, October 12th, 2010

Business deals ignite national interest in Cleveland

CLEVELAND, Tenn. — Cleveland is receiving more national interest than ever before, city officials say.

The area has caught the eye of several business prospects, some on the same scale as Whirlpool, said Doug Berry, vice president for economic development with the Cleveland-Bradley County Chamber of Commerce. Berry said he could not specify the businesses.

“We’re on the radar of a lot of people,” Cleveland Mayor Tom Rowland said. “It’s really getting hot right now.”

The surge in attention comes after Whirlpool’s decision to build an expanded $120 million manufacturing plant in the city to replace its aging downtown facilities.

“When we’re blessed enough to get an expansion of a local industry, that sends a strong signal that we’re a good place to do business,” Rowland said.

MEDIA ATTENTION

National and state publications have praised the Cleveland area in recent months, Bradley County Mayor Gary Davis said.

MSNBC listed the city as one of the first metropolitan areas recovering from the recession, he said.

In national rankings, Forbes.com listed Cleveland as No. 3 for projected economic growth, No. 11 for the cost of doing business, and No. 34 for projected job growth. The city also ranked as one of the “best small places for businesses and careers” in the country.

Last year the city was featured on the cover of “Great Places to Live” magazine. In addition, it’s been ranked in the top 50 “family friendly towns” by BusinessWeek.

The Whirlpool project is the latest in a series of area business deals including $1 billion investments from Wacker Chemical in Bradley County and from Volkswagen in next-door Hamilton County. Other investments include pharmaceutical plastics manufacturer Starplex Scientific and Christian TV provider Sky Angel, officials said.

“The psychology is that if our community is getting projects like that we must be doing something right,” Chamber President Gary Farlow said. “This puts you on the map among consultants.”

In hopes of opening up new areas for growth, the city and Bradley County are splitting the $4 million cost of a new interchange on APD-40, Bradley County Mayor Gary Davis said.

Two national restaurant chains have expressed interest in Cleveland and will be scouting the area later this month, Rowland said, although he declined to elaborate. Companies take notice of where the economy is strongest, he said.

“The investments going into Southeast Tennessee have raised our state’s profile,” said Matt Kisber, commissioner of the Tennessee Department of Economic and Community Development.

Economic effects evident

Site development for Wacker’s Bradley facility already is stirring up local business, company spokesman Bill Toth said.

New transportation and utility infrastructure being installed for the project will add value to the area, he said.

BRADLEY MANUFACTURING EMPLOYMENT

2007: 9,170

2010: 8,260

2015 (estimated): 7,910

Source: Cleveland-Bradley County Strategic Plan

Note: Manufacturing generally is declining nationally.

Davis said a new three-lane highway constructed near the Wacker site will provide a better route to the interstate and also benefit existing industries Olin and Arch Chemical.

New electrical transmission lines and substations the Tennessee Valley Authority is building also may make more energy available to other industries in the future, he said.

“You have some very diverse, high-level technologies coming into the area,” Toth said. “This really serves to broaden the scope of the entire community.”

With new jobs are on the way, Cleveland-area Realtors are beginning to see a difference, Berry said.

“You would not believe the number of calls we’re getting from Atlanta,” he said.

Industrial sites in the Cleveland area also are drawing more interest from potential buyers, said Loye Hamilton, president of Coldwell Banker Hamilton & Associates.

Many are suppliers for Volkswagen, Whirlpool or Wacker, he said.

“The atmosphere here has changed a lot in the last six months,” he said.

Challenges ahead

Bradley County’s surging growth is going to bring significant challenges in coming years, the county’s mayor said.

“For the last 10 years our growth has been at a manageable rate,” Davis said. During that period, growth stayed steady at 20 percent, he said.

Traditionally, revenues increase at the same rate as expenditures, Davis said. Sudden growth means infrastructure is essential before there’s revenue to pay for it, he said.

TOP FIVE RECENT BRADLEY INVESTMENTS

1. Wacker Chemical, $1 billion, 500 projected jobs

2. Whirlpool Corp., $120 million, 130 projected jobs

3. Eastern Lighting Distribution (GE), $35 million, 350 created jobs

4. Southeastern Container, $21 million, 22 created jobs

5. Schering-Plough, $18 million, 106 created jobs

Source: Cleveland-Bradley County Chamber of Commerce

To make up that deficit, citizens should expect a gradual increase in sales tax, Davis said.

Rowland said that, while he hopes tax rates won’t increase, he won’t know until a budget planning session later this year.

Cleveland’s mayor said he hopes industrial growth, which brings in more revenue than residential growth, will help to cover the cost of new infrastructure.

Until property taxes are collected on new homes, the county may face two more years of tight budgets, he said.

Davis said he’s unconvinced Southeast Tennessee will see a population boom on the same scale.

“I really hope that this region doesn’t become like an Atlanta or a Murfreesboro,” he said. “That’s why we’re doing a strategic plan.”

The sudden influx of corporate suitors also means the Chamber must prioritize and let some projects go in the process, Berry said.

The Chamber doesn’t have the time and staffing to respond to prospective companies that ask for a quick turnaround on relocation questionnaires, he said.

“We’re not closing off the community to other prospects,” Farlow stressed. “We’re focusing on the bird in hand. They get top priority, and we’ll work on the other things when we can.”

Berry said the key is to maintain a balance between comfort and growth.

“Change creates stress, concern and sometimes conflict,” he said. “Everyone starts looking around and identifying with the things that make this a place they want to live, then they all get concerned and protectionist about it.”

Dicky Walters, plant leader for Whirlpool’s Cleveland division, said he’s confident about the company’s local growth for years to come.

“Clearly an investment like this is an investment in the community for the long term,” he said. “This is big. It’s big for Cleveland.”

In the meantime, the transition from a small town to a bustling community has been tough to navigate, Berry said.

“[I’m] in the heat of trying to help a community decide what it wants to be at any time,” he said. “And that is professionally very challenging.”



TAX INCENTIVES AND PUBLIC FUNDING

Whirlpool and Wacker Chemical received tax abatements and public funding to locate in Bradley County.

Whirlpool:

The city of Cleveland and the county split the cost of $1.8 million in public money as an incentive for Whirlpool’s new plant, Bradley County mayor Gary Davis said.

The state also put up $6.5 million in public money for infrastructure and site development for Whirlpool, said Doug Berry, VP for economic development with the Cleveland-Bradley County Chamber of Commerce.

Whirlpool will receive a 100 percent abatement on all new construction, he said.

The company also will receive a 20-year tax abatement for all new investments in equipment and property, he said. The taxes, which would normally amount to $700,000 a year, will receive an abatement decreasing by 5 percent every year, starting at 95 percent until it reaches 50 percent, he said.

During that time Whirlpool would normally pay a total tax revenue of $29 million, he said, but under the abatement it will only pay $9.5 million.

Wacker:

Bradley County put up $5 million and the state put up roughly $65 million in public funds for Wacker, Davis said.

Berry said Wacker received a 50 percent tax abatement on property taxes for 25 years.

about Harrison Keely...

Harrison Keely is an online breaking news producer for the Chattanooga Times Free Press. He also anchors the daily newscast. He joined the Times Free Press as a reporter in 2010. He previously served as managing editor of the Smoky Mountain Sentinel in western North Carolina and as a business reporter for the Washington Times in Washington, D.C. He graduated from Lee University in 2009 where he served as managing editor of the student news ...

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