Survey faults Chattanooga's friendliness to business

Beacon Center report

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A new study by a conservative think tank rates Chattanooga among the bottom 20 percent of cities in Tennessee for business.

The Beacon Center of Tennessee, a Nashville group founded as the Tennessee Center for Policy Research, rated suburban towns around Nashville and Knoxville to be the most business-friendly, based upon those cities' comparatively low tax rates and above-average population and income growth.

Chattanooga, which ranked 40th among the 50 cities studied in its appeal to businesses, was hurt by its above-average tax and crime rates and lower levels of high school graduation and population growth.

"We wanted to give Tennesseans a picture of how individual cities stack up for business so our economists figured out criteria that business valued in terms of economic vitality, community allure and the local tax burden," said Justin Owen, president of the Beacon Center. "Some of the bigger cities, especially Memphis, didn't fare well because they tended to have higher tax burdens and slower growth than many of the suburban cities that rated the best."

The best city in the state was the Knoxville suburb of Farragut, followed by the Nashville suburbs of Brentwood, Franklin, Mount Juliet and Spring Hill, Owen said.

But Chattanooga City Council Chairman Pam Ladd dismissed the study Wednesday, questioning why researchers overlooked major new investments in the Scenic City and nationally acclaimed technology advantages for Chattanooga.

"I think we're a leading-edge city and should be at the top for business," Ladd said. "We have the fastest Internet speed in the country; we have industry leaders in new automotive manufacturing and alternative energy from Volkswagen, Alstom Power and TVA, and we're kicking off a major 16-county regional initiative to better plan the growth we expect for this area."

Chattanooga was the first American city last year to bring gigabit-per-second Internet speed to every household through EPB's $220 million fiber-optic initiative.

Over the past three years, Chattanooga also landed the biggest single job generator -- the 3,000-job Amazon distribution center at Enterprise South -- and one of the biggest new auto plants in the country in recent years -- the $1 billion VW assembly plant which employs more than 2,100 workers.

Although property tax rates are above average in Chattanooga, the city and county have granted property tax breaks for most major business additions or expansions.

"I just think they are wrong about our city's business vitality," Ladd said.

While Chattanooga has added more jobs than most cities, Chattanooga's population growth was more sluggish and the city continues have higher rates of violent crime and lower rates of educational achievement than the statewide average, according to the Beacon Center study.