This aerial photo shows the Volkswagen plant at Enterprise South.

A Chattanooga panel agreed Tuesday to move ahead with millions of dollars of grading work to prepare for a potential expansion at the Volkswagen plant.

"Those areas are where the plant expansion footprint would be," City Engineer Bill Payne told the Industrial Development Board.

VW officials said there is no decision on expansion of the plant or the nearby supplier park, and city officials noted the timetable for any addition belongs to the German automaker.

One site involves an adjacent tract where the existing plant could be mirrored, VW officials have said.

The other site is next to two buildings in the VW supplier park. VW would like to add more suppliers to its park.

The Industrial Development Board, which owns and oversees the Volkswagen site at the Enterprise South industrial park, voted Tuesday to spend $208,100 in state funds for engineering firm Barge Waggoner Sumner and Cannon to design the scope of work for the grading projects.

The state has earmarked about $19 million in added money for work for VW and Enterprise South.

Steve Leach, the city's public works administrator, said the site closest to the plant is "the forerunner of developing another industrial building for VW."

"It gets it ready for another iteration for construction of another plant," he said.

Payne said work is expected to begin moving dirt there before the end of the year. Some of the dirt will be "flipped" and then left to settle for a number of months, he said. Work on the parcel will be finished next summer, Payne said.

Grading of the supplier park location also could start this year, and it's likely to continue into 2013, he said.

Frank Fischer, chief executive of VW's Chattanooga operations, has said VW already is making about $7 million in changes inside the plant to bolster the speed of its assembly line so it can produce 170,000 vehicles annually, up from 150,000. VW also is bringing on a third team of workers to meet production demands for the Passat, bolstering its workforce to about 3,500.

"There's no decision on a future vehicle," Fischer said, though he has indicated he's hopeful of a second product in addition to the existing Passat sedan in the future.

Financial Times Deutschland has reported that top managers in Germany are weighing production of a sport utility vehicle in Chattanooga.

Ultimately, VW officials said the factory could be expanded to produce 500,000 vehicles a year, if the carmaker decides to make the investment.

State officials have said $16.8 million of the added funds is to fulfill obligations under the 2008 memorandum of understanding with VW related to site preparation.

The remaining $2.3 million is for expanding the employee parking lot that was agreed upon earlier this year.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.