State OKs $168 million state grant for VW expansion

Construction continues on an expansion at Volkswagen's Chattanooga manufacturing plant.
Construction continues on an expansion at Volkswagen's Chattanooga manufacturing plant.

NASHVILLE - The State Building Commission Thursday approved a $168.86 million infrastructure grant for the Volks- wagen plant expansion in Chattanooga.

But the actual grant's language will first have to be reviewed by the state's bond counsel. The Building Commission also gave similar approval to a $35 million grant for development and associated upgrades of the Nissan Supplier Park in Smyrna.

The money for Volks- wagen's Chattanooga plant are a part of state incentives that were promised to get the German auto manufacturer to locate its planned line of SUV production in Tennessee instead of Mexico.

For legal purposes, the actual grant actually goes to the city of Chattanooga's Industrial Development Board.

The five-year VW grant, included in Gov. Bill Haslam's 2015-2016 budget, permits reimbursement of expenses the company incurs with regard to infrastructure, site development, equipment, facility construction and "all related work," according to State Building Commission documents.

Money for both the VW and Nissan projects will come from issuing state general obligation bonds.

Because of that, state Comptroller Justin Wilson, a Building Commission member, told colleagues that while he supported both grants he needed to ensure his office's bond counsel first reviewed the language.

As approved, both grants are subject to review by bond counsel with any necessary revisions to be approved by Finance Commissioner Larry Martin, a Haslam appointee who also serves on the Building Commission.

The city of Chattanooga and Hamilton County also have earmarked a total of $52.5 million in grants for the VW expansion and the automaker will continue to receive property tax abatements on most of its new investment over the next decade.

Contact Andy Sher at asher@timesfreepress.com.

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