For more info
For more information on the Innovation District, visit www.chainnovate.com.
Innovation District Jobs Grant
• Businesses must hire 25 or more new employees.• All newly hired employees must be located within Chattanooga’s Innovation District.• Eligible employees must be full-time employees (at least 30 hours per week).• Incentive is based upon multiplier of new jobs by $250.• Grant will be made on a reimbursable basis to qualifying business after jobs are created.Source: City of Chattanooga
Chattanooga Mayor Andy Berke sweetened the pot for two businesses, Coyote Logistics and VaynerMedia, by promising them $250 per new employee to support their plans to hire 235 additional employees in the city's new downtown Innovation District.
The Innovation Grants are brand new. The grant program - and its first two recipients - were announced Tuesday as part of a new $100,000 program Mayor Andy Berke hopes will help boost interest in the downtown Innovation District.
Berke said he hopes to give out more Innovation Grants, which city officials say help support the "innovation economy" by offsetting the cost of hiring new employees. The city grant money provides $250 for each new employee added to help convince businesses to choose Chattanooga as the place to grow, said Nick Wilkinson, deputy administrator for the city's economic development department.
"I think it's a major part of their [VaynerMedia and Coyote] decision," Wilkinson said. "The mayor has been working with these companies to encourage them to make a decision to [bring] all of these jobs for the last several months."
The Innovation District grants are in addition to the city's Growing Small Business Incentives, which provide up to $500 per employee multiplied by the pay levels offered compared to the average wage in Chattanooga. The maximum amount for any business is $10,0000 and employers must have fewer than 100 workers and hire five or more new employees.
Berke's fiscal 2015 budget allocated $160,500 for The Enterprise Center programs, including the creation of the Innovation District, and Berke allocated $100,000 in the current budget for small business incentives this year. Last year, seven small businesses received a total of $37,579 in city grants to collectively add 76 jobs, or $494 per job, across the city.
The Innovation District grants are restricted to businesses expanding within the 140-acre downtown district around the Edney Building, although both small and bigger companies may qualify.
Wilkerson said the city job grants are "a way for us to help (expanding businesses) offset some of the costs they're going to have with making these hires."
"It shows these companies - as well as every other company - that we're willing to invest in these types of jobs to grow our local economy," he said.
However, Helen Burns Sharp, founder of Accountability for Taxpayer Money (ATM) in Chattanooga, questioned whether the new Innovation Grants - which amount to an extra dollar each work day per full-time employee over a year - really were the deciding factor in convincing either VaynerMedia or Coyote Logistics to hire more workers.
The incentive - like all other incentives involving taxpayer dollars - must meet two tests, she said: public benefit, including the creation of jobs, investment and salaries, and the "but for" test that asks if an incentive is a determining factor influencing the company's decision to locate or expand.
"I wonder if these grants will meet the 'but for' test?" Sharp asked. "Are these grants an incentive or a reward? With all the needs in our city, is this how we want to spend taxpayer dollars?"
Just the first round
In its announcement of the new grants, the city called these the "first round" of the Innovation Grants.
"We have several companies right now that we are working with in the pipeline," Wilkinson said.
The $58,750 in grants that the city plans to spend if the 235 new jobs materialize at VaynerMedia and Coyote Logistics leaves another $41,250 that the mayor could grant.
The money was a sign of the city's willingness to support startups, said the head of the local VaynerMedia office. The New York-based social media-focused marketing business also has offices in New York City, San Francisco and Los Angeles.
"We have hard training and relocation costs that we invest into all of our Chattanooga employees that this grant is set up to help offset," said Mickey Cloud, vice president at VaynerMedia's Chattanooga office. "More than even the capital, which certainly helps when you're a high-growth company, the grant showcases the city's willingness to invest in the innovation economy."
VaynerMedia, which was founded in 2009 by social branding expert Gary Vaynerchuk and his brother AJ Vaynerchuk, was given space rent-free for a year in the Loveman's Building by the Lamp Post Group, a startup business "incubator" there. One of Lamp Post Group's partners, Ted Alling, who made millions in his 30s through the trucking logistics company Access America, is a fan and invited Gary Vaynerchuk to make his first visit to Chattanooga in May 2014.
VaynerMedia had about a dozen employees when it opened its office here in July 2015. It plans to grow its Chattanooga team to 75 employees, city officials say.
Coyote Logistics is expected to add 160 jobs, according to city officials.
Coyote Logistics is a Chicago-based startup company founded in 2006 that bought Access America in March 2014 for a reported $125 million. Then UPS Inc., bought Coyote Logistics in July 2015 for $1.8 billion. Coyote hires tech-savvy young people who don't necessarily know anything about the trucking business to learn how to use its proprietary software.
Contact staff writer Tim Omarzu at tomarzu@timesfreepress.com or www.facebook.com/MeetsForBusiness or twitter.com/meetforbusiness or 423-757-6651.