The Chattanooga City Council has approved a contract with Volkswagen to provide methane gas from the city landfill to produce electricity for the automaker's plant.
The city also is leasing to VW a building in which the gas will be converted to electricity.
"Our hope is there will be enough to generate two megawatts of electricity," said Wade Hinton, attorney for Volkswagen.
The council approved the contact on an 8-0 vote.
The council first heard about the contract two weeks ago, but deferred a decision because of concerns that the city could be trapped in a contract with no outs.
Hinton told council members Tuesday there are contract clauses saying both parties can walk away by Nov. 15.
Volkswagen wants to buy the methane from Chattanooga's Summit landfill for 50 cents a dekatherm, resulting in about $70,000 of annual revenue for the city, Hinton said. The car company also wants to lease a city building at the site for $200 a month, he said.
Plans call for methane to be pumped to the building, which holds generators in which the gas - a product of the landfill's decomposing waste - will be turned into electricity. The power then will be sent along a dedicated electrical line to VW's auto assembly plant at Enterprise South industrial park.
"I think it's innovative," said Councilwoman Carol Berz. "I think it's a model project."
Councilman Andraé McGary raised some concerns about pricing, however.
"Is 50 cents the market value?" he asked.
City Attorney Mike McMahan said the present market value for methane gas is about 53 cents a dekatherm, but he said the city has until November to negotiate the price.
In other business, in an 8-0 vote, the council also approved permanent residential zoning for property on Hunter Road where a controversial apartment complex was proposed. The zoning ensures that apartments cannot be placed there.
The council also approved 8-0 a bond issue within the next year and a half for up to $20 million to help pay for capital expenses.