Looking for public industrial park space in Chattanooga

Looking for public industrial park space in Chattanooga

August 28th, 2011 by Mike Pare in News

Workers install fiberglass balls at the entrance to Enterprise South Industrial Park in 2003. The park didn't take off until five years later with VW's decision to locate there.

Photo by Tim Barber/Times Free Press.

Chattanooga/Hamilton County Industrial Parks

• Bonny Oaks Industrial & Office Park: Full

• Centre South Riverport/Industrial Park: 73 acres left

• Enterprise South industrial park: 64 acres left

• Lookout Valley Industrial Park: Full

• Mountain View Industrial Park: Full

• Ooltewah Industrial Park: Full

• Soddy-Daisy Industrial Park: Full


Enterprise South Timeline

• 1941 - Ground is broken for the 7,000-acre Volunteer Army Ammunition Plant.

• 1977 - Munitions production halted. Plans started for local acquisition.

• 1991 - Raytheon Co. leases part of site to assemble Maverick missiles for Persian Gulf War.

• 1995 - Under management by chemical manufacturer ICI Americas, the renamed Volunteer Site gets $15 million in federal funds for cleanup.

• 2000 - City and county pay $7.5 million for first 940 acres, soon rebrand it as Enterprise South industrial park.

• 2004 - ESpin Technologies and TAG Manufacturing locate at Enterprise South.

• 2008 - Volkswagen decides to build $1 billion auto assembly plant at Enterprise South and employ at least 2,000.

• 2010 - Amazon announces plans to build a million-square-foot distribution center at the industrial park and create 1,200 full-time jobs.

When Volkswagen officials weighed where to put a $1 billion auto assembly plant three years ago, they said the shovel-ready nature of 1,400 acres at Enterprise South industrial park helped seal the deal.

Today, just 64 acres of the 7,000 acres at the former Volunteer Army Ammunition Plant are uncommitted or not under option.

And the remaining inventory of public industrial park space across Chattanooga and Hamilton County is as tight as it has been in years, some experts say. Only two of the publicly owned industrial parks in the county are not full, with Centre South Riverport having 75 acres along with the space at Enterprise South.

As a result, Hamilton County could find itself without enough suitable acreage to attract other major industrial projects at a time when competition is heating up in the Southeast.

"You're not in the game if you don't have the chips," said Tom Edd Wilson, chief executive of the Chattanooga Area Chamber of Commerce, the city's main economic development group. "We've got to go out and find properties."

Both Hamilton County Mayor Jim Coppinger and Chattanooga Mayor Ron Littlefield said they're looking for more land.

"Absolutely," said Coppinger. "There are some areas we've had our real property people investigate that might be a good fit."

Littlefield said the city is "in the mode of looking for additional large acreage."

Chattanooga Mayor Ron Littlefield

Photo by John Rawlston/Times Free Press.

Both mayors declined to name any prospective sites.

Littlefield said the current problem isn't necessarily a bad one. In addition to VW, Enterprise South has attracted more than a half-dozen suppliers for the automaker, an Amazon distribution center, Erlanger Health Systems, Archer Daniels Midland and other companies.

Before VW, some had considered the investment in Enterprise South a bit of a boondoggle. Today, driven primarily by the automaker and Internet retailer Amazon, the industrial park has become a huge economic engine. Activity at the park is expected to generate more than 10,000 jobs and hundreds of millions of dollars in commerce for the region for years to come, according to a study by the University of Tennessee's Center for Business and Economic Research.

But David DeVaney, president of NAI Charter Real Estate Corp., said the county is back where it was about a decade ago before Enterprise South was created.

He said he has talked to companies that are frustrated at the lack of industrial space in Hamilton County and are looking at other locations along the Interstate 75 corridor. For example, DeVaney said he worked with a company recently that didn't need rail or the river and said there was little the county has to offer.

"It's very limited," he said.

Jimmy Hudson, a longtime developer and president of Hudson Cos., said he doesn't recall industrial park inventory being so short in Hamilton County.

"We're seeing activity outside [Hamilton]," he said, with other counties being more active in assembling industrial park space.

Meanwhile, other cities in the region are readying for the future.

In Huntsville, Ala., officials recently unveiled plans for 9,323 acres of annexed farmland. Up to 2,000 acres of it is earmarked for industry, as officials eye major employers such as a potential Audi auto assembly plant that Chattanooga officials also are pursuing.

"It's on everybody's radar if it comes about," said Huntsville Mayor Tommy Battle. "If not, we'll end up doing industrial development and have a number of industries out there."

Staff photo by Dan Henry/Chattanooga Times Free Press - December 01, 2010. Enterprise South complex including Volkswagen, VW, Erlanger, and Amazon. Aerials from Hamilton County and Bradley County.

FROM TNT TO VW

Enterprise South was redeveloped from a portion of the Volunteer Army Ammunition Plant, which was built during World War II to make TNT. The production of TNT ended after the Vietnam War in the 1970s.

Decades of land negotiations by the city and county, cleanup and site work led to a portion of the former Army plant being certified by TVA in 2005 as an industrial "megasite" and ready to do battle in the hunt for new industry.

In mid-2008, Chattanooga landed Volkswagen, which began production of cars this spring. Once the old Volunteer Army site became known as a marketable megasite, officials said, development occurred rapidly.

About 3,000 acres of the 7,000 was deemed OK for economic development. The remainder, property too hilly for industry, was turned into a 2,800-acre nature park and acts as a buffer between VW and I-75.

VW has 1,340 acres and used part of it to build its factory. The German automaker also has an option for about 1,200 adjacent acres.

FINANCES

When it comes to new industrial park space, Coppinger noted that the county's budget is tight. But, he said, there are mechanisms in place to help finance new space.

In this file photo Jim Coppinger speaks to reporters after taking the oath of office to become Hamilton County Mayor on Jan. 11, 2011.

Photo by John Rawlston/Times Free Press.

The county has "a good, healthy fund balance," he said, and some of the county's outstanding bonds are maturing.

"There will be an opportunity ... to have money available," Coppinger said.

At the same time, a $5 million bill is coming due, related to part of the city and county acquisition of Enterprise South. Under legislation sponsored by former U.S. Rep. Zach Wamp, R-Tenn., the federal government sold 1,024 acres to Chattanooga and Hamilton County and gave the city and county 10 years to pay for the property.

Paul Parker, Hamilton County's real property manager, said the money is due the federal government by 2015.

"It allowed us to take possession before we paid for it in the event we were able to use it," he said.

Parker said he's not aware from what source that money will come, but he's sure preparations are made to pay.

Wilson said that, while economic conditions are difficult, he's confident the city and county can find the money if they locate a well-situated tract that meets the need for an industrial park.

"It needs to happen much sooner rather than later," he added. "You never know when there is a nice project that needs 50, 100, 125 acres. They're not willing to wait for two years for you to buy the property. You've got to be ready to go."

PRIVATE SOURCES

Chamber President Tom Edd Wilson

Wilson also said many cities have privately held industrial parks, including at least three in Hamilton County. Bonnyshire Industrial Park is off Bonny Oaks Drive, Valley Industrial Park is in Lookout Valley and North River Industrial Park, which is full, is off Highway 153.

The Chamber CEO said there may be opportunities for a public-private partnership concerning future industrial park space.

"I would say that, going forward, that might be an area of development we might want to look at," Wilson said.

Coppinger, too, cited the partnership idea, saying that's one way to "sustain the momentum we have."

DeVaney said he thinks the public-private approach is a good one. Without public help, however, he said it's difficult for a private landholder to put together an industrial park today.

Hudson said partnering public and private sources is "very possible," but agreed with DeVaney that the economics of totally assembling a private park are difficult.

"It's tough to be in speculative real estate development right now," Hudson said. He earlier developed the 52-acre Valley Industrial Park, which only has one seven-acre tract left, he said.

Hudson said tracts ranging in size from 50 acres to 500 need to be assembled in Hamilton County.

Public ownership of industrial sites also allows communities to offer more incentives to recruit industry. At Enterprise South, for instance, the city and county gave Volkswagen 1,340 acres, valued at $40.2 million, and gave Amazon 80 acres, valued at $2.5 million. The city, county and federal government also have invested in roads, sewers, rail lines and other infrastructure to serve businesses that have located in Enterprise South.

Former Hamilton County Mayor Claude Ramsey, currently Tennessee's deputy governor, said last year such investments "are the costs of doing business" and are needed to help Chattanooga compete with other cities for new jobs.

REGIONAL APPROACH

While Hamilton County is running out of available industrial sites, neighboring counties are assembling public industrial parks and promoting private locations for businesses interested in the region.

Gary Farlow, CEO of the Cleveland Bradley County Chamber of Commerce

Photo by John Rawlston/Times Free Press.

Wilson said development of a regional growth plan is in the Chattanooga Chamber's new economic development blueprint and work is in the early stages.

"We've got to move to the next level," he said. "It's planning on a regional basis for everything growth brings with it and putting a consolidated front up there when competing against other communities."

Gary Farlow, the Bradley/Cleveland Chamber of Commerce's chief, said there may be companies that want to be in the vicinity of the Volkswagen plant.

"We need to be looking in the surrounding region," he said.

Farlow said that Bradley, like Hamilton, has succeeded in wooing companies such as Wacker Chemical, Amazon and others, and it, too, is running out of industrial park space.

The Bradley Chamber is trying to put together a new 343-acre industrial park near exit 20 along I-75.

"That puts us back into the game of having inventory we can sell," Farlow said, and triggers hopes of gaining spin-offs from VW and Wacker.

In Whitfield County, Ga., officials have assembled about 185 publicly held acres in the south end of the county, said Alex Stall, senior project manager for Dalton-Whitfield County Joint Development Authority. There're also about 300 acres of privately held property that can be used as an industrial park, he said.

"Now we have two options," Stall said. "Having a publicly held site, we can control that. We didn't have large amounts of land. We didn't have anything to show."

Whitfield's topography often makes it hard to find large, flat parcels, he said.

A regional approach can make sense, Stall said, because when targeting businesses, it's harder to stand out as just a city.

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