Updated at 11:49 p.m. on Wednesday, Sept. 25, 2019, with more information.
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An automotive paint factory planned in East Chattanooga to supply a new Huntsville, Alabama, car plant could also supply some of the money to finance housing, retail and community-support facilities in Avondale under a redevelopment plan announced Wednesday.
Billed as "East Chattanooga Rising," Chattanooga Mayor Andy Berke said he wants to use a portion of the property taxes to be paid by the new $61 million Nippon Paint USA plant to support other development on the former Harriet Tubman housing project site where the new paint plant will be built over the next two years.
Standing in front of the vacant site along Roanoke Avenue that once housed one of Chattanooga's biggest public housing projects, Berke and Hamilton County Mayor Jim Coppinger proposed creating a tax increment financing (TIF) district to plow back some of the extra taxes paid by Nippon into supporting new development in the area.
The city is giving most of the vacant site between Sholar and Roanoke Avenues to Nippon for the project. But the Japanese-based paint company will pay full city and county property taxes on the new factory.
The extra tax revenues generated by the paint factory are projected to produce more than $2.8 million over the next 20 years in additional taxes for Hamilton County public schools and more than $5 million in other payments to city and county governments, while still providing enough extra property taxes under the TIF plan to fund a 20-year bond issue of up to about $3.5 million. Those TIF funds could be used to build infrastructure and other investments to aid development of the other 15 acres or so of the Tubman site.
"The investment by Nippon is a huge vote of confidence in this area and we hope to build upon that and use some of the resources from this investment to help develop this area in a way that aligns with what the new Area 3 plan for East Chattanooga is proposing," Berke said. "If we can get private investment on the front side of the Tubman site as well, that is truly a sign that East Chattanooga is rising."
The Regional Planning Agency is developing a new planning guide for Avondale, Glenwood and the entire East Chattanooga area and will conduct another public meeting about the plan at 10 a.m. Saturday at Orchard Knob Elementary School.
Berke said the the city will put out a request for proposals with the goal of encouraging development on the portion of Tubman along Roanoke Avenue and Southern Street that is compatible with what the neighborhood wants in East Chattanooga, which could include more housing, a preschool and retail development for the area.
The proposed tax increment financing district would be the third TIF zone created in Chattanooga and still must be approved by the Chattanooga City Council and the Hamilton County Commission.
The first TIF was established seven years ago to aid the Black Creek development in Lookout Valley, and last year the city created another TIF to help pay for the extension of West M.L. King Boulevard to a new riverfront park and walkway on the Westside.
Under a TIF, developers spend the money for a project up front, then are paid back with interest over a period of time with additional tax revenues generated by development in the designated area.
"We're trying to make really transformative investments and sometimes that takes a lot of time and work," said Berke, who has allocated nearly $9.5 million over the past six years as mayor to acquire, clear and clean up what was once one of Chattanooga's biggest housing projects. "I think this project has a great potential to help all of East Chattanooga."
Coppinger said Nippon will provide additional tax revenues for county schools, and he is supportive of the efforts to reinvest in a part of the city that has lacked much new investment in recent years. The new Nippon plant will be the largest manufacturer to locate in East Chattanooga since the hosiery mill that later became Buster Brown Apparel opened in 1917.
But some local activists said they didn't like the lack of transparency in how the city recruited Nippon Paint to the Tubman site while a new neighborhood plan was still being developed, and they worry that the local community may not benefit from the jobs and investment associated with the new factory.
"What I don't understand is that if this is in our best interest of the people of our neighborhood, then why were we caught off guard and why were we not part of the process of bringing this to the public?" community activist Marie Mott asked the Chattanooga City Council Tuesday night. "How dare you take our tax money and not allow us to have a seat at the table? The 'Chattanooga Way' is going to die with some of you."
Mott, who plans to challenge City Councilman Anthony Byrd in the District 8 City Council election in 2021, said with more public participation in the recruitment of Nippon there could have been more graduates from programs such as the robotics training offered at Motlow State Community College's campus in McMinnville, Tennessee, ready for the new jobs planned at the facility.
Berke said Chattanooga officials, who have been talking with Nippon about the project for the past year and a half, were competing with three or four other Southern cities. They worried that waiting longer to make zoning changes or assemble the city's offer after more public meetings could have left Chattanooga out of the final competition for the business investment.
"Given that some of the other offers [to lure Nippon to other cities] were richer than ours, we decided to go on [and rezone the site] to give us the best chance to secure this," Berke said.
Tetsuruo Fujita, CEO of Nippon Paint USA, said Monday the company was impressed with the training offered at Chattanooga State Community College and Nippon plans to try to hire local workers for the new plant, which will not begin production until 2021 and may not reach full staffing until 2025 or 2026.
Berke acknowledged that neighboring residents "have reason to be skeptical" because of the lack of new investment in the area over many decades. But the mayor said the neighborhood residents he has talked with about Nippon's plans "are ecstatic" and welcome the new jobs in the area.
Byrd, the council member who represents Avondale, and Demetrus Coonrod, another city council representative who grew up in the former Harriet Tubman housing development before it closed in 2012, both voiced strong support for the new development, as did Hamilton County Commissioner Warren Mackey, who represents the area on the county commission.
Ken Smith, president of the Avondale Neighborhood Association, called the announcement of the redevelopment plans next to the Nippon Paint plant "the icing on the cake" after the recent additions of the Avondale Youth and Family Center and improvements such as the Wilcox tunnel and sidewalks along Glass Street in the area.
"We hope to build on this momentum by working together with the city, the county and the community to try to move things forward," he said.
Coppinger said the planned development by Nippon Paint and the rest of the Tubman site is projected to generate more than $11 million in additional property taxes from a site that now generates none.
"We can take a portion of that to help further redevelop this area, and that's a win for everyone," he said.
Helen Burns Sharp, president of the citizens group known as Accountability for Taxpayer Money (ATM), praised the proposed tax increment financing plan for the Tubman site as an example of how such tax-funded redevelopment projects should be structured to help economically challenged parts of the city.
ATM criticized the tax-funded improvements being made in the city's first TIF projects in Lookout Valley and near the riverfront on the west side "because they were located in upscale residential neighborhoods and the new roads to be paid for with TIF funds would likely have happened anyway," Sharp said.
"This TIF would be different in that this neighborhood meets the blight test," Sharp said Wednesday. "TIF can be a catalyst for development that likely would not happen without the incentive."
Sharp said she hopes city and county leaders "will make sure that neighborhood residents can help shape the plan for the site and neighborhood and that the new Area 3 Ridge to River Plan will serve as a guide."
Contact Dave Flessner at email@example.com or 423-757-6340.