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Staff Photo by Robin Rudd/ Chattanooga Mayor Andy Berke welcomes Nippon Paint USA, Inc. to Chattanooga. Behind Burke from left are Hiroyuki Kobayashi, consulate-general of Japan in Nashville and Tetsuro Fujita, president and CEO of Nippon Paint USA Inc. It was announced in September that Nippon Paint USA will invest $61 million in a plant on the former Harriet Tubman site in East Chattanooga.

NASHVILLE — City and Tennessee state government assistance for a Japanese automotive paint company planning to build a $61 million factory in East Chattanooga is one of 25 projects skewered in a Nashville-based, free-market research group's annual "Pork Report."

Under the heading of "Paint the Town Red, Pay the Company Green," the Tennessee Beacon Center's report this year criticizes the Tennessee Department of Economic and Community Development and the city of Chattanooga for giving land and financial assistance to recruit Nippon Paint, a Japanese paint manufacturer.

The department has awarded $1.1 million in support for the project at the former Harriet Tubman Homes site that Nippon Paint and Chattanooga officials announced in September.

The company plans to build a 270,000-square-foot manufacturing complex on about 29 acres of the 45-acre former housing development site. Nippon Paint is looking at hiring 150 workers over the next five to seven years, and Chattanooga Mayor Andy Berke and others are looking for a number of the jobs to go to residents of the low-income community.

The city is giving most of the vacant site between Sholar and Roanoke avenues to Nippon for the project. But Nippon will pay full city and county property taxes on the new factory, and local officials hope to raise sufficient funds through a tax increment financing plan to provide more money to local schools and have enough to plow into further development at the site.

While the $1.1 million state grant is a modest sum by the Economic and Community Development department's standards, Beacon Center officials gleefully linked it to Tennessee's ongoing financial support for Volkswagen's operations in Chattanooga. The group lobbies for less government and lower taxes.

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"Like an experienced painter, the Tennessee Economic and Community Development Department thoroughly covers all corners of Tennessee. But instead of brushing on paint, it rolls out taxpayer-funded grants to corporations," the group jabs in the 2019 edition of its annual Pork Report.

After "years of handing out $800 million to Volkswagen [and proposing another $50 million in 2019], [the department] decided to add a few more coats, this time spreading $1.1 million to Nippon Paint, a Japanese paint manufacturer," Beacon said. "The city of Chattanooga acted as a primer for Nippon, giving the corporation free land for their building. With no plan to stop these handouts, it's hard to cover the stain of wasted tax dollars through corporate welfare."

Scott Harrison, spokesman for the department, called it "disappointing that the Beacon Center dismisses the creation of 150 jobs in one of Chattanooga's most economically vulnerable communities."

Noting Avondale community leaders and residents "have long clamored for access to quality jobs in their neighborhood," Scott went on to say "that is exactly what Nippon Paint's $60 million investment will do. The creation of 150 manufacturing jobs promises to rejuvenate this community.

"[The department] is proud to support the City of Chattanooga's efforts to transform Avondale and attract quality jobs that pay living wages for families in East Chattanooga."

Charles Wood, vice president of economic development at the Chattanooga Area Chamber of Commerce, said Nippon's investment will generate jobs and taxes, which the city and Hamilton County are planning to put back into the rest of the Tubman site to spur other housing, retail and business development in the area in a tax increment financing district.

"We expect the redevelopment of the former Harriet Tubman housing project site and Nippon Paint's investment there to become a case study for creating jobs and economic mobility in low-income neighborhoods," Wood said.

While noting that far more costly government spending in Murfreesboro, Metro Nashville and Memphis dominated the 25-project list of what Beacon considers taxpayer boondoggles, the group's vice president of communications and outreach, Mark Cunningham, said the report's aim is consistent.

"We tried to hit all the cities we could with waste. And Chattanooga happened to be run fairly well this year, so that was kind of the one example we came up," he said. "Obviously, we never agree with taxpayer dollars going to individual corporations to come there.

"Chattanooga seems to be really thriving by most accounts," Cunningham added. "We don't think they would need to give a million dollars to get this company to come to the area. Maybe they wouldn't have come to that particular district. But Chattanooga is a thriving place, and we think the company should want to come there."

Nippon will supply automotive paint to the $1.6 billion Toyota-Mazda assembly plant being built in Huntsville, Alabama, and Berke said other cities in Alabama and elsewhere offered more money to lure the Nippon facility. But the former Tubman site is located along a rail line, with good road transportation, and is near an available work force to staff the new plant.

Cunningham said this year's dubious distinction of the worst "pork project" was "a really close race" between Graceland in Memphis and the city of Murfreesboro's Richard Siegel Soccer Complex, which is losing money.

"In another example of a company holding a city hostage and leaving taxpayers all shook up, the Memphis City Council authorized $75 million in incentives for Graceland, Elvis' historic mansion," the report states. "This came on the heels of veiled threats by the management company to actually move Graceland brick by brick from Memphis."

Regarding Murfreesboro's Siegel Soccer Complex, Beacon says "no wonder the city of Murfreesboro was forced to raise property taxes a few months ago to pay off its terrible investments. Murfreesboro is losing nearly $150,000 per year on the [complex], but instead of cutting its losses and selling it to the private sector, the city decided to double down by adding to the complex and upgrading the lights to the tune of $14.5 million."

Those two projects were among four finalists that Beacon asked its members and website followers to vote on for the "Pork of the Year" award. The East Chattanooga project wasn't among them.

The hands-down winner? It was the Murfreesboro soccer complex, Cunningham said.

Staff writer Dave Flessner contributed to this story.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.

Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.

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