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Staff photo by Troy Stolt / McDonald Farm is seen on Monday, Oct. 5, 2020 in Sale Creek, Tenn. It was recently announced that Hamilton County has an interest in purchasing the farm, which is up for sale, in order to build an industrial park on the land.

As Hamilton County government prepares its biggest land purchase in decades for a new industrial park, a conservative think tank in Nashville is blasting the move as "a horrible policy" that will allow only about a third of the property to be developed for new industry.

Hamilton County Mayor Jim Coppinger said he hopes to complete a $16 million acquisition in the next week for the 2,179-acre McDonald Farm in Sale Creek to develop needed sites for industrial and business development and as well as provide additional parkland and recreational areas.

But the Beacon Center of Tennessee claims the farm purchase is one of the worst examples of government waste in the state for 2021.

"Hamilton County commissioners must be fans of the movie 'Field of Dreams' after spending $16 million to buy 2,170 acres in hopes to turn it into a manufacturing hub," the Beacon Center says in its new Pork Report, highlighting what it calls the worst examples of waste, fraud and abuse in Tennessee during the past year. "On top of shelling out millions of tax dollars with the dream of making it a manufacturing hub, the actual cost of the land was way out of left field."

Only about 700 acres of the farm is flat and developable enough for new industry, putting the cost of the usable land at nearly $23,000 an acre even before costly sewer and water lines and new roads to the site are built, the Beacon Center says.

But Coppinger said he pushed to acquire the farm in northern Hamilton County not only for its industrial potential along Highway 27 and the Norfolk Southern rail line but also because of its scenic farmland and access to the Cumberland Plateau for recreational, agricultural and environmental purposes.

"Our intent from the very beginning was to not only build an industrial park on this site but to also use the property for mixed-use development as green space and even a learning environment for children, much like what we have done at Enterprise South where we have both industry and a nature park," Coppinger said. "This property presents a lot of opportunities for different types of use."

Sewer lines will be extended to the property from the city of Dayton and other improvements will be made over time to help provide needed land for industry and businesses looking to locate in the growing Sunbelt, Coppinger said.

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Read the 2021 Pork Report from the Beacon Center of Tennessee

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Charles Wood, vice president of economic development for the Chattanooga Area Chamber of Commerce, said the McDonald farm will provide sites needed for more economic growth in Chattanooga.

"We have missed out on a number of opportunities that would have been very significant in terms of new school tax revenue and economic impact for Hamilton County because we just did not have viable options for some companies to consider as they plan for their growth," Wood said.

The site shortage has intensified in the past couple of years, and the McDonald's farm site that straddles both sides of the Hamilton and Rhea county border is ideally suited for the growth already being propelled by the recent expansions by Nokian Tyres in Dayton and other projects, Wood said. The land was owned by the family of the late Roy McDonald, founder of the Chattanooga News-Free Press, since merged with the Chattanooga Times.

Beacon officials question why the private sector can't meet demand for industrial space without imposing the costs of future business on existing businesses.

"'If you build it, they will come' might be a good movie quote, but it makes for horrible policy," said Mark Cunningham, vice president of strategy and communications for the Beacon Center, a free-market advocacy group. "These types of deals historically have been a strikeout for taxpayers instead of a grand slam. Elected officials should stop short of spending tax dollars and instead seek to make it easier for businesses to operate in Tennessee."

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Hamilton County to purchase McDonald Farm

Beacon also criticizes the example of the Memphis Regional Megasite which sat empty for 15 years until the state agreed to provide hundreds of millions of dollars in tax breaks and assistance to lure Ford Motor Co. and a Korean battery maker to build a battery and electric car assembly plant on the 3,600-acre property.

While Beacon objects to such government incentives and property purchases, the Memphis megasite did ultimately land the biggest new economic investment in Tennessee history with plans by Ford and SK Innovation to invest $5.6 billion and create at least 5,800 new jobs, starting in 2025.

Similarly in Chattanooga, local governments invested millions of dollars to convert the former Volunteer Army Ammunitions plant in Tyner into the Enterprise South Industrial Park, which has been used to recruit Volkswagen, Amazon and dozens of smaller companies that collectively employ more than 10,000 jobs on site and have spurred thousands of other jobs in the region.

Aided by nearly $800 million of current and future tax breaks along with infrastructure investments on the site, Volkswagen and its suppliers have invested more than $2 billion in VW's only North American vehicle assembly plant, which a 2019 University of Tennessee study estimates helped add over 16,000 jobs in Tennessee even before VW's recent $800 million expansion to make battery-powered SUVs.

 

Municipal broadband debate

In its 16th annual Pork Report, the Beacon Center also criticizes Knoxville Utilities Board for proposing to spend $702 million to build a broadband network when 98% of its customers already have access to more than one private high-speed internet provider.

"Government-run internet is something we would never support, especially when there are private sector alternatives," Cunningham said. "But it is especially bad in Knoxville because it is completely unneeded and even KUB said in an earlier report that it doesn't make sense because of the costs and other issues."

The Beacon Center and other critics of municipal broadband services raised similar concerns more than a decade ago when Chattanooga's EPB issued more than $200 million of bonds to help launch its broadband service in 2009 as part of its fiber optic network built for a smarter electric grid. Although municipal broadband ventures in Memphis and other cities proved unsuccessful, EPB's high-speed broadband network has helped generate nearly $2.7 billion in economic benefits and added nearly 10,000 jobs in Chattanooga, according to an economic analysis released earlier this year by the University of Tennessee at Chattanooga economist Bento Lobo.

Wood said the public-private partnerships that made long-term investments in projects like the Tennessee Riverwalk, EPB's "Gig City" fiber optic network and previous industrial parks such as the Riverport, Bonny Oaks and Enterprise South have all propelled Chattanooga's economy and quality of life.

As businesses move more quickly to respond to changing market conditions, most are looking for industrial sites where they can move ahead quickly, if needed, to build new facilities with utilities and roads already in place, Wood said.

"Economic development is really the business of preparation," he said. "You are not going to be successful if you are not preparing yourself for the future. Fortunately in our community, we have had political and civic leaders who have invested in long-term projects like these industrial parks to help us attract billions of dollars in new business investments that help propel our economy."

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

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