Long List Of Sweeteners Helped Lure Volkswagen To Chattanooga

1,340-Main Site Could Expand By Another 1,200 Acres

Wednesday, November 19, 2008

A 49-page Memorandum of Understanding outlines a long list of sweeteners that helped lure the $1 billion Volkswagen plant to Chattanooga.

The incentives range from a 30-year tax abatement and free land to establishment of a German school and a German ambassador program.

The document says in addition to the main plant site, VW in the future might use an additional 1,200 acres for a plant expansion.

City and county are giving the main 1,340-acre tract at the Enterprise South Industrial Park in Tyner to VW.

VW has an eight-year option to pay $1,000 for the 1,200 acres at the expansion site. Local governments will continue to work to gain environmental clearances on the expansion site.

The pact that was signed by the city, county, state and Volkswagen says there should eventually be 2,000 workers at the plant.

It was agreed that for the project a full-time local development project coordinator and a part-time environmental coordinator will be provided.

VW will also have available experts from the state Department of Workforce Development, a tax coordinator, a local workforce development coordinator, a public policy advocacy coordinator and a public relations and communications coordinator.

Officials agreed to use their best efforts to obtain all needed permits for the project within 30 days from the request - or 60 days if a public hearing is required. All permitting fees are waived.

Local governments will spend up to $100,000 to cover the cost of insuring that the site is within a Foreign Trade Zone. The local governments will also pay up to $24,000 per year for four years for annual FTZ fees.

There is a 30-year abatement of real and personal property taxes for Volkswagen. The agreed market value of the plant site is listed at $10 million.

Officials agreed to waive taxes on inventory as well as sales and use taxes.

A number of jobs tax credits will be made available to the automaker.

The state pledged to VW that it will receive at least $40 million through the refundable Relocation Expense Credits.

The governments are covering the cost of preparing the huge site and building new roads and other infrastructure to it.

The city is to build a fire station near the auto plant.

Officials have agreed that Volkswagen can rename the industrial park if it so chooses.

On job training assistance, the state is committing $24 million. For on-the-job training, it will spend $3.4 million

The state and local governments will spend $40 million on a worker training facility and equipment near the plant. It is "for use by the company and their suppliers at the park in accordance with the requirements and standards of the company."

The state will issue bonds to finance the training center sold through the Hamilton County Health, Education and Welfare Board

Chattanooga State is to operate the training center, while receiving $2 million per year for eight years from the state.

State officials said they will seek legislation so that all company vehicles will be exempt from taxes.

VW is to be paid $25,000 per business day lost as a result of construction delays in getting the site ready.

Volkswagen is being provided office space in the nearby Eastside Utility Office Building until Jan. 1, 2013.

The governments will match the company dollar for dollar up to $6 million to build a "green" welcome center off I-75. The governments will pay all operating costs for the portion of the center dedicated to emphasizing the adjacent passive park and recreational area. Each acre used for the welcome center will be offset by adding another acre to the park.

VW may take ownership of the welcome center if it so chooses. Officials said VW can use the facility to highlight its products to the 55 million travelers who pass by there each year.

The welcome center is to be LEED certified.

The county schools are to integrate a German curriculum into its system by January 2009.

An ambassadors program is to be created to welcome company employees and help integrate them into the community.

The Chamber of Commerce has identified 10 hotels in the immediate vicinity of the project site who are prepared to offer 25 to 50 rooms for a 90-day period at $50 to $70 per room, it was stated.

Company officials will be allowed to name the roads at the plant site.

The state is providing $2 million for marketing and public relations for the project and the company.

A $35 million environmental insurance policy is provided for the site through AIG.

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