published Wednesday, October 12th, 2011

VW spends most of $235 million in infrastructure aid

Train cars sit near a lot at the Volkswagen plant waiting to be loaded for transport to dealers.
Train cars sit near a lot at the Volkswagen plant waiting to be loaded for transport to dealers.
Photo by Angela Lewis.
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Key funds provided for the VW project by city, county and state:

$79.6 million: site development (state)

$70 million: infrastructure (state)

$40 million: training center (state)

$39.3 million: plant infrastructure (city/county)

$6 million: welcome center (local)

Source: City Industrial Development Board

Volkswagen's assembly plant project has burned through nearly all of the public funding pledged to it three years ago as a part of the incentive package to lure the automaker to Chattanooga.

Officials said Tuesday that about 96 percent of the more than $235 million in infrastructure, training and other money earmarked for the project is either spent or encumbered.

The plant that officially opened in May was provided the funding as a portion of the estimated $577.4 million incentive package of federal, state and local assistance and tax breaks offered to VW. The sum is a record for an auto plant in the United States.

Officials said spending is on budget, and they'll likely take several months wrapping up contracts related to the biggest single manufacturing project ever in Hamilton County.

"We've really tried to be careful about everything we spent," said Steve Leach, the city's public works administrator, at a meeting of Chattanooga's Industrial Development Board. The panel was charged with overseeing the $235 million, which accounts for nearly all of the public infrastructure spending for the $1 billion plant.

City Engineer Bill Payne, asked by board member Ric Ebersole if all the public money will be spent, said that's likely to be the case.

Tidying up

He said work on VW's welcome center to be located near Interstate 75 hasn't started yet, and some $6 million is earmarked for it.

Payne said everything outside the welcome center generally is accounted for.

"There's still some pending projects being considered," he said.

  • photo
    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 /Chattanooga Times Free Press.

Hamilton County Mayor Jim Coppinger said the public money was worth spending, citing the more than 2,000 workers hired by Volkswagen and hundreds of other jobs added by VW suppliers.

"That has played out significantly," he said, adding that 90 percent of the production slots at the plant were filled by county residents. "The commitments VW made, it has fulfilled those."

Richard Beeland, spokesman for Chattanooga Mayor Ron Littlefield, termed the project "a great investment for the city."

Leach said the city is looking forward to another challenge if VW decides to expand the factory.

"It's just a rare opportunity to have this kind of facility that has this kind of expansion opportunity," he said.

Coppinger added that the public spending on the project is on budget.

"It has been done very effectively," he said. "We're pleased Volkswagen is up and running and that there could be an expansion."

Other tax credits

While the plant initially was built to produce 150,000 vehicles a year, officials have said it could be enlarged to make more than 500,000 units.

The $577.4 million in incentives also includes jobs and machinery tax credits awarded by the state valued at over $104 million. Local payment in lieu of tax agreements for VW were put at about $133 million, figures show.

Tuesday, the industrial development board approved a couple of new contracts, including spending up to $98,387 for the purchase of additional equipment from Chattanooga-based Walter A. Wood Supply Co. Inc. for the Volkswagen Academy, which is the training center on the VW property.

"That training center has been very active," said Ted Mills, the board's chairman.

Payne said the training center equipment will be paid for from the state's portion of the funding.

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about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
carlosshane1477 said...

Volkswagen’s set up place venture has used through nearly all of the community money promised to it three a long time ago as a piece of the motivation offer to attract the car maker and auto repair makers to Knoxville.

December 6, 2011 at 1:18 a.m.
J3rrYcid said...

Volkswagon knows how to make use of the public funds that were spent to lure them to Chattanooga. Though the investment Is great, the payout will likely be good because the plant looks scalable, and so more production will bring more jobs. This is good news for the employment market there. Thomas -

June 20, 2012 at 12:17 a.m.
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