Infrastructure and development around Enterprise South will significantly raise city debt, but officials say long-term growth and future revenue from a nearby annexation will pay for itself.
The Chattanooga City Council authorized the issuance and sale of municipal bonds Tuesday evening for substantial infrastructure improvements at the Enterprise South site. The resolution, approved unanimously, states that the $20 million price tag is for "the purpose of paying all or a portion of the costs" associated with the Volkswagen auto manufacturing plant.
The infrastructure project includes streets, a helipad, welcome center, fire building, and electric transformer station, along with water and stormwater drainage, the resolution says.
City Finance Officer Daisy Madison said the resolution "sets a marker in the sand as to which projects the city is willing to finance with these municipal bonds." Under the American Recovery and Reinvestment Act, municipal bonds for private sector projects are tax-exempt, she said.
Prior to the vote, Councilwoman Carol Berz said the measure is peremptory while the Budget, Finance and Personnel Committee continues work on the 2010 fiscal year capital budget. "This allows us to go forward should the capital budget be passed, and begin the bonding process—so that when it is passed, we're ready to go the next step," she added.
During the afternoon agenda session, Madison told council members that the city will retire 33.9% of its debt in five years and 86.7% of its debt within 15 years, the Times Free Press reports.
The Budget, Finance and Personnel committee reconvenes Tuesday at 2:00 p.m. to work on the capital budget.
Tuesday evening, the City Council voted 6-3 in favor of annexing 230 acres near Exit 9 on I-75. Area 9B consists largely of residential and undeveloped property across the interstate from Enterprise South. Council members Peter Murphy, Deborah Scott and Russell Gilbert voted against the ordinance on first reading.
The city will spend $2.85 million to annex the area, Scott said, but will only generate $46,000 in tax revenue.
Mayor Ron Littlefield acknowledged the disparity between the expense of sewer installation and current tax revenue from the area, saying, "I think there's no clearer piece where what you're looking at is the lowest amount of taxes that you could anticipate, and the worst case scenario on sewers."
But, he told council members, "This area is going to change, and change very dramatically." He also said that he would feel more comfortable if city engineers and planners managed the growth and development there instead of the county.
Public Works administrator Steve Leach pointed to recent, commercial development in Ooltewah as an example of where the area is heading. The area will connect Chattanooga and Collegedale, he told council members.
"If we were annexing nothing else, this is the area we need to be annexing," the mayor said. "This is a site that I'm sure will pay for itself."
Councilwoman Sally Robinson echoed the mayor's remarks, saying that the area is "ground zero for the first wave of commercial development that we're going to see" as a result of the Volkswagen facility.
David Morton
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