Commissioner Hagerty Addresses East TN Megasite During TN State House Budget Hearings

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The Jefferson County Budget Committee is heading into the Budgeting season for the 2013-2014 fiscal year. In addition to the usual requests that are presented to the Budget Committee, EDOC by way of the Industrial Development Board is expected to request nearly $2 million additional dollars to continue the certification process for the proposed Megasite. The Jefferson County Commission recently allocated $442,311 in initial funding that is currently awaiting transfer to the Industrial Development Board for the beginning of the Megasite certification. The Jefferson County Finance Office is preparing to give recommendations for the source of the anticipated additional request for funds. Director of Jefferson County Finance stated recently that his office, with the assistance of the County Financial Advisor, is running numbers to be able to provide Commissioners with information on funding avenues for the nearly $2 million for continued certification and an additional $50-$60 million to fund the County’s portion of the project if it continues to progress. According to Helton, the projections that the Finance Office is working from came from the Younger Report, which is an Economic Impact Analysis prepared for the Jefferson County Economic Development Oversight Committee. The Economic Impact Analysis is dated January 2013 and was an integral part of EDOC’s campaign to secure funding for the initial phase of site certification. According to Sharon Younger, of Younger Associates, the data assumptions were provided by Jefferson County EDOC and there was no request for a risk impact analysis, only a benefit impact analysis. The requested Economic Impact Analysis was based on a funding split between Jefferson County, TVA and the State of Tennessee, with Jefferson County responsible for $60 million dollars of a projected $306 million dollar investment and the remaining $246 million dollars coming from TVA and the State of Tennessee. The Analysis is further based on the fact that the site will be certified as a TVA Megasite.

During a February 13, 2013 meeting of the Tennessee State House Budget Hearings, Commissioner Hagerty, the head of the Department of Economic and Community Development for the State of Tennessee, addressed the question of the State’s participation in the Jefferson County (East Tennessee) Megasite. Following extensive questions regarding the West Tennessee Megasite that the State is currently committed to getting up and running, Representative Hill directly asked Commissioner Hagerty if there were funding plans for the North East Tennessee (Jefferson County) site and the Commissioner stated that, though he was aware of the proposed site, there had been no request for assistance with funding from officials associated with the project. Representative Hill then posed the question of funding, should a request be made from officials and Commissioner Hagerty responded that it would be challenging considering the investment that the State has in the West Tennessee site. The State of Tennessee will, as of the 2013 budget, have invested around $117 million dollars in the West Tennessee project. The State owns the West Tennessee site and will be charged with marketing it to large industry. TVA and the State of Tennessee have heavily invested in two other Megasites in Tennessee, as well. The Chattanooga Megasite is now the home to Volkswagen, however the Clarksville site has recently had a serious set back. Hemlock Semi Conductor, the industry recruited for the Clarksville site, has laid off a large portion of current employees. The announcement came just on the heels of Jefferson County’s announcement of the East Tennessee Megasite Project. Of the three Megasites currently in Tennessee, only one is currently on track to meet employment expectations. Wacker, a chemical company that was in the process of building another huge site in Bradley County, has pushed back their production date until 2015. Wacker is touted as having the largest manufacturing investment in Southeast Tennessee.  

In addition concerns regarding State funding assistance and in the face of TVA’s recent declaration that it is not involved in the Jefferson County Megasite Project, there are issues regarding competition for targeted automotive manufacturers. McCallum and Sweeney, the certification company that is currently under contract with Jefferson County, is also considering similar certification in Davidson County, North Carolina. The North Carolina site has local competition from a neighboring county that is also seeking certification and both are reported to be looking toward the automotive industry to fill a Megasite. The State of North Carolina is on board with bringing a Megasite to that general area.

Jefferson County Mayor Palmieri stated in an interview last week that he has reservations about the amount of funding assistance that will be coming from other sources than Jefferson County tax payers. He said that during a recent conversation with Governor Haslam concerning the Jefferson County Megasite, the Governor stated that the State of Tennessee has a good finger on the automotive industry and that he is unaware of any automotive manufacturers that are currently looking to relocate in Tennessee. Mayor Palmieri said that he is not yet ready to dismiss the Megasite project, however he is not ready to invest further funds until more information is forthcoming on the project.

The State of Tennessee is currently contracting with two certification companies for their Select Tennessee program, which certifies sites for mid industry. Austin Consulting and Foote Consulting are certifying sites, much in the same way that a megasite is certified, for industry that is considered mid or small sized. Governor Haslam is promoting the Select Tennessee program and it is a part of his budget proposal. Mayor Palmieri stated that the Select Tennessee program could be a good fit for Jefferson County and that he is hopeful that, regardless of the outcome of the Megasite project, Jefferson County takes steps to secure jobs and diversify the tax base.