Grant increases, building constructions approved by development department



(The Center Square) – Tennessee plans to increase the amount it is spending on preparing sites for future development and will now also fund prospective buildings on public-owned economic development sites.

This week, the Tennessee Department of Economic and Community Development announced it would be expanding its Site Development Grant program and increases the amount spent on these sites.

Local or state governments purchase sites, attempt to get them approved as select sites by the economic development arm for potential companies coming to the state, and then the state sends those companies incentives if they build at a site.

After years of working to find a company for the megasite outside of Memphis, Ford announced in 2021 plans to build its BlueOval electric truck factory on the site. On Tuesday, supplier Magna announced it would build two facilities on the site and a third on a select site in Lawrenceburg.

“Through these changes, we are reinforcing Tennessee’s position as a competitive player in the economic development landscape, and we look forward to seeing the new opportunities that these updates will bring to our rural communities,” said Commissioner Stuart C. McWhorter of the economic development department.

While state leadership is applauding the additional spending, academic studies from economists have shown that the benefits of such incentives are outweighed by the costs.

“In most places around the world, government owning the land, funding the businesses and paying for the factories is called ‘socialism,’” said John Mozena, president of the Center for Economic Accountability. “It doesn’t matter how much you dress it up in the language of ‘economic development’ and ‘proactive approach to economic growth,’ what Tennessee is doing is recreating the kind of top-down economic micromanagement that gave us the vibrant economies of North Korea and East Germany. These are economic policies better suited for Beijing or Shanghai than Nashville or Memphis.”

While Tennessee ultimately found a company for the Memphis megasite, it spent years spending on infrastructure without any promise of a company coming to the space and ultimately it also promised $884 million in incentives for Ford to come to the site.

“This is a recipe for disaster,” Mozena said. “Given the history of governments’ attempts over the years at ‘If you build it, they will come’ facility construction, I can virtually guarantee that it’ll end up with local communities spending lots of taxpayer money on facilities that’ll end up as vacant white elephants.

“This is putting politicians and bureaucrats in the position of being real estate developers, a job that very few of them are qualified to do.”

As of February, Tennessee had spent $81 million in site development grants since 2016 and awarded $5.9 million more in the past month. Partnership Park II in Bristol, for example, received a $1 million grant for site grading, rail connection and pad access in 2017 and another $1 million grant for grading recently before the Seaman Corp. recently announced it would spend $30 million to build a 350,000-square-foot facility that would support 35 jobs there.

The new grant program increases the maximum grant from $1 million to $5 million at a time for a site and decreases the required amount for local governments to match the Department of Economic and Community Development grants.

The prospective buildings must be a minimum specifications 100,000 square feet expandable to 200,000 square feet to be approved.

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