Sun
Jan 22 2006
04:03 pm

There were a couple of recent articles in the Knoxville News Sentinel about local developments and business expansions that will add hundreds of new jobs and millions of dollars to the region's economy.

According to the first article (registration required), a Houston company recently purchased 18.5 acres of a property from Target Corp. for $8.95 million to build a new shopping center.

Here's the interesting part. According to the article, the property is part of a 30.5 acre parcel that Target Corp. purchased from Knox County in January 2005 for $7.6 million. The property was formerly part of the 74 acre Knox Farmer's Market site. So, Target just made a windfall profit of $1.35 million (yeah, I know, it's a rounding error on their books) and, bonus, got 12 acres of commercial property for free. Sweet!

You have to wonder how the value of this property appreciated so dramatically in one year. A new shopping center with Target as the anchor would certainly explain an increase in nearby property values. But why wouldn't Knox County have figured that out when they, like, sold the property to Target to develop a new shopping center?

And as I recall (someone please correct me if I'm wrong), Target said when they bid on the property that they didn't need all of it and planned to sell some of it off. Why didn't Knox County just sell them what they needed and sell the rest for the higher price it is apparently worth? Wouldn't this have been a better deal for taxpayers? These guys don't sound like very good bidnessmen, but maybe there's more to the story. Regardless, I'm sure Target isn't complaining about a $1.35 million windfall and 12 free acres of land.

There has been plenty of other controversy about this deal, some of which Betty Bean reported on before.

The second article is about a new luxury boat/yacht building company moving to the Tellico West Industrial Park in Monroe County. According to the article, the expansion will create approx. 350 new jobs -- jobs that are sorely needed in the Tellico region.

(More than twenty years ago, TVA promised that the Tellico Dam project would grow the region's economy and revitalize its industrial and residential prospects. Unfortunately, those promises haven't quite panned out, unless you are a real estate developer building multi-million dollar homes in exclusive lakeshore neighborhoods on property taken from farmers and residents for pennies on the dollar. Not that there's anything wrong with that -- maybe I will own one some day!)

Anyway, here's the interesting part. According to the article, Monroe County came up with $8 million in bonds and other incentives to lure the company there. The company also got incentives from the state, although these have not yet been disclosed (which is reminiscent of the recent secret legislation our state passed to give Nissan nearly $200 million to relocate their headquarters to Tennessee.) The article also says Phil Bredesen was personally involved in recruiting the company, so one would expect there are some pretty nice incentives coming from the state.

We can sure use the jobs, and it's great that East Tennessee is becoming a nationally recognized center of pleasure boat manufacturing (SeaRay, Allison, Mastercraft, and others are already here). But at what cost to taxpayers? You can argue the long term benefits, but you can also ask what other long term benefits we might get from tending to some basics, such as education and infrastructure, that would make our region more attractive to companies in the first place.

OK, then.

WhitesCreek's picture

A good friend of mine at

A good friend of mine at Georgia Tech oversaw the studies that determined what brought jobs to an area. He wrote to me saying that you have to bait your hook. Sure you can give a Mega Corp money, incentives, what have you, but what you really want are businesses whoseowners are willing to live near them.

"Good schools" were the best bait.

The acronym was CaRPS...Curb appeal, Recreation, Parks, and Schools. and by Recreation, he was talking about grown up things like restaurants and theaters.

Make your town a great place to live and the businesses will show up in the "Build it and they will come" mode.

Steve

foo's picture

i believe TVA has evolved

i believe TVA has evolved into the single worst entity the US government ever created.

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