Image Credit: Nippon Paint Automotive Americas, Inc. / LinkedIn.
Article by Olivia Lupia, Tennessee Conservative News –
The City of Chattanooga is preparing to try and recoup some of its investment into a Japanese paint and coatings manufacturer after the company failed to meet its financial and employment obligations to both the city and the state.
Japan-based Nippon Paint Holdings Co. is the world’s fourth largest paint and coatings manufacturer, making and distributing their products for the architectural, automotive, and industrial coatings markets.
Wholly owned by the Japanese parent company, Nippon Paint USA announced in 2020 a nearly $60 million investment into a Chattanooga facility and promised to create 150 jobs over the following five to seven years.
“Nippon Paint is a welcome addition to the many great companies that call Tennessee home,” said Gov. Bill Lee at the time. “Tennessee is a perfect place for international businesses to operate, and the creation of 150 quality job opportunities is terrific news for the Chattanooga community.”
And Tennessee Department of Economic and Community Development (TDEC) Commissioner Bob Rolfe said of the project, “Tennessee has a strong relationship with Japanese companies, and more than 51,500 Tennesseans work at nearly 200 Japanese-owned businesses throughout the state. Nippon Paint’s significant investment in Chattanooga underscores the fantastic environment for job creation we’ve fostered in Tennessee.”
The company received financial incentives from both the state through a FastTrack grant of over $1 million and the City of Chattanooga through the donation of 29 acres of land and Tax Increment Financing based on the investment and employment promises Nippon made.
Now, both government entities are looking to claw back the taxpayer money given to the company as Nippon has failed to deliver.
According to Charita Allen of Chattanooga’s Economic Development office, Nippon invested only $52 million of the pledged $59 million, has only 32 employees at the site as of last November, and a planned second and third building have not been constructed.
She said the project was hampered by COVID, but there has not been any confirmation or explanation as to why there has been virtually no progress since that time.
The city has informed Nippon of its intentions to proceed with the clawback, though she reiterated that “the negotiated settlement is not yet final” and the City Council still must officially act on the measure next week.
A tentative proposal would see Nippon repay $1,057,600 and return 10 of the nearly 30 acres it received from the city, but City Council members are divided on how much the city should try and reclaim, especially given the city’s $4 million additional expense to move a sewage line and create a street extension.
“Why are we only going for 10 acres? They are getting 19 free acres and they barely scratched the surface on what they promised. Let’s snatch all the land back and make them lease it back,” one member proposed.
“I will not be supporting this deal. It is very weak,” said another who believed the city “should get back what we lost.”
Others said that the firm had made a “significant investment” at the site and the land was now back on the tax roll after being off “for decades.”
The mayor’s chief of staff said he doesn’t think the city should be “overly punitive” as the firm is “still operational and trying to grow.”
Meanwhile, Nippon repaid the $1,125,000 FastTrack grant on July 2 of this year after TDEC initiated their own clawback proceedings for the company’s failure to fulfill their job creation obligations.
The state’s clawback record has come under scrutiny since a $30 million FastTrack grant was awarded to Starbucks while millions of taxpayer dollars have not been recouped from the dozens of companies that have defaulted on their incentive obligations over the past few years.
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About the Author: Olivia Lupia is a political refugee from Colorado who now calls Tennessee home. A proud follower of Christ, she views all political happenings through a Biblical lens and aims to utilize her knowledge and experience to educate and equip others. Olivia is an outspoken conservative who has run for local office, managed campaigns, and been highly involved with state & local GOPs, state legislatures, and other grassroots organizations and movements. Olivia can be reached at olivia@tennesseeconservativenews.com.
