Chattanooga IDB approves $135,000 performance grant for Master Machine expansion

The City of Chattanooga Industrial Development Board on Aug. 4 approved a resolution authorizing board leadership to execute a project grant agreement with Master Machine Inc. for a performance-based award of up to $135,000 to support a Chattanooga expansion that the company says will create about 45 new jobs.

The grant will be paid only after the company creates and retains jobs according to a multi-year schedule; Hamilton County is expected to consider a matching share of the award at its upcoming meeting. The board voted to approve the resolution after staff and outside presenters described the program and the company’s investment plans.

Board staffer Sherry Allen, senior adviser for economic and workforce development for the City of Chattanooga, told board members, "The staff is recommending approval of this item. It's a performance based grant and that the company has to create the jobs before the performance is paid out." Allen said the maximum award is $135,000, paid over multiple years, and that payments would be split with Hamilton County but administered through the IDB if both jurisdictions approve.

Why it matters: The award supports job creation and higher wages in a target industry — Master Machine supplies parts and services to the nuclear power sector and defense contractors — but public comment at the meeting raised concerns about transparency and whether the city council had formally adopted the underlying program rules.

Adam Myers, vice president of economic development at the Chattanooga Area Chamber, said Master Machine has operated in Chattanooga since 1993 and currently employs 72 people in local facilities. He described the project as a consolidation into a 79,000-square-foot building at 200 Copper Street that will involve significant retrofits. "They will be investing into that facility 7,700,000 in real property improvements as well as 2,500,000 in personal property improvements," Myers said in his presentation.

Public comment raised questions about the program’s oversight. Helen Burn Sharp, of Accountability for Taxpayer Money (APM), urged greater transparency and asked several policy questions, including whether the high growth jobs and investment program had been established by city council resolution and whether the program applies a "but-for" test to determine whether public incentives are necessary. "What sort of message does it send when the IDB is asked to give what would have been taxpayer dollars if they had been collected to a business that was going to expand here anyway? It sounds more like a more of a reward than an incentive," Sharp said.

Board members asked implementation questions about compliance and enforcement. Myers and Allen described the program as fully performance based: Master Machine must create specified job counts by year, maintain at least 90% of the proposed job creation to receive that year’s payment, and submit quarterly-average employment figures to verify retention. Allen said confirmed compliance would lead to a payout by March 1 of the compliance year.

Company president Warren Brandon said the expansion is driven by growth in nuclear and Department of Energy work and that the company plans to consolidate four facilities into the new site. "We currently operate at 1401 Workman Road And 3801 Dodd. So we are very excited to continue our growth, in basically nuclear power department of energy, here in Chattanooga," Brandon said.

The incentive structure described in the staff packet sets amounts by average wage bands; Myers said the proposed $3,000-per-job value applies where average wages fall between 100% and 150% of the Hamilton County average. For this project, staff said the company’s proposed average wage for the new positions is about $72,330, roughly 111% of the current county average.

The board member who moved to approve the resolution said the request represented one of the higher average-wage proposals the IDB has seen and praised the high-skilled jobs. A second was recorded, members voted in favor, and the resolution passed.

What the board approved and next steps: The resolution authorizes the IDB chair or vice chair to execute a project grant agreement under the high growth jobs and investment program with Master Machine Inc. Payments are conditional on meeting the performance schedule; Hamilton County must approve its share of the funding separately. Compliance reports and annual verification will be used to confirm payouts.

Details that bear watching: the staff report cites a state statute authorizing the board’s action; meeting discussion also noted the program itself has not been codified by city council and is funded from economic development fees tied to existing pilot and TIF recipients. Hamilton County commissioners were scheduled to vote on their portion the week after the IDB meeting.