Novonix outlines $1 billion expansion at Enterprise South; council hears proposed 15-year PILOT and community-benefit commitments

Novonix, a battery materials and technology company operating in Chattanooga since 2017, presented details on a proposed expansion to be sited at Enterprise South Industrial Park during the City Council meeting on Jan. 7.

Why it matters: The project would be among the largest private investments proposed in the area and includes a long-term PILOT (Payment-In-Lieu-of-Taxes) request that the city and county would consider alongside community-benefit commitments and workforce-development provisions.

Company overview and project summary: Darcy McDougall, chief operating officer for Novonix, told the council the company manufactures synthetic graphite used in lithium-ion batteries and is pursuing a greenfield plant on approximately 182 acres at Enterprise South. Novonix said the project would support an initial target of 20,000 tonnes per year at existing facilities and could expand capacity to 30,000 tonnes by 2028, with potential further expansion. The Phase 1 greenfield project was described with an estimated total capital investment of $1,000,000,000 (real property $450 million; personal property $550 million) and a target of approximately 500 full-time operational jobs at full ramp-up and an additional 500 construction jobs.

Proposed incentive and terms described: City staff presented a draft term sheet that would phase in property tax abatement over 15 years on a declining schedule: 100% in year 1, 75% in year 2, 60% in year 3 and 50% in years 4–15. The presentation stated that school taxes would not be abated, and the company would pay a 15% economic-development fee for each year of the PILOT; staff said an additional $13.3 million in economic-development fees has been negotiated to support workforce and infrastructure measures connected to the project. Hamilton County staff was described as proposing at least $5 million in county-directed fees toward education/workforce efforts, including Gateway School initiatives and other workforce pipelines. Staff estimated that during the 15-year PILOT period the project would pay roughly $101.36 million in taxes and fees to the community and that the net incentive value (taxes and fees subtracted from otherwise payable taxes) was approximately $54–55 million over the 15‑year term.

Community benefits and workforce commitments: Novonix and city staff identified workforce partners such as Project Return, Lookout Valley Middle/High School, University of Tennessee at Chattanooga, Chattanooga State and Tennessee State. Company representatives said they would (1) publicize job opportunities and seek to maximize qualified local hires, (2) publicize construction and service-contract opportunities to local contractors, (3) collaborate with UTC and other educational partners on research and training partnerships, and (4) take steps to recruit historically underserved applicants, including people with criminal records, as part of “good faith” hiring efforts. Company representatives also described Department of Energy grants, a qualifying advanced energy-project tax credit, and a conditional federal loan commitment as part of project financing.

Council questions and concerns: Council members sought more specificity on local hiring targets and compliance reporting, the scope and enforceability of “good faith” community-benefit commitments, and how the city would track compliance with job-creation and local‑hire expectations. Several council members asked Novonix for data on current hiring from partners such as Project Return and for a stronger description of specific workforce pipelines that would channel residents into the jobs the company expects to create. Other questions focused on infrastructure impacts (transportation and bus service to Enterprise South), environmental and long-term market risks for lithium-ion battery supply chains, and the mechanics of including a Phase 2 expansion in the same PILOT agreement (staff said Phase 2 could be included under the same PILOT terms but would not extend the PILOT's term).

Next steps: Staff said the Novonix PILOT request would come before the Economic Development Committee and ultimately the full council for consideration. The item was presented and discussed; no final council vote on the PILOT was recorded in the transcript. Council members asked for clarified compliance metrics, local-hire targets and a breakdown of how the dedicated economic-development fees would be spent.