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Commission approves 35‑year lease of former jail for 'Jailhouse Studios' with limits on data use and a workforce fund
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Summary
The Board approved a 35‑year lease of the former Hamilton County Justice Center to Jailhouse Properties LLC for redevelopment into mixed film/production and limited data‑use facilities; an amendment caps data‑related uses at 12,000 sq. ft. and requires an annual 1.5% profit contribution to local workforce development programs.
The Hamilton County Board of Commissioners on March 18 approved Resolution 3 26‑17 authorizing the county mayor to execute a long‑term lease with Jailhouse Properties LLC for adaptive reuse of the former Hamilton County Justice Center at 601 Walnut Street. The lease term discussed was 35 years with an initial annual rent starting at $375,000 and a 3% annual increase, and developers estimated $50–80 million in redevelopment costs.
Commissioners and staff questioned financial terms, liabilities for a vacant, deteriorated building, utility costs, demolition versus adaptive reuse options, and what protections and deliverables would be included in the lease. Commissioner Sharp offered and successfully moved an amendment that was read into the record by counsel and adopted before the final vote. The amendment (Addendum to Lease Agreement) contains two main provisions: 1) a data‑use limitation that caps any data storage, processing, or data‑center‑type uses on the premises to 12,000 square feet of the project area; and 2) a workforce development contribution requiring the tenant to allocate annually 1.5% of net profits from operations at the premises to support entertainment and creative workforce programs administered through Songbirds Foundation (or successor), with annual reporting within 121 days of fiscal year end. The addendum makes failure to comply a nonmonetary default under the lease.
Public comment was lengthy and divided. Supporters — including local filmmakers, educators, labor representatives, and workforce advocates — said the project would create a local film and music production hub, generate well‑paying jobs, and provide training pathways for students. Filmmaker Bryce McGuire said having local infrastructure would keep creative production in Chattanooga and expose students to viable careers. Labor leaders pressed for strong local‑hire and apprenticeship requirements; Commissioner Sharp’s amendment specifically requires funds to support workforce training.
Opponents and some environmental advocates raised concerns about the data‑center component (water and energy use, potential scale of operations, and corporate partners). Speakers such as Sam Naomi emphasized broader water‑resource concerns observed in other states with large data centers and called for transparency on cooling and resource use. Commissioners and county staff repeatedly said the proposed hardware uses limited power (discussed as roughly 1.4 megawatts by one commissioner) and that the project's cooling approach would not rely on evaporative water cooling.
The Sharp amendment passed on roll call; the lease as amended then passed on roll call and was announced as adopted. Commissioners noted there are break clauses and performance milestones in the contract and that staff will monitor compliance with reporting and workforce commitments.
Key implementation items: counsel and staff identified milestone and default provisions in the lease; county staff estimated utilities and demolition costs and said a lease preserves county ownership while shifting redevelopment risk and cost to the tenant; the county will receive the contracted lease revenue stream while the tenant funds renovation.
Votes at a glance: Resolution 3 26‑17 (lease of 601 Walnut Street) — amendment limiting data use and creating a workforce contribution passed on roll call; the amended lease passed on roll call.
