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Study of the National Scope and Potential for Improvement of State Economic Development Highway Programs

Part 3. Case Study - Tennessee Industrial Access Roads Program

3.1 Program Overview

The Industrial Access Roads Program provides grants to local governments (cities and counties) to pay for design, engineering and construction of access roads to industrial areas that help facilitate the development and expansion of industry in the State of Tennessee. Only industrial areas are eligible, so commercial retail and office projects are not allowed. Funding is restricted to access roads on public land, and the local community must bear costs of right of way, utility adjustment and railroad crossing protection. The Tennessee Dept. of Transportation (TDOT) administers the program. The Commissioner of Transportation makes grant awards.

The program process starts with a local government filling out an application for funding an access road project, with information about the proposed new industry (or industrial expansion) and the local participation role. A TDOT field engineer reviews design and permitting needs. Upon approval, TDOT builds the road or lets a contract for construction of the access road (industrial highway project.) Once the industrial highway construction is completed, it is the responsibility of the local government to maintain the industrial highway.

The State Legislature appropriates funding each year when it approves the Department of Transportation budget. For recent years, the Legislature has funded the program at $10 million annually. In FY 2003 actual spending was reduced as much as half due to revenue shortfalls, but increased in FY 2004 to $11 million for 14 projects.

3.2 History and Evolution of the Program.

The Industrial Access Roads Program was enabled by the Tennessee legislature through the Industrial Highway Act of 1959. However, funding started in 1966 with $600,000. That annual funding allocation has grown over time. In 1986 funding was increased contemporaneously with a gas tax increase. As noted above, in recent years it has generally been in the range of $10 million/year.

Starting in the mid 1990's, benefit cost information was required. As of the time of this study, TDOT staff conducted a benefit/cost type analysis on applications, by considering the local property tax revenues and payrolls to be generated (as reported on applications) relative to the expected costs.

Another evolutionary change has been program staffing. Originally, the program was centralized with all staff at the TDOT headquarters, but now the program has regional project managers, located at TDOT's four regional offices. This has helped with local liaison and engineering review. However, the four regions of the TDOT do not exactly match the seven regions of the Tennessee Dept of Economic and Community Development (TECD.)

In 2000, there were several rules changes to give more flexible options to local communities:

In 2003, there were additional rules changes with the addition of environmental guidelines to avoid historically or environmentally sensitive areas. Also in 2003, the Governor (Phil Bredesen) signed an Executive Order creating the "Fast Track" service to cut government red tape for existing or prospective Tennessee businesses seeking to expand or invest in Tennessee jobs. With this system, there were protocols for coordination among state agencies in responding to inquiries from prospective or existing businesses interested in locating or growing in the state, and the state government commits to provide a response within three days. Under this system, each agency including TDOT assigns a representative to work closely with the TECD, the latter being the lead agency. Part of the new system was a "pre-application process" for the Industrial Access Roads Program. TDOT assigned its Chief Engineer as its Fast Track representative.

3.3 Program Funding Decisions and Follow-Up.

Program eligibility for Tennessee's Industrial Access Roads Program is set by law, and is restricted to applications for funding the construction of a public road or street (on public land), designated and located to provide access to an industrial site or industrial park.

Program funding decisions considerations include:

There is no formal follow-up to confirm the number of jobs and payroll actually added to the community. TDOT reviews road maintenance. If the road is not being effectively maintained, then TDOT may take over maintenance and withhold all funds otherwise allocable to the city and/or county until the project is restored to its proper condition.

3.4 Supplementary Program Information.

Procedures

The Industrial Highway Act of 1959 (T.C.A. 54-5-403) authorized the Tennessee Department of Transportation to contract with cities and counties for the development of "Industrial Highways" in order to provide access to industrial areas, and to facilitate the development and expansion of industry within the State of Tennessee. The following is a list of steps for making application and developing projects under the State Industrial Access (SIA) Program.

  1. Project Eligibility. The proposed project must be eligible as an industrial highway. An "Industrial Highway" means any road or street designated and located to provide access to an industrial site or industrial park. These proposed roadways may be eligible for the funding under the TDOT SIA Program. An Industrial Highway cannot be constructed on private property.
  2. Field Review. Local representatives and TDOT representatives review the proposed project in the field. The purpose of this review is to confirm the eligibility of the project, discuss the parameters of the project, and gather information to develop a cost estimate for the project.
  3. Project Design. The typical section for Industrial Highway projects is 2-12' lanes with 4' shoulders. The Applicant may request additional design features. Such features are to be the cost responsibility of the Applicant. The TDOT prepares cost estimates. Traffic analysis is required only if the request is for wider road or traffic signals. Since 2000, give locals options - either they can do road design or let state do it. Either they can do right of way or lets state pay for 50%l it is usually faster to let the community do it
  4. Permits. TDOT will conduct technical studies and obtain all permits for the construction of the proposed highway. The local government is responsible for obtaining all Federal, State, and local Permits for development of the plant site.
  5. Applications. The application consists of 1) a form detailing information about the proposed industry (or industrial expansion) and the local participation, 2) a certified Resolution indicating that the application is an official action by the government making application, and 3) maps showing the location of the proposed roadway, plant site, and entrances.
  6. Consideration. The TDOT is to consider and approve Industrial Highways based on the project eligibility and available funding.
  7. Approval. Upon approval of the Application, the TDOT and local government is to execute a contract defining the responsibilities of each party. Appropriate monetary deposits are to be submitted by the Applicant.
  8. Project Activities. Design, right-of-way acquisition, and utility relocation activities will proceed in accordance with the responsibilities defined in the contract.
  9. Construction. The project may be let to contract or constructed by TDOT, depending on the complexity of the work and the availability of TDOT maintenance forces.
  10. After Construction. The local government assumes full responsibility for the maintenance of the Industrial Highway.

Application for Industrial Highway Projects

The following text was taken verbatim from Tennessee DOT documents:


It is the intent and purpose of this application to provide the Department with information necessary to properly consider justification of the required highway facility. The Application consists of three parts. Attachment "A" is the Application form to be filled out by the local government. Attachment "B" is an example Resolution. A similar Resolution should be submitted with the Application. Attachment "C" is an list of features to be depicted on a map for the proposed project.

APPLICATION TO: Commissioner Tennessee Department of Transportation

SUBJECT: Application to the Tennessee Department of Transportation For Assistance in the Construction of an Industrial Highway

It is the desire of _____________________ to make application to the (Local government) Tennessee Department of Transportation for assistance in the construction of an Industrial Highway under the provisions of the Industrial Highway Act of 1959. In order to expedite the review of this application, and to furnish necessary information for the economic analysis of the proposal, the following information is being provided.

  1. General
    1. Industry Name, Location, Type of Industry
    2. Initial Employment
    3. Potential Employment
    4. Average Hourly Wage or Average Annual Payroll
    5. Estimated Value of Land, Improvements, Plant and Equipment
    6. Are Taxes Paid by Industry
    7. The daily number of heavy trucks (multi-unit) to use the proposed Industrial Highway
  2. Assurance from Industry that the development will be undertaken and that the Industry will be placed in operation.
    1. Anticipated date of Initial Production
    2. Anticipated date of Full or Potential Employment
  3. Responsibilities
    Indicate the responsibility option for each phase of project development. These will be used as a basis for preparing a contract between TDOT and the local government.
  • Survey & Design:

    Option 1 - The local government will provide the survey and design either with its own forces or by employing a consultant. This will be at no cost to the Department but must meet the standards and guidelines of the Department and be coordinated with the Regional Survey & Design Office.

    Option 2 - The Department will handle the survey and design of the project with no cost to the local government.

  • Right of Way

    Option 1 - The local government will donate, secure donations or purchase the right of way for the project in accordance with State policies and procedures. This will be at no cost to the Department but needs to be coordinated with the Regional ROW Office.

    Option 2 - The Department will purchase the right of way for the project. The local government will pay 50% of the cost.

  • Utilities - Must be same as option chosen under Right of Way

    Option 1 - The relocation of the utilities will be coordinated by the Department's Regional Utility Office. The local government will be responsible for the reimbursement contracts and cost for the relocation of utilities. To qualify as a reimbursable utility cost, the utility which is being relocated due to the project must be located outside the existing right of way.

    Option 2 - The relocation of the utilities will be coordinated by the Department's Regional Utility Office. The local government will pay 50% of the reimbursable cost for relocating the utilities. To qualify as a reimbursable utility cost, the utility which is being relocated due to the project must be located outside the existing right of way.

  • Railroad Crossings - There are/ are not railroad crossings on the project. Railroad crossings will be handled by the Department with local government paying 50% of cost.
  • Permits - Known environmentally sensitive areas -- The Department will prepare the appropriate technical studies and obtain the required permits for the SIA highway project, with no cost to the local government.
  • Construction
    1. Construction will be done by TDOT forces or by a TDOT construction contract with no cost to the local government. Standard SIA section is 2 @ 12' lanes with 4' gravel shoulders.
    2. The local government requests additional construction work. Work beyond the scope of the standard SIA typical section. The cost of the additional work shall be at no cost to the Department and shall be paid for by the local government. Describe additional work:
  1. Exhibits Resolution -
    A resolution signed by local government official(s).
    Location Map and Site Map

MODEL LOCAL RESOLUTION

RESOLUTION is vitally interested in the (City, Town or County) economic welfare of its citizens and wishes to provide the necessary leadership to enhance this areas capabilities for growth and development, provision of jobs to area citizens by local industry is both necessary and vital to the economic well-being, authorizes the Tennessee Department of Transportation to contract with cities and counties for the construction and maintenance of "Industrial Highways" to provide access to industrial areas and to facilitate the development and expansion of industry within the State of Tennessee, construction of an industrial access road to serve said proposed plant is necessary and vital to the successful completion of this project and the future economic well-being of this area


3.5 Examples of Funded Projects.

The Industrial Access Roads program was used in the 1980's as one element of a package of incentives used to attract a Nissan auto plant and later a Saturn auto plant. More recent projects are listed on the table that follows:

Tennessee Industrial Access Roads Program Projects FY 2002

Project Project scope State Amount
Lowe's Home Center- distribution center Base and paving $175,000
Franklin Life Sciences Center-research & development Grading, drainage, base paving $194,000
Tennessee Mills Company -manufacture wooden pallets Grading, drainage, base paving $216,500
Sherwood Industry (expansion) -manufacture furniture Grading, drainage, base paving $124,500
Nestle' North American Waters -bottled water manufacture Grading, drainage, base paving $754,500
John Deere -distribution center for lawn tractors Base and paving $67,000
Tullahoma Industries, LLC -manufacture apparel Grading, drainage, base paving $344,500
Gregory Manufacturing -welding/metal fabrication Base and paving $77,000
Bridgestone/Firestone, Inc. -tire distribution center Grading, drainage, base paving $356,500
Garner Automotive (expansion) -manufacture starters & alternators Base and paving $265,500
Micro Metals -manufacture metal automotive & power tool components Grading, drainage, base paving $294,000
Airborne Express -air cargo distribution center Base and paving $159,000
Total Funds1   $3,241,000
Total Funds FY 2002   $10,800,000

1 Projects approved in calendar year 2002

Updated: 04/18/2012
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