Price tag for Ford megasite deal hits $884M

Gov. Bill Lee speaks at Ford’s announcement it will build an electric vehicle and battery plant at the Memphis Regional Megasite on Sept. 28, 2021. (Erik Schelzig, Tennessee Journal)

When lawmakers return into special session next week to take up an incentive package for Ford’s Blue Oval City at the Memphis Regional Megasite, they might be surprised the price tag has now reached $884 million.

Gov. Bill Lee’s administration had already disclosed the $500 million grant it had agreed to provide to Ford and battery maker SK Innovation. But as first unearthed by Chattanooga Times Free Press reporter Andy Sher, the legislation appropriates state funds for three further items.

Here’s the breakdown:

— State grant to Ford Motor Co. or its affiliates: $500 million.

— Road work: $200 million.

— Building, demolition, and related work on site: $138.2 million.

— Construction of Tennessee College of Applied Technology at the site: $40 million.

— Consulting and legal services: $5 million.

— Establishment of a new Megasite Authority of West Tenenssee: $675,000.

Just like any other major investor, Ford and SK Innovation will also qualify for statutory job tax credits worth $4,500 for each new job created. The Haywood County location also qualifies for an enhanced credit of an additional $4,500 for five years. Or the company can choose the “super tax credit,” of between $4,500 and $5,000 per position (depending on wage level) for up to 20 years.

The enhancement and super tax credit can’t be used together, so the Blue Oval City project will have to decide whether to go for the large per-employee credit for a shorter amount of time, or the lesser amount for longer.

The full projected employment level of 5,800 workers times $4,500 is $26 million. At the enhanced level, the total credit would balloon to $52 million against the projects franchise and excise tax obligations.