Oracle, the Texas-based technology giant, will bring 8,500 jobs and $1.2 billion of capital investment to Nashville’s River North development, representing a record-setting economic development project for Tennessee.
Details of the long-discussed project began to emerge on Wednesday because the project will soon be in front of Metro’s Industrial Development Board for consideration.
The terms of the deal, negotiated by Nashville Mayor John Cooper, represent a diametrical shift for Metro on such economic development projects.
The city already committed $20 million in infrastructure work to River North, the ambitious 65 acre development on the Cumberland River.
In its new arrangement with Metro, Oracle will build $175 million worth of public infrastructure including a pedestrian bridge, park space and environmental remediation of a former landfill on the property. The company will be able to recoup its investment by way of reimbursements of 50 percent of its future property tax payments.
Unlike previous economic development deals, this incentive package won’t include high interest loans financed through the Metro Development and Housing Agency or job grants, rewarding Oracle for each job it brings to town.
More economic incentives will be on the way from the state of Tennessee. Multiple sources told the Tennessee Lookout that the involvement of Gov. Bill Lee, who took an active interest in talks with the company and carried the deal over the goalline in recent weeks. “He took a personal, day-to-day involvement, which is different from previous deals. He spent dozens, and dozens and dozens of hours on it, and he was briefed on it multiple times per week for many months,” a source with knowledge of the deal said.
The shift in economic development strategy for Metro has been years in the making. During his time campaigning for the mayor’s job, Cooper lamented bad economic development deals the city approved over the previous decade. Combined with Amazon, which is bringing 5,000 jobs to Nashville, the investment by Oracle puts rocket fuel in Nashville’s already growing technology sector. The average annual salary of the Oracle jobs will be $110,000 approximately.
“Today’s news is another affirmation that major companies want to be in our city. They want to build here and grow roots here,” Cooper said. “My job is to make sure Nashville invests in our students and graduates. It’s great that our graduates won’t need to go to the West Coast for top-tier tech jobs.”
Metro Councilman Bob Mendes also played a leading role in changing the way the city doles out incentives. Mendes sponsored legislation that led to the formation of a working group to examine tax increment financing deals similar to the agreement the IDB will consider for Oracle. That group concluded that property tax splits should guarantee the city at least 25 percent of the annual revenue. The Oracle deal will guarantee Metro at least 50 percent of the future tax revenue.
Oracle can use its 50 percent of the property tax collection to be reimbursed for its actual infrastructure costs, without the interest and fees that would normally be charged to an MDHA economic development package. The reimbursement cap is a hard $175 million, the mayor’s office said.
The arrival of Oracle also signals hope for broader redevelopment of the east bank of the Cumberland. The Tennessee Titans are pursuing plans for a major redevelopment of the parking lots and adjacent land around Nissan Stadium. It’s not unreasonable to expect that after the Oracle and Titans’ stadium deals are consummated that the focus will shift south to the PSC Metals scrap yard and possibly using taxpayer funds to relocate that operation in favor of a mixed-use development and greenspace.