Editorials

"There comes a point in an auction," Gov. Bob Riley noted last week, "where you don't want to be the one with your hand in the air." Then he added, in reference to the bidding war that went on to lure Volkswagen to Alabama, "we hit that point."

Alabama had offered Volkswagen some $205 million in cash and $181 million in tax breaks, job training and what was referred to as "other considerations."

Tennessee offered more.

Volkswagen officials have said incentives were not the reason the Chattanooga site was chosen. But if you think incentives don't matter, then there is some beachfront property on Sand Mountain the owner would be happy to sell you.

At some point, those offering the incentives had to calculate cost versus gain and decide if the investment is worth the return. That was surely a factor in Alabama's decision to pull out of the competition.

Then there was also the simple matter of cost.

No matter what the return, some investments are simply beyond the reach of even the most enthusiastic investors. "Too rich for my blood," is the old poker saying. It may have come down to that.

Incentives aside, it's coming to light that the Tennessee Valley Authority had a hand in luring Volkswagen to Chattanooga. The German automaker will build on a TVA "megasite" — one of a number of large, consultant-certified, ready-to-go sites owned by the giant utility. The plan put in motion four years ago to use these sites for industrial development (and to turn a profit for the utility) has resulted in automakers building plants in Tupelo and Columbus, Miss. Now add Chattanooga to the list.

It was another megasite in the Athens-Huntsville area that attracted Volkswagen's attention and became the runnerup to the Tennessee location. That site still sits ready for another company.

The Athens site is one of four that TVA has ready for a large manufacturer. Another is in Kentucky. Two more are in Tennessee. These will be Alabama's competition in the future.

In the 1930s, when the TVA was created, one of its goals was to bring industrial development to what was then one of the most impoverished regions in the nation. Although it is unlikely that its creators saw the utility as a land developer, it has become just that.

In the process, it joins other large landholders that have discovered the property they hold is as valuable — in some cases more valuable — than the product the company initially produced. (In Florida, St. Joe Paper Co. is out of the paper business and into real estate.)

Whether the TVA actually helped Volkswagen pick Chattanooga instead of the Athens-Huntsville site raises an interesting point. However, by opening these megasites to manufacturing, the TVA will do what it was created to do, though not necessarily in the way its creators thought it would be done.