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How Chattanooga Reinvented Itself

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How Chattanooga Reinvented Itself

Set in the lush foothills of the Appalachians, the Tennessee city has built a technology infrastructure for the twenty-first century. Autumn 2021
Cities
Technology and Innovation
Economy, finance, and budgets

Chattanooga was into remote work before it was cool—or at least, before it became a public-health necessity. Pre-pandemic, this midsize city in the southeast corner of Tennessee had already shown impressive hustle when it came to persuading remote workers and tech startups to rethink their relationship with America’s big, expensive cities and relocate to the lush foothills of the Appalachians.

Chattanooga’s local leaders and economic- development officials spent much of the last decade touting the city’s attributes—“the fastest Internet connection in the Western Hemisphere”—to laptop-toting Silicon Valley exiles. Its “Geek Move” initiative even offered tech workers a $10,000 forgivable mortgage and $1,250 in cash to move to the area. A humorous, slickly produced 2016 ad campaign featured the founders of fictional tech firms who relocated to Chattanooga because of high costs and burdensome regulations on the West Coast. “It’s the Tom Hanks of towns,” sings one of the campaign’s characters.

In 2019, a combination of fast Internet speeds and affordable housing earned Chattanooga the top spot in a Zillow ranking of America’s best cities for remote work. Outside awarded Chattanooga its annual Best Town Ever designation in 2011 and 2015, highlighting its outdoorsy, rock-climbing-before-work, kayaking-before-dinner lifestyle that officials hoped would appeal to young West Coast transplants.

So after the pandemic struck, Chattanooga was ready to capitalize when lockdowns and social distancing forced millions of Americans to question their assumptions about where they live and how they work. Bob Corker, mayor of Chattanooga from 2001 to 2005 and a Republican U.S. senator from 2007 to 2019, agrees. “We have a lot of momentum and are poised to benefit from what—unfortunately—has happened to so many Americans,” he tells me in his office in downtown Chattanooga.

According to one study by Upwork, nearly 20 percent of workers could be fully remote even after the pandemic. (Before Covid-19, the figure was just under 5 percent.) All this points to a geographic rebalancing, especially of the massive concentration of tech-industry jobs and wealth in a few cities.

A recent visit provided plenty of anecdotal evidence that the pandemic has brought Chattanooga’s gig-city dreams closer to reality. The real-estate market is red-hot, with homes sold sight-unseen to families relocating from both coasts. According to U-Haul, Tennessee saw a larger net gain of the company’s do-it-yourself moving trucks than any other state last year, with east and central Tennessee seeing the largest inflows. Every Chattanoogan I talked with shared a story about pandemic arrivals, and I spoke to dozens of newcomers myself. However, real-estate firm CBRE’s study of U.S. Postal Service changes of address hardly suggests a glut of new arrivals—with net moves for the Chattanooga area at close to zero in 2020. Which is it, then? Those bullish on the city’s future argue that many of those who moved to the city as a short-term escape from bigger cities plan to stay. They maintain that for Chattanooga, unlike the beach towns and ski resorts for which the pandemic will likely prove to be a temporary boon, the real opportunity lies in long-term changes to work habits. In other words, they hope that the anecdotal evidence will soon show up in the numbers.

To see Chattanooga is to understand some of that bullishness: the city’s dramatic location on a bend in the Tennessee River; the beautiful view from the top of nearby Lookout Mountain; the surprisingly lively downtown; the hundreds of waterfalls in the surrounding hills. It’s not a tough sell.

Yet for all Chattanooga’s advantages, banking on changes to working and living habits is no sure bet. There are many competitors. Just a 90-minute drive away, Nashville, the booming and boisterous big brother, has seen the pandemic accelerate the inflow of jobs and exiles from superstar cities like New York and San Francisco.

“Nashville has become not just the envy of our state but, in some ways, the envy of the country,” says Corker. “Most of us applaud that great success. With the critical mass it has in health care, technology, country music, and pro sports, it’s just going to build on itself. We’re not even going to recognize Nashville in another five years. But I think Chattanooga has a place as a not- Nashville. It’s a little different pace here. It’s an easier place to live. And that makes us poised to benefit significantly from distanced working.”

Chattanooga has reinvented itself before. Almost anyone you talk with about that earlier revival starts the story in the same place: a 1969 news bulletin in which Walter Cronkite labeled Chattanooga “the dirtiest city in America.” The pronouncement is etched into local lore: a moment of civic shame talked about the way a reformed addict remembers the moment he hit rock bottom.

Decades earlier, Chattanooga had been known as the Dynamo of Dixie, a thriving midsize industrial town full of manufacturing and iron foundries. By the late 1960s, though, the city was stuck with the mess created by manufacturing, and heavy industry drove many residents out of town. Pollution and a shrinking population created a vicious cycle of urban decline just as the industries responsible for much of that population were becoming less profitable. The same year that Cronkite singled out Chattanooga, the newly installed Nixon administration embarked on an antipollution drive, part of which required cities to meet new air-quality standards, staying below 80 micrograms of suspended particulate per cubic meter of air per year. Chattanooga’s rate was almost double that cap.

“Politics in Chattanooga demonstrates an enviable disconnection from the divisions polluting the national scene.”

The biggest polluter was the federal government. The Volunteer Army Ammunitions Plant in Tyner, just outside Chattanooga, produced 40 percent of the world’s TNT. According to a report from the newly formed Department of Health, Education, and Welfare, the site was the “worst single federal source of air pollution” in America.

Chattanooga’s pollution problem wasn’t just about air quality. The mighty Tennessee River, now one of the city’s most prized assets, was treated as a dumping ground. Showing me around, former mayor Ron Littlefield pointed to houses on a bluff overlooking the bend in the river, where garbage disposal was once nothing more than a chute into the river.

Cleaning up pollution didn’t stop the city’s socioeconomic deterioration. It wasn’t until the mid-1980s that the city got serious about reversing its decline. What followed was a consensus-driven process of civic renewal now known as the Chattanooga Way. In 1986, copying a similar scheme in Indianapolis (another fading industrial powerhouse looking to reinvent itself), Chattanooga leaders convened a 60-member board of citizens to thrash out a path forward. “We sat people around the table who didn’t normally talk to one another,” says Littlefield, who was involved in this process before he went on to serve as mayor. Labor and management, black and white, rich and poor came together to discuss what they wanted their community to look like at the turn of the millennium.

The group settled on a revitalization of the city’s downtown, starting with its neglected riverfront. This process, which became known as Vision 2000, was as important for the transformation in attitudes it caused as it was for its concrete proposals. “It changed the minds of the city,” says Littlefield. “People began to see the city through a different lens and realized that their part in changing the city was not to throw up their hands and blame the power structures for making all the decisions; it was for them to get involved. . . . Little by little, project by project, attitudes changed, and the city changed.”

Eleanor Cooper, the former head of Chattanooga Venture, the nonprofit born out of Vision 2000, says that the process created a dynamic “that required cooperation and eventually drew in more and more people who were at first reluctant or antagonistic.” Cooper argues that the vagueness of Chattanooga Venture’s headline ambition—to create the best midsize city in America—helped make “everybody feel like their little part of the puzzle made a difference.”

Today, local politics in Chattanooga demonstrates an enviable disconnection from the divisions and bad blood polluting the national scene. Decision-making still seems to proceed mostly by consensus, and what disagreements exist appear, at least to the outsider, to be in good faith. The bottom-up revival of the 1980s may seem a distant memory, but the civic-mindedness it instilled endures. As one person involved in local philanthropy and politics put it to me, “everyone plays on team Chattanooga.”

The other vital ingredient in Chattanooga’s revival was private money. In this area, the seeds of the city’s comeback were sown far earlier. In 1899, two Chattanoogan businessmen, Ben Thomas and Joseph Brown Whitehead, traveled to Atlanta to talk with pharmacist Asa Candler about a medicinal drink he had recently bought the rights to. They returned with the rights to bottle Coca-Cola. Teaming up with a third Chattanoogan entrepreneur, they made themselves rich by bottling and distributing the drink across the United States. Their success not only drove prosperity in the city at the turn of the century; it also bankrolled much of its revival almost 100 years later.

“The city has attracted the kinds of well-paid manufacturing jobs that civic leaders elsewhere covet.”

By the 1980s, the heirs to the city’s Coca-Cola fortunes had endowed multiple foundations dedicated to Chattanooga’s revitalization. Jack Lupton, grandson of one of the three original bottling tycoons, sold the world’s largest Coca-Cola bottling company for $1.6 billion in 1986 and invested tens of millions of his own money and his family’s foundation money in Chattanooga. The money went to a new aquarium and other riverside amenities and attractions. Affordable downtown housing was another focus. The Walnut Street Bridge, which had sat in disrepair for more than a decade, reopened as a pedestrian crossing, a visible sign of the city’s revival. Private investment slowly returned as a once-dying city began showing signs of life again.

You can chart Chattanooga’s revival in its population size. One in ten residents moved out in both the 1960s and 1980s, but the city has grown by around 10 percent for each of the last two decades. According to a 2009 study, Chattanooga was the only midsize or large U.S. city to lose more than a tenth of its population over the preceding three decades and then rebound to surpass its previous peak. Today, 569,000 people call the Chattanooga metro area home. According to census data, the population of Hamilton County (which contains Chattanooga) grew by more than a quarter between 2010 and 2020.

Unlike many comparable cities, Chattanooga has managed to replace manufacturing jobs with other industries. Wages in Hamilton County grew by 39 percent in the 1990s. More recently, the city has managed to attract the kinds of well-remunerated modern manufacturing jobs that civic leaders elsewhere covet. In 2011, Volkswagen opened a billion-dollar factory on the site of the old TNT plant. The German carmaker’s only U.S. manufacturing operation directly employs 4,000 workers and is responsible for many more local jobs in the plant’s supply chain. The city has also capitalized on its central location in the southeast, halfway between Atlanta and Nashville and at the meeting point of I-75 and I-24, as well as its world-class Internet speeds, to build a thriving cluster of logistics firms. Today, Chattanooga boasts an unemployment rate that undershoots the national figure and a workforce that has grown steadily for decades.

Chattanooga’s cleanliness and quality of life today make a stark contrast with the late 1960s, when Walter Cronkite called it “the dirtiest city in America.” (THE PRINT COLLECTOR/ALAMY STOCK PHOTO)

Cam Doody grew up just a few hours’ drive away, in Knoxville, but he hadn’t visited Chattanooga until he moved his startup there almost a decade ago. “It used to be kind of a drive-through city,” he tells me. “But when we got there in 2012, we were blown away. We fell in love with it from day one, and now I couldn’t imagine ever living anywhere else. I’m a Chattanooga lifer.” With Stephen Vlahos, Doody founded Bellhop, a tech-enabled moving company. Since shifting operations to Chattanooga, the pair have raised nearly $80 million, employing hundreds in their headquarters and contracting thousands across the country as America’s fastest-growing moving company. “Our biggest challenge has always been talent density,” says Doody. “Chattanooga is totally under the radar. It was like we had to recruit everybody to an island. But post-Covid, everything has changed.”

As Doody sees it, the new possibilities of remote work alter the calculation. “The biggest hurdle with recruiting to Chattanooga has been people worrying where they will go if it doesn’t work out. Now that everybody is a work-from-anywhere operation, that’s no longer a major concern.”

Still, Corker thinks that taking advantage of these newfound advantages will require the city to make a concerted effort. “We’ve lost focus on recruitment of white-collar jobs,” he says. “We have to have that workforce that is able to fill those kinds of jobs. We were known for a while as a place that had venture capital and was attracting startups. . . . But the meat is not there as much as it should be. We have a reputation as a startup community, but it’s time to turn the volume up and make sure reality meets perception.”

One area that Chattanooga cannot afford to neglect is crime. During the city’s resurgence, the cleanup and economic comeback downtown were made possible by growing confidence in public safety. As in other American cities, the last year has been a reminder that such progress cannot be taken for granted. Violent crime in Chattanooga rose by 11 percent from 2019 to 2020 and was up by 21 percent in the first half of 2021, versus the first half of 2020.

Much is made of Chattanooga’s pioneering citizen-led revival and, more recently, its headline-grabbing attempts to lure tech workers. A less splashy but significant part of the formula is Tennessee’s business-friendly tax and regulatory environment. The Cato Institute ranks the Volunteer State as the seventh-freest state in America. Tennessee is a right-to-work state with no income tax, flexible land-use regulations, and few of the regulatory burdens that frustrate entrepreneurs in California, New York, and elsewhere.

Ted Alling, a Chattanooga-based investor, says that these policies are “one million percent” a factor in the city’s attractiveness, as are quality-of-life considerations. “A lot of people who live in the big cities are reexamining their lives and saying to themselves, ‘I’ve done the hustle and grind. Here’s a place that has all the amenities I need.’ For people who know they can work from home, Chattanooga is really an ideal spot to live.”

“It feels like we’re in the golden era of Chattanooga right now,” says Doody. “It is still largely undiscovered. It’s extremely special; you feel like you’re in an elite club that knows something that other people don’t. But the writing is on the wall. It’s going to see a big influx of people.”

Two such recent arrivals are Andrew and Adeline Voss, who moved to Chattanooga from Los Angeles just before the pandemic shut things down. Andrew had been working as a rocket engineer at SpaceX in Los Angeles but quit to found an educational startup. The couple’s reason for choosing Chattanooga matched that of many new arrivals I spoke with. “What makes it special?” I ask. “Place,” he says. “It comes down to the community here, and how people engage with each other.”

Voss cites the small-group church meetings he has attended as evidence of what Chattanooga offers him and his wife: “It was both really thoughtful and authentic,” he says. “People pursuing real Christian community and life together, and I thought, ‘This is it. This is honest. This is what we were searching for: the secret treasure hidden in a field.’”

Chattanooga’s recipe for success doesn’t appear to be the headline-grabbing “gig city” branding or hipster accoutrements of most aspiring tech hubs—street art, exposed brick, coworking spaces, and so on. Instead, its virtues seem more rooted to the past, and more conservative: an entrepreneurial spirit; business-friendly instincts; a local business elite committed to the town’s success; a philanthropic tradition that started with Coca-Cola and continues with today’s tech investors; and a vibrant civic culture, one in which Chattanooga’s little platoons all seem to be pulling in the same direction.

Yet something of an irony remains in the city’s efforts to attract more remote workers: Chattanooga’s rootedness is precisely what makes it so appealing to many of today’s rootless professionals. “This is fertile ground to really build something,” says Alling. “It’s a values-driven place where, if you want to launch something, people get behind it and want to help you grow it.”

Top Photo: Fast Internet speeds and affordable housing earned Chattanooga the Zillow ranking as America’s best spot for remote work. (ZOONAR GMBH/ALAMY STOCK PHOTO)

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