Answers to frequently asked questions about the Cameron Hill corporate campus.

Financials/Costs

With insurance premiums continuing to rise, how can you justify the cost of a new office complex?

Actually, this investment will optimize our business processes and activities and control costs over the long term. Administrative inefficiencies caused by having employees located in several different areas add considerable costs to our operations. Our analyses have predicted that our workforce could be up to one-third more efficient with a consolidated office complex.

In addition, our present buildings, which have an average age of 67 yrs, would require considerable expenditures over the next decade to keep them in suitable condition, especially to comply with stringent government security regulations. The efficiencies gained by building a facility to meet our specific needs will allow us to reduce our total space requirements. We strongly believe that a consolidated office complex is a wise investment that will help us better serve our members.

Will insurance rates increase to pay for the new building?

No. In fact, we believe that with the increase in administrative efficiency that the new office complex will bring, it will allow us to keep insurance rates as low as possible. 

How will the building project be financed?

The construction of the new corporate campus is being financed via a combination of an attractive low-interest rate loan and self-funding from our reserves. We feel this is the most fiscally prudent way to pay for the project andhelp us to make health care more affordable for our members.

You originally estimated a $226 million price tag on the construction of 800,000 square feet of office space, what are your most recent projections for space and cost?

Our construction budget is now $299 million for 950,000 square feet—an increase over our October 2003 baseline projections.

Several factors have contributed to the size and cost increases.  During our original space planning, we took an efficiency-based approach to our needs.  We wanted the most economical way to build the campus.  Once we began work with our workplace strategy firm, the focus shifted to effectiveness—how our growing employee base works best together, universal workstations, and health and professional development centered areas.

Next, construction costs are up 20 percent due to supply and demand as impacted by both hurricanes and rising fuel costs.
 
Even with the increase in size and cost, we will still be spending less on facilities and related costs for the new campus versus our current operations.  In fact, we estimate that consolidating Chattanooga operations into one campus will result in at least a10 percent reduction in overall facilities costs.

What tax incentives are you receiving and do you think they’re fair?

The County Commission and the City Council approved a property tax incentive package that will make the Cameron Hill project economically feasible for BlueCross and, at the same time, will result in a projected increase of $40 million in new tax revenues to the city and county. The incentives are similar to those offered to other companies that build or expand in the area.

Properties

What will happen to the Lupton City property?

We are considering options for the 210-acre Lupton City property as we move forward with construction of our new headquarters.  No decision has been made.

What will happen to the buildings BlueCross vacates?

We are working closely with city and county officials, the Chamber of Commerce, the RiverCity Company, and other groups to find occupants for any office space we will vacate.  We anticipate selling and/or leasing the vacated buildings for a variety of potential uses, i.e. retail, commercial, residential. Whatever action is taken, it will be made to improve the city, not injure it.

What are the values of your owned properties?

We need to keep that information propriety as we work to secure buyers.

What is your exit timeline?  What buildings will you vacate first?

We will move into the Cameron Hill complex in several phases.  It will probably begin in late 2008 and finish by mid 2009, so that will give us time for a planned, careful exit from our present buildings.

What will happen to Boynton Park on Cameron Hill?

BlueCross recognizes that Cameron Hill holds a special place in Chattanooga’s history.  With the construction of the new corporate headquarters and the design’s emphasis on public space, the company hopes to return beauty and pride to this landmark property. 

The exact plans for Boynton Park or similar public areas are yet to be determined.

How will this construction affect BlueCross' operations in other parts of the state?

This project will have no affect on BlueCross' regional operations. We will continue to maintain regional operations in Memphis, Nashville, Knoxville, Jackson, and Johnson City.

Community Connection

How does BlueCross plan to stay connected to downtown?  How will businesses be impacted?

We are seeking to balance the public and private space of our campus.  There’s a real need to create a working environment that is safe and secure while meeting the expectations of the public’s desire not to lose access to the hill.

We want to make the site walkable and viewable, as well as a destination for people.  This may take the form of walking trails, observation space, public meeting rooms, etc.

As far as the potential impact on retail and restaurant business, we are exploring ways to keep our employees tied to downtown. We’re thinking innovatively to make the journey up and down the hill as attractive as possible for our employees. We haven’t yet determined what the best means to do this are, perhaps a tiered walking path or a shuttle service.

How will downtown traffic be impacted by the new headquarters?

About 1,100 employees will return to downtown from our Eastgate Mall office.  Traffic engineers associated with our new campus are studying traffic flow and designing multiple ways into and out of the campus location.  Currently, we think there will be a modest increase in traffic but it will occur in a staggered fashion.  We have flex hours; employees come and go at different times. Additionally, we are working with the Tennessee Department of Transportation on the US27 redesign.  The redesign and construction of US27 as currently drawn will provide more ingress/egress routes and make it easier to navigate downtown traffic.

What kinds of community feedback have you received regarding construction plans?

We’ve already invited members of First Baptist Church, Newtown Chevrolet and the Westside Neighborhood to our design studio to discuss the proposed campus and its impact on their operations and living conditions. The feedback has been positive.  Additionally, we’ve met with city and county officials to update them on the project.  Their response has been positive as well.

Have you made selections of local or minority firms to work on the headquarters?  

To ensure that our suppliers reflect our diversity goals, BlueCross has worked to establish on-going relationships with minority-owned and small businesses. These relationships not only further the growth and development of the individual businesses, but also ultimately benefit our health plan members.

The current participation rates are significantly higher than a typical commercial construction project of this size.  We are encouraged by the local and minority participation to date.