Contacts: Mary Thompson, BlueCross – 535-7694

Todd Womack, Mayor’s Office – 757-5152

CHATTANOOGA, Tenn. — BlueCross BlueShield of Tennessee President and CEO Vicky Gregg, Chattanooga Mayor Bob Corker, and Hamilton County Mayor Claude Ramsey today announced a proposal by BlueCross to consolidate nine of its Chattanooga buildings into a central office complex. Pending property tax incentive approval by the City Council and the County Commission, the complex will be constructed on Cameron Hill in downtown Chattanooga on the present site of the Cameron Hill Apartments. Construction will begin in early 2006.

“This represents a commitment to our current and future members to serve them better and more efficiently,” Gregg said. “Also, this new facility will underscore our commitment to our employees by giving them a better environment in which to perform their important work. And this renews our commitment to Chattanooga and its vibrant downtown area. We are proud to be part of the city’s resurgence.”

BlueCross, the state’s largest health insurance company, has been headquartered in downtown Chattanooga since its founding in 1945. The company employs about 3,800 in Chattanooga, with an annual economic impact on the community in excess of $300 million.

“I am very excited that BlueCross has decided to keep their corporate headquarters downtown, ensuring that our city’s core remains healthy and strong,” said Chattanooga Mayor Bob Corker. “Through their consolidation, additional housing will be created for downtown Chattanooga, and their total investment adds even more momentum and energy to the renaissance that continues to occur in our community.”

Hamilton County Mayor Claude Ramsey said, “As one of the largest employers in Hamilton County, BlueCross is part of the economic foundation of our community. This commitment to build for the future is something we can all take pride in.”

Presently, the BlueCross Chattanooga operations are spread among 10 office buildings. The Cameron Hill complex will enable BlueCross to consolidate those operations, resulting in increased efficiency. It is estimated that day-to-day efficiency could increase by up to one-third, saving more than $3.5 million annually.

The new facility also will enable BlueCross to continue to grow to accommodate future needs. Membership growth has doubled in the past decade, and employment numbers have risen to serve that increase in members, Gregg said.

The project is contingent upon approval of property tax incentives by the Hamilton County Commission and the Chattanooga City Council. The tax incentives will make the 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 during the incentive period. The tax incentive package will be presented to the County Commission and City Council within the next few weeks.

BlueCross has worked with the development firm of Kinsey Probasco Hays to purchase the 48-acre Cameron Hill site.

Dan Jacobson, vice president of properties and corporate services for BlueCross, said the company plans to build a series of interconnected buildings on the site that will house most of its 3,800 Chattanooga employees. “It will be quality office space that is modestly appointed and designed to maximize functionality. This will allow our employees to serve our members in a much more efficient manner. It also addresses pressing needs for more security. Our many government contracts are requiring us to meet more stringent security requirements,” he said.

Cost of the construction project, which will include about 800,000 square feet of office space, will be about $200 million.

The idea of a corporate complex for BlueCross is not new. As early as 1984, a consulting firm studying BlueCross’ long-term facilities needs recommended that such a facility be constructed. A 1994 study by another consulting firm reached the same conclusion.

“A best-use study has already been conducted on our present downtown buildings,” Jacobson said. “This study suggested that a combination of residential and ground level retail would be the most appropriate use of the buildings. Conversion plans for the existing buildings are in progress and primary consideration and preference is being given to converting them to downtown housing and supporting economic development.”

As an option for Cameron Hill residents to continue living downtown, Kinsey Probasco Hays plans to construct a large apartment complex in the 600 block of Broad Street. This development is contingent upon receipt of Renewal Community Commercial Revitalization Deductions and resolution of other typical development issues. The apartments, a portion of which will be similarly priced as the Cameron Hill apartments, will be ready for occupancy by the time Cameron Hill is vacated.

“This project is possible because of the can-do attitude of city leaders and the vibrant climate for growth in Chattanooga,” Gregg said. “We are proud to be a member of this city’s business community. At a time in which insurance companies are consolidating nationally, BlueCross BlueShield of Tennessee is robust and growing and committed to remaining an independent company headquartered in Chattanooga.”

About BlueCross

BlueCross BlueShield of Tennessee's mission is to provide its customers and communities with peace of mind through affordable solutions for health and healing, life and living. Founded in 1945, the Chattanooga-based company is focused on reinventing the health plan for its 3 million members in Tennessee and across the country. Through its integrated health management approach, BlueCross provides patient-centric products and services that drive health improvement and positively impact health care quality and value. BlueCross BlueShield of Tennessee Inc. is an independent licensee of the BlueCross BlueShield Association. For more information, visit the company's website at www.bcbst.com.