LOOKOUT VALLEY — The Tennessee Department of Mental Health and Substance Abuse Services abandoned plans to relocate the Moccasin Bend Mental Health Institute to a site on Birmingham Highway in Lookout Valley. The reversal came on September 28, 2026, just days after state officials announced the purchase of the property.

State officials had announced the acquisition of the Birmingham Highway site on September 23, 2026. The state purchased the 49-acre site from Koch Foods for $2,450,000. The Rileys submitted an appeal to the Governor's Office to stop the hospital relocation.

A spokesperson for the Department of Mental Health and Substance Abuse Services stated he was "unaware of any direct appeal to the White House in this matter." Former Chattanooga Mayor Ron Littlefield called for a public hearing to examine why the state changed its mind about the site. Littlefield said, "When the state has blown $2.5 million on a site that checks all the boxes and then abruptly backs out allegedly because some well-connected people are afraid of a modern mental hospital, then that should be examined in a public hearing."

Why It Matters

The Moccasin Bend Mental Health Institute is a psychiatric hospital in Chattanooga, Tennessee, with 150 beds. The Tennessee Department of Mental Health and Substance Abuse Services has a history of managing mental health facilities in Tennessee, including the Moccasin Bend Mental Health Institute, which was established in 1961 and has served as a critical resource for adults with severe mental illness. The Moccasin Bend National Archaeological District, which includes the current Moccasin Bend Mental Health Institute, was designated as a National Historic Landmark in 1986, emphasizing the cultural and historical significance of the site that contributed to the decision to avoid relocating the hospital there. In September 2024, Tennessee Gov. Bill Lee announced that the State of Tennessee would no longer move forward with plans to build a new psychiatric hospital on state-owned land at Moccasin Bend in Chattanooga, based on initial findings of an ongoing archaeological review. Primary source: tn.gov

Prior funding discussions shaped the recent timeline. In 2021, the Tennessee Governor's Office proposed using $276.52 million in federal funds to renovate the existing Moccasin Bend facility rather than relocating it, showing prior discussions about the hospital's future before the 2026 relocation decision. The Tennessee General Assembly allocated $260 million for the Moccasin Bend relocation in 2022, but the state had previously proposed $276.52 million in federal funds for renovations to the existing facility in 2021. In 2021, Gov. Lee’s administration proposed using $276.52 million in federal funds for renovations to the existing Moccasin Bend facility rather than a new site, a plan that faced opposition from local conservation groups. The Moccasin Bend National Archaeological District, designated a National Historic Landmark in 1986, has been a focal point of preservation efforts by the nonprofit National Park Partners since the 1980s. Primary source: tn.gov

Timeline

The Tennessee General Assembly appropriated $260 million for the project in 2022. State officials announced the purchase of the Birmingham Highway site on September 23, 2026.

What's New

The Tennessee Department of General Services had been working with the Department of Mental Health and Substance Abuse Services for over three years to identify a replacement site for Moccasin Bend, evaluating 127 potential locations across nine east Tennessee counties before selecting the Birmingham Highway site. The Tennessee Department of General Services had previously approved the purchase of the Birmingham Highway property in August 2026, and the transaction was finalized in September 2026, indicating that the state had already committed significant resources to the site before reversing its decision. The State Building Commission approved the Birmingham Highway site purchase in August 2026, with the transaction finalized in September 2026, just days before the reversal on September 28. In September 2024, Tennessee Gov. Lee announced that the State of Tennessee would no longer move forward with plans to build a new psychiatric hospital on state-owned land at Moccasin Bend in Chattanooga, based on initial findings of an ongoing archaeological review.