Posts by: Economic Development HQ.com

Economic Development Arms Race – Kansas City vs. Kansas City

There’s an economic development arms race in full bloom with the main protagonists as Kansas City vs. Kansas City. That’s Kansas City, Kansas and Kansas City, Missouri, where businesses in the region have been showered with $750 million in tax incentives to move a few miles across the state line either way.

Kansas Speedway

Kansas Speedway (Photo - balpeck @ flickr)

According to documents obtained by the AP, the two states have spent an astounding $750 million in tax incentives and bonds in the last five years to lure 200 businesses into opening new facilities or expanding in the Kansas City area.

Around three-fourth of the giveaways have come from Kansas, which is trying to lure businesses in Missouri. For its part, Missouri is offering what it can to keep businesses from relocating across the border. Both states also compete against each other when a new firm wants to locate to Kansas City.

The fight goes back a decade to the Kansas Speedway, which Kansas won by providing $150 million in tax breaks, bonds and other aid. Missouri was only able to offer a $42 million incentive package.

Near the Nascar track is another stadium for the Major League Soccer team that was lured away by Kansas from Kansas City, MO. Also nearby is another company named Cerner Corp., which had 5,500 people on the Missouri side and wanted to expand its operations. The new facility with 4,000 more employees is on the Kansas side, near the soccer stadium. Kansas won Cerner by offering them $85 million in incentives.

The most recent case cited in the AP report is that of Teva Neuroscience Inc. The company was based in Kansas City, MO. Kansas tried to lure their headquarters with its 400 jobs across the state border. Missouri tried to hold them back with new incentives worth $11 million, but it was no match for the $31 million that Kansas reportedly offered to Teva. The company is now headquartered in Overland Park, Kansas which is a part of the Kansas City metro area.

Restaurant chain Applebee has been bounced back and forth across the border in this ED arms race. It moved from Kansas City, Missouri to a suburb in Kansas in 1993 and then moved back to Missouri in 2011 after they were offered $10 million in incentives.

Normally, it makes for good headlines for state governors to announce new jobs and new companies moving into their area. But in all the above listed ED projects and others like them, the benefits for the metro area are largely cosmetic because no new jobs are created and they end up losing tax revenues overall.

Businesses in the area have sent a joint letter to Governors Sam Brownback and Jay Nixon of Kansas and Missouri respectively, pleading with them to declare a truce and focus their ED dollars on attracting new businesses from outside the Kansas City metro area.

Discover Selects New Albany, OH for $76 Million Data Center

Discover Financial Services will be adding a new data center to its New Albany, Ohio campus.

Ohio

Ohio (Photo - http://www.onntv.com/content/)

The $76 million data center is on schedule to open in 2013 and will create 162 new jobs, the company said in an announcement made by Carlos Minetti, executive vice president for Discover.

There was intense competition for the data center during the site selection process, with Ohio competing against South Carolina and Arizona.

“We weren’t going to lose everything, but we could’ve lost jobs here, there isn’t any question about it,” said Ohio Gov. John Kasich. “These other states were ferociously competing against us. Not only did we avoid the loss, but we have exciting new gains.”

“There’s a couple of other states that made a strong push,” said Carlos Minetti. “Had it not been for the county, the city, and the state, I think some of the other options could’ve looked attractive.”

Discover was provided with $4.1 million in tax credits as incentives, and Minetti also hinted at a long-term plan being cooked up between the company and the state that tipped the scales in Ohio’s favor. The company already has 1,500 employees at the New Albany campus. Discover is additionally being offered a property tax abatement and the possibility of more tax credits down the road.

The announcement made and words used by both Gov. Kasich and Minetti seem to indicate that had Ohio not gone all out to win the data center, then the state would have lost a lot more as Discover might have additionally chosen to move some of the existing jobs in New Albany to the site chosen for the data center. In this context, the Discover site selection victory for Ohio is much bigger than 162 jobs.

The new data center will be in the New Albany Business Park, in the R&D District which already has other data centers.

Agero Selects Clarksville, TN for Vehicle Services Call Center

Tennessee Gov. Bill Haslam and Economic and Community Development (ECD) Commissioner Bill Hagerty announced that Massachusetts-based Agero, a provider of connected vehicle services, will open a call center in Clarksville, TN. Agero will invest $8 million for the new 53,000 sq.ft. facility in Montgomery County that will create 500 new jobs.

Clarksville, TN

Photo - Bob Jagendorf (flickr)

“In creating our economic development strategies last year, we found Tennessee held a unique advantage in the ‘business services’ cluster, which includes call centers, and this announcement exemplifies a promising future for our state’s economic growth,” said Haslam.

“The available sites and exceptional workforce in the area made Clarksville the perfect choice for Agero to locate its new facility, and we appreciate the company’s investment in our state. Agero’s choice also underscores Tennessee’s strength in the business services industry – a rapidly growing sector whereTennessee’s unique competitive advantages are strong,” said Hagerty.

The announcement was made at the new call center site at2971 International Blvd. by Gov. Haslam and Commissioner Hagerty, along with other ECD officials and Agero executives.

The 16 month site selection process considered 21 different communities throughout the Southeast and Midwest. Earlier this year, the list was whittled down to two finalists – Florence, SC and Clarksville, TN.

“The overwhelming response we received at a local job fair from more than 500 qualified job applicants, as well as the immediate availability of an existing facility specifically designed to accommodate a modern call center operation are among the primary reasons I’m announcing this decision today,” said Agero CEO Michael A. Saxton.

The Clarksville, Tennessee center is Agero’s sixth North American driver assistance call and data response center, and is projected within its first year to handle more than 2 million calls annually from drivers across the country that are requesting roadside assistance.

The company will begin hiring in July this year, starting with 250 employees by the end of the year and another 250 next year. The new facility will begin operations in October 2012.

O’Hare Airport Redevelopment Project to Create 11,000 Jobs

Chicago Mayor Rahm Emanuel announced a major cargo redevelopment plan for O’Hare International Airport that will create 11,000 jobs and provide $600 million in direct economic benefits to the airport.

O'Hare Airport

O'Hare Airport (Photo- Myname@wikimedia)

The City of Chicago, Illinois has reached an agreement with Aeroterm LLC to begin the construction of the Chicago O’Hare International Airport Northeast Cargo Center.

The nearly $200 million project is expected to create 1,200 construction jobs, 1,200 permanent on-site cargo jobs and 10,000 regional jobs related to this development.

‚ÄúO’Hare is one of our City’s key economic engines and this project will vastly increase O‚ÄôHare‚Äôs cargo operations capacity, create thousands of quality jobs for Chicagoans, and increase Chicago‚Äôs competitive position as a global transportation and cargo leader,‚Äù said Mayor Rahm Emanuel.

Under an incentive program that encourages companies to hire college grads from Chicago, Aeroterm is setting up a job-training program to train students for skills and careers in the aviation industry.

The Northeast Cargo Center will be built in three phases on approximately 65 acres of undeveloped property. The first phase includes construction of a building with cargo and office space and a new taxiway connecting the development with the rest of the airport. Subsequent phases will include construction of additional buildings with cargo and office space.

The entire project is being designed and will be executed under the CDA Sustainable Airport Manual. The design and construction will be green, and the buildings will aim for LEED certification with green roofs.

The city is also building a $393 million rental car campus at the airport, financed by an $8 fee for renting a car at O‚ÄôHare. Mayor Rahm Emanuel also recently kicked off a plan to implement a parking access and revenue-control technology at O’Hare to do away with the toll booths and streamline the flow of vehicles in and out of O’Hare’s parking lots with 25,000 parking spaces.

One payment option would allow motorists to enter, pay and exit using a smart phone app. Another one would allow drivers to pay for a ticket beforehand which can be inserted into a machine while exiting.

California Governor Declares Small Business Month

California Governor Edmund G. Brown, Jr. issued an official proclamation declaring the month of May as “California Small Business Month.”

CA Gov. Edmund G. Brown, Jr.

CA Gov. Edmund G. Brown, Jr. (Photo - business.ca.gov/)

It’s a bit late, but the proclamation might still do some good in putting fire under state and regional agencies that provide support and assistance to startups and small business owners in the Golden State.

“This month, we reaffirm our commitment to helping California’s small businesses thrive and prosper. The Governor’s Office of Business and Economic Development, along with key agencies of state government, works to facilitate economic growth through collaboration with small businesses,” said Governor Brown in his proclamation. “Supporting small-scale private-sector job creators is among our most promising strategies to enhance California’s human capital, expand job opportunities and increase our competitive advantage in the global marketplace.”

California has 3.4 million small businesses which account for 99 percent of all California firms and more than 52 percent of the state’s workforce. As part of “Small Business Month,” the Governor‚Äôs Office of Business and Economic Development (Go-Biz) is participating in a number of small business related events across the state.

These events are designed to connect small business owners with the resources and tools they need to succeed as well as to recognize their role in California’s recovery. Their regional SBDC (small business development centers) partners will additionally host a series of free small business seminars and events.

According to the Go-Biz event calendar, the 1st Annual Southwest Veterans’ Business Resource Center (SWVBRC) Small Business Outreach Event to connect small businesses, secure federal contracts, and create jobs is scheduled to be held on May 17, 2012 in Perris, CA.

May 20, 2012 is the Small Business Week Conference in Washington, D.C. hosted by the Small Business Association, with forums, workshops, and networking events to meet and connect with leaders in the small business community.

The 4th Annual Small Business Resource EXPO, hosted by the Greater Riverside Chambers of Commerce, is scheduled for May 24, 2012 at the Riverside Convention Center in Riverside, California. The free admission event will feature over 50 exhibitors ready to help businesses grow and free workshops in social media, marketing, labor laws, and more.

NYC Tech Sector Now Second Biggest in US

A study report released by the Center for an Urban Future (CUF) shows that New York City’s tech sector has surpassed Boston to become the second biggest in the US, after Silicon Valley. What’s even more impressive is that NYC is the fastest growing tech-hub in the US, bar none.

CUF study - NYC tech sector

NYC tech sector (Photo - CUF)

The CUF report titled “New Tech City” is accompanied by the New York City Digital Start-up Index, an analysis of tech businesses formed in the city since 2007 which have received some form of outside investment from angel investors, seed funders or venture capital firms.

Highlights from the study and Digital Start-up Index:-

The city has over 1,000 web-based technology startups. There have been 486 digital start-ups born in NYC since 2007 that have received angel, seed or VC funding. Over a dozen established tech startups have moved to New York lately, from the San Francisco Bay Area, Boston and other locations.

The number of VC deals shot up by 32 percent in New York during this period whereas venture activity was down significantly in every other region, including Silicon Valley (-10 percent), New England (-14 percent), LA/Orange County (-8 percent), Texas (-17 percent) and San Diego (-38 percent). Nationally, there was an 11 percent decline in VC deals.

Ten startups secured over $50 million in funding, while 152 got between $1 million and $5 million. Another 99 got less than a million each. Gilt Groupe topped the list with $221 million, followed by Tumblr with $125 million and Zocdoc which secured $95 million.

Five years ago, Gilt Groupe hired its first employee. Today the company has more than 900 employees, including 700 in New York. Tumblr employs 103 people and Zocdoc has 165 employees.

There are more than 12 incubators and co-working spaces that house digital start-ups today. These shared spaces have already housed nearly 500 tech start-ups.

If there is any cause for worry, it might be the unequal distribution among the five boroughs in New York because Manhattan sucks up all the startup oxygen. Manhattan can boast of 431 tech startups, as compared to 27 for Brooklyn and five for Queens.

In the last five years, information technology jobs in the city have increased by 28.7 percent, from 41,100 to 52,900. During this same period, overall private sector jobs in New York‘s five boroughs grew by just 3.6 percent.

Download the full CUF “New Tech City” report ‚Äì Download (pdf) or see Infographic

EDA Survives Congressional Attempt to Eliminate 2013 Funds

The U.S. Economic Development Administration (EDA) has again survived another congressional attempt to eliminate the entire agency.

Rep. Mike Pompeo (R-Kansas)

Rep. Mike Pompeo (Photo - House.gov)

Funding for the EDA was again in doubt after yet another amendment was introduced by Rep. Mike Pompeo (R-Kansas) to the House fiscal 2013 Commerce, Justice, and Science appropriations bill (H.R. 5326).

EDA funding in the bill was set at $219 million, which is what President Obama requested. Of this, $182,000,000 is set aside for grant funding and $37,500,000 for salaries and expenses.

Then Rep. Pompeo tried to add Amendment.1039 to the bill. The amendment sought to “zero out the economic development assistance programs and grants in the Economic Development Administration Account and to apply the savings to the spending reduction account.”

The amendment had zero co-sponsors and failed by a 129–279 vote. Another amendment by Rep.Michael Michaud (D-ME) to add $38 million to the EDA funding level also failed, but by a 190–218 margin.

The EDA’s fiscal 2012 budget was a bit higher at nearly $258 million, out of which almost $38 million was set aside for salaries and expenses. So the administrative overheads remain about the same, but grant funding for fiscal 2013 has been scaled down by around $38 million.

Apart from the base $257,924,000 appropriation for fiscal 2012, the EDA additionally got allocated $200 million in FY 2012 for disaster relief funding for economic development and job creation projects in affected states.

Rep. Pompeo had previously tried to eliminate the EDA by introducing the EDA Elimination Act of 2011 (H.R. 3090), at which time he called the agency a “White House Earmark Machine.”

‚ÄúI believe investing should be done by private citizens with their own money, not by federal agencies. I have spent my time in Congress working to create an environment that encourages such investment and risk-taking behavior. The Economic Development Administration is a White House earmark machine and, for the past 45 years, has redistributed wealth for purely local projects,” said Rep. Pompeo.

H.R. 3090 had 18 co-sponsors but never came up for a full vote and ultimately got buried in the House Subcommittee on Domestic Monetary Policy and Technology.

Maryland DBED Switches to LOIS Site Selection Tool

The Maryland Department of Business and Economic Development (DBED) has finally moved from a decade old custom site selection tool to a cutting-edge online database that allows site selectors to sift through 400 available commercial, retail or industrial properties and 1,400 buildings in Maryland that can be leased or purchased.

Maryland Business Properties - Site Selection tool

Maryland Business Properties - Site Selection tool (Photo - choosemaryland.org)

The interactive tool called “Maryland Business Properties” was launched at the Maryland Economic Development Association (MEDA) annual meeting in Cambridge, where¬†local economic developers learned they will get their special branded version of the database to integrate on their respective websites so they can maintain and update the data.

“Maryland Business Properties is the latest in a suite of free interactive tools that DBED introduced this year to give our citizens, businesses and economic development partners improved access to information and research, which helps to spur economic activity and create jobs,” said DBED Secretary Christian S. Johansson.  “With this new system, businesses looking to locate to the State or expand to a new site have a simple one-stop search to find their ideal home in Maryland.”

The tool allows for a customized search by property type, site size, location and zoning and rail service, with a database that is updated every week. It has a mapping feature based on Google maps, which lets users create analyses of market areas by demographics, household income, education and workforce data. A national mobile platform will be introduced later this year.

The platform is operated and maintained by Location One Information Systems (LOIS), a division of Kansas City Power and Light (KCPL). LOIS runs databases for 18 states, and has users in nearly 30 states representing more than 8,500 communities and 3,000 economic development organizations.

Maryland is now part of this network, and this doesn’t just mean that it will be easier for site selectors to find properties when they have decide to look for sites in Maryland. It also means that when site selection consultants search the central LOIS database, properties in MD will start popping up if they match the search criteria.

Maryland Business Properties is part of the Maryland Made Easy program, an interagency initiative to streamline procedures, simplify regulations and improve communications where business and government intersect.

InVison Gets Seed Funding from NYC Entrepreneurial Fund

New York City Economic Development Corporation (NYCEDC) and FirstMark Capital have announced the next round of investments for the NYC Entrepreneurial Fund (NYCEF), and hi-tech startup InVison has been chosen for $200,000 in NYCEF seed funding.

InVision

Photo - InVision

NYC-based InVison offers a user interface (UI) prototyping tool that allows designers to easily create simulations of web and mobile apps that enable the designer to express and view ideas before wading into the full design, development, and coding process.

“Great design and NYC have always gone hand-in-hand,‚Äù said InVision CEO Clark Valberg.¬† ‚ÄúThat said, we’re really excited to be teamed with the NYC Entrepreneurial Fund to help fuel the next generation of designer-led innovations.”

In addition to the City’s contribution via NYCEF, InVision has also received funding from other venture capital funds, including FirstMark Capital itself.

“Early-stage funding for start-ups is critical to their development, and we look forward to watching these promising new businesses grow and become an important engine for the City’s economy for decades to come.” said New York City Economic Development Corporation President Seth Pinsky.

The $22 million NYCEF was launched in 2010 as a partnership between NYCEDC and FirstMark Capital to invest in early-stage technology companies in New York City. The city put up $3 million and Firstmark took care of the remaining $19 million.

Firstmark is primarily responsible for sourcing and evaluating potential investments, negotiating terms and conditions, and closing each seed investment. It monitors the performance of the companies it funds directly and through NYCEF.

The $200k being provided to InVision is the fourth round of investments by the NYCEF. The first startup chosen was MyCityWay, a mobile application provider that developed NYC Way, which won the inaugural NYC BigApps competition. Since then, MyCityWay app downloads for 70 cities have almost hit 5 million.

NYCEF has also invested in Jirafe, which helps eCommerce store managers grow their online businesses, and Medico.com, a global health-focused Internet company allowing users around the world to gather and share locally-relevant health care information.

Interested companies and entrepreneurs can apply online with New York City Entrepreneurial Fund for up to $750,000 in first round investment at firstmarkcap.com, or find out more at nycedc.com.

NY Announces $750M REDC Second Round Competition

New York Governor Andrew M. Cuomo announced that up to $750 million will be available as part of a second Regional Economic Development Council competition.

NY Gov. Andrew Cuomo - Open for Business

Photo credit - Office of the Governor, NY

The first round of $785.5 million under the Consolidated Funding Application (CFA).program was awarded in December last year for 720 economic development project funding proposals submitted by the state’s 10 regional economic development councils.

Under the rules of the first contest, four of the REDCs with the best projects were to be awarded an extra $40 million each. It went to Central NY, North Country, Long Island and Western NY.

Funding for the second round includes $220 million ($150 million in capital and $70 million in tax credits from the Excelsior Jobs Program) to implement regional strategic plans and support priority projects, and up to $530 million from state agency programs through the CFA to support regionally-significant economic development projects.

Instead of four awards of $40 million each to the best REDCs, this round will have five $25 million awards. But it’s a little more complicated than that, because the awards are divided into two sections.

The four regions mentioned above who got $40 million in 2011 will compete for two more awards of up to $25 million each in capital funds. The remaining six regions will compete for three awards of up to $25 million each in capital funds. They are expected to submit updated plans to make sure they do better than last time.

To maximize participation in the process and ensure high-quality applications, public workshops will be held in each region of the state to explain the programs and eligibility standards, as well as recent improvements to the CFA application process. A schedule of workshops is available here. Application materials, 2012 Regional Council Guidebook, CFA Available Resource Guide and calendar of CFA workshops are available online at nyworks.ny.gov.

The 20 co-chairs of the 10 REDCs wrote a letter to Governor Cuomo in which they said that, “We are excited that you and the Legislature have put in place a second round of the Regional Council process. After the countless hours spent putting together the regional plans, and now with the first round of awards that were announced last December in hand, there is new energy and enthusiasm in our communities as we begin to implement our regional strategies. The process moved swiftly last year and the feedback we received has been vital as the initiative improves and progresses.”

Apart from the $750 million ED funds for the REDCs and the REDC competition, Gov. Cuomo also announced the membership of the NY Works Task Force to coordinate a statewide infrastructure plan that will allocateNew York’s capital investment funding.

In addition, the Governor announced that 101 project contracts to repair New York state highways, bridges, and parks, consisting of more than $133 million in infrastructure investments, have been opened for bidding.

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