Economic Development Blog

Economic Development

Maine Aims to Create Jobs by Using Liquor Sales to Pay Off $484M Hospital Debt

Jan 16

Maine Governor Paul R. LePage has submitted emergency legislation to pay the $484 million in debt owed to the state’s 39 community hospitals as part of a total direct investment of nearly $700 million into Maine’s economy in 2013.

Maine hospitals

A revenue bond on future liquor sales would cover the $186 million Maine owes its hospitals for MaineCare services dating back to 2009.

This would immediately trigger a $298 million federal match and erase the hospitals’ unpaid debt.

“By paying the State’s bills we strengthen our economy and the hospitals that care for and employ Maine people,” said Governor LePage. “Hospitals will be able do the same including paying new and existing employees and local vendors, pursuing capital improvements and maintaining the high level of service that has earned the state national recognition for quality care.”

The Governor said he will additionally issue voter-authorized bonds, including $51.5 million for transportation infrastructure improvements and $53.5 million for conservation, clean water upgrades, and construction and energy efficiency at post-secondary educational institutions.

The Governor has also proposed a $100 million facilities bond for the construction of new corrections facilities in Windham, to be paid from savings generated by more efficient operations.

The recipients, needless to say, are thrilled. Some of the reactions below:-

R. David Frum, President, Rumford and Bridgton Hospitals – “We have had selective layoffs, deferred hiring people, frozen wages and delayed needed capital projects due in part to our tenuous cash situation. Payment of the MaineCare debt is the single most effective way to improve the stability of our organization.”

“The sale of these bonds will allow the University of Maine to move forward with needed infrastructure upgrades on campus. Bond investments like these play an important part in ensuring that our students have access to quality educational facilities.” –James Page, UMaineSystem Chancellor

Steve Levesque, MRRA Executive Director – “I am delighted to hear that the Governor is releasing the bonds, which will allow for important economic development to proceed in Brunswick that will reoccupy these buildings and create jobs.”

Charles D. Therrian, President & CEO, MaineCoast Memorial Hospital – “As the second largest employer in Hancock County, the unpaid debt has played a major role in the management and operations of Maine Coast Memorial Hospital. Payment of the debt will be invested in people, services and community.”

Maria Vienneau, CEO/CNO, Millinocket Regional Hospital – “In July of 2012 we were forced to lay off staff, outsource jobs to a contractor to save money and reduce hours of clinical services in several departments. Payment of the debt will go directly back into the services and employees of our facility.”

ACSE Failure to Act Report – Infrastructure Shortfall to Cost 3.5M Jobs

Jan 16

The American Society of Civil Engineers (ACSE) released their “Failure to Act” report which outlines in stark detail the impact of current infrastructure investment on the U.S. economy.

ACSE Failure to Act report and infographic

ACSE Failure to Act report (infographic by asce.org)

Cumulative infrastructure investment needs will be approximately $2.7 trillion by 2020 and will rise to $10 trillion by 2040.

It is expected that funding will be available to cover only 60 percent (approximately $1.7 trillion) of these needs through 2020, and that will drop to 53 percent by 2040.

Thus, the investment gaps will total $1.1 trillion by 2020, and will grow to $4.7 trillion by 2040.

The ACSE report says an additional $157 billion per year in infrastructure investments all the way through to 2020 is required in order to prevent 3.5 million job losses.

This extra $157 billion invested each year will prevent a loss of:-

- $3.1 trillion in GDP, almost the equivalent of Germany’s entire GDP;

- $1.1 trillion in U.S. trade value, equivalent to Mexico’s GDP;

- 3.5 million jobs, more than the jobs created in the U.S. over the previous 22 months;

- $2.4 trillion in consumer spending, comparable to Brazil’s GDP; and

- $3,100 in annual personal disposable income.

The report states that after the aggregate GDP loss of $3.1 trillion cumulatively over the years 2012-2020, an additional $18 trillion loss can be expected from 2021 through 2040.

By 2020, the economy is expected to lose almost 3.5 million jobs, and mounting impacts from underinvestment in infrastructure will result in nearly seven million jobs lost by 2040. Large, labor-intensive industries such as retail, medical services, and restaurants will be particularly hard hit by 2040.

Job losses in part will be mitigated by more people working for less money. Many of these jobs will replace technology-based and education industry jobs that are the basis of long-term economic development.

Declining business productivity due to inefficient infrastructure may actually add jobs to some sectors. For example, deficient infrastructure is expected to negatively affect the value of agriculture sales and exports as shipping costs rise. However, even though this sector’s sales and exports will fall, more workers will be needed in 2020 to produce and supply its products.

Other sectors that will increase job shares in the U.S. by 2020 are automobile repair services, truck driving, and highway passenger services.

Read the full “Failure to Act” report – Download (pdf; 34.2mb)

UTSA Institute for Economic Development Claims $1.4B Economic Impact

Jan 15

The University of Texas at San Antonio (UTSA) Institute for Economic Development claims that the institute and its clients generated $1.4 billion in business growth during fiscal year 2012.

UTSA Institute for Economic Development (photo – utsa.edu)

This includes $1.06 billion in increased sales, contracts and exports, and another $330 million in new capital. This is the first time the institute’s economic impact has crossed the billion dollar threshold.

“These remarkable numbers show how UTSA is, in many ways, already providing a Tier One level of service,” said UTSA president Ricardo Romo. “In the past year alone, the institute has expanded its reach throughout the Eagle Ford region at home and internationally in Latin America and the Caribbean. This is the impact a Tier One institution creates. I am so proud of the great work that is underway.”

During FY 2012, the UTSA Institute for Economic Development:-

- Served 37,306 business and community clients including 23,253 training participants, 8,073 consulting cases, and 5,980 research tasks and projects;

- Helped launch 496 new businesses;

- Helped expand 476 existing businesses; and

- Supported the creation of 4,307 new jobs and helped its clients retain 5,778 jobs.

Highlights of the projects the institute was involved in during FY 2012:-

- Studies quantifying the Eagle Ford Shale energy development economic impact, and creation of an Eagle Ford Shale Community Development program with support from the U.S. Dept. of Commerce;

- New Orleans, Louisiana office for the Gulf Oil Spill Disaster Assistance program for businesses to recover from the BP Deepwater Horizon spill economic effects; and

- New Braunfels office of the Small Business Development Center (SBDC) to cater to high-growth Interstate 35 corridor businesses.

The institute also executed an agreement with Brazil’s Small Business Agency, SEBRAE, to connect their 1.1 million clients to the U.S. SBDC Network and LAC markets through www.sbdcglobal.com, an international trade platform developed by the UTSA International Trade Center.

“At home and abroad, small businesses provide the dynamism and diversification for healthy economies,” said institute executive Robert McKinley, “and our team of UTSA professionals is providing Tier One services as evidenced by these excellent results and extensive reach.”

Report – Gateway City Transformative Redevelopment for Massachusetts

Jan 11

A white paper put together by Boston, Massachusetts-based think tank MassINC and its Gateway City Innovation Institute recommends that the Commonwealth should invest $1.7 billion over the next decade targeting its 24 Gateway Cities for transformative redevelopment.

MassINC gateway city transformative redevelopment report

MA Transformative Redevelopment report (photo – massinc.org)

The report says that the $1.7 billion investment could stimulate approximately $3.4 billion in new development and reuse, providing funds to make possible at least seven major transformative redevelopment projects and generating total reinvestment in Gateway Cities approaching $7 billion.

Economic impact analysis suggests this level of reinvestment activity would support approximately 80,000 jobs.

Gateway Cities are “Gateways” to the middle class and generations of families climbing the economic ladder.

Transformative redevelopment in this case refers to public and private financial support for projects that catalyze significant follow-on private investment, leading over time to the transformation of an entire downtown or urban neighborhood.

The report suggests a 10-point investment plan for applying this concept in Massachusetts. Highlights below:-

Transformative Redevelopment Fund – Commit to $125 million per year for the next 10 years for this fund, to be established in the economic development capital budget.

Loan Guarantee for Transformative Projects – A state loan guarantee program to support up to $1 billion in private lending.

Transformative Redevelopment Revolving Loan Fund – A $100 million interest-free or low-interest-rate revolving loan fund to support construction, upgrading, and fit-out of commercial spaces for marketing and delivery to tenants.

MassWorks Grant Program Expansion – Commit an additional $20 million per year overthe next 10 years.

Targeted Incentives for Homebuyers – State income tax credits capped at $5 million annually could go to households who buy and rehabilitate substandard houses in targeted neighborhoods.

Economic Development Programs that Catalyze Gateway City Markets – Includes expansion of existing programs, and $75 million for the creation of three satellite UMass campuses.

Build Gateway City Capacity – Community assistance teams for early-stage efforts. Also asks for $2.5 million to select, train, and place five mid-career professionals to serve four-year terms in Gateway City economic development agencies implementing transformative redevelopment plans.

Assemble data to identify market opportunities and evaluate progress – An annual expenditure of$150,000 could be used to collect, analyze, and make public resale and other market data in areas targeted for transformative development so that developers, financers, and policymakers can gain a better understanding of Massachusetts Gateway City markets and the impact of state investments.

Read the full report from MassINC

SBA Approves Upto $50M For NC Venture Fund

Jan 08

Hatteras Venture Partners of Durham, North Carolina has been approved as the first licensee in the Early Stage Innovation Funds initiative, a part of the U.S. Small Business Administration’s (SBA) Small Business Investment Company (SBIC) capital investment program.

SBA SBIC (photo – sba.gov)

Licensed Early Stage Innovation Funds such HVP will receive up to a maximum of $50 million in SBA-guaranteed funding to match their privately raised capital.

They are required to invest at least 50 percent of their investment dollars in early stage small businesses.

Hatteras has already raised $88 million, and plans to use the SBA-guaranteed loans to reach its funding investment capital goal of $125 million.

The SBA statement said that HVP was selected because it demonstrated that it has a strong team with a clear, focused strategy and a track record investing in an undercapitalized region.

“The New Year is the perfect time to celebrate new businesses and win-win opportunities like the Early Stage Initiative,” said SBA Administrator Karen Mills. “The Early Stage Innovation Funds initiative promotes American innovation and job creation by encouraging private sector investment in early stage small businesses. And by licensing funds like Hatteras Venture Partners IV, we can expand entrepreneurs’ access to capital at no cost to taxpayers.”

High-growth, early stage companies commonly experience a gap in the availability of funding between $1 million and $4 million levels. This gap is often referred to in the venture capital industry as the “Valley of Death.”

Since January 2006, less than 10 percent of all U.S. venture capital dollars went to seed funds investing at those levels, and approximately 70 percent of those dollars went to just three states: California, Massachusetts, and New York.

The SBA’s Early Stage Innovation Funds initiative targets this gap by licensing and guaranteeing leverage to funds focused on early/seed stage investments.

SBA has committed up to $1 billion in SBA-guaranteed leverage for this program over a five-year period for selected Funds using its current SBIC program authorization.

SBICs use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine capital investments in small businesses. There are nearly 300 SBICs with more than $18 billion in capital under management.

More information on the Early Stage Innovation Funds initiative and the regulations governing these SBICs may be found at sba.gov.

Canada To Invest $250M to Support Large-Scale Automobile Sector Projects

Jan 07

Prime Minister Stephen Harper of Canada announced the renewal of the Automotive Innovation Fund (AIF), with another $250 million over five years (2013-2018) to automotive companies in Canada in support of strategic, large-scale research and development projects.

Prime Minister Stephen Harper at Ford Oakville Assembly Complex (photo – pm.gc.ca)

“Our Government remains focused on creating jobs, growth and long-term prosperity and to keeping Canada’s automotive manufacturing sector globally competitive and innovative,” said Prime Minister Harper, who made the announcement at the Ford Motor Company’s Oakville Assembly Complex. “The Automotive Innovation Fund has a proven track record of generating results for Canadians in terms of jobs, prosperity and foreign investment in Canada.”

This new investment builds on the previous and initial commitment of $250 million over five years, introduced in Budget 2008.

Since AIF’s inception, the following companies have benefitted from the Fund – Ford Motor Company of Canada, Linamar Corporation, Toyota Motor Manufacturing Canada Inc., and Magna International. To date, investments have leveraged up to $1.6 billion in R&D and innovation investments in Canada’s automotive sector.

The Ford Motor Company of Canada got $80 million towards an investment of up to $730 million to establish a flexible engine assembly plant and create an advanced powertrain research centre in Windsor, Ontario.

Linamar Corporation got $54.8 million towards an investment of up to $365 million to develop and commercialize advanced components and modules within three product areas – transmissions, engines and drivelines.

Toyota Motor Manufacturing Canada Inc. got $70.8 million towards an investment of $506 million to maximize production efficiency, reduce emissions and upgrade equipment to permit the production of more fuel-efficient vehicles including electric vehicles.

Magna International got $21.7 million towards an investment of up to $199 million to develop energy-efficient components for vehicles and innovative powertrain components for next-generation vehicles.

For this next round of AIF funding, the Government of Canada will consider investment proposals valued at more than $75 million.

Each proposal for AIF support will be subjected to a comprehensive due diligence process to assess the project’s feasibility and risk, as well as its ability to deliver the proposed innovation, technical, environmental and economic benefits.

Nevada ED Board Caught in Cross-Fire Between NRA and GTA

Jan 07

Morality critics usually find themselves ignored by Nevada, so the argument over whether Nevada should have provided $600,000 in incentives to help video game company Take-Two Interactive Software, Inc. (NASDAQ: TTWO) relocate to Las Vegas comes as a surprise.

Grand Theft Auto (photo – Silvio Sousa Cabral/flickr)

Nevada officials are being forced to respond by the media mostly because of the unfortunate timing of the decision to approve incentives to Take-Two on Dec 14, 2012 – the same day on which the 20 Sandy Hook school kids and six adults were shot dead by a deranged killer.

But at that time, nobody really knew or cared that much about the fact that Nevada was providing incentives to a video game development company whose flagship game is Grand Theft Auto (GTA) and its many versions.

GTA has often been criticized for its excessive violence and alleged propensity to encourage children towards lawless behavior.

Nobody cared, that is, until the NRA executive vice president Wayne LaPierre gave a press conference on Dec 21, 2012, where he blamed the Sandy Hook incident on violent video games, and specifically named Grand Theft Auto.

That got the LV Sun interested, with an article titled – “Should tax dollars be spent to draw maker of violent video games to Las Vegas?” The article quotes Secretary of State Ross Miller as claiming that the meeting to approve the Take-Two incentives had already adjourned on Dec 14 by the time they heard of the Sandy Hook shootings.

Even so, the critics are piling on now. Former State Sen. Sheila Leslie said it is hard to believe Nevada would stoop to this level and invest in a business like this. Nevada Assembly Minority Leader Pat Hickey wants to invite the Take-Two CEO for a discussion on the influence of video game violence on youngsters.

Take-two had no comment, and neither did the Entertainment Software Association (ESA). However, ESA’s position on this issue is perfectly clear – they hauled the State of California all the way to the U.S. Supreme Court last year to strike down a California law regulating the distribution of computer and video games.

The U.S. Supreme Court ruled, “California’s effort to regulate violent video games is the latest episode in a long series of failed attempts to censor violent entertainment for minors…Even where the protection of children is the object, the constitutional limits on governmental action apply.”

So Nevada has plenty of legal cover if they want to justify their decision to provide incentives for Take-Two.

Besides, it’s a no brainer from a purely economic development point of view. Steve Hill, director of the Nevada Governor’s Office of Economic Development, pointed out the positives – 150 new jobs at $18 per hour, and a new company that would be a part of the downtown Las Vegas revitalization.

Not to mention the fact that consumers spent $24.75 billion on video games, hardware and accessories in 2011 (latest data available).

NYC 2012 Tourism Impact – $55.3 Billion, 356,000 Jobs

Jan 01

New York City Mayor Michael R. Bloomberg and NYC & Company CEO George Fertitta announced that New York City welcomed a record 52 million visitors in 2012.

I Love NY (photo – Milton Glaser/wikipedia)

Visitors generated an estimated $55.3 billion in economic impact to the city’s economy, and the hospitality industry employed 356,000 New Yorkers across all five boroughs.

Highlights from the statement:-

- 41 million domestic visitors and 11 million international visitors;

- 29 million hotel room nights generated $504 million in hotel tax revenue;

- Average annual earnings for the 356,000 workers are higher than $52,000;

“The tourism industry is thriving, creating thousands of jobs for New Yorkers at all rungs of the economic ladder,” said Mayor Bloomberg. “We are well on our way to achieving our new goal of 55 million visitors and $70 billion in economic impact by 2015.”

“Tourism is the City’s fifth largest industry and continues to generate record numbers of visitors, spending, jobs and hotel tax revenue,” said Deputy Mayor for Economic Development Robert K. Steel. “Through NYC & Company’s strategic presence in 18 global markets, the City is able to attract visitors in markets where the potential for growth is strongest. We will continue to support a targeted approach and invest in markets that will yield the greatest return.”

Since 2006, New York City’s share of overseas visitors to the U.S. has increased from 28 to 33 percent. Each market share point represents an additional $750 million in direct spending by tourists in New York City.

New York City’s hotel room inventory has expanded to 91,500 active rooms. Even with the addition of new rooms, the city’s hotel occupancy remains strong at 87 percent, the highest in the nation.

“On behalf of all of NYC & Company’s 2,000 members, we look forward to working together to ensure the City maintains its position as the number one big city destination in the U.S.,” said Emily Rafferty, president of the Metropolitan Museum of Art, and Chairman of NYC & Company’s Board of Directors.

The Official Word on New Year Resolutions

Dec 31

Regardless of what happened to the resolutions made last year, you must have New Year Resolutions (NYR) once again. Your favorite federal agencies and state officials all have something to say about what you need to be doing in 2013.

Quit smoking in 2013 – New Year Resolutions (photo – cdc.gov)

The CDC wants you to quit smoking in 2013. They say “it is the most important New Year’s resolution you may ever make.”

CDC has developed resources that tap into the tradition of setting New Year’s resolutions to encourage smokers to quit. Visit Smokefree.gov for more information.

FEMA wants to make disaster preparedness your NYR for 2013. They helpfully inform you that those who make New Year’s resolutions are 11 times more likely to report continued success in achieving a goal than individuals who have not made a resolution.

FEMA’s Ready Campaign unveiled a “Resolve to be Ready” initiative for 2013. They hope you will join the Ready Campaign this holiday season in promoting Resolve to be Ready.

USA.gov makes it easy by listing links to all the possible NYR choices from healthy eating to getting a better job and volunteering to help others.

The Commerce department was perhaps too tired to make any new resolutions after taking a shellacking of spending cuts in 2012. But they did wish everyone a Happy 2013, and shared this nugget of information – on January 1, 2013, the total United States population will be 315,091,138.

At the state level, the best NYR choice goes to Indiana Governor-elect Mike Pence, who says he wants to “do everything I can, every day, to make Indiana the state that works for every Hoosier.” Outgoing Indiana Gov. Mitch Daniels, who has taken on a job as Purdue University president, wants to “to personally meet at least 5,000 Purdue students in 2013.”

On a local level, the winner was Konstantina B. Lukes, City Councilor-At-Large for Worchester, Massachusetts. Go Local Worchester asked city officials for their NYR choices. Here’s what Konnie Lukes wants to do in 2013:

- Have the City Council become a role model for Congress by solving the fiscal cliff issues between the City and School Committee.

- Forever close all the police chief’s Twitter accounts.

- Appoint a blue ribbon panel to study the impact of marijuana dispensing sites, slot parlors and the Assessor’s Office on the economic future of the City.

- Do eminent domain takings of all tax-exempt properties in the City of Worcester.

- Send the EPA a bill for disturbing the peace of Public Works Commissioner Bob Moylan.

- Convince the City Council to read the reports of the Worcester Regional Research Bureau’s report before criticizing the reports.

On a global level, José Manuel Durão Barroso, president of the European Commission, says the EC’s NYR is sustainable development – not just for the year, but for a whole generation. Canada’s Prime Minister Stephen Harper has an NYR suggestion for Canadians – go easy on consumer debt in 2013.

LED Report – Louisiana Economic Growth Outperforms U.S. and South

Dec 31

Louisiana Economic Development released a report detailing the state’s selected economic highlights for calendar year 2012. The report shows that Louisiana has been adding jobs at a faster clip than both the South and the U.S. since the official end of the recession in June2009.

Louisiana economic growth (photo – louisianaeconomicdevelopment.com)

Highlights from the report:-

- Nonfarm employment grew by 40,100 jobs from November 2011 to November 2012, which s about 30 percent faster than the South and 50 percent faster than the U.S.

- Louisiana is one of only six states that have seen employment gains (1.6 percent for La.) since January 2008.

- During the last four years, over 20,000 more people moved into Louisiana from other states than moved out of Louisiana to other U.S. states.

LED Secretary Stephen Moret issued a statement to go with the report.

“Louisiana had its best year for business development in the last five years, securing more retained jobs, more new jobs and more capital investment than in any of the previous four years,” said Moret. “Louisiana announced dozens of company expansions or relocations in 2012, launching projects that will result in more than 24,000 new jobs and $22.3 billion in new capital investment, along with hundreds of millions in new sales for small businesses across Louisiana.”

Highlights of Louisiana’s business development wins in 2012:-

- GE Capital’s new 300-job technology center in New Orleans;

- Ronpak’s relocation of its corporate headquarters from New Jersey to Shreveport;

- the $2.1 billion CF Industries expansion in Donaldsonville;

- Benteler Steel/Tube’s 675-job seamless steel tube mill and steel mill project at the Port of Caddo-Bossier; and

- Sasol’s integrated gas-to-liquids and ethylene complex, a 1,250-job, $16-21 billion investment in Westlake.

Three national business climate rankings (Area Development, Business Facilities and Site Selection) now place Louisiana among the Top 10 states in the U.S. for business.

Moret added that, “In the year ahead, LED will pursue targeted initiatives to enhance Louisiana’s economic competitiveness; retain Louisiana’s existing economic driver firms; support Louisiana’s small businesses; cultivate attractive development sites; offer world-class, customized workforce solutions; and recruit new growth industries to Louisiana. LED also will continue its aggressive efforts to position Louisiana to benefit from the advent of low, stable natural gas prices more than any other state in the U.S.”

Read the full LED Economic Highlights for 2012 report – Download (pdf)

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