Economic Development

Virginia Signs Agreement for $1.4B Highway Project

Virginia Governor Bob McDonnell announced an agreement with US 460 Mobility Partners and the Route 460 Funding Corporation of Virginia to finance, design and build a new 55-mile section of U.S. Route 460 in southeastern Virginia.

Route 460, Virginia

Route 460, Virginia (photo – route460ppta.org)

Project development begins immediately for the new $1.4 billion roadway, which is expected to generate an estimated 4,000 jobs during construction and 14,000 jobs over the long-term.

“Legislative leaders supported the project because it would improve safety for motorists and connectivity for freight and military traffic among other benefits,” said Gov. McDonnell. “Today, the Commonwealth is finally delivering on that need and building a project that will not only make transportation better for the southeastern region and the state, it will also generate jobs and economic development opportunities, bringing extensive long-term benefits in so many ways.”

The new U.S. 460 will be a four-lane divided highway from Prince George County to the City of Suffolk. The toll road will be parallel to the existing U.S. 460. The existing Route 460 will remain a free alternative.

Apart from the aforementioned jobs that will be created, the highway project will attract new business opportunities, boost tourism and accommodate greater freight traffic from the growth in demand at the Port of Virginia.

The road will help the Port of Virginia compete with Ports of Savannah and Charleston for fast-growing North Carolina markets such as Charlotte and Raleigh, and solidify its competitive advantages over these Southeast seaports.

When the road opens in 2018, tolls will begin at approximately 7 cents per mile ($0.067) for cars and 21 cents per mile ($0.213) for trucks. This equates to $3.69 for cars and $11.72 for trucks for the entire 55 miles. The state estimates the new road will get around 5,000 to 6,000 vehicles per day.

As per an economic impact analysis report prepared by Chmura Economics, the highway project will have an annual economic impact of $7.3 billion by 2020.

When the project is complete in 2020, the Commonwealth will receive nearly $60 million in sales, gas, corporate and individual income taxes. Local governments along the corridor will get annual tax benefits totaling $3.7 million starting in 2020 in the form of sales, meal, lodging and other forms of tax revenue.

William Fralin, who chairs the Virginia Port Authority (VPA) Board of Commissioners, said that, “The VPA is investing in the new U.S. 460 project because it will be an economic engine for the Commonwealth over the long-term, creating opportunities for distribution centers and light manufacturing that will drive cargo through the Port of Virginia. This creates jobs and grows our economy.”

The exact project cost is $1.396 billion including design, construction and toll collection set-up. Public funding from VDOT is $903 million.

Suffolk Mayor Linda T. Johnson said, “The City of Suffolk was recently named one of America’s best places to live for job growth. The benefits that the new U.S. 460 will bring including job opportunities and economic development will further enhance this mark of distinction. I welcome this project to our community.”

Forbes List of Best States for Business

The seventh annual Forbes list of the best states for business published last week shows that Utah once again topped the list. The second spot is also the same from last year, and goes to Virginia.

North Dakota went up one place to third, with North Carolina being pushed down one step to fourth place. Colorado retained its 5th place ranking from last year. See the list of the top 10 best states for business below.

  1. Welcome to Utah

    Photo credit – Phillie Casablanca (flickr)

    Utah

  2. Virginia
  3. North Dakota
  4. North Carolina
  5. Colorado
  6. Nebraska
  7. Texas
  8. Georgia
  9. Oklahoma
  10. Iowa

See the full 50-state Forbes list of the best states for business.

“It’s almost becoming impolite to other states-but Utah just can’t help it,” Utah Gov. Gary R. Herbert said. “But in all seriousness, our economy continues to outpace the national trend because we budget on sound principles and maintain a business-friendly environment. You simply cannot tax your way to prosperity, as others in our country try to do-you can only grow your way to prosperity. That is the Utah model.”

“This study reaffirms what those working and doing business in Virginia already know,” Virginia Gov. Bob McDonnell said. “My administration has been aggressive in making sure that Virginia has the best possible environment for private sector businesses to start up, grow and create jobs. Our focus on economic development and jobs has yielded results, with the unemployment rate dropping from 7.3 percent when I took office to 5.7 percent in October.”

What’s interesting is that Forbes writer Kurt Badenhausen analyzed the results as a vindication of “Right to Work” laws adopted by the top states on the list, since every state listed above (except Colorado) has these laws on the books. For the record, Michigan, which just passed a right to work law, is ranked at No. 47. Just above it at No. 46 is Mississippi, also a right to work state.

In the individual category rankings, Texas retains top slot for the best business climate. Virginia topped the list as the state with the most favorable regulatory environment. Colorado was No.1 for its labor supply. South Dakota tops the list for business costs, and Massachusetts for quality of life. California topped the list in the growth prospects category.

Cuomo Hands Out $738M to NY Regional Councils

At the 2012 Regional Economic Development Council (REDC) awards ceremony held this morning at the Hart Theatre in Albany, New York Governor Andrew M. Cuomo announced a total of $738 million in grants and tax credits for 725 projects put forward by the ten Regional Councils.

NY Regional Economic Development Council awards ceremony

NY Regional Economic Development Council awards ceremony (photo – regionalcouncils.ny.go)

There were five winners, but no losers because each REDC goes back with at least $50 million for its priority projects.

Central NY and North Country were named as top performers for 2012, and continued their winning streak from last year. Each of them won an extra $25 million award.

The six councils which did not win the extra $40 million last year were competing for three more $25 million awards this year. Among these six, Finger Lakes topped the charts as the REDC with the “Best Plan” and was awarded $96.2 million. Mid-Hudson ($92.8 million) and Southern Tier ($91.1 million) were the other two winners.

The amounts each REDC was awarded this year are listed below.

Finger Lakes – $96.2 million (2011 – $68.8 million)

Central NY – $93.8 (2011 – $103.7 million)

Mid-Hudson – $92.8 million (2011 – $67 million)

Southern Tier – $91.1 million (2011 – $49.4 million)

North Country – $90.2 million (2011 – $103.2 million)

Long Island – $59.7 million (2011 – $101.6 million)

Mohawk Valley – $59.7 million (2011 – $60.2 million)

Western NY – $52.8 million (2011 – $100.3 million)

NYC – $51.4 million (2011 – $66.2 million)

Capital Region – $50.3 million (2011 – $62.2 million)

NYC and the Capital Region are now the only two regional councils which have not won a competitive award in both 2011 and 2012.

“For the second year in a row, the Regional Councils have been on the forefront of rebuilding New York State’s economy,” said Governor Cuomo. “For too many years, top-down economic development policies have failed communities across the state and not truly invested in the unique resources and strengths of each of New York‘s regions. The strategic plans created during this process have given each region a comprehensive, locally created plan for future economic growth. With this second round of Regional Economic Development Council awards, the state is recognizing the creativity and innovation of each strategic plan, while investing hundreds of millions of dollars to put New Yorkers back to work and rebuild our economy.”

“The Regional Councils are one of the many ways New York is working to attract and promote business growth and investment, and proving that it is once again open for business. I congratulate the winners on putting forward plans that will create jobs and enhance communities — both small and large — across the state,” said Senate Majority Leader Dean Skelos.

Mark Zuckerberg Makes $500M Donation to Silicon Valley Community Foundation

Facebook CEO Mark Zuckerberg announced that he is is donating around $500 million to Mountain View, California-based Silicon Valley Community Foundation (SVCF).

Mark Zuckerberg, Facebook CEO

Mark Zuckerberg, Facebook CEO (Photo – Guillaume Paumier / Wikimedia Commons)

This is Zuckerberg’s biggest donation to-date, and has been made in the form of 18 million Facebook shares that have been transferred to SVCF as a gift.

Writing on his Facebook page, Zuckerberg said that he and his wife Priscilla Chan were looking to make an impact in education and health with their donation.

“Two years ago, Priscilla and I signed The Giving Pledge, committing to donate the majority of the money we earn to charity,” said Zuckerberg. “Today, in order to lay the foundation for new projects, we’ve made a contribution of 18 million Facebook shares to the Silicon Valley Community Foundation. Together, we will look for areas in education and health to focus on next. I’m hopeful we’ll be able to have as positive an impact in our next set of projects.”

As per their website, SVCF uses its expertise to “make giving easy and effective, helping donors achieve their philanthropic goals whether local, national or international.”

Their services include professional investment management of the funds entrusted by individual and corporate donors. As of 2011, SVCF had $2 billion in assets and more than 1,500 philanthropic funds under management.

They received $470 million in contributions last year, and awarded 10,477 grants worth $235 million. Zuckerberg’s $500 million grant more than doubles the total amount SVCF gets in annual contributions.

“Mark’s generous gift will change lives and inspire others in Silicon Valley and around the globe to give back and make the world a better place,” said SVCF CEO Emmett D. Carson.

The Giving Pledge mentioned by Zuckerberg is a campaign initiated by Warren Buffett and Bill Gates to encourage exceptionally wealthy people in the U.S. to give away most of their fortune to philanthropic causes.

Back in Sept 2010, before the Facebook IPO made him a billionaire several times over, Zuckerberg launched the Startup: Education Foundation with a $100 million pledge. The foundation’s mission is to reform public schools in Newark, New Jersey by applying a startup approach.

Zuckerberg noted in his Facebook post that the foundation had helped open four new district high schools and 11 new charter schools.

Ford Launches $10M Detroit Community Development Program

Ford Motor Company and its community relations arm, Ford Motor Company Fund (Ford Fund), announced the launch of a $10 million program in Detroit, Michigan to strengthen neighborhoods and provide support for education, summer jobs programs and other community needs.

Operation Brighter Future – Detroit

Ford Resource and Engagement Center, Operation Brighter Future – Detroit (photo – ford.com)

The $10 million program is called “Operation Brighter Future – Detroit.” The new Ford Resource and Engagement Center at the Mexicantown Mercado building in southwest Detroit will be the centerpiece of the program.

Members of the Ford Volunteers Corps will participate in the Gleaners client choice food service center and other community organizations within the center.

“The Mexicantown Community Development Corporation (MCDC) board of directors is proud to partner with Ford Motor Company Fund and the city of Detroit to provide comprehensive programming at the Mexicantown Mercado that aligns with its original purpose as a community resource,” said Hector Hernandez, chairman emeritus of the MCDC board.

The unused Mercado building will offer cultural and job training programs and other community services. Ford Fund will provide funding to local nonprofits to implement these programs and also provide the resources to operate the facility for at least four years.

“The Operation Brighter Future – Detroit initiative supports Ford’s work to build a better world,” said Mark Fields, chief operating officer, Ford Motor Company. “We are excited to contribute this $10 million investment toward services and support that will empower families and strengthen the community.”

Ford also is announcing it will “adopt” the Patton Recreation Center in southwest Detroit, and provide funding for the Brighter Future Summer Camp at Patton Recreation Center. Ford Fund also will provide a limited number of scholarships for youth to attend Camp Brighter Future.

Other initiatives getting funding under Operation Brighter Future include:-

-          Donation to the Public Safety Foundation of two F-Series chassis, which will be turned into new ambulances for the city of Detroit;

-          Support for Greening of Detroit and its projects to turn abandoned sites into parks; and

-          Funding for the Detroit Summer Youth Employment program that provides training and work experience for youth ages 14 to 21.

This latest $10 million program augments Ford Fund’s ongoing community partnerships and support of southeast Michigan nonprofits. This investment has totaled approximately $60 million dollars during the past five years.

WEDC Audit Committee Gets Independent Audit Results

An independent audit of the Wisconsin Economic Development Corporation’s (WEDC) financial statements by Schenck SC has been presented to the WEDC Audit Committee.

WEDC

WEDC (photo – commerce.state.wi.us)

WEDC commissioned the independent audit after a furor caused by their failure to track millions of dollars in loans.

“This audit illustrates the extraordinary steps WEDC’s current management has taken to be transparent and forthcoming about challenges the organization faces and past mistakes,” said Reed Hall, secretary and interim CEO of WEDC.

Schenck audited the financial statements of the governmental activities and the major fund of the WEDC, as of and for the year ended June 30, 2012. The audit identified two material weaknesses and two significant deficiencies, with corresponding recommendations in internal control over financial reporting.

The key paragraph in the audit is on page 8, where the schedule of findings and responses is listed. The paragraph in question says – “At the start-up of the Corporation, the majority of the resources were dedicated to the development of economic development programs. In addition, the departure and reassignment of many of the previous Wisconsin Department of Commerce employees resulted in a number of open financial positions for a period of time. The gap in employment for these financial positions played a significant role in the lack of, and accuracy, of financial transactions and internal control procedures.”

That is a reference to the formation of the WEDC in July 2011, when the former Wisconsin Dept. of Commerce staffed by 300 workers was replaced by the WEDC staff of 50. The number of WEDC staffers has since been increased from 50 to 90.

The audit recommended the establishment of an effective and efficient control system for receipt and deposit of collections and other revenues; disbursement of program loan and grant payments; and development and distribution of financial reports.

“This audit is consistent with previous management communications surrounding the challenges within our financial documentation and controls. WEDC has already started addressing the recommendations Schenck included in its audit,” Hall added.

Hall said WEDC has started providing the WEDC board a monthly management report that includes at least an income statement, balance sheet, statement of cash flows, statement of fund balances, and loan portfolio aging report.

Hall also said WEDC is analyzing and drafting detailed procedural and internal control plans for all loan activity. He said monthly reconciliations are being completed on a timely basis and reviewed by the Controller, and reports will be developed in the separate loan management software to quickly and accurately reconcile between systems.

Read the full draft of the WEDC Audit by Schenck SC – Download (pdf)

Prince George’s County EDI Fund Update

Last year in November, Prince George’s County, Maryland launched a $50 million Economic Development Incentive (EDI) Fund that was intended to be used to “employ, develop, and invest” in Prince George’s County residents.

Prince George's County, MD EDI Fund

Prince George’s County, MD EDI Fund (photo – princegeorgescountymd.gov)

County Executive Rushern L. Baker, III provided the first annual EDI Fund update, which shows a lot of promise for the fund and Prince George’s County, if it continues to provide the same results.

As per the update, the fund has made loans worth a total of $2.4 million to six different companies, and has leveraged a combined $26.8 in private investments so far. The EDI Fund has been credited with saving 480 jobs and creating 510 new jobs in the county.

“Our Economic Development team has been steadfast in promoting the EDI funds and attracting new businesses to the County,” said Baker. “Their hard work and efforts are evident in the companies that now have a Prince George’s County address. We are proud to highlight these businesses, job opportunities and tout their available services. Our continued goal is to reach and welcome more potential EDI eligible companies.”

One of the recipients was Landover, MD-based Man and Machine, which got $500,000 to make and provide a germ-free keyboard and mouse to hospitals. The biggest loan made was $1.2 million to a new Hampton Inn in Camp Springs, MD.

Software company IMS was provided a $110,000 loan to facilitate its relocation to Calverton, MD.  These loans may be forgiven if the recipients hit their job creation goals and retain the jobs over the long term.

The EDI Fund was set up with a $50 million appropriation over a five year period, including $7 million for 2012. The fund requires special priority to be given to projects that maximize Local Minority Business Enterprise (LMBE) participation and hiring opportunities for the county’s residents.

Gwen S. McCall, president and CEO of the Prince George’s County Economic Development Corporation, said last year that the fund provided much needed revenue to level the playing field for Prince George’s County.

“For years, surrounding jurisdictions were able to offer financial incentives to attract and/or retain businesses for their counties. We were limited. We could offer tax abatements, tax credits and land use, but we never had the stimulus funds to encourage businesses to stay or choose us over some other area,” said McCall.

At that time, they predicted that the fund would be able leverage private funds by 5:1, 10:1, or even higher ratios. That seems to be working out as expected, and the county has indeed been able to level the playing field, as demonstrated by the Nash Finch expansion project.

Nash Finch, a food distributor, chose Landover for an expansion because both the State of Maryland and Prince George’s County were able to offer $200,000 each as incentives.

Chrysler Looking at $162M Transmission Plant in Tipton, IN

Chrysler Corp.’s on-off relationship with Tipton County, Indiana seems to be on again. The company has asked the county for tax abatement for equipment purchase for what would be a $162 million transmission plant.

IN Gov. Mitch Daniels at Getrag transmission plant announcement in Tipton in June 2007

IN Gov. Mitch Daniels at Getrag transmission plant announcement in Tipton in June 2007 (photo – Indiana Governor’s Office)

The Chrysler transmission project in Tipton is estimated to create 850 jobs over the next two years.

The tax abatement requested is for $48.6 million worth of equipment that would be installed in the former ill-fated Getrag-Chrysler transmission plant in Tipton which fizzled out after a lot of investment and hype, but before it could open.

The company is additionally looking at sites in the City of Kokomo for another project, and a similar tax abatement request has been filed with the city council.

The saga of the Getrag transmission plant began in June 2007, when German transmission maker Getrag formed a partnership with Chrysler and announced a plan to build a new $530 million plant in Tipton. The 840,000 sq ft facility was slated to produce 700,000 transmissions annually and employ approximately 1,400.

At that time, the Indiana Economic Development Corporation (IEDC) offered the company up to $8.75 million in performance-based tax credits and up to $500,000 in training grants based on the company’s announced plans. The state also offered the community up to $3.4 million in infrastructure assistance for off-site improvements to facilitate the project.

The plant was supposed to open its doors in 2009, but the recession intervened. Getrag Transmission Manufacturing LLC, the partnership formed to operate the plant, declared bankruptcy. Litigation ensued between Chrysler and Getrag, and the manufacturing project was terminated.

Tipton County sent notice to Chrysler to return $5.5 million dollars in bonds the county had issued, in addition to reimbursing Tipton County at least $4.5 million for amounts owed to third parties as a result of the project. Chrysler sent them a rejection letter.

“We are very disappointed and upset by Chrysler’s rejection of our requests,” said Jane Harper, Tipton County Commissioner, at that time. “We merely called for Chrysler to honor its obligation under the commitment agreement we all agreed to in 2007.”

The bonds were ultimately returned in October 2009 after the agreement was accepted by a bankruptcy court judge.

The lot at the middle of all this activity stood vacant until July 2010, at which time Abound Solar, Inc. decided to open a $500 million solar module manufacturing operation that would add up to 850 jobs.

This time the IEDC offered $11.85 million in performance-based tax credits and $250,000 in training grants to Abound. The project also got assistance from the U.S. Dept. of Energy.

Unfortunately for Tipton and Indiana, the same thing happened all over again – Abound declared bankruptcy and abandoned the plant before it could be opened.

And now we’re back to a Chrysler transmissions manufacturing facility, also planning to add 850 new jobs. Hopefully, all parties concerned have learned a thing or two in the past few years and will manage to at least open the plant this time.

Ohio Economic Development Compliance Report

Ohio Attorney General Mike DeWine released his 2012 Report on award recipient compliance with state awards for economic development. The report analyzes compliance with the terms of economic development awards for 255 recipients which had performance periods ending in calendar year 2011.

Ohio economic development

Ohio economic development (photo – ohio.gov)

The report found that 162 awards were in substantial compliance while 93 awards did not comply, resulting in an overall compliance rate of 63.5 percent.

Awards issued by ODSA fall into four main categories – workforce awards, grants, tax credits, and loans. The report listed compliance rates by award categories:-

-          Workforce compliance rate: 89.9 percent (80 of 89 awards in substantial compliance);

-          Grant compliance rate: 48.6 percent (36 of 74);

-          Tax credit compliance rate: 59.5 percent (25 of 42); and

-          Loan compliance rate: 42.0% (21 of 50).

Most of the awards analyzed were made by the Ohio Development Services Agency (ODSA) in between 2006-08, and the Great Recession in between then and now may have had a negative impact on the projections, which might account for some of the non-performers.

For example, automobile supplier YSK Corporation was given a $2.5 million loan for expansion in 2006 in return for a promise to create 30 new jobs and retain 236 existing ones. They managed to retain the jobs, but could create only two new jobs.

Similarly, ABC Manufacturing, Inc. received tax credits to create 200 jobs, and managed to create only 53 jobs. Their tax credit term is being reduced from six to four years. ABC also received a $250,000 grant, for which the ODSA has sent notice of clawback of $181,250. They were also given a $750,000 loan under the Pioneer Rural Loan program, and the ODSA has now sent them a notice that it may increase the interest rate due to non-compliance.

But some of it is just about companies not living up to their commitments. For example, Caterpillar, Inc., which received $25,694 for workforce training and committed to training for 2,000 workers, has managed to provide training for just 52 workers. The ODSA sent Caterpillar a notice of clawback of $16,594.

Similarly, Home Depot U.S.A. Inc. received $32,500 under the Ohio Workforce Guarantee program to train 200 workers. They trained only 65.

Read the full report Ohio 2012 economic development compliance report – Download (pdf)

AFL-CIO HIT Investing $33.5M For Low-Income Housing in Boston

The AFL-CIO Housing Investment Trust (HIT) is investing $33.5 million of union pension funds to construct 129 apartments for low-income households in Boston, Massachusetts.

Old Colony, Boston redevelopment

Old Colony existing apartments contrast with new housing (photo – aflcio-hit.com)

The project will be located in Old Colony, one of Boston’s largest and most distressed public housing properties. It is expected to generate 340 union construction jobs.

The new investment is part of the HIT’s “Construction Jobs” Initiative, a national effort to get union construction workers back on the job through investments in housing projects.

Previously, the HIT invested $26.7 million in Old Colony’s $56.8 million first phase of redevelopment, which included 116 housing units and the 10,000-square-foot Joseph M. Tierney Learning Center.

The redevelopment plan is being carried out by the Boston Housing Authority and MassHousing in conjunction with the developer, Beacon Communities of Boston.

This latest $33.5 million investment is a part of the $61.4 million second phase of their plan. The success of the Old Colony master plan and its environmentally sustainable design is being looked at as a national model for reviving older urban communities.

The rehabilitation work is being carried out in accordance with LEED criteria for sustainable development and includes the replacement of aged infrastructure with energy-efficient systems to reduce operating costs.

“The HIT’s investment in the Old Colony redevelopment is part of our long-standing commitment to support the City of Boston in developing and preserving quality affordable housing for low-income families,” said HIT Senior Vice President Tom O’Malley, director of the HIT New England Regional Office. He added that the union-built project “is already helping improve the quality of life for residents, who are enjoying the new environmentally friendly housing and attractive outdoor green space.”

Since establishing the Construction Jobs initiative in 2009, HIT investments of $1.2 billion, together with $59.6 million of New Markets Tax Credits from the HIT’s subsidiary Building America CDE, have generated more than 15,000 union construction jobs across the country. The HIT has now set a new goal of creating 20,000 union construction jobs by year-end 2013.

Three thousand of these jobs have been created in Boston, Massachusetts. The HIT and its subsidiary have financed 10 projects in Boston since 2009, representing $646 million of development and 1,202 housing units.

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