Economic Development

Fitchburg State Univ. EDI Forum on Broadband Availability and Usage

The Regional Economic Development Institute (REDI) at Fitchburg State University held a public research forum in Fitchburg, Massachusetts on Monday where researchers presented their findings in a study on broadband usage and availability.

Broadband for small business

Broadband for small business (photo – house.gov)

The report was completed by REDI faculty researchers Jane Zhang and Beverly Hollingsworth and includes a survey of broadband access across 20 cities and towns in North Central Massachusetts.

REDI completed the research project with the help of the Massachusetts Broadband Institute (MBI), which is currently working on a $40 million statewide project to improve broadband service to its cities and towns.

MBI has a stated goal of providing broadband access to 98 percent of statewide businesses and residents in Massachusetts. It seems they have a long road ahead, because the REDI study found that only 46 percent of businesses in the survey region were using high-speed broadband internet.

The survey team collected 380 responses via telephone surveys, with 90 percent of the respondents being private businesses. Seven percent were government organizations and agencies, and the remaining three percent were non-profits.

A full 11 percent said they do not use internet at all. Another 18 percent of the respondents said they used slower DSL connections, while 25 percent responded with “other.” Residential users were not included in the survey, and wireless was also not factored in.

What’s disheartening is that apart from the 46 percent who already use broadband for business purposes, the rest don’t seem to even want it.  A full 41 percent said they had no interest in cable internet, while another eight percent said it “depends.” Only five percent said they would like to be able to use broadband.

Even so, the REDI report’s conclusion was optimistic – “The desire for high speed internet clearly points to the fact that demand for cable will likely rise as broadband users realize its effectiveness in business. As small and medium size businesses grow, the demand for broadband will potentially move in a direct relationship with business growth.”

“This REDI study shows that the availability of broadband to the targeted areas of North Central Massachusetts is significant to the region’s economic sectors, especially for potentially aiding employment, improving business growth, and advancing economic development,” said Joshua Spero, REDI director and a member of the university’s Economics, History and Political Science faculty.

Read the full REDI report – Download (pdf, 13.7 mb)

Schumer Steps In to Defend EDA Grant for Pepsico Yogurt Project

When U.S. Senator Tom Coburn (R-OK) released his list of “Wastebook” projects for 2012, he probably expected a little blowback. Many of the funded projects on the list certainly deserve to be ridiculed.

Pepsico Muller Quaker yogurt

Pepsico Muller Quaker yogurt (photo – Pepsico)

But listing the $1.3 million U.S. Economic Development Administration (EDA) grant for infrastructure improvements at the Genesee Valley Agri-Business Park (GVAB) in Batavia, New York was probably a bit of an overreach.

U.S. Senator Chuck Schumer (D-NY), who championed the grant in order to facilitate the Pepsico yogurt plant and create 186 jobs, immediately piled on to defend the grant, and quite effectively too.

“One of the primary roles of the federal government is to responsibly invest in public infrastructure that bolsters economic growth in local communities, leverages private investment, and puts more Americans back to work,” said Schumer. “When the Economic Development Administration and the U.S. Department of Agriculture invested about $1.3 million to build an access road and improve the water supply at Batavia’s Genesee Valley Agri-Business Part, an out-of-state lawmaker failed to recognize the value in the hundreds of new workers at the site who will use these vital improvements to boost the local economy and support the region’s hard-working family dairy farms. This modest but critical federal investment in essential infrastructure creates a more fertile environment for a rapidly growing industry and related agricultural ventures to take root and grow in an economically stressed region of our state. It allows a wide range of food and yogurt producers – which create jobs and support the local tax base — to flourish in Batavia and beyond.”

“All told, this funding will help create a regional cluster of over a dozen businesses focused on food and Greek yogurt production; clusters are widely recognized as one of the most productive models for economic development,” added Schumer.

Sen. Coburn’s Wastebook lists the grant (scroll down to No. 24) as “Corporate welfare for the world’s largest snack food maker – A business park in New York received federal funds to make a road for a Pepsico yogurt factory.”

Sen. Schumer took exception to this too, and explained that Pepisco was not a recipient. The $1.3 million includes three separate grants. A $1 million grant was awarded to Genesee Gateway Local Development Corporation (GGLDC), which runs the agri-business park.

This $1 million helped make the needed improvements that landed the state and GVAB a $206 million investment in the form of the Pepsi’s Muller Quaker yogurt plant, which created 186 jobs and brought a number of smaller companies along to the GVAB. This was the largest manufacturing operation to locate in Genesee County in the past 50 years.

All told, the infrastructure improvements facilitated by the EDA grant have attracted an additional 10 companies to expand or relocate to New York and set up plants in the GVAB. In addition to the $1 million EDA grant, the USDA provided a $199,921 grant to Genesee County. The third grant was also a USDA grant to the town of Batavia.

Agencies Scramble to Provide NYC Housing Assistance

NYC Mayor Michael R. Bloomberg said that the U.S. Department of Housing and Urban Development (HUD) had told him they would have to find new homes for 40,000 people left homeless in New York by Hurricane Sandy.

Hurricane Sandy

Hurricane Sandy (photo – jaydensonbx/flickr)

Local, state and federal agencies are scrambling to provide emergency housing and help home owners rebuild or buy new homes.

Local community development corporations (CDCs) such as the Long Island CDC have stepped in with emergency home loan repair and improvement loans of up to $25,000.

“CDC is available to assist income-eligible Long Islanders with emergency home repair loans,” said Eileen Anderson, senior vice president of the Long island CDC. “There is a lot of misinformation out there right now. This issue, coupled with the trauma people are experiencing in the aftermath of Hurricane Sandy, can result in poor decision making.”

The U.S. Small Business Administration (SBA) is offering disaster loans up to $200,000 to homeowners to repair or replace disaster damaged or destroyed real estate. Homeowners and renters are eligible up to $40,000 to repair or replace disaster damaged or destroyed personal property.

Businesses and private non-profit organizations of any size may borrow up to $2 million to repair or replace disaster damaged or destroyed real estate, machinery and equipment, inventory, and other business assets.

Interest rates are as low as 1.688 percent for homeowners and renters, three percent for non-profit organizations and four percent for businesses with terms up to 30 years.

‘“The U.S. Small Business Administration is strongly committed to providing the people of New York with the most effective and customer-focused response possible to assist homeowners, renters, and businesses with federal disaster loans,” said SBA administrator Karen G. Mills. “Getting businesses and communities up and running after a disaster is our highest priority at SBA.”

Meanwhile, New York Governor Andrew M. Cuomo has issued a waiver for hurricane deductibles on insurance claims stemming from damage caused by Hurricane Sandy. Ironically enough, this was made possible because Sandy was not really a full-blown hurricane when it hit New York.

Many homeowners’ insurance policies for homes contain hurricane deductibles that range from one to five percent of a home’s insured value. So for example, with a five percent deductible on a home insured for $300,000, the homeowner would have to pay for the first $15,000 of damage.

Benjamin M. Lawsky, superintendent of the New York State Dept. of Financial Services, said, “We have informed the insurance industry that hurricane deductibles are not triggered because Sandy did not have sustained hurricane-force winds when it made land in New York. We will be working with insurers to help them respond as quickly as possible to homeowners who need to file claims. And we will be sending our mobile command center to hard hit areas to help consumers with insurance questions and problems.”

Homeowners unable to resolve disputes with insurers can file complaints at dfs.ny.gov.

LAEDC Report – Economic Impact of Pacific Standard Time

The Los Angeles County Economic Development Corporation (LAEDC) has published an economic impact analysis report for the Pacific Standard Time art exhibit staged by 60 cultural institutions and more than 70 galleries across Southern California between October 2011 and March 2012.

LAEDC report - Pacific Standard Time economic impact

LAEDC report – Pacific Standard Time economic impact (photo – getty.edu)

The report, commissioned by the J. Paul Getty Trust and funded by Bank of America, found that the combined activity related to “Pacific Standard Time: Art in L.A. 1945—1980” during the six month program period generated $280.5 million in economic output in Southern California.

In addition to exhibitions hosted by cultural institutions, dozens of local galleries and several art fairs (such as the art fair hosted by Art Platform) piggy-backed on the exposure generated for PST and debuted their own exhibitions and sales.

All put together, PST supported 2,490 jobs with total labor income of $101.3 million. This activity is estimated to have added $19.4 million in tax revenues for state and local governments across a six county region.

An estimated 1.8 million visitors participated at exhibitions across the region. The majority of visitors came from within California, with about 78 percent originating from Southern California. Approximately 13 percent of visitors came from states other than California, and 3.4 percent traveled from outside the United States.

The center of activity was Los Angeles County. Out of a total of 60 participating cultural institutions, more than 40 were in Los Angeles County. Among the largest institutions were the J. Paul Getty Museum, the Los Angeles County Museum of Art and the Norton Simon Museum.

In Los Angeles County, PST supported 2,130 jobs with total labor income of $88.5 million. The total output impact in the county is estimated to have been $234.8 million. This activity is estimated to have generated $15.5 million in state and local tax revenues.

Outside Los Angeles County, the program supported 370 jobs with total labor income of $12.8 million. The total output impact excluding Los Angeles County is estimated to have been $45.7 million. This activity is estimated to have generated $4.0 million in state and local tax revenues.

Pacific Standard Time was first initiated by the Getty Foundation and the Getty Research Institute in 2002, as a collaborative effort to preserve the archival record of the milestones in this region’s artistic history. By the time they got the project open last year, the Getty Foundation had already sunk $10 million on it.

Pacific Standard Time brings to light the dynamic history of art in Los Angeles from the post-World War II era through the turbulent 1960s and 1970s.

“The record of decades of artistic innovation was for too long scattered in storerooms and files all over Southern California, difficult to access and in some cases in danger of being lost or destroyed,” said Deborah Marrow, director of the Getty Foundation. “Through Pacific Standard Time, the region’s enormously creative history has been preserved and re-examined, narrative by narrative.”

“Los Angeles is the creative epicenter of the world, and we believe that supporting the arts contributes to a climate where innovation flourishes, economies grow, and people, businesses and communities thrive,” said Janet Lamkin, president, Bank of America California.

Read the full “Pacific Standard Time” economic impact report – Download (pdf)

RIEDC Files Lawsuit Against Curt Schilling and Former EDC Officials

The Rhode Island Economic Development Corporation (RIEDC) has filed a lawsuit against 38 Studios founder and former Red Sox pitcher Curt Schilling. Apart from Schilling, the lawsuit names thirteen other defendants including former RIEDC executive director Keith Stokes and the RIEDC’s own lawyers who acted as legal counsel for the deal.

RI Gov. Chafee on 38 Studios lawsuit

RI Gov. Chafee video on 38 Studios lawsuit

38 Studios was a video game company that was provided a $75 million loan guarantee by the RIEDC as an incentive to relocate from Massachusetts to Providence, RI.

They spent the loan money and more borrowed funds trying to make the video game, but ended up laying off hundreds of workers before filing for bankruptcy.

The state of Rhode Island was left holding an unfinished finished game and a huge unpaid loan. This led to RIEDC executive director Keith Stokes and others to resign. Curt Schilling blamed the Governor for denying the company film tax credits and eroding confidence in the company with public statements that pulled the rug out from under financing deals 38 Studios was negotiating.

Many state and federal agencies, including the FBI, were investigating actions taken by the company and its officials leading up to the layoffs and bankruptcy. The company’s headquarters was recently auctioned by the RIEDC, and that brought in a gross $650,000.

A recent RIPEC study ordered by RI Gov. Lincoln Chafee recommended complete restructuring of the agency and turning the quasi-public agency into a state agency as part of a larger Office of Commerce in the Governor’s Office.

The lawsuit now filed by the RIEDC in the Rhode Island Superior Court throws the book at everyone involved, from Wells Fargo Securities which it claims received a $500,000 hidden commission to the lawyers, the EDC board and Stokes for not doing their fiduciary duties to assess whether the company could complete the game it was making.

Gov. Chafee put out a video statement along with a copy of the complaint filed in the court.

In the statement, Gov. Chafee says that with the goal of minimizing loss of taxpayer dollars, “we engaged Max Wistow, a seasoned attorney with decades of experience in complex litigation matters, including financial restitution and settlements. Over the past four months, Mr. Wistow and his team have thoroughly examined the 38 Studios situation and the state’s position. In executive session of the Economic Development Corporation Board, we received an extensive briefing from Mr. Wistow on his findings. In that meeting, the Board voted without opposition to authorize legal action.”

A lawsuit against Curt Schilling and other 38 Studios executives was to be expected. But it might have been a bit of an overreach to haul so many of the EDC’s own people to court. It sends the wrong message that if an economic development project in Rhode Island goes wrong, then agency officials and consultants may literally have to pay for it out of pocket.

NYC Offers Hurricane Sandy Business Recovery Program

New York City agencies, including the New York City Economic Development Corporation (NYCEDC) and the Department of Small Business Services (SBS), are coordinating to offer a set of services designed to help small businesses in recovering from Hurricane Sandy.

NYC Mayor Mike Bloomberg and Hurricane Sandy

Photo – NYC Mayor’s Office

NYC Mayor Michael R. Bloomberg delivered an address at City Hall outlining the services being offered to help businesses get back on their feet quickly.

“As you know, the storm represents an enormous challenge for small businesses, especially in areas affected by flooding and power outages. So today we’ve put together a package of relief for small businesses to help them get through the setbacks caused by the storm,” said Mayor Bloomberg.

Emergency Business Loans: Emergency loans up to a maximum of $10,000 are available immediately for small and mid-sized businesses. Call 311 or click here to contact an NYC Business Solutions account manager.

Emergency Office Space: If you have lost your business location, short-term office space at Brooklyn Army Terminal is available free of charge for the next 30 days. NYCEDC has 40,000 sq ft of warehouse space available at the terminal. Contact details same as above.

Emergency Assistance: The SBS business outreach team and is on call to help small businesses with any storm-related business inquiries. They are closely coordinating with the NYC Office of Emergency Management. Contact details same as above.

Reconstruction Subsidies: For reconstruction projects that will be costing $500,000 or more, the New York City Industrial Development Authority (IDA) is issuing emergency sales tax letters to allow businesses to avoid payment of city and state sales taxes on materials purchased for rebuilding.

The IDA is also waiving its fees and will be streamlining its process to make it easier and faster. Contact Shin Mitsugi at smitsugi @ nycedc.com for further information on this program.

Property Loss Loans: Loans up to $2 million are available for business property losses not fully covered by insurance and for businesses that have had cash flow problems caused by the storm and need funds to get back on their feet. Small businesses, agricultural co-ops, and most nonprofits in New York City can apply, regardless of size.

Federal Disaster Funding: Information about the U.S. Small Business Administration’s disaster loans for small businesses, along with other federal agency programs and funding sources for post-disaster economic development.

EDA Approves $15M Grant for Bloomsburg, PA Flood Wall

The U.S. Economic Development Administration (EDA) has approved a $15 million grant for a flood wall project in Bloomsburg, Pennsylvania. The floodwall project was being pushed by elected PA officials in Washington DC as being necessary to protect more than 1,000 manufacturing jobs.

Bloomsburg after 2011 flood

Bloomsburg after 2011 flood (Photo – Cole Camplese/flickr)

The $15 million EDA grant will help fund the design and construction of a floodwall around Autoneum (formerly Rieter Automotive North America) and Windsor Foods, two of Columbia County’s largest employers.

Both of these manufacturers’ facilities and the site of the Bloomsburg Fair are flooded when the Susquehanna River and Fishing Creek overflow their banks. The town was been damaged by floods in 1936, 1972, 1975 and most recently from Tropical Storm Lee.

Flooding caused by Lee cancelled the Bloomsburg Fair for the first time in 157 years. Smaller floods have affected more than 400 residential homes and seven major commercial enterprises.

U.S. Rep. Lou Barletta and Senators Bob Casey and Pat Toomey have all been working to get this grant approved.

“It is critical we move this project forward to protect residents and provide long-term economic stability to the region,” said Senator Casey. “The people of Bloomsburg have suffered enough and it is time for the Army Corps to move on this project.”

“This funding will help keep these manufacturing jobs, not just in Columbia County, but in the United States,” said Rep. Barletta. “In today’s economic climate, it is important that we protect every single job we can, so this $15 million grant comes at the perfect time.”

“Since being sworn into office, I’ve been meeting and talking with local officials in Columbia County to address the town’s flood concerns,” said Sen. Toomey. “Without flood protection, more than a thousand jobs in Columbia County will be threatened. I hope we can move forward with this project as soon as possible.”

The $15 million provided by the EDA was based on a review done by EDA analysts of how much the project would need. The rest is supposed to come from the state and the two companies whose jobs are being saved.

The original plan called for a $46 million project, of which $30 million was supposed to come from the federal government, with $8 million from the Commonwealth of Pennsylvania and $8 million more from the Town.

Pennsylvania has a H2O PA program funded with $800 million, of which $13.6 million have been spent as H2O flood control funds in various counties. One of these projects was a $6 million project in Bloomsburg to create a levee and wall system around the Kawneer Manufacturing Co., which now allows the plant to remain open and operational during a flood.

El Pajaro CDC Incubator Chosen as Power of Small Finalist

A Community Kitchen Incubator Program (CKIP) developed by the El Pajaro Community Development Corporation (CDC) in Watsonville, California has been nominated as a finalist in the “Power of Small: Entrepreneurs Strengthening Local Economies” competition.

El Pajaro Community Development Corporation

El Pajaro CDC (photo – changemakers.com)

The El Pajaro CKIP was one of 11 finalists chosen by judges in the Changemakers international competition. A total of 370 projects and organizations had been nominated from all over the world.

The competition’s goal is to promote the most innovative strategies that help emerging entrepreneurs and small businesses grow and thrive in under-served communities. El Pajaro’s CKIP is the only U.S. project on the list of finalists.

The top four winners out of these 11 finalists will be chosen by popular vote. The voting period ends on Nov 2, 2012. The four winners will each get a capital, technology and promotion package from SAP – including a cash prize of $10,000 and a technology donation to optimize performance and scale-up operations.

“We’re thrilled to be recognized as innovative in a global competition,” said Carmen Herrera, executive director of El Pájaro CDC. “But what winning this competition really means for our community is that we can support more micro-entrepreneurs in their quest for economic security.”

Hidden behind the vast agricultural wealth of Central California are communities which suffer from persistent concentrations of poverty and high unemployment with rates near 30 percent, affecting the predominantly rural, immigrant, Latino farm workers.

The El Pajaro Incubator allows people without means in this area to take advantage of the available food and supply chain network in the area without having to invest the thousands of dollars a commercial kitchen requires.

Apart from the fully equipped, shared-use commercial kitchen facility, El Pajaro helps out with licensing, micro-loans of up to $5,000, technical support and business assistance to help new businesses grow and succeed.

The incubator was set up in Watsonville, California by El Pajaro with the help of a $90,000 Small Business Administration (SBA) grant that was used to purchase equipment. The building, which is a former tofu plant, is leased for four years with an option to buy. The El Pajaro CDC is confident they will be able to buy the building in two years.

All eleven finalists in the Power of Small competition have been invited to the SAP SAPPHIRE NOW Conference in Madrid, Spain from November 13-15, 2012, where the four winners will be announced.

Vote before Nov 2, 2012 for the El Pajaro CDC Kitchen Incubator here. You can vote for up to three of the 11 finalists if you are not rooting for anyone in particular. But if you want the El Pajaro CDC to win, then you might want to restrict yourself to just that one vote . 

Restoring Your Economy After Hurricane Sandy

Hurricane Sandy has wreaked a lot of damage across a vast area, with ten states under a state of emergency. From the destroyed boardwalk in Atlantic City, New Jersey to the flooded Ground Zero construction site in Lower Manhattan, New York, there will be a whole lot of rebuilding to be done now.

Disaster Recovery

Disaster Recovery (Photo – SBA.gov)

Total economic damages are expected to top $20 billion, of which insured losses will cover only $7 billion to $8 billion. The rest of the reconstruction and economic rebuilding will be up to the cities, with help from state and federal governments.

Here’s a round-up of the federal disaster funding programs that might come in handy to rebuild, reopen businesses, and restore your economy, if you are in a region that has been impacted by Hurricane Sandy.

SBA Disaster Loans – The U.S. Small Business Administration (SBA) has an entire Office of Disaster Assistance working to provide low-interest, long-term loans to businesses and private nonprofits following a disaster.

FEMA Public Assistance (PA) Grant Program – For events that qualify as a Presidentially-declared disaster, FEMA’s PA grants provide supplemental federal disaster grant assistance for emergency and permanent repair, replacement, or restoration of disaster-damaged facilities. The PA grant is available only to state and local government agencies, and certain private nonprofit organizations.

FEMA Hazard Mitigation Assistance (HMA) – This grant program provides funding for eligible mitigation activities that reduce disaster losses and protect life and property from future disaster damages. HMA pre-and post disaster grants are provided to states and territories that, in turn, provide sub-grants to local governments and communities.

HUD CDBG Disaster Recovery – The US Department of Housing and Urban Development (HUD) provides flexible grants to help cities, counties, and states recover from Presidentially-declared disasters, especially in low-income areas, subject to availability of supplemental appropriations.

HUD’s Community Development Block Grant (CDBG) disaster recovery assistance can be used to fund a broad range of recovery activities, and can be used as supplemental aid on disaster recovery projects and programs being funded by FEMA, SBA and other federal agencies. Also, HUD has HOME Disaster Recovery grants to provide affordable housing to disaster victims.

EDA Disaster Recovery – For FY2012, Congress has appropriated $200 million in disaster relief funding, which is being distributed by the U.S. Economic Development Administration (EDA) via competitive grants to eligible applicants. These grants are meant for long-term disaster recovery needs under three categories:-

-          Strategic Planning and Technical Assistance;

-           Infrastructure Design and Development; and

-          Capital for Alternative Financing.

Of the $200 million available for FY2012, the EDA’s Philadelphia, Penn. Regional Office which covers the Northeast got the biggest share of $53.73 million. Funds are available until expended, and applications are accepted and reviewed on a rolling basis (not quarterly).

Post-Disaster Economic Recovery Resources:-

Restoreyoureconomy.org

National Disaster Recovery Framework

Alternative financing after disasters

VA Tech Opens National Tire Research Center in Alton, VA

The Virginia Tech Transportation Institute (VTTI) has opened a $14 million National Tire Research Center (NTRC) next to the Virginia International Raceway in Alton, Virginia.

VA Tech National Tire Research Center ribbon cutting

VA Tech National Tire Research Center ribbon cutting (Photo – VTTI)

An official ribbon cutting ceremony was held last week to display the unique custom-built machine which can test passenger-car, light-truck and motorsport tires.

Economic development leaders and Virginia Tech officials said they hope the NTRC will make the Southern Virginia region a one-stop destination for global tire testing and development.

“Virginia Tech wanted to be involved due to the research opportunities,” said VTTI director Tom Dingus. “And the commercial aspect enables us to afford a world-class machine to perform applied research.”

Apart from VTTI, General Motors and the Virginia Tobacco Revitalization Commission were also involved in the project, which has been in the works since 2010.

“Without the commission’s $5 million grant, this idea would have never come to fruition,” said Virginia Tech president Charles W. Steger. “General Motors also deserves credit for helping to make the business plan work by paying for several years of its use in advance and guaranteeing that its suppliers would test at the facility for the next 20 years.”

“General Motors will be using the machine extensively starting as soon as it is operational. That was the basis for our business model. As a bonus, there has already been interest from other major automobile manufacturers, tire companies, and motorsports representatives,” said NTRC executive director Frank Della Pia. “We hope to be operating with two shifts in early 2013 with the addition of a third shift by midyear 2013.”

“The huge economic development potential offered by the tire research center is a result of the investment by the Tobacco Commission,” said Virginia Delegate of the 14th District Danny Marshall, who is a member of the Virginia Tobacco Commission. “This project has the potential to save the public money through fuel savings.”

Proximity to the Virginia International Raceway creates synergy, enabling researchers and commercial customers to take what has been done in the laboratory testing environment and see if the results can be replicated on a closed-course circuit. Motorsports involvement is expected and projects are already under way.

NTRC will create 15 direct jobs in 2013, and likely as many as 30 when it is fully operational. Southern Virginia is likely to get in excess of 100 new jobs as a result of the project. Direct revenues of almost $15 million are expected within the next five years.

“Our goal is jobs now plus jobs later,” said Della Pia. “I think it will be very easy to establish ourselves as a global center for this type of innovative work. The facility will attract other companies to the area, resulting in even more jobs in the long term.”

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