Economic Development

New York State’s ESD Approves $10M in Economic Development Funding For 19 Projects

The Board of Directors of Empire State Development, the chief New York economic development agency, has approved $10 million in funding for 19 projects that will create or retain a total of 325 jobs.

Empire State Development

Empire State Development (photo – ny.gov)

“These projects spur economic development from the ground-up, and they are helping to drive growth and attract new businesses in communities that need it most,” said Governor Andrew M. Cuomo.

One of two REDC award grants approved by the ESD Board goes to the Development Authority of the North Country. DNAC is getting a $1 million grant to establish a revolving loan fund (Value Added Agricultural Loan Fund) that will help develop agribusiness facilities.

The REDC award grant was for vocational rehabilitation center Challenge Industries, which is getting $300,000 for a food production facility that will provide rental space and a central packaging and processing hub for farmers and producers for an area that covers nearly 5,000 farms.

Funding for four other projects was approved through the Empire State Economic Development Fund and Economic Development Purposes Fund.

Thomas Mott Osborne Memorial Fund Capital – This non-profit organization is getting $6 million to help them redevelop the Fulton Correctional Facility, which will now be the Fulton Economic Development and Community Reentry Center with a mission to help ex-offenders with everything from temporary housing to job training, placement and business development services.

Advanced Tool Inc. – Advanced Tool is getting $200,000 to help with an investment project including machinery upgrades and facility renovation. This $1.5 million project in Oneida County would not have gone ahead without the ESD grant.

Coast Professional, Inc. – This Louisiana-based company was considering an expansion on either coast, and chose New York over California, aided by a $90,000 grant to support their construction and renovation plans for an existing facility in Geneseo, Livingston County. The project helped retain the company’s 103 existing jobs, and helped create 47 new jobs.

Plattsburgh‐North Country Chamber of Commerce – The Chamber is getting $68,000 to help them attend the 2014 Farnborough Air Show in the U.K., where they plan to assist companies from New York market their products and services.

The ESD Board additionally approved $2,423,196 under the Market NY Grant Program to 13 Regional Marketing Tourism projects. These are all projects that support their respective Regional Council’s strategic plans for tourism, and will also be coordinating with the state’s “I LOVE NY” tourism division to maximize the statewide impact of the project.

ESD President, CEO and Commissioner Kenneth Adams said these strategic investments ESD is making in New York State support major economic development projects and are creating job opportunities for New Yorkers.

North Carolina Considering Legislation to Boost Economic Development Incentives for Large Projects

New legislation aimed at beefing up North Carolina economic development incentives that can help close deals on large projects creating hundreds of jobs is making its way through the NC Senate now.

NC economic development incentives

NC economic development incentives (photo – nccommerce.com)

The Senate version of HB 1224 includes, among other things, a framework for creating a new Job Catalyst Fund (JCF) under the purview of the NC Department of Commerce.

JCF, if established, would be used to provide state grants to local governments for helping them secure large projects that have the potential to create hundreds of jobs and generate tens of millions of dollars in private investments.

To be specific, the grants would be available to communities in designated tier one, two or three areas that are in consideration for projects creating 500, 800 or 1,200 jobs with an investment of $20 million, $35 million or $50 million respectively in real and/or personal property.

These jobs would need to provide health insurance and wages of at least 100 percent of the average wage in the county for tiers one and two, and 110 percent for tier three areas.

The recipient local governments would also need to match the state funding with local funds and must use the JCF state grant for things such as land acquisition, site and infrastructure improvements and facility development that make their location more desirable in the site selection process.

HB 1224 also seeks to enhance existing North Carolina economic development incentive programs. The bill hikes the Job Development Investment Grant (JDIG) program’s funding for the 2013‑2015 fiscal biennium from $22.5 million to $36.5 million.

Another program being enhanced is the Job Maintenance and Capital Development Fund. These JMAC grants are meant to keep jobs in-state by supporting investments being made by large manufacturing companies. The bill lowers the eligibility threshold for required investments from $69 million to $50 million, and would include projects where manufacturers are making investments to enhance pollution controls and energy efficiency while reducing emissions.

The maximum allowed annual cost of a JMAC agreement with any one company is still $6 million, but the overall funding for the program has been hiked from $69 million to $79 million.

All these proposed changes to boost North Carolina’s ability to close on economic development projects come after several large projects recently slipped out of their hands because neighboring states were able to offer higher incentives. HB 1224 will level the playing field and increase cooperation between state and local economic development agencies and officials as they work together to secure large projects with hundreds of jobs.

Google as an Economic Development Tool – Impact Report

Every year, Google releases an economic development report that includes state by state data on how Google is helping businesses all over the U.S. grow and succeed.

Google economic development report

Google economic development report (photo – google.com)

Their latest impact report shows that last year, Google’s search and advertising tools helped more than 1.5 million businesses generate $111 billion in economic activity.

California dominates the report, with 285,000 businesses and non-profits using Google tools to generate $25.4 billion in economic activity in 2013.

Not to mention the fact that Google has its headquarters and more than 19,000 full time employees in California.

New York follows with 141,000 businesses and non-profits using the company’s tools to generate $18.3 billion in economic activity. New York also has more than 3,500 Google employees.

The third biggest pool of Google Adwords and Adsense users is in Texas, where 116,000 businesses and non-profits used these and other Google tools to generate $5.6 billion in economic activity.

The report also includes featured businesses in each state, showing how startups, SMBs and non-profits are using various Google tools to grow and find solutions to business, social and economic issues.

One of the businesses featured in the California section of the report is Los Angeles-based BeyondCurious, founded as an “innovation consultancy” by Nikki Barua and Vishal Agarwal in October 2011 with zero capital investment and no clients. Three years later, they now have more than 50 team members and are generating millions in revenue at a growth rate of more than 500 percent year-on-year.

Their business is entirely cloud-based, and smartphone and tablet apps that solve business problems for leading brands make up a large part of their business. Android apps produce more than half of their revenue. The company also uses Google Docs, Adsense, Google Analytics, Youtube and Google+ as business tools.

The New York section of the report features The Wild Center – a not-for-profit organization dedicated to helping people get to know the Adirondacks and examining the relationship between nature and humans. Howard Fish, their director of Communications, explains in the report that they use the web to encourage people around the world to visit the Adirondacks and look at the ways in which people and nature can co-exist in the same place.

The rush of visitors to the Adirondacks is concentrated during four months of the year. The rest of the time, says Fish, they rely on advertising through Google Adwords to target specific markets and audiences such as those interested in Monarch Butterflies or programs they provide such as green building training.

Adwords and other Google tools including Gmail, Google Drive, Google+ and Youtube have made The Wild Center’s website one of the most heavily trafficked ones in Upstate New York, with website traffic doubling year-on-year. The organization now has dozens of staffers and interns and hundreds of volunteers that are helping preserve the environment while promoting tourism and economic development in Upstate New York.

Jim Lecinski, Vice President, Customer Solutions, Google, wrote on the official Google Blog that recent data shows that businesses that are online are expected to grow 40 percent faster and hire twice as many workers as compared to businesses that are not online.

Lecinski added that every year, it gets clearer that the web is helping create more successful businesses and more vibrant towns and prosperous communities with stronger economies.

Read more about the Google impact report here.

Audit Shows Boston Economic Development Organizations in Need of Structural Reform

Boston Mayor Martin J. Walsh released the findings of an audit of the Boston Redevelopment Authority and the Boston Economic Development Industrial Corporation that looked into their adherence to internal protocols, policies and procedures.

Audit

Audit (photo – LendingMemo/Flickr)

The audit of the two agencies which merged operationally back in 1995 was commissioned by the Mayor earlier this year in March, and subsequently conducted pro bono by KPMG.

In theory, the BRA and EDIC are supposed to function as a unified entity working on Boston economic development programs and planning efforts. The same board of directors oversees the activities of both organizations.

However, their operations are still largely separate 20 years after the merger. Actions and decisions taken by the board related to BRA are not binding on the EDIC, and vice versa.

The audit also found that employees of both organizations are still physically located in different places. BRA staff is mostly centered at City Hall, while EDIC is split between offices at two distinct locations at the Boston Marine Industrial Park and on Hawkins Street. Furthermore, their payroll and benefits are also different from each other.

The report also piles on the lack of integration between departments that operate under the umbrella of the BRA and EDIC. This includes the Office of Jobs and Community Services, Youth Opportunities Unlimited, and ReadBoston and WriteBoston, all of which operate almost autonomously while technically being required to report to the BRA’s director and board.

This lack of integration, according to the KPMG auditors, makes the BRA seem less efficient, responsive and accountable to the public than it should be.

The report suggests that all activities currently under the purview of BRA/EDIC should be examined to determine whether they are consistent with the overall mission, or may be better elsewhere.

The auditors also suggested changes at the top, with a BRA Director who can ensure the mission is defined and adhered to, and a chief operating officer responsible for day-to-day operations that are consistent with the implementation of the agency’s mission.

Another major shortcoming highlighted in the report is the BRA’s disjointed and insufficient compliance protocols. A compliance department was established in 2004, but the KPMG auditors were unable to get hold of a list of compliance requirements the BRA/EDIC should be monitoring and adhering to.

It seems Boston’s economic development organizations are currently unable to coordinate in order to track commitments made by developers, as well as deed restrictions and lease and equity payments.

The BRA does not have a centralized digital document repository, and critical documents are maintained in papers racked up in files. Leases expire and get renegotiated without new leases being prepared and executed, and there is no written policy for evicting tenants who are behind on their rent.

“We have a lot of work ahead of us to make the Boston Redevelopment Authority a more modern, nimble, transparent, and responsive agency,” said Mayor Walsh.

As a start, the BRA plans to hire an outside firm to do a comprehensive review of the agency’s planning department.

Brian Golden, acting director of the BRA, said they embrace these findings. “This is an opportunity to strengthen the way we do business so that we’re able to serve the public in a more efficient, accountable, and transparent manner,” said Golden.

Read the full BRA/EDIC audit – Download (pdf) 

DC Mayor Unveils Creative Economy Strategy

District of Columbia Mayor Vincent C. Gray, accompanied by Interim Deputy Mayor for Planning and Economic Development M. Jeffrey Miller, together unveiled The Creative Economy Strategy.

DC Creative Economy Strategy

DC Creative Economy Strategy (photo – dc.gov)

The strategy offers a roadmap to leverage the creative industries in order to help achieve the stated goals of the Five-Year DC Economic Development Strategy to create 100,000 new jobs and generate $1 billion in new tax revenue by 2018.

The Creative Economy Strategy alone is expected to create 10,000 new jobs over the next three years, making the District’s economy more resilient and less dependent on the federal government.

The three main components of this strategy are as follows:-

Creative Startup Hub – Make DC a hub for creative startups and entrepreneurs by improving access to affordable space, funding and other resources, and making the District’s bureaucracy friendlier for small businesses.

Attracting Creative Corporations – Make DC a magnet for creative corporations by cultivating a workforce attractive to these corporations, offering them incentives to locate in the District, and promoting DC’s creative economy to attract new businesses.

Fostering Local Arts Community – Foster an entrepreneurial local arts community in the District by helping arts institutions in developing sustainable business models, connecting creative organizations with businesses and universities, and mobilizing government resources for supporting arts and cultural organizations.

This Creative Economy Strategy is part of a broader effort to implement and advance the five-year DC economic development strategy. Arts and Heritage is one of the four key sectors targeted for job growth under the five-year strategy, along with culinary arts, professional services, and information and technology.

Mayor Gray said the District is home to some of the smartest and most creative people in the world, and has some of the richest cultural resources in the world. “My administration believes in doing everything we can to leverage those resources and grow our creative industries,” said Mayor Gray.

The Creative Economy Strategy was formulated over an eight-month period by an advisory group comprised of government agency directors and leaders from academia, business and non-profit organizations. They worked with the Kellogg Consulting team and staff at the Office of the DC Deputy Mayor for Planning and Economic Development.

Doug Guthrie, a visiting scholar at Georgetown School of Business, helped lead the groups as they formulated the strategy with input from interviews with 133 stakeholders in the District.

Read the full Creative Economy Strategy – Download (pdf)

Delaware Governor Signs Legislation Boosting Small Business R&D Tax Credits

Delaware Governor Jack Markell signed into law new legislation that will double the research and development tax credit the state offers to startups and small businesses.

Delaware Governor Jack Markell at HB 318 bill signing

Delaware Governor Jack Markell at HB 318 bill signing (photo – delaware.gov)

The Governor signed House Bill 318 at the Delaware BioScience Association’s headquarters in the Delaware Technology Park.

The bill was passed with overwhelming bipartisan support last month by the Delaware Senate and House of Representatives.

As per the new law, businesses with less than $20 million in average annual gross receipts for the most recent four years are eligible for a state R&D tax credit equal to 100 percent of the corresponding federal credit.

Before HB 318 became law, all businesses in the state were entitled to a state R&D tax credit of up to 50 percent of the federal credit. Larger companies will continue to be able to claim up to half of the federal credit.

The amendment is meant to boost Delaware economic development by attracting companies from out of state and by increasing the opportunities for entrepreneurs in the state to innovate and grow.

Gov. Markell said that state R&D tax credits have been proven to encourage research, attract out-of-state companies, and boost the high-tech sector.

Even so, only about two percent of these credits go to startups and small businesses. The Governor said this needs to change, and that’s what this law is about.

“By encouraging research and development at all of our companies, we will incentivize innovation and growth in emerging industries that are vital to our economic future,” said Gov. Markell.

The enhanced amount in tax credits available to each small business won’t reduce state revenues, because the total funding for the R&D tax credit program is still capped at $5 million. The law merely ensures a more equitable distribution, with small businesses and startups getting a larger share of this amount.

State Representative Bryon Short, who sponsored the bill in the House, said the passage and signing of the bill is another step in establishing Delaware as the best state to start and grow a business.

Rep. Short added that Delaware is increasing the opportunity for job growth and enhancing its competitiveness with other states by modernizing the state R&D tax credit to better support the growth of small businesses.

Kansas State University Kicks Off Construction of Bulk Solids Innovation Center

Kansas State University last week broke ground on their long-planned and much-awaited Bulk Solids Innovation Center project in Salina, KS.

Rendering of K-State Bulk Solids Innovation Center in Salina, KS

Rendering of Bulk Solids Innovation Center in Salina, KS (photo – k-state.edu)

The 13,000-square-foot innovation center is a public-private partnership involving K-State, the Salina Economic Development Corporation, the U.S. Economic Development Administration,State of Kansas, City of Salina, the Salina Area Chamber of Commerce, and a number of private companies.

Along with the university, Coperion K-Tron Salina Inc. and Vortex Valves will serve as the building’s anchor tenants.

This innovation center for researching the science and understanding of bulk solids materials handling will be the only one of its kind in North America.

Bulk solids are dry commodities such as sugar, grain, minerals, chemicals, recycled plastics and other pellets, granules and powders that make up 80 percent of items being transported worldwide and used as components of almost all manufactured goods.

Unlike liquids and gases, the science behind these bulk solids is not as yet thoroughly understood, and very little research has been done on the most efficient methods of handling, storage and distribution of bulk solids.

New research into the science behind bulk solids could provide a wide range of industries with significantly enhanced productivity and cost savings.

To facilitate this project, the EDA invested $1 million in 2013 for construction of the Bulk Solids Innovation Center, which had been in the planning stage for around five years.

Once operational after April 2015, the center will offer space for multiple small and medium-sized research projects related to improving storage and transportation of bulk solids. Major companies including Dow Chemical, Procter and Gamble, Exxon Mobil, Cargill and DuPont have expressed interest in contracting with the university for solving problems with their bulk solids processing operations.

Kurt Barnhart, associate dean of research and engagement at K-State Salina, said this center is the next step in defining K-State Salina in the field of research. Barnhart added that expert faculty and committed students are key to making K-State and the innovation center distinctive locally and internationally, which will in turn attract sponsored research funding and world-class industries, resulting in a positive economic impact on the area.

Mark Jackson, head of the engineering technology department at K-State Salina, said the innovation center will help them redesign degree programs to embrace project and product-based learning, and their graduates will start being immediately productive in the bulk solids processing industries.

New York and GE Launch Power Electronics Manufacturing Consortium as Public-Private Partnership

New York State is partnering with a group of more than 100 companies to launch the Power Electronics Manufacturing Consortium as a public-private partnership to develop and manufacture high tech materials used in semiconductors.

Gov. Cuomo at launch of Power Electronics Manufacturing Consortium

Gov. Cuomo at launch of Power Electronics Manufacturing Consortium (photo – ny.gov)

The Consortium, led by GE and the State, will invest more than $500 million and create thousands of new jobs in Upstate New York over the next five years.

The announcement was made at an event at the GE Global Research Center in Niskayuna, NY by Governor Andrew M. Cuomo, GE Chairman and CEO Jeff Immelt and other state and local officials.

“With commitment from our partners, we are advancing New York’s capability to compete in the international marketplace and make this state the place to develop and manufacture high tech materials,” said Gov. Cuomo.

The Governor added that this investment and the partnership today will be utilizing the workforce of tomorrow, creating jobs and increasing long-term investments in the state.

The Power Electronics Manufacturing Consortium (NY-PEMC) will be based out of a State-owned R&D facility in Albany, NY and managed through the SUNY College of Nanoscale Science and Engineering (CNSE/SUNYIT).

This site will function as a shared open-innovation facility that will enable the expansion and growth of SMEs and major corporate partners alike. GE is the lead partner in this fab, which will be housed at the CNSE Nano Tech complex. As the anchor tenant, GE alone will be investing more than $100 million to establish the facility.

“GE is proud to support New York’s Power Electronics Manufacturing Consortium, which places New York at the forefront of the next revolution in power,” said GE Chairman and CEO Jeff Immelt.

New York State is pitching in with another $135 million that will be provided to CNSE to fund the establishment of the NY-PEMC facilities.

Gov. Cuomo explained that they are using the same model that worked so brilliantly in the nanotechnology experience where the state owns the equipment and the facility.

Businesses come for the facility and equipment and research capabilities, and end up staying for the cluster and collective energy of all the companies already working on the same things. The state finances the magnet that initially attracts companies, and the effort then gathers its own momentum. The whole thing stays in place afterwards because the state owns all the essential facilities.

To make the prospect even more appealing, the operations of NY-PEMC partner companies at the CNSE site will be entirely tax-exempted under the STARTUP-NY initiative.

The Governor said it was a brilliant effort that was vastly different from not just New York economic development efforts in the past, but also from those by states all over the country.

SUNY CNSE/SUNYIT CEO and Officer in Charge Dr. Alain Kaloyeros said that power electronics is one of the fastest growing global markets, and New York is now poised to lead the way in their continued refinement.

Wisconsin Economic Development Corp Reopens Historic Preservation Tax Credit Program

The Wisconsin Economic Development Corporation has lifted a moratorium on the state’s Historic Preservation Tax Credit (HTC) program.

Wisconsin

Wisconsin (Photo – inwisconsin.com)

Last month, the WEDC had placed a moratorium on the program and stopped accepting applications in order to conduct a review.

The HTC program was originally established with an expected budget impact of $4 million. However, the popularity and demand for the tax credit soon outgrew the funding.

The budgetary impact of the program has been creeping up steadily every year, and is currently at $35 million.

The incentive offered under this program is a 20 percent transferable tax credit on qualified expenses associated with rehabilitation of historic buildings. This means that credits can be transferred to a third-party in return for a cash payment.

The goal of the HTC program is to jumpstart investment in main streets, downtowns and small businesses in aging communities across the state. It’s one of the measures implemented to align with the WEDC’s Core Strategies outlined in the four-year strategic plan (pdf).

To be specific, Strategy 1.5 (scroll down to pg 12) calls for alignment of community development resources (main street, public infrastructure investment) to support WEDC objectives.

“The Historic Preservation Tax Credit has proven to be a successful economic development tool,” said Governor Scott Walker.

The Governor added that the moratorium was necessary in order for the Wisconsin Economic Development Corporation to determine the best method to continue the program, and worthwhile projects can now move forward and help grow local economies and revitalize communities throughout the state.

After completing the review of the program, the WEDC decided to end the moratorium on providing the HTC tax credit for rehabilitation projects in certified historic buildings. The moratorium is still in place for non-historic buildings dating back to before 1936, which were also previously eligible to apply for the tax credit.

The WEDC will also be collecting additional information now, in terms of the HTC program’s return on investment to the State. They will be collecting data on the projected permanent and construction jobs being created by the projects, and the wages for these jobs.

Information will also be collected about each project’s ability to leverage additional investments upon receiving the HTC tax credit, the extent of local participation in the project, tax impact, etc.

Digital Domain Facing Legal Action Over Florida Economic Development Incentives

The Florida Department of Economic Opportunity has retained outside counsel for filing a suit against Digital Domain and related parties.

gavel

Photo by toridawnrector/flcikr

The announcement, made by Florida Governor Rick Scott’s General Counsel Peter Antonacci, is about recovering $20 million in Florida economic development incentives provided to the company for a project in Port St. Lucie, FL which ultimately didn’t create any jobs.

“The state has hired outside counsel to identify any and all legal action available against the company and any other individuals involved in wrongdoing related to this bad deal. We expect to announce specific legal action in the coming weeks,” said General Counsel Antonacci.

Back in 2009, under the previous administration before Gov. Scott took office, the Digital Domain Media Group, Inc. was awarded $20 million in State of Florida economic development incentives to locate a digital production company in Port St. Lucie.

Between Sept 2009 to April 2011, the company received four payments from the State totaling $20 million. On Sept 7, 2012, Digital Domain announced that it was closing down its Florida operations by reducing the workforce at the Port St. Lucie facility, which had by then grown to 300 employees. Shortly after that on Sept 11, 2012, Digital Domain filed a Chapter 11 bankruptcy petition.

A review conducted last year by the Florida Inspector General reveals how the company managed to obtain this funding.

Unspent funds under the state’s Quick Action Closing Fund (QACF) for 2008-09 were reverted back to the Legislature, and then appropriated to the Florida Office of Tourism, Trade and Economic Development (OTTED) and subsequently awarded to Digital Domain without having to go through the statutory process that is required in order to receive incentives from the QACF.

This was legal, but it was unusual in that it was pushed through concurrently with the usual process where a possible QACF award is recommended by Enterprise Florida (the non-profit public-private Florida economic development partnership) to OTTED. This process did not result in a recommendation to provide funds to Digital Domain.

The Inspector General  noted in the report that they were unable to determine all the factors that led to the decision to award funds to Digital Domain because of gaps in written documentation and unavailability of key witnesses.

The report added that although improvements have since been made to the process of awarding economic development incentives, the way in which Digital Domain was awarded the funds could still work if the Legislature appropriates funds and gives the Executive Branch discretion on using the funds.

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