State Solicits Input from Solar, Wind Stakeholders

A nonprofit company specializing in addressing complex public policy issues has begun holding a series of meetings to solicit input from solar and wind energy stakeholders that will be used to formulate the Northam administration’s update to the Virginia Energy Plan.

Discussion topics will address community solar, corporate procurement of clean energy, state/local barriers to the deployment of renewable energy projects, and net metering (connecting rooftop solar panels to the electric grid).

The nonprofit, Washington, D.C.-based Meridian Institute is organizing the sessions under contract with Dominion Energy, as provided for under the Grid Transformation and Security Act enacted earlier this year. Meridian will publish a compilation of comments around the end of August. The feedback from this and other stakeholder groups addressing energy efficiency, electric vehicles and battery storage will provide input into the Northam administration’s development of the state’s energy plan. The previous plan, written by the McAuliffe administration, was published in 2014.

The inaugural session was not organized to collect input on the designated topics but to discuss the way Meridian had organized and framed the issues. Stakeholders will have a chance to make specific comments in hearings scheduled in July and August.

Given the preliminary nature of discussions, no strong points of contention emerged at the meeting, which was held at Virginia Commonwealth University in Richmond earlier today.

A few members of the roughly 60 people in attendance did wonder if Meridian might suffer from a conflict of interest due to its engagement by Dominion. Tim Mealey, a Meridian managing director, responded that his group is committed to openness, transparency, and reflecting the voices of all stakeholders. Meridian will not be issuing a report or making policy recommendations — its work product will be a summary of the participants’ views. Dominion will not review or approve the summary.

Several others questioned the way Meridian framed issues relating to the siting of solar and wind projects: What is Virginia doing right regarding the siting of renewable energy projects, and do stakeholders believe there are impediments to siting renewable energy projects in the Commonwealth?

Adam Gillenwater with the American Battlefield Trust said members of his group do not see the preservation of battlefields as an “impediment” to solar farms but rather as a competing good to be taken into consideration in siting decisions.

Others noted that the problems encountered by utility-scale solar and wind projects are different from the obstacles experienced by small power producers generating electricity at the rooftop level. Perhaps Meridian would consider conducting separate discussions for utility-scale and rooftop-scale issues, suggested Katharine Bond, Dominion senior policy adviser.

Mealey did not indicate what changes he might make to the discussion format. It is a “very unusual arrangement” to have an electric utility pay and contract for policy discussions mandated by a piece of legislation, he said. But he did not see that as a problem. His charge is to address the topics enumerated in the Grid Transformation and Security Act without being “unduly constrained” by the wording of the act.

SCC Examiner Rejects Dominion Tax Argument

A State Corporation Commission hearing examiner has rejected Dominion Energy Virginia’s arguments that it was correct to ignore a lower federal income tax rate in calculating transmission costs for 2018 and is recommending that the full commission give ratepayers the benefit of the lower tax rate immediately.

Chief Hearing Examiner Deborah V. Ellenberg’s ruling was issued July 9, following a June 29 hearing where Dominion employees said it had to use the 35 percent tax rate in calculating bills running into 2019, even though the federal corporate income tax rate had dropped to 21 percent effective January 1 of this year.  This was the subject of an earlier Bacon’s Rebellion post.

At issue is the rate adjustment clause (RAC) known at Rider T1, which passes along to customers the utility’s cost for transmission services.  It is one of several elements on monthly bills and the utility was seeking a substantial increase.  Dominion had put the higher monthly cost for a residential customer using 1,000 kilowatt hours at more than $4, with higher amounts hitting larger customers.

At the hearing Dominion argued that the T1 rate is driven by a formula approved by the Federal Energy Regulatory Commission (FERC) that includes as a factor the base federal rate, and it had to plug in the higher previous tax rate because it hadn’t consulted with stakeholders since the tax rate had changed.   Consumer advocates at the hearing said there was no prohibition on correcting the rates based on the new tax rate.   The hearing officer agreed.

“I find it disappointing that the Company has taken the position that the revenue requirement should include a 35% federal income tax rate that is no longer in effect rather than incorporate the significantly lower tax rate made effective even before the Company made its informational filing with the FERC in January 2018, and well before it filed this Application in May 2018,” she wrote. “It could, and should have, like other utilities, revised its annual filing to include the known and certain tax rate change. I recommend the Commission direct the Company to file a corrected annual filing with FERC effective January 1, 2018.”

The RAC tariff in question is due to be adjusted September 1 and stay in place 12 months.   Ellenberg suggested that the full commission adjust the new rate to reflect the lower taxes, saving consumers $71 million during the period.  She also suggested an additional reduction of $46 million to reflect the lower tax liability during the first eight months of 2018.  Dominion was arguing that consumers would have to wait until the true-up process in future cases to see rates adjusted to reflect the lower tax rates.

Ellenberg ruled against Dominion on a second point, involving a $13 million credit being paid to Dominion by the regional transmission organization PJM.  Dominion argued that payment was for generation services at its Yorktown plant, which is staying open longer than planned.  Ellenberg agreed with the SCC staff, the Attorney General and other consumer advocates that the payment was for transmission services and should reduce the revenue requirement for Rider T1.  The cost of operating Yorktown is fully recovered in base rates and the fuel charge.

If the full commission adopts her recommendations, Dominion’s request for $755 million for Rider T1 over the next 12 months will be reduced to $625 million, which is about the same as was approved a year ago.  That wipes out the 20 percent increase requested by the utility, with any increase in transmission costs being balanced by the lower taxes.

Back In Top 5, The Challenge Is To Stay There

Corks are popping all over Richmond as the business network CNBC announced this morning that Virginia is back in the top five of its annual survey of best states for business, ranking number 4.  It is the only state in the top five east of the Mississippi. The full Virginia report is here.

The photo on the CNBC page shows a Huntington Ingalls-built warship, but one of the amphibious ships built in Pascagoula, Mississippi.  Perhaps the web designers remember that the first time Virginia topped this list as number one the announcement was made from pier 3 at Newport News Shipbuilding with the future U.S.S. George Bush in the background as Governor Robert McDonnell took the bow.

Governor Ralph Northam will get to enjoy the spotlight this time, and should, but the credit needs to be spread widely. The person doing handsprings should be Stephen Moret, president of the Virginia Economic Development Partnership, who has been focused on improving these rankings since coming to Virginia to fix a broken agency its reputation.

Speaker Bill Howell and the others who joined with McDonnell in pushing forward the transportation tax package years ago deserve a nod, as those projects are starting to come on line. Virginia’s rank for infrastructure improved from number 25 in 2017 to number 20 for 2018, and may continue to rise now.

Also improved over last year was the ranking for education. Despite growing costs Virginia’s higher education system, public and private, remains the envy of many other states, but the focus now extends beyond degrees to work-related certifications.

This ranking is a marketing coup with no immediate value to the average Virginian. Staying in the top five over time will have value, however, as more business location or investment decisions start with Virginia on the short list.

Looking at the details there are only a handful of individual categories where the state ranked extremely well (workforce, education, business friendliness) and only two where Virginia was below the median – the related categories of cost of living and cost of doing business.  First or second quintile scores in several categories resulted in the good overall score.

Those outliers deserve some attention. A huge component of the cost of living and cost of doing business is the cost of electricity and other forms of energy, and the trend lines there are bad despite the energetic public relations efforts of a certain large utility. Another huge component of both is state and local taxes, which are under growing pressure to rise and where Virginia has a chance to be creative thanks to federal tax reform.

Not a time for any resting on any laurels. But some martinis at lunch are indicated.

State Employees Not Funding Own Retirement

Source: VRS Report to JLARC

State and local employees, like many of their peers in the private sector, are declining in droves to contribute to their own retirement plans, despite the availability of matching funds, a.k.a. free money which compounds for decades.

The Virginia Retirement System has been putting new hires into a hybrid retirement plan that combines a defined benefit with a defined contribution plan which depends on employee contributions. More than 85,000 active workers are now part of the hybrid plan, but only 18 percent of those are socking away the maximum 4 percent of their pay, which is matched with another 2.5 percent by the state.

Of the rest, 42 percent are contributing nothing, and 36 percent are contributing  only one-half of one percent, or $50 per $10,000.  Most of those are apparently doing so because the state automatically escalated all contribution rates by one-half of one percent on January 1, 2017 and employees had to then intentionally opt out.

The information was part of the annual report on VRS to the Joint Legislative Audit and Review Commission Monday, covering all aspects of an operation vital to 700,000 participants or beneficiaries.  JLARC was presented with a brief oversight, a longer and more detailed overview, and the report of an outside actuary.

Since that first “automatic escalation” the participation has been dropping and it may continue to drop until a second auto-escalation is planned for 2020.  “Current low rates of voluntary contribution by hybrid plan members will result in lower retirement income,” the presentation slide states.   That’s a major understatement, but the hybrid plan and the low participation are saving the taxpayers a bundle in the short run and will save even more as the previous defined benefits plans fade away.

As of March 1, the overall year to date return was 9.9 percent, slightly behind the goal of 10.0.  No figure was given for the end of the fiscal year on June 30 and the last 90 days have been a trade fear-induced roller coaster.  The long-term return baked into VRS funding assumptions is 7 percent.  The five-year average has been 8.1 percent and the 25-year average 8.2, but as the saying goes, past results are not a guarantee.

The charts tracking the funding status of the various individual retirement plans were all inching up and the average overall is now about 77 percent.  Under current assumptions it will take 26 more years to get back to 100 percent funded, where the state was as recently as 2002.  The key phrase there is “current assumptions.”

“VRS is actuarially sound” concluded Lance Weiss of Gabriel, Roeder, Smith and Co. (GRS), the outside auditor.  He praised Virginia for setting that 7 percent target return a few years back, but then reported it is no longer a conservative assumption but merely a reasonable one.  Many of their clients are moving to 6.75 percent, he said.  A figure below 6.5 percent was hinted at.  With an aging workforce looking at starting benefits in the short term, there is even more reason for Virginia to rethink that 7 percent assumption on return.

The assumption on return is what drives the size of employer contributions.  In another report it was noted that if the two largest funds, those for teachers and for general state employees, moved to a 6.75 percent “discount rate” the state would need to increase its annual contribution by $182 million.  Changing that assumption also drives up the unfunded liability on both funds and pushes the 100 percent funded goal further out.

The reports today were merely accepted, with few hard (or easy) questions. It may take a longer period of market uneasiness to undermine the current return assumptions, but House Appropriations Chairman S. Chris Jones told reporters after the meeting he would consider it.

Senate Finance Co-Chair Thomas Norment did ask out loud if the hybrid plan was “worth keeping” but the question received no response.  The defined benefit plan is gone and unless participation patterns change future VRS retirees (86 percent of whom remain in Virginia) will not have the same comfortable income as current retirees.

Uberizing Van Pools: A Useful Experiment

Northern Virginia transportation officials will try an interesting experiment to help cope with traffic disruptions during construction of the $2.3 billion Interstate 66 widening project — they will allow commuters to sign up and pay for van-pool services through a smartphone app. Reports the Washington Post:

“This is not just new technology for the area, it is also new technology and service in an area that has been a bit of a desert for transit options,” said Chuck Steigerwald, director of strategic planning at the Potomac and Rappahannock Transportation Commission (PRTC), which oversees a regional van-pool service and runs commuter buses from Prince William to Washington.

The apps will be critical, he said, to encouraging people to use transit and van-pool services during peak construction on the I-66 expansion, a project that also aims to change the way people move along the corridor.

The PRTC is planning to launch a free, on-demand ­microtransit service from the Gainesville and Haymarket neighborhoods to OmniRide commuter lots starting next summer. PRTC officials say the agency will develop an app to connect riders to rides. The $1.1. million project will provide transportation from residential areas to bus stops for commuters who don’t take the bus because of the challenges of using park-and-ride lots, which are already at capacity, officials said.

The funding will cover the cost of a software interface that will allow vehicle operators to respond to commuter requests with dynamic, real-time routing. It also will pay for vehicles, onboard vehicle hardware, transit operations and advertising of the services.

In another high-tech effort, the PRTC is creating a platform for a flexible van-pool program that will connect riders with van pools and facilitate payment of fares. The $317,600 project will enable the use of the technology to potentially transform the way van pools operate in Northern Virginia, said Robert Schneider, executive director of the PRTC.

Bacon’s bottom line: It’s good to see Northern Virginia transportation officials experiment with new technology. Persuading more commuters to use vans and buses is potentially the most cost-effective way to squeeze more capacity out of the region’s overloaded transportation arteries.

There’s more to a successful ride-hailing service like Uber and Lyft, though, than just connecting people with rides via smart phone. Ride-hailing companies have sophisticated algorithms to predict when and where ridership demand will materialize and where to pre-position vehicles to serve that demand. As demand waxes and wanes and moves around, these companies respond nimbly. Will PRTC be able to go with the (traffic) flow? We’ll see.

Another question is whether riders will avail themselves of van pools for the convenience of reaching park-and-ride lots. Might they not prefer to ride a van directly to their destination (or very close to it) rather than to a park-and-ride lot where they then shift to another transportation mode? Will they see enough of a value-add proposition to make it worth their while?

Finally, I wonder if PRTC ever considered the option of contracting directly with Uber, Lyft or another third-party company to come up with creative solutions. The Washington Post article doesn’t tell us.

Still, I don’t see how this initiative can hurt. The worst case scenario is that commuters don’t respond. In the context of a $2.3 billion construction project, the cost is peanuts. On the positive side, things just might work out as hoped. If we’re ever going to improve our transportation system, we need to make lots of small, inexpensive experiments, discard the losers, and scale up the winners. You don’t know if something will work until you try it. There is nothing wrong with failure — as long as government acknowledges the failures, shuts them down quickly, and moves on.

Eat My (Coal) Dust!

Possum Point coal ash ponds

In a possible early-warning sign of what may be in store for Virginia electricity consumers, North Carolina regulators have decided that Duke Energy could charge their Tarheel rate payers the first $778 million chunk of an estimated $5 billion in coal-ash cleanup costs. The sum does not include $100 million in two mismanagement penalties for practices that “resulted in cost increases greater than those necessary to adequately maintain and operate its facilities,” reports the Associated Press.

Dominion Energy Virginia will likely incur coal-ash disposals costs in the $1 billion to $4 billion range, although no firm figure will be available until the state issues solid-waste permits for a disposal plan. Dominion says that de-watering the coal ash, consolidating the material in a single pit at each power plant, and covering it with a synthetic liner will protect the public at a fraction of the cost of the alternative, favored by activist groups, of hauling the ash to landfills with greater environmental protections.

North Carolina’s Attorney General said he would go to court to stop Duke from passing along its disposal costs to rate payers. “This case will ultimately be decided by the North Carolina Supreme Court,” he said.

The coal-ash disputes in North Carolina could prefigure in part what happens in Virginia. State regulators must approve disposal plans for millions of tons of coal ash that accumulated legally over the decades at Dominion’s Bremo, Possum Point, Chesterfield, and Chesapeake power plants. Presumably, Dominion will file with the State Corporation Commission (SCC) to pass along as much of that cost as possible to ratepayers.

What makes Dominion’s situation different from Duke’s is that Dominion’s base electric rates were frozen between 2015 and 2018, and Dominion has already written off a portion of disposal costs incurred during that period. Also, under terms of recently enacted grid-modernization legislation, Dominion now will plow surplus earnings into renewable-energy, energy-efficiency and grid-upgrade projects. The public has not yet been informed how multi-billion charges for coal ash-disposal costs would be treated from an accounting viewpoint, what impact they would have on Dominion profits, or how the costs would ripple through to grid modernization.

I cannot foresee any circumstances in which the SCC would dun Dominion for mismanagement penalties. The company has complied with state and federal laws and regulations as well as judicial rulings throughout the process.

“All Matters” Makes Lobbyist Reports Worthless

“Matters Related” phrase used to avoid specifics is blessed by Virginia Ethics Council example.

“With as much specificity as possible.”

That is the instruction given to Virginia registered lobbyists about how they should list the various “executive and legislative actions and procurement transactions” they seek to influence on behalf of their principals.   The instruction to be as specific as possible is routinely ignored and never enforced.

Most of the hundreds of annual lobbyists disclosure forms filed on behalf of corporations, unions, associations, and government entities reveal nothing about which bills, resolutions, budget items or appointments they sought to influence.  Most simply report working on “all matters related to” or “matters of interest to” that company or association or entity.  One Chamber of Commerce lobbyist replied simply: “business issues.”

It is hard to blame the lobbyists for being vague.  In the illustration above, which is from the official example provided on a state website for those filling out the form, the stock phrase “all matters related to….” is shown to be acceptable.

July 1 was the annual deadline for lobbyist filings and if you know how to maneuver on the database you can find them here.  Set the date range for 2017-2018 and then enter a name for the lobbyist or their principal, which can be a client or an employer.  Look for the disclosure reports.  There are still some reports missing but most are up.  (The data will also eventually be picked up on the Virginia Public Access Project lobbyist listings.)

A Glimpse Inside the Process

There are many filings which do list specific bill numbers where the principal’s views were communicated and some even go so far as to list specific budget items by number.  But even in those cases it is not possible to determine if lobbyist expressed support, opposition or sought to amend the bill.  In some cases lobbyists suggested, requested or actually provided the text of a bill or amendment – an important specific detail never reported.

So many of the reports fail to list bill numbers or other details that there is no point in singling out anyone for doing so.  Some of the largest and busiest law firm lobby shops routinely use the “all matters” or “matters related” phrase or something similarly amorphous.

An earlier post described the way some lobbyists evade reporting the names of officials and their families on their entertainment expenses by splitting the cost between more than one client to stay below the $50 reporting trigger.

This failure to require actual details on which bills, appointments or budget decisions are being influenced – ignoring what appears to be a clear instruction – is another weak spot in Virginia’s oversight.  Absent that information the reports are worthless.

Other sections of the reports deal with spending on communication efforts, with advertising, social media and direct mail becoming increasingly common in legislative battles.  How much out-of-town lobbyists spent on hotels for themselves, or whether they rented a locker or subscribed to the bill tracking service, are details which are included.  They are also details which do not matter.

The required information on compensation is also meaningless because most lobbyists pro-rate the amount based on the narrow percentage of their time spent in direct contact with legislators or other officials.   Again, the reports are worthless.

How much information about what bills drew the attention and effort of the lobbyists could be the subject of debate.  The lobbyists’ natural inclination would be to share nothing.  Open government advocates would want to know everything.  Right now “nothing” is winning.

Many of these lobbyists are working for state agencies or for local governing boards, school boards or authorities.  They are spending taxpayer dollars seeking to influence tax and spending decisions or changes to their client’s authority – undisclosed government-to-government lobbying on our dime.

The private company or association lobbyists use private dollars, but are often fighting proposed regulations or seeking for the law to give them an advantage over customers or competitors.  Many of them are seeking tax changes or spending items in the budget that will provide a benefit to them or their stockholders.

One of the most important discussions during 2018 has been about filling an open seat on the State Corporation Commission, still unresolved.  The SCC is the crucial regulator for multiple businesses in Virginia.  You may look in vain for a lobbyist who discloses talking to legislators about any candidate for that job.  Does that mean no lobbyist has weighed in?  Unlikely.

Any competent lobbyist can sit down at the end of the session and list the bills or issues worked in the previous weeks, and some record the specific meetings or communications. (Not all are competent, but that’s another issue.)  They know what they did, and in most cases their employers or clients have received regular reports, with full specificity.  Requiring a list of bills and issues that were worked on the report would not be onerous.

“Pterodactyl Tim” Kaine Watch: Lying about SCOTUS Nominee

The Age of Innocence.  Tim Kaine was born in St. Paul, Minnesota, but grew up in Overland Park, Kansas. All that folksy Midwestern-ness seemed to imbue Kaine with a decency and honesty that people noticed. One imagines a young man so innocent and naive that he would sneak behind the barn and do nothing. Kaine even interrupted his studies at Harvard Law to help Jesuit missionaries in Honduras run the prophetically named El Progresso School.

Once upon a time in Virginia. Tim Kaine entered politics the old fashioned way – he married into it. While at Harvard, Kaine met his future wife, the daughter of former Virginia governor Linwood Holton. From there Kaine’s political career proceeded rapidly. 1994 – Richmond City Council, 1998 – Mayor of Richmond, 2001 – Lieutenant Governor of Virginia, 2005 – Governor of Virginia. Through all of those Virginia-based positions Kaine was seen as diligent and likable, even by those who disagreed with his leftist views.

Creature from the black lagoon. Kaine’s journey to the dark side began when he became the chairman of the Democratic National Committee in 2009. He was no longer operating within the corrupt-but-friendly confines of the bourbon-and-branch water set in Richmond. Now he was dealing with the mentally deranged, venomous reptiles-from-hell in the D.C. swamp. He went from Timmy the Sweet to the Lizard of Oz. His election as U.S. Senator from Virginia in 2013 may have pulled him from the deepest cesspool of Washington’s primordial ooze but he was about to make a move that would cement his position as a central character from the original Star Wars cantina scene.

When you lie down with dogs … …you get up with fleas. In the case of being Hillary Clinton’s running mate – bionic, radioactive killer fleas that infect their host dog with an overwhelming addiction to misrepresentation, deceit and outright lying. Pterodactyl Timmy was hatched in the nest of the high-flying reptiles of the Clinton crime family.

No such Gorsuch. After conversion to the reptilian class Kaine unleashed one of his most outlandish lies. Aiming his beady lizard gaze at then-Supreme Court nominee Neil Gorsuch Kaine claimed on Twitter that,

He has cavalierly referred to contraceptive use – a constitutionally protected right for 50+ yrs – as ‘the wrongdoing of others.’

Kaine’s quote refers to an opinion then Judge Gorsuch wrote in the famous (or infamous) Hobby Lobby case. He was trying to describe how the owners of the Hobby Lobby company felt about contraceptives. In no way, shape or form could anybody have interpreted Gorsuch’s words as being his own opinion of contraceptives. You can find Judge Gorsuch’s opinion here. You can read Mark Hemmingway’s take on the incident here. In true swamp-dweller fashion Kaine hoped that by telling the big lie he could perhaps sideswipe Neil Gorsuch’s nomination. In this case it turned out Kaine’s dishonesty was exceeded only by his incompetence. Neil Gorsuch is now a member of the U.S. Supreme Court.

General orders. Kaine could have simply apologized, perhaps claiming that Twitter was a poorly chosen vehicle for expressing that opinion. But he didn’t. Instead, he wrote a six-page explanation with a 1,000 word summary of how his lie was actually unvarnished truth. Kaine could have saved himself some time by studying General George Washington. It was he who said, “It is better to offer no excuse than a bad one.” Unfortunately, Pterodactyl Timmy couldn’t find that quote in his bag of carpet. His bad excuse fell on deaf ears. Ramesh Ponnuru over at Bloomberg was having none of it.

Here we go again. On Monday President Trump will put forth his nominee to fill the Supreme Court vacancy caused by Justice Anthony Kennedy’s retirement. Will the high-flying reptile of the D.C. swamp (Pterodactyl Timmy) be able to refrain from further lies about this nominee? Let’s hope so. The last three former governors of Virginia have been Pterodactyl Timmy, Rolex Bob and Terry McCronyCapitalism (whatever happened to that golf cart company, anyway?).  We’re getting a bad reputation.

— Don Rippert

Huzzah for Middle-Aged Startup Entrepreneurs

Many communities are obsessed with making themselves attractive locations for Millennials on the theory that recruiting and retaining skilled and educated young workers will boost the entrepreneurial economy. Come to think of it, I might have contributed to that line of thinking. But maybe localities should be appealing to an older crowd. Successful start-up entrepreneurs are more likely to be middle-aged than youthful.

According to data published by Pierre Azoulay and three other economists in a National Bureau of Economic Research paper, “Age and High-Growth Entrepreneurship,” Americans are more likely to start up new enterprises between the ages of 35 and 45 than at any other age. The likelihood of starting high-growth enterprises skews even older.

“The view that young people are especially capable of producing big ideas — whether in scientific research, invention, or entrepreneurship — is common and longstanding,” the authors state. “Famous individual cases such as Bill Gates, Steve Jobs, and Mark Zuckerberg show that people in their early 20s can create world-leading companies. Meanwhile, venture capital firms appear to emphasize youth as a key criteria in targeting their investments.”

Younger people are less beholden to existing paradigms of thought and practice, according to this train of thought, and they are less distracted by family obligations. But Azoulay et al. find that the most successful entrepreneurs tend to be middle-aged, not young. “The mean founder age for the 1 in 1,000 highest growth new ventures is 45.0. … We further find that the ‘batting average’ for  creating successful firms is rising dramatically with age.”

Mid-life entrepreneurs have had more time to accumulate human capital (deep experience and knowledge in their field), financial capital (money), and social capital (contacts and relationships), yet the still maintain high levels of energy and ambition.

Bacon’s bottom line: A half year ago, I compiled some research for a client comparing economic trends for the City of Richmond, and the counties of Henrico, Chesterfield and Hanover. With its walkable urbanism, Richmond has positioned itself within the region as the preferred abode for Millennials, and many businesses are relocating from suburban locations to downtown Richmond in order to recruit the Millennials. I expected Richmond, with all that youthful energy, to outpace the counties in start-ups and entrepreneurship.

Source 2017 Inc. 5000

Richmond does, in fact, host more fast-growth start-up companies, as measured by 2017 Inc. 5000 entries, than Chesterfield, Hanover or Powhatan counties. But Henrico boasted the most of all, accounting for nearly half of the 29 fast-growth companies in the entire metropolitan area. Henrico has precious little walkable urbanism to sell; land use is dominated by traditional sprawl-style development. What the county does have is lower taxes, good schools, low crime, upscale retail, and neighborhoods with spacious houses — primary considerations for middle-aged families raising kids.

I think Henrico could benefit from more walkable urbanism, which would make a killer land use in a jurisdiction with low taxes, low crime, and good schools. But the larger point is that a middle-aged population and entrepreneurial vitality need not be incompatible. Indeed, the two traits go hand-in-hand.

Prosperity Bomb

What if Amazon dropped, to borrow a phrase gaining currency these days, a “prosperity bomb” on Washington, D.C., by selecting the District as the location of its HQ2 project?

Martha Ross with the Brookings Institution worries about the implications of creating 50,000 jobs and pumping $5 billion in investment into a city already marked by huge racial disparities in wealth and income. (D.C. has greater wealth inequality than any of the 50 states.) Amazon, she argues, would create few jobs for lower-income Washingtonians. It would push already-pricey housing costs even higher, displacing lower-income households. And it would strain the fiscal resources of the district government to the tune of $60 million to $80 million a year in direct incentives and pot sweeteners.

A project as big as HQ2 would create enormous growth-related stresses on any local government. Under ideal circumstances, growth would pay for itself through higher tax revenues. But giving tax breaks and subsidies to Amazon would shift the burden of paying for expanded infrastructure and government services to others. Even subsidizing workforce training and higher education poses moral issues for progressives. As Ross points out, such spending benefits the college educated, not the poor.

I have sympathy for some anti-Amazon arguments, little patience with others — such as the specter of thousands of Amazon-employed Yuppies buying and fixing up cheap inner-city properties, pushing up real estate prices, and displacing the poor. Ignored is the fact that 50,000 Amazon workers also would support a whole lot of tradesmen, retail clerks, landscapers, house cleaners, restaurant workers, and other service-sector occupations. By creating job opportunities for unskilled and semiskilled workers, Amazon employees would support higher wages for Washington’s urban poor.

The problem with prosperity in tech hubs like San Francisco, San Jose, and Amazon’s home town of Seattle isn’t the influx of jobs and investment, it’s the inability or unwillingness of local governments to increase the supply of housing. Homeowners fight any development project that they think, rightly or wrongly, might negatively impact their property values, and it’s oh, so easy, especially in cities dominated by progressives, to demonize and defeat the developers who want to add to the housing stock. The reason the working class can’t find housing in these cities is that no one is building enough.

It would be naive to argue that growth is always good — if a mega-project doesn’t pay its own way, it can unfairly shift costs to others. But the growth-is-bad argument is folly. If you want to see what a no-growth economy looks like, go visit Southside or Southwest Virginia. A prosperity bomb is a problem they would love to have.