Another Bust: $90 Million Spent on Industrial Megasites

by James A. Bacon

Virginia’s Tobacco Region Revitalization Commission has invested $90 million to develop seven industrial “mega-sites” in Southside and Southwest Virginia, but so far only two sites have attracted tenants, reports the Joint Legislative Audit and Review Commission (JLARC) in a review of state economic-development incentives, “Infrastructure and Regional Incentives.”

The two “successful” megasites are Commonwealth Crossing in Henry County and Oak Park in Washington County. Together, they accounted for two industrial investments totaling $48.4 million and creating 260 jobs. (A third tenant is a state job training program.) Press Glass, a European glass manufacturing company, is expected to open a 280,000-square-foot manufacturing facility this year. Blue Ridge Beverage, a wholesale beverage distribution company, started production in 2014.

The megasites could accommodate 4,400 workers after 10 years and 22,000 at full build-out. Two sites are not yet considered business ready.

JLARC identified four other projects for which the megasites were in the running but did not make the final cut, including two automobile makers. “In each case, workforce availability concerns and larger incentives offered by competing states played a major role in business choosing other locations.” Writes JLARC:

The tobacco region megasites have significant limitations when compared with
megasites around the country that will affect their ability to attract businesses. The Tobacco Commission megasites have much more limited workforce access (i.e., population aged 18-64), particularly workers residing within 30 miles of the park. … Expanding to 60 miles improves the size of the workforce significantly, but it still lags behind the national benchmark. Educational attainment levels of county residents in the tobacco region are also significantly lower than average megasites around the country.

Many of these limitations were pointed out in a study by a consultant in the early 2000s to help the Tobacco Commission identify a megasite to attract a foreign automobile manufacturer. The study examined 19 sites and found none were ideal. Even the best site (Sussex) still had substantial limitations. …

Tobacco Commission-funded megasites also lag megasites nationally on other features. The topography of Tobacco Commission megasites is more varied, likely making the costs of construction, such as grading, roads, and stormwater infrastructure, more expensive than national competitors. Further, none of the four Tobacco Commission megasites has a commercial airport within the locality, although they generally have similar interstate and mainline rail access as national competitors.

Bacon’s bottom line: The creation of a tobacco commission endowed with hundreds of millions of dollars from the tobacco settlement created a once-in-a-generation opportunity to reinvent the economies of Southside and Southwest Virginia. The industrial megasite program represented one of the commission’s biggest investments on the logic that you’ve got to pay to play. It was a big bet, and has yet to pay off.

Maybe someone will get lucky and that story-line will change. The projects were conceived before Stephen Moret became CEO of the Virginia Economic Development Authority. One can hope that he can salvage the $90 million investment through VEDP’s new job-training and marketing initiatives.

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46 responses to “Another Bust: $90 Million Spent on Industrial Megasites”

  1. LarrytheG Avatar

    I’d be curious in hearing Mr. Moret’s take on the mega-sites especially if he has changed his thinking or not.

    1. Anonymous Avatar

      Agreed. Mr. Moret has been so kind as to comment here occasionally, and it would be marvelous to hear any thoughts he can share.

  2. Steve Haner Avatar
    Steve Haner

    Hey, the Tobacco Revitalization Commission was born, at least it was a “partial birth” there, in the Office of Attorney General. It didn’t get Mark Earley elected Governor but plenty of other political careers have since been enhanced. But it hasn’t had much success to brag about and a few serious missteps along the way. I bet the record for GO Virginia is no better, but somehow it is not getting the same scrutiny yet.

    I still believe the general business, tax, workforce skills, labor law and regulatory climate matter more than individual project incentives. This is another point of evidence for my side. But when did those win an election? Instead, Democrats win elections by promising to raise business taxes and regulations, to empower organized labor, and add to legal liability.

    The report is about 150 pages long so I haven’t tried to wade through it yet. When I do, I will be looking to see if they still use these assumptions to discount the value of the programs.

  3. Peter Galuszka Avatar
    Peter Galuszka

    Doubtful mega sites will go anywhere in the Trumpian economy

    1. idiocracy Avatar

      Yea, blame it on Trump. Not the idiots in Richmond.

  4. James Wyatt Whitehead V Avatar
    James Wyatt Whitehead V

    It won’t take too much longer for Danville to revert to the William Byrd campsite on the Dan River.

    1. Baconator with extra cheese Avatar
      Baconator with extra cheese

      No kidding…. I believe Sheetz is the anchor-employer in town.

  5. Baconator with extra cheese Avatar
    Baconator with extra cheese

    Why would we need megasites in a Blue state? I thought the consensus was Orangeman-Bad was stupid for ever saying he would bring manufacturing back to the US. Biden is a big “learn to code” guy and you can do that from a bungalow and not a megasite.
    Or is Terry B planning to get the band back together to make some Chinese papergoods or electric cars?
    Besides the new VA Covid regs will keep anyone from staring up here anyway.

    1. idiocracy Avatar

      You need “megasites” in a Blue state so politically-connected landowners can make lots of money.

  6. idiocracy Avatar

    What a smart idea. Let’s spend millions to develop industrial sites with the only Interstate access from a highway (I-81) where congestion and wrecks are a regular occurrence.

  7. TooManyTaxes Avatar

    Just think that, had the fools that run Virginia spent an appropriate sum on bringing broadband connections to rural Virginia!

    1. djrippert Avatar

      I was just going to write the same thing. But, in retrospect, idiocracy had it right …

      “You need “megasites” in a Blue state so politically-connected landowners can make lots of money.”

      If the General Assembly could find a way for Dominion to profit from rural broadband it would be built out in six months.

    2. idiocracy Avatar

      Or maybe just reduced the amount of VDOT red tape involved in using right-of-way.

  8. TooManyTaxes Avatar

    Like I often write, Democrats only care about illegal immigrants and convicted criminals.

  9. Guvment picking Winners and Losers….
    I’ve probably spelled out the details before, and it’s everywhere…

    1. LarrytheG Avatar

      Agree – but for economically depressed geography – that the rest of the state is subsidizing with entitlements – should the government be involved in trying to improve their economy?

      1. Steve Haner Avatar
        Steve Haner

        I remember a House of Delegates incumbent who argued in his election that the state should not be doing that for his region (Lynchburg, I recall). His term was not renewed…..I remember a candidate for Governor giving a big speech (which I helped write) about working hard to bring jobs to depressed areas. Getting back in the car to drive back to his Fairfax mansion we discussed how it was not actually going to work, but it had to be promised….

        1. LarrytheG Avatar

          Jobs are the generic holy grail because of their downstream ripple effects. Each job is worth more economically that just that job.

          That said – the reasons why and why not any industry or company would locate in an economically depressed area need to be looked at skeptically and with a ” if you produce, we’ll give credit” rather than the other way around.

  10. Matt Hurt Avatar

    From my very limited view in Wise County, I cannot see much benefit from the millions the Tobacco Commission has paid out. Nor would I expect to see that- why would any company wish to locate here? It takes an hour to get to the much maligned I-81, and that’s the closest interstate. It is very difficult for current businesses to find employees who will show up to work as scheduled, or even pass a drug screening.

    Our locality has done a lot of work to provide subsidized housing, so much so that folks are moving here from all over the country to take advantage of it- literally. Our kids who desire opportunities, have to look elsewhere, where they find it, move there, and rear their families away from Wise County. As a result of this and the decline of coal mining, our working aged resident population is shifting towards more reliance on government assistance. Unfortunately, this also contributes to the problem of employers failing to find folks who can pass a drug screening. As it turns out, many of our residents on public assistance don’t entertain themselves with job training, reading the Bible, or other less than negative pursuits to while away the hours they’re not investing in wage earning work.

    I do have one ray of sunshine to report- St. Paul, Virginia. This small community on the edge of Wise County has really taken the reigns and capitalized on their positives. Dominion built a power plant there about ten years ago, and the Spearhead Trail system was built nearby just a few years later. The townsfolk who had recently organized to thwart efforts to consolidate their high school turned their attention to rebuilding their town. Entrepreneurs there began a boutique hotel, a brewery, restaurants, outdoor tourism companies, and etc. I am very proud of what they accomplished.

    1. LarrytheG Avatar

      Had not heard of the Spearhead Trails, thanks!

      The money from the Tobacco Commission – I thought, came from the Tobacco Lawsuit Settlement – it’s like “free money” that was actually compensation for the state for the harm done.

      ” In 1998, the Attorneys General of 46 states signed the Master Settlement Agreement (MSA) with the four largest tobacco companies in the United States to settle state suits and recover billions of dollars in costs associated with treating smoking-related illnesses.”

      Somehow, it apparently got turned into an economic development program – perhaps instead of being used to help pay for the Medicaid Expansion or more/better education opportunities , etc?

      I do not think that rural economic development is a futile endeavor or lost cause but it’s likely not what we do for more urbanized regions and I’m not convinced the Tobacco Commission is really focused that way. When I search their “Strategic Plan” for “rural”, I get zero hits.

      Perhaps the Spearfish Trails got help from the Tobacco money?

      In terms of drugs – people who are idle, have little or no work and in general have lost hope -will fall prey to drugs – rural or urban IMHO.

      1. 50% to revitalization efforts in tobacco region (which areas are probably 95%+ rural)
        40% to general fund
        10% to anti-tobacco advertising/education efforts

        That’s how the Commonwealth decided to divide up the fund.

        Here is a link to the 2019 Annual Report of the “Tobacco Region Revitalization Commission”. Like all such reports, it engages in a bit of self-congratulation and “rah-rah” self-promoting, but it gives a decent accounting of the types of things they are doing with the money:

        1. idiocracy Avatar

          Page 11 has no dollar amounts on it to say how much they actually spent on any of that.

          If I go to the “special projects” section on page 22, it appears that a grand total of $1,065,000 has been spent on healthcare.

      2. Matt Hurt Avatar

        I think the Spearhead trails did get some Tobacco money, and if so, that money was wisely used. However, have you ever been to a Tobacco Commission meeting? Its all politics- just like pouring all that money down a crawdad hole, at least most of it.

        1. LarrytheG Avatar

          Never been to their meetings but they have developed a reputation over the years. I’m from the school that if the money came as compensation for health impacts – that it should be spent more or less for that purpose and it’s not like there are not needs – like with the oxy-codine and for others just a lack of decent health care.

          They do claim to have supported rural broadband.

          1. idiocracy Avatar

            As far as I can determine, about none of the tobacco settlement money in Virginia is spent on healthcare.

          2. idiocracy,

            Please take a look at page 11 of the 2019 report at the link I posted above. The expenditures may not be enough to suit you, but they are more than “about none”.

          3. idiocracy Avatar

            Additionally, what little they spend on healthcare is concentrated in one part of the state.

          4. LarrytheG Avatar

            and to me – that’s an issue. The money ought to be going to broad-based programs that benefit the two regions and their people – not individual grants and awards that seem arbitrary.

          5. idiocracy Avatar

            There are people suffering from COPD and lung cancer all over the state. Much of that due to tobacco use. If you’re going to use the money to offset the effects of tobacco, well, the effects of tobacco are statewide.

          6. LarrytheG Avatar

            I agree with that but it appears that decisions were made to compensate the regions that grew tobacco and help them find other industry to replace it.

            If they were going to do that – they should have set up a competitive grant program that required applicants to structure their requests to confirm to specific criteria -much like Smart Scale does now for transportation projects.

          7. idiocracy Avatar

            But if they did that then it would make it much harder to dole out cash to the politically connected.

          8. LarrytheG Avatar

            I think all economic development programs could be structured as competitive awards based on stated criteria up-front – and incentives for performance once up and running.

            It’s yet another example of cronyism and special interest dealing.

  11. James Wyatt Whitehead V Avatar
    James Wyatt Whitehead V

    Virginia produced nearly 30 million pounds of flue cured, dark fire cured, and burley tobacco in 2019. 18,000 acres of land in Virginia are used for tobacco cultivation.

    1. Nancy_Naive Avatar

      Which in turn caused how many cases of lung disease?

      1. Baconator with extra cheese Avatar
        Baconator with extra cheese

        With the current will to create legislation to “save” people from guns, climate, Rona, flavored tobacco, eCigs, etc it makes you wonder why no one has the guts to go after regular good ole tobacco.

        1. idiocracy Avatar

          COPD is a cash cow for the medical-industrial complex.

        2. Matt Hurt Avatar

          Dear governmental Mothers and Fathers, who art in Richmond,

          Thank you so much for taking care of your children in Virginia. Without your wise paternalistic governance we would all shoot each other or ourselves, vape ourselves to death, destroy the planet’s ability to sustain life, and etc. Thank you for realizing that the People of Virginia are not capable of making our own decisions about how our lives should be or how to keep ourselves safe. We owe our lives to your wise oversight.

          Through Government’s name we pray,

          1. LarrytheG Avatar

            Oh, they go running to Daddy when they are hurt…. sure enough.

        1. Nancy_Naive Avatar

          Um, yes and no. Most likely because of poverty. I think it wouldn’t be difficult to show that poverty and smoking are hand-in-hand. Anecdotally, the poor are most likely to vote and identify Democrat. So assuming those are true, then I can certanly see that chart being valid.

          I wonder what the association of politics and cessation program attempts would be. I suspect the same sort of result.

          Now, it would be interesting to perform the same calculations accross income quintiles.

        2. Nancy_Naive Avatar

          How do you get to that report?

          Actually, there’s a lot being said (and open to question) in that chart about Republicans and Other, even without the issue of smoking.

          Obviously, they normalized to the Democrats responses and so washed out anything about them, but it does show that Republicans think/report themselves in better health by a significant number over the other two groups.

          And, it is self-reporting. That’s key. This is self-image stuff. Of course, it doesn’t show which/why on stuff.

          For example, “Are they really in better health, or just report that way?” Will a fat Republican not see being overweight as a problem?

          Then too, the margins are just about right on the ACA acceptance. We know a lot of Republicans support pre-existing condition provisions, but less than Democrats.

          “Do Republicans report better health because they oppose the ACA, or do they oppose the ACA because they report better health?”

          We could go on and on.

    2. idiocracy Avatar

      That should keep the demand for oxygen cylinders, oxygen concentrators, and respiratory therapists strong.

      1. LarrytheG Avatar

        Spending they could do Virgina-wide that would have focused benefits to rural Virginia is tele-health.

    3. LarrytheG Avatar

      and perhaps not well recognized. People just could not grow tobacco – you had to have an “allotment” – and they actually took air photos of planted allotments and sent out people to cut down excess plants.

      I can see how the loss of that crop would lead to some advocacy to spend the tobacco settlement money on economic development to replace the loss of tobacco , but the premise of the settlement was to compensate for health care costs not the loss of economic development.

      Money on economic development is a problematic crap shoot… with plenty of examples of badly spent money.

    4. James Wyatt Whitehead V Avatar
      James Wyatt Whitehead V

      Take a ride down Route 40 and enjoy the pastoral beauty of tobacco fields in full bloom. The road is lined with old tobacco warehouses and barns that date back to another era. Start your journey in Rocky Mount. Head east to Gretna, Chalk Level (ancestral home of the Whiteheads), on to Brookneal (home of Patrick Henry), then to Keysville, next is Victoria, Kenbridge, and Blackstone. The heart of Virginia’s tobacco belt. If you listen carefully you can hear the whistle theme song to Andy Griffith.

      1. LarrytheG Avatar

        Grandparents grew the tobacco as a “cash crop” which was pretty important back in those days – because it was sold and became their cash money they used to pay for things they could not grow for the year.

        He did use a little of it to make “plugs” to chew and he smoked a pipe and the aroma pretty much became a standard part of the screen porch in the evenings.

        Every day, he would walk the crop rows and pick off the green tobacco worms and squash them as he walked. Finally, when it was ready to harvest, 6 foot long sticks were carried to the field in the back of his stakebed pickup. The tobacco was cut and then hung on the sticks and taken to the barn and hung on long poles than spanned the upper part of the barn.

        Actually cutting the tobacco was nasty work as the tobacco would “bleed” a sticky juice that stuck to you and then sand and dirt stuck to that.

        The tobacco would stay in the barn until it “cured” and then it was taken off the sticks, layered on burlap and taken to auction in Richmond where it fetched most of the entire years cash money.

        Judging from the surnames, they were descended from the English and their original farm was far out in the “sticks” down miles of dirt roads in Caroline county. None of the sons and Daughters wanted that life and left the farm to go find jobs. join the armed service, etc. Just one stayed behind to help but even he had a full time job as a lineman at the electric co-op.

        There was no Social Security and Medicare. There were some country doctors but anything serious would likely be the end of you.

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