Category Archives: Economic development

Who Hit the Brakes on NoVa Growth?

Hamilton Lombard. Photo credit: UVA Today

by James A. Bacon

Northern Virginia’s population is growing, but not nearly as fast as before. According to a new study by University of Virginia demographer Hamilton Lombard, Northern Virginia accounted for 66.5% of the state’s population growth between 2010 and 2019, but slipped to 33.7% in the last year.

“While Northern Virginia is still growing in population, its recent slowdown is remarkable given how long so much of Virginia’s population growth has been concentrated in Northern Virginia,” Lombard said in an interview with UVA Today. “Since 1980, Northern Virginia has contributed to over half of the commonwealth’s entire population growth. Earlier in the 2010s, over two-thirds of Virginia’s population growth occurred in Northern Virginia.”

“Yet, since the mid-2010s, population growth in Northern Virginia has slowed considerably as more residents have left the region, often moving to other Southern states,” Lombard said. “Some of the initial out-migration may have been driven by the federal budget sequestration and shutdowns, which slowed growth in the region’s economy.”

Northern Virginia has driven demographic, political and economic change in Virginia over the past three or four decades. The region now dominates the state in much the same way that Chicago overshadows the rest of Illinois and New York City runs the Empire State. A marked slowdown in the region’s growth could have momentous consequences for Virginia’s economic prosperity and political economy. Here’s the big question: Was 2020 a transitory blip or does it portend longer-lasting changes? Continue reading

An Old Use of Solar Power

By Dick Hall-Sizemore

Greenhouses have been used since the time of the Roman Empire. A couple of Virginia Beach entrepreneurs are planning to use this old technology to harness the sun’s energy in a big way.

Their company, Sunny Farms, plans to invest $60 million to build hydroponic greenhouses on more than 30 acres, about 25 football fields, over three years. It would be one of the largest greenhouse facilities on the East Coast. The goal is to produce fresh vegetables for the big box chain stores in Hampton Roads, as well as for military commissaries. In its first year of operation, the company projects it will grow 10 million plants. Continue reading

TCI Debate Rages in Comments on Proposed Rule

by Steve Haner

The political wannabes in both parties and the state’s media are continuing to ignore it, but the argument over the proposed motor fuel carbon tax called the Transportation and Climate Initiative rages in comments on the proposal flowing into its advocates.

The Thomas Jefferson Institute has also launched a short video (above), perhaps just the first, to alert the public through more populist means. It features owners of two regional fuel businesses, well known as major local employers and taxpayers. Without doubt, Virginia’s membership in TCI would shrink and perhaps severely damage those businesses.

The video was actually ready to use had the 2021 General Assembly taken up the issue, but Governor Ralph Northam did not ask for legislative permission to join the interstate compact involved. The state remains involved in the planning for the cap and tax and ration scheme, now set for 2023 in the states who agree to the compact.

If put in place, all fuel Virginia wholesalers would need to buy government-issued allowances to sell gasoline or diesel, in effect a carbon tax. The amount of allowances will be frozen to prevent the any growth in fuel sales, and then decline annually to force down consumption, in effect rationing.  Continue reading

Has COVID-19 Killed the Urban Renaissance?

Image credit: “Has the Pandemic Changed Cities Forever?”

by James A. Bacon

If you’re looking for a good Sunday read, consider an article by Tim Sablik, “Has the Pandemic Changed Cities Forever?“, in the Richmond Federal Reserve Bank’s Econ Focus. Sablik does a fine job of sketching out the big issues identified by the nation’s leading urbanologists as they ponder the impact of the COVID-19 epidemic on urban development.

In a nutshell, Sablik argues that (a) the epidemic has clobbered the urban cores of American metros as knowledge workers have drastically changed their work habits and personal preferences, (b) that the pendulum will swing back partially as the epidemic subsides, but that (c) things will not go back to the way they were. There are profound implications for cities and counties in Virginia as they plot their futures. Reading Sablik essay is a good place to start any re-evaluation. Continue reading

Virginia Taxes New Firms Higher, NC the Opposite

The overall effective tax rate on various kinds of businesses in Virginia, and how they rank against the other 50 states. (Lowest = #1) Click for larger view. Source: Tax Foundation and KPMG LLC

 

by Steve Haner

Virginia is far more tax friendly to established businesses than it is to new ones.  That’s one major conclusion of a major state-by-state business tax comparison released today (here) by the Tax Foundation and KPMG LLC.

In neighboring North Carolina, on the other hand, the tax structure encourages new investment with more attractive rates for incoming businesses of several types. It has been a conscious strategy for that state’s political leaders for some time.

Instead of seeking to put an overall ranking on the state’s business tax climate, as has been done in the past or in other studies, the Tax Foundation devised eight imaginary firms in different industries and then calculated their effective tax rate in each of the fifty states. It used tax laws and incentives as they were in force January 1 of this year.

One of the principal authors is a former General Assembly legislative aide well known around our capital, Jared Walczak, now a vice president at Tax Foundation. This approach of comparing how the various states would tax a set of reasonably typical firms is a big step up from previous methods.  Continue reading

Some College Graduates Will Get Paid to Live in Southwest or Southside Virginia

by Dick Hall-Sizemore

The Tobacco Commission (Virginia Tobacco Region and Revitalization Commission) has come up with a program that does not involve pork-barrel grants.

Two of the problems afflicting the area served by the Commission, Southside and Southwest, are a shortage of people to fill certain jobs and a shortage of young adults putting down roots in the area. Its Talent Attraction Program is designed to address both problems. Under it, young graduates working in certain field can get up to $48,000 in student loans paid off.

The program is open to anyone graduating since 2019 with a bachelor’s degree or higher. Each participant must commit to living in the area for 24 months and working in one of the following areas:

  • Public School Teacher in Science, Math, Technology/Computer Science, or Career and Technical Education (Grades 6-12)
  • Public School Special Education Teacher (K-12)
  • Speech Language Pathologist
  • Physical Therapist
  • Occupational Therapist
  • Industrial or Electrical Engineer
  • Information Security, Network, or Computer Systems Analyst

Continue reading

Podcast: How the General Assembly Has Changed

By Peter Galuszka

I haven’t contributed much to BR lately since I am slammed with non-Virginia work. I did manage to help out on a Podcast about how the General Assembly has changed the state over the last two years as Democrats have gained power.

This Podcast is produced by WTJU, the University of Virginia radio station. I do a weekly talk show on state politics and economics and, on occasion, work on Podcasts.

Joining me is Sally Hudson, a delegate from the Charlottesville area. She is Assistant Professor of Public Policy, Education and Economics. Sally studied at the Massachusetts Institute of Technology and Stanford and is one of the youngest members of the General Assembly.

I hope you enjoy it.

COVID and the Workforce


by James A. Bacon

Virginians with college degrees were far less likely to be laid off during the COVID-19 epidemic, and their occupations are in highest demand during the economic upturn, concludes an analysis written by the Virginia Economic Development Partnership and distributed by the State Council of Higher Education for Virginia (SCHEV).

“In order to ensure an inclusive, resilient, COVID economic recovery and continued growth across Virginia,” writes Pam Harder, managing director-strategic talent initiatives for VEDP, ” now more than ever we need to invest heavily in helping those without four-year-degrees find affordable and accessible pathways to good jobs.”

Harder makes the case that Virginia needs to “invest in education across the entire spectrum — industry certifications, state licensures, apprenticeships and certificates, as well as traditional degree programs.” Continue reading

Hey, Mount Trashmore, Top This!

by Bill Tracy

According to WJLA-TV7, The Fairfax County Board of Supervisors has approved the next phase in the evolution of the former Lorton landfill off of Interstate 95: It will become a 1,700-foot ski slope. That’s right, a ski resort. In Northern Virginia. Only 10 minutes from my home.

The project, Fairfax Peak, will be a 450,000-square-foot indoor snow sports facility with a 100-room luxury hotel, sky bar, restaurants, and a bunny slope. The first of its kind in the United States, it will have not have only the longest indoor ski slope in North America but one of the longest in the world.  

The project will be super-green too. Aside from the obligatory solar panels, the planned facilities will use waste heat from the adjacent county Waste-To-Energy plant. In other words, the incinerator will serve as bona fide co-gen plant.

Interestingly, per a Google search, Landfills-to-Ski Slopes is a global trend.  The picture above is an artist rendering of a Denmark power plant that will incinerate trash while using the energy produced to power the city and the ski slope. Continue reading

Port Development a Double-Edged Sword

Norfolk container yard. Credit: Virginian-Pilot

by James A. Bacon

An enduring question on this blog is what accounts for the lagging economic performance of the Hampton Roads metropolitan statistical area. Growth in Gross Domestic Product since 2001 has been roughly half that of Virginia’s, while growth in real personal income since 2010 has lagged by 30%. We have explored various explanations on this blog from the necessity of adapting to increased flooding to a cap on natural gas supplies, from restrictions on water usage to excess reliance on the military as an economic foundation.

Ironically, an important reason for the region’s slow growth may be the success of one of its key industries, its ports. Since the introduction of cargo containers, ports have required more land. As ports expand, argues a new paper published by the National Bureau of Economic Research, they literally “drive up land rents and crowd out other economic activity.” Continue reading

Coal Counties Make Bid for Data Centers

Coal mines as source of geothermal cooling. Shown here: Will Payne, director of InvestSWVA. Credit: Virginia Business.

by James A. Bacon

Six localities in far Southwest Virginia have agreed to offer big tax breaks in a bid to recruit more data centers to the economically depressed region. The Project Oasis initiative will dangle the lower taxes as well as geothermal cooling from old coal mines as enticements that no other region can match.

The localities in the Lonesome Pine Regional Industrial Facilities Authority — Dickenson, Lee, Scott, and Wise counties and the City of Norton — have agreed to tax data-center equipment at a rate of $0.24 per $100, almost half the rate of the $.40 rate, the previous lowest rate in the state, that enabled Henrico County to attract a $1.75 billion Facebook data center.

As a kicker, Project Oasis offers industrial sites located near former coal mines filled with water naturally cooled to a temperature of 51 degrees. Energy consumption for cooling is a major expense for data centers. Project Oasis claims that geothermal cooling could save data centers more than $1 million annually in reduced electric costs and municipal water purchases. Continue reading

The Virginia War On Fossil Fuels

by Steve Haner

First published in the Fredericksburg Free Lance-Star Feb. 26 then distributed by the Thomas Jefferson Institute for Public Policy.  

The lesson of the Texas grid collapse is not just about electricity. Imagine the week Texans would have had if once the power went out and stayed out, they had no gasoline, diesel, propane, or natural gas to fall back on. How much worse would their plight have been without natural gas heating homes and businesses, propane space heaters and grills, and gasoline or diesel-powered cars and trucks to get where they needed to go?  Continue reading

What Texas’s Crisis Means for Virginia

by Peter Galuszka

The Texas freeze and ensuing energy disaster has clear lessons for Virginia as it sorts out its energy future.

Yet much of the media coverage in Virginia and certainly on Bacon’s Rebellion conveniently leaves out pertinent observations.

The statewide freeze in Texas completely fouled up the entire energy infrastructure as natural gas pipelines and oil wells stopped working, coal at generating plants iced over and wind turbines stopped working.

Making matters much worse, Texas opted not to have power links with other states. Its “free market” system of purchasing power meant utilities skimped on maintenance and adding weather-relative preventive measures such as making sure key generation components were weatherproof.

The result? Scores dead and millions without electricity. Here are more points worth considering in Virginia:

Climate Change is For Real

It is a shame that so much comment in Bacon’s Rebellion is propaganda from people who are or were paid, either directly or indirectly, by the fossil fuel industry. Thus, the blog diminishes the importance of dealing with climate change in a progressive way.  Continue reading

Reinventing Roanoke as Virginia’s Outdoor Capital

by James A. Bacon

The Roanoke Valley doesn’t have any natural amenities more special than those of other communities along Virginia’s magnificent Blue Ridge Mountains. What it does have, at a very propitious time when the COVID-19 epidemic is scrambling the traditional calculus of where businesses and individuals decide where to locate, is an organizational infrastructure to the promote assets it does have.

Founded as a Norfolk & Western railroad town in the late 1800s, the City of Roanoke has been traumatized by the loss of N&W industrial and headquarters facilities over the past two decades. Reinventing the economy hasn’t been easy. The dynamics of the Knowledge Economy have long favored large metropolitan areas with deep labor markets, and with a population of about 220,000, the Roanoke Valley (Roanoke City, Roanoke County, and Salem) lack critical mass. The main exceptions to the “urban agglomeration” trend were towns with research universities, such as Virginia Tech. But Tech, separated by a mountain range and 45 minutes travel time, was almost in another world.

The Roanoke Regional Partnership (RRP), the local economic development organization, recognized years ago that it needed to rebrand the region. What did the region have that other small metro areas did not? Among other assets, it has the Appalachian Trail, the Blue Ridge Parkway, and, nearby, Virginia’s second largest lake, Smith Mountain Lake.  “We’ve had these assets,” said Beth Doughty, RRP director. “We treated them like wallpaper instead of an economic sector.” But under Doughty’s leadership, that thinking changed. Continue reading

The Logic for Rural Broadband Subsidies

Source: “Bringing Broadband to America”

by James A. Bacon

Reputable estimates of the cost of making high-capacity Internet service universal across the United States run in the $80-billion to $85-billion range, but the society-wide benefits may be worth the outlay, argues Alexander Marré, a Baltimore-based regional economist with the Federal Reserve Bank of Richmond in a recent paper.

There are multiple benefits, Marré contends. Broadband has positive effects for business-location decisions and employment growth in rural areas, research data shows (although effects can be stronger in rural areas that are closer to metropolitan areas than more remote regions). Broadband also enables rural consumers to choose from a wider array of goods and services, potentially saving more than $1,000 per household. High-speed Internet also can improve the efficiency of rural labor markets. It can improve access to healthcare via telemedicine and distance learning. And, as a desirable amenity, it can boosts home values.

The  low density of businesses and households makes deployment of broadband infrastructure costlier than in metropolitan areas, and for-profit telecom companies can’t justify the low return on investment. But if the social benefits are as extensive as Marré contends, rural communities have a different cost-benefit calculus. His article explores several alternatives for bringing broadband to rural communities, including a Shenandoah Telecommunications (Shentel) projectin Virginia. Continue reading