Category Archives: Economic development

Northern Virginia Still Dominates Data Centers

Image credit: CBRE

by James A. Bacon

Northern Virginia accounted for 64% of wholesale data-center construction in the U.S. during the first half of 2020, as measured by megawatts of electric power consued, according to a CBRE report, “Data Centers Critical to Business Operations.” The construction trend reinforces the region’s role as the biggest, baddest center for data warehousing in the U.S. and the world.

Led by Loudoun County, the region touts 1,275 megawatts of “inventory,” about three-and-a-half times that of the No. 2 data-center cluster, Dallas/Fort Worth, and more than four times that of Silicon Valley.

The national outlook for the industry is favorable, says the report. “Companies are prioritizing IT spending as they restructure their overall budgets. While every dollar of investment is subject to scrutiny, a focus on mission-critical IT spending will be important to support remote working, transition to online platforms and serves, and to support online marketing and sales to consumers.” (Hat tip: Bill Tracy) Continue reading

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. Continue reading

Coal Severance Tax Credits Obsolete, JLARC Says


by James A. Bacon

Virginia’s coal tax credits are obsolete, cannot forestall the decline of coal mining in the state, and should be eliminated, finds the Joint Legislative Audit and Review Commission in a new report, “Infrastructure and Regional Incentives.”

The state provides two tax credits to encourage coal production: The Coalfield Employment Enhancement Tax Credit and the Virginia Coal Employment and Production Incentive Tax Credit. The two programs have saved coal companies and electricity generators $291.5 million in income taxes between FY 2010 and FY 2018, according to the report on the cost-effectiveness of economic development incentives. But the credits ranked at the bottom of JLARC’s list of incentives based on economic benefits per $1 million in spending.

The  coalfield credit is not needed because Virginia’s remaining mines are competitive with mines in other states based on a labor productivity basis (tons per employee hour), JLARC contends. The credit targeting electricity generators is fast becoming irrelevant when the state is moving towards a 100% renewable electric grid and phasing out its remaining coal-fired power plants. Continue reading

End the Coalfield Boondoggle

Alpha Natural Resources mine facility

By Peter Galuszka

The General Assembly’s auditing watchdog has recommended the elimination of  two coal tax credits that have been a bonanza to Virginia coal companies worth $315 million from 2010 to 2018 but have created only 10 jobs.

The report by the Joint Legislative and Audit and Review Commission (JLARC) studied 16 different tax credits to boost the state’s economy but recommended  only eliminating the ones involving coal production.

Those credits involve the Coalfield Employment Enhancement Tax Credit, formed in 1995, and the Production Incentive Tax Credit, formed in 1986 to help with electricity generation.

Virginia’s coal production peaked in 1990 and has been declining since. In 2000, for instance, it had been 33 million short tons but in 2019, it had dropped to 12 million short tons.

Continue reading

A Sad Emblem of Our Times

By Dick Hall-Sizemore

A venerable Richmond-based printing company closed last May. Somehow, that really saddened me. Perhaps because it was located not far from where I live. Perhaps because it had been around for so long.  Perhaps because it had a niche business that seemed sort of neat to me. Perhaps because its closing seemed so emblematic of the times.

I meant to comment on it then, but other topics and activities kept bumping it down the list. Then, Jim’s post yesterday about the Virginia economy and some of the follow-up comments brought it back to my mind.

The William Byrd Press was founded in 1913. In 1984, it merged with a North Carolina company and was renamed Cadmus. By 2007, it had 500 employees and was the world’s largest printer for publishers of scientific, technical, and medical journals. It was the fifth largest printer of periodicals in North America. Continue reading

Is Green Hydrogen the Answer?

By Peter Galuszka

Utilities, including Dominion Energy, are increasingly exploring the use of now-costly hydrogen technology to produce electricity with little or no carbon.

One of the most promising uses involves using excess renewable electricity from solar farms or wind turbines to power electrolyzer devices that strip hydrogen away from oxygen in water. The hydrogen is then used to power special batteries.

The result? Carbon free power that is available at just about any time when winds are blowing or the sun isn’t shining.

According to the Wall Street Journal, Dominion plans on experimenting with hydrogen for another use. It will try to blend hydrogen into its natural gas distribution system to reduce carbon and methane emissions. It will be testing a 5% hydrogen blend in some natural gas shipments next year, the Journal reports.

Eventually, it may go the route of electrolyzers and use solar and wind power to produce hydrogen. It appears that Dominion’s experiments may take place in the Far West where it owns power generation and distribution systems in Utah.

Another firm that has plans for hydrogen is NextEra Energy Inc., based in Florida. It plans on using hydrogen and natural gas to run a power plant in California. “What makes us really excited about hydrogen is that it has the potential to supplement significant deployment of renewables,” the Journal quotes NextEra CFO Rebecca Kujawa as saying. Continue reading

COVID-19’s Long-Term Changes in Virginia

by DJ Rippert

In the long run…  Over the past eight months COVID-19 has dramatically impacted the world, the United States and Virginia.  One hundred and twenty thousand cases of COVID-19 have been reported in Virginia  Over 2,500 people have died from COVID-19 . The cases, hospitalizations and deaths continue to grow in the Old Dominion. One year ago unemployment in Virginia hovered at 3%. Today it is 8%. Protests and rioting, possibly catalyzed by the COVID-19 lockdowns, have occurred regularly in several Virginia cities as well as Washington, D.C. Schools in Virginia moved to virtual teaching last Spring and many schools will open this Fall with either fully or partially virtual teaching. Nobody doubts the short- and mid-term effects of COVID-19. But what of the long-term effects? What impacts of COVID-19 will be felt after this version of the Coronavirus is gone?

The Spanish Flu (1918), Polio (1916 – 1955), H2N2 (1957), HIV/AIDS (1980s -), Swine flu (2009), COVID-19 (2020 -). Epidemics have broken out in the United States since the colonial days. Smallpox, yellow fever and cholera outbreaks plagued the country for centuries. The Spanish Flu pandemic was far worse than COVID-19 (to date). That flu struck in four waves and is estimated to have killed up to 50 million people worldwide. However, most Americans today would say that the Spanish Flu didn’t create major long-term changes in the United States. Some would disagree. Academics like Andrew Price-Smith believe that flu tipped the balance toward the allies in World War I. The growth of predominantly female-led nursing in the US may have been a consequence. In utero exposure to the pandemic may have negatively affected the health and prosperity of those exposed. Some survivors of the Spanish Flu never fully recovered. Despite all that, the Spanish Flu was called “the forgotten pandemic” until COVID resurrected interest. Economically speaking, the end of the Spanish Flu coincided with the start of the Roaring Twenties, making it hard to find long -term negative economic impacts from that pandemic. Continue reading

Virginia’s Return on Investment in Corps of Engineers Civil Works Projects

by James C. Sherlock

In response to my suggestion to use the Corps of Engineers to assess Virginia’s needs for hurricane and flood control, libertarian commenters on this blog used the argument that only oceanfront landowners will benefit.

That shows a fundamental misunderstanding of how the process works.  I ran into that same level of ignorance in the General Assembly.

No plan can defend everything everywhere, but a proper plan will do a cost-benefit analysis, and the USACE by law does that in every plan. Corps plans will protect what that its cost-benefit analysis indicates can be protected with a significant return on investment.   The value of people, disadvantaged communities, historically minority communities and areas of historical and ecological significance are counted in that assessment, not just property.

The Corps is a designated federal enforcer of environmental laws with regards to water and water related projects. They first will do everything they can with natural solutions before shifting to such construction projects as levies, pumps, seawalls, flood gates and berms.

The Corps uses a Regional Economic System (RECONS) model, which is a program used to assess the regional, state, and national impacts of projects. It is constantly assessed and updated. Continue reading

Elmer Gantry In Lynchburg

Jerry Falwell, Jr., and wife Becki

By Peter Galuszka

The resignation of Jerry Falwell Jr. amid a series of scandals may have a strong impact in Virginia where his late father built an extraordinary, ultra-conservative evangelical university in Lynchburg that later became highly politicized lightning rod supporting President Donald Trump.

Falwell has been caught up in a number of controversies including limiting speech on campus, going after The New York Times for trespassing when it reported he insisted that student ignore wearing anti-viral pandemic masks and so on.

What happened with Falwell Jr is as  an American story as apple pie topped with a Cross. It might have some straight out of the pages of Elmer Gantry.

After touting strict school policies that forbid students from drinking alcohol, watching “R”-rated movies or engaging in pre-marital sex, Falwell was pictured aboard a NASCAR mogul’s yacht half dressed with a semi-clad, pregnant woman who was said to be his wife Becki’s assistant. Falwell was holding a wine glass with a liquid in it but Falwell said it wasn’t wine.

Shortly afterwards, he gave an interview to the right-leaning Washington Examiner stating that his wife had been involved with a multi-year sexual affair with Giancarlo Granda, a former Miami Beach pool boy whom Falwell funded to set up a hostel business. Continue reading

Is There a Government Role for Rural Development?

A scene from Dollywood, near Knoxville, Tenn.

by James A. Bacon

John Accordino, a planning professor at Virginia Commonwealth University, has been giving extensive thought to a perennial problem, the nation’s urban-rural divide. As author of a newly published article and State and Local Government Review, he provides a broad overview of his thinking in a Richmond Times-Dispatch column.

Accordino sees the urban-rural divide — the divergence in incomes and job growth — as unhealthy for America’s economy, society and politics. And he thinks it is something that government intervention can address.

I know John, and I think he is a very thoughtful guy. And I agree that there may be a limited role for government. But I am skeptical that the federal and state governments can be very helpful. The solutions, such as they are, must come from the bottom-up — from rural communities and local governments themselves.

But before I get into that, let’s see what Accordino has to say. Continue reading

Good Schools as Rural Development Magnets

The Duncansville One-Room School Museum in Washington County.

by James A. Bacon

An enduring question in Virginia’s economic development community is how to revitalize the state’s rural counties. Traditional rural industries such as farming, mining, timbering, and light manufacturing are shrinking. Young people are leaving to seek better career opportunities elsewhere, and few people are moving in to replace them. A contracting workforce is not conducive to recruiting entrepreneurs and corporate investment.

Some commentators (I’m one of them) have suggested that rural counties build on their natural amenities such as bays, lakes, and mountains, to attract retirees and tourists. But not all counties are blessed with scenic beauty and recreational resources.

There is one policy lever that rural leaders do control, however, and that is K-12 education. Newly published research by Alexander Marré with the Richmond Federal Reserve Bank and Anil Rupasingha with the U.S. Department of Agriculture concludes that good schools encourage in-migration.

“Our results suggest that for the 2005–2009 time period, the quality of schools—as measured by the share of high school dropouts and nationally benchmarked mathematics and reading test scores—had a positive pull effect on migration to nonmetropolitan counties,” write the authors in an article published in the Journal of Regional Science. “Schools with better outcomes appear to draw in new in‐migrants, even after taking into account the fact that higher‐quality schools are more likely to be located in areas with higher median incomes.” Continue reading

Will COVID-19 Spark a U.S. Manufacturing Renaissance?

Thanks to COVID–19, super-duper high-tech manufacturing processes at Micron’s Manassas semiconductor plant are getting even more high-tech.

by James A. Bacon

Will the COVID-19 epidemic inspire the “re-shoring” of manufacturing to the United States and a revitalization of the U.S. manufacturing economy? If so, that could be great news for Virginia communities bet on manufacturing as a source of economic development.

The story is not a simple one. Several commentators in the latest edition of the Virginia Economic Review, published by the Virginia Economic Development Partnership, explore the ramifications of the epidemic for global supply chains and corporate manufacturing strategies. While there is a consensus that corporations will seek to reduce their dependence upon China, the pundits have diverse views on how likely multinational corporations are to repatriate manufacturing operations to the U.S. and what kind of job skills would be required.

Here follows some of the pithier observations and quotes on the topic from the Review. Continue reading

What Needs To Be Done After the ACP

By Peter Galuszka

For six long years, Dominion Energy and its partners in the $8 billion Atlantic Coast Pipeline have waged war against Virginians as they have pushed their way forward with the 600-mile-long natural gas project.

Their strong-armed methods have created untold misery and expense  for land-owners, members of lower income minority communities, nature lovers, bird watchers, fishermen, and many others.

When some declined to let the ACP to trespass on their property for survey work, they ended up in lengthy and expensive lawsuits. Others spent hundreds of hours on their own time and dime fighting Virginia regulatory agencies who all but seemed to be in the pocket of the ACP.

And so it goes. For what? So Dominion and its partners could make billions of dollars, some of it paid for by electricity ratepayers, for a project whose public need was always in doubt. On July 5, the ACP threw in the towel.

I put together this commentary in The Washington Post suggesting what might be done to prevent this from happening again: Continue reading

Common Sense and Coronavirus in Virginia

by DJ Rippert

Stepping back. Over the past five months there has been an unending flood of information, guesses, misinformation and politicized ramblings about COVID-19.  Various factions put forth their experts and cherry picked data to support their agendas. It’s time to step back and synthesize all that has been written into a set of common sense observations and preliminary conclusions about COVID-19.

The virus isn’t going anywhere. Even the most aggressive attempts to contain the Coronavirus will not eradicate the virus. The spread can be slowed and the curve can be flattened but the infections continue and the outbreaks resurge. After a catastrophic bout with Coronavirus in the spring Spain thought it had the contagion under control. The country reopened in what the Spanish thought was a sober and controlled way. Today, cases are spiking – particularly in the Catalan region. In the San Francisco Bay area of California strict lockdown protocols were implemented. The tide seemed to have turned. Reopening commenced.  Now, many bay area counties are seeing a spike in Coronavirus. Continue reading

More Big, Honking Data Centers Coming to Virginia

Honk!

The COVID-19 epidemic may be slowing the national economy, but it is accelerating the trend toward a digitized and virtual economy. That requires more data centers, and Virginia is still a key locus of the data-center universe.

Amazon Web Services is proposing to build 1.75 million-square-feet of data center space in Loudoun County, reports the Loudoun Times. Blue Ridge Group LLC, which is acting on behalf of Amazon, is seeking approval to rezone 100-acre parcel, which is located just south of Washington Dulles International Airport.

Meanwhile, Delaware-based T-Rex Ventures LLC wants to build a $60 million data center at the York River Commerce Park. T-Rex has won a $1.5 million grant from the local Economic Development Authority and a $380,000 credit from Dominion Energy to the county, which can be used for the new data center, reports WYDaily.

— JAB