Category Archives: Economic development

Danville’s Bad $912,000 Loan — Isolated Case or Tip of the Iceberg?

Danville City Council will decide next week whether to forgive $912,000 owed the city by its land purchasing arm, the Industrial Development Authority. The money represents the unpaid portion of a $1.6 million loan issued in 2015 to entice Telvista, a call center operator which closed its facility in 2018 and ceased making lease payments.

The city needs to clear the books on the Airside Industrial Park property to make way for a new investment by Norfolk-based PRA Group, which has promised to invest $15 million and bring 500 jobs. “The property can’t close until this is done,” said City Manager Ken Larking, as reported by the Danville Register & Bee.

City Council is likely to forgive the loan. The PRA operation — ironically, a debt collection center — will employ more people and pay better at $38,400 per year on average than the old Telvista operation. Continue reading

Addiction as a Workforce Development Issue

How ubiquitous is drug abuse in Virginia’s workforce? In western Virginia, it’s mind-numbingly pervasive.

“In many environments, as many as 50 percent of employee applicants who are eligible on the basis of their training, skills, and background fail to be employable because they fail to pass a drug screen,” Dr. Bob Trestman, chairman of psychiatry for Carilion Clinic, told Roanoke-area employers in a panel talk yesterday, reports the Roanoke Times.

Most employers have Employee Assistance Programs but Trestman said employees are reluctant to use them because addicts are stigmatized. “We need to think of them as people with an illness. Then we can reframe how we approach care and treatment and engage and support them in the workplace safely.” Continue reading

Food Trucks Can Create Oases in Food Deserts

Food desert theory.  Food deserts in cities can be defined as urban areas where it is difficult to buy high quality fresh foods at an affordable price.  This lack of access to healthy food causes problems for people living within these food deserts.  Instead of eating healthily people living in food deserts buy the “junk food” that is available. This, in turn, causes a variety of predictable health problems such as heart disease, malnutrition and diabetes.

Food desert solutions. Over the years, many well meaning people have proposed a series of solutions designed to solve the food desert problem. One example, described on Bacon’s Rebellion, involves the sale of collard greens in the small grocery and convenience stores in the Church Hill neighborhood of Richmond. Another involves not only selling healthy foods in Richmond but growing those vegetables in Richmond too. There have even been efforts by local health care organizations to provide “the Class-A-Roll” … a truck with a teaching kitchen inside to provide healthy food cooking lessons. Given that Sen. Mark Warner, D-VA, was conducting a town hall yesterday in Richmond to address food insecurity, one can only assume that these well intended ideas didn’t work. Of course they didn’t work. They miss the real point. Continue reading

Yes, Virginia, There Still Is Hope for Manufacturing

I remain skeptical that Virginia’s mill towns should peg their hopes for economic revival on manufacturing (see “Virginia Manufacturing Jobs Still in Decline“). But Stephen Moret, CEO of the Virginia Economic Development Partnership, makes a powerful case that Virginia can improve its track record in luring manufacturing investment.

In a lengthy comment to my post, Moret lays out his strategy, key tenets of which include building a national-class custom workforce training program, investing in site preparedness (building industrial parks on speculation), marketing more aggressively outside the state, and being more creative (and competitive with other states) on incentives.

Among the interesting tidbits of news in his comment is the fact that VEDP has has just recruited one of the top experts in the country to run the custom workforce training program, Mike Grundmann, from Georgia. He will start work next month, says Moret. “We expect to have this program up and running by late this calendar year.” Continue reading

The Marijuana Legalization Debate in Virginia: Lessons from Colorado

It’s a long way from Colorado to Virginia!

Elevated thinking.  I recently had the opportunity to do some skiing in Colorado. I hadn’t been to Colorado since the state legalized recreational marijuana use in 2014. I expected to see a Cheech and Chong movie played out on a vast scale high in the Rocky Mountains. That expectation went unmet.  Instead, I saw an American town where legal marijuana use has been incorporated into everyday life in a barely noticeable manner. Colorado has more pot shops than Starbucks outlets but you wouldn’t know that from a cursory visit. All of which got me thinking – what has been the marijuana legalization experience in Colorado and what lessons are there for Virginia?

Nil sine numine. “Nothing without providence.”  Residents of The Centennial State believe Colorado is guided by a “divine will.” After five years of “divine will” has legal pot turned into Rastafarian revelry or Puritanical perfidy? My unscientific poll of Coloradans riding various chairlifts and gondolas with me established a consensus of … “more good than bad”. Continue reading

Does Virginia Beach Have the Right Investment Priorities?

The City of Virginia Beach has shelled out $265 million in public funds to support 13 major public-private development projects from the Cavalier Hotel renovation to the Sandler Center for the Performing Arts. Those projects have attracted more than $1 billion in private investment, said Virginia Beach Mayor Bobby Dyer in his state-of-the-city address two days ago. “That’s a solid return that has meant money for schools, public safety, roads and other essential city services.”

“I have not always been on board with every public-private partnership as considered, but I do know a good deal when I see it,” Dyer said, according to the Virginian-PilotBut the city’s overall approach to P3s has paid off, he contended. The city has a AAA bond rating. All of its public schools are accredited. And the crime rate is the lowest it has been since the 1960s.

Bacon’s bottom line: Public-private partnership always warrant close scrutiny. Private interests have every incentive to seek public subsidies in order to maximize their private returns, and studies ginned up to support P3 projects often are loaded with dubious and unsupported assumptions. But if a locality works to minimize risks and ensure that each project is cash-flow positive, I can be converted on a case-by-case basis.

Virginia Beach is an especially interesting case because its proximity to the Atlantic Ocean and its low-lying elevation make it especially vulnerable to the rising sea level. Continue reading

Gentrification, Racism and the Democratic Electoral Coalition

Washington Post headline today: “D.C. has the highest ‘intensity’ of gentrification of any U.S. city, study says. More than 20,000 African American residents were displaced from low-income neighborhoods from 2000 to 2013, researchers say.”

Forbes magazine, circa June 2018: “Washington DC is being sued for gentrification. The 82-page class action lawsuit, filed by Aristotle Theresa, brought grievances against the city for its alleged discriminatory policies favoring creatives and millennials at the expense of the city’s historically African American, low-income residents.”

Reminder: Washington, D.C., also is one of the most liberal and Democratic jurisdictions in the country. In the 2016 presidential election, 91% of the population voted for Hillary Clinton.

Question: How long can the electoral alliance between creatives/millennials and African-Americans persist?

Virginia Manufacturing Jobs Still in Decline

Source: StatChat blog

Virginia has lost nearly 136,000 manufacturing jobs since 2000, a 36% decrease, according to Kyaw Khine writing in the StatChat blog. The losses occurred mostly in the latter phases of the 2000 and 2007 recessions, but, far from making up the losses during the last eight years of economic expansion, manufacturing jobs have been treading water.

Further, Khine cites long-term industry projections by the Virginia Employment Commission that employment in Virginia’s manufacturing sector will decrease by another 5.7% between 2016 and 2026.

Khine’s numbers call into question the economic-development priorities of Virginia’s non-metropolitan areas which continue to invest resources in building a manufacturing base as well as the Northam administration’s well-intentioned goal of ensuring that no region gets left behind economically. Continue reading

Arlington Welcomes Amazon 5-0 As Crowd Screams

Crowd at Arlington Board meeting Saturday March 16. Source: Arlington Now

The Arlington Board of Supervisors endured six hours of public hearing marked by local hooligans screaming at Amazon company representatives, then voted 5-0 Saturday for the modest local incentive package negotiated to bring the tech giant to a new location near Reagan National Airport and Crystal City.

A review of the final county staff presentation (here) puts the $51 million in identified incentives, spread out over several years, side by side with the $174 million in projected local taxes over the first 12 years, and the $342 million in local taxes over the first 16 years.  Those assume Amazon hits 25,000 employees by around 2030 and 37,850 employees by around 2034, and ultimately occupies 6 million square feet of owned and rented office space.   Continue reading

Loudoun Data Centers Drive Electricity Demand

Dominion Energy has filed an application to build two new electric substations in Loudoun County to serve a growing population and the boom in data centers…. mostly the data centers.

A typical data center consumes about the same amount of power as 7,500 residential households. There are more than 100 data centers operating in Loudoun now, according to the Washington Business Journal, with many more in the development pipeline. Their power demand is equal to that of about 750,000 homes. Loudoun County expects its population to grow from about 400,000 residents today to nearly 500,000 by 2045.

Dominion’s proposed 230-kilovolt switching stations will have dedicated circuits for future data center customers. Data center demand is forcing a reconfiguration of Virginia’s electric grid. In addition to the substations, Dominion needs to build or upgrade electric transmission lines to Northern Virginia. Needless to say, none of these projects are popular. Everyone likes the tax revenue they generate, but no one wants electric grid infrastructure in their back yard.

Passing Class No Guarantee of Certificate In New State Workforce Program

Average earnings three years before and one after completing the VCCS FastForward workforce certificate program. Source: SCHEV. Click for larger view.

Virginia’s FastForward workforce credential program now in its third year is showing good success in getting students through training, but a high number of people in some programs do not earn the matching certificate.  Those who achieve both usually show the highest wage growth.

For those who went into the program earning under $20,000 a year, the subsequent increase in earnings is dramatic, almost 140 percent year over year.  “We are serving a very high need population, even compared to the traditional community college population,” said Lori Dwyer, assistant vice chancellor for programs for the Virginia Community College System.   Continue reading

Amazon in Northern Virginia: 5 Positives

The road to the Silicon Swamp is paved with gold.

1-The Future. In 2011 Marc Andreessen, founder of Netscape, wrote an essay for the Wall Street Journal titled, “Why Software is Eating the World.” The eight years since Andreessen’s essay was published have served to vindicate, validate and verify the accuracy of his thesis. Yet while software eats the world, it doesn’t necessarily dine in the same old restaurants.  Car making used to be centered in Detroit. Now Silicon Valley is the new Detroit. Not only are upstarts like Tesla centered in The Valley but traditional car manufacturers are heading west too. As Andreessen noted, traditional non-technology companies all need to become software companies in order to survive. Metropolitan areas with strong software skills will attract not only technology companies but non-technology companies as well. Embrace software or be eaten by it. The future belongs to those who code.

2-Ecosystem. Silicon Valley isn’t Bentonville, Arkansas. No one company dominates Silicon valley and therein lies its enduring strength. The Valley is an economic growth machine fueled by start-ups, spin-outs, mergers, acquisitions, bankruptcies and oceans of venture capital. The idea that NoVa’s benefits from the Amazon deal start and stop with Amazon is myopic. Talented employees will come to National Landing, work for Amazon, and then leave to start new ventures. The 25,000 Amazon jobs should be seen as a starting point rather than a final outcome. In fact, startups founded by Amazon veterans like Fugue are already operating in the area. Continue reading

Amazon Local Incentives Not Worth A Revolution

Artist rendering of possible Crystal City to Reagan National Airport pedestrian bridge. Source: Crystal City Business Improvement District.  Click for larger view.

One of the self-styled revolutionaries seeking to prevent Amazon from planting its second headquarters in Arlington County complains the local incentive package offered is $23 million.  A research fellow at the Mercatus Center at George Mason University puts the total at $51 million.  The actual monetary value is elusive and still to be determined.

Both critics appear in a story from the politically-charged “news” outlet The Blaze, showing Amazon’s local incentives are national news.  So far, the much-larger state package, now approved by the 2019 General Assembly, has been the focus.  That was before a band of New Yorkers spit out their piece of Amazon Pie, inspiring Northern Virginians of similar ideological bent to step up a local battle.

UPDATE (2 p.m.):  The Arlington Board of Supervisors is set to vote on its agreement with Amazon on March 16, and here is the draft of the contract, just posted.  Continue reading

Killjoys versus GilJoy: Grievance Versus Opportunity

Gilbert Bland, CEO of the GilJoy Group and the Urban League of Hampton Roads, sees opportunities everywhere.

Northern Virginia progressives opposed to subsidies for Amazon are grievance-mongering nihilists who have nothing to offer but spittle and bile. Far from helping the people they purport to speak for, if they were successful in scuttling the Amazon deal — the Arlington County Board still must vote on county subsidies — they would cause only harm.

Instead of trying to kill the deal, progressive whiners and complainers could be working to capture a share of the  influx of public and private monies for the benefit of Arlington’s poor. An example they could emulate, but never will, is Gilbert T. Bland, chairman of the GilJoy Group and CEO of the Urban League of Hampton Roads, who, according to Virginia Business magazine, is leading initiatives to improve housing, education, health and workforce development for the region’s African-Americans.

But working within the establishment is not how progressives roll. Listen to Roshan Abraham with Our Revolution Arlington, as quoted by NBC News: Continue reading

Amazon as Un-Apple

Apple headquarters in Cupertino, California.

When Apple decided to build a new corporate headquarters, it designed a massive structure that resembled a flying saucer. The facility was an architectural marvel but it was entirely self contained, permitting no interaction with the surrounding community. It was impossible for employees to walk to work from home, and the campus was located far from public transit. For all practical purposes, the only commuting options were riding in cars, vans, and corporate buses.

Amazon might compete with Apple for the title of world’s most valuable company, but Amazon has a very different philosophy regarding real estate and facilities. Think of Amazon’s East Coast headquarters in Arlington and Alexandria as the un-Apple. Amazon does not regard itself as a company apart. To the contrary, the company wants to embed itself into the urban fabric. Here’s how the Washington Business Journal described Amazon’s thinking:

Amazon.com Inc.’s second home in the D.C. region will be a neighborhood — not a campus — of largely locally hired employees who eat at local restaurants and maybe bring their dogs to work, according to Holly Sullivan, who was among the leaders of the e-commerce giant’s HQ2 search.

Continue reading