According to a story in Saturday’s Virginian Pilot, Virginia Beach is slated for more beach widening this summer. The total cost of the project is $22.6 million, with the federal government providing $14.7 million (65 percent) and the city of Virginia Beach paying the remaining $7.9 million.
The newspaper article says that this project is a “part of a long-term plan to protect the commonwealth’s shoreline from storms.” That sounds like a worthy idea, especially in this era of sea-level rise. But, let’s not kid ourselves. This project is not about protecting the shoreline or about resiliency, the buzzword of the day. After all, if one is going to protect the shoreline and make it more resilient to stronger storms, one would not try to do so by putting down a substance that will start washing away the day after it is put down. The owner of one of the ocean front hotels stated quite plainly the real purpose of the project: “…having a wide beach is important, not only for safety, but for what we’re selling to our guests.”
I do not have an objection to spending public funds to enhance a tourist attraction of the Commonwealth. After all, tourism is one of the state’s largest industries. The Virginia Tourism Corporation reported that, in 2017, tourism accounted for $25 billion in domestic visitor spending, supported 232,000 jobs, and brought in $1.7 billion in state and local tax revenue.
I do have an objection to who is providing the funding for the beach widening. Continue reading
Update. In the first installment of this two installment post I described the metropolitan juggernaut that is modern day Nashville. I also provided some historical perspective on how Nashville became the sixth fastest growing US city (measured along several axes) between 2011 and 2016. As a side note, the 35 fastest growing cities documented in the prior link included no cities in Virginia. I have family in Nashville. For three of the last four years I have visited my family, run in a wildly popular race and witnessed the remarkable growth of Music City. My 2019 trip is complete and this article is the promised update.
First, a step back. Admiring the rapid growth of Nashville requires a fundamental belief. One has to believe that rapid growth in urban areas is a good thing. This is not a universally held belief, in Virginia or in Tennessee. Thomas Jefferson, for example, was quoted as saying, “When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe.” While I understand the bucolic allure of country living I believe that the economic future of the United States and Virginia will largely be in the cities. I think Virginia should be striving to create an environment conducive to fast growing, safe, livable cities. To that end much can be learned from Nashville as well as Charlotte, Austin, Raleigh, etc. Continue reading
Subsidies, tax breaks and other economic development incentives may attract corporate investment to a state, but do they pay for themselves or represent a net drain on state resources? Based on data from 32 states, a study by four North Carolina State University researchers find that the overall net effect is mildly negative, although results vary by the type of incentive.
Fortunately for Virginia, according to that data, the Old Dominion ranks second-to-the-bottom for incentives as a percentage of economic value added. Continue reading
Site Selection magazine has awarded the Virginia Economic Development Partnership (VEDP) its Prosperity Cup as “the most competitive state-level economic development group” in the country. That’s quite a turnaround for an economic development organization that only two-and-a-half years previously the Joint Legislative Audit and Review Commission (JLARC) had found to be inefficient, ineffective, and suffering from “systemic deficiencies.”
The magazine credited VEDP’s jump to first place, from sixth in 2017 and 2018, to CEO Stephen Moret for assembling a team that’s “serious about economic development..” Virginia’s success in nailing down two mega-projects, the $3 billion Micron Semiconductor deal and the nationally touted, $2.5 billion Amazon HQ2 project, certainly didn’t hurt.
Amazon and Micron “were obviously two signature wins for Virginia in the last several months, but there are a lot of other great things going on all over the state,” Moret told Site Selection. In addition to the two mega-projects, Virginia snagged an impressive $5 billion of investment in smaller deals.
Dust Bowl refugees in the 1930s. Will Virginia be on the delivering end or receiving end of the next recession-induced migration?
In the previous post I argued that there are large pockets of hidden risk in the U.S. and global economies that could trigger a devastating economic downturn. I’m not predicting that a recession is imminent — I do not profess to see the future — but I would suggest that only fools would pretend that these risks do not exist and fail to protect themselves from them.
As I have detailed in previous posts, Virginia is highly vulnerable to an economic downturn. The consolation is that we’ll have plenty of company. The Old Dominion is hardly the only state in the union that has failed to take advantage of 10 years of economic expansion to buffer itself from the next recession, which, unless President Trump has repealed the law of business cycles, is inevitable. What we don’t know is the timing. Do we have five years to adapt, or only one? Continue reading
Stephen Moret, CEO of the Virginia Economic Development Partnership (VEDP), is doing more than closing billion-dollar deals and resurrecting Virginia’s reputation as a top state to do business. He’s trying to change how Virginians think about economic development — or at least change what outsiders think about how Virginians think about economic development.
The VEDP has done something it has never done in the dozens of years that I have followed the partnership — launched a quarterly publication, the Virginia Economic Review, that will, in Moret’s words, “provide an inside look at Virginia’s economy, its diverse array of world-class companies, its amazing talent, and its stunning natural beauty, as well as insights from national thought leaders.”
With apologies to Oldsmobile, this is not your father’s sales material. With a focus on tech companies and tech talent, the inaugural edition interviews Amy Liu, a nationally known thinker about economic development with the Brookings Institution (cited previously on this blog); Peter Cappelli, director of the human resources center at the Wharton School; and Dan Restuccia, chief product and analytics officer of Burning Glass Technologies, a labor market analytics firm, among others.
Some of the insights contained within: Continue reading
Pharmaceutical giant Merck & Co. has announced plans to invest $1 billion over the next three years to expand its manufacturing operations in Rockingham County. The project will add 120,00 square feet to an existing 1.1 million-square-foot plant to increase production of Gardasil, a human papillomavirus (HPV) vaccine. The project is expect to create “close to 100 new jobs,” reports the Daily New-Record.
Merck will be eligible for a custom performance grant of up to $7.5 million for storm water and infrastructure upgrades, subject to General Assembly approval. Blue Ridge Community College and James Madison University are eligible for another $2.5 million to create a custom workforce solution. The company is also eligible to receive sales and use tax exemptions on manufacturing equipment, as well as a Major Business Facility Job Tax Credit for new, full-time jobs created.
Bacon’s bottom line: As always, I have questions… Continue reading
Pockets of prosperity. America’s big metropolitan regions may be sucking up most of the growth and prosperity of the current business cycle, but they’re not sucking up all of it. In crunching data measuring economic prosperity, population growth and rising incomes, GOBankingRates found numerous “cities” (not metros) that qualify as “boomtowns.” One region stood out as especially vigorous: the South. And Virginia nabbed two spots in the top 10, reports CNBC.
Charlottesville ranked 6th among cities in the South with 2012 -to-2017 income growth of 17.9%, population growth of 11.9%, and GDP growth of 22.4%.
Richmond ranked 9th in the South with income growth of 15% over the same period, population growth of 7.6%, and GDP growth of 22.4%.
Can Amazon avoid a housing crunch? Amazon officials have told the Washington Post that the company will learn from its experience in Seattle how to avoid creating a housing crunch when its HQ2 expansion brings 25,000 jobs to a Washington region that already has full employment and high housing prices. Amazon contributed $80 million to public and private efforts to support affordable housing and prevent homelessness in Seattle, said Jay Carney, a senior vice president. But he added that it is primarily the government’s responsibility to ensure an adequate supply of affordable housing. Continue reading
Garry Warren, CEO of ivWatch in Hampton has developed technology to reduce the infection risk from IV therapy. Photo credit: Virginia Business
Virginia business boosters have long fanned fantasies that the state might join the ranks of the nation’s biotech industry leaders. There isn’t much chance of Virginia becoming a center of pharmaceutical commercialization — an industry in which the required expertise is highly concentrated geographically — but there may be hope for medical devices.
Writes Virginia Business: “Analysis released last year found the medical-device subsector of Virginia’s bioscience industry grew four times faster than the national average. In 2016, the commonwealth had 184 medical device and equipment companies, a 31% increase from 2014.” Continue reading
Hey, Alexa, does Amazon have any job openings for its Alexa project? Amazon has posted its first job listings for its new Arlington County headquarters and is moving two vice presidents from Seattle to Arlington, reports the Washington Post. One will oversee workforce development, and the other will run a technical team focused on international growth of its virtual assistant Alexa.
Commercializing one of the world’s most awesome materials. Graphene is 200 times stronger than steel. It is superb at conducting heat and electricity. And it’s incredibly pliable. Now the Carbon Research and Development Co. is building a Graphene Research Center in Wise County with the backing of a $1.5 million loan from the Virginia Coalfield Economic Development Authority. The Center, which is focusing on applications in the manufacturing center, is collaborating with Virginia Tech, reports the Roanoke Times, to derive the carbon-based material from coal.
First nurse practitioner licensed under new law. Continue reading
The employment-growth gap between metropolitan areas and non-metro areas in the United States is displayed dramatically in this chart compiled by the Brookings Institution and published in the New York Times. The disparity in growth rates between metro and non-metro is old news. What I find intriguing — and even encouraging — is that the difference between large, medium and small metros is relatively small.
The chasm in economic growth between large metros and isolated rural areas is explainable largely by the so-called agglomeration effect — the huge advantage bequeathed by large labor markets with a wide range and great depth of technical, managerial and executive skills. This effect is so powerful that it overpowers big-metro drawbacks such as traffic congestion and high housing costs.
However, size is not destiny. Continue reading
High-tech bonanza. Virginia has captured almost $16 billion in capital investment through economic development since Governor Ralph Northam took office 16 months ago, reports the Richmond Times-Dispatch. “It’s probably the biggest 16-month period in state history,” said Stephen Moret, who came on board as CEO of the Virginia Economic Development Partnership in early 2017. The investment includes two massive projects — Amazon’s $2.5 billion HQ2 project and Micron’s $3 billion expansion — which the state began pursuing during the McAuliffe administration. Another $7.4 billion came from projects, mostly data centers, that companies did not want to announce.
Rejuvenate rural areas by investing in cities. “Micropolitan areas” — rural communities with small urban centers, have rebounded to near pre-recession employment levels, observe Amy Liu and Nathan Arnosti with the Brookings Institution in a New York Times op-ed. They write: “In an economy where private investment flows to places with dense clusters of prized assets, the best rural policy may be supporting the development of small and midsize cities across the country, improving rural residents’ access to jobs, customers, training programs and small-business financing.” Continue reading
Seeding entrepreneurship. The Virginia Coalfield Economic Development Authority has approved $180,000 in seed-capital grants up to $10,000 for businesses that have been operating less than a year and have fewer than 10 full-time employees. The new businesses are projected to create $770,000 in total private investment and create 135 full-time and part-time jobs. Assuming the businesses deliver on their investment and jobs — not to be taken for granted — this looks like a promising approach to economic development. Since it started two years ago, reports the Bristol Herald-Courier, 53 businesses receiving micro-grants have generated $3.1 million in private investment and created 542 full- and -part-time jobs. Beats subsidizing an out-of-state company to build a light manufacturing plant and then shut it down 10 years later.
Addressing the doc shortage. Southwest Virginia has a chronic shortage of doctors, nurses and other health care providers. The United Company Foundation in Bristol is issuing a $1 million challenge grant to the Edward Via College of Osteopathic Medicine in Blacksburg to lower medical school debt for doctors who agree to practice in Southwest Virginia, reports the Roanoke Times. Two $40,000 scholarships will be awarded this spring to third-year medical students. After they complete their residencies, they will be required to work for three years in the region.
To plug the broadband gaps, first you have to find the broadband gaps. Continue reading
Dominion Energy has announced the construction of six new solar farms — three in Virginia and three in North Carolina – to offset the electricity demand of Facebook data centers in the two states. The 590 megawatts of new renewable energy generation will be enough to power 147,000 homes at peak output.
The partnership will support Dominion’s goal of having 3,000 megawatts of new solar and wind energy in operation or under development by 2022 and Facebook’s goal of supporting its global operations with 100% renewable energy by the end of 2020. (See the press release here.)
In the abstract, I’m all in favor of generating electricity with clean, renewable energy sources like solar. But I’m still trying to understand the implications of the solar rush for grid stability and ratepayers. Continue reading
Let’s see now. Arlington County offered $29 million in incentives to land the economic development coup of the decade, Amazon’s HQ2 project. Now, according to the Washington Business Journal, the County Board is considering granting another $11.5 million in incentives to keep the Drug Enforcement Administration in town. Are you kidding me?
Citizens are raising legitimate concerns that the influx of 25,000 Amazon employees will drive up housing costs and displace lower-income residents and make Northern Virginia’s overloaded roads and highways even more congested. I have argued that the benefit to Arlington — increased economic dynamism and diversification — is worth the millions of dollars worth of enticements. But let’s not pretend there isn’t a cost.
Who needs to bribe the DEA when you’ve got Amazon coming? And not just Amazon, but all the vendors, partners, spin-offs, and other enterprises that will become part of the Amazon ecosystem. What does the DEA bring to the table? Economic diversification? Hah! The DEA perpetuates dependency upon the federal government. Economic dynamism? Laugh out loud! The DEA is a government bureaucracy. Continue reading