Tag Archives: Rural development

More Restrictions Proposed for Culpeper Solar Farms

Off limits to utility-scale solar? Civil War battlefield locations in Virginia.

by James A. Bacon

Culpeper County prohibits construction of solar farms on Civil War battlefields. Now a proposal under consideration by the Board of Supervisors would discourage large solar projects adjacent to battlefield land held in historic easement, reports the Culpeper Star-Exponent. And that restriction is just one of many changes to the county’s Utility Scale Solar Facility Development Policy under review by the board.

Last year the board approved the 1,000-acre Greenwood Solar project over local opposition. Since then resistance to the land-consuming facilities has gotten more organized. One group, Citizens for Responsible Solar,  has actively pursued a policy of delay and encumber to restrict development of large-scale solar farms. Last month Cricket Solar pulled a proposal for a 1,600-acre solar farm in the county. Meanwhile, local opposition has stalled progress on utility-scale projects in other counties.

On the state level, it is the policy of the Northam administration, the General Assembly, the environmental community, and Dominion Energy to boost the contribution of solar power to Virginia’s energy mix. People may disagree about how far and how fast to go, but just about everyone agrees on the desirability of having more solar than we have now. But opposition at the local level has emerged as a significant barrier to large-scale deployment of solar. Continue reading

Why Is Expanding Broadband Still Such a Problem?

by Peter Galuszka

U.S. Rep. Abigail Spanberger (D-7th) has drawn lots of attention for her Rural Broadband Summit at Louisa County High School in Mineral on Aug. 17, which got plenty of comment from primarily rural residents unhappy that they can’t get access to quick, reliable Internet service.

Good for Spanberger, who beat Republican Dave Brat in last year’s hotly contested election. But this all brings questions: after so many years why are we still facing this?

I am now in my second decade of writing about the lack of broadband access in rural and inner city areas.

A piece I did for Chief Executive magazine about 10 years ago explored how mostly minority business owners in inner Philadelphia couldn’t afford broadband because the big providers, which would include Comcast and Verizon, cherry pick their locations. The firms wanted to boost margins so they pushed “triple play” (Internet, telephone and television) access in wealthier areas. Those not so privileged had to struggle with higher costs and access issues. “I don’t need 400 channels,” an inner city business owner told me. Continue reading

Hey, Why Not Satellites for Rural Broadband Access?

Everyone can agree, I think, that broadband Internet service is an essential utility for Virginia’s rural areas. There appears to be a wide base of support for the commonwealth to expend modest sums of money to help extend broadband to rural Virginians where the population density is insufficient to attract fiber-optic and wireless investment by private telecom companies. But I do have one question: What’s wrong with satellite broadband?

My question is prompted by an op-ed in the Richmond Times-Dispatch today by Evan Feinman and Courtney Dozier, the point persons in Governor Ralph Northam’s bid to expand rural broadband access. They describe programs that use public dollars to grease partnerships between localities, internet service providers, and electric utilities. Since the beginning of the Northam administration, they note, state-funded programs have helped establish 71,000 connections to homes and businesses. And that’s just the beginning of what they have planned. They are asking for tens of millions of dollars more.

That all sounds great. When it comes to rural economic development, investing in broadband may be the most effective way to spend public dollars. Still, what’s wrong with satellite technology? Continue reading

Danville’s Revival: Historic Architecture + Walkable Urbanism

The new Danville — more of this….

In Part II of his extended essay on the revitalization of downtown Danville, Va., The Atlantic magazine writer James Fallows dates the beginning of the city’s revival to the decision to demolish The Downtowner, a classic example of atrocious 60s-era architecture. In retrospect, it now obvious that the “modernist” architecture of the 50s and 6os was so hideous that it is not only not worth preserving, it is a blight. Or, as Fallows put it: “Most people believed that the old buildings had timeless-classic potential, and the Downtowner did not.”

… and less of this.

When the city took the wrecking ball to the Downtowner in 2012, only 400 or so people worked or lived in the downtown tobacco warehouse district now known as the River District. After several years the renovation and retrofit of old industrial buildings, the number now stands at 6,000.

Classic architecture (even if it is industrial architecture) + a traditional downtown street grid + views of the Dan River have proved to be a winning combination. Who ever would have thought that Danville would reinvent itself as a center of walkable urbanism? But it has, and therein lies its hope for sustainable economic growth. Continue reading

Certifications and Upward Mobility

I have been critical of the Virginia higher-ed establishment’s goal of making Virginia the best-educated state in the country. The goal is arbitrary and unconnected to the demand for higher-ed degrees. Pursuing the goal could result in over-investment in higher-education at great cost to students who wind up indebted and under-employed, and at the expense of lower-income Virginians and minorities who can’t keep up with the never-ending degree inflation.

However, the State Council of Higher Education in Virginia does deserve credit for defining “best educated” as including not just four-year and advanced degrees but educational certifications, which recognize mastery of narrow skill sets in demand in the labor market. And SCHEV aims to boost programs, mostly in community colleges, that provide “certifications.

Now comes the Demographics Research Group at the University of Virginia with data showing the distribution of degrees and certifications granted in major regions across the state (measured by credentials granted per 100,000 population in the 2016-17 school year). Due to technical difficulties, I will replicate that relevant chart in a separate post. Writes Spencer Shanholz on the StatChat blog: Continue reading

Bacon Bits: Rural Development Edition

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

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

Conservation Vs. Solar in Powhatan County

Conservation easements don’t just block projects like pipelines, highways and electric transmission lines. As demonstrated in Powhatan County Monday, they can block solar farms as well.

Faced with skepticism from the Powhatan County Board of Supervisors, Cartersville Solar LLC has withdrawn a proposal to build a solar farm on a 3,000-acre tract of property, reports the Richmond Times-Dispatch.

The proposal had encountered opposition from Powhatan residents. Citizens commenting at public hearings cited negative ecological impact on protected wetlands — the only remaining wildlife corridor connecting the James and Appomattox rivers — and on rare and endangered species.

Cartersville Solar had acquired 2,998 acres near the intersection of Cartersville and Duke roads for the purpose of building a solar farm. (The RTD article does not say how much power it would generate.) In November, the Powhatan County Planning Commission voted to recommend denial of the project on the grounds that the proposed use is not consistent with the 2010 Long-Range Comprehensive Plan. Part of the project would fall into an area designed Priority Conservation Area and Protected Land. Continue reading

Virginia Needs to Up its Game When Talking about “Rural” Development

Governor Northam delivers conventional wisdom to rural economic development conference.

Despite the creation of 4,500 jobs in the “rural” portions of Virginia since he took office in January, Governor Ralph Northam told the Virginia Rural Summit yesterday that Virginia needs to do more to stimulate employment in rural areas.

Sounding familiar themes, Northam stressed STEM education, broadband access, and transportation. Twenty-first century jobs such as cyber-security and artificial intelligence require STEM education, the governor said, but young people don’t necessarily need to complete four-year college degrees. For some high-paying jobs, community college and certification programs may suffice. Rural Virginia also needs broadband access — within ten years, he said, as reported by the News Virginian. He also touted a recently unveiled, $2 billion plan to upgrade Interstate 81.

This is a familiar grab-bag of remedies, and it reflects the safe conventional wisdom on how to approach “rural” economic development. While improved broadband access indisputably would help “rural” economic competitiveness, it’s not clear at all that educating youth for “21st century jobs” or reducing congestion on I-81 will accomplish anything useful for “rural” communities. Northam’s address — like most of the discussion we hear — overlooks some unpleasant realities.

Let’s start by identifying what former blog contributor EM Risse refers to as a “core confusing word.” Near the top of the list of most obfuscating words used by planners and politicians is “rural.” It is impossible to have a rational discussion about “rural” development until we understand what we mean by “rural.”

As commonly used by the Governor and others, “rural” refers to most of Virginia outside of the three main Metropolitan Statistical Areas — Washington/Northern Virginia, Richmond, and Hampton Roads. Depending on context, it may or may not include smaller MSAs such as Roanoke, Charlottesville, Lynchburg, Winchester, Staunton/Waynesboro, Danville, Bristol, Blacksburg/Christiansburg, and Harrisonburg. The term probably includes small mill towns such as, say, Galax, Halifax, Pulaski, Rocky Mount, and the former coal camps of Virginia’s “rural” coal-producing counties. However, the only areas we can be absolutely certain the term “rural” encompasses are the vast tracts of sparsely populated farms and woodlands outside the MSAs.

The economic assets and challenges faced by smaller MSAs, mill towns, and farmland/woodlands are very different. Likewise, the realistic expectations we can set vary widely depending upon a community’s particular assets and liabilities. Some key points:

The agglomeration force. The “agglomeration” force in a predominantly knowledge-based economy is incredibly powerful. Knowledge-intensive companies, which include almost all technology companies, gravitate toward urban areas with large, deep labor pools. As is vividly on display in Amazon’s selection process for its massive second headquarters, technology employers also seek urban areas with the kind of amenities — primarily walkable urbanism — that will enable them to recruit from outside the region and then to retain their employees.

We can educate rural, small-town, and small-metro employees to participate in 21st-century knowledge-economy jobs, but they will find few employment opportunities outside the large MSAs. They will migrate to the large MSAs because that’s where the job opportunities are. Investing in educating “rural” young people for “21st century jobs,” whether in an expensive four-year college setting or a community-college setting, effectively subsidizes workforce development for the big, wealthy MSAs. If Virginia wants to create “rural” jobs, it needs to invest in occupations in which rural places and mill towns have a competitive advantage — which is not cyber-security and artificial intelligence.

Light manufacturing. Small-town Virginia continues to enjoy a competitive advantage in attracting light manufacturing, which requires cheap land, low taxes, and a supply of unskilled and semi-skilled labor. The problem is that manufacturing operations are subject to automation, which means that the yield in jobs from landing new manufacturing investment is smaller than in the past. As manufacturing gets more automated, we can expect fewer jobs but higher-skilled workforce needs from new projects. Manufacturing may be an area where an investment in community-college degrees and certifications may pay off — if the training is done in concert with the manufacturing companies to ensure that workers are learning relevant skills. How many manufacturing plants will need employees with certifications in cyber-security and AI, I have no idea. I’m guessing a few, but not many.

Transportation. The congestion on I-81 has virtually nothing to do with “rural” economic vitality. The highway links a string of small MSAs (Winchester, Harrisonburg, Staunton, Roanoke, Salem, Christiansburg, Bristol) and small towns. Just as big MSAs like Washington, Richmond and Hampton Roads have co-opted the Interstate highway system for local traffic, so have the small cities and towns along I-81.

I haven’t seen the plan for upgrading I-81, which has been described as involving widening and other improvements to be financed with some combination of gas tax, sales tax or tolls. But I feel confident about saying one thing: The improvements will be focused on increasing the capacity of the Interstate highway itself. It will not entail any changes to land use patterns or nearby non-Interstate transportation investments. Localities will continue to allow the clustering of development near I-81 intersections in a land-use pattern I call “rural sprawl.” Thus, they will perpetuate the use of the Interstate as a local transportation artery and accelerate the need for more improvements a couple of decades from now.

Rural/mill town/small MSA Virginia has two sustainable competitive economic advantages. One is a lower cost of living, which makes it potentially attractive to retirees who want to stretch fixed incomes. The other is raw physical beauty and access to recreational activities such as hiking, biking, canoeing, kayaking, sailing, ATV trails, and the like. Some communities also can build upon their local historical and cultural heritage. These assets can support retirement- and tourism-related industries. Whether such industries can support existing populations with decently paid jobs is problematic. Many rural/small town communities will have to learn how to deal gracefully with population decline.

Which brings me to a final point: How to deal gracefully with population decline. How do small and sparsely populated localities maintain a tolerable level of services and amenities when the population and tax base is shrinking? Not by subsidizing rural sprawl that drives up the cost of building and maintaining infrastructure. No one in Virginia is talking about this at all. But maybe, instead of squandering scarce resources on pipe dreams, “rural” Virginians and their political champions in Richmond should be giving this question more thought.

The Logic Behind Northam’s Plan for Spending the Tax-Reform Windfall

Finance Secretary Aubrey Layne

The starting point for understanding the Northam administration’s logic behind divvying up the tax windfall from federal income tax reform is the conviction that Virginia cannot count on the personal and corporate tax cuts lasting more than a few years. Democrats may regain power in Washington, D.C., and reverse the tax cuts, or at the very least block any attempt to extend the personal income tax breaks beyond the five years provided in the legislation.

While the tax reforms might survive, explained state Secretary of Finance Aubrey Layne in an hour-long interview with Bacon’s Rebellion Tuesday, political volatility in the nation’s capital makes it unwise to count on an ongoing boost to state revenue, which is estimated to amount to $532 million in fiscal 2019 and $444 million in 2020. It would be irresponsible to expand ongoing state expenditures in the hope that the revenue gusher will continue. Prudence dictates that Virginia allocate the funds to non-recurring programs and capital projects.

There are many possible uses of the money, Layne conceded. Some say give the money back to taxpayers. Some say dedicate the money to school improvements. Governor Ralph Northam prefers initiatives that would benefit mainly rural Virginia: Earned Income Tax Credits for lower-income wage earners and non-recurring investments in broadband, workforce development, and affordable healthcare.

The controversy swirling around the impact of federal tax reform on Virginia finances has created considerable confusion, Layne said. One sticking point is the issue of “conformity” with the federal tax code. When Congress enacted new tax policies in the past, Virginia traditionally has enacted the changes needed to make the state tax code align with the federal code. Congress’ new tax code will require 20 or more significant changes in the Virginia code. Failure to conform is not an option, he said. It would throw state tax collections into confusion at enormous expense to tax payers.

If Virginia conforms and makes no adjustment to tax rates, brackets or deductions, as he expects, the Commonwealth should see a spike in revenue. There has been some controversy over the effect on taxpayers – the impact will vary widely from household to household — but there is no question that, absent any action to return money to taxpayers, the state treasury will be a big beneficiary.

Then comes the question of what to do with that money. Virginia may not spend any revenue from tax year 2018. The tax year is advanced and the state is still awaiting guidance on the details. “There’s a lot we still don’t know,” said Layne. There will be no time to update tax preparers much less modify tax-calculation software such as Quicken. Returning money to taxpayers that year might make sense, although, he added, he’s not advocating such an action.

The 2019 tax year is a different matter. He expects the General Assembly to bring the tax code into conformity in the 2019 session, eliminating the uncertainty, and the Commonwealth will be in a position to start spending money.

Northam wants use the money to help working families in rural Virginian, said Layne. The governor proposes to do that by dedicating about half the windfall to increasing the Earned Income Tax Credit (EITC), a tax refund that would eliminate state income taxes for many lower-income households. The money would flow to lower-income Virginians across the state, but the beneficiaries would be concentrated in rural localities, especially in Southside and Southwest Virginia.

The governor wants to use the other half to fund economic development programs for rural Virginians. A top priority would be to accelerate the deployment of broadband Internet in low-density areas where Internet Service Providers cannot profitably invest. The state needs about $1 billion to make broadband ubiquitous, said Layne. Perhaps the windfall could use public dollars to seed public-private partnerships that could leverage private investment.

Northam also has talked about using the money to underwrite programs for workforce development and education — although Layne conceded that the welter of state workforce training programs is redundant, inefficient and needs fixing — and to improve rural access to healthcare. The priorities are conceptual in nature, and no specific proposals have been advanced. He readily agreed that the state might consider other alternatives such as raising money for Interstate 81 improvements, upgrading the Central State mental health facility, or paying down the pension liability. Northam would consider an alternative to the beefed-up EITC if it would benefit rural Virginia, he added.

Whichever priorities lawmakers approve, said Layne, they should be one-off projects. “I don’t know how we could go to the [bond] rating agencies and use this money for ongoing expenses.”

Stay Put, Young Man, Stay Put

Source: Commonwealth Institute for Fiscal Analysis

The Commonwealth Institute for Fiscal Analysis has published a useful reminder of how job and wage growth has bifurcated in Virginia — jobs and wages have increased smartly in Virginia’s major metro areas since the recession but have lagged markedly in non-metro Virginia.

The trends, which reflect the larger urban-rural divide nationally cannot be reversed, notes CI, but they can be ameliorated. “State lawmakers have some specific options on the table that could offer an economic development boost to rural Virginia.”

What do all of those options entail? Tax breaks and rural subsidies targeted to helping lower- and middle-income households. Expanding Medicaid. Eliminating the work requirement for receiving Medicaid. A bigger state Earned Income Tax Credit (EITC). State investment in roads, bridges, and broadband. CI doesn’t advocate showing infrastructure money indiscriminately on localities — investments should be “placed based” reflecting the needs of local communities — but the approach is all about subsidies and wealth transfers.

Virginia already has an entity — the Virginia Tobacco Region Revitalization Commission — that has been helicoptering money all over Southside and Southwestern Virginia for a couple of decades now with little discernible effect. The Institute doesn’t articulate what criteria should be applied for dispensing the cash any differently. 

What CI does says forthrightly is that “asking rural Virginians to move to jobs isn’t a solution.” 

Why not?

Americans throughout their history have been moving to areas of greater opportunity. As Horace Greeley famously proclaimed in the 19th century, “Go west, young man.” In the early 20th century thousands of farmers and immigrants migrated to the Central Appalachian coalfields, and when the coal industry withered, they moved on. African-American sharecroppers migrated from Southern rural areas to greater opportunity in the urbanizing North. In the 1930s, Okies choking on the Dust Bowl moved to California. And so it has gone. But for some reason, CI has ruled out moving from rural areas whose mill-town manufacturing economies have been devastated by globalism and automation.”

I have penned innumerable posts on this blog suggesting strategies on how rural Virginia communities can revitalize themselves by selling access to mountains and the Chesapeake Bay, and investing in the kind of amenities that will attract retirees, nature lovers, resort-goers and small entrepreneurs. Are the Virginia mountains any less picturesque than North Carolina’s? Is Virginia’s portion of the Bay any less beautiful than Maryland’s? Why can’t we replicate the economic  success of western N.C. and Maryland’s Eastern Shore?

But even if Abingdon could become another Blowing Rock and Deltaville another St. Michael’s, there is a limit to how many jobs a tourism/resort/retiree economy can support. If our goal is helping people rather than helping regions, then we should encourage people to move to where the jobs are. The single biggest barrier to moving isn’t the lack of Medicaid or insufficient EITC, it’s the lack of affordable housing in Virginia’s major metros.

If we want to build a society around redistribution and the amelioration of poverty, fine, go with the Commonwealth Institute plan. If we want to build a society around jobs, opportunity, and upward mobility then our focus should be on mobility and affordable housing.

Virginia’s Competitive Advantage in Green Power

Solar power is looking better and better by comparison to wind power, and that’s a good thing for Virginia.

In Germany, a global pioneer of wind power, hundreds of wind turbines are experiencing metal fatigue and other issues as they pass their 20- to 25-year design lives — and they are literally falling apart. Turbines are falling to the ground. Blades are snapping off and flying hundreds of feet. Razor-sharp glass fiber splinters have been documented to have flown 800 meters away. So far, no one has been hurt, but one expert speaks of a “ticking time bomb.” (Die Welt has the story here.)

Problems with an energy-production source often don’t become evident for decades. That certainly was the case with coal and oil. Now, a couple of decades after the widespread deployment of wind turbines, we’re learning about a downside of wind. Compared to Deepwater Horizon-scale oil spills and mountaintop-removal coal mining, flying turbine debris may be small potatoes. But as we think about our energy future, the comparison isn’t between wind and coal or oil — no one is building new coal or oil plants — it’s between wind and solar. The great virtue of solar panels is that they just sit there… except when hurricanes tear them off their mountings. But, then, high winds are a problem for wind turbines, too.

Assuming we can design and test turbines to withstand hurricane-force winds, there will be a place for wind in Virginia’s long-term energy future. Wind turbines work at night, which solar panels do not, so they can partially offset the daily drop-off in solar production. Furthermore, if Virginia taps large-scale wind resources, most turbines will be located offshore. Flying turbine blades are less of a problem when people are 20 miles away. But solar power poses none of these issues, and solar is being rolled out on a large scale today. Right now.

The biggest barrier to solar power in Virginia isn’t technology, it isn’t grid reliability (not at this stage of development) and it isn’t obstruction in Richmond. State law now proclaims large volumes of renewable energy to be in the public interest, and Virginia’s largest utility, Dominion Energy Virginia, is forecasting the deployment of more than 5,000 megawatts of solar in its service territory alone. The biggest barrier is local zoning codes, as we are reminded by a story today in The News Virginian.

The Augusta County Board of Supervisors adopted an ordinance yesterday by a narrow 4-3 vote that allows for the leasing of county land for solar energy use. However, critics said the requirement for a 1,000-foot setback from other residences will discourage solar development. The ordinance also does not allow for solar projects on land zoned industrial.

Roger Willetts, who owns the 44 acres in Stuarts Draft, said his property is taxed $6,000 a year by the county. But he said if a solar farm is allowed, he could generate $60,000 in revenue a year. “I think it is an appropriate use. It won’t employ anybody and it won’t have any bathrooms,” Willett told supervisors.

But under the ordinance approved Wednesday, Willetts’ property would be excluded because solar energy on industrial land is not allowed.

Augusta County, situated in a once-beautiful stretch of the Shenandoah Valley, is not a “rural” county with pristine viewsheds of farms and forests. It is characterized by what I call “rural sprawl” — scattered, low-density residential, commercial and industrial development smeared across the countryside. The viewsheds are despoiled already. Sad to say, solar farms aren’t any uglier than what’s already there.

Everywhere a developer proposes to build a solar farm — arguably the most benign form of energy production known to man — the NIMBYs come out and call for restrictions. NIMBYs don’t want gas pipelines. They don’t want electric transmission lines. They don’t want wind turbines. They don’t even want solar farms.

Ironically, solar power could be a boon to the sluggish economies of Virginia’s non-metropolitan cities and counties. Not only do Virginia’s electric utilities envision more solar, the potential exists for Virginia, long a net importer of energy from other states, to export solar power. Virginia is the southern-most state (excluding the northeast corner of North Carolina) in the PJM electric transmission region. For both political and business reasons, there is an insatiable demand for more renewable power within that 13-state region, which stretches from Virginia north to New Jersey and Illinois. Much of that demand comes from Virginia itself, the nation’s leading location for data centers, because West Coast cloud providers insist upon renewable energy sources. PJM creates a  wholesale market for that region, which makes it easier for energy producers located within it to sell into the wholesale market than it is for energy producers on the outside.

While wind-swept Midwestern states in the PJM region are better situated for wind, Virginia is the best situated for solar. As the southern-most state, the Old Dominion has greater solar energy potential — more sunny days and a latitude closer to the equator — than its northern neighbors. As seen in the table above, Virginia has the highest percentage of sun — defined as the percentage of time between sunrise and sunset that sunshine reaches the ground — as well as the largest number of annual hours of sunlight of any PJM state.

Local government officials in Virginia should think of solar power as an economic development tool. Solar farms provide a royalty-income stream to landowners, and they augment the local tax base. While they create few long-term jobs, they do deliver a burst of short-term construction work. As utilities invest in grid modernization, Virginia can provide solar energy for its own needs — up to 30% of the electricity supply, some say, without diminishing grid reliability — and it can export green power to states to the north. This looks like a once-in-a-generation economic opportunity for rural Virginia. Let’s not blow it!

Virginia’s Housing Shortfall

Underproduction as a % of 2015 housing stock.

Between 2000 and 2015, 23 states fell 7.3 million units short of meeting the housing needs of their growing populations — equivalent to about 7.3% of the housing stock of the United States, according to a new study, “Housing Underproduction in the U.S.,” published by the Up for Growth Coalition.

Although not the worst offender, Virginia was one of the states notable for housing underproduction, falling short of demand by 131,000 units over the 15-year period.

Restrictive zoning and development policies in Virginia and elsewhere have created an imbalance in supply and demand imbalance that has dire economic consequences. States the report:

As people migrate toward cities in search of jobs, education and economic opportunities, the demand for housing in our most populous and economically productive regions has far outstripped the production of new housing units. Due to dramatic shifts in generational preferences and household demographic trends, migration to cities over the past decade are at the highest level since World War II, while housing production has fallen to historic lows. This imbalance has led to rapidly rising housing prices, economic displacement of lower income families and communities of color, and increases in homelessness.

Long-term Bacon’s Rebellion readers familiar our Smart-Growth-for-Conservatives critique of Virginia land use and development policies will be right at home with this study. The report blames “restrictive local development and land use policies that reflect opposition to high-density, multi-family urban growth in favor of low-density, single-family, suburban sprawl.” Offending policies include:

  • Zoning restrictions, which create a shortage of zoned, high-density sites;
  • Escalating and misaligned fee structures, such as impact and linkage fees;
  • Poorly calibrated inclusionary housing requirements; and
  • Lengthy review processes that invite gaming and abuse by growth opponents that can delay projects, create unpredictability, reduce incentives to invest and increase the per-unit cost of development.

Not only do dysfunctional housing markets produce fewer units than would be supported by demand, according to the report, they produce units in the wrong locations. The market for housing in walkable, high-density, high-value urban areas is significantly under-served, while housing continues to be built in lower-density suburban communities with a backlog of land zoned for residential.

Average change in home prices by county, 2000-2016.

The study advocates a loosening of anti-development restrictions to encourage  a “smart growth” model of growth that promotes high-density residential development in major transportation corridors. Benefits will include increasing the housing supply, exploiting existing infrastructure, and increasing tax yields to local governments. Four broad tools would achieve these aims:

  • By-right approval. Establish “by right” high-density residential development in a half-mile radius around a transit station (roughly 5 percent of a metropolitan region’s land area).
  • Impact fee recalibration. Recalibrate impact fees to reflect actual costs of infrastructure service for high-density development.
  • Property tax abatement. Use property tax abatement as a gap financing tool to enable denser and more affordable housing production.
  • Value capture. Establish mechanisms to capture value created through up-zones and tax abatement investments to be used as dedicated funding for a range of housing programs.

Clearly, Virginia has a lot of work to do. We’re not as bad as the West Coast, the Northeast, or even our neighbor to the north, Maryland, but we’re the worst state in the Southeast (excepting Florida). The cost of housing is harming our economic competitiveness and hindering our ability to adapt to economic circumstances.

One of the ways to address rural poverty in Virginia, for instance, would be to encourage unemployed or under-employed workers in small towns and countryside to migrate to metropolitan areas offering better employment opportunities. When local governments in metro areas restrict housing development, they block this migration. Lower-income Americans literally can’t afford to make the move. The result is the worst of both worlds: sub-par employment opportunities in rural areas combined with job shortages in the major metros.

The higher cost of housing also helps explain another phenomenon — the shift of Virginia in recent years from a state from a people-importing state into a people-exporting state.

Finally, as the report alludes to, high housing costs disproportionately impact the poor and minorities. High housing costs, not racism, keep minorities trapped in public housing projects and slums. High housing costs block them from becoming homeowners, building home equity, and accumulating wealth, thus perpetuating income inequality.

Where is the General Assembly on the housing issue? Where was the McAuliffe administration? Where is the Northam administration? AWOL, all of them.

Yet Another Path to Rural Broadband: Other Peoples’ Money

The Pamunkey Indian Tribe… soon delivering broadband Internet from a wireless tower near you.

Speaking of bringing broadband Internet to rural Virginia (see previous post)… PamunkeyNet, a business entity of the Pamunkey Indian Tribe, has received approval from the GO Virginia State Board to develop a plan to bring broadband to Gloucester, Mathews, Middlesex and other rural counties along the Chesapeake Bay.

The newly awarded federal designation of the Pumunkeys as an officially recognized Indian tribe is key to the venture. According to a GO-Virginia document, the project would unfold over three years. GO-Virginia, a state-funded economic development initiative, would provide backing for two years. The Pamunkey-owned project would:

  • Create a network of existing and new wireless towers throughout the Middle Peninsula and George Washington region that will have a high-performance backbone between towers and local access radios on each tower to provide affordable business, residential, and institutional broadband Internet service, and will provide Gigbit fiber services on the Pamunkey reservation.
  • Create a fiber-based Technology Corridor on Route 33 between Rappahannock Community College, the planned Telework Center, and the Middle Peninsula Regional Airport.
  • Design for linkage with Hampton Roads, specifically for VIMS and Rappahannock Community College, and anticipate the benefits of linkages to the south with transoceanic destinations from the MAREA landing point, as well as to the north at Ashburn.

Key to making this happen is Pamunkey access to federal funds — “the sole federally designated tribe in Virginia and a conduit to currently untapped federal resources.”

The project also would involve the Middle Peninsula Planning District Commission, the Rappahannock and Germanna community colleges, ten localities, and two electric co-ops.

Bacon’s bottom line: I’ve just finished reading Nassim Nicholas Taleb’s brilliant and confounding new book, “Skin in the Game: Hidden Asymmetries in Daily Life.” Taleb doesn’t have much use for movers, shakers, and pundits (which would include people like me) who don’t have “skin in the game,” that is, people who, if their analysis proves unfounded, walk away unscathed. One commonly encountered group of skinless gamers is people who play with taxpayers’ money.

If you had to make a prediction, which would you pick to have a greater chance of economic success (that is, recovering the funds invested): Gary Wood’s plan (described in the previous post) for the Central Virginia Electric Cooperative to deliver broadband to its 36,000 customers, or the Pamunkey plan to deliver broadband to a geographic area of comparable size?

I would lay my money on Wood. In a word, Wood has put his ass on the line, and he reports directly to a board of directors, whose members represent the interests of the customer-members of the co-op. If the venture fails, co-op members will take a bath, board members will catch endless flack from their friends and neighbors, and Wood’s career likely will be ruined. I would feel even better if he had some of his own money at stake, but there is a clear line of accountability, and the people involved have a lot to gain or lose. Without knowing Wood personally, I feel reasonably assured that he will do everything within his power to make the project a success.

Conversely, it doesn’t appear that anybody has skin in the game in the Pamunkey deal. There is no indication that the Pamunkeys are putting up any of their own money or that they’ll suffer any loss if the project bombs. Basically, a bunch of bureaucrats are playing with other peoples’ money, and if the project fizzles, there is no discernible impact on any of the participating organizations. Furthermore, participation is so broad and so diffused, there won’t be anyone to hold accountable. The Pamunkeys might tap enough state, federal, and local money to get the broadband service built. But would the project be economical, in the sense of earning back its cost of capital? Who cares? It’s other peoples’ money.

Another Path to Rural Broadband: Electric Co-ops

Service territories of Virginia electric utilities. The CVEC territory is shown in bright blue in the center of the state. (Click for larger image.)

The Central Virginia Electric Cooperative has been delivering electricity to the inhabitants of 14 Central Virginia localities for 80 years. Now it’s planning to provide high-bandwidth Internet connections. The company has announced a plan to invest $11o million to connect all 36,000 co-op members.

Co-op members will be able to purchase 100 megabits per second (mbps) access for $49.99 a month or 1 gigabit per second (gbps) for $79.99 a month, reports the Fluvanna Review.

Keeping the pricing reasonable was important to CVEC President Gary Wood. “I didn’t want this to become a premium service or a luxury service,” he says. Continues the Rivanna Review:

Wood said the project is anticipated to lose money for the first seven years and reach the break-even point in about 11. He admits that “give me $100 million and in seven years, I’ll start bringing you your profits,” hasn’t been the easiest argument to sell, but he believes it can be done with a combination of  loans, grants, state and federal funding and tax rebates.

CVEC is also asking for financial support from each of the counties in its service area.

For a for-profit business, eleven years would be a slow payback. But for an electric co-op, owned by its customers, that might seem like a reasonable proposition.

One objection, I would expect, would revolve around opportunity cost. By taking on a financial obligation of this size, the co-op might be limiting its ability to pursue other projects such as, say, grid modernization or solar energy. Another objection would be risk. What if rural residents aren’t willing to pay $50 to $80 per month for broadband access? Could disappointing revenues put the co-op in financial jeopardy?

But let’s face it, no one else is likely to want to deliver broadband to the rural residents of Central Virginia. This seems like a project that is custom-made for CVEC, and it could provide a model for other co-ops, who cover roughly a third of the geographic expanse of the state.