REPORT TO THE JOINT LEGISLATIVE AUDIT AND REVIEW COMMISSION
Impact Assessment of State-Level Economic Development Grants
NICOLE GAFFEN XINGCHEN WANG JARED WILKERSON DECEMBER 2011
ACKNOWLEDGEMENTS:
Dr. Greg Rest and Massey S. J. Whorley, JLARC
Professor Eric Jensen and Professor David Finifter, College of William & Mary, Course Instructors
Professor Elaine McBeth and Professor John McGlennon, College of William & Mary, Faculty Advisors
Rui Pereira, College of William & Mary, assistance with IMPLAN
Any opinions expressed here are those of the authors and not Joint Legislative Audit and Review Commission staff. Any errors or omissions are the sole responsibility of the authors.
1 TABLE OF CONTENTS
I. EXECUTIVE SUMMARY ...... 5 II. INTRODUCTION ...... 6 A. Directive from the General Assembly ...... 6 B. Overview of JLARC Special Report on Development Grants ...... 7 1. Key Findings and Recommendations ...... 7 C. Non-Grant Economic Development Incentives ...... 8 1. Tax Incentives ...... 9 2. Technology Zones ...... 9 3. Financial Assistance ...... 9 4. Managing and Technical Support ...... 10 D. Economic Development Grants ...... 10 1. Governor’s Opportunity Fund (GOF) ...... 10 2. Virginia Investment Partnership (VIP) Grant ...... 11 3. Major Eligible Employer (MEE) Grant ...... 12 4. Virginia Economic Development Incentive Grant (VEDIG) ...... 12 5. Clean Energy Manufacturing Incentive Grant (CEMIG) ...... 12 6. Virginia Jobs Investment Program (VJIP) ...... 13 7. Economic Development Access Program (EDAP) ...... 13 8. Rail Industrial Access Program (RIAP) ...... 13 9. Transportation Partnership Opportunity Fund (TPOF) ...... 14 10. Tobacco Region Opportunity Fund (TROF) ...... 14 III. EVALUATION OF JOB CREATION ...... 15 A. Rationale ...... 15 B. Methodology ...... 15 1. Job Projections Database ...... 16 2. Job Creation Database ...... 16 C. Job Creation ...... 18 1. Evaluation Conducted on Original Data ...... 19 2. Evaluation Conducted under Bracketing System ...... 20 D. Job Creation by Sector ...... 24
2 1. Performance of Manufacturing Sectors ...... 25 2. Performance of White Collar Sectors ...... 26 3. Average Salary by Sector ...... 26 4. Sector Economic Multipliers ...... 28 IV. STATE-LEVEL GRANT EXPENDITURES & TAX REVENUES ...... 30 A. State-Level Grant Expenditures...... 30 1. Aggregate Grant Awards ...... 30 2. Aggregate Grant Expenditures ...... 32 B. State-Level Tax Revenues ...... 34 1. Using IMPLAN to Estimate State-Level Tax Revenues ...... 34 2. Sector-Level Analysis of State-Level Tax Revenues ...... 36 C. Comparison of State-Level Expenditures and Revenues ...... 37 V. CYCLICAL AND COUNTER-CYCLICAL TRENDS ...... 39 A. Effect of Business and Election Cycles on Job Projections ...... 39 B. Effect of Business and Election Cycles on Grant Awards ...... 41 VI. CASE STUDIES ...... 43 A. Goodyear Automotive Service ...... 43 B. STIHL, Incorporated ...... 44 C. Barber & Ross Company ...... 45 D. Eli Lilly and Company...... 46 VII. Recommendations for Further Evaluation ...... 48 A. Limitations to Using Input-Output Software ...... 48 B. Considerations for Current Development Incentive Policies ...... 50 VIII. Conclusion ...... 52 APPENDIX 1: GRANT PROGRAM GUIDELINES ...... 55 APPENDIX 2: ANNUAL JOBS COMPARISON TABLES ...... 60 APPENDIX 3: JOB PROJECTIONS AND CREATION BY SECTOR...... 78 APPENDIX 4: STATE-LEVEL GRANT EXPENDITURES AND REVENUES BY SECTOR ...... 87 APPENDIX 5: TOTAL EFFECT ON EMPLOYMENT AND OUTPUT BY SECTOR ...... 90 APPENDIX 6: METHODOLOGY OF USING IMPLAN ...... 98 References ...... 100
3 LIST OF TABLES
TABLE III-A: AVERAGE ANNUAL RATIOS OF JOB CREATION ...... 18 TABLE III-B: JOB CREATION PERFORMANCE WITHIN FIVE YEARS OF PROJECT ANNOUNCEMENT ...... 20 TABLE III-C: AGGREGATE JOB CREATION ...... 21 TABLE III-D: JOB CREATION PERFORMANCE (PROJECTS MEETING LESS THAN 75% OF PROJECTIONS) ...... 22 TABLE III-E: JOB CREATION PERFORMANCE (PROJECTS MEETING BETWEEN 75 AND 99.99% OF PROJECTIONS) ...... 23 TABLE III-F: JOB CREATION PERFORMANCE (PROJECTS MEETING OR EXCEEDING PROJECTIONS) ...... 24 TABLE IV-A: AGGREGATE GRANT AWARDS AND PLEDGES ...... 30 TABLE IV-B: AGGREGATE GRANT EXPENDITURES FOR QUANTIFIED GRANTS ...... 33 TABLE IV-C: AGGREGATE GRANT EXPENDITURES...... 34 TABLE IV-D: STATE AND LOCAL TAX REVENUES ...... 36 TABLE IV-E: STATE-LEVEL EXPENDITURES AND REVENUES ...... 37 TABLE V-A: BUSINESS CYCLES, 1999-2007 ...... 40 TABLE V-B: STATE-WIDE ELECTION CYCLES, 1999-2007 ...... 41
TABLE 3A: JOBS COMPARISON (SECTORS EXCEEDING JOB CREATION PROJECTIONS) ...... 78 TABLE 3B: JOBS COMPARISON (SECTORS MEETING STANDARD GRANT REPAYMENT CUTOFF) ...... 79 TABLE 3C: JOBS COMPARISON (SECTORS MEETING BETWEEN 50-74.99% OF PROJECTIONS) ...... 80 TABLE 3D: JOBS COMPARISON (SECTORS MEETING LESS THAN 50% OF JOB CREATION PROJECTIONS) .....81 TABLE 3E: ECONOMIC MULTIPLIERS BY SECTOR ...... 82 TABLE 3F-1: HIGHEST PERFORMING DEVELOPMENT PROJECTS (JOB CREATION RATIO) ...... 83 TABLE 3F-2: HIGHEST PERFORMING DEVELOPMENT PROJECTS (NET JOBS) ...... 84 TABLE 3G: AVERAGE HOURLY WAGE BY SECTOR ...... 85 TABLE 3H: GRANT AWARDS BY SECTOR...... 86
LIST OF FIGURES
FIGURE III-A: JOBS COMPARISON .…………………………………………………………………………………………………20 FIGURE V-A: BUSINESS AND ELECTION CYCLE TRENDS (JOB CREATION PROJECTIONS) …………………………40 FIGURE V-B: BUSINESS AND ELECTION CYCLE TRENDS (GRANT AWARDS)……………………………………………42
4 I. EXECUTIVE SUMMARY STUDY HIGHLIGHTS Virginia offers numerous economic development incentives to businesses contemplating relocation to or expansion within the state. A Timeframe: 1999-2007 report on the effectiveness of these grant programs conducted by JLARC in 2002 followed the results of development projects announced in 1997 Development Projects: and 1998. The report revealed that over-performing companies 490 compensated for both under-performing and non-performing companies in terms of job creation. Additionally, these jobs produced individual income tax revenues that allowed the state to recover the costs of GOF and Total Job Projections: workforce service training grants within two and a half years. 131, 767 The current update examines development projects announced over nine years (1999-2007), which includes periods of recession and Estimated Job Creation: expansion, as well as Republican and Democrat control of the Lower Bound - 58,845 governorship. Job projections resulting from the development projects Mid-Level - 87,787 exceeded 131,000. A bracketing system was applied to projects for which Upper Bound - 94,825 data could not be obtained, resulting in job creation estimates ranging from approximately 58,845 to 94,825 – a finding notably distinct from the result of the 2002 report. If the indirect and induced effects of direct job Total Grant Awards: creation are factored in, however, projections are well exceeded. $346.32 million Manufacturing companies tended to come closest to meeting metrics established in performance agreements, while companies creating non- Total Grant manufacturing jobs brought the highest net number of jobs to the state. Expenditures: The state promised $346.32 million in quantifiable grants to the Lower- $238.79 million 490 development projects announced within this timeframe. Estimated Mid- $268.61 million expenditures ranged from $204.27 million under the lower bound of the Upper- $275.51 million bracketing system to $234.93 million under the upper bound. Despite the lower rate of job creation than present in the 2002 report, however, State-Level Tax Revenue: estimated state-level tax revenues more than matched grant expenditures. Lower- $460.52 million Revenues were estimated for jobs created by direct, indirect, and induced Mid- $1,081.08 million effects over a two to three year period; as a result, estimates are likely low. Upper- $1,110.45 million Even so, tax revenues significantly exceed expenditures – estimated state collections range from $460.52 million under the lower bound to $1.11 Net State Revenue: billion under the upper bound. Lower- $78.75 million Incentive grants appear to be a revenue-enhancing policy that Mid- $695.41 million provides added benefits for the state in terms of lower unemployment and Upper- $723.55 million the maintenance of a highly ranked business climate. It is in Virginia’s best interest to maintain these grant programs to more effectively compete Projects Exceeding Job with regional and national competitors. There is room, however, for a Projections: 112 thorough re-evaluation of the policies governing grant programs. Additionally, the state should consider targeting grants to sectors that tend to meet performance metrics (briefly examined in this study). Projects Achieving Job Projections: 20
5
II. INTRODUCTION
The effects of the most recent recession are still being felt in Virginia, particularly for the nearly 300,000 unemployed who comprise a ―jobs gap‖ between pre-recession and post- recession employment levels.1 While economic development incentives cannot alone bridge the gap, effective programs can bring high-paying jobs to localities and needed employment to areas of economic decline, such as Southwestern Virginia. Consequently, the Virginia General Assembly has directed that a study be undertaken to evaluate the effectiveness of current grant incentive programs – this study provides an initial examination of the program policies, the resulting impacts of economic development supported by grants, and avenues of future consideration for the year-long study to be conducted by the Joint Legislative Audit and Review Commission (JLARC).
A. Directive from the General Assembly
In February 2011, the General Assembly directed JLARC to evaluate the effectiveness of state-level economic development grants. Senate Joint Resolution 329 noted the substantial increase in funds such programs have received over the past decade, in addition to an increase in the number of programs themselves (such as the establishment of the Clean Energy Manufacturing Incentive Grant in 2011). An important aspect of evaluating program effectiveness is whether, in light of other factors impacting company decisions to locate or expand in the Commonwealth, economic development grants provide Virginia with an advantage over competing states.2 The legislature mandated that the report include three elements. First, identify grant programs currently offered by Virginia and the extent to which businesses make use of these incentives. Second, evaluate the extent to which each grant program fulfills the public policies ―for which the grant programs were established.‖3 Third, recommend a method for conducting ongoing analysis of the effectiveness of these incentive programs.4 The present study will focus on the first and third elements, providing an update to JLARC’s 2002 Special Report, ―State Business Incentive Grant Programs.‖ This report will first provide a broad overview of economic development incentives, as well as a detailed examination of the major development grants
6 offered by the State of Virginia. Following is an analysis of the effectiveness of major economic development grant programs in Virginia based on job creation performance. A cost-effectiveness analysis is also conducted, weighing grant expenditures against state-level tax revenues. For both of these measures of effectiveness, a sector-level analysis is also conducted, revealing which industry sectors are highest performing. Next, an examination of business and election cycles reveals whether there are cyclical or counter-cyclical effects on employment or grants. This report then discusses four specific development projects in-depth, providing additional insight into why certain projects are more successful than others. Finally, this report provides recommendations for future evaluation of development grants and suggests several policies that should be re-examined in light of the findings.
B. Overview of JLARC Special Report on Development Grants
The 2002 JLARC report examined economic development projects announced over a two year period, 1997-1998. All eighty-nine projects received incentive grants from the Commonwealth; their record of job creation was tracked for five years following the announcement. Over the course of the report, JLARC implemented two fundamental assumptions: (1) but for the promised grants, Virginia would not have received the investment of companies to whom the grants were promised, and (2) all jobs created following the announcement of a development project could be attributed to the initial promise of grant funds.5 This study continues to rely on those assumptions. This study will also evaluate current findings against those contained in the 2002 report to assess whether program effectiveness remained constant over the past decade.
1. Key Findings and Recommendations A principal finding of the original report revealed that while many companies did not create the number of jobs promised, those that exceeded performance agreements created enough jobs to meet the total of annually announced projections.6 Several over-performing companies created as many as three to four times the number of jobs initially projected, thereby compensating for under-performing or non-performing companies. This study will examine certain characteristics of over-performing companies that may allow state officials to better
7 target grant funds. Recommendations following from this analysis may allow the state to better target grant awards to businesses that are more likely to meet performance metrics. JLARC also found that estimated individual income tax revenues collected from jobs directly created by development projects outweighed grant expenditures within three years of the project announcement.7 Such an estimate was conservative because it did not include increased revenue from other state-level taxes (such as corporate or sales taxes), leading to greater certainty that financial benefits outweighed program costs. Consequently, JLARC recommended that the two major grant programs, GOF and Workforce Services, remain functional - a recommendation based on the conclusion that negative long-term consequences would result if Virginia eliminated these programs. Among these negative impacts would be the creation of fewer new jobs due to businesses deciding to locate in competing states. In the two or three years following such a cut, ―the State’s resulting loss of individual income tax revenues would likely be more than the amount that was saved by cutting these programs.‖8 This study will conduct a similar cost-effectiveness analysis, although it makes use of a different method to estimate tax revenue that more broadly reflects overall revenues collected by the state. Such a method will provide a more detailed measure of the extent to which grant programs are revenue-enhancing for the state. There was a negative finding of the special report, however: some grant recipients may pose risks that outweigh the positive impacts of job creation and capital investment.9 Such impacts include undesirable business practices, which result in negative externalities for the state and its citizens. A Consequently, JLARC concluded that additional screening should be implemented before the state awards grant funds.10 The case studies presented within this report also examine the likelihood of local or state-level economic development officials detecting risks before grants are awarded.
C. Non-Grant Economic Development Incentives
Virginia offers a wide variety of incentives targeted at businesses locating or expanding in the state in an effort to successfully compete nationally and internationally. As development
A Examples of negative externalities include pollution and health-related impacts. Additionally, the 2002 report uncovered a telemarketing firm that engaged in deceptive trade practices – before Virginia awarded the business grant money, approximately twenty states initiated legal proceedings against it.
8 grants are just one of the Commonwealth’s many economic enticements, this section frames the broad incentives available to qualifying businesses by briefly introducing non-grant incentives.
1. Tax Incentives Virginia offers three types of tax incentives: corporate income, property, and sales and use. Corporate income tax credits are not targeted towards all businesses; rather, they incentivize certain behaviors. Thus, credits are available for businesses that create green jobs or a significant number of new jobs, manufacturers purchasing recycling equipment, businesses that retrain workers or invest in research and development, entities that increase their port volume, and companies that use rail or barges instead of highways to transport goods.11 Property tax incentives are implemented solely at the local level. Localities have the option to fully or partially waive taxes for property such as recycling equipment, rehabilitated real estate, solar energy devices, and environmental restoration sites. Furthermore, localities can reduce tax rates on items such as research and development property, semiconductor manufacturing machinery, clean-fuel vehicles, and energy-efficient buildings.12 Finally, Virginia offers sales and use tax exemptions for the purchase or lease of certain goods, such as semiconductor clean rooms, internet access charges, custom computer software, and certain utilities.13
2. Technology Zones Technology zones are created by local ordinances to attract technology-oriented businesses. Qualifying businesses in these zones may receive fee waivers, local tax incentives, and exemption from ordinances.14
3. Financial Assistance The Virginia Small Business Financing Authority, a branch of the Virginia Department of Business Assistance (VDBA), provides programs to make capital available to expanding businesses and communities. These programs include the issuing of industrial development bonds, guaranteeing loans to small businesses, and subsidizing loan portfolio insurance to business-lending banks.15
9 4. Managing and Technical Support The Center for Innovative Technology (CIT) provides two service lines to aid small companies when accessing investment opportunities. First, CIT Entrepreneur connects innovative companies with early-stage investors. Second, CIT R&D helps researchers transition federally-funded and other research projects into commercial products and, ultimately, into businesses or licensing opportunities. Additionally, the Virginia Small Business Development Center Network, the Virginia Economic Development Partnership (VEDP)’s Division of International Trade, and the Virginia Leaders in Export Trade program all assist their target constituencies in achieving goals by strengthening small businesses and increasing international trade.16 These diverse economic incentives often work in tandem with the subject of this report, economic development grants, to encourage businesses to locate or expand in Virginia.
D. Economic Development Grants
The state offers a number of grant programs – some are available to any company that can meet eligibility requirements based on capital investment and job creation, while others are highly specialized and only offered to companies providing certain services or belonging to specific industries. This section outlines ten major development programs; of these, the Governor’s Opportunity Fund and Virginia Jobs Investment Partnership are the largest in terms of both the number and size of grants awarded.
1. Governor’s Opportunity Fund (GOF) The Virginia General Assembly established the GOF as a ―deal closer‖ that provides performance grants to relocating or expanding businesses deciding between several competing states. 17 The governor exercises discretion when offering funds to businesses, although recipients must meet eligibility requirements, and projects must ―bring additional income into the Commonwealth.‖18 The governor also maintains final approval of the amount of the grant itself, considering recommendations made by VEDP and negotiations conducted by the Secretary of Commerce and Trade with the prospective recipient.19
10 The grant is given to localities—which provide matching funds—and then The General Assembly has appropriated more than applied towards site preparation, the expansion of utilities, and $216 million to the Fund since its inception in infrastructure development.20 VEDP gives priority to projects in localities 1992. with high unemployment rates, which must receive at least one-third of total funds.21 The limit on grant payments per development project is $1.5 In FY 2010, sixteen GOF grants were awarded to million, although the governor may approve a higher payout for projects businesses, totaling $6.37 22 million. These businesses that ―are of statewide or regional interest.‖ One vetting mechanism announced new capital applies to businesses that have ―closed, downsized, consolidated, or laid off investments of $288.9 million and the employees within the past 30 months‖ prior to applying for a grant, anticipated creation of 2,998 jobs. although such actions do not necessarily preclude these businesses from receiving funds.23
Source: VEDP 2. Virginia Investment Partnership (VIP) Grant The General Assembly established VIP through the Virginia Investment Partnership Act (VIPA) to benefit Virginia businesses maintaining at least a five-year presence in the Commonwealth. 24 Funds are intended for
In FY 2010, four VIP manufacturing companies or associated research and development grants were awarded to operations to support increased production capacity and productivity, businesses, totaling $4.85 million. These businesses facility modernization, and the development and implementation of announced new capital advanced technology.25 Grant payments per project are generally limited to investment of $500.5 million and the $3 million, subject to eligibility requirements (including a restriction on anticipated creation of receiving other state-level incentive grants). Grants of up to $5 million are 681 new jobs and the retention of 150 existing available for projects meeting more rigorous performance standards. An jobs. increase in grant payments is also possible following the creation of new jobs.26 VIP grant amounts are based on recommendations by VEDP and Source: VEDP negotiations conducted by the Secretary of Commerce and Trade, then subject to final approval by the governor. 27 Grants are paid with funds appropriated by the General Assembly, and there is a program ceiling of $6 million in any given year.28
11 3. Major Eligible Employer (MEE) Grant VIPA also established the MEE program, a discretionary performance incentive geared towards existing Virginia manufacturers and non- In FY 2010, no businesses manufacturing basic employers. 29 Eligibility requirements are more were awarded MEE grants. rigorous than with VIP, although recipients are also prohibited from simultaneously receiving other state-level grants.30 The MEE grant award is based on VEDP recommendations and negotiations led by the Secretary Source: VEDP of Commerce and Trade. The governor retains final approval of all payments.31 Funds for MEE grants are subject to appropriations by the General Assembly, and payments cannot exceed $25 million per project. Businesses must complete capital investment and job creation within five years, although extensions are possible.32
4. Virginia Economic Development Incentive Grant (VEDIG) VEDIG was also established by VIPA. 33 Funds are targeted towards Virginia businesses seeking to locate ―significant headquarters, In FY 2010, VEDIG funds 34 were awarded to one administrative or service sector operations‖ in the state. The governor business, which reserves final approval of each grant awarded based on recommendations announced new capital investment of $25 million made by VEDP and negotiations conducted by the Secretary of Commerce and the anticipated 35 creation of 1,200 jobs. and Trade. Eligibility requirements differ based on locality; businesses are ineligible if they simultaneously benefit from other state grant programs or receive VIP or MEE funds.36 The VEDIG program is limited to annual Source: VEDP payouts of $6 million, and aggregate outstanding awards may not exceed $30 million.37
5. Clean Energy Manufacturing Incentive Grant (CEMIG) The General Assembly established CEMIG in 2011; program funds are subject to annual appropriations.38 CEMIG is targeted towards clean energy manufacturers seeking to locate or expand their business in the Commonwealth and is intended to improve business performance, not fund initial site preparation or infrastructure development.39 CEMIG limits the maximum grant awarded to $9 million for eligible businesses, although the
12 governor is able to authorize a higher payout ―for projects with significant state or regional interest.‖40
6. Virginia Jobs Investment Program (VJIP) VJIP provides partial reimbursement for customized recruiting and training
In FY 2010,721 services to companies creating new jobs or experiencing technological businesses received funds change.41 Eligibility requirements ensure that a company is for-profit and from VJIP to train or retrain employees. pays a minimum wage of $10 per hour (this requirement may be waived in Workforce training some localities due to high unemployment rates). Additionally, only certain reimbursements totaled nearly $7 million. businesses are eligible: manufacturers, distribution centers, corporate headquarters, call centers, informational technology services, and research
Source: VEDP and development facilities. VJIP offers three programs to better serve businesses with different workforce training needs: the New Jobs Program, the Small Business New Jobs Program, and the Retraining Program.42
7. Economic Development Access Program (EDAP) EDAP is a state-funded program administered by the Virginia Department of Transportation (VDOT) and allocated by the Commonwealth In FY 2010, five grants Transportation Board (CTB). The program provides funds to localities for were awarded for road improvements, totaling road improvements needed for adequate access for new or substantially $2.65 million. expanding qualifying projects. The award amount is determined by the eligible capital investment of the company and the estimated cost of the Source: VEDP access road.43 The maximum award for an economic development access road is $0.5 million; however, an additional $0.15 million is available but must be matched dollar-for-dollar by the locality.
8. Rail Industrial Access Program (RIAP) In FY 2010, six grants were awarded for rail Administrated by the Virginia Department of Rail and Public improvements, totaling Transportation, RIAP operates in a similar manner to EDAP—funds are $1.31 million. appropriated to construct railroad tracks for new or substantially expanding industrial and commercial projects. Eligible localities can receive awards of Source: VEDP
13 up to $450,000 per fiscal year.44 Up to two-thirds of the grant payment can be unmatched; the remainder must be matched dollar-for-dollar by the recipient or from other non-program sources. Each application for funds must be accompanied by a resolution from the local governing body requesting an allocation.
9. Transportation Partnership Opportunity Fund (TPOF) Although VDOT also administers TPOF, the governor awards payments in the form of grants, revolving loans, or other financing tools and equity In FY 2010, one TPOF contributions. TPOF can only be granted to supplement activities grant was awarded to a business, totaling $3 associated with eligible transportation projects, which must meet the million. minimum criteria established in the GOF Guidelines. Additionally, projects must address the needs identified in the appropriate state, region or local Source: VEDP transportation plan.45 Once funded by TPOF and completed, transportation development projects become or remain public property.
10. Tobacco Region Opportunity Fund (TROF) Administered by the Tobacco Indemnification and Community Revitalization Commission, TROF provides performance-based grants at In FY 2010, twenty-five grants and loans from the Commission’s discretion to localities in the tobacco producing region TROF were provided to (thirty-four counties and seven cities located in Southside and businesses, totaling $4.86 million. Southwestern Virginia). TROF grants support job creation and capital investments associated with the establishment or expansion of a business.
Source: VEDP The grant amount varies based on local unemployment rate, prevailing wage rate, capital investment level, industry type, and other factors chosen by the Commission.46
14 III. EVALUATION OF JOB CREATION
A. Rationale
Economic impact assessments often ―enumerate outcomes and . . . assume that any new activities of assisted firms must be attributable to the economic development program.‖ 47 Although this study does not assess the impact that many other factors can exert on job creation numbers (e.g., natural business expansion due to increased sales), and thus cannot determine strict causation, such enumeration can provide general (although limited) insight into the effectiveness of development grants. One method of evaluation revealing whether economic development grants led to job creation is a comparison of the number of jobs projected by each company and the number of jobs directly created. B In this case, effectiveness was measured according to the following categories: 1. Businesses exceeding projections within five years of a project’s announcement 2. Businesses meeting projections within five years 3. Businesses failing to meet projections but still created jobs 4. Businesses failing to meet projections and did not create any jobs
A thorough analysis of the results follows, which includes an examination of the number and types of businesses that fall into each category.
B. Methodology
A comparison of the projected number of jobs and the actual number of jobs created by a business resulted from the comparison of two unique databases developed for this report: one containing job projections (―Job Projections database‖) and another containing the number of jobs directly created (―Job Creation database‖). Both will be described in detail below. Examining the performance of companies in meeting job creation projections provides a useful measure of program effectiveness based upon the most fundamental intent of the grant programs – to provide employment opportunities for citizens of the Commonwealth.
B Saved jobs were included in the total job projection and creation numbers because VDBA includes them when making these calculations. Additionally, by saving jobs, the state ensures that employment and tax revenues remain constant. All further mention of job projections and creation throughout the report will implicitly include the number of jobs saved as well.
15 1. Job Projections Database This database included information from press releases publicly announcing development projects from the Office of Governor between January 1999 and December 2007.48 For each project announcement, the following information was recorded: (1) the name of the grant recipient and the location of the economic development, (2) the number of jobs projected to be created or saved, (3) the value of each grant awarded or pledged, and (4) a description of the industry in which the jobs would be created. The press releases covered 497 project announcements between January 1999 and December 2007, the years for which job creation data allowed an accurate assessment of both short-term (one to two years following the announcement) and long-term (three to five years following the announcement) job creation.C From this set of projects, seven were eliminated because they were awarded to state agencies, did not project job creation, or were not promised grant funds.D Thus, the final database contained 490 projects.
2. Job Creation Database Three data sources were used to estimate the number of jobs created or saved. The initial data source for this study came from the National Establishment Time Series (NETS) database, which annually tracks the number of employees at each business location in Virginia. 49 Approximately half of development projects from the Job Projection Database remained without employment information after importing the data, due primarily to an inability to find businesses in the NETS database. Such gaps indicate the presence of a name discrepancy between the press release and the NETS data or the failure of projects promising to create business locations in Virginia. Other explanations include companies for which multiple business locations matched the location given in the press releases, and subsidiaries or company mergers that were listed under alternative names in NETS. All possible discrepancies were resolved but more than twenty percent of projects were still without job creation information. Data from VDBA was later incorporated; the agency provided information on job creation, grant expenditures, and hourly
C Dropping 2008-2011 projects from this evaluation allows more accurate comparison among projects incorporating both short-term and long-term effects. Projects from 2008 may have (at most) four full years of employment data, depending on the month in which the project was announced – projects announced later have even fewer full years of employment data. By standardizing the length of time encompassed by long-term effects to five years, direct comparisons between job creation numbers become more reliable. D These projects are: eToys Inc. (August 23, 2000), DuPont (April 23, 2001), Leica Microsystems (April 25, 2001), Port of Virginia (October 18, 2001), VEDP (May 27, 2003), Merck & Co., Inc. (February 4, 2005), and Indage Group (April 25, 2007).
16 wages on companies for which VDBA has records of VJIP training reimbursements. The final source of job creation data came from the Secretary of Commerce and Trade (SCT), which provided employment numbers for projects receiving GOF grants.E To correct for the problem of overlapping and contradictory data, the three data sources were ranked to fill in job creation information: (1) VDBA (271 projects); (2) SCT (30 projects); and (3) NETS (87 projects). VDBA data was seen as most reliable, since the information came directly from the companies and was verified by the state. The same was true of SCT data, although these reports did not divide job creation between the short- and long-term.F NETS data often differed from the state data; however, the annual employment numbers provided a more detailed picture of employment trends.G Using this system filled in job creation information for 388 of the 490 projects from the Job Projection database. To correct for the problem of missing data for the remaining twenty-one percent of projects, a bracketing system was applied (lower bound of job creation, mid-level, and upper bound) to estimate job creation. Under the lower bound estimate – the worst-case scenario – the condition was imposed that none of the remaining development projects created jobs. Under the upper bound estimate – the best-case scenario – the condition was imposed that job projections were fully met for each development project. Finally, under the mid-level estimate, the number of jobs created for a particular project was assumed to be proportionate to the annual average
E SCT data came from the Secretary’s annual Reports on Business Incentives, 2004-2010. Each report tracks the performance of GOF funded development projects based on job projections and job creation, in addition to tracking grant promises, average salaries, and company performance on capital investment. The reports also included information on projects receiving VIP grants; these employment numbers were not incorporated due to the inconsistent timeframe over which job creation was measured. For example, Nylstar announced a development project in April 2000 – the SCT data measures job creation from this point until fiscal year 2010, a nine-year timeframe. On the other hand, Hershey Chocolate announced a development project in April 2007 – the SCT data measures job creation from this point until fiscal year 2010, a three-year timeframe. To continue to maintain reliable comparability between job creation numbers, this information was not included in the database. F These job creation numbers were classified as long-term, since the SCT reports were issued more than two years after the development projects had been announced. G There is a noteworthy discrepancy between VDBA and NETS data on employment. VDBA data and NETS data were both available for a total of 181 projects, associated with 43,113 job projections. Aggregating job creation numbers among all these projects, VDBA data shows the creation of 33,772 jobs within five years, while only 11,192 jobs were created according to NETS. Consequently, we calculated the ratio of job projections to job creation per project to be .78 from VDBA data and .26 from NETS data. By excluding outliers (where the job creation to projection ratio is greater than 10 – over 1,000%), the average ratio becomes 0.97 from VDBA data and 0.44 from NETS. Although this gap is still substantial, we placed a floor (0 jobs) on the lowest employment values that NETS provided for a project. Because NETS recorded negative employment values indicating lost jobs, and VDBA only provided non-negative employment values, such action standardized the two data sources according to the state agency data. Consequently, the two ratios of job creation to projections converge slightly: the ratio becomes 0.51 from NETS (after excluding outliers), while the VDBA ratio remains 0.97.
17 ratio of the number of jobs created and the number of jobs projected. Significant outliers were dropped to maintain the most accurate ratio possible (see Table III-A).
Table III-A: Average Annual Ratios of Job Creation Year of Project Ratio of Job Projections to Announcement Job Creation 1999 0.655 2000a 0.958 2001 0.854 2002 0.840 2003 0.867 2004 0.636 2005b 0.922 2006c 0.687 2007d 0.637
a. Goodyear dropped; ratio was an extreme outlier (10.58) b. STIHL Incorporated dropped; ratio was an extreme outlier (6.667) c. MillerCoors dropped; ratio was an extreme outlier (20.25) d. Progress Printing dropped; ratio was an extreme outlier (15.00)
Source: Authors’ calculations based on VDBA, SCT, and NETS data.
Examining these ratios reveals that both the lower and upper bounds may be too conservative. It is highly unlikely that all projects for which VDBA, SCT, or NETS did not provide data created no jobs. Internet searches revealed that several businesses are currently operating at the location in which they promised to develop in the public project announcement, even though the number of created jobs cannot concretely be determined. In the same vein, the high assumption does not account for the possibility that companies may exceed performance measures, which occurred in 112 out of 490 projects. By using conservative brackets on both ends, however, the confidence in the findings of this study is increased, particularly with respect to state-level tax revenues (discussed in Section IV.B).
C. Job Creation
By comparing job creation projections with actual performance, it can be determined whether each business created enough jobs to meet the performance metrics provided in the
18 public announcement of the development project. This evaluation was conducted both without and with the bracketing system to ensure that results remained consistent across scenarios.
1. Evaluation Conducted on Original Data Job creation projections were not met by businesses that announced development projects within the nine year timeframe of this study (see Figure III-A). Performance ranged decidedly among cohorts – projects announced during 2001 had the lowest overall rate of job creation (29.78%), while projects announced during 2005 had the highest overall rate of job creation (88.97%).
Figure III-A: Jobs Comparison
20,000 18,000 16,000 14,000 12,000 10,000 8,000
Number JobsNumber of 6,000 4,000 2,000 - Year of Announcement 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total job projections 12,75 11,96 13,24 9,624 11,60 17,65 9,019 4,637 5,016 Total job creation 5,005 10,54 3,943 6,467 8,604 10,07 8,024 3,171 3,008
Source: VDBA, SCT, and NETS data.
Consequently, within no cohort did the job creation of over-performing companies fully compensate for under-performing or non-performing companies—a far different conclusion from JLARC’s 2002 report. A small number of individual projects were often responsible for the drastic difference between projections and job creation – see Appendix 2 for project-specific information among cohorts. Additionally, examining the number of development projects within each of the four categories described in the introduction to this section reveals both positive outcomes and areas for improvement. Nearly thirty-five percent of projects exceeded initial job creation projections within five years of the development project announcement (see Table III-B).
19 Table III-B: Job Creation Performance within Five Years of Project Announcement
Year of Failed to Meet Projections Exceeded Achieved Project Created No TOTAL Projections Projections Created Jobs Announcement Jobs 1999 8 0 23 4 35 2000 15 1 21 3 40 2001 9 2 16 3 30 2002 13 3 26 7 49 2003 23 3 25 7 58 2004 11 2 39 5 57 2005 15 7 24 5 51 2006 8 2 18 7 35 2007 10 0 15 8 33 Total 112 20 207 49 388
Source: Press releases from Office of the Governor; VDBA, SCT, and NETS data.
However, nearly two-thirds of development projects failed to achieve job creation projections. One positive finding is that a significant majority (81%) of these unsuccessful development projects did create jobs, even if not the number initially anticipated. On the other hand, nearly fifty projects failed to create any jobs. Interviews conducted with several regional economic development officials for the four case studies included in this report (see Section VI) may provide limited insight into whether a stricter screening process is needed. Although beyond the scope of this study, a more detailed examination of all forty-nine projects that did not manifest may reveal whether a re-evaluation of existing screening procedures for grant applicants is necessary.
2. Evaluation Conducted under Bracketing System Applying the bracketing system revealed similar results; aggregate job projections were not met by any cohort under any scenario (see Table III-C). Average job creation across cohorts ranged from 47.68% under the lower bound estimate to 77.59% under the upper bound estimate. There was a wide disparity among cohorts in terms of job creation performance, which remained relatively consistent across the different scenarios. Under the lower bound estimate, job creation ranged from a low of 24.30% among cohorts from 2001 to a high of 66.81% among 2003 cohorts. These percentages increased significantly under the mid-level estimate. The lowest percentage of job creation occurred among the 1999 cohorts (46.40%), while the highest
20 occurred among the 2000 cohorts (91.69%). The upper bound estimate reveals similar findings, although the lowest percentage of job creation is even lower than under the mid-level estimate, occurring among 2001 cohorts (44.53%). The cohorts in 2006 achieve the highest percentage of job creation among those in the upper bound estimate (96.29%).
Table III-C: Aggregate Job Creation
Year of Job Creation Job Project Projections Lower % Jobs Mid- % Jobs Upper % Jobs Announcement Bound Created Level Created Bound Created 1999 18,450 5,005 27.13% 8,561 46.40% 10,731 58.16% 2000 22,419 10,544 47.03% 20,555 91.69% 21,129 94.25% 2001 16,226 3,943 24.30% 6,492 40.01% 7,226 44.53% 2002 12,840 6,467 50.37% 9,168 71.4% 10,616 82.68% 2003 12,878 8,604 66.81% 9,704 75.35% 10,561 82.01% 2004 25,260 10,079 39.90% 14,918 59.06% 18,631 73.76% 2005 12,279 8,024 65.35% 11,030 89.83% 11,560 94.14% 2006 5,769 3,171 54.97% 3,949 68.45% 5,555 96.29% 2007 5,646 3,008 53.28% 3,409 60.38% 4,091 72.46% TOTALa 131,767 58,845 47.68% 87,786 66.95% 100,100 77.59% a. Value for the percentage of jobs created represents an annual average under each scenario.
Source: Job projections from Office of the Governor. Job creation numbers from VDBA, SCT, NETS, and authors’ calculations.
Moreover, a substantial shortfall of jobs exists under each scenario. The lower bound estimate yields a shortfall of approximately 73,000 jobs, which decreases to approximately 44,000 jobs under the mid-level estimate. Even under the upper bound estimate, however, a shortfall of more than 32,000 jobs exists. This finding implies that over-performing companies did not compensate for the under-performing companies as they did in the 2002 report. A more detailed evaluation of the extent to which businesses met performance metrics concerning job creation follows. Companies receive grant money with the understanding that they will meet 100% of agreed-upon performance measures, including the number of new or saved jobs. A more refined analysis of the four categories measuring grant effectiveness under the bracketing system provides additional information about company performance (see Table III-D).
21 Table III-D: Job Creation Performance within Five Years of Project Announcement
(Development Projects Meeting Less Than 75% of Job Projections)
Percentage of Total Jobs Total Jobs Number of Estimate Job Creation Projected Created Projects 0.00% 49,688 0 151 0.01 – 10.00% 9,032 618 27 10.01 – 20.00% 7,950 1,227 15 20.01 – 30.00% 6,546 1,635 21 Lower Bound 30.01 – 40.00% 4,459 1,547 23 40.01 – 50.00% 2,715 1,165 18 50.01 – 60.00% 7,747 4,360 30 60.01 – 70.00% 7,717 5,079 29 70.01 – 74.99% 2,287 1,632 6 TOTAL 320 0.00% 13,708 0 49 0.01 – 10.00% 9,032 618 27 10.01 – 20.00% 7,950 1,227 15 20.01 – 30.00% 6,546 1,635 21 Mid-Level 30.01 – 40.00% 4,459 1,547 23 40.01 – 50.00% 2,715 1,165 18 50.01 – 60.00% 7,747 4,360 30 60.01 – 70.00% 22,517 14,653 68 70.01 – 74.99% 2,287 1,632 6 TOTAL 257 0.00% 13,708 0 49 0.01 – 10.00% 9,032 618 27 10.01 – 20.00% 7,950 1,227 15 20.01 – 30.00% 6,546 1,635 21 Upper Bound 30.01 – 40.00% 4,459 1,547 23 40.01 – 50.00% 2,715 1,165 18 50.01 – 60.00% 7,747 4,360 30 60.01 – 70.00% 7,717 5,079 29 70.01 – 74.99% 2,287 1,632 6 TOTAL 218
Source: VDBA, SCT, NETS, and authors’ calculations.
Under all three estimates, a substantial number of companies failed to reach the standard threshold to avoid grant re-payment (see Appendix 1 for additional information on grant clawback policies for each program). Under the lower bound estimate, this number was inflated due to the number of development projects for which no concrete employment information could be obtained – the 151 projects in this category represents nearly half of all projects that failed to reach the seventy-five percent threshold. The remaining categories contain a fairly even
22 distribution of projects, with two exceptions: projects creating between sixty and seventy percent of projected jobs under the mid-level estimate and projects creating between seventy and seventy-five percent under all estimates. The former can be explained by the average annual ratios calculated for the 1999, 2004, 2006, and 2007 cohorts (see Table III-A). The latter is an unexpected finding – a larger clustering of projects below seventy-five percent would be expected, as businesses that did not meet projections attempt to avoid the clawback of grant funds. A more positive finding concerns the number of projects which met the repayment threshold (see Table III-E).
Table III-E: Job Creation Performance within Five Years of Project Announcement
(Development Projects Meeting Between 75% and 99.99% of Job Projections)
Percentage of Total Jobs Total Jobs Number of Estimate Job Creation Promised Created Projects 75.00 – 80.00% 5,409 4,076 12 Lower Bound 80.01 – 90.00% 6,743 5,678 16 90.01 – 99.99% 2195 2,129 10 TOTAL 38 75.00 – 80.00% 5,409 4,281 12 Mid-Level 80.01 – 90.00% 13,613 11,489 49 90.01 – 99.99% 15,905 15,146 38 TOTAL 99 75.00 – 80.00% 5,409 4,281 12 Upper Bound 80.01 – 90.00% 6,143 5,678 16 90.01 – 99.99% 2,195 2,129 10 TOTAL 38
Source: VDBA, SCT, NETS, and authors’ calculations.
Approximately forty projects met this threshold under the lower and upper bound estimates – this number increases to nearly one hundred under the mid-level estimates. Of note, however, is the increased number of projects clustered above the seventy-five percent threshold (twelve) compared with the number clustered below (six). Such a finding may substantiate the above hypothesis and show that businesses are more successful at reaching such a threshold when job creation approaches seventy-five percent. Twenty projects met job creation projections under both the lower bound and mid-level estimates (see Table III-F).
23 Table III-F: Job Creation Performance within Five Years of Project Announcement
(Development Projects Meeting or Exceeding Job Creation Projections)
Percentage of Total Jobs Total Jobs Number of Estimate Job Creation Promised Created Projects 100% 3,714 3,714 20 Lower Bound over 100% 15,565 25,780 112 TOTAL 132 100% 3,714 3,714 20 Mid-Level over 100% 15,565 25,780 112 TOTAL 132 100% 39,694 39,694 122 Upper Bound over 100% 15,565 25,780 112 TOTAL 234
Source: VDBA, SCT, NETS, and authors’ calculations.
The number of projects meeting this threshold under the upper level estimate is much higher (112 projects) due to the condition of full job creation imposed on this scenario. A very positive finding concerns the number of development projects exceeding initial Number of projects exceeding job creation projections, however. Approximately twenty-three percent of all projections: 112 development projects announced between 1999 and 2007 created more jobs than initially anticipated, resulting in an additional 10,000 jobs Number of additional jobs created: 10,215 state-wide. While beyond the scope of this study, the state would benefit from further analysis of the types of development projects that are high performing. The results of such an analysis would allow the state to better target grants to businesses that will provide added value in the form of additional jobs and tax revenues.
D. Job Creation by Sector
Examining sector-level output may provide beneficial guidelines as to which sectors generally meet (or exceed) performance measurements and which offer the highest-quality jobs for localities. These factors are important to consider when evaluating the effectiveness of economic development grants. Additionally, knowledge about sector performance may help state officials to target grants towards companies that are more likely to be successful, however that term is defined.
24 Ten sectors exceeded total job creation projections for the sector based on mid-level estimates (see Appendix 3, Table 3A). These sectors represent seventy-eight development projects projecting the creation of 8,645 jobs and directly creating 10,530 jobs. Several of these sectors had a low number of projects (between one and three), indicating that a few over- performing companies positively impacted the high ratio of job creation. Half of the sectors, however, contained enough projects to be able to assert, with some degree of certainty, that they represent a positive investment for the state; manufacturing is well-represented among these high performers.
1. Performance of Manufacturing Sectors Transportation Equipment Manufacturing (sector 336) contained the highest number of development projects which exceeded 200% of job creation projections Highest Performing Development Project – eight projects that originally projected 739 jobs but created 2,043 jobs (Ratio of Projection to Creation) (see Appendix 3, Table 3F). Plastics and Rubber Products Manufacturing (sector 326) contained six projects that also met this MillerCoors (2006) threshold of job creation. The performance of one business heavily
Jobs Projected: 8 influenced this outcome – Essel Propack America undertook four development projects that anticipated creating 206 jobs but delivered Jobs Created: 162 515 jobs.
Ratio: 20.25 The two most successful development projects over the nine year timeframe of this study in terms of the ratio of projections to creation and the highest number of net jobs exceeding projections belonged to manufacturing sectors (see Highest Performing Development Project Appendix 3, Tables 3F-1 and 3F-2). The former belongs to Beverage and (Most Net Jobs Exceeding Projections) Tobacco Product Manufacturing (sector 312). MillerCoors (then Coors Brewing) announced a development project in 2006 projecting the STIHL, Inc. (2006) creation of eight jobs – within five years, 162 had been created. The
Jobs Projected: 150 latter belongs to Machinery Manufacturing (sector 333). In 2005, STIHL, Inc. projected the creation of 150 jobs through the course of Jobs Created: 1,000 their development project. Job creation reached 1,000 jobs within five
Net Difference: 850 years (see Section VI.B for a detailed case study of the 2005 STIHL development project).
25 Such successes are positive for localities due to increased employment and economic activity, and the state also benefits from increased tax revenues that are not counterbalanced by additional grant expenditures. These high-performing projects offset to some degree the projects that significantly underperformed or failed to create jobs; as discussed in Sections III.C.1 and III.C.2, however, these projects could not fully compensate for the shortfalls in job creation.
2. Performance of White Collar Sectors White collar sectors had the highest overall projections for job Sector with Highest Net Job Creation creation, although their performances were often not as successful as that of the manufacturing sectors discussed above. Development projects Professional, Scientific, and Technical Services initiated by businesses in Professional, Scientific, and Technical Services (sector 541) projected overall job creation of 24,625 jobs (see Appendix Jobs Projected: 24,625 3, Table 3C). Under the lower bound estimate, these projects created
Jobs Created, Lower approximately 10,000 jobs – the highest net number of jobs among any Bound: 9,927 sector, even though this figure represents a forty percent job creation
Jobs Created, Upper rate. The upper bound reveals a more positive outcome: an eighty-one Bound:percent 19,993 job creation rate yields approximately 20,000 jobs under this scenario. Additionally, these jobs are among the highest-paying with an average salary of $37.57 (see Appendix 3, Table
G).H Telecommunications (sector 517) projected the second highest job creation among all sectors - 12,718 jobs. The ratio of job creation was low, however, ranging from seventeen percent under the lower bound to twenty-five percent under the upper bound. The poor performance of this sector can be directly attributed to one development project, however: WorldCom projected the creation of 8,000 jobs that never materialized due to the fraud-induced bankruptcy of the company shortly after the December 2001 announcement of the development project.
3. Average Salary by Sector The state currently takes the average hourly wage of jobs created by development projects into account when choosing grant recipients.I An analysis of the average hourly wage
H Expenditures, revenues, and hourly wages are calculated in 2008 dollars throughout the report. I See individual program guidelines for eligibility requirements.
26 associated with each sector offers insight into the sectors that perform well in this aspect (see Appendix 3, Table 3G). This analysis included 284 projects (representing forty-six out of the fifty-nine sectors in this study) for which information on hourly wages was available.J The average hourly wage for each sector was calculated based on project- Sectors with Highest Average Hourly Wages specific information and then creating a weighted average for each sector.K Beverage & Tobacco: $54.26 Of the forty-six sectors included in this analysis, six pay
Accommodation: $43.29 average hourly wages that provide an annual salary higher than the state-wide median income of $61,064 in 2008.50 The average hourly Professional, Scientific, and wages of these sectors range from $31.48 for Textile Product Mills Technical: $37.57 (sector 314) to a high of $54.26 for Beverage and Tobacco Product Financial Investment: $36.61 Manufacturing (sector 312). These six sectors had seventy-seven development projects that anticipated the creation of approximately Insurance: $32.76 28,000 jobs; applying the bracketing system estimates the creation of betweenTextile Mills: 13,000 $31.48 and 24,000 jobs. It is important to note that the average hourly wage of the two highest-paying sectors is
driven by two development projects: Philip Morris in Beverage and Sectors with Lowest Average Hourly Wages Tobacco Product Manufacturing (sector 312), and Meristar Hospitality in Accommodation (sector 721). The average hourly
Non-Store Retailers: $9.05 wage at Philip Morris was $77.81 across 500 created jobs, increasing
Administrative & Support the average salary of that sector significantly. Additionally, Meristar Services: $9.12 was the only project in the Accommodation sector; the company paid an average hourly wage of $43.29. In contrast, the average hourly Paper Manufacturing: $10.27 wage ($37.57) for the third highest paying sector, Professional, Food & Beverage Stores: Scientific, & Technical Services (sector 541), was based on the $10.33 hourly wages of 10,000 jobs across 59 development projects and is
J VDBA data provided hourly wage information for 240 projects. SCT provided salary information for twenty-four additional projects, which was converted into hourly wages. In some sectors, no companies sought reimbursement, so there is no estimate of an average salary. K The weighted average salary was created according to the following steps: (1) multiplying the average hourly wage of each project by the total number of jobs created by that project (from VDBA, NETS, and SCT data); (2) summing the average hourly wage of each project across the sector; and (3) dividing that number by the total number of jobs created the companies for which hourly wage information existed in the sector.
27 thus a more reliable estimate. The five sectors with lower average hourly wages (ranging from $9.05 to $10.53) also created fewer jobs compared to original job projections. Thirty-nine projects among these sectors announced the expected creation of approximately 14,300 jobs. Between approximately 5,000 and 10,500 jobs were created under the lower and upper bound estimates. Thus, it appears that the higher-paying sectors tend to have higher job creation performance than their lower-paying counterparts. This finding offers one area in which the state can seek to improve strategies concerning development grants. Although the state seeks to attract development projects that create higher-paying jobs, a slight disconnect currently exists between outcomes and policy as evidenced by the above results. A more detailed analysis of the location of the development projects paying lower wages may reveal that they are located in southwestern Virginia. As encouraging economic development in this region is a primary consideration for the state (and thus high paying wages becomes a secondary consideration), these projects may require additional assistance from the state in order to successfully perform. For example, it may be that additional time is needed to meet performance metrics. Additionally, efforts to target businesses within these higher-paying and -performing sectors should be increased.
4. Sector Economic Multipliers A brief examination of the economic multipliers associated with each sector also provides state officials with useful information to consider when weighing Sector with Highest Economic Multiplier between potential grant recipients (see Appendix 3, Table 3E). Sectors with higher multipliers provide additional benefits for the Beverage & Tobacco Mfg state in terms of jobs created through indirect and induced effects. Higher total job creation leads to higher state and local tax revenues Multiplier: 5.29 in the form of income taxes, sales taxes, and other related taxes. Sectors with Lowest Economic Many of these sectors with higher multipliers are manufacturing Multiplier sectors, which makes sense intuitively. Manufacturing firms require Nonmetallic Mineral Product inputs from many different industries, which in turn create additional Manufacturing; Store Retailers jobs. For example, the multiplier for the Beverage and Tobacco
Multiplier: 1.16 Product Manufacturing sector (312) is 5.29, which indicates that for every job directly created by a business in that sector, another 4.29
jobs are created throughout the local economy (in this case, the state of Virginia) through indirect
28 and induced effects. Service-oriented industries, in contrast, rely heavily on the human capital of their employees to provide a product to customers – fewer ancillary jobs are created as a result. Consequently, Store Retailers (sector 453) have the lowest economic multiplier among sectors with development projects examined in this study. Nonmetallic Mineral Product Manufacturing also shares this low multiplier, although it represents the only manufacturing sector with a multiplier below 1.5.
29 IV. STATE-LEVEL GRANT EXPENDITURES & TAX REVENUES
A. State-Level Grant Expenditures
1. Aggregate Grant Awards Many grant awards are provided upfront to either the locality, through programs such as GOF or TROF, or the business itself, through programs such as VIP (see Appendix 1). The amount awarded through these programs was provided by the Office of the Governor and incorporated in the Job Projections database.L However, grants requiring reimbursement, such as VJIP, and those awarded from smaller grant programs, such as RIAP or EDAP, were generally not quantified. The former issue was largely resolved through receipt of the VDBA data. The state agency provided information on initial budget projections for the workforce training programs, as well as the final reimbursement amount for many of the projects that had been pledged VJIP funds. Expenditures related to the remaining projects without VJIP information, as well as the smaller unquantified grants, will be discussed below in Section IV.A.2.a). Within the nine year timeframe of this study, there existed substantial variation in annual grant awards. These ranged from a high of $64.76 million in 2003 to a low of $16.85 million in 2007 (see Table IV-A).
Table IV-A: Aggregate Grant Awards
Year of Project Quantified Grant Awards Announcement (in millions) 1999 $28.98 2000 $41.34 2001 $34.61 2002 $30.76 2003 $64.76 2004 $39.02 2005 $47.92 2006 $42.08 2007 $16.85 TOTAL $346.32
Note: Dollar amounts adjusted to 2008 USD.
Source: Grant projections are from the Office of the Governor and VDBA budget estimates for VJIP grants.
L In addition to GOF, TROF, and VIP awards, as well as certain VJIP pledges, other quantifiable grants between 1999 and 2007 include five RIAP grants.
30
A more detailed analysis of grant awards and pledges according to projects and sectors will reveal more information about the industries that are awarded the highest number of grants and the most grant money. a) Project-Level Analysis of Grant Awards Only three development projects announced between 1999 and 2007 were awarded incentive grants totaling more than $10 million. Philip Morris received the largest total grant award over this timeframe for a 2003 development project in Henrico County - $3 million in GOF grant money and $25 million in VIP grants. The company was also the recipient of another significant payment in 2005 for a development project in the City of Richmond – a $3 million GOF grant and $12 million in VIP funds. In 2008 dollars, grant payments to the tobacco manufacturer totaled $49.30 million. Job creation for the 2003 project reached 500 within five years, while the 2005 project created 450 jobs within five years – a 100% job creation rate for the two projects combined. The other substantial grant award during this timeframe went to WorldCom, which was pledged $11 million in VIP fund ($13.37 million in 2008 USD) in return for job creation projections of 8,000 jobs. As discussed in Section III.D.2, however, the WorldCom development project did not materialize. b) Sector-Level Analysis of Grant Awards The sector projecting the highest number of jobs created – Professional, Scientific, and Technical Services (sector 541) – also received the highest total amount of grant awards and pledges: $45.42 million (see Appendix 3, Table 3H). The sector also had the highest number of development projects (fifty-seven) that received grant funds, however, resulting in an average grant of $0.80 million per-project. Transportation Equipment Manufacturing (sector 336) had the second highest number of development projects that received grant funds: thirty-one projects received $23.83 million. As with Professional, Scientific, and Technical Services, however, average per-project awards and pledges were low ($0.77 million). Large aggregate grant awards and pledges were also given to several manufacturing sectors, which comprised the next five highest recipient sectors. The 2003 Philip Morris grant awards, discussed above, significantly impacted the overall total of the eight development projects belonging to the Beverage and Tobacco Product Manufacturing sector (312). With the Philip Morris grants factored in, the per-project average of the sector is $4.82 million, the highest
31 per-project average of any sector; without the grants, the per-project average drops to $1.48 million, which is still the sixth highest average among all sectors. Telecommunications (sector 517) was also impacted by the WorldCom grant, discussed above. The sector received a total of $19.44 million, only $6.07 million of which went to thirteen other development projects initiated by companies in the sector. The substantial impact can be seen in the drastic decrease in per- project awards: $0.47 million without the WorldCom grant, compared to $1.39 million with the grant included.
2. Aggregate Grant Expenditures a) Methodology for Calculating Expenditures To estimate state expenditures on grant payments for all 490 development projects, a formula was developed to predict total grant payments a project would receive given the performance of the business in terms of job creation.M A positive relationship exists between the proportion of projected jobs that were created and the proportion of grant money the state provides a development project, which is reflected in the formula for estimating grant expenditures:N
, i = project 1, 2, …, 490
Where the formula predicted a ratio greater than one of grant payments to grant promises (in the case of projects that over-performed), estimated grant payments were limited to the amount of the initial grant promises. The formula was applied across all projects within the lower bound, mid-level, and upper bound scenarios. Within the nine-year timeframe of this study, grant payments (based on the quantified awards and pledges discussed in the previous section) fell between $204.27 million and $234.93 million (see Table IV-B).
M This formula was developed collaboratively with JLARC. N ―Grant payment‖ represents all quantified grants (except VJIP reimbursements) received by a particular project. ―Grant Awards and Pledges‖ represents the total amount of quantified grants a project was promised. ―Jobs Created‖ indicates the total number of jobs created by a project. ―Job Creation Projections‖ indicates the total number of jobs a project promised to save or create.
32 Table IV-B: Aggregate Grant Expenditures for Quantified Grants
Year of Project Lower Bound Mid-Level Upper Bound Announcement (in millions) (in millions) (in millions) 1999 $11.84 $15.24 $17.03 2000 $28.21 $35.07 $35.37 2001 $11.69 $14.86 $15.40 2002 $13.62 $18.42 $19.33 2003 $57.63 $58.61 $58.76 2004 $19.19 $21.80 $22.75 2005 $32.00 $34.31 $34.51 2006 $14.05 $15.79 $16.58 2007 $15.11 $15.17 $15.21 TOTAL $204.27 $229.25 $234.93
Note: Dollar amounts have been adjusted to 2008 USD. Source: Grant expenditures are from VDBA data and authors’ calculations.
Thirty-one projects remained without a VJIP reimbursement amount, however; these were projects for which data on employment had not been obtained. Calculating an average cost of workforce training per employee within a sector allowed the estimation of VJIP reimbursements within the bracketing system.O Estimated VJIP reimbursements totaled $20.23 million under the lower bound, $24.13 million under the mid-level, and $25.36 million under the upper bound estimate. Additionally, twenty-three grants awarded under RIAP and twenty grants awarded under EDAP were not quantified in the development project announcements. Average per-project expenditures were calculated using data from the Secretary of Commerce and Trade’s annual Report on Business Incentives.51P As a result, unquantified EDAP awards totaled an estimated $7.1 million over the nine year timeframe of this study, while unquantified RIAP
O A sector-level estimate was generated due to the different training needs among sectors, which would impact the cost of providing these services. The 271 projects for which VDBA provided workforce training reimbursement information were sorted by sector; the total reimbursements for each sector were then summed and divided by the number of jobs associated with the development projects in a sector to create a per-job cost of reimbursement. For the projects without VDBA reimbursement information, the applicable sector per-job cost of reimbursement was multiplied by the lower bound, mid-level, and upper bound estimates to calculate the VJIP expenditure per project. Project estimates were then summed to create a total estimate of unquantified VJIP reimbursement. P The average per-project award was calculated using a four year average of awards granted between fiscal years 2006 and 2009. Using this timeframe (which included periods of both recession and expansion) provided a more accurate assessment of the average grant awarded from each program. This method produced an average award of $357,437 for EDAP grants and $350,747 for RIAP grants.
33 awards totaled an estimated $8.1 million. Adding the estimated VJIP, RIAP, and EDAP awards yields unquantified grant expenditures ranging between $35.45 million under the lower bound and $40.58 million under the upper bound. Consequently, estimated aggregate grant expenditures are between $238.79 million under the lower bound and $275.51 million under the upper bound.
Table IV-C: Aggregate Grant Expenditures
Unquantified VJIP Total Grant Expenditures Quantified Expenditures Unquantified Reimbursements Year of (in millions) EDAP / RIAP (in millions) Project Lower Mid-Level Upper Expenditures Lower Mid- Upper Lower Mid- Upper Announcement Bound Bound (in millions) Bound Level Bound Bound Level Bound
1999 $11.84 $15.24 $17.03 $1.42 $2.31 $2.68 $2.78 $15.57 $19.34 $21.23 2000 $28.21 $35.07 $35.37 $2.48 $6.36 $7.35 $7.43 $37.05 $44.90 $45.28 2001 $11.69 $14.86 $15.40 $0.36 $1.30 $2.35 $2.92 $13.35 $17.57 $18.68
2002 $13.62 $18.42 $19.33 $2.13 $3.86 $3.88 $3.88 $19.61 $24.43 $25.34
2003 $57.63 $58.61 $58.76 $2.13 $2.72 $2.98 $3.01 $62.48 $63.72 $63.90
2004 $19.19 $21.80 $22.75 $0.70 $0.96 $1.29 $1.39 $20.85 $23.79 $24.84
2005 $32.00 $34.31 $34.51 $2.47 $1.28 $1.62 $1.72 $35.75 $38.40 $38.70
2006 $14.05 $15.79 $16.58 $2.47 $1.05 $1.30 $1.40 $17.57 $19.56 $20.45
2007 $15.11 $15.17 $15.21 $1.05 $0.40 $0.68 $0.83 $16.56 $16.90 $17.09
TOTAL $204.27 $229.25 $234.93 $15.22 $20.23 $24.13 $25.36 $238.79 $268.61 $275.51
Note: Dollar amounts adjusted to 2008 USD.
Source: Grant projections are from the Office of the Governor and VDBA budget estimates for VJIP grants.
B. State-Level Tax Revenues
1. Using IMPLAN to Estimate State-Level Tax Revenues IMPLAN calculated economic output and estimated state-level tax revenues across each of the three jobs creation scenarios (lower bound, mid-level, and higher bound assumptions) following three steps. Before running the software, each project was assigned to an economic
34 sector corresponding with a NAICS code.Q IMPLAN did not offer NAICS codes for six sectors, so the corresponding IMPLAN sector code was assigned for these projects.R The first step was to total all employment within a sector that was created as a result of the development grants. This study relied upon Virginia-specific data for IMPLAN, which included the amount of economic activity associated with each job in a sector. IMPLAN estimated the direct effect by multiplying average economic activity by the number of jobs created (see Appendix 5). In the second step, the direct effect estimate from Step 1 was multiplied by an economic multiplier indicating the amount of total economic activity generated in a local economy (in this case, the economy of the state of Virginia) as a result of one job created by a development project (see Appendix 3, Table 3E for the multipliers used by IMPLAN).S IMPLAN then used this total economic output (summed across direct, indirect, and induced effects) when calculating tax revenues in the final step. a) Distinguishing between Local- and State-Level Tax Revenues IMPLAN reported state and local taxes without clearly distinguishing the two. Several of the tax categories generated by IMPLAN (see Table IV-D) could not be easily divided between state and local revenues. The following four-step method was used to calculate state-level tax revenues from the output provided by the software. T First, IMPLAN output categories were divided between state and local revenues according to the percentage of each tax that is collected by either the state or the locality. The percentages from this first step were then applied to the tax outputs generated by IMPLAN for six of the largest sectors (Wholesale Trade; Professional, Scientific, & Technical Services; Telecommunications; Administrative & Support Services; Merchant Wholesalers, Durable
Q Sector codes were assigned based on NAICS codes contained in the Virginia Announcements Database, maintained by VEDP at http://virginiascan.yesvirginia.org/ResourceCenter/AnnouncementsWeb.aspx. For development projects that were not listed in VAD, industry descriptions from the press released were used, in addition to matching the information with sector descriptions found on the NAICS website: http://www.naics.com/search.htm#naicsdrill. R The following NAICS sector codes were assigned with IMPLAN sector codes: NAICS sector 236 was coded as IMPLAN sector 37, NAICS sector 315 was coded as IMPLAN sector 86, NAICS sectors 423, 424, and 425 were coded as IMPLAN sector 319, NAICS sector 488 was coded as IMPLAN sector 338, and NAICS sector 711 was coded as IMPLAN sector 402. Conversion data for 2007 NAICS codes obtained from IMPLAN Bridges Tables: http://www.implan.com/V4/index.php?option=com_docman&task=doc_download&gid=110&Itemid=7. S The version of IMPLAN used contained 2009 data, which included the most current multipliers available. T This methodology was developed in conjunction with a project advisor.
35 Goods; and Transportation Equipment Manufacturing). This cross-section of manufacturing and white-collar sectors provided a representative sample among all sectors included in this study.
Table IV-D: State and Local Tax Revenues Impacted by Development Projects
Tax Revenue Assigned to State Corporate Profits Tax 100% Dividends 100% Indirect Bus Tax: Motor Vehicle License 100% Indirect Business Tax: Other Taxes 67% Indirect Business Tax: Property Tax 0% Indirect Business Tax: S/L Non-Taxes 67% Indirect Bus Tax: Sales Tax 80% Indirect Bus Tax: Severance Tax 100% Personal Tax: Income Tax 100% Personal Tax: Motor Vehicle License 100% Personal Tax: Non-Taxes (Fines & Fees) 67% Personal Tax: Other Tax 67% Personal Tax: Property Taxes 0% Note: Tax impact categories generated by IMPLAN. Percentage of revenue assigned to state derived from authors’ calculations in consultation with project advisor.
The third step was to calculate an average percentage of state tax revenue from the total state and local tax revenues generated by IMPLAN (55.6%) using the information from the second step. Finally, this average was multiplied by the total state and local tax revenues that IMPLAN generated for each sector to estimate aggregate state-level tax revenues.
2. Sector-Level Analysis of State-Level Tax Revenues A sector-level analysis was conducted for across all three scenarios (lower bound, mid- level, and higher bound estimates) using the tax revenues generated according to the four-step method explained above (see Appendix 4). Despite the failed WorldCom project, Telecommunications (sector 517) brought in the most state-level tax revenue under the lower bound estimate – approximately $137 million. Only two other sectors also exceeded $100 million in state-level tax revenues under this scenario: Professional, Scientific, and Technical Services (sector 541), which netted approximately $127 million in tax revenue for the state, and Merchant Wholesalers (sectors 423, 424, and 425),
36 which produced approximately $113 million in tax revenue. Seven sectors did not produce any tax revenue for the state under this scenario. Five sectors generated more than $100 million in tax revenue across both the mid-level and upper bound estimates. In addition to the aforementioned sectors, the Beverage and Tobacco Product Manufacturing sector (312) generated nearly $400 million in tax revenues under the upper bound estimate, while Management of Companies (sector 551) generated close to $180 million. These sectors together generated approximately sixty percent of the state-level tax revenue under the upper bound estimate.
C. Comparison of State-Level Expenditures and Revenues
State-level tax revenues were then aggregated across all sectors for each scenario to create a total estimate of tax revenues generated by the development projects announced between 1999 and 2007. Incorporating the estimates of grant expenditures for each scenario from Section IV.A.2.a permitted an analysis of total net revenues to the state (see Table IV-E).
Table IV-E: State-Level Expenditures and Revenues
Expenditures Revenues Net Revenue
Lower Bound $239.72 $460.52 $78.75 (in millions) Mid-Level $385.67 $1,081.08 $695.41 (in millions) Upper Bound $386.90 $1,110.45 $723.55 (in millions)
Note: Dollar amounts adjusted to 2008 USD.
Source: Expenditure estimates from Table IV-C. Revenue estimates from IMPLAN and adjusted by authors to remove local tax revenues.
The key finding from this analysis is that revenues outweigh expenditures under each scenario of job creation. Under the lower bound estimate, revenues exceed expenditures by approximately $79 million. Under the other estimates, net revenue is between $695 million and $724 million. It is important to note, however, that tax revenues were estimated only in the short term. IMPLAN generates tax revenues within a time period necessary for the direct, indirect, and induced effects to occur, between two and three years. Thus, the revenue estimates in this study are very conservative, as many of the jobs created by development projects exist, and remain, beyond the
37 short term. Consequently, the long-term direct, indirect, and induced effects on state-level tax revenues are likely much larger than those shown in the table. Such a conservative estimate of tax revenues provides further weight to the finding that economic development grants are revenue-enhancing for the state.
38 V. CYCLICAL AND COUNTER-CYCLICAL TRENDSU
Business and election cycles were examined in relation to job projections and grant promises, based on two differing hypotheses: 1. A counter-cyclical trend related to economic conditions: during recessions, job projections and the amount of grants awarded to development projects will increase to compensate for poor economic conditions. 2. A cyclical trend related to political conditions: leading up to state-wide political elections, there will be more grants and higher job projections to persuade voters that the economic policies of the governor’s party are effective.
A. Effect of Business and Election Cycles on Job Projections
A correlation exists between state-wide unemployment rates and monthly job creation projections, although it is largely cyclical and not counter-cyclical (see Figure V-A).
Figure V-A: Business and Election Cycle Trends Job Creation Projections
14,000 5
EXPANSION Rate VA Unemployment RECESSION EXPANSION 4.5 12,000 4 10,000 3.5 8,000 3 2.5 6,000 2 4,000 1.5 1
2,000
Job CreationJobProjections 0.5 0 0
Month Monthly Job Creation Projections Unemployment Rate State-Wide Election Cycle
Source: Dates of national business cycles from the National Bureau of Economic Research. Monthly unemployment rates from the Bureau of Labor Statistics’ Local Area Unemployment Statistics Program. Dates of state-wide elections from the Virginia State Board of Elections.
U This analysis is conducted only on projects for which VDBA, SCT, or NETS provided concrete employment information. Including projects for which employment information had been estimated under the bracketing system would have been inappropriate due to the cyclical nature of both the questions of interest and the manner in which the mid-level estimates were calculated - any distinguishable trends would have been obscured through such inclusion.
39 A noticeable decline in job projections occurred during the 2001 recession (see Table V-A for business cycles). Prior to March 2001, average monthly projections totaled approximately 970 jobs; between March and November 2001, monthly projections dropped to approximately 540 jobs. The end of the 2001 recession was accompanied by a significant spike in projections in December 2001, even though unemployment rates remained above four percent. During this period of expansion, monthly projections increased to approximately 1,270 jobs through the end of 2004. These findings provide support for a cyclical, and not counter-cyclical, hypothesis.
Table V-A: Business Cycles, 1999-2007 Timeframe Business Cycle January 1999 – March 2001 Expansion March 2001 – November 2001 Recession November 2001 – December 2007 Expansion December 2007 Recession
Source: National Bureau of Economic Research.
Of note is the decline in job projections beginning in 2005, even though the nation remained in a period of expansion and unemployment rates were decreasing. Monthly projections declined further in 2006 and 2007, however, as economic conditions worsened and unemployment rates began to rise. Such findings provide some support for the counter-cyclical hypothesis introduced at the beginning of this section. It may be that economic conditions proceeding the 2007-2009 recession were much worse than those leading up to the 2001 recession, which is not captured through monthly unemployment rates during this timeframe. Such conditions may impact the job projections of businesses looking to avoid grant clawback due to unsuccessful performance. A significant spike in job creation projections in October 2000 appeared to substantiate the second hypothesis introduced above. However, other substantial spikes in job creation projections occurred after elections (see Table V-B for election information): December 2001 and November 2004. Although only one of the November 2004 development projects was announced before the election, it is possible that officials were expecting to announce many of these projects prior to November 2nd.
40
Table V-B: State-Wide Election Cycles, 1999-2007
Election Date Contested Positions November 2000 President, Senate, House of Representatives November 2001 Governor, Lieutenant Governor, Attorney General November 2002 Senate, House of Representatives November 2004 President, House of Representatives November 2005 Governor, Lieutenant Governor, Attorney General November 2006 Senate, House of Representatives
Source: Virginia State Board of Elections.
B. Effect of Business and Election Cycles on Grant Awards
A strong relationship between state-wide unemployment rates and monthly grant promises exists (see Figure V-B).
Figure V-B: Business and Election Cycle Trends
Grant Awards
45 5 Rate VA Unemployment 40 EXPANSION RECESSION EXPANSION 4.5 35 4 30 3.5 25 3 2.5 20 2 15 1.5 10 1 5 0.5
0 0 Promised Promised Grants (inmillions)
Month Promised Grants (in millions) Unemployment Rate State-Wide Election Cycle
Source: Dates of national business cycles from the National Bureau of Economic Research Monthly unemployment rates from the Bureau of Labor Statistics’ Local Area Unemployment Statistics Program. Dates of state-wide elections from the Virginia State Board of Elections.
As unemployment rates increased, so did average monthly grant awards. Prior to the 2001 recession, the average monthly total was $2.75 million; during the recession, this amount dropped to $2.00 million. As the recession ended with a substantial increase in job projections, so too did it end with a spike in grant awards in December 2001. During the 2001-2007
41 expansion, grant awards increased dramatically. The average monthly award granted between December 2001 and December 2006 totaled nearly $4 million – almost double the monthly awards granted during the recession. Two development projects undertaken by Philip Morris during this time period were given substantial awards (discussed at length in Section IV.A.1.a)), which impacts the findings slightly. Removing these two projects still yields high average monthly awards, totaling $3.25 million. A significant flattening in grant awards began in 2007 (two years later than the impact on job projections) as unemployment rates again begin to rise. During the last year of project announcements included in this study, average monthly grant awards dropped below those of the 2001 recession, reaching a low of $1.41 million. An examination of the effect of state-wide election cycles on grant awards revealed no relationship. Major spikes in total monthly grant awards generally occurred one to four months after an election: December 2000, December 2001, March 2003, and February 2006. It is unlikely that these projects were intended to be announced prior to elections but took longer than expected to finalize, due to the length of time separating them from election dates.
42 VI. CASE STUDIES
A. Goodyear Automotive Service
On April 13, 2000, Governor Jim Gilmore announced investment in a new Goodyear maintenance training facility in the City of Danville. Goodyear is a global manufacturer of tires, transportation products, rubber chemicals and engineered products that originally located to Danville in 1966. The development project was awarded a $200,000 grant from GOF in exchange for the creation of fifty new jobs and capital investment of $50 million in an existing Danville manufacturing plant. Workforce training services would also be provided through VJIP.52 Danville typically concentrates its economic development efforts towards attracting the relocation or start-up of companies belonging to the plastics and polymer industries, such as Goodyear. Companies within these manufacturing industries create jobs which are labor- intensive, which is consistent with the skills of the city’s labor force. Local development officials expect high school graduates will gain employment and work experience through these companies, an additional benefit. 53 Although Goodyear was well-established in the city by 2000 due to its long-standing manufacturing facility, it had a proven performance record. Such a factor was not the only driving force in the city’s decision to assist the company’s expansion: Goodyear (the largest private employer in Danville) pays among the highest of industrial wages in the Dan River Region.54 Following the announcement of the development project in 2000, 529 new jobs were successfully created within two years – more than ten times the company’s original projection. 55 Goodyear currently employs a total of 2,250 people in its various Danville facilities.56 The city’s relationship with the company remains attune to the differing needs of the community and the local economic development strategy. Goodyear recently began development in Danville of a tire research laboratory, which cooperates with the Institute for Advanced Learning & Research (a regional learning and research center from Virginia Tech).57 Although local officials would like to assist Goodyear with further expansion of its manufacturing plant, the establishment of a research lab creates job opportunities for local residents with higher education. The development of such a facility would therefore provide long-term sustainable growth in Danville.
43 The Goodyear development project announced in 2000 was a success, for both the company and the locality. The company continued to be high-performing; this was aided by a lack of significant market changes that would affect production. Danville economic development officials continue to work actively to meet the company’s needs through the locality’s strengths, especially through the labor force and by providing additional workforce training services at the local level.
B. STIHL, Incorporated
On December 21, 2005, Governor Mark Warner announced the expansion of a manufacturing facility owned by STIHL, Inc. in Virginia Beach following international competition with Germany and Brazil for the development project. STIHL anticipated capital investment of $78.4 million and the creation of 150 new jobs in exchange for an award of $150,000 from GOF and workforce training services through VJIP.58 Virginia Beach targets specific industries and types of development through its economic policies, including high performance manufacturing, defense contractors, headquarters locations, biomedical companies, research facilities, and professional services.59 In addition to substantial capital investment, these industries tend to produce stable, high-paying jobs and strong tax revenues for the locality, thereby providing the local workforce with quality employment opportunities and generating revenue for the city to improve its operations. Like Goodyear, STIHL (pronounced ―steel‖), a manufacturer of handheld power tools, had an established location in the locality prior to the announcement of the 2005 development project. The company’s Virginia Beach location began as a sales office in 1974, later expanded into warehouse operations, and finally became a manufacturing facility.60 Within two years of the project announcement, STIHL had created 1,000 new jobs – more than six times the original job projections.61 STIHL currently employs approximately 2,000 people at its Virginia Beach manufacturing plant.62 Virginia Beach and STIHL continue to take part in a symbiotic relationship. Over the course of nearly four decades, the city has provided many development incentives to STIHL, in addition to seeking state incentives on the company’s behalf, such as the Governor’s Opportunity Fund grant STIHL received for its 2005 expansion. In return, STIHL continues to provide benefits for the locality and its residents. Not only does the company pay property and sales
44 taxes to Virginia Beach, it has built business parks, consistently produced high-paying jobs, and even attracted other companies, such as small gear manufacturers and packaging enterprises, which generate additional economic activity with the community.63 Thus, Virginia Beach takes an aggressive approach to economic development, offering its own incentives as well as brokering deals with the state. STIHL is another example of the success that can be achieved over time when localities and the state work with a stable, consistent performer.
C. Barber & Ross Company
On September 16, 2003, Governor Warner announced the relocation and expansion of Barber & Ross Company headquarters from Leesburg to Winchester, both located within Frederick County. Barber & Ross is a manufacturing firm that produces windows and other millwork products. The 2003 development project promised to save 375 jobs already belonging to Virginia employees and create another 100 jobs through the expansion.64 Frederick County concentrates their development efforts (through the allocation of resources) on businesses already located within the county that have proven performance records. Development policies seek to ensure that these businesses continue to expand and grow, providing continual benefits for businesses and the county.65 From the 1960s until 2003, Barber & Ross has maintained its headquarters in Leesburg, Virginia – its prior record of job creation was well-established, and the firm’s plans for expansion corresponded with the county’s economic development goals. Additionally, company headquarters are a desirable asset for localities due to the higher wages that employees often receive, the types of jobs that are available, and the substantial ties to the community that such development creates. Initially, Barber & Ross met almost all of the conditions of its performance agreement with the state.66 At the time that grants were awarded to the company and the development project commenced, manufacturing (a core industry in Frederick County) was performing well. By June 2007, however, the company had filed for bankruptcy and closed its headquarters, leaving 400 unemployed.67 The economic downturn affected the company in a way that could not have been foreseen by development officials when the project was announced in 2003, particularly since past performance had been positive. Although the company owed more than $80,000 in local back taxes at the time of its closure, funds from the sale of the Winchester site
45 were later used to reimburse the locality. 68 Consequently, despite the lost employment, Winchester and the state received tax revenues that compensated for the grant expenditures used to fund the development project initially.69 The 2003 Barber & Ross development project is one of mixed success. Although performance metrics were largely met and the project proved cost neutral for the locality and state, the loss of hundreds of jobs (and future revenues) is not an ideal outcome. It is apparent that the locality took every precaution to prevent a negative outcome, however, and such rigorous examination of prospective grant recipients should be incorporated into the procedures of economic development agencies, if it is not already. The information taken from this case study is among the most valuable for state and local officials to consider when deciding whether to change economic development policies. Despite the best intentions of officials (and due diligence in evaluating the prospects for success), development projects can fail as a result of unforeseen and unpreventable circumstances.
D. Eli Lilly and Company
On May 3, 2002, Governor Mark R. Warner announced the expansion of Eli Lilly and Company (Lilly) in Prince William County. Lilly is a global pharmaceutical company that discovers, develops, manufactures, and sells pharmaceutical products. 70 Lilly anticipated the creation of more than 700 high-technology jobs and capital investment of $425 million for a new insulin manufacturing facility – this substantial capital investment would have been among the ten largest in the state’s history.71 In return, the state awarded a $2.25 million GOF grant and pledged EADP and VJIP funds. The company also qualified for a $3 million VIP grant.72 In 2002, Prince William County focused its development efforts on attracting pharmaceutical companies. The timing was convenient for Lilly, which decided to expand in the community at that time – the development project established the company’s first manufacturing facility outside of Indiana. The county had made great efforts to prepare for and assist Lilly’s decision: in addition to the state incentives provided, the county awarded a $2-million grant from its Economic Development Opportunity Fund.73 However, in January 2007, Lilly suddenly halted construction on the site and dismissed over 100 recently hired employees, due to changes negatively impacting the pharmaceutical market. The Prince William County location was not the only one impacted by the downturn in
46 the market – the company also halted construction in various other locations. Lilly repaid all state and local grants due to the clawback policy, and Prince William Country put the building left by the company on the market.74 To compensate for the loss of Lilly, local officials worked with George Mason University to continue development in the county’s Innovation Technology research park in an effort to bring in new companies. Nine months later, Covance, a drug development and animal test company, announced the purchase of the former Lilly property. With Covance’s decision, the county appeared to be on the receiving end of a larger investment and additional job opportunities. However, also due to continued downturns in the pharmaceutical market, the company did not move ahead as anticipated and closed the Vienna facility. The county, again, seeks to identify new potential users of the property.75 The county is in the process of broadening the industries that are targeted by its development policies. Currently, Prince William is targeting companies in the information technology industry, which has been a success to local economic development.76 The Eli Lilly and Company development can be classified as unsuccessful, with caveats. Abrupt changes that led to the halt of the development project were unexpected. Although there were no direct financial costs due to the clawback of grant funds, however, the loss of employment due to the failed development projects of Lilly (and later Covance) impacts the number of employment opportunities available to area residents, as well as cutting off a source of tax revenue for both the locality and state. One positive finding, however, is the flexibility certain localities maintain in their development policies: change with the market, look for new target industries, and work actively to compensate for the loss from unusual circumstances.
47 VII. Recommendations for Further Evaluation
There are substantial benefits to conducting an economic impact analysis, including gaining an understanding of how economic development projects ―will affect the wider local or regional economy.‖77 When evaluating incentives, such as grants, the primary consideration is whether a project will add value to the local community. During our analysis, we defined value as employment created directly and indirectly by the project, output generated by the business as a result of job creation, and tax revenues collected by the locality and state as a result of direct and indirect job creation. Economic impact modeling through IMPLAN generated the indirect and induced effects of employment; the total effect of the development project on employment was then used to generate estimated output and revenues.
A. Limitations to Using Input-Output Software
There are several limitations to using software such as IMPLAN, however. The first concern is a result of the assumptions incorporated into the models – these impact the validity of the results. While the bracketing system imposed fairly conservative estimates of job creation, the average annual ratios of job creation may have still been impacted by other outliers that were not removed from the calculations. This discrepancy, in turn, would have been compounded by the economic multipliers used in IMPLAN. A second limitation is that input-output models ―do not explicitly consider possible displacement impacts‖ resulting from direct competition with an existing firm. 78 If a firm relocates to a locality where several other businesses are already established that sell the same or very similar products or services, they will be competing for the same consumer base. The resulting impact on direct and induced employment as a result of the project will be smaller, as will the firm’s output and tax revenues. An additional concern is that a higher displacement impact is likely within certain sectors, such as retail.79 We were unable to account for such a possibility within our analysis. One possibility for improvement may be to consider the number and size of existing firms within a particular locality that directly compete with a business that is relocating and create a weight to adjust for possible displacement impacts. Businesses that are expanding rather than relocating do not contribute as greatly to displacement impacts, so it may not be as important to perform such a correction for these types of development projects.
48 A more significant limitation of input-output modeling is that costs to local and state governments (beyond grant expenditures or workforce training reimbursements) are not considered. Not all newly created jobs are filled by unemployed workers living in the locality. Employees may come from other parts of the state or even from outside the state to fill available positions. Local governments then face an increased demand for public services, such as infrastructure, education, and safety, which is not directly captured through input-output modeling.80 Local government costs directly related to a development project include infrastructure expenditures, such as road construction, and economic incentives, such as matching grants.81 These costs are easily quantifiable. What are not so readily quantifiable, however, are the costs ―associated with the expected growth that will occur… due to the development project‖ – those that stem from an increased demand for public services.82 One recommendation for overcoming this limitation is to utilize fiscal impact analysis, in conjunction with economic impact analysis, to best evaluate all costs and benefits associated with an economic development project. Using an average cost approach, the current average cost per person (or household) ―of providing a local government service‖ is calculated.83 This average cost is then considered across the additional number of people (or households) that are coming into the locality as a result of the economic development project. Three methods can be used: per-capita-multiplier (costs are assumed to be the same for each person/household), service standard (different costs are calculated for each public service), and proportional valuation.84 The average cost approach is not appropriate to use in areas experiencing rapid growth rates, such as Northern Virginia, with much higher costs of providing services than other areas in the state. Conversely, the average cost approach is also not appropriate for areas of economic decline, such as Southwestern Virginia, which have much lower costs for public services due in part to under-utilized existing infrastructure. In these situations, a marginal cost approach is more appropriate. This approach ―considers the capacity of a jurisdiction’s infrastructure and capital facilities in determining the incremental cost of serving one more‖ person or household. 85 Marginal costs are most commonly calculated using case study analysis, in which excess capacity for public services and infrastructure – or strain – is identified, as are the costs to expanding services.86
49 Additional costs and benefits of an economic development project may not be captured through either economic impact analysis or fiscal impact analysis, however, although such omission should not discount the importance of performing such analyses. Omitted qualitative impacts include restoring self-respect to the unemployed and renewing a sense of hope among communities in economic decline – ―socio-psychological benefits of development‖ that cannot be quantified.87 Negative externalities, such as increased traffic congestion and pollution, are also not quantified through these analyses.88
B. Considerations for Current Development Incentive Policies
One concern raised about economic development incentives is that ―hyper-competition‖ causes politicians to irresponsibly offer funds to attract a business to their state.89 Incentives may be offered in the form of ―massive, even highly liquid cash grants and tax abatements.‖90 In return, however, the business may create jobs with low wages, or very few jobs. Additionally, a small positive impact on the local economy or a negative impact on the environment may occur.91 One reform measure that the State of Virginia has currently implemented is that of clawbacks, where the state requires that the grant recipient pay back a portion (or all) of the grant if projections of capital investment and job creation are not met (see Appendix 1 for clawback requirements).92 The response to this measure has been mixed, and often additional costs are incurred by the state and localities as a result. One publicized example of such a negative outcome occurred in Carroll County. In November 2008, the county sued AmerLink to regain control of 32.4 acres of land and obtain reimbursement of $600,000 in state grant money, paid in 2005 with the expectation that 200 jobs would be created (by then, AmerLink had created one job).93 Although the county eventually settled out of court, the protracted ordeal lasted until January 2011 and consumed many resources, both fiscal and human capital.94 Local economic development officials caution, however, against eliminating upfront grant awards and shifting to rewards for performance. The Commonwealth is currently at a disadvantage compared to neighboring states, which can offer much larger incentives and grants – Virginia counties and cities that border these states (such as Frederick County and Danville) are better able to compete as a result of upfront grant payments and targeted programs, such as TROF. The evolution of performance agreements over the past decade has resulted in a better
50 understanding between the state and businesses concerning development incentives. Businesses are well aware that it is taxpayer money funding the awards they receive and have become much more understanding and conservative about the performance metrics upon which they agree. Additionally, the attitudes of state and local officials about the strict clawback deadlines have shifted due to the present economic conditions – there is an increased willingness to provide extensions as long as the business is continue to head towards performance metrics.95 A second concern about economic development incentives is that they do not require ―accountability on the part of businesses to remain in a community after they receive incentives.‖96 While many of the state-level incentive grants require a business to remain in a locality for a certain length of time, the requirements are generally between 2 to 3 years. The VDBA data we received from the state indicates that 229 out of 271 projects receiving grants created jobs only in the short-term (within two years of the project’s announcement). We cannot determine how many of these businesses simply maintained the jobs in long-term, as opposed to going bankrupt, closing, relocating, or merging with another entity. It would be beneficial to gain a better understanding of company behavior in the long-run, to ensure that grant funds are being spent on companies that continue to provide benefits for the Virginia economy.
51 VIII. Conclusion
This study made several key findings. The first is that the 490 development projects announced between 1999 and 2007 did not, on the whole, meet performance metrics concerning job creation. This finding Key Findings was true based on an analysis of VDBA, SCT, and NETS data, as well as an analysis applying a bracketing system to estimate job creation. Results from the latter revealed a jobs shortfall ranging from 32,000 under the 1. Aggregate job creation upper bound to 73,000 under the lower bound. Over-performing did not meet job creation companies did create approximately 10,000 more jobs than originally projections. anticipated, although this finding differs significantly from that of the 2002 JLARC report. In that case, over-performing companies were able to compensate for their under- and non-performing counterparts. 2. Manufacturing sectors The second finding is that the economic multiplier of companies in generally have higher manufacturing sectors is generally higher than the multiplier associated economic multipliers than with white collar sectors. As a result, a higher number of jobs are created white collar sectors. within the state through indirect and induced effects for every job created by a manufacturer than for every job created by a white collar business. 3. White collar sectors Such a finding yields positive benefits for the state only if manufacturers typically generate more achieve projected job creation numbers. This study reveals evidence of state-level tax revenue that: manufacturing sectors had the highest number of over-performing than manufacturing development projects, in addition to the two most successful projects sectors. completed within the timeframe of this study: MillerCoors (2006) and STIHL (2005). However, white collar industries tend to generate the most tax 4. Economic development revenue for the state. This study found that despite lower job creation grants are revenue- rates, the three sectors generating the highest amount of tax revenue for enhancing for the state. the state were all non-manufacturing under the lower bound estimate; they represent four out of the top five producers of tax revenue for the state under the upper bound. 5. Some companies continue to pose a risk to Due in part to the higher tax-revenue generating sectors, this study the Commonwealth and its found positive net revenue for the state under all three estimates – $79 residents. million under the lower bound and more than $1 billion under the mid- level and upper bound estimates – despite the failure to meet aggregate job projections. This finding supports the 2002 report’s finding, although the analysis was not conducted on the project level in this study. The above findings suggest an important consideration for state officials. One goal of economic development incentives is to create jobs for state residents. The evidence uncovered by this study suggests that manufacturing companies tend to achieve (or come much closer to) this
52 goal than other companies, in addition to creating other jobs throughout the community. One caveat, however, is that state officials generally seek to create high-paying jobs. This study found that non-manufacturing sectors paid among the highest hourly wages – only the Beverage and Key Recommendations Tobacco Manufacturing sector paid higher wages. As the case studies of Goodyear and STIHL revealed, economic development succeeds when a symbiotic relationship exists between 1. Re-evaluate the company and locality. Unforeseen changes within industries can impact screening process for the potential for success, however. A positive existing relationship grant applicants. between Frederick County development officials and Barber & Ross could not prevent the 2007 economic downturn from negatively impacting the company and causing it to close its headquarters in Winchester. 2. Include additional What the case studies did not reveal, and internet searches did, was factors, such as increased that certain companies receiving grants pose a risk to the Commonwealth cost of public services, in that outweigh the benefits of the economic development and tax revenue future evaluations. they may generate. Several companies have since violated state laws against pollution, one was fined by the federal government for animal 3. Do not eliminate GOF cruelty, and several others have had lawsuits brought against them by V or VJIP; carefully localities to clawback grant funds. In light of this information, we consider what types of recommend a re-evaluation of the process currently in place to screen business or development grant applicants, as the 2002 report recommended. other grant programs are This study conducted a limited analysis that could not account for targeted towards. additional factors impacting expenditures and qualitative factors associated with development projects funded by incentive grants. We recommend that a more rigorous evaluation of the effectiveness of state- level incentive grants is needed. Additionally, when multiple grants are awarded to one development project, it is difficult to ascertain the impact of each on job creation and tax revenues. Such impacts may be revealed through a more detailed study. Virginia remains the top location for business in the United States. While the Commonwealth does not provide incentive grants that are as substantial as those of neighboring states, there are many other positive qualities that increase its relative competitiveness. The incentive grants it does provide, however, serve as an important source of funding to many companies who would be harmed by an elimination of grant programs or the shift to a system of grants that reward, rather than incentivize, development and job creation. In conclusion, we recommend that the long-
V Polluters include: Celanese Acetate LLC, Reline America, Dynax America, Banker Steel, and MW Manufacturers (DEQ). Covance was fined for animal cruelty by the US Department of Agriculture in 2006 (Arizona Business Gazette). Lawsuits or negotiations to retrieve grant funds were taken up against companies including: AmerLink (the Carroll News) and StarTrek (AP).
53 term impacts of eliminating the two major state-level incentive programs (GOF and VJIP) would be negative. The lost revenue and lost job opportunities may not be made up by businesses that have no such incentives to engage in economic development within the Commonwealth, particularly in tough economic times.
54 APPENDIX 1: GRANT PROGRAM GUIDELINES
Grant GOF VIP
Recipient Locality Business
Project must be on file for 36 months prior Upon entering into Performance Agreement to payments (24 months for fiscally Payment of Locality must request disbursement within stressed localities)
State Funds 3-4 months of project’s public Payments made in 5 equal, annual announcement installments Provide annual notice to VEDP of progress towards meeting performance goals
Maintain capital investment and jobs Notify VEDP within 90 days of completing created through ―Performance Date‖ (36 capital investment in ―Initial Company months after date by which locality needs Notification‖ (VEDP prefers completion Company to request funds) within 5 years of signing of ―Performance Requirements If ―break-even-point‖ occurs after the Agreement‖)
―Performance Date,‖ jobs created must be Certify whether a net reduction in maintained through this date employment has occurred one year following the ―Initial Company Notification‖ Grant awarded only if company meets statutory minimum for capital investment or steady employment in one-year period If company does not meet statutory minimums for capital investment and jobs Grant not awarded if company does not created, it must repay 100% of grant reach at least 50% of projected capital Contractual investment and does not reach projected Obligation to If 90% of predicted value not met, jobs creation Grant Funds repayment is proportionate to underperformance (extension of 15 months In general, 75% of each grant is allocated may be granted) to capital investment and 25% to jobs creation – partial achievement of projected capital investment / jobs creation impacts grant payment proportionately Locality responsible for requesting Repayment of repayment of grant and returning money to − Grant state if Performance Agreement not met
GOF Sources: VEDP GOF Guidelines, Virginia Code § 2.2-115 VIP Sources: VEDP VIP Guidelines, Virginia Code § 2.2-5100-§ 2.2-5104
55 Grant MEE VEDIG
Recipient Business Business
Project must be on file for 6 years (4 Project must be on file for 36 months years for fiscally stressed localities) Payment of State prior to payments
Funds Payments made in 5 to 7 equal, annual Payments made in no fewer than 5 installments installments
Notify VEDP within 90 days of Notify VEDP within 90 days of completing capital investment and job completing capital investment and job creation creation
Company Performance Agreement establishes end- Performance Agreement establishes end- Requirements date for achieving targeted capital date for achieving targeted capital investment and job creation (VEDP investment and job creation (VEDP prefers completion within 5 years signing prefers completion within 5 years of Performance Agreement) signing of Performance Agreement) No grant awarded if statutory minimum for capital investment and job creation are unmet No grant awarded if statutory minimum capital investment OR 50% of projected No grant awarded if at least 50% of capital investment projections are unmet capital investment or jobs creation projections are unmet, even if statutory No grant awarded if statutory minimum minimums are attained job creation with average salaries at least 50-100% greater than locality’s average Contractual Grant awarded on sliding scale if prevailing wage OR 50% of projected Obligation to company attains statutory minimums and job creation with average salaries at least Grant Funds achieves between 50-100% of capital 50-100% greater than locality’s average investment and job creation projections prevailing wage
In general, 50% of MEE is allocated to If company creates capital investment or capital investment and 50% to jobs job creation above minimums but below creation – partial achievement of projected goals, grant will be awarded on projected capital investment / jobs sliding scale creation impacts grant payment proportionately Repayment of − − Grant
MEE Sources: VEDP MEE Guidelines VEDIG Sources: VEDP VEDIG Guidelines
56 Grant CEMIG VJIP
Recipient Business Business 2-6 annual installments (may be paid in 1annual installment if significant state or regional interest exists) Funding reimbursable 90 days after
Payment of State Payment generally not paid earlier than trainee is hired (New Jobs Program) or Funds one year after performance metrics are upon completion of retraining (Retraining met (may be paid upon completion if Programs) significant state or regional interest exists) Performance Agreement establishes end- date for achieving targeted capital Company investment and job creation (VEDP Submit Reimbursement Form to VEDP Requirements prefers completion within 3-5 years of signing; extensions are possible at VEDP’s discretion) New Jobs Program: companies must create at least 25 jobs within 1 year of No grant awarded if statutory minimums date of first hire and make capital for capital investment and job creation investment of at least $1 million are unmet Small Business New Jobs Program: No grant awarded if at least 50% of companies must create at least 5 jobs capital investment or jobs creation within 1 year of date of first hire and at projections are unmet, even if statutory least 5 jobs for three consecutive years, as minimums are attained well as make new capital investment of at
Contractual Grant awarded on sliding scale if least $1 million Obligation to company attains statutory minimums and Retraining Program: companies must Grant Funds achieves between 50-100% of capital retrain at least 10 full-time employees and investment and job creation projections make new capital investment of at least
In general, 50% of CEMIG is allocated to $500,000
capital investment and 50% to jobs Small Business Retraining Program: creation – partial achievement of retrain at least 5 full-time employees and projected capital investment / jobs make new capital investment of at least creation impacts grant payment $50,000 proportionately Under all programs: minimum entry-level hourly wage of $10 Business returns installments made before end-date if statutory minimum for capital investment and job creation is Repayment of − Grant unmet OR does not reach 50% of projected capital investment or jobs creation
CEMIG Sources: VEDP CEMIG Guidelines, VA Code § 59.1-284.25-§ 59.1-284.27 VJIP Sources: VDBA VJIP Guidelines, VDBA VJIP Program Description
57 Grant EDAP RIAP
Recipient Locality Locality
Maximum unmatched allocation to any For regular access projects, allocations project within any fiscal year is $300,000 are expected to be committed by contract (funds in excess of $300,000 are matched or under construction within two years dollar-for-dollar from non-program Payment of State from date of Commonwealth Funds sources, up to $150,000) Transportation Board (CTB) approval Completed project costs reimbursed after For bonded access projects, maximum 60-day (maximum) field review and time limit for bond is five years Department inspection Performance Agreement metrics Business must make Qualifying Company (Employment and Annual Carload Investment (cost of land, building, Requirements Performance) reported annually following manufacturing or processing equipment) date of project acceptance Upon completion, Grantee must report performance annually on fiscal year schedule beginning July 1 following date of project acceptance by Department
Qualifying Establishment must provide Grantees must give Commonwealth a 15- Contractual locality and VDOT with a preliminary year contingent interest in portions of Obligation to plan and a letter of request to the track and facilities built or improved with Grant Funds appropriate local governing body the funds, to be exercised upon non- performance
Landowner or using business must provide continuous maintenance and assume liability of tracks and facilities DRPT repaid its contribution to cost of construction and materials, less Locality must return any funds owed to depreciation, if project tracks are VDOT for expenditures not justified by abandoned, relocated or sold the investment (voluntarily or by DRPT repaid its contribution to cost of Repayment of forfeiture of the surety) Grant access track if: Employment Performance De-allocation of funds is possible if commitment for first two years or Annual project is not underway within 2 years of Carloads for first five years is CTB approval significantly below commitment levels; rail use is no longer for its intended purpose; or track is unused
EDAP Sources: VDOT Local Assistance Division EDAP Program Guide RIAP Sources: DRPT RIAP Application Guidance & Procedures
58 Grant TPOF TROF Agency or political subdivision of the Recipient Locality (in tobacco producing regions) Commonwealth; certain private entities Disbursement of financial assistance Limited to three per county per fiscal year begins following execution of Financing Payment of State Agreement and submission of request for Grants of less than $50,000 will not be Funds disbursement to VDOT offered, except for motorsports grants (which will not be offered at less than May be allowed in one lump sum $10,000) Performance Agreement must be executed within 90 days Project must meet GOF criteria Company Application for a GOF grant is required Requirements Meet bi-annual reporting requirements as outlined in Financing Agreement Periodic auditing and verification of the Performance Agreement by the Commission For transportation projects associated with economic development, recipients must reach and maintain specified job creation Contractual Entitled to receive disbursement following Obligation to and capital investment levels within and written request for funds Grant Funds through 30 months after disbursement of funds or until Commonwealth reaches its ―break even‖ point, whichever is later For transportation projects associated with economic development, private entity repays if performance criteria unmet Repayment of If performance metrics are not met, full or (partial grant or total waiver to repayment Grant pro-rated repayment of grant occurs or extend performance period may be applied to some projects have certain economic benefits to locality)
TPOF Sources: VDOT TPOF Guidelines and Criteria, VA Code § 33.1-221.1:8 TROF Sources: TICRC TROF Grant Program Guidelines, VEDP Business Incentives Guide 2011-2012
59 APPENDIX 2: ANNUAL JOBS COMPARISON TABLES
Job Job Creation 1999 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Precision Bed Rail Mfg. Co. Appomattox County 100 34 0.34 34 0.34 34 0.34 Best Doctors, Inc. Arlington County 50 31 0.62 31 0.62 31 0.62 Koyo Steering Systems of USA, Botetourt County 200 129 0.65 129 0.65 129 0.65 Inc. Ball Corp. Bristol 40 83 2.08 83 2.08 83 2.08 Data Services America, Inc. Buchanan County 50 21 0.42 21 0.42 21 0.42 Icicon Electronics India, Ltd. Buchanan County 80 0 0.00 52 0.65 80 1.00 Sherwood Brands Charlotte County 150 0 0.00 0 0.00 0 0.00 Innovations in Transportation, Chesapeake 100 0 0.00 66 0.66 100 1.00 Inc.a Eternal Technology Corporationa Chesterfield County 100 40 0.40 40 0.40 40 0.40 Capital One Financial Corp. Chesterfield, Fairfax, 3,075 533 0.17 533 0.17 533 0.17 Henrico, & Spotsylvania Co. Pharming Healthcare, Inc.a Craig & Montgomery Co. 88 0 0.00 58 0.66 88 1.00 Toll Integrated Systems Emporia 150 210 1.40 210 1.40 210 1.40 Ahold USA Fairfax County 100 3 0.03 3 0.03 3 0.03 Intel Online Services, Inc. Fairfax County 250 167 0.67 167 0.67 167 0.67 Science Applications Int’l Corpa Fauquier County 150 0 0.00 98 0.65 150 1.00 HP Hood Frederick County 170 102 0.60 102 0.60 102 0.60 Tritex, LLC Grayson County 30 60 2.00 60 2.00 60 2.00 Annin & Co. Halifax County 160 85 0.53 85 0.53 85 0.53 Gatewaya Hampton 1,200 0 0.00 786 0.66 1,200 1.00 Nextel Communicationsa Hampton 700 0 0.00 459 0.66 700 1.00 Rapid Rack Hampton 100 0 0.00 0 0.00 0 0.00 Cavalier Telephone Co. Hampton Roads; Richmond 200 315 1.58 315 1.58 315 1.58 City Outsourcing Solutions Inc.a Henrico County 440 0 0.00 288 0.66 440 1.00 Stanley Furniture Co. and Henry County 700 0 0.00 459 0.66 700 1.00 American of Martinsvillea
60 Job Job Creation 1999 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Blue Ridge Technology Inc. Henry County 100 0 0.00 0 0.00 0 0.00 John Deere James City County 300 189 0.63 189 0.63 189 0.63 Super Sack Bag, Inc. Lee County 180 200 1.11 200 1.11 200 1.11 America Online, Inc. Loudoun & Prince William 1,375 118 0.09 118 0.09 118 0.09 Co. National Catalog Corporation Martinsville 250 413 1.65 413 1.65 413 1.65 Synerject Co Newport News 107 76 0.71 76 0.71 76 0.71 Energy Recovery, Inc. Northampton County 50 0 0.00 0 0.00 0 0.00 eToys Inc. Pittsylvania County 330 196 0.59 196 0.59 196 0.59 Perdue Farms, Inc. Prince George County 175 50 0.29 50 0.29 50 0.29 Ameriserve Food Distribution, Prince William County 250 0 0.00 164 0.66 250 1.00 Inc.a Covad Communications Prince William County 1,000 233 0.23 233 0.23 233 0.23 Avenir, Inc.a Prince William County 166 0 0.00 109 0.66 166 1.00 Volvo Trucks North America Pulaski County 1,277 450 0.35 450 0.35 450 0.35 Aspen Motion Technologies Radford 171 190 1.11 190 1.11 190 1.11 Innotech Roanoke City 600 201 0.34 201 0.34 201 0.34 Process Integration Co.a Russell County 50 0 0.00 33 0.66 50 1.00 Tempur-Pedic, Inc. Scott County 1,200 300 0.25 300 0.25 75 0.06 VFP, Inc.a Scott County 100 90 0.90 90 0.90 90 0.90 Dynamarketinga Spotsylvania County 200 0 0.00 131 0.66 200 1.00 Capital One Financial Corp.a Spotsylvania County 1,200 0 0.00 786 0.66 1,200 1.00 Dominion Pictures Suffolk 130 231 1.78 231 1.78 231 1.78 CBF, LLCa Tazewell County 40 0 0.00 26 0.65 40 1.00 Coastal Training Technologies Virginia Beach 366 67 0.18 67 0.18 67 0.18 21st Century Containers, Ltd. Washington County 120 113 0.94 113 0.94 113 0.94 Morrill Motors, Inc.a Washington County 65 0 0.00 43 0.66 65 1.00 Utility Trailer Mfg. Co. Washington County 265 75 0.28 75 0.28 300 1.13 TOTALb 18,450 5005 0.27 8,563 0.46 10,434 0.57 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
61 Job Job Creation 2000 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Tower Automotive Botetourt County 120 90 0.75 90 0.75 90 0.75 Altec Industries Botetourt County 150 242 1.61 242 1.61 242 1.61 BWX Technologies, Inc. Campbell County 50 529 10.58 529 10.58 529 10.58 HomePlus Insurance Co.a Chesapeake 150 0 0.00 144 0.96 150 1.00 First Data Resources, Inc. Chesapeake 130 95 0.73 95 0.73 95 0.73 CeoTronicsa Chesapeake 50 0 0.00 48 0.96 50 1.00 DaiEi Papers Corp. Chesapeake 105 48 0.46 48 0.46 48 0.46 Usui International Company, UIC Chesapeake 25 9 0.36 9 0.36 9 0.36 Dendrite International Chesapeake 335 253 0.76 253 0.76 253 0.76 The Antioch Company Chesterfield County 140 175 1.25 175 1.25 175 1.25 Lawson Mardon Packaging Chesterfield County 150 166 1.11 166 1.11 166 1.11 Capital Onea Chesterfield, Goochland, & 7,000 0 0.00 6,706 0.96 7,000 1.00 Henrico Co. Goodyear Danville 320 350 1.09 350 1.09 350 1.09 NEC America Fairfax County 100 0 0.00 0 0.00 0 0.00 Capital One Financial Corp.a Fairfax County 1,000 0 0.00 958 0.96 1000 1.00 Litton TASCa Fairfax County 150 0 0.00 144 0.96 150 1.00 Fairchild Dornier Fairfax County 150 3 0.02 3 0.02 3 0.02 Fisher Scientific Company Frederick County 250 211 0.84 211 0.84 211 0.84 O'Sullivan Industries - Virginia, Halifax County 100 94 0.94 94 0.94 94 0.94 Inc. Nextel Communications Hampton 200 856 4.28 856 4.28 856 4.28 Fidelity Holdingsa Henrico County 500 0 0.00 479 0.96 500 1.00 Infineon Technologies Henrico County 1,100 1,845 1.68 1,845 1.68 1,845 1.68 Nautica Enterprises, Inc. Henry County 375 345 0.92 345 0.92 345 0.92 Nylstar Henry County 50 210 4.20 210 4.20 210 4.20 Sara Lee Activewear Henry County 557 303 0.54 303 0.54 303 0.54 CPFilms Henry County 52 54 1.04 54 1.04 54 1.04 National Catalog Corporation Henry County & Martinsville 875 100 0.11 100 0.11 100 0.11 Smithfield Foods, Inc. Isle of Wight County 176 176 1.00 176 1.00 176 1.00 Cost Plus, Inc. Isle of Wight County 160 97 0.61 97 0.61 97 0.61 Wal-Mart Stores, Inc. James City County 400 585 1.46 585 1.46 585 1.46 John Deerea James City County 25 0 0.00 24 0.96 25 1.00
62 Job Job Creation 2000 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Sterling Semiconductor, Inc. Loudoun County 172 0 0.00 0 0.00 0 0.00 FlashVision, LLCa Manassas 600 0 0.00 575 0.96 600 1.00 Nationwide Homesa Martinsville 170 0 0.00 163 0.96 170 1.00 Investors Corporationa Martinsville 380 0 0.00 364 0.96 380 1.00 EchoStar Communications Corp. Montgomery County 1,400 1,147 0.82 1,147 0.82 1,147 0.82 ACT MicroDevicesa Montgomery County 300 0 0.00 287 0.96 300 1.00 Evercel Newport News 180 43 0.24 43 0.24 43 0.24 ArborTech Forest Products Nottoway County 50 51 1.02 51 1.02 51 1.02 Engineered Building Components Nottoway County 100 0 0.00 96 0.96 100 1.00 Internationala Von Holtzbrinck Publishing Orange County 50 130 2.60 130 2.60 130 2.60 Services EMCO Page County 343 344 1.00 344 1.00 344 1.00 Boehringer Ingelheim Corp Petersburg 104 246 2.37 246 2.37 246 2.37 CFW Communications, d/b/a Portsmouth 250 11 0.04 11 0.04 11 0.04 NTELOS SMI Steel Products Prince Edward County 150 62 0.41 62 0.41 62 0.41 SMI Steel Products Prince Edward County 30 12 0.40 12 0.40 12 0.40 America Online, Inc. Prince William County 1,325 897 0.68 897 0.68 897 0.68 Ethan Allen Pulaski County 446 0 0.00 0 0.00 0 0.00 Precision Technology Group Roanoke City 100 15 0.15 15 0.15 15 0.15 SYSCO Foodservice Suffolk 650 150 0.23 150 0.23 150 0.23 Raleigh Mine and Industrial Tazewell County 249 80 0.32 80 0.32 80 0.32 Supply Sykes Interprises, Inc. Wise County 400 520 1.30 520 1.30 520 1.30 Somic Ishiwakaa Wythe County 25 0 0.00 24 0.96 25 1.00 TOTALb 22,419 10,544 0.47 20,556 0.92 20,994 0.94 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
63 Job Job Creation 2001 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound McKee Foods Augusta County 200 320 1.60 320 1.60 320 1.60 Hershey Foods Corporation Augusta County 100 38 0.38 38 0.38 38 0.38 Bristol Brass Bristol 125 0 0.00 0 0.00 0 0.00 Atlanta Pulp & Paper Companya Brunswick County 282 0 0.00 241 0.86 282 1.00 Transfer Specialtiesa Buena Vista 250 0 0.00 214 0.86 250 1.00 Harris-Tarkett, Inc.a Campbell County 100 0 0.00 85 0.85 100 1.00 ERNI Components, Inc. Chesterfield County 550 140 0.26 140 0.26 140 0.26 The Rochester Corporation Culpeper County 35 20 0.57 20 0.57 20 0.57 Travelocity.com Dickenson County 500 291 0.58 291 0.58 291 0.58 Centrivity Fairfax 45 63 1.40 63 1.40 63 1.40 Creative Technology Incorporated Fairfax County 108 150 1.39 150 1.39 150 1.39 Invicta Networks Fairfax County 100 0 0.00 0 0.00 0 0.00 Biovail Technologies, Inc. Fairfax County 40 9 0.23 9 0.23 9 0.23 Kraft Foods Frederick County 75 272 3.63 272 3.63 272 3.63 VIMCO Inc. Hanover County 150 25 0.17 25 0.17 25 0.17 Alfa Laval Henrico County 100 100 1.00 100 1.00 100 1.00 Institute for Computational Genomics, Inc. James City County 20 3 0.15 3 0.15 3 0.15 WorldCom Loudoun County 8,000 0 0.00 0 0.00 0 0.00 Wal-Mart Stores, Inc.a Louisa County 600 0 0.00 512 0.85 600 1.00 Carlisle Motion Control Mecklenburg County 110 119 1.08 119 1.08 119 1.08 International Cold Storagea Nelson County 147 0 0.00 126 0.86 147 1.00 Symantec Corp. Newport News 300 25 0.08 25 0.08 25 0.08 Ferguson Enterprises Newport News 400 550 1.38 550 1.38 550 1.38 Zim-American Israeli Shipping Co., Inc.a Norfolk 235 0 0.00 201 0.86 235 1.00 Ford Motor Company Norfolk 200 572 2.86 572 2.86 572 2.86 Zim-American Israeli Shipping Co., Inc. Norfolk 235 235 1.00 235 1.00 235 1.00 proVENTO Internationala Northampton County 25 0 0.00 21 0.84 25 1.00 LaJobi Industries, Inc.a Nottoway County 110 0 0.00 94 0.86 110 1.00 K-B Toys a Pittsylvania County 150 0 0.00 128 0.85 150 1.00 NTELOS a Portsmouth 250 0 0.00 214 0.86 250 1.00 Hanmi International Corporationa Portsmouth 170 0 0.00 145 0.85 170 1.00 ASTROLINK International LLCa Prince William County 250 0 0.00 214 0.86 250 1.00 Boehringer Ingelheima Richmond City 16 0 0.00 14 0.88 16 1.00
64 Job Job Creation 2001 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Maple Leaf Bakery Roanoke City 45 133 2.96 133 2.96 133 2.96 Advance Auto Parts Roanoke City 234 125 0.53 125 0.53 125 0.53 Novozymes Biologicals, Inc. Roanoke County 90 79 0.88 79 0.88 79 0.88 TeleCorp PCS, Inc. a Russell County 300 0 0.00 256 0.85 300 1.00 Petals, Inc. Suffolk 250 5 0.02 5 0.02 5 0.02 Sara Lee Coffee & Tea Suffolk 100 102 1.02 102 1.02 102 1.02 AFFINA Suffolk 450 307 0.68 307 0.68 307 0.68 VeriSign, Inc.a Tazewell County 100 0 0.00 85 0.85 100 1.00 Universal Companies, Inc. Washington County 104 56 0.54 56 0.54 56 0.54 Bristol Compressors Washington County 350 78 0.22 78 0.22 78 0.22 V&S Bristol Galvanizing, LLC Washington County 25 11 0.44 11 0.44 11 0.44 Northwood Manufacturing Winchester 200 115 0.58 115 0.58 115 0.58 TOTALSb 16,226 3,943 0.24 6,493 0.40 6,928 0.43 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
65 Job Job Creation 2002 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Interstate Hotels & Resorts / MeriStar Arlington 270 270 1.00 270 1.00 270 1.00 Hospitality Barr Laboratories, Inc. Bedford County 75 235 3.13 235 3.13 235 3.13 Ross Products Division of Abbott Laboratories Campbell County 443 0 0.00 0 0.00 0 0.00 Dan River Inc. Campbell Co. & Danville 30 50 1.67 50 1.67 50 1.67 Magnolia Manufacturing Carroll County 61 0 0.00 0 0.00 0 0.00 Kentucky Derby Hosiery Carroll County 72 70 0.97 70 0.97 70 0.97 Visteon Corporation Chesapeake 42 90 2.14 90 2.14 90 2.14 TDS US Chesapeake 210 204 0.97 204 0.97 204 0.97 DuPonta Chesterfield County 20 0 0.00 17 0.85 20 1.00 AttoTek Culpeper County 40 2 0.05 2 0.05 2 0.05 Competitive Innovations, LLC Culpeper County 40 5 0.13 5 0.13 5 0.13 EsselPropack America, LLC Danville 81 187 2.31 187 2.31 187 2.31 Universal Leaf Tobacco Company, Inc. a Danville 38 0 0.00 32 0.84 38 1.00 Creative Playthings Emporia 275 229 0.83 229 0.83 229 0.83 BAE SYSTEMS Fairfax County 1,000 999 1.00 999 1.00 999 1.00 Interstate Worldwide Relocation Fairfax County 135 176 1.30 176 1.30 176 1.30 Daston Corporationa Fairfax County 30 0 0.00 25 0.83 30 1.00 The Boeing Company a Fairfax County 100 0 0.00 84 0.84 100 1.00 WAM!NET Fairfax County 200 0 0.00 0 0.00 0 0.00 Microsoft Fairfax County 100 0 0.00 0 0.00 0 0.00 BAE SYSTEMSa Fairfax County 1,000 0 0.00 840 0.84 1,000 1.00 STG, Inc. Fairfax County 700 85 0.12 85 0.12 85 0.12 Dreaming Creek Timber Frame Homes, Inc. Floyd County 30 36 1.20 36 1.20 36 1.20 Trinity Packaging Corporation Franklin County 300 175 0.58 175 0.58 175 0.58 American Plastics, Inc. Greensville County 108 108 1.00 108 1.00 108 1.00 Danaher Power Solutions Henrico County 180 54 0.30 54 0.30 54 0.30 Nautica Enterprises, Inc. Henry County 300 260 0.87 260 0.87 260 0.87 Cerxon Microtechnologies, LLC a Henry County 250 0 0.00 210 0.84 250 1.00 Knauss Snack Food Company Henry County 105 124 1.18 124 1.18 124 1.18 Activewear, Inc. Henry County 190 81 0.43 81 0.43 81 0.43 Greenridge Environmental Corporationa Lunenburg County 165 0 0.00 139 0.84 165 1.00 Frito-Lay Lynchburg 125 0 0.00 0 0.00 0 0.00 Bausch & Lomb Lynchburg 35 45 1.29 45 1.29 45 1.29 Norcraft Companies, LLCa Lynchburg 155 0 0.00 130 0.84 155 1.00
66 Job Job Creation 2002 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Axiom Technologiesa Martinsville 250 0 0.00 210 0.84 250 1.00 Basalt Fiber Companya Mecklenburg County 55 0 0.00 46 0.84 55 1.00 Trinity Packaging Corporationa Mecklenburg County 150 0 0.00 126 0.84 150 1.00 Star Scientific, Inc. a Mecklenburg County 315 0 0.00 265 0.84 315 1.00 Red Oak E-Commerce Solutions, Inc. (ROES) Mecklenburg County 40 4 0.10 4 0.10 4 0.10 Sherwood Brands Mecklenburg County 250 250 1.00 250 1.00 250 1.00 Siemens VDO Automotive Newport News 55 300 5.46 300 5.46 300 5.46 Wako Chemicals USA, Inc. Northampton County 5 10 2.00 10 2.00 10 2.00 Keystone Dyeing & Finishing Orange County 100 102 1.02 102 1.02 102 1.02 Lohmann Corporation Orange County 30 0 0.00 0 0.00 0 0.00 Narroflex, Inc. Patrick County 450 268 0.60 268 0.60 268 0.60 Unique Industries, Inc. Pittsylvania County 420 329 0.78 329 0.78 329 0.78 Service Center Metals (SCM) Prince George County 100 43 0.43 43 0.43 43 0.43 Noland Company Prince George County 40 5 0.13 5 0.13 5 0.13 Eli Lilly and Company Prince William County 700 83 0.12 83 0.12 83 0.12 Comcast Cable Communications, Inc. Prince William County 375 300 0.80 300 0.80 300 0.80 Power Systems International, Inc. Rockbridge County 64 15 0.23 15 0.23 15 0.23 AT&T Wirelessa Russell County 300 0 0.00 252 0.84 300 1.00 U.S. Foodservice Salem 200 206 1.03 206 1.03 206 1.03 Unilever Suffolk 65 28 0.43 28 0.43 28 0.43 Target Corporation Suffolk 500 362 0.72 362 0.72 362 0.72 SafeCard ID Inc. Virginia Beach 55 14 0.26 14 0.26 14 0.26 Cendant Corporation Virginia Beach 100 166 1.66 166 1.66 166 1.66 SYSCO Corporationa Warren County 388 0 0.00 326 0.84 388 1.00 Rubbermaid Commercial Products Winchester 250 0 0.00 0 0.00 0 0.00 EnVirtue Biotechnologies, Inc. Winchester 12 1 0.08 1 0.08 1 0.08 Verizon Wise County 61 25 0.41 25 0.41 25 0.41 Klöckner Pentaplast of America, Inc. Wythe County 405 328 0.81 328 0.81 328 0.81 The Pepsi Bottling Group, Inc. Wythe County 200 143 0.72 143 0.72 143 0.72 TOTALSb 12,840 6,467 0.50 9,169 0.71 9,683 0.75 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
67 Job Job Creation 2003 Development Projects Locality Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Hyosung America Inc. Albemarle County 100 100 1.00 100 1.00 100 1.00 Advanced Information Services (AIS) Alexandria 125 147 1.18 147 1.18 147 1.18 Lear Corporation Alleghany County 200 250 1.25 250 1.25 250 1.25 AES Corporation Arlington County 115 0 0.00 0 0.00 0 0.00 ABB Inc. Bland County 75 95 1.27 95 1.27 95 1.27 Metalsa Botetourt County 70 140 2.00 140 2.00 140 2.00 Framatome ANP (Advanced Nuclear Campbell Co. & 300 91 0.30 91 0.30 91 0.30 Power) Lynchburg Schrader Bridgeport International Inc. Campbell County 50 55 1.10 55 1.10 55 1.10 Care Rehab and Orthopaedic Products, Charlotte County 50 69 1.38 69 1.38 69 1.38 Inc. Chesapeake Hardwood Products Chesapeake 50 25 0.50 25 0.50 25 0.50 Hudd Distribution Chesapeake 260 304 1.17 304 1.17 304 1.17 HCA Chesterfield County 200 219 1.10 219 1.10 219 1.10 DuPont Engineering Polymers Chesterfield County 20 25 1.25 25 1.25 25 1.25 Continental Teves, Inc. Culpepper County 29 35 1.21 35 1.21 35 1.21 Essel Propack America LLC Danville 50 110 2.20 110 2.20 110 2.20 Sunrise Senior Livinga Fairfax County 140 0 0.00 121 0.84 140 1.00 Unisys Corporation Fairfax County 900 363 0.40 363 0.40 363 0.40 Money Mailer Franklin 160 110 0.69 110 0.69 110 0.69 MW Manufacturers Franklin County 130 259 1.99 259 1.99 259 1.99 The Home Depot Frederick County 30 10 0.33 10 0.33 10 0.33 Ford Motor Company Frederick County 95 0 0.00 0 0.00 0 0.00 Trex Company, Inc. Frederick County 475 0 0.00 0 0.00 0 0.00 Barber & Ross Company Frederick County 36 107 2.97 107 2.97 107 2.97 CarMax, Inc. Goochland County 600 400 0.67 400 0.67 400 0.67 Harvest Pharmaceuticals Inc. Grayson County 30 9 0.30 9 0.30 9 0.30 D&R USA, Inc. Halifax County 40 68 1.70 68 1.70 68 1.70 Virginia Brands, LLC Halifax County 35 23 0.66 23 0.66 23 0.66 Sunshine Mills, Inc. Halifax County 8 0 0.00 0 0.00 0 0.00 Gray Hawk Systems, Inc. Hampton Roads & 200 244 1.22 244 1.22 244 1.22 Northern Virginia Wachovia Securities LLC Henrico Co. & Richmond 1,200 849 0.71 849 0.71 849 0.71 City Philip Morris USA Henrico County 450 500 1.11 500 1.11 500 1.11
68 James River Insurance Company Henrico County 42 2 0.05 2 0.05 2 0.05 Globaltex Inc.a Henry County 154 0 0.00 134 0.87 154 1.00 Goldschmidt Chemical Corporation Hopewell 28 0 0.00 0 0.00 0 0.00 Augusta Lumber Company King William County 65 34 0.52 34 0.52 34 0.52 WaveLight Laser Technologie AG Loudon County 30 11 0.37 11 0.37 11 0.37 RR Donnelleya Lynchburg 50 0 0.00 43 0.86 50 1.00 MZM, Inc. Martinsville 250 43 0.17 43 0.17 43 0.17 DRS Group Mecklenburg County 115 200 1.74 200 1.74 200 1.74 APT, Inc.a Mecklenburg County 375 0 0.00 325 0.87 375 1.00 Liebherr Newport News 134 170 1.27 170 1.27 170 1.27 Siemens VDO Automotive Newport News 75 40 0.53 40 0.53 40 0.53 Boehringer Ingelheim Corporation Petersburg 165 165 1.00 165 1.00 165 1.00 Intertape Polymer Group Inc. Pittsylvania County 65 65 1.00 65 1.00 65 1.00 Carbone Kirkwood LLC Prince Edward County 50 44 0.88 44 0.88 44 0.88 Standard Motor Products, Inc Prince George County 107 92 0.86 92 0.86 92 0.86 General Dynamics Land Systems Prince William County 170 400 2.35 400 2.35 400 2.35 Global Contact Services, LLC Pulaski County 300 170 0.57 170 0.57 170 0.57 Grucci Radford 53 0 0.00 0 0.00 0 0.00 Dominion Richmond City 110 2 0.02 2 0.02 2 0.02 The Vidette Groupa Roanoke City 500 0 0.00 434 0.87 500 1.00 Marvin Windows and Doors Roanoke County 100 58 0.58 58 0.58 58 0.58 Cardinal Glass Industries Roanoke County 160 75 0.47 75 0.47 75 0.47 Wal-Mart Stores, Inc. Rockingham County 1,600 902 0.56 902 0.56 902 0.56 Teleflex Automotive Russell County 175 0 0.00 0 0.00 0 0.00 General Dynamics Smyth County 120 174 1.45 174 1.45 174 1.45 Lockheed Martina Suffolk 50 0 0.00 43 0.86 50 1.00 STIHL Inc. Virginia Beach 80 84 1.05 84 1.05 84 1.05 Cendant Corporation Virginia Beach 187 41 0.22 41 0.22 41 0.22 AMERIGROUP Corporation Virginia Beach 858 755 0.88 755 0.88 755 0.88 AFG Industries Washington County 200 71 0.36 71 0.36 71 0.36 Carry-On Trailer Corporation Westmoreland County 140 161 1.15 161 1.15 161 1.15 Wytheville Technologies, Inc. Wythe County 102 215 2.11 215 2.11 215 2.11 Musser Lumber Sales, Inc. Wythe County 45 23 0.51 23 0.51 23 0.51 TOTALSb 12,878 8604 0.67 9,704 0.75 9,873 0.77 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
69 Projected Job Creation 2004 Development Locality Job Lower Mid- Upper Projects Ratio Ratio Ratio Creation Bound Level Bound Science Applications (Multiple locations) 4,515 0 0.00 2,872 0.64 4,515 1.00 International Corporationa Corporate Executive Boarda Arlington County 2,500 0 0.00 1,590 0.64 2,500 1.00 SRA International Arlington Co.; Fairfax Co. 1,400 1,127 0.81 1,127 0.81 1,127 0.81 Hershey Chocolate of VA, Inc. Augusta County 110 125 1.14 125 1.14 125 1.14 Arkay Packaging Corporation Botetourt County 75 0 0.00 0 0.00 0 0.00 Crowley Foods Bristol 96 29 0.30 29 0.30 29 0.30 Snack Alliance, Inc. Bristol 180 104 0.58 104 0.58 104 0.58 Rage Corporation Campbell County 25 21 0.84 21 0.84 21 0.84 M.C. Dean, Inc. Caroline County 150 44 0.29 44 0.29 44 0.29 Merillat Industries, Inc. Culpepper County 140 237 1.69 237 1.69 237 1.69 Luna Innovations Danville 54 15 0.28 15 0.28 15 0.28 Telvista, Inc. Danville 500 800 1.60 800 1.60 800 1.60 Columbia Flooring Danville 200 135 0.68 135 0.68 135 0.68 Knight-Celotex, LLC Danville 145 88 0.61 88 0.61 88 0.61 Nestlé Refrigerated Foods Danville 50 21 0.42 21 0.42 21 0.42 Franklin Braid Emporia 25 44 1.76 44 1.76 44 1.76 Charah, Inc. Emporia 290 89 0.31 89 0.31 89 0.31 Toll Integrated Systems Emporia; Greensville Co. 28 10 0.36 10 0.36 10 0.36 Cam Communications, Inc. Fairfax County 31 83 2.68 83 2.68 83 2.68 IBM Corporation Fairfax County 1250 124 0.10 124 0.10 124 0.10 PricewaterhouseCoopers Fairfax County 600 600 1.00 600 1.00 600 1.00 Booz Allen Hamilton Fairfax County 3,700 2,953 0.80 2,953 0.80 2,953 0.80 AgustaWestland, Inc. Fairfax County 300 15 0.05 15 0.05 15 0.05 CTS&I Millwork, Inc.a Franklin County 40 0 0.00 25 0.63 40 1.00 M&H Plastics Frederick County 57 33 0.58 33 0.58 33 0.58 HP Hood Inc.a Frederick County 55 0 0.00 35 0.64 55 1.00 Executive Protection Systems Frederick County 30 17 0.57 17 0.57 17 0.57 Guardian Industries Corp.a Galax 54 0 0.00 34 0.63 54 1.00 Celanese Acetate LLC Giles County 65 104 1.60 104 1.60 104 1.60 Universal Food and Beverage Grayson County 151 31 0.21 31 0.21 31 0.21 Company, Inc. Veggie Patcha Greenville County 80 0 0.00 51 0.64 80 1.00 ABB, Inc. Halifax County 375 200 0.53 200 0.53 200 0.53 Infineon Technologies Richmond Henrico County 2,000 200 0.10 200 0.10 200 0.10 Virginia Credit & Finance Henrico County 150 107 0.71 107 0.71 107 0.71
70 Saxon Capital, Inc. Henrico County 234 33 0.14 33 0.14 33 0.14 America Online, Inc.a Henrico County & Norton 107 0 0.00 68 0.64 107 1.00 MasterBrand Cabinets, Inc. Henry County 700 196 0.28 196 0.28 196 0.28 HT Motorsportsa Henry County 75 0 0.00 48 0.64 75 1.00 StarTek, Inc. Henry County 500 693 1.39 693 1.39 693 1.39 Cost Plus, Inc Isle of Wight County 190 100 0.53 100 0.53 100 0.53 Wal-Mart Stores, Inc. James City County 125 121 0.97 121 0.97 121 0.97 StarTek, Inc. Lynchburg 542 333 0.61 333 0.61 333 0.61 Microwave Circuits, Inc. Lynchburg 200 27 0.13 27 0.14 27 0.14 SEA Systems Group, Inc. Mecklenburg County 25 7 0.28 7 0.28 7 0.28 Basic Sportswear Mecklenburg County 40 20 0.50 20 0.50 20 0.50 Southern Textile Service, Inc. and 55 74 1.35 74 1.35 74 1.35 Mecklenburg County RD Group CMA-CGM Norfolk 116 68 0.59 68 0.59 68 0.59 Trader Publishing Company Norfolk 1,150 197 0.17 197 0.17 197 0.17 Ride-Away Corporation Norfolk & Richmond City 45 15 0.33 15 0.33 15 0.33 Aerojet Orange County 149 121 0.81 121 0.81 121 0.81 Hopkins Lumber Company Patrick County 50 0 0.00 0 0.00 0 0.00 APM Terminals Portsmouth 210 6 0.03 6 0.03 6 0.03 Geo-Centers, Inc.a Prince William County 10 0 0.00 6 0.60 10 1.00 General Dynamics Future Combat Prince William County 150 70 0.47 70 0.47 70 0.47 Systems Mediatech, Inc. Prince William County 100 5 0.05 5 0.05 5 0.05 Kollmorgen Corporation Radford 71 2 0.03 2 0.03 2 0.03 Ashford Court Richmond City 105 64 0.61 64 0.61 64 0.61 Morningstar Food Rockingham County 50 57 1.14 57 1.14 57 1.14 MillerCoors Rockingham County 4 0 0.00 0 0.00 0 0.00 Joy Mining Machinery Scott County 45 53 1.18 53 1.18 53 1.18 Midpaco Scott County 60 60 1.00 60 1.00 60 1.00 RJJ Tire Co., Inc. Shenandoah County 28 0 0.00 0 0.00 0 0.00 Utility Trailer Mfg. Co. Smyth County 100 200 2.00 200 2.00 200 2.00 Merillat Corporationa Smyth County 173 0 0.00 110 0.64 173 1.00 Global Contact Services Smyth Co.; Washington Co. 200 130 0.65 130 0.65 130 0.65 Windsor Mill Surry County 70 0 0.00 0 0.00 0 0.00 Blue Ridge Wood Products, Inc. Tazewell County 160 71 0.44 71 0.44 71 0.44 TOTALSb 25,260 10,079 0.40 14,918 0.59 17,688 0.70 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
71 Job Creation Job Creation 2005 Development Projects Locality Lower Mid- Upper Projection Ratio Ratio Ratio Bound Level Bound Princeton BioMeditech Albemarle County 115 0 0.00 106 0.92 115 1.00 Corporationa TransCorea Alleghany County 60 0 0.00 55 0.92 60 1.00 Specialty Blades, Inc. Augusta County 25 40 1.60 40 1.60 40 1.60 Koyo Steering Systems of USAa Botetourt County 96 0 0.00 89 0.93 96 1.00 AmerLink, Inc. Carroll County 200 0 0.00 0 0.00 0 0.00 BT Conferencing, Inc. Chesapeake 150 2 0.01 2 0.01 2 0.01 American Funds Service Co.a Chesapeake 250 0 0.00 231 0.92 250 1.00 Pearson Government Solutionsa Chesterfield County 800 0 0.00 738 0.92 800 1.00 Merit Medical Systems Inc.a Chesterfield County 200 0 0.00 184 0.92 200 1.00 Redemtech, Inc. Chesterfield County 80 60 0.75 60 0.75 60 0.75 Bureau of National Affairs, Inc.a Crystal City 1,000 0 0.00 922 0.92 1,000 1.00 Yorktowne Cabinetry, Inc. Danville 540 294 0.54 294 0.54 294 0.54 TWM Cabling Solutions, Inc Danville 58 40 0.69 40 0.69 40 0.69 Essel Propack America, LLC Danville 40 109 2.73 109 2.73 109 2.73 EIT, Inc. Danville 250 290 1.16 290 1.16 290 1.16 SI International Dickenson County 100 120 1.20 120 1.20 120 1.20 BAE Systems Fairfax County 700 614 0.88 614 0.88 614 0.88 OPTIMUS Corporation Fairfax County 234 234 1.00 234 1.00 234 1.00 Mod-U-Kraf Homes, LLC Franklin County 50 40 0.80 40 0.80 40 0.80 Turman Hardwood Flooring, Inc. Galax 40 134 3.35 134 3.35 134 3.35 Lindstrand USA, Inc. Hailfax County 50 32 0.64 32 0.64 32 0.64 Pacific Headwear, Inc. Halifax County 25 33 1.32 33 1.32 33 1.32 ADi Motorsports Halifax County 860 571 0.66 571 0.66 571 0.66 Newmarket Trading Group, Ltda Hanover County 100 0 0.00 92 0.92 100 1.00 Texturing Services Inc. Henry County 150 91 0.61 91 0.61 91 0.61 Ridgeway Furniture Products Henry County 134 110 0.82 110 0.82 110 0.82 Gerdau Ameristeel King George County 50 57 1.14 57 1.14 57 1.14 KCG Call Centers, LLC Lee County 100 109 1.09 109 1.09 109 1.09 Framatome ANP, Inc. Lynchburg 32 0 0.00 0 0.00 0 0.00 Aurora Flight Services Manassas 100 33 0.33 33 0.33 33 0.33 Corporation Micron Technology, Inc. Manassas 130 387 2.98 387 2.98 387 2.98 Peebles Mecklenburg County 107 226 2.11 226 2.11 226 2.11 Narricot Industries, LP Mecklenburg County 138 337 2.44 337 2.44 337 2.44 Home Care Delivered, Inc.a Mecklenburg County 147 0 0.00 136 0.93 147 1.00 Wolseley Newport News 400 0 0.00 0 0.00 0 0.00
72 Job Creation Job Creation 2005 Development Projects Locality Lower Mid- Upper Projection Ratio Ratio Ratio Bound Level Bound U.S. Gypsum Companya Norfolk 25 0 0.00 23 0.92 25 1.00 Virtus Marketing Norton 35 1 0.03 1 0.03 1 0.03 Ten Oaks, LLC Patrick County 200 123 0.62 123 0.62 123 0.62 StarTek, Inc. Petersburg 500 341 0.68 341 0.68 341 0.68 Lindab USA Portsmouth 57 0 0.00 0 0.00 0 0.00 Paris Ceramics USA, Inc. Prince Edward County 30 38 1.27 38 1.27 38 1.27 Service Center Metals Prince George County 32 50 1.56 50 1.56 50 1.56 Sterling Gelatin, America, Inc.a Prince George County 20 0 0.00 18 0.90 20 1.00 Reyes Holdings, LLC Prince George County 120 0 0.00 0 0.00 0 0.00 Goya Foods, Inc. Prince George County 60 38 0.63 38 0.63 38 0.63 James Hardie Pulaski 200 200 1.00 200 1.00 200 1.00 BondCote Corporation Pulaski County 27 17 0.63 17 0.63 17 0.63 Lumbee Enterprises Pulaski County 50 16 0.32 16 0.32 16 0.32 Philip Morris USA Richmond City 500 450 0.90 450 0.90 450 0.90 FreightCar America, Inc. Roanoke City 400 400 1.00 400 1.00 400 1.00 UnitedHealth Group Roanoke City 250 250 1.00 250 1.00 250 1.00 Tecton Products LLC Roanoke County 50 50 1.00 50 1.00 50 1.00 ITT Industries Night Visiona Roanoke County 200 0 0.00 184 0.92 200 1.00 Dynamic Aviation Rockingham County 206 206 1.00 206 1.00 206 1.00 Designer Wood Tile & Finishing Russell County Inc. 155 1 0.01 1 0.01 1 0.01 CGI Group, Inc. Russell County 300 169 0.56 169 0.56 169 0.56 Call Evolution Company Scott County 250 150 0.60 150 0.60 150 0.60 McGill-Leprechauna Sussex County 25 0 0.00 23 0.92 25 1.00 Clinch River Forest Products, Tazewell County Inc.a 102 0 0.00 94 0.92 102 1.00 STIHL Incorporated Virginia Beach 150 1000 6.67 1000 6.67 1000 6.67 Interbake Foods LLC Warren County 381 248 0.65 248 0.65 248 0.65 Strongwell Corporation Washington County 65 50 0.77 50 0.77 50 0.77 K-VA-T Food Stores, Inc. Washington County 110 110 1.00 110 1.00 110 1.00 Universal Fiber Systems Washington County 94 100 1.06 100 1.06 100 1.06 Pepsi Beverages Companya Wythe County 120 0 0.00 111 0.93 120 1.00 Klöckner Pentaplast of America, Wythe County Inc. 54 53 0.98 53 0.98 53 0.98 TOTALSb 12,279 8,024 0.65 11,030 0.90 11,284 0.92 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
73 Job Job Creation 2006 Development Locality Creation Lower Mid- Upper Projects Ratio Ratio Ratio Projection Bound Level Bound MW Manufacturers Inc. Bland County 175 197 1.13 197 1.13 197 1.13 Tier Technologies Botetourt County 77 2 0.03 2 0.03 2 0.03 Corning Botetourt County 50 0 0.00 0 0.00 0 0.00 Merillat, Inc. Bristol 150 0 0.00 0 0.00 0 0.00 U.S. Components, LLC Buckingham County 104 97 0.93 97 0.93 97 0.93 Intermet Corporation Campbell County 175 0 0.00 0 0.00 0 0.00 Visador Holding Campbell County 100 0 0.00 69 0.69 100 1.00 Corporationa Tosoh Quartz Caroline County 27 0 0.00 0 0.00 0 0.00 FERIDIES® Chesapeake 25 14 0.56 14 0.56 14 0.56 Clinch Mountain Finishing & Chesterfield County Logisticsa 220 0 0.00 151 0.69 220 1.00 Telvista, Inc. Danville 250 590 2.36 590 2.36 590 2.36 Reline America, Inc. Danville 25 19 0.76 19 0.76 19 0.76 Banker Steel Company, LLC Danville 110 110 1.00 110 1.00 110 1.00 Holston Medical Group Danville 40 0 0.00 0 0.00 0 0.00 (HMG) Water World Fiberglass Danville & Pittsylvania 100 0 0.00 69 0.69 100 1.00 Pools, N.E. Inc.a County Arrow Truck Sales, Dex Fairfax County 25 2 0.08 2 0.08 2 0.08 Division Oran Safety Glass Floyd County 50 128 2.56 128 2.56 128 2.56 E.I. DuPont de Nemours & Franklin County 50 0 0.00 34 0.68 50 1.00 Co., Inc.a Arista Tubes, UK Franklin County 145 54 0.37 54 0.37 54 0.37 Jennmar Corporation of Greensville County 70 49 0.70 49 0.70 49 0.70 Virginia, Inc. ABB Inc. Halifax County 30 40 1.33 40 1.33 55 1.83 ABB Inc. James City County 127 55 0.43 55 0.43 40 0.32 NYK Logistics Inc.a King William County 100 0 0.00 69 0.69 100 1.00 Lockheed Martin Corporation Loudoun County 200 234 1.17 234 1.17 234 1.17
74 Lynchburg, Roanoke Prime Choice Foods, Inc. 35 33 0.94 33 0.94 33 0.94 Co. & Rockingham Co. AVID Medical Inc. Manassas 303 163 0.54 163 0.54 163 0.54 Lees Commercial Carpets Martinsville 25 25 1.00 25 1.00 25 1.00 American Industrial Heat Mecklenburg County 85 47 0.55 47 0.55 47 0.55 Transfer, Inc.a Federal-Mogul Corporation Montgomery County 71 38 0.54 38 0.54 38 0.54 Philip Morris USAa Montgomery County 75 0 0.00 52 0.69 75 1.00 Raytheon Companya Orange County 15 0 0.00 10 0.67 15 1.00 Diversified Information Radford 200 0 0.00 137 0.69 200 1.00 Technologiesa Unarco Industries, Inc. Richmond City 194 131 0.68 131 0.68 131 0.68 MeadWestvaco Corporation Rockbridge County 400 589 1.47 589 1.47 589 1.47 MillerCoors Rockingham County 8 162 20.25 162 20.25 162 20.25 R.R. Donnelley & Sons Co.a Russell County 139 0 0.00 95 0.68 139 1.00 Virginia Cobia Farms LLC Scott County 60 24 0.40 24 0.40 24 0.40 Dynax America Corporation Shenandoah County 52 131 2.52 131 2.52 131 2.52 The Mennel Milling Smyth County; 33 0 0.00 23 0.70 33 1.00 Companya Washington County Smyth County; Swedwood North America 740 50 0.07 50 0.07 50 0.07 Washington County Command Information Southampton County 400 4 0.01 4 0.01 4 0.01 Amcor Rigid Plastics Suffolk 144 115 0.80 115 0.80 115 0.80 M.C. Dean, Inc.a Tazewell County 100 0 0.00 69 0.69 100 1.00 McAirlaid’s Vliesstoffe Wise County 160 68 0.43 68 0.43 68 0.43 GmbH & Co. KG The Timken Company Wythe County 50 0 0.00 0 0.00 0 0.00 Smorgon Steel Group Ltd. York County 55 0 0.00 0 0.00 0 0.00 TOTALSb 5,769 3,171 0.55 3,949 0.69 4,303 0.75 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
75 Job Job Creation 2007 Development Locality Creation Lower Mid- Upper Projects Ratio Ratio Ratio Projection Bound Level Bound H2Gen Innovations, Inc. Alexandria 50 51 1.02 51 1.02 51 1.02 GridPoint, Inc. Arlington County 250 98 0.39 98 0.39 98 0.39 The Hershey Company Augusta County 150 200 1.33 200 1.33 200 1.33 Universal Impact, Inc. Augusta County 50 5 0.10 5 0.10 5 0.10 Carded Graphics, LLC, Augusta County 121 177 1.46 177 1.46 177 1.46 (CGL) Innovative Wireless Bedford County 50 6 0.12 6 0.12 6 0.12 Technologies (IWT) Bedford County; The Matrixx Group 40 10 0.25 10 0.25 10 0.25 Bedford City Progress Printing Campbell County 10 150 15.00 150 15.00 150 15.00 Alderman Railcar Services, Charlotte County 110 0 0.00 0 0.00 0 0.00 Inc. INIT Innovations in Traffic Chesapeake 13 0 0.00 0 0.00 0 0.00 Systems AG Dollar Tree Stores, Inc. Chesapeake 100 102 1.02 102 1.02 102 1.02 Capital Group Companies Chesapeake 250 0 0.00 0 0.00 0 0.00 Terremark Worldwide, Inc. Culpepper County 250 92 0.37 92 0.37 92 0.37 Nestlé USA Danville 50 0 0.00 0 0.00 0 0.00 Essel Propack Danville 35 109 3.11 109 3.11 109 3.11 Volkswagen of America, Inc. Fairfax County 400 269 0.67 269 0.67 269 0.67 Quality Culvert Inc. Greensville County 50 0 0.00 0 0.00 0 0.00 Criticon Harrisonburg 25 0 0.00 0 0.00 0 0.00 Ariake USA, Inc Harrisonburg 25 27 1.08 27 1.08 27 1.08 Bostwick Laboratories Henrico County 600 5 0.01 5 0.01 5 0.01 Synergy Biofuels LLCa Lee County 30 0 0.00 19 0.63 30 1.00 Lignetics Lunenburg County 35 22 0.63 22 0.63 22 0.63 Filtration Specialties Inc. Mecklenburg County 10 7 0.70 7 0.70 7 0.70 Showbest Fixture Nottoway County 104 40 0.39 40 0.39 40 0.39 Corporation Aerial Machine and Tool Patrick County 75 188 2.51 188 2.51 188 2.51 Corp
76 Job Job Creation 2007 Development Locality Creation Lower Mid- Upper Projects Ratio Ratio Ratio Projection Bound Level Bound Rolls-Roycea Prince George County 550 0 0.00 350 0.64 550 1.00 Covance Inc. Prince William County 500 121 0.24 121 0.24 121 0.24 Merck & Co., Inc. Rockingham County 70 133 1.90 133 1.90 133 1.90 International Automotive Components Group North Russell County 26 0 0.00 0 0.00 0 0.00 America Inc. (IAC) Rogers Foam Corporationa Scott County 50 0 0.00 32 0.64 50 1.00 International Automotive Components Group North Shenandoah County 35 27 0.77 27 0.77 27 0.77 America Inc. (IAC) Smyth & Washington Gates Corporation 172 78 0.45 78 0.45 78 0.45 Co. Wellborn Cabinet, Inc. Smyth County 100 0 0.00 0 0.00 0 0.00 American Wood Fibers Smyth County 60 45 0.75 45 0.75 45 0.75 Bristol Compressors Washington County 1,000 1,028 1.03 1,028 1.03 1,028 1.03 International Pinnacle Wood Products of Wise County 200 18 0.09 18 0.09 18 0.09 Virginia, Inc. TOTALSb 5,646 3,008 0.53 3,409 0.60 3,638 0.64 a: Employment information not obtained from VDBA, SCT, or NETS – lower bound, mid-level, and upper bound estimates for employment apply b: Ratios are an annual average across all development projects
77 APPENDIX 3: JOB PROJECTIONS AND CREATION BY SECTOR
Table 3A: Jobs Comparison Sectors Exceeding Job Creation Projections
Job Direct Job Creation Sector Sector Description Projects Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Insurance Carriers & 524 2 42 757 18.02 757 18.02 757 18.02 Related Activities Performing Arts, 711 Spectator Sports, & 2 415 856 2.06 904 2.18 931 2.24 Related Industries Construction of 236 1 30 36 1.20 36 1.20 36 1.20 Buildings Machinery 333 14 2,899 3,138 1.08 3,282 1.13 3,288 1.13 Manufacturing Beverage & Tobacco 312 Product 8 1,300 1,118 0.86 1,415 1.09 1,471 1.13 Manufacturing Nonmetallic Mineral 327 Product 7 559 551 0.99 608 1.09 630 1.13 Manufacturing Plastics & Rubber 326 Products 27 2,615 2,485 0.95 2,716 1.04 2,790 1.07 Manufacturing Warehousing & 493 2 360 304 0.84 373 1.04 404 1.12 Storage Food & Beverage 445 3 425 275 0.65 439 1.03 525 1.24 Stores Management of 551 Companies & 12 9,421 1,778 0.19 9,526 1.01 9,953 1.06 Enterprises
Note: Sector refers to NAICS code designation. Source: Number of projects from Governor’s Press Releases. Lower bound, mid-level, and upper bound estimates for direct job creation from IMPLAN. Ratios for each scenario from authors’ calculations.
78 Table 3B: Jobs Comparison Sectors Meeting Standard Grant Repayment Cutoff (75-100% of Job Creation Projections)
Job Direct Job Creation Sector Creation Lower Mid- Upper Sector Description Projects Projections Bound Ratio Level Ratio Bound Ratio 721 Accommodation 1 270 270 1.00 270 1.00 270 1.00 Printing & Related 323 3 329 175 0.53 314 0.95 364 1.11 Support Activities Support Activities 488 2 306 206 0.67 290 0.95 306 1.00 for Transportation Transportation 336 Equipment 31 4,638 4,347 0.94 4,395 0.95 4,397 0.95 Manufacturing Building Material & Garden 444 3 680 147 0.22 627 0.92 702 1.03 Equipment & Supplies Dealers Fabricated Metal 332 Product 22 2,449 1,985 0.81 2,199 0.90 2,235 0.91 Manufacturing Leather & Allied 316 Product 1 375 0 0.00 325 0.87 375 1.00 Manufacturing Nursing & 623 Residential Care 1 140 0 0.00 121 0.86 140 1.00 Facilities Water 483 3 586 303 0.52 504 0.86 538 0.92 Transportation Wholesale Electronic Markets 425 1 147 0 0.00 126 0.86 147 1.00 & Agents & Brokers Sporting Goods, 451 Hobby, Book, & 1 150 0 0.00 128 0.85 150 1.00 Music Stores Waste Management & 562 1 165 0 0.00 139 0.84 165 1.00 Remediation Service 531 Real Estate 1 30 0 0.00 25 0.83 30 1.00 Broadcasting 515 2 1,775 1,447 0.82 1,447 0.82 1,447 0.82 (excludes Internet) Food 311 26 2,927 2,304 0.79 2,378 0.81 2,417 0.83 Manufacturing Credit 522 Intermediation & 2 1,234 33 0.03 991 0.80 1033 0.84 Related Activities Merchant 424 Wholesalers, 20 3,465 1,626 0.47 2,654 0.77 2,831 0.82 Nondurable Goods Textile Product 314 4 205 154 0.75 154 0.75 154 0.75 Mills
Note: Sector refers to NAICS code designation. Source: Number of projects from Governor’s Press Releases. Lower bound, mid-level, and upper bound estimates for direct job creation from IMPLAN. Ratios for each scenario from authors’ calculations.
79 Table 3C: Jobs Comparison Sectors Meeting between 50-74.99% of Job Creation Projections
Job Job Creation Sector Sector Description Projects Creation Lower Mid- Upper Ratio Ratio Ratio Projections Bound Level Bound Religious, Grantmaking, Civic, Professional, & 813 Similar Organizations 2 120 88 0.73 88 0.73 88 0.73 322 Paper Manufacturing 4 950 329 0.35 680 0.72 784 0.83 313 Textile Mills 14 2,202 1,440 0.65 1,574 0.71 1,594 0.72 Professional, Scientific, & 541 Technical Services 59 24,625 9,927 0.40 16,762 0.68 19,993 0.81 Securities, Commodity Contracts, & Other Financial Investments 523 & Related Activities 3 1,830 849 0.46 1,213 0.66 1,229 0.67 Computer & Electronic Product 334 Manufacturing 9 5,182 2,643 0.51 3,429 0.66 3,493 0.67 112 Animal Production 1 88 0 0.00 58 0.66 88 1.00 Electronics & 443 Appliance Stores 1 1,200 0 0.00 786 0.66 1,200 1.00 Administrative & 561 Support Services 28 11,689 4018 0.34 7,616 0.65 8,618 0.74 Miscellaneous 339 Manufacturing 7 1,818 711 0.39 1,183 0.65 1,211 0.67 811 Repair & Maintenance 2 160 15 0.09 104 0.65 111 0.69 Chemical 325 Manufacturing 27 2,536 1408 0.56 1,620 0.64 1,669 0.66 Motion Picture & Sound Recording 512 Industries 2 496 298 0.60 298 0.60 298 0.60 Merchant Wholesalers, Durable 423 Goods 17 3,154 1,553 0.49 1,894 0.60 2,003 0.64 Apparel 315 Manufacturing 2 629 373 0.59 373 0.59 373 0.59 Wood Product 321 Manufacturing 25 3,486 1,494 0.43 1,987 0.57 2,086 0.60 General Merchandise 452 Stores 1 1,600 902 0.56 902 0.56 902 0.56 Motor Vehicle & Parts 441 Dealers 7 1,632 897 0.55 903 0.55 907 0.56 Electrical Equipment, Appliance, & Component 335 Manufacturing 14 2,064 904 0.44 1,041 0.50 1,109 0.54
Note: Sector refers to NAICS code designation. Source: Number of projects from Governor’s Press Releases. Lower bound, mid-level, and upper bound estimates for direct job creation from IMPLAN. Ratios for each scenario from authors’ calculations.
80 Table 3D: Jobs Comparison Sectors Meeting Less Than 50% of Job Creation Projections
Job Job Creation Sector Sector Projects Creation Lower Mid- Upper Description Ratio Ratio Ratio Projections Bound Level Bound Non-store 454 Retailers 2 1,125 513 0.46 513 0.46 513 0.46 Ambulatory Health Care 621 Services 3 1,300 523 0.40 523 0.40 523 0.40 Furniture & Related Product 337 Manufacturing 19 6,089 1,765 0.29 2,317 0.38 2,575 0.42 Internet Service Providers, Web Search Portals, & Data Processing 518 Services 10 2,910 971 0.33 971 0.33 971 0.33 Primary Metal 331 Manufacturing 6 427 110 0.26 136 0.32 150 0.35 517 Telecomm. 12 12,718 2,166 0.17 3,003 0.24 3,173 0.25 Publishing 511 Industries 2 1,450 222 0.15 222 0.15 222 0.15 221 Utilities 3 185 2 0.01 23 0.12 27 0.15 Rental & Leasing 532 Services 2 397 47 0.12 47 0.12 47 0.12 Air 481 Transportation 1 300 15 0.05 15 0.05 15 0.05
Note: Sector refers to NAICS code designation. Source: Number of projects from Governor’s Press Releases. Lower bound, mid-level, and upper bound estimates for direct job creation from IMPLAN. Ratios for each scenario from authors’ calculations.
81 Table 3E: Economic Multipliers by Sector
Sector Sector Description Multiplier Sector Sector Description Multiplier Nonmetallic Mineral Product Furniture & Related Product 327 1.16 337 1.93 Manufacturing Manufacturing 423- 453 Miscellaneous Store Retailers 1.16 Merchant Wholesalers 1.94 425 454 Nonstore Retailers 1.18 532 Rental & Leasing Services 1.94 Sporting Goods, Hobby, Book, & Fabricated Metal Product 451 1.19 332 2.01 Music Stores Manufacturing Performing Arts, Spectator Sports, Professional, Scientific, & Technical 711 1.19 541 2.02 & Related Industries Services Waste Management & Remediation 452 General Merchandise Stores 1.25 562 2.03 Service Insurance Carriers & Related 445 Food & Beverage Stores 1.27 524 2.05 Activities Building Material & Garden Transportation Equipment 444 1.35 336 2.10 Equipment & Supplies Dealers Manufacturing 443 Electronics & Appliance Stores 1.41 236 Construction of Buildings 2.12 Plastics & Rubber Products 561 Administrative & Support Services 1.44 326 2.12 Manufacturing 112 Animal Production 1.45 321 Wood Product Manufacturing 2.29 Nursing & Residential Care Electrical Equipment, Appliance, & 623 1.46 335 2.32 Facilities Component Manufacturing 441 Motor Vehicle & Parts Dealers 1.47 481 Air Transportation 2.36 Securities, Commodity Contracts, & 523 Other Financial Investments & 1.48 333 Machinery Manufacturing 2.38 Related Activities Management of Companies & 315 Apparel Manufacturing 1.52 551 2.56 Enterprises Internet Service Providers, Web Leather & Allied Product 316 1.56 518 Search Portals, & Data Processing 2.60 Manufacturing Services 314 Textile Product Mills 1.59 511 Publishing Industries 2.66 Computer & Electronic Product 811 Repair & Maintenance 1.59 334 2.90 Manufacturing Motion Picture & Sound Recording 512 1.60 515 Broadcasting (except Internet) 3.08 Industries Support Activities for 488 1.61 517 Telecommunications 3.27 Transportation 493 Warehousing & Storage 1.62 331 Primary Metal Manufacturing 3.34 721 Accommodation 1.67 322 Paper Manufacturing 3.38 Religious, Grantmaking, Civic, 813 Professional, & Similar 1.68 221 Utilities 3.59 Organizations 313 Textile Mills 1.73 311 Food Manufacturing 3.93 Printing & Related Support Credit Intermediation & Related 323 1.80 522 4.17 Activities Activities 339 Miscellaneous Manufacturing 1.81 325 Chemical Manufacturing 4.56 531 Real Estate 1.84 483 Water Transportation 4.96 Beverage & Tobacco Product 621 Ambulatory Health Care Services 1.89 312 5.29 Manufacturing
82 Table 3F-1: Highest Performing Development Projects
(Job Creation Ratio)
Date of Project Projected Jobs Job Creation Sector Company Name Announcement Jobs Created Ratio 312 1/5/2006 MillerCoors 8 162 20.25 561 7/30/2007 Progress Printing 10 150 15.00 326 4/13/2000 Goodyear 50 529 10.58 333 12/21/2005 STIHL Incorporated 150 1,000 6.67 336 5/14/2002 Siemens VDO Automotive 55 300 5.46 711 2/23/2000 Nextel Communications 200 856 4.28 336 4/14/2000 Nylstar 50 210 4.20 445 12/13/2001 Kraft Foods 75 272 3.63 321 12/2/2005 Turman Hardwood Flooring, Inc. 40 134 3.35 325 3/13/2002 Barr Laboratories, Inc. 75 235 3.13 326 4/26/2007 Essel Propack America, LLC 35 109 3.11 551 11/4/2005 Framatome ANP, Inc 130 387 2.98 325 9/16/2003 Trex Company, Inc. 36 107 2.97 311 6/13/2001 Maple Leaf Bakery 45 133 2.96 336 7/24/2001 Ford Motor Company 200 572 2.86 326 4/29/2005 Essel Propack America, LLC 40 109 2.73 541 7/6/2004 Cam Communications, Inc. 31 83 2.68 551 3/13/2000 Von Holtzbrinck Publishing Services 50 130 2.60 327 8/16/2006 Oran Safety Glass 50 128 2.56 336 4/7/2006 Dynax America Corporation 52 131 2.52 332 8/16/2007 Aerial Machine and Tool Corp 75 188 2.51 313 3/18/2005 Narricot Industries, LP 138 337 2.44 325 3/9/2000 Boehringer Ingelheim Corp 104 246 2.37 561 1/10/2006 Telvista, Inc 250 590 2.36 336 8/26/2003 General Dynamics Land Systems 170 400 2.35 326 7/3/2002 EsselPropack America, LLC 81 187 2.31 326 11/7/2003 Essel Propack America LLC 50 110 2.20 336 8/13/2002 Visteon Corporation 42 90 2.14 332 10/28/2003 Wytheville Technologies, Inc. 102 215 2.11 551 3/9/2005 Peebles 107 226 2.11 326 11/3/1999 Ball Corp. 40 83 2.08 313 2/16/1999 Tritex, LLC 30 60 2.00 336 3/19/2003 Metalsa 70 140 2.00 336 3/9/2004 Utility Trailer Manufacturing Co. 100 200 2.00 424 5/20/2002 Wako Chemicals USA, Inc. 5 10 2.00
Source: VDBA, SCT, and NETS data. Ratios from authors’ calculations.
83
Table 3F-2: Highest Performing Development Projects
(Net Jobs)
Date of Project Projected Jobs Net Sector Company Name Announcement Jobs Created Difference 333 12/21/2005 STIHL Incorporated 150 1,000 850
334 12/19/2000 Infineon Technologies 1,100 1,845 745
711 2/23/2000 Nextel Communications 200 856 656
326 4/13/2000 Goodyear 50 529 479
336 7/24/2001 Ford Motor Company 200 572 372
561 1/10/2006 Telvista, Inc 250 590 340
517 4/13/2004 Telvista, Inc. 500 800 300
551 11/4/2005 Framatome ANP, Inc 130 387 257
336 5/14/2002 Siemens VDO Automotive 55 300 245
336 8/26/2003 General Dynamics Land Systems 170 400 230
313 3/18/2005 Narricot Industries, LP 138 337 199
445 12/13/2001 Kraft Foods 75 272 197
561 8/9/2004 StarTek, Inc. 500 693 193
551 2/15/2006 MeadWestvaco Corporation 400 589 189
424 3/17/2000 Wal-Mart Stores, Inc. 400 585 185
454 7/7/1999 National Catalog Corporation 250 413 163
325 3/13/2002 Barr Laboratories, Inc. 75 235 160
336 4/14/2000 Nylstar 50 210 160
312 1/5/2006 MillerCoors 8 162 154
423 9/7/2001 Ferguson Enterprises 400 550 150
Source: VDBA, SCT, and NETS data.
84
Table 3G: Average Hourly Wage by Sector
Sector Sector Description Average Hourly Wage 312 Beverage & Tobacco Product Manufacturing $54.26 721 Accommodation $43.29 541 Professional, Scientific, & Technical Services $37.57 523 Securities, Commodity Contracts, & Other Financial Inv. $36.61 524 Insurance Carriers & Related Activities $32.76 314 Textile Product Mills $31.48 551 Management of Companies & Enterprises $28.21 517 Telecommunications $26.85 423 Merchant Wholesalers, Durable Goods $25.82 512 Motion Picture & Sound Recording Industries $24.79 236 Construction of Buildings $24.58 511 Publishing Industries $23.73 334 Computer & Electronic Product Manufacturing $22.65 325 Chemical Manufacturing $21.17 488 Support Activities for Transportation $19.85 518 Internet Service Providers, Web Search Portals & Data Proc. $19.54 522 Credit Intermediation & Related Activities $19.18 441 Motor Vehicle & Parts Dealers $18.09 336 Transportation Equipment Manufacturing $16.94 327 Nonmetallic Mineral Product Manufacturing $16.87 452 General Merchandise Stores $16.38 532 Rental & Leasing Services $16.38 483 Water Transportation $15.76 333 Machinery Manufacturing $15.53 326 Plastics & Rubber Products Manufacturing $14.82 453 Miscellaneous Store Retailers $14.36 444 Building Material & Garden Equipment & Supplies Dealers $14.04 332 Fabricated Metal Product Manufacturing $13.95 424 Merchant Wholesalers, Nondurable Goods $13.95 331 Primary Metal Manufacturing $13.93 621 Ambulatory Health Care Services $13.82 711 Performing Arts, Spectator Sports, & Related Industries $13.13 339 Miscellaneous Manufacturing $13.07 311 Food Manufacturing $12.98 315 Apparel Manufacturing $12.93 335 Electrical Equipment, Appliance, & Component Mfg $12.86 321 Wood Product Manufacturing $12.86 337 Furniture & Related Product Manufacturing $12.58 313 Textile Mills $12.43 493 Warehousing & Storage $12.40 515 Broadcasting (except Internet) $11.70 813 Religious, Grantmaking, Civic, Professional, & Similar Orgs $10.53 445 Food & Beverage Stores $10.33 322 Paper Manufacturing $10.27 561 Administrative & Support Services $9.12 454 Nonstore Retailers $9.05
Source: VDBA and SCT data and authors’ calculations.
85
Table 3H: Grant Awards by Sector
Aggregate Average Average Per- Number Aggregate Grant Per-Project Number of Project Sector of Sector Grant Awards Awards Award Projects Award Projects (in millions) (in millions) (in millions) (in millions) 481 0.00 1 0.00 322 1.71 4 0.43 531 0.00 1 0.00 326 12.27 27 0.45 623 0.00 1 0.00 441 3.20 7 0.46 236 0.03 1 0.03 562 0.48 1 0.48 221 0.22 3 0.07 335 6.85 14 0.49 316 0.08 1 0.08 112 0.52 1 0.52 488 0.18 2 0.09 518 5.22 10 0.52 331 0.62 6 0.10 333 7.35 14 0.52 522 0.21 2 0.11 523 1.63 3 0.54 454 0.27 2 0.14 512 1.09 2 0.54 314 0.60 4 0.15 339 5.17 7 0.74 493 0.30 2 0.15 453 1.50 2 0.75 425 0.18 1 0.18 336 23.83 31 0.77 483 0.62 3 0.21 541 45.42 57 0.80 721 0.24 1 0.24 325 21.67 27 0.80 445 0.76 3 0.25 332 19.51 22 0.89 321 6.81 25 0.27 423 16.78 17 0.99 444 0.82 3 0.27 524 2.10 2 1.05 561 8.47 28 0.30 337 20.19 19 1.06 451 0.30 1 0.30 315 2.16 2 1.08 813 0.63 2 0.32 551 13.88 12 1.16 532 0.66 2 0.33 515 2.69 2 1.34 424 6.64 20 0.33 517 19.44 14 1.39 711 0.70 2 0.35 511 2.98 2 1.49 323 1.13 3 0.38 334 16.29 9 1.81 327 2.80 7 0.40 443 1.94 1 1.94 313 5.86 14 0.42 452 2.32 1 2.32 311 11.04 26 0.42 312 38.36 8 4.79 621 1.28 3 0.43
Source: Office of the Governor and authors’ calculations.
86 APPENDIX 4: STATE-LEVEL GRANT EXPENDITURES AND REVENUES BY SECTOR
Lower Bound Mid-Level Upper Bound Sector Sector Description Tax Grant Grant Grant Tax Revenues Tax Revenues Revenues Expenditures Expenditures Expenditures 112 Animal Production $0 $0 $219,659 $338,635 $333,578 $517,000 221 Utilities $211,351 $0 $2,352,013 $0 $2,895,323 $0 236 Construction of Buildings $403,099 $30,531 $403,099 $30,531 $403,099 $30,531 311 Food Mfg $46,981,384 $7,259,822 $48,096,686 $7,878,237 $49,285,594 $8,210,762 312 Beverage & Tobacco $22,797,390 $36,444,204 $354,523,315 $37,549,955 $393,707,859 $37,760,574 Product Mfg 313 Textile Mills $14,226,586 $3,443,483 $15,018,682 $3,747,800 $15,748,039 $3,794,483 314 Textile Product Mills $975,423 $447,658 $975,423 $447,658 $975,423 $447,658 315 Apparel Mfg $2,284,561 $1,294,166 $2,284,561 $1,294,166 $2,284,561 $1,294,166 316 Leather & Allied Product $0 $0 $1,857,198 $71,007 $2,162,872 $81,900 Mfg 321 Wood Product Mfg $17,618,683 $2,764,824 $21,872,942 $3,859,507 $24,600,113 $4,107,954 322 Paper Mfg $10,056,739 $425,160 $19,882,157 $1,145,941 $23,964,997 $1,371,010 323 Printing & Related Support $1,567,217 $0 $2,652,466 $784,436 $3,259,809 $1,126,500 325 Chemical Mfg $51,695,947 $13,235,749 $57,067,559 $13,446,146 $61,278,780 $13,516,984 326 Plastics & Rubber Products $40,182,655 $9,005,852 $42,424,217 $9,343,391 $45,114,535 $9,432,771 Mfg 327 Nonmetallic Mineral $8,281,985 $1,839,372 $8,610,592 $2,456,371 $8,922,161 $2,561,607 Product Mfg 331 Primary Metal Mfg $2,905,002 $143,246 $3,599,226 $227,905 $3,961,366 $272,496 332 Fabricated Metal Product $24,490,676 $5,687,756 $26,197,191 $5,791,543 $27,575,145 $5,809,286 Mfg 333 Machinery Mfg $50,533,413 $9,489,388 $50,746,706 $9,489,388 $52,948,972 $9,489,388 334 Computer & Electronic $66,343,856 $10,026,770 $77,213,849 $11,224,653 $87,680,314 $11,277,170 Product Mfg 335 Electrical Equip & $15,755,943 $3,305,644 $17,622,585 $3,360,673 $19,328,916 $3,389,657 Appliance Mfg 336 Transportation Equipment $61,161,303 $16,816,395 $61,458,839 $16,906,236 $61,864,801 $16,910,175 Mfg
87 Lower Bound Mid-Level Upper Bound Sector Sector Description Tax Grant Grant Grant Tax Revenues Tax Revenues Revenues Expenditures Expenditures Expenditures 337 Furniture & Related Product $16,994,881 $4,946,697 $21,165,336 $6,040,442 $24,794,234 $6,588,844 Mfg 339 Miscellaneous Mfg $6,970,675 $2,260,471 $11,104,870 $2,859,413 $11,872,696 $2,885,671 423-425 Merchant Wholesalers $113,029,081 $11,202,563 $159,883,880 $13,009,467 $162,408,690 $13,327,021 441 Motor Vehicle & Parts $14,484,111 $2,232,537 $14,599,224 $2,232,537 $14,645,584 $2,232,537 Dealers 443 Electronics & Appliance $0 $0 $8,881,135 $1,269,881 $14,222,366 $1,938,750 Stores 444 Bldg Material & Gardening $2,203,095 $175,500 $8,955,154 $732,956 $10,520,905 $820,335 Stores 445 Food & Beverage Stores $3,233,450 $761,129 $4,919,372 $761,129 $6,172,950 $761,129 451 Sporting Goods, Book & $0 $0 $961,357 $259,467 $1,182,033 $303,825 Music Stores 452 General Merchandise Stores $10,074,244 $1,519,225 $10,074,244 $1,519,225 $10,074,244 $1,519,225 453 Miscellaneous Store $2,263,182 $1,083,078 $2,263,182 $1,083,078 $2,263,182 $1,083,078 Retailers 454 Nonstore Retailers $5,918,303 $249,344 $5,918,303 $249,344 $5,918,303 $249,344 481 Air Transportation $343,845 $0 $343,845 $0 $343,845 $0 483 Water Transportation $16,231,953 $401,179 $25,353,947 $504,966 $28,821,092 $522,709 488 Support for Transportation $2,437,807 $181,912 $3,252,417 $181,912 $3,621,210 $181,912 493 Warehousing & Storage $2,010,566 $301,567 $2,261,297 $301,567 $2,671,936 $301,567 511 Publishing Industries $4,071,868 $444,059 $4,071,868 $444,059 $4,071,868 $444,059 512 Motion Picture & Sound $2,187,297 $557,753 $2,187,297 $557,753 $2,187,297 $557,753 Recording 515 Broadcasting (except $24,950,156 $1,970,328 $24,950,156 $1,970,328 $24,950,156 $1,970,328 Internet) 517 Telecommunications $137,290,023 $2,966,269 $182,467,568 $4,288,510 $201,117,822 $4,514,561 518 Internet Services & Data $20,904,513 $2,050,000 $20,904,513 $2,050,000 $20,904,513 $2,050,000 Processing 522 Credit Intermediation & $1,467,276 $30,093 $44,062,754 $30,093 $48,606,228 $30,093 Related 523 Securities & Investments $5,208,919 $827,775 $5,541,892 $1,067,352 $7,202,188 $1,077,855 524 Insurance Carriers & $15,641,444 $1,757,846 $15,641,444 $1,757,846 $15,641,444 $1,757,846 Related
88 Lower Bound Mid-Level Upper Bound Sector Sector Description Tax Grant Grant Grant Tax Revenues Tax Revenues Revenues Expenditures Expenditures Expenditures 531 Real Estate $0 $0 $1,151,800 $0 $1,444,864 $0 532 Rental & Leasing Services $1,001,159 $54,896 $1,001,159 $54,896 $1,001,159 $54,896 541 Professional, Scientific & $126,611,329 $33,326,033 $200,899,197 $35,324,386 $254,995,487 $36,018,613 Technical 551 Management of Companies $31,949,294 $8,444,517 $160,419,993 $13,289,461 $178,847,763 $13,639,977 561 Administrative & Support $20,949,033 $3,578,847 $37,372,807 $6,296,362 $44,932,496 $6,875,427 Services 562 Waste Management & $0 $0 $2,187,075 $402,091 $2,718,225 $478,680 Remediation 621 Ambulatory Health Care $4,971,309 $1,036,300 $4,971,309 $1,036,300 $4,971,309 $1,036,300 Services 623 Nursing & Residential Care $0 $0 $656,046 $0 $814,123 $0 711 Performing Arts, Spectator $2,060,057 $548,874 $2,299,026 $585,123 $2,367,692 $605,869 Sports 721 Accommodation $3,435,640 $239,340 $3,435,640 $239,340 $3,435,640 $239,340 811 Repair & Maintenance $204,876 $28,685 $1,349,461 $28,685 $1,516,088 $28,685 813 Religious, Civic & $737,294 $631,578 $737,294 $631,578 $737,294 $631,578 Professional Organizations TOTAL $460,517,650 $205,468,415 $1,081,083,807 $230,453,723 $1,110,450,889 $236,129,878 Source: Office of the Governor, VDBA, SCT, IMPLAN, and authors’ calculations.
89 APPENDIX 5: TOTAL EFFECT ON EMPLOYMENT AND OUTPUT BY SECTOR
Lower-Bound Mid-Level Upper-Bound Sector Impact Type Employment Output Impact Type Employment Output Impact Type Employment Output 112 Direct Effect 0.0 $0.00 Direct Effect 58.0 $4,404,056.00 Direct Effect 88.0 $6,470,441.00 112 Indirect Effect 0.0 $0.00 Indirect Effect 20.7 $2,871,563.00 Indirect Effect 30.4 $4,218,901.70 112 Induced Effect 0.0 $0.00 Induced Effect 6.3 $726,239.00 Induced Effect 9.2 $1,066,991.60 112 Total Effect 0.0 $0.00 Total Effect 84.9 $8,001,858.00 Total Effect 127.6 $11,756,334.30 221 Direct Effect 2.0 $1,651,088.00 Direct Effect 23.0 $18,374,170.50 Direct Effect 27.0 $22,289,694.60 221 Indirect Effect 2.3 $373,635.00 Indirect Effect 25.2 $4,158,006.30 Indirect Effect 30.6 $5,044,074.80 221 Induced Effect 2.9 $333,276.00 Induced Effect 32.1 $3,708,872.80 Induced Effect 39.4 $4,550,892.30 221 Total Effect 7.2 $2,358,000.00 Total Effect 80.3 $26,241,049.50 Total Effect 97.0 $31,884,661.60 236 Direct Effect 36.0 $6,574,839.00 Direct Effect 36.0 $5,795,631.00 Direct Effect 36.0 $6,574,839.00 236 Indirect Effect 20.3 $2,387,559.35 Indirect Effect 20.3 $2,266,339.60 Indirect Effect 23.0 $2,571,043.20 236 Induced Effect 16.0 $2,014,049.32 Induced Effect 16.0 $1,914,507.60 Induced Effect 17.3 $2,067,128.70 236 Total Effect 72.3 $10,976,447.68 Total Effect 72.3 $9,976,478.20 Total Effect 76.3 $11,213,010.90 311 Direct Effect 2,304.0 $958,229,149.00 Direct Effect 2,378.0 $995,766,301.90 Direct Effect 2,417.0 $1,005,225,630.20 311 Indirect Effect 4,812.2 $707,901,585.00 Indirect Effect 5,000.7 $735,632,540.70 Indirect Effect 5,048.2 $742,620,716.30 311 Induced Effect 1,945.5 $225,424,120.00 Induced Effect 1,978.2 $229,210,224.00 Induced Effect 2,040.9 $236,480,077.70 311 Total Effect 9,061.7 $1,891,554,854.00 Total Effect 9,356.9 $1,960,609,066.70 Total Effect 9,506.1 $1,984,326,424.10 312 Direct Effect 1,118.0 $464,974,030.00 Direct Effect 1,415.0 $1,847,099,564.70 Direct Effect 1,471.0 $2,297,406,007.60 312 Indirect Effect 2,335.1 $343,504,321.00 Indirect Effect 3,134.5 $676,328,777.30 Indirect Effect 3,898.7 $841,211,716.90 312 Induced Effect 944.0 $109,385,487.00 Induced Effect 2,044.4 $236,924,066.40 Induced Effect 2,414.6 $279,823,411.30 312 Total Effect 4,397.1 $917,863,837.00 Total Effect 6,593.9 $2,760,352,408.40 Total Effect 7,784.3 $3,418,441,135.90 313 Direct Effect 1,440.0 $313,278,694.00 Direct Effect 1,574.0 $338,449,894.40 Direct Effect 1,594.0 $346,782,086.50 313 Indirect Effect 444.9 $91,243,565.00 Indirect Effect 480.6 $98,574,769.50 Indirect Effect 492.4 $101,001,550.90 313 Induced Effect 610.0 $70,713,918.00 Induced Effect 642.3 $74,466,996.60 Induced Effect 675.2 $78,276,373.20 313 Total Effect 2,494.8 $475,236,177.00 Total Effect 2,696.9 $511,491,660.40 Total Effect 2,761.6 $526,060,010.70 314 Direct Effect 154.0 $17,754,224.00 Direct Effect 154.0 $17,475,778.10 Direct Effect 154.0 $17,754,224.10 314 Indirect Effect 46.5 $6,426,314.00 Indirect Effect 45.7 $6,325,527.50 Indirect Effect 46.5 $6,426,313.70 314 Induced Effect 46.0 $5,329,774.00 Induced Effect 44.4 $5,143,259.90 Induced Effect 45.1 $5,225,208.70 314 Total Effect 246.5 $29,510,312.00 Total Effect 244.2 $28,944,565.50 Total Effect 245.6 $29,405,746.60
90 Lower Bound Mid Level Upper Bound Sector Impact Type Employment Output Impact Type Employment Output Impact Type Employment Output 315 Direct Effect 373.0 $50,513,160.00 Direct Effect 373.0 $49,844,508.00 Direct Effect 373.0 $50,513,160.00 315 Indirect Effect 94.7 $14,810,685.00 Indirect Effect 93.4 $14,614,633.20 Indirect Effect 94.7 $14,810,684.90 315 Induced Effect 102.4 $12,259,517.00 Induced Effect 98.6 $11,798,557.10 Induced Effect 99.9 $11,956,831.80 315 Total Effect 570.1 $77,583,362.00 Total Effect 565.0 $76,257,698.20 Total Effect 567.6 $77,280,676.80 316 Direct Effect 0.0 $0.00 Direct Effect 325.0 $36,377,044.00 Direct Effect 375.0 $41,973,512.00 316 Indirect Effect 0.0 $0.00 Indirect Effect 94.3 $17,310,574.90 Indirect Effect 108.8 $19,973,740.10 316 Induced Effect 0.0 $0.00 Induced Effect 85.7 $9,928,353.20 Induced Effect 100.1 $11,590,780.50 316 Total Effect 0.0 $0.00 Total Effect 505.0 $63,615,972.20 Total Effect 583.9 $73,538,032.60 321 Direct Effect 1,494.0 $287,380,289.00 Direct Effect 1,987.0 $350,689,761.60 Direct Effect 2,086.0 $401,255,169.80 321 Indirect Effect 1,095.8 $160,389,917.00 Indirect Effect 1,337.2 $195,723,589.80 Indirect Effect 1,530.0 $223,944,668.10 321 Induced Effect 837.5 $96,948,362.00 Induced Effect 1,043.1 $120,752,373.50 Induced Effect 1,169.3 $135,364,299.90 321 Total Effect 3,427.2 $544,718,569.00 Total Effect 4,367.2 $667,165,724.90 Total Effect 4,785.3 $760,564,137.80 322 Direct Effect 329.0 $186,365,726.00 Direct Effect 680.0 $370,298,587.30 Direct Effect 784.0 $444,105,562.30 322 Indirect Effect 409.7 $69,792,777.00 Indirect Effect 814.0 $138,674,462.30 Indirect Effect 976.2 $166,314,704.30 322 Induced Effect 374.8 $43,403,316.00 Induced Effect 740.8 $85,796,043.60 Induced Effect 893.0 $103,429,179.40 322 Total Effect 1,113.4 $299,561,819.00 Total Effect 2,234.7 $594,769,093.20 Total Effect 2,653.2 $713,849,446.10 323 Direct Effect 175.0 $28,010,866.00 Direct Effect 314.0 $46,770,700.00 Direct Effect 364.0 $58,262,604.00 323 Indirect Effect 55.6 $8,480,630.00 Indirect Effect 92.8 $14,160,397.30 Indirect Effect 115.6 $17,639,710.80 323 Induced Effect 83.8 $9,707,640.00 Induced Effect 142.2 $16,481,148.30 Induced Effect 174.2 $20,191,893.00 323 Total Effect 314.3 $46,199,136.00 Total Effect 549.0 $77,412,245.60 Total Effect 653.8 $96,094,207.70 325 Direct Effect 1,408.0 $1,133,428,510.00 Direct Effect 1,620.0 $1,256,369,697.20 Direct Effect 1,669.0 $1,343,531,171.50 325 Indirect Effect 2,691.6 $529,044,320.00 Indirect Effect 2,983.6 $586,428,915.90 Indirect Effect 3,190.6 $627,112,807.80 325 Induced Effect 2,313.8 $268,029,482.00 Induced Effect 2,551.9 $295,614,851.60 Induced Effect 2,742.7 $317,713,875.40 325 Total Effect 6,413.4 $1,930,502,312.00 Total Effect 7,155.5 $2,138,413,464.70 Total Effect 7,602.3 $2,288,357,854.60 326 Direct Effect 2,485.0 $771,701,954.00 Direct Effect 2,716.0 $838,118,914.30 Direct Effect 2,790.0 $866,417,986.40 326 Indirect Effect 1,149.1 $251,479,059.00 Indirect Effect 1,248.0 $273,122,744.90 Indirect Effect 1,290.2 $282,344,730.10 326 Induced Effect 1,624.8 $188,358,026.00 Induced Effect 1,713.9 $198,687,060.40 Induced Effect 1,824.2 $211,476,439.20 326 Total Effect 5,258.9 $1,211,539,039.00 Total Effect 5,677.9 $1,309,928,719.50 Total Effect 5,904.4 $1,360,239,155.60 327 Direct Effect 551.0 $147,308,543.00 Direct Effect 608.0 $151,544,142.90 Direct Effect 630.0 $29,494,144.00 327 Indirect Effect 351.0 $57,420,344.00 Indirect Effect 361.1 $59,071,366.10 Indirect Effect 60.1 $8,221,075.80 327 Induced Effect 372.9 $43,199,805.00 Induced Effect 388.4 $44,995,981.20 Induced Effect 42.0 $4,867,761.80 327 Total Effect 1,274.9 $247,928,693.00 Total Effect 1,357.5 $255,611,490.20 Total Effect 732.1 $42,582,981.60
91 Lower Bound Mid-Level Upper Bound Sector Impact Type Employment Output Impact Type Employment Output Impact Type Employment Output 331 Direct Effect 110.0 $63,810,740.00 Direct Effect 136.0 $81,960,912.60 Direct Effect 150.0 $87,014,640.70 331 Indirect Effect 139.4 $22,110,436.00 Indirect Effect 179.1 $28,399,474.30 Indirect Effect 190.1 $30,150,592.20 331 Induced Effect 118.5 $13,735,624.00 Induced Effect 146.6 $16,984,097.00 Induced Effect 161.6 $18,730,395.10 331 Total Effect 367.9 $99,656,800.00 Total Effect 461.6 $127,344,484.00 Total Effect 501.7 $135,895,628.00 332 Direct Effect 1,985.0 $528,290,914.00 Direct Effect 2,199.0 $578,426,242.50 Direct Effect 2,235.0 $594,826,306.60 332 Indirect Effect 790.5 $126,794,945.00 Indirect Effect 865.5 $138,827,909.90 Indirect Effect 890.1 $142,764,084.40 332 Induced Effect 1,215.2 $140,863,120.00 Induced Effect 1,294.8 $150,081,036.10 Induced Effect 1,368.3 $158,604,071.00 332 Total Effect 3,990.7 $795,948,979.00 Total Effect 4,359.3 $867,335,188.40 Total Effect 4,493.3 $896,194,461.90 333 Direct Effect 3,138.0 $1,045,324,837.00 Direct Effect 3,282.0 $1,060,229,476.70 Direct Effect 3,288.0 $1,095,292,643.80 333 Indirect Effect 1,931.6 $356,760,196.00 Indirect Effect 1,959.2 $361,847,018.90 Indirect Effect 2,023.9 $373,813,770.20 333 Induced Effect 2,384.8 $276,410,207.00 Induced Effect 2,390.0 $277,016,437.40 Induced Effect 2,498.8 $289,622,952.90 333 Total Effect 7,454.4 $1,678,495,240.00 Total Effect 7,631.2 $1,699,092,933.00 Total Effect 7,810.7 $1,758,729,366.90 334 Direct Effect 2,643.0 $1,156,734,048.00 Direct Effect 3,429.0 $1,716,368,208.00 Direct Effect 3,493.0 $1,528,744,533.30 334 Indirect Effect 1,963.6 $397,750,348.00 Indirect Effect 2,913.7 $590,184,108.60 Indirect Effect 2,595.2 $525,668,516.40 334 Induced Effect 3,062.6 $354,602,125.00 Induced Effect 4,028.5 $466,443,259.90 Induced Effect 4,047.5 $468,643,644.30 334 Total Effect 7,669.2 $1,909,086,521.00 Total Effect 10,371.1 $2,772,995,576.50 Total Effect 10,135.7 $2,523,056,694.00 335 Direct Effect 904.0 $335,943,454.00 Direct Effect 1,041.0 $385,355,998.10 Direct Effect 1,109.0 $412,125,310.00 335 Indirect Effect 510.8 $101,659,167.00 Indirect Effect 585.9 $116,611,796.80 Indirect Effect 626.6 $124,712,404.00 335 Induced Effect 684.6 $79,384,657.00 Induced Effect 762.6 $88,427,353.80 Induced Effect 839.9 $97,386,705.70 335 Total Effect 2,099.4 $516,987,278.00 Total Effect 2,389.6 $590,395,148.60 Total Effect 2,575.5 $634,224,419.60 336 Direct Effect 4,347.0 $1,438,883,108.00 Direct Effect 4,395.0 $1,397,669,539.40 Direct Effect 4,397.0 $1,455,433,636.90 336 Indirect Effect 1,681.8 $322,192,127.00 Indirect Effect 1,633.6 $312,963,658.60 Indirect Effect 1,701.1 $325,898,091.80 336 Induced Effect 3,119.4 $361,684,132.00 Induced Effect 3,008.9 $348,869,975.50 Induced Effect 3,155.3 $365,844,347.70 336 Total Effect 9,148.2 $2,122,759,368.00 Total Effect 9,037.5 $2,059,503,173.60 Total Effect 9,253.4 $2,147,176,076.40 337 Direct Effect 1,765.0 $288,345,595.00 Direct Effect 2,317.0 $357,803,257.30 Direct Effect 2,575.0 $420,674,200.20 337 Indirect Effect 787.1 $126,844,761.00 Indirect Effect 976.7 $157,399,556.00 Indirect Effect 1,148.4 $185,056,818.20 337 Induced Effect 852.5 $98,800,120.00 Induced Effect 1,062.6 $123,154,360.20 Induced Effect 1,243.7 $144,141,829.50 337 Total Effect 3,404.6 $513,990,476.00 Total Effect 4,356.3 $638,357,173.50 Total Effect 4,967.1 $749,872,847.90
92 Lower Bound Mid Level Upper Bound Sector Impact Type Employment Output Impact Type Employment Output Impact Type Employment Output 339 Direct Effect 711.0 $121,763,435.00 Direct Effect 1,183.0 $195,902,452.70 Direct Effect 1,211.0 $207,391,733.00 339 Indirect Effect 226.4 $38,754,689.00 Indirect Effect 364.3 $62,351,547.80 Indirect Effect 385.7 $66,008,339.20 339 Induced Effect 350.7 $40,632,463.00 Induced Effect 557.8 $64,627,275.80 Induced Effect 597.4 $69,206,629.50 339 Total Effect 1,288.2 $201,150,587.00 Total Effect 2,105.2 $322,881,276.30 Total Effect 2,194.1 $342,606,701.70 423- 425 Direct Effect 3,179.0 $616,563,200.00 Direct Effect 4,674.0 $951,040,576.00 Direct Effect 4,674.0 $906,516,608.00 423- 425 Indirect Effect 1,192.8 $162,347,300.00 Indirect Effect 1,839.9 $250,418,562.20 Indirect Effect 1,753.7 $238,694,953.00 423- 425 Induced Effect 1,949.1 $233,368,009.00 Induced Effect 2,783.9 $333,323,541.50 Induced Effect 2,653.6 $317,718,648.20 423- 425 Total Effect 6,320.8 $1,012,278,510.00 Total Effect 9,297.8 $1,534,782,679.70 Total Effect 9,081.3 $1,462,930,209.20 441 Direct Effect 897.0 $68,413,472.00 Direct Effect 903.0 $67,180,216.00 Direct Effect 907.0 $69,176,168.00 441 Indirect Effect 63.3 $9,301,987.00 Indirect Effect 62.2 $9,134,304.50 Indirect Effect 64.0 $9,405,688.50 441 Induced Effect 358.2 $41,454,566.00 Induced Effect 343.8 $39,786,465.90 Induced Effect 362.2 $41,916,714.90 441 Total Effect 1,318.5 $119,170,025.00 Total Effect 1,308.9 $116,100,986.40 Total Effect 1,333.2 $120,498,571.40 443 Direct Effect 0.0 $0.00 Direct Effect 786.0 $52,473,560.00 Direct Effect 1,200.0 $82,128,672.00 443 Indirect Effect 0.0 $0.00 Indirect Effect 50.9 $7,470,611.30 Indirect Effect 79.7 $11,692,581.70 443 Induced Effect 0.0 $0.00 Induced Effect 260.1 $30,152,572.60 Induced Effect 416.5 $48,279,181.20 443 Total Effect 0.0 $0.00 Total Effect 1,097.0 $90,096,743.90 Total Effect 1,696.2 $142,100,434.90 444 Direct Effect 147.0 $10,291,281.00 Direct Effect 627.0 $42,817,776.00 Direct Effect 702.0 $49,146,120.00 444 Indirect Effect 9.4 $1,371,811.00 Indirect Effect 38.9 $5,707,540.20 Indirect Effect 44.7 $6,551,098.20 444 Induced Effect 42.1 $4,883,837.00 Induced Effect 171.4 $19,868,001.80 Induced Effect 201.2 $23,322,814.70 444 Total Effect 198.5 $16,546,929.00 Total Effect 837.3 $68,393,318.00 Total Effect 947.9 $79,020,032.90 445 Direct Effect 275.0 $15,357,523.00 Direct Effect 439.0 $23,914,288.00 Direct Effect 525.0 $29,318,908.00 445 Indirect Effect 14.4 $2,098,037.00 Indirect Effect 22.4 $3,267,002.10 Indirect Effect 27.4 $4,005,343.30 445 Induced Effect 61.1 $7,083,325.00 Induced Effect 93.1 $10,785,975.80 Induced Effect 116.7 $13,522,710.70 445 Total Effect 350.5 $24,538,885.00 Total Effect 554.5 $37,967,265.90 Total Effect 669.1 $46,846,962.10 451 Direct Effect 0.0 $0.00 Direct Effect 128.0 $4,761,028.50 Direct Effect 150.0 $5,719,758.50 451 Indirect Effect 0.0 $0.00 Indirect Effect 4.6 $663,812.60 Indirect Effect 5.6 $797,484.80 451 Induced Effect 0.0 $0.00 Induced Effect 18.4 $2,130,060.40 Induced Effect 22.6 $2,616,704.60 451 Total Effect 0.0 $0.00 Total Effect 151.0 $7,554,901.50 Total Effect 178.2 $9,133,947.90
93 Lower Bound Mid Level Upper Bound Sector Impact Type Employment Output Impact Type Employment Output Impact Type Employment Output 452 Direct Effect 902.0 $47,633,880.00 Direct Effect 902.0 $46,464,404.00 Direct Effect 902.0 $47,633,880.00 452 Indirect Effect 43.7 $6,327,605.00 Indirect Effect 42.7 $6,172,253.90 Indirect Effect 43.7 $6,327,605.10 452 Induced Effect 189.1 $21,932,364.00 Induced Effect 180.4 $20,919,611.40 Induced Effect 184.9 $21,446,143.40 452 Total Effect 1,134.9 $75,893,849.00 Total Effect 1,125.1 $73,556,269.30 Total Effect 1,130.7 $75,407,628.50 453 Direct Effect 367.0 $11,626,109.00 Direct Effect 367.0 $11,340,673.00 Direct Effect 367.0 $11,626,109.00 453 Indirect Effect 12.1 $1,728,885.00 Indirect Effect 11.8 $1,686,438.70 Indirect Effect 12.1 $1,728,885.10 453 Induced Effect 49.5 $5,724,587.00 Induced Effect 47.2 $5,460,775.20 Induced Effect 48.4 $5,598,218.70 453 Total Effect 428.6 $19,079,581.00 Total Effect 426.0 $18,487,886.90 Total Effect 427.5 $18,953,212.80 454 Direct Effect 513.0 $27,537,000.00 Direct Effect 513.0 $26,860,930.00 Direct Effect 513.0 $27,537,000.00 454 Indirect Effect 27.0 $3,921,428.00 Indirect Effect 26.3 $3,825,152.20 Indirect Effect 27.0 $3,921,428.50 454 Induced Effect 65.3 $7,551,186.00 Induced Effect 62.4 $7,214,314.50 Induced Effect 64.0 $7,395,893.50 454 Total Effect 605.3 $39,009,615.00 Total Effect 601.7 $37,900,396.60 Total Effect 604.0 $38,854,322.00 481 Direct Effect 15.0 $4,281,126.00 Direct Effect 15.0 $3,737,980.30 Direct Effect 15.0 $4,281,126.00 481 Indirect Effect 8.9 $1,224,461.00 Indirect Effect 7.7 $1,069,113.80 Indirect Effect 8.9 $1,224,460.90 481 Induced Effect 10.8 $1,255,747.00 Induced Effect 10.0 $1,164,429.10 Induced Effect 11.5 $1,333,626.10 481 Total Effect 34.7 $6,761,334.00 Total Effect 32.8 $5,971,523.20 Total Effect 35.4 $6,839,213.00 483 Direct Effect 303.0 $204,512,960.00 Direct Effect 504.0 $311,927,808.00 Direct Effect 538.0 $363,128,608.00 483 Indirect Effect 620.4 $76,271,109.00 Indirect Effect 946.3 $116,330,426.40 Indirect Effect 1,101.6 $135,425,264.20 483 Induced Effect 579.0 $67,125,375.00 Induced Effect 901.8 $104,547,215.30 Induced Effect 1,028.1 $119,186,305.90 483 Total Effect 1,502.5 $347,909,444.00 Total Effect 2,352.1 $532,805,449.70 Total Effect 2,667.7 $617,740,178.10 488 Direct Effect 206.0 $19,141,302.00 Direct Effect 290.0 $24,713,354.00 Direct Effect 306.0 $28,433,196.00 488 Indirect Effect 39.9 $4,411,235.00 Indirect Effect 51.5 $5,695,349.40 Indirect Effect 59.3 $6,552,610.60 488 Induced Effect 85.3 $10,204,640.00 Induced Effect 113.7 $13,605,175.50 Induced Effect 126.7 $15,158,349.10 488 Total Effect 331.2 $33,757,177.00 Total Effect 455.2 $44,013,878.90 Total Effect 492.0 $50,144,155.70 493 Direct Effect 304.0 $28,654,656.00 Direct Effect 373.0 $29,889,502.00 Direct Effect 404.0 $38,080,528.00 493 Indirect Effect 71.2 $9,139,180.00 Indirect Effect 74.2 $9,533,024.40 Indirect Effect 94.6 $12,145,488.50 493 Induced Effect 118.0 $13,682,569.00 Induced Effect 134.8 $15,632,135.80 Induced Effect 156.8 $18,183,413.10 493 Total Effect 493.2 $51,476,405.00 Total Effect 582.0 $55,054,662.20 Total Effect 655.4 $68,409,429.70 511 Direct Effect 222.0 $63,300,410.00 Direct Effect 222.0 $65,508,078.50 Direct Effect 222.0 $63,300,410.40 511 Indirect Effect 180.8 $23,231,127.00 Indirect Effect 187.1 $24,041,336.70 Indirect Effect 180.8 $23,231,126.80 511 Induced Effect 199.0 $23,041,592.00 Induced Effect 195.2 $22,601,595.40 Induced Effect 188.7 $21,839,905.80 511 Total Effect 601.9 $109,573,129.00 Total Effect 604.4 $112,151,010.60 Total Effect 591.5 $108,371,443.10
94 Lower Bound Mid Level Upper Bound Sector Impact Type Employment Output Impact Type Employment Output Impact Type Employment Output 512 Direct Effect 298.0 $36,438,640.00 Direct Effect 298.0 $31,944,800.00 Direct Effect 298.0 $36,438,640.00 512 Indirect Effect 83.3 $10,303,711.00 Indirect Effect 73.0 $9,032,993.10 Indirect Effect 83.3 $10,303,710.90 512 Induced Effect 89.4 $10,354,510.00 Induced Effect 82.9 $9,610,680.30 Induced Effect 94.6 $10,962,664.40 512 Total Effect 470.7 $57,096,861.00 Total Effect 454.0 $50,588,473.50 Total Effect 475.9 $57,705,015.30 515 Direct Effect 1,447.0 $384,794,080.00 Direct Effect 1,447.0 $335,049,568.00 Direct Effect 1,447.0 $384,794,080.00 515 Indirect Effect 1,392.6 $136,310,583.00 Indirect Effect 1,212.6 $118,688,941.10 Indirect Effect 1,392.6 $136,310,582.90 515 Induced Effect 1,508.2 $173,656,217.00 Induced Effect 1,405.1 $161,770,446.70 Induced Effect 1,613.7 $185,788,361.30 515 Total Effect 4,347.8 $694,760,880.00 Total Effect 4,064.7 $615,508,955.80 Total Effect 4,453.3 $706,893,024.20 517 Direct Effect 2,166.0 $1,257,055,232.00 Direct Effect 3,003.0 $1,714,575,104.00 Direct Effect 3,173.0 $1,841,475,456.00 517 Indirect Effect 2,337.1 $399,607,455.00 Indirect Effect 3,187.7 $545,049,236.00 Indirect Effect 3,423.6 $585,389,807.70 517 Induced Effect 2,585.4 $299,636,843.00 Induced Effect 3,455.8 $400,508,937.20 Induced Effect 3,787.4 $438,941,645.90 517 Total Effect 7,088.5 $1,956,299,530.00 Total Effect 9,646.5 $2,660,133,277.20 Total Effect 10,384.0 $2,865,806,909.50 518 Direct Effect 971.0 $336,050,816.00 Direct Effect 971.0 $304,038,624.00 Direct Effect 971.0 $336,050,816.00 518 Indirect Effect 638.3 $99,785,075.00 Indirect Effect 577.5 $90,279,551.70 Indirect Effect 638.3 $99,785,075.40 518 Induced Effect 878.7 $101,829,180.00 Induced Effect 824.4 $95,543,626.30 Induced Effect 911.2 $105,603,403.80 518 Total Effect 2,488.0 $537,665,072.00 Total Effect 2,372.9 $489,861,802.00 Total Effect 2,520.6 $541,439,295.20 522 Direct Effect 33.0 $20,438,552.00 Direct Effect 991.0 $572,705,408.00 Direct Effect 1,033.0 $639,788,544.00 522 Indirect Effect 53.1 $8,250,231.00 Indirect Effect 1,486.9 $231,178,397.70 Indirect Effect 1,661.0 $258,257,191.90 522 Induced Effect 51.7 $5,972,482.00 Induced Effect 1,464.7 $169,329,139.50 Induced Effect 1,617.2 $186,956,775.40 522 Total Effect 137.7 $34,661,265.00 Total Effect 3,942.6 $973,212,945.20 Total Effect 4,311.3 $1,085,002,511.20 523 Direct Effect 849.0 $52,858,520.00 Direct Effect 1,213.0 $101,416,968.00 Direct Effect 1,229.0 $76,517,216.00 523 Indirect Effect 114.4 $16,896,569.00 Indirect Effect 219.6 $32,418,591.50 Indirect Effect 165.7 $24,459,224.30 523 Induced Effect 290.2 $33,617,962.00 Induced Effect 420.7 $48,740,878.10 Induced Effect 420.0 $48,664,867.20 523 Total Effect 1,253.6 $103,373,051.00 Total Effect 1,853.3 $182,576,437.60 Total Effect 1,814.7 $149,641,307.50 524 Direct Effect 757.0 $185,307,899.00 Direct Effect 757.0 $165,693,547.60 Direct Effect 757.0 $185,307,899.10 524 Indirect Effect 284.0 $47,484,386.00 Indirect Effect 253.9 $42,458,289.40 Indirect Effect 284.0 $47,484,386.30 524 Induced Effect 487.8 $56,463,215.00 Induced Effect 457.4 $52,948,199.80 Induced Effect 511.6 $59,216,063.70 524 Total Effect 1,528.8 $289,255,501.00 Total Effect 1,468.4 $261,100,036.90 Total Effect 1,552.6 $292,008,349.10 531 Direct Effect 0.0 $0.00 Direct Effect 25.0 $8,456,165.80 Direct Effect 30.0 $10,290,951.80 531 Indirect Effect 0.0 $0.00 Indirect Effect 13.1 $2,249,178.10 Indirect Effect 16.0 $2,737,196.10 531 Induced Effect 0.0 $0.00 Induced Effect 7.4 $859,097.30 Induced Effect 9.2 $1,059,222.70 531 Total Effect 0.0 $0.00 Total Effect 45.6 $11,564,441.30 Total Effect 55.1 $14,087,370.60
95 Lower Bound Mid Level Upper Bound Sector Impact Type Employment Output Impact Type Employment Output Impact Type Employment Output 532 Direct Effect 47.0 $7,616,075.00 Direct Effect 47.0 $7,019,558.40 Direct Effect 47.0 $7,616,075.40 532 Indirect Effect 19.9 $2,909,142.00 Indirect Effect 18.3 $2,681,288.40 Indirect Effect 19.9 $2,909,142.30 532 Induced Effect 23.8 $2,754,712.00 Induced Effect 22.4 $2,594,226.50 Induced Effect 24.4 $2,814,681.90 532 Total Effect 90.7 $13,279,929.00 Total Effect 87.8 $12,295,073.20 Total Effect 91.2 $13,339,899.60 541 Direct Effect 9,927.0 $1,440,346,629.00 Direct Effect 16,762.0 $2,185,017,607.30 Direct Effect 19,993.0 $2,900,861,193.70 541 Indirect Effect 2,887.5 $384,668,063.00 Indirect Effect 4,380.4 $583,544,596.00 Indirect Effect 5,815.5 $774,722,303.20 541 Induced Effect 7,280.5 $842,714,801.00 Induced Effect 11,606.8 $1,343,490,538.50 Induced Effect 14,662.8 $1,697,229,413.50 541 Total Effect 20,095.0 $2,667,729,493.00 Total Effect 32,749.2 $4,112,052,741.80 Total Effect 40,471.3 $5,372,812,910.50 551 Direct Effect 1,778.0 $420,241,984.00 Direct Effect 9,526.0 $2,030,755,328.00 Direct Effect 9,953.0 $2,352,456,960.00 551 Indirect Effect 882.9 $129,607,888.00 Indirect Effect 4,266.6 $626,310,362.70 Indirect Effect 4,942.5 $725,527,172.80 551 Induced Effect 1,884.9 $218,550,881.00 Induced Effect 9,509.8 $1,102,643,108.20 Induced Effect 10,551.7 $1,223,417,845.10 551 Total Effect 4,545.9 $768,400,754.00 Total Effect 23,302.5 $3,759,708,798.90 Total Effect 25,447.2 $4,301,401,977.90 561 Direct Effect 4,018.0 $276,107,426.00 Direct Effect 7,616.0 $476,452,258.90 Direct Effect 8,618.0 $592,208,515.60 561 Indirect Effect 578.4 $74,793,320.00 Indirect Effect 998.1 $129,063,700.50 Indirect Effect 1,240.6 $160,420,317.20 561 Induced Effect 1,174.9 $135,999,130.00 Induced Effect 2,103.6 $243,500,893.10 Induced Effect 2,519.9 $291,697,490.00 561 Total Effect 5,771.3 $486,899,876.00 Total Effect 10,717.7 $849,016,852.50 Total Effect 12,378.5 $1,044,326,322.70 562 Direct Effect 0.0 $0.00 Direct Effect 139.0 $25,175,308.00 Direct Effect 165.0 $31,036,474.00 562 Indirect Effect 0.0 $0.00 Indirect Effect 65.3 $9,366,432.10 Indirect Effect 80.6 $11,547,069.30 562 Induced Effect 0.0 $0.00 Induced Effect 72.5 $8,400,465.70 Induced Effect 90.1 $10,436,587.70 562 Total Effect 0.0 $0.00 Total Effect 276.8 $42,942,205.80 Total Effect 335.6 $53,020,131.00 621 Direct Effect 523.0 $66,396,618.00 Direct Effect 523.0 $59,904,313.40 Direct Effect 523.0 $66,396,617.50 621 Indirect Effect 146.6 $20,628,776.00 Indirect Effect 132.2 $18,611,681.40 Indirect Effect 146.6 $20,628,776.50 621 Induced Effect 304.6 $35,258,242.00 Induced Effect 287.2 $33,248,745.90 Induced Effect 318.4 $36,852,175.40 621 Total Effect 974.2 $122,283,636.00 Total Effect 942.5 $111,764,740.70 Total Effect 987.9 $123,877,569.40 623 Direct Effect 0.0 $0.00 Direct Effect 121.0 $6,995,766.00 Direct Effect 121.0 $7,913,620.50 623 Indirect Effect 0.0 $0.00 Indirect Effect 15.3 $2,339,937.60 Indirect Effect 17.3 $2,646,940.70 623 Induced Effect 0.0 $0.00 Induced Effect 34.1 $3,955,233.70 Induced Effect 38.6 $4,474,166.00 623 Total Effect 0.0 $0.00 Total Effect 170.4 $13,290,937.30 Total Effect 176.9 $15,034,727.30 711 Direct Effect 856.0 $20,109,250.00 Direct Effect 904.0 $18,741,092.00 Direct Effect 931.0 $21,871,158.00 711 Indirect Effect 83.3 $8,521,126.00 Indirect Effect 77.6 $7,941,380.70 Indirect Effect 90.6 $9,267,719.90 711 Induced Effect 78.3 $9,357,960.00 Induced Effect 77.2 $9,227,134.00 Induced Effect 90.1 $10,768,214.90 711 Total Effect 1,017.6 $37,988,336.00 Total Effect 1,058.9 $35,909,606.70 Total Effect 1,111.7 $41,907,092.80
96 Lower Bound Mid Level Upper Bound Sector Impact Type Employment Output Impact Type Employment Output Impact Type Employment Output 721 Direct Effect 270.0 $28,230,082.00 Direct Effect 270.0 $25,823,576.00 Direct Effect 270.0 $28,230,082.00 721 Indirect Effect 87.0 $11,394,044.00 Indirect Effect 79.6 $10,422,745.10 Indirect Effect 87.0 $11,394,043.50 721 Induced Effect 92.4 $10,706,148.00 Induced Effect 86.7 $10,045,772.60 Induced Effect 94.8 $10,981,940.80 721 Total Effect 449.5 $50,330,273.00 Total Effect 436.3 $46,292,093.70 Total Effect 451.8 $50,606,066.40 811 Direct Effect 15.0 $1,538,842.00 Direct Effect 104.0 $10,013,110.90 Direct Effect 104.0 $10,669,301.90 811 Indirect Effect 2.5 $371,593.00 Indirect Effect 16.2 $2,417,921.60 Indirect Effect 17.2 $2,576,375.70 811 Induced Effect 6.3 $721,443.00 Induced Effect 41.2 $4,751,143.50 Induced Effect 43.9 $5,062,501.10 811 Total Effect 23.7 $2,631,877.00 Total Effect 161.4 $17,182,176.00 Total Effect 165.1 $18,308,178.60 813 Direct Effect 88.0 $7,962,951.00 Direct Effect 88.0 $7,198,076.90 Direct Effect 88.0 $7,962,951.40 813 Indirect Effect 21.4 $3,076,119.00 Indirect Effect 19.3 $2,780,645.40 Indirect Effect 21.4 $3,076,119.40 813 Induced Effect 36.9 $4,282,527.00 Induced Effect 34.8 $4,034,970.30 Induced Effect 38.5 $4,463,730.10 813 Total Effect 146.3 $15,321,598.00 Total Effect 142.1 $14,013,692.60 Total Effect 147.9 $15,502,800.90 TOTALS 69,285.9 $8,908,242,545.00 143,118.6 $18,574,266,794.70 166,746.0 $22,712,466,793.50
97 APPENDIX 6: METHODOLOGY OF USING IMPLAN
IMPLAN (Impact Analysis for Planning) software conducts economic input-output modeling. Three major functions are served by IMPLAN: data retrieval, data reduction and model development, and impact analysis.97 In this report, we used IMPLAN primarily to conduct impact analysis of economic development grants awarded by the state of Virginia to both re- locating and expanding businesses. This appendix will specifically introduce the methodology of using IMPLAN that contributed to our analysis. The data purchased by the Thomas Jefferson Public Policy Program is the 2009 IMPLAN State Data Package of Virginia. This data package provides IMPLAN information for each county and independent city within Virginia, as well as aggregated information at the state level. Our model is built on the aggregated state-level dataset, which captures the effect of creating one job within the state economy. We estimate impacts by sector, using 3-digit NAICS codes. Thus, before running impacts, we changed the aggregation settings from IMPLAN sector codes to NAICS codes. There were 59 sectors represented by the development projects examined in this report. However, only 52 sectors could be recognized by IMPLAN under 3-digit NAICS codes; as a result, 7 sectors were aggregated under the IMPLAN sector codes. After selecting the dataset and setting up the aggregation codes, we constructed multipliers models. These models are Social Accounting Matrices (SAM) that are ―constructed to show the effects of a given change on the economy of interest.‖98 They are the framework for building impact analysis questions, and they ―estimate the magnitude and distribution of economic impacts, and measure three types of effects… [that] are direct, indirect and induced changes within the economy.‖W After constructing a model for each sector, we set the default event year as 2008 in order to ensure consistency among sectors, which incorporated data from development projects that
W Specifically, ―direct effects are determined defined by the user.‖ These were the number of jobs created by each development project, aggregated across a sector. ―The indirect effects are determined by the amount of the direct effect spent within the study region on supplies, services, labor and taxes. Finally the induced effect measures the money that is re-spent in the study area as a result of spending from the indirect effects.‖ (http://implan.com/V4/index.php?option=com_content&view=article&id=282:what-is-implan&catid=152:implan- appliance-&Itemid=2).
98 had been announced in different years. With the same logic, the dollar year was also set as 2008 to account for inflation and maintain consistency throughout the report. In addition, as introduced in the paper, we applied a bracketing system to fill missing employment data. We created lower and upper bounds for the estimated grant expenditures and revenues. When using IMPLAN, we constructed three separate models under each of these scenarios (lower bound, mid-level and upper bound). The impact on employment, output, and tax revenues for each sector was estimated three times. Finally, for each sector under each assumption, IMPLAN provides 5 types of impact results available for download. X However, we only used and analyzed the estimates from Summary Results and State/Local Tax Impact for calculations.
X Five types of results are: Summary Results of employment (which includes the number of employment, labor income, value added and output for direct, indirect and induced effects, respectively, and the total effects of three types of impact under each category), Top Ten Industries Affected, Industry Impact Detail Results, State/Local Tax Impact (which provides information on revenues from various taxes) and Federal Tax Impact.
99 References
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Morgan, Jonathan Q. ―Analyzing the Benefits and Costs of Economic Development Projects.‖ Community and Economic Development Bulletin, School of Government, University of North Carolina at Chapel Hill. No. 7, April 2010 http://sogpubs.unc.edu/electronicversions/pdfs/cedb7.pdf (accessed November 25, 2011).
News Center. Virginia Economic Development Partnership. http://www.yesvirginia.org/About_Us/News.aspx (accessed September 4, 2011).
―Prince William County Overview/Innovation Technology Park and Lilly/Covance Sites.‖ Presentation slides provided by Jim Gahres.
―Report on Business Incentives 2005–2006.‖ Secretary of Commerce and Trade. 30 October 2006 http://leg2.state.va.us/dls/h&sdocs.nsf/fc86c2b17a1cf388852570f9006f1299/d062b14ccb 1a11a3852570ae004db66f/$FILE/RD261.pdf (accessed December 7, 2011).
―Report on Business Incentives 2006–2007.‖ Secretary of Commerce and Trade. 30 October 2007 http://leg2.state.va.us/dls/h&sdocs.nsf/By+Year/RD2922007/$file/RD292.pdf (accessed December 7, 2011).
―Report on Business Incentives 2007–2008.‖ Secretary of Commerce and Trade. 30 October 2008 http://www.yesvirginia.org/pdf/FY2008IncentivesReport.pdf (accessed December 7, 2011).
―Report on Business Incentives 2008–2009.‖ Secretary of Commerce and Trade. Oct. 30, 2009 http://www.ltgov.virginia.gov/initiatives/JCC/EconomicallyDistressedAreas/EconDisAre a_BusinessIncentivesReport_2008-2009.pdf (accessed December 7, 2011).
―Report on Business Incentives 2009-2010.‖ Virginia Economic Development Partnership. 30 October 2010 http://www.yesvirginia.org/pdf/2010incentivesreport.pdf (accessed October 16, 2011).
Senate Joint Resolution 329. Virginia General Assembly, Legislative Information System. 7 March 2011. http://lis.virginia.gov/cgi-bin/legp604.exe?111+ful+SJ329ER (accessed October 19, 2011).
―Special Report: State Business Incentive Grant Programs.‖ Joint Legislative Audit and Review Commission. November 2002 http://jlarc.virginia.gov/reports/Rpt285.pdf (accessed September 15, 2011).
102 ―The Transportation Partnership Opportunity Fund: Guidelines and Criteria.‖ Virginia Department of Transportation. September 2005 http://www.virginiadot.org/projects/resources/tpofImplementationGuidelines10-2005.pdf (accessed October 16, 2011).
Virginia Acts of Assembly, § 2.1-51.6:5 (Governor's Development Opportunity Fund). 1996 http://leg1.state.va.us/cgi-bin/legp504.exe?961+ful+HB306+pdf (accessed October 14, 2011).
Virginia Acts of Assembly, Chapter 815. 6 April 2011 http://leg1.state.va.us/cgi- bin/legp504.exe?111+ful+CHAP0815 (accessed October 15, 2011).
Virginia Acts of Assembly, Chapter 875. 29 March 1999 http://leg1.state.va.us/cgi- bin/legp504.exe?991+ful+CHAP0875+pdf (accessed October 15, 2011).
Virginia Announcements Database. Virginia Economic Development Partnership. http://virginiascan.yesvirginia.org/ResourceCenter/AnnouncementsWeb.aspx (accessed September 29, 2011).
―Virginia Beach Success Grows.‖ StihlUSA.com. http://www.stihlusa.com/stihl-inc.html (accessed December 3, 2011).
Virginia Code, Chapter 51 (Virginia Investment Partnership Act) § 2.2-5102.1 http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+2.2-5102.1 (accessed October 15, 2011).
―Virginia Guide to Business Incentives, 2011–2012.‖ Virginia Economic Development Partnership. 2011 http://www.yesvirginia.org/pdf/guides/BusinessIncentivesGuide2011.pdf (accessed September 21, 2011).
―What is IMPLAN? Introduction.‖ Minnesota IMPLAN Group (MIG). http://implan.com/V4/index.php?option=com_kunena&func=view&catid=82&id=52&Ite mid=35 (accessed November 25, 2011).
―Working with Goodyear.‖ Danville Register and Bee. http://www.ialr.org/news/74-working- with-goodyear-editorial-danville-register-and-bee (accessed December 2, 2011).
Worrell, Allen ―AmerLink now faces liquidation.‖ The Carroll News. 3 November 2009, http://www.thecarrollnews.com/view/full_story/4257963/article-AmerLink-now-faces- liquidation? (accessed November 25, 2011).
Worrell, Allen. ―Carroll settles with AmerLink, Pro-Form.‖ The Carroll News, 19 January 2011, http://www.thecarrollnews.com/view/full_story/11060564/article-Carroll-settles-with- AmerLink--Pro-Form? (accessed November 25, 2011).
103
1 ―Jobs Gap Widens in Virginia,‖ The Commonwealth Institute, 16 September 2011, http://www.thecommonwealthinstitute.org/wp- content/uploads/2011/09/110916_release_job_gap_widens_bls_data.pdf (accessed November 28, 2011). 2 Senate Joint Resolution 329, Virginia General Assembly, Legislative Information System, 7 March 2011, http://lis.virginia.gov/cgi-bin/legp604.exe?111+ful+SJ329ER (accessed October 19, 2011). 3 Senate Joint Resolution 329, Virginia General Assembly. 4 Senate Joint Resolution 329, Virginia General Assembly. 5 ―Special Report: State Business Incentive Grant Programs,‖ Joint Legislative Audit and Review Commission, November 2002, 5 http://jlarc.virginia.gov/reports/Rpt285.pdf (accessed September 15, 2011). 6 ―Special Report: State Business Incentive Grant Programs,‖ 5, 8–10. 7 ―Special Report: State Business Incentive Grant Programs,‖ 8, 11–13. 8 ―Special Report: State Business Incentive Grant Programs,‖ 16. 9 ―Special Report: State Business Incentive Grant Programs,‖ 11, 14. 10 ―Special Report: State Business Incentive Grant Programs,‖ 16. 11 ―Virginia Guide to Business Incentives, 2011–2012,‖ Virginia Economic Development Partnership, 2011, 4–5, http://www.yesvirginia.org/pdf/guides/BusinessIncentivesGuide2011.pdf (accessed September 21, 2011). 12 ―Virginia Guide to Business Incentives,‖ 6. 13 ―Virginia Guide to Business Incentives,‖ 6–7. 14 ―Virginia Guide to Business Incentives,‖ 9. 15 ―Virginia Guide to Business Incentives,‖ 21–22. 16 ―Virginia Guide to Business Incentives,‖ 23–24. 17 ―A Guidebook for Local Officials, 2010-2011,‖ Virginia Economic Development Partnership, 23, http://www.virginiaallies.org/assets/files/publications/ed_handbook.pdf (accessed October 14, 2011) and ―Governor’s Development Opportunity Fund Guidelines,‖ Virginia Economic Development Partnership, 1 July 2011, 1 and 2, http://www.virginiaallies.org/assets/files/incentives/GOFGuidelines.pdf (accessed October 16, 2011). 18 ―Governor’s Development Opportunity Fund Guidelines,‖ 1. 19 Virginia Acts of Assembly, § 2.1-51.6:5 (Governor's Development Opportunity Fund), 1996, 1 http://leg1.state.va.us/cgi-bin/legp504.exe?961+ful+HB306+pdf (accessed October 14, 2011) and ―A Guidebook for Local Officials,‖ 16. 20 Virginia Acts of Assembly § 2.1-51.6:5, 1. 21 ―Governor’s Development Opportunity Fund Guidelines,‖ 1. 22 ―Governor’s Development Opportunity Fund Guidelines,‖ 6. 23 ―Governor’s Development Opportunity Fund Guidelines,‖ 7. 24 Virginia Acts of Assembly, Chapter 875, 29 March 1999, 2, http://leg1.state.va.us/cgi- bin/legp504.exe?991+ful+CHAP0875+pdf (accessed October 15, 2011). 25 ―Virginia Guide to Business Incentives,‖ 17. 26 ―Guidelines for Virginia Investment Partnership Grant,‖ Virginia Economic Development Partnership, 1 July 2011, 1 and 7, http://www.virginiaallies.org/assets/files/incentives/VIPGuidelines.pdf (accessed October 15, 2011). 27 ―Virginia Guide to Business Incentives,‖ 17. 28 ―Guidelines for Virginia Investment Partnership Grant,‖ 7 and 8. 29 Virginia Acts of Assembly Chapter 875, 1 and ―Guidelines for Major Eligible Employer Grant,‖ Virginia Economic Development Partnership, 1 July 2011, 3, http://www.virginiaallies.org/assets/files/incentives/MEEGuidelines.pdf (accessed October 15, 2011). 30 ―Guidelines for Major Eligible Employer Grant,‖ 1. 31 ―Virginia Guide to Business Incentives,‖ 17. 32 ―Guidelines for Major Eligible Employer Grant,‖ 6 and 7. 33 Virginia Code, Chapter 51 (Virginia Investment Partnership Act) § 2.2-5102.1, http://leg1.state.va.us/cgi- bin/legp504.exe?000+cod+2.2-5102.1 (accessed October 15, 2011). 34 ―Virginia Guide to Business Incentives,‖ 18. 35 ―Virginia Guide to Business Incentives,‖ 18. 36 ―Virginia Guide to Business Incentives,‖ 18. 37 ―Virginia Guide to Business Incentives,‖ 18. 38 Virginia Acts of Assembly, Chapter 815, 6 April 2011, http://leg1.state.va.us/cgi- bin/legp504.exe?111+ful+CHAP0815 (accessed October 15, 2011).
104
39 ―Guidelines for Clean Energy Manufacturing Incentive Grant,‖ Virginia Economic Development Partnership, 1 July, 2011, 1, http://www.virginiaallies.org/assets/files/incentives/CEMIGGuidelines.pdf (accessed October 15, 2011). 40 ―Guidelines for Clean Energy Manufacturing Incentive Grant,‖ 5. 41 ―Virginia Guide to Business Incentives,‖ 10. 42 ―Report on Business Incentives 2009-2010,‖ Virginia Economic Development Partnership, 30 October 2010, 24, http://www.yesvirginia.org/pdf/2010incentivesreport.pdf (accessed October 16, 2011). 43 ―Virginia Guide to Business Incentives,‖ 13. 44 ―Virginia Guide to Business Incentives,‖ 13. 45 ―The Transportation Partnership Opportunity Fund: Guidelines and Criteria,‖ Virginia Department of Transportation, September 2005, 3, http://www.virginiadot.org/projects/resources/tpofImplementationGuidelines10- 2005.pdf (accessed October 16, 2011). 46 ―Virginia Guide to Business Incentives,‖ 19. 47 Timothy J. Bartik and Richard D. Bingham, ―Can Economic Development Programs Be Evaluated?‖ Upjohn Institute for Employment Research, 1995, 9, http://research.upjohn.org/cgi/viewcontent.cgi?article=1046&context=up_workingpapers&sei (accessed October 23, 2011). 48 Press releases from the Virginia Economic Development Partnership News Center: http://www.yesvirginia.org/About_Us/News.aspx (accessed September 4, 2011). 49 JLARC provided the NETS database. 50 ―Household Income for States: 2008 and 2009,‖ US Census Bureau, September 2010, 4, http://www.census.gov/prod/2010pubs/acsbr09-2.pdf (accessed December 10, 2011). 51 See ―Report on Business Incentives 2005–2006,‖ Secretary of Commerce and Trade, 30 October 2006, 60, http://leg2.state.va.us/dls/h&sdocs.nsf/fc86c2b17a1cf388852570f9006f1299/d062b14ccb1a11a3852570ae004db66f/ $FILE/RD261.pdf (accessed December 7, 2011); ―Report on Business Incentives 2006–2007,‖ Secretary of Commerce and Trade, 30 October 2007, 52, http://leg2.state.va.us/dls/h&sdocs.nsf/By+Year/RD2922007/$file/RD292.pdf (accessed December 7, 2011); ―Report on Business Incentives 2007–2008,‖ Secretary of Commerce and Trade, 30 October 2008, 46, http://www.yesvirginia.org/pdf/FY2008IncentivesReport.pdf (accessed December 7, 2011); Secretary of Commerce and Trade, ―Report on Business Incentives 2008–2009,‖ Oct. 30, 2009, 39, http://www.ltgov.virginia.gov/initiatives/JCC/EconomicallyDistressedAreas/EconDisArea_BusinessIncentivesRepor t_2008-2009.pdf (accessed 7 Dec. 2011). 52 ―Governor Gilmore Approves Grant for Goodyear Training Facility,‖ Virginia Economic Development Partnership, 13 April 2000, http://www.yesvirginia.org/About_Us/NewsArticle.aspx?newsid=74 (accessed December 2, 2011). 53 Information obtained through author interview of Jeremy Stratton, Director of the City of Danville, Office of Economic Development, on November 23, 2011. 54 ―Working with Goodyear,‖ Editorial, Danville Register and Bee, http://www.ialr.org/news/74-working-with- goodyear-editorial-danville-register-and-bee (accessed December 2, 2011). 55 VDBA data. 56 ―Major Employers List,‖ Danville Economic Development Office, http://discoverdanville.com/DocumentView.aspx?DID=344 (accessed December 2, 2011). 57 ―Working with Goodyear.‖ 58 ―Governor Warner Announces 150 New Jobs for Virginia Beach,‖ Virginia Economic Development Partnership, 16 September 2003, http://www.yesvirginia.org/About_Us/NewsArticle.aspx?newsid=766 (accessed December 3, 2011). 59 Information obtained through author interview of David Couch, Business Development Manager of Virginia Beach. 60 Author interview of David Couch. 61 VDBA data. 62 ―Virginia Beach Success Grows,‖ StihlUSA.com, http://www.stihlusa.com/stihl-inc.html (accessed December 3, 2011). 63 Interview of David Couch. 64 ―Barber & Ross Headquarters Saved for Virginia,‖ Virginia Economic Development Partnership, 16 September 2003, http://www.yesvirginia.org/about_us/NewsArticle.aspx?newsid=568 (accessed December 1, 2011).
105
65 Information obtained through author interview of Patrick Barker, Executive Director of the Winchester-Frederick County Economic Development Commission, on November 30, 2011. 66 Author interview of Patrick Barker. VDBA data shows no employment growth as a result of this project. 67 ―Barber & Ross Look for Bankruptcy Options,‖ Window and Door, 1 October 2007, http://www.windowanddoor.com/news-item/companies/barber-ross-looks-bankruptcy-options (accessed December 2, 2011). 68 Lorraine Halstead, ―Frederick will receive Barber and Ross taxes; Sale of business site will pay firm’s debt,‖ The Winchester Star, http://nl.newsbank.com/nl-search/we/Archives?p_action=list&p_topdoc=11 (accessed December 2, 2011). 69 Author interview of Patrick Barker. 70 ―Eli Lilly and Company,‖ New York Times, 1 October 2011, http://topics.nytimes.com/top/news/business/companies/lilly_eli_and_company/index.html (accessed December 3, 2011). 71 Jack Lyne, ―Lilly Picks Northern Virginia for $435M, 700-Job Insulin Plant,‖ The Site Selection, Online Insider, 13 May 2002 http://siteselection.com/ssinsider/bbdeal/bd020513.htm (accessed December 10, 2011). 72 ―Governor Gilmore Approves Grant for Goodyear Training Facility.‖ 73 Lyne, ―Lilly Picks Northern Virginia for $435M, 700-Job Insulin Plant.‖ 74 Information obtained through author interview of Jim Gahres, Business Development Manager, The Department of Economic Development, on November 30, 2011. 75 Author interview of Jim Gahres and ―Prince William County Overview/Innovation Technology Park and Lilly/Covance Sites,‖ Presentation slides provided by Jim Gahres. 76 Information obtained through interview of Jim Gahres. 77 Jonathan Q. Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ Community and Economic Development Bulletin, School of Government, University of North Carolina at Chapel Hill, No. 7, April 2010, 2, http://sogpubs.unc.edu/electronicversions/pdfs/cedb7.pdf (accessed November 25, 2011). 78 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 6. 79 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 6. 80 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 7. 81 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 7. 82 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 7. 83 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 7. 84 See Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 8, for a more detailed explanation of each method. 85 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 9. 86 Comparable city analysis and employment anticipation are also techniques that can calculate marginal cost, although both are rarely used. See Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 9, for a more detailed explanation of these three methods. 87 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 13. 88 Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 14. 89 John Accordino, ―Economic Development Incentives in Virginia: Principles and Practices,‖ Virginia Issues & Answers, Virginia Tech, Fall 2010, 5, http://www.via.vt.edu/fall10/VIA-fall2010-feature1.pdf (accessed November 25, 2011). 90 Accordino, ―Economic Development Incentives in Virginia: Principles and Practices,‖ 5. 91 Accordino, ―Economic Development Incentives in Virginia: Principles and Practices,‖ 5. 92 Accordino, ―Economic Development Incentives in Virginia: Principles and Practices,‖ 6. 93 Allen Worrell, ―AmerLink now faces liquidation,‖ The Carroll News, 3 November 2009, http://www.thecarrollnews.com/view/full_story/4257963/article-AmerLink-now-faces-liquidation? (accessed November 25, 2011). 94 Allen Worrell, ―Carroll settles with AmerLink, Pro-Form,‖ The Carroll News, 19 January 2011, http://www.thecarrollnews.com/view/full_story/11060564/article-Carroll-settles-with-AmerLink--Pro-Form? (accessed November 25, 2011). 95 Author interviews of Patrick Barker and Jeremy Stratton. 96 Accordino, ―Economic Development Incentives in Virginia: Principles and Practices,‖ 5.
106
97 ―What is IMPLAN? Introduction,‖ Minnesota IMPLAN Group (MIG) http://implan.com/V4/index.php?option=com_kunena&func=view&catid=82&id=52&Itemid=35 (accessed November 25, 2011). 98 Aaron Alward, ―What is IMPLAN?‖ Minnesota IMPLAN Group (MIG), 9 June 2009, http://implan.com/V4/index.php?option=com_content&view=article&id=282:what-is-implan&catid=152:implan- appliance-&Itemid=2 (accessed November 25, 2011).
107 Impact Assessment of Economic Development Grants
Nicole Gaffen Xingchen Wang Jared Wilkerson EXECUTIVE SUMMARY
• Timeframe: 1999-2007 • Number of development projects: 490
• Total job projections: 131,767 jobs • Estimated shortfall: 32,000 jobs - 73,000 jobs
• Estimated expenditures: $239 million - $276 million • Net revenues: $222 million - $835 million
AAgendaGENDA
• Job projections vs. jobs created • State-level expenditures vs. revenues • Cyclical and counter-cyclical trends • Case studies • Policy recommendations • Conclusion COMPARISON OF JOB PROJECTIONS AND JOBS CREATED DDataATA
• Employment information on 388 projects:
• Department of Business Assistance (271)
• Secretary of Commerce and Trade (30)
• National Employer Time Series Database (87)
Figure 1: Jobs Comparison 20,000
18,000
16,000
14,000
12,000
10,000 Number of Jobs of Number
8,000
6,000
4,000
2,000
- 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total number of jobs promised 12,751 11,969 13,241 9,624 11,609 17,651 9,019 4,637 5,016 Total number of jobs created 5,005 10,544 3,943 6,467 8,604 10,079 8,024 3,171 3,008 Table 1: Job Creation Performance within Five Years of Project Announcement
Failed to Meet Year of Project Exceeded Achieved Projections TOTAL Announcement Projections Projections Created Created No Jobs Jobs 1999 8 0 23 4 35 2000 15 1 21 3 40 2001 9 2 16 3 30 2002 13 3 26 7 49 2003 23 3 25 7 58 2004 11 2 39 5 57 2005 15 7 24 5 51 2006 8 2 18 7 35 2007 10 0 15 8 33 Total 112 20 207 49 388 BBracketingRACKETING System SYSTEM
• No employment information for 102 projects • Bracketing system used to estimate missing
information Year of Project Ratio of Job Projections to Announcement Job Creation • Lower: 0% 1999 0.655 2000 0.958 • Mid: see table 2001 0.854 2002 0.840 • Upper: 100% 2003 0.867 2004 0.636 2005 0.922 2006 0.687 2007 0.637 Table 2: Aggregate Job Creation
Job Creation Year of Project Job Lower Upper Announcement Projections Mid-Level Bound Bound 1999 18,450 5,005 8,561 10,731 2000 22,419 10,544 20,555 21,129 2001 16,226 3,943 6,492 7,226 2002 12,840 6,467 9,168 10,616 2003 12,878 8,604 9,704 10,561 2004 25,260 10,079 14,918 18,631 2005 12,279 8,024 11,030 11,560 2006 5,769 3,171 3,949 5,555 2007 5,646 3,008 3,409 4,091 TOTAL 131,767 58,845 87,786 100,100 JOB CREATION BY SECTOR
• Highest Performing Sectors • Manufacturing • Professional, Scientific, and Technical
• Lowest Performing Sectors • Telecommunications • Internet Service Providers JOB CREATION BY SECTOR
• Highest Average Hourly Wages • Beverage and Tobacco ($54.26) • Accommodation ($43.29) • Professional, Scientific, and Technical ($37.57)
• Lowest Average Hourly Wages • Non-Store Retailers ($9.05) • Administrative and Support ($9.12)
JOB CREATION BY SECTOR
• Highest Economic Multipliers • Beverage and Tobacco (5.29) • Water Transportation (4.96)
• Lowest Economic Multipliers • Nonmetallic Mineral Product Manufacturing (1.16) • Store Retailers (1.16) • Non-Store Retailers (1.18)
COMPARISON OF STATE-LEVEL EXPENDITURES AND REVENUES Table 3: Aggregate Grant Expenditures
Quantified Grant Unquantified VJIP, Total Grant Expenditures EDAP, and RIAP Grants Expenditures Year of Project (in millions) (in millions) (in millions) Announcement Lower Upper Lower Upper Lower Upper Bound Bound Bound Bound Bound Bound
1999 $11.84 $17.03 $3.73 $4.20 $15.57 $21.23 2000 $28.21 $35.37 $8.84 $9.91 $37.05 $45.28 2001 $11.69 $15.40 $1.66 $3.28 $13.35 $18.68 2002 $13.62 $19.33 $5.99 $6.01 $19.61 $25.34 2003 $57.63 $58.76 $4.85 $5.14 $62.48 $63.90 2004 $19.19 $22.75 $1.66 $2.09 $20.85 $24.84 2005 $32.00 $34.51 $3.75 $4.19 $35.75 $38.70 2006 $14.05 $16.58 $3.52 $3.87 $17.57 $20.45 2007 $15.11 $15.21 $1.45 $1.88 $16.56 $17.09
TOTAL $204.27 $234.93 $35.45 $40.58 $238.79 $275.51 SStateTATE -TaxLEVEL Revenues TAX REVENUES
• Generated in IMPLAN
• Short-term, conservative estimates
• Method of separating state and local taxes:
Percent Assigned to State IMPLAN Category Revenue Corporate Profits; Dividends; Income; Severance 100% Motor Vehicle Licenses 100% Sales Tax 80% Other Taxes and Non-Taxes 67% Property Tax 0% Table 4: State-Level Expenditures and Revenues
Expenditures Revenues Net Revenue (in millions) (in millions) (in millions)
Lower Bound $238.79 $460.52 $221.73
Mid-Level $268.81 $1,081.08 $812.27
Upper Bound $275.51 $1,110.45 $834.94 CYCLICAL AND COUNTER-CYCLICAL TRENDS: BUSINESS AND ELECTION CYCLES Figure 1: Business and Election Cycle Trends Job Creation Projections 14,000 5 EXPANSION RECESSION EXPANSION 4.5 12,000
4
VARateUnemployment 10,000 3.5
3 8,000 2.5 6,000 2
1.5
Job Creation Job Projections Creation 4,000
1 2,000 0.5
0 0
Month
Monthly Job Creation Projections Unemployment Rate State-Wide Election Cycle Figure 2: Business and Election Cycle Trends Grant Awards 45 5 EXPANSION RECESSION EXPANSION
40 4.5
4 35
3.5 VARateUnemployment 30 3 25 2.5 20 2
Promised Grants (in millions) Grants Promised 15
1.5
10 1
5 0.5
0 0
Month Promised Grants (in millions) Unemployment Rate State-Wide Election Cycle DEVELOPMENT PROJECT CASE STUDIES SSuccessfulUCCESSFUL Development DEVELOPMENT
• Goodyear Auto Service - Danville (2000)
• Expanded existing location
• Promised 50 jobs, created 529 jobs
• Employment needs consistent with local labor force
• Economic development in Danville
• Locality provides labor force training
• Successful competition with NC
SSuccessfulUCCESSFUL Development DEVELOPMENT
• STIHL, Inc. – Virginia Beach (2005)
• Expanded existing location
• Promised 150 jobs, created 1,000 jobs • Performance a known quantity • Economic development in Virginia Beach
• Desirable industries targeted
• Locality advocates on behalf of businesses MMixedIXED SuccessDEVELOPMENT Development
• Barber & Ross – Frederick County (2003)
• Relocated, expanded headquarters
• Promised 100 new / 375 saved jobs – metrics largely met
• Bankruptcy led to closure (2007) • Economic development in Frederick County
• Focus on existing businesses
• Difficulty competing with other states
UUnsuccessfulNSUCCESSFUL Development DEVELOPMENT
• Eli Lilly – Prince William Co. (2002)
• Relocated manufacturing facility
• Promised 700 new jobs
• Ended project in middle of construction (2007) • Economic development in Prince William Co.
• Cooperates with university and research park
• Adapts to the market and targets new industries
RECOMMENDATIONS FOR FUTURE EVALUATION OF DEVELOPMENT GRANTS LLimitationsIMITATIONS to OF IMPLAN IMPLAN
• Displacement impacts • Existing businesses provide similar goods/services
• Additional costs to local/state governments • Increased demand for public services
• Qualitative impacts • Socio-psychological benefits • Negative externalities
RReE--EEvaluatingVALUATING Existing POLICIES Policies
• Repayment of grant funds (clawbacks) • Additional costs may be incurred • Eliminating upfront payments may place Commonwealth at a disadvantage
• Requirement to remain in community • Most job creation occurs in short-term • Need for greater accountability in long-term
CONCLUSION KFindingsEY FINDINGS
• Aggregate job creation did not meet projections
• Manufacturing sectors were high-performing in terms of job creation
• Economic development grants are revenue-enhancing
• Non-manufacturing sectors were high-performing in terms of generating tax revenue
• Business cycles impact job projections and grant awards