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Virginia Municipal League Annual Meeting October 16, 2007

Attracting Jobs: Economic Development Policies and Mega Projects Liz Povar, Director of Business Development Rob McClintock, Director of Research Virginia Economic Development Partnership. Virginia Municipal League Annual Meeting October 16, 2007.

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Virginia Municipal League Annual Meeting October 16, 2007

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  1. Attracting Jobs: Economic Development Policies and Mega ProjectsLiz Povar, Director of Business DevelopmentRob McClintock, Director of ResearchVirginia Economic Development Partnership Virginia Municipal League Annual Meeting October 16, 2007

  2. Governor’s Strategic Economic Development Goals • Enhance VA’s strong business climate • Programs to support existing business • Provide a world-class workforce • Reduce disparity between distressed and non-distressed areas • Emphasize regional cooperation • Capitalize on proximity to Washington DC and federal assets • Support technology, R&D and emerging sectors • Strengthen position in national and international tourism • Develop a coordinated international marketing strategy

  3. VEDP Mission Statement To enhance the quality of life and raise the standard of living for all Virginians, in collaboration with Virginia communities, through aggressive business recruitment, expansion assistance, and trade development, thereby building the tax base and creating higher income employment opportunities

  4. Stephen R. Adkins Chief, Chickahominy Tribe Mary Rae Carter Owner/President, MRC Enterprises W. Clay Campbell President, Martinsville Speedway George B. Cartledge, III, Vice Chair President, Grand Home Furnishings R. B. Clark Charlotte County Administrator Jake Gosa Chairman and CEO, American Woodmark Corporation F. Randolph Jones John A. Mahone Charles H. Majors, Chair President and CEO, American National Bank and Trust Company John F. Malbon President and CEO, PAPCO, Inc. Board of Directors

  5. David Oliver President, Oliver Cleaning Services A. Carole Pratt, D.D.S. McKinley L. Price, D.D.S. Ike Prillaman Samuel A. Schreiber Regional President, Wachovia Bank James E. Ukrop Chairman, First Market Bank Ex-Officio: Patrick O. Gottschalk, Secretary of Commerce & Trade Jody M. Wagner, Secretary of Finance Board of Directors

  6. VEDP Organization

  7. Overseas Offices Brussels Tokyo Seoul Mexico City Hong Kong São Paulo

  8. Changing Face of Economic Development • Change from Manufacturing to Nonmanufacturing Projects • Business Services is driving Virginia’s economy • Compressed Timeframe • Consultant Usage • Internet Usage • Process of Elimination, Rather than Selection

  9. Themes • Business Consolidation • Existing Business Retention and Expansion • Workforce Development • International Focus • Incentives Challenge

  10. Economic Development Process Retention and Expansion of Existing Business Expansion of Existing Business Attraction of New Business Segment: In Market Cross Market Out of Market Localities/ Regions VEDP VEDP Localities/Regions VEDP Localities/Regions Leader: Collaborator:

  11. Recent Accolades According to ITAA (International Technology Association of America), the Distributed Services Initiative is the most proactive example found of a comprehensive economic development strategy to recruit advanced technology jobs to rural localities.

  12. VITAL INVESTMENT TRADE BOTH Foreign Owned Firms Service Exports India Emerging Markets China Mergers & Acquisitions Policy Sales Offices Brand Virginia Global Logistics

  13. Marketing & Outreach FY ‘08 • Aligned with strategic sectors • Measured results • Partner with localities/regions in over 40 events • Marketing Missions • Conferences and Trade Shows • Special Events • Focused Marketing Initiatives

  14. Marketing Channels Special Events Marketing Trips Web Site Service Allies Conferences Companies Consultants Media Local & Regional ED

  15. Key Target Markets Advanced Manufacturing Polymers/Composites Initiative Fabricated Wood Initiative Food Processing Pharmaceuticals Natural Resources Chemicals Security & Services Distributed Services Initiative Modeling & Simulation Initiative Federal Security Agencies & Providers Information Technology Finance, Insurance, HQ Professional & Business Services Science & Research Energy Initiative Biotechnology/R&D Nanotechnology Emerging Industries Medical/Federal Labs Transportation Global Logistics Initiative Automotive Aerospace Global Logistics Distribution

  16. Initiative Strategy • Declare sectors Virginia can leverage to drive centers of excellence and market leadership • Apply intense focus, significant marketing resources, and senior management leadership • Collaborate with a university to enhance the initiative through research and educational opportunities • Collaborate with public and private sector players to define markets and drive success • Develop value proposition that leverages regional assets

  17. Investment and EmploymentFY 2007 • Totals • Investment $2.6 billion • Jobs 18,863

  18. Key Announcements • Grand Opening – City of Portsmouth – $450 million; 210 jobs • Coors Grand Opening – Rockingham County $229 million; 25 jobs

  19. Marquee Announcements Since September 2005

  20. Marquee Announcements Projected Impact of these Announcements on the Commonwealth: • Incentives Awarded: $43,638,434 (over ten years) • New Jobs Created: 2,866 • Jobs Saved: 200 • Capital Investment: $770 million • 10-Year State Revenue: $209,566,867 (5 to 1 return) • 20-Year State Revenue: $504,968,707 (12 to 1 return)

  21. Regional Liaison Network • Regional Assistance & Market Alignment • Understand and facilitate communication of knowledge of the assets, weaknesses • Be the voice of the region for business opportunities • Be the point of contact for local and regional developers • Communicate the VEDP vision and strategy to the regional leaders • Understand and facilitate communication of marketing partnerships

  22. Regional Targets C entral Virginia Hampton Roads Northern Virginia Southside Virginia Southwestern Virginia Valley Northern Virginia • Headquarters • Technology Valley • Science & Technology • Research & Development • Energy Central Virginia • Headquarters • Advanced Manufacturing Southwestern Virginia • Energy & Technology • Wood products Hampton Roads • Modeling & Simulation • Global Logistics Southside Virginia • Distributed Services • Wood Products

  23. Initiatives Modeling & Simulation • Northern Virginia • Hampton Roads Global Logistics • Hampton Roads • I-81 Corridor Distributed Services • Harrisonburg • Lynchburg • Blacksburg • Danville Planned Initiatives Energy, Nuclear & Renewables • All of Virginia’s regions based upon energy sector Polymers & Plastics • Southwestern Virginia • Southside Virginia Fabricated Wood Products • Southwestern Virginia • Southside Virginia

  24. What’s New for VEDP in FY08 • Marketing • Implement the Site Selection Consultant’s Strategy • Implement the Executive Pulse software to support VEDP’s existing industry program by providing localities with standard management tool • Contract with Lead Generation Consultant focused on Federal agencies and contractors • Launch the Virginia International Trade Alliance (VITAL), a working public-private partnership to prepare and implement Virginia’s International Strategy

  25. What’s New for VEDP in FY08 • Marketing • Roll out a Global Logistics branding campaign • Research a consultant database, develop a contact program, and create specific outreach marketing events to attract and educate consultants on Virginia’s value proposition • Implement a Targeted Call Program directed at Vertical Market Companies that have previously shown an interest in Virginia • Focus on University Outreach

  26. What’s New for VEDP in FY08 • Support • Support the Governor’s Advisory Committee working on ways to compete for “Mega” projects

  27. Economic Development Mega Projects • Current ad hoc process not meeting needs of mega project prospects • Difficult to assemble new large sites; incentive packages • Mega Project- $250+ million capital investment, 400+ employees, site requirements range from 300 to 2,000 acres • Advisory Committee on Mega Projects established at Governor’s request to: • Explore alternatives and solutions for Virginia’s competitiveness for mega projects • Develop set of recommendations for legislative action • VEDP engaged Fluor Global Location Strategies to: • Analyze Virginia’s Competitiveness • Review competitor states' programs (approval processes and funding mechanisms)

  28. Why Pursue Mega Projects? • Major revenue producers for states/regionsExample: Auto plants averaging $30 million in annual revenue • ThyssenKrupp AG in Alabama, 2007 ($3.7 billion investment; 2,700 jobs) • Toyota in Mississippi, 2007 ($1.3 billion investment; 2,000 jobs) • Kia Motors in Georgia, 2006 ($1.2 billion investment; 2,900 jobs) • Samsung in Texas, 2006 ($4 billion investment; 900 jobs) • Catalyst for transforming regional economies • Signify to market that states are serious about economic development in current competitive environment • Component of an overall economic development strategy • Means to drive progress on other key issues: • Workforce delivery • Higher education collaborations • Transportation improvements • Increase brand awareness and image projection (VW in VA media exposure)

  29. Incentives for Selected Virginia Mega Projects

  30. Consultant Perceptions of Virginia • Competitive in regards to business climate factors-lowest in Worker Compensation • Current incentives are not perceived as competitive • No visible site development programs • Incentive approval process unclear for mega projects and considered “High Risk” • Can Virginia deliver? • Put company operations and decisions at risk

  31. General Findings • Virginia is strong in overall multi-state business climate competitive analysis • Limited recent success in closing mega deals in Virginia • 2 out of 40 top deals landed in Virginia (Site Selection 2003-2006) • Both Philip Morris USA and Micron had strong ties to Virginia and no new site had to be developed • Three areas of study focus emerged • Lack of competitive mega project sites • Lack of funding mechanism for site and incentives programs of sufficient scale to win these deals • Approval process with General Assembly is uncertain for companies

  32. Advisory CommitteeRecommendations Guiding Principles • Incentives continue to be performance-based with agreements and claw-back provisions • State programs designed to attract mega projects should build on Virginia’s diversity and benefit the entire Commonwealth---rural, suburban and urban • automotive and other advanced manufacturing operations in rural areas, as well as • corporate headquarters and service-related projects in suburban and urban areas • Recommendations should promote regional cooperation and solutions to help transform and benefit the regional economy

  33. Advisory Committee Recommendations • Establish a State Site Planning Grant Program • To proactively identify and develop sites for strategic regional targets • Encourage regional efforts • Administered by VEDP • Competitively selected and geographically dispersed • 6 Regions • Local match of 25% required; some local control of site needed • Funding phased to support environmental, geotechnical reviews, engineered solutions for infrastructure

  34. Advisory Committee Recommendations • Amend existing legislation to permit bond financing for certain economic development initiatives • Consider ways to develop an “approval process” that gives prospects “comfort” when the General Assembly is not in Session • VEDP initiates process with Secretary of Commerce and Trade and Governor • Supported by ROI, decision brief • Key metrics reviewed ($ return, high wage, strategic need, etc.)

  35. Resources… “Economic Development Handbook for Local Elected Officials” “A Guide to Business Incentives” Virginia Allies Website: www.VirginiaAllies.org– Economic Development Resources www.YesVirginia.org

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