By the BF Staff
From the January/February 2016 Issue
PROJECTS: KAISER PERMANENTE (GA DED; AMAZON (GSMP); COMMUNITY HEALTH SYSTEMS (TN DECD); SOLARCITY (UTAH GOED); SUBARU EXPANSION (IEDC); POLARIS INDUSTRIES (AL DOC); NOVO NORDISK (EDC OF NC)
Kaiser Permanente (KP) is a leading integrated healthcare provider operating 600 medical offices and 38 hospitals in 8 states. The company operates the largest private electronic health record deployment in the world. KP employs 300 physicians and associates in Georgia.
Under the codename “Project Profile,” KP conducted a wide-ranging site selection search for a new National Innovation Center. The locations KP considered were Denver, CO and Atlanta, GA. An available high-tech workforce was paramount in their ultimate decision.
Georgia emerged as the winner of the big prize, a project that will create 900 new jobs over five years. The new positions will include executive, administrative, network IT, software developers, analysts, cyber security and application developers; the average salary will be $110,000 plus benefits.
Kaiser Permanente is investing $22.3 million in the project, which is expected to have a direct economic impact in Fulton County of $99 million over 10 years while creating nearly $78 million in new wages during the same period.
Georgia has become a hotbed for global brands such as Kaiser Permanente to locate innovation and IT centers. The robust technology talent, thriving network of companies and overall high quality of life in GA puts Georgia on the radar for these industry leaders.
Georgia’s economic development team provided a $1.2 million grant to defray costs of computer supplies, office equipment and hiring. But it was the workforce availability at Georgia Tech and surrounding universities that really closed the deal. The company will locate its new offices in Pershing Point Plaza on Peachtree Street near the Woodruff Arts Center. The new 157,000-square-foot IT campus in Atlanta joins a string of technology announcements in Midtown, including NCR and Worldpay US.
“We are delighted to bring a new IT campus to Georgia,” said Julie Miller-Phipps, president of Kaiser Permanente Georgia. “The Atlanta area is a strong health technology hub with a high availability of tech talent, making it the ideal location for Kaiser Permanente’s new IT campus.
This year, Kaiser Permanente doubled down on its commitment to expand its Georgia operations: Gov. Nathan Deal recently announced that the company will add 800 jobs in metro Atlanta. Of the newly created positions, more than 600 will be located at a new facility in Gwinnett County, representing a $51 million capital investment.
AMAZON: BIG WIN FOR SAN MARCOS
San Marcos, TX has been one of the country’s fastest growing cities, home to a leading research hub at Texas State University. In 2015, San Marcos snared the largest job-creating project in the history of the city and surrounding Hays County—Amazon’s new fulfillment center, which is bringing more than 1,000 jobs to the region at the site.
San Marcos, strategically positioned between Austin and San Antonio, had its first shot at an Amazon distribution hub in 2012, but the site the online giant was considering in San Marcos wasn’t aligned with the company’s timeline and ultimately they chose another location. City officials learned from this setback: they identified ways that San Marcos could be better prepared for the next opportunity of similar scale, including the creation of an exact timeline for rezoning processes.
Last April, that opportunity arrived: a site selection consultant contacted the Greater San Marcos Partnership (GSMP) with a prospect that would create at least 800 jobs at a 855,000-square-foot facility, but needed a site that was ready to turn dirt in August, only three months away.
When Amazon started a site search again, they asked the consultant to look again at the site in San Marcos they had passed over in 2012, with the caveat that the community would have to move quickly to meet their required deadline. During the next three months, staff from GSMP, the City of San Marcos and Hays County worked tirelessly to ensure all approvals were in place, including rezoning and incentives, by the company’s deadline of July 31. In that time, the required rezoning was finished and both the City of San Marcos and Hays County voted to enter Chapter 380 and 381 agreements with the company. The Texas Department of Transportation (TxDOT) also weighed in with an expedited expansion of a major intersection on Interstate 35 (including the installation of a traffic light), which turned out to be the element that sealed the deal.
Amazon.com broke ground in San Marcos in August. The Amazon fulfillment center in San Marcos currently is hiring 350 employees, a workforce expected to grow to 1,000 full-time employees by 2022. Amazon is spending $191 million to build and equip the fulfillment center in return for a 15-year package of economic incentives that includes property tax reductions and sales tax rebates on any local purchases made by the company.
Amazon actively recruits U.S. military veterans and military spouses to join the company, and hundreds have careers in its fulfillment network. The Greater San Marcos region, located less than 60 miles from three military instillations in San Antonio and 100 miles from Fort Hood, has a large veteran population.
Distribution and logistics have been identified by GSMP in its recently updated five-year economic development strategy as major growth sectors for the region. San Marcos has access to multiple trans-load facilities to move product by road, air and Class 1 rail lines. There are 250 supply chain-related firms in the Greater San Marcos region.
COMMUNITY HEALTH SYSTEMS EXPANDS IN TENNESSEE
Community Health Systems (CHS), Inc. is one of the nation’s leading operators of general acute care hospitals and one of Tennessee’s largest employers. The organization’s affiliates own, operate or lease 199 hospitals in 29 states with approximately 30,000 licensed beds.
If there was any doubt that CHS would continue to center its burgeoning operations in the Volunteer State, that doubt was erased by the company’s announcement that it is investing $66 million to construct a new Shared Services Center in Nashville. Through this expansion, the national healthcare company will create 1,500 new jobs over the next five years.
“We want to thank Community Health Systems for this investment in Middle Tennessee and the new jobs they are creating in Davidson County,” Gov. Bill Haslam said at the project announcement. “Companies right now have a choice between not only what states they want to do business in but what countries, and when a company like CHS chooses to expand right here in Tennessee, it speaks volumes about the high quality business environment we have and our talented workforce.”
“We looked at many states and sites for this expansion and ultimately determined that Middle Tennessee offers the business environment, skilled workforce and quality of life to support our growth,” Wayne T. Smith, chairman/CEO of Community Health Systems, Inc., said.
As Community Health Systems celebrates its 30th anniversary, it is expanding its physical footprint by constructing a new office building near Cane Ridge Road in southeastern Davidson County. The six-story, 240,000-square-foot CHS Shared Services Center will perform business and administrative functions that support the organization’s affiliated hospitals, enhancing operations efficiencies and standardizing processes.
“Community Health Systems is a great company, and I’m thrilled to welcome them to Nashville,” Nashville Mayor Karl Dean said. “These jobs will be a wonderful addition to the Antioch area and Southeast Davidson County, where Metro Government has opened a new library, community center and park in the past year. CHS’s plans are further proof that public investment leads to private investment, and I see the potential for much more.”
Across Tennessee, CHS has 19 affiliated hospitals and corporate headquarters in Franklin, totaling nearly 16,000 employees across the state.
SOLARCITY POWERS JOBS IN UTAH
The Beehive State scored a big win in 2015 with SolarCity’s announcement that it will open a regional corporate headquarters in Utah, resulting in up to 4,000 new jobs and $94 million in capital investment over the next 10 years.
“SolarCity’s choice of Utah for its regional headquarters is a reflection of the vibrant growth of alternative energy companies in the state,” said Val Hale, executive director of GOED.
Founded in 2006, SolarCity has more than 200,000 residential customers throughout 18 states. The firm now installs one out of every three solar systems in the U.S.
“We’ve chosen Utah as a regional headquarters because of its educated workforce and affordable cost of living for those in the professional roles we will create in the Beehive State,” said Brendon Merkley, executive vice president at SolarCity. “In addition to creating many skilled labor and technical roles, the growing solar industry also has increased demand for professional services and supporting functional roles.”
SolarCity has indicated that wages, excluding medical benefits, for the up to 4,000 new employees hired over the coming 10 years are expected to exceed 125 percent of the county average wage. The establishment of the regional headquarters is expected to generate an estimated $94 million in capital investment. SolarCity may earn up to 25 percent of the new state taxes they will pay over the 10-year life of the agreement in a post-performance Economic Development Tax Increment Finance (EDTIF) tax credit rebate; GOED has approved a tax credit rebate of $24.4 million.
If the company generates a minimum of 4,500 jobs and meets additional criteria, SolarCity may earn an extension to the agreement for another five years. SolarCity may also earn a post-performance Industrial Assistance Fund relocation grant of up to $200,000 as it relocates management personnel.
SUBARU EXPANDS IN INDIANA
Subaru of Indiana Automotive (SIA) continues to grow its automotive manufacturing hub in Indiana. The Hoosier State scored a big win with Subaru’s 2015 announcement it will expand its Lafayette, IN operations, creating up to 1,204 new jobs by 2017.
SIA will invest $140.2 million to increase its production capacity by nearly 100,000 units annually. The company will upgrade its existing campus at 5500 State Road 38 East and purchase new machinery and equipment in order to support the expansion and meet the growing demand for Subaru vehicles in North America. SIA, which builds the Subaru Outback, Subaru Legacy and Toyota Camry, is Subaru’s only production facility located outside Japan.
The expansion deal came on the heels of Gov. Mike Pence’s jobs and economic development mission to Japan, where he met with the president of Fuji Heavy Industries in Tokyo. SIA’s investment in Lafayette will be in addition to a $400 million expansion, announced in 2013, of the engine assembly and stamping sections to enable SIA to begin Subaru Impreza production by the end of 2016. SIA currently employs more than 3,800 Hoosiers and produces approximately 300,000 cars each year. The facility has built more than 4 million vehicles, including more than 2 million Subarus, since the start of production in 1989. The company’s expansion is also expected to spur growth of its direct material suppliers as well, including 28 located across Indiana.
The Indiana Economic Development Corporation offered Subaru of Indiana Automotive up to $7.6 million in conditional tax credits and up to $250,000 in training grants based on the company’s job creation plans.
ALABAMA LANDS ‘PROJECT AXLE”
Polaris Industries announced plans in 2015 to build an advanced manufacturing facility in Huntsville, AL, to produce off-road vehicles, a highly coveted project that will bring as many as 2,000 jobs to Alabama. The $127-million plant $1.8 billion in new wages over 15 years.
To win this high-stakes competition, Alabama had to beat out 14 other states in what was codenamed “Project Axle.” In its announcement, Polaris said Huntsville was an ideal pick for its 600,000-square-foot facility because of the city’s skilled workforce, a history of technology and innovation, existing utility infrastructure, and local and state support. The 453-acre site also brings Polaris closer to its key customer base in the region and offers a strong logistics network for the new operation.
Medina, MN-based Polaris plans to complete construction on the facility in early 2016 and begin production shortly after that. At full capacity, the Huntsville facility will employ at least 1,700 workers—a figure that could rise to 2,000 by 2020. The Polaris manufacturing facility will support core processes including vehicle assembly, chassis and body painting, welding, fabrication, and injection molding. The company’s popular Ranger, ACE and RZR off-road vehicles will be produced there.
The “Project Axle” recruitment climaxed in late 2014 when economic development officials from Alabama and two other Southeastern states designated as finalists made pitches at the company’s headquarters in Minnesota. Shortly afterwards, the Alabama team got word it had secured the Polaris project. The Polaris recruitment hinged on teamwork between multiple economic development agencies in north Alabama—a collaboration that reunited many of the same players in Huntsville’s successful recruitment of Remington Outdoor Co.’s $110-million firearms manufacturing facility in 2014.
Joining the Alabama Department of Commerce and the Chamber of Commerce of Huntsville-Madison County on the project was the Tennessee Valley Authority, which also assisted with Remington’s “Project Traveler.” Polaris’ was the first major project in Huntsville to land in a newly annexed area of Limestone County; Limestone officials agreed to contribute incentives valued at $1 million to the package.
AIDT, the state’s primary job training agency, also played a prominent role, committing to provide pre-employment screening and training for Polaris as part of an incentive valued at $20 million. In addition, the State of Alabama agreed to provide $31 million in discretionary incentives to Polaris, and it reserved an incentive of $2.5 million to offset capital costs for future expansion at the site.
PROJECT BRIGHT SKY: $1.7-BILLION WINDFALL FOR NORTH CAROLINA
Originally know as Project Bright Sky, Novo Nordisk Pharmaceutical Industries’ expansion project in Johnston County, NC, is the largest single foreign direct investment recorded in the Tarheel State.
In August 2015, Novo Nordisk executives joined NC Gov. Pat McCrory in announcing a 700-job expansion at its bio-manufacturing campus in Johnston County. The company will invest up to $1.7 billion at its site in Clayton, NC over the next five years.
Denmark-based Novo Nordisk is a leading global manufacturer of insulin and related diabetes treatment products. Its massive new North Carolina plant will manufacture active pharmaceutical ingredients for its diabetes care products. The company, founded in 1923, had previously manufactured its active ingredients only in Denmark; it has a global workforce of 39,700 across 75 countries.
Novo Nordisk’s existing bio-manufacturing plant in Clayton, NC opened in 1996 and has since undergone several expansions. That a global site search for Project Bright Sky led the company again back to Johnston County, where it already had a 719-worker facility, is credible evidence of the commitment by county’s economic development leaders to go the extra mile to meet the company’s needs.
After initially considering Denmark as the site of its new plant for semaglutide production, Novo Nordisk expanded its location search to the United States, the world’s largest market for diabetes drugs. Along with the Johnston County campus and sites in three other NC counties, company campuses in Massachusetts and New Jersey were considered for the expansion.
In announcing the expansion, Gov. McCrory indicated that Novo Nordisk’s initial $1.3-billion capital investment was the largest single investment in the history of the state’s Job Development Investment Grant (JDIG) program, created by the NC General Assembly in 2002. Moreover, the project represents one of the nation’s largest foreign direct investment (FDI) projects in 2015.
Johnston County Economic Development Director Chris Johnson said the economic impact of the new facility makes the endeavor “a legacy project.” It will take five years to build the 200,000- square-foot facility, generating 2,000 construction jobs in the process.
NC Commerce’s Labor and Economic Analysis Division (LEAD) estimates that Novo Nordisk will add $7.4 billion to the state’s gross domestic product through 2030, the final year of its JDIG grant. After all grant funds are dispersed to the company, the North Carolina treasury will still see a positive inflow of $209 million in net tax revenues over that period.
North Carolina’s Industrial Development Fund (Utility Account), a key source of funding for infrastructure in the state’s rural counties, also will benefit from Project Bright Sky. This program will derive more than $5.28 million in new funds through a formula that taps a percentage of JDIG awards supporting projects in less economically distressed counties, such as Johnston.
Locally, jobs at Novo Nordisk’s new production site—spanning manufacturing, administrative, technical services and support personnel—will average $68,420 in annual compensation, nearly twice Johnston County’s overall annual wage level.
Novo Nordisk made it clear in vetting candidate properties in multiple states that availability of adequate power and capacity to manage significant wastewater were key concerns. The specific utility demand requirements could not be provided to state and local economic developers, so the candidate sites were evaluated for land and infrastructure options that required a wide range of utility capabilities.
Having an adequate sewer infrastructure, including a water pretreatment facility capable of processing high concentrations of effluents, was mandatory for the project. Because infrastructure this specialized did not exist on the candidate sites, NC officials realized that to win Project Bright Sky they would have to creatively meet this challenge. Johnston County water and sewer officials conducted their own due diligence and came up with an infrastructure plan that met these needs.
In addition to North Carolina’s $20.8 million incentives offer and local incentives noted above, the Golden LEAF Foundation offered $4 million, and the NC Biotechnology Center offered $100,000 in infrastructure development assistance.
The availability of a rail line bridging the land between Novo Nordisk’s current facility, additional land it owns and another parcel that the company was considering provided a resolution to the road-access requirements of the project.
NC’s Department of Transportation and rail owner NC Railroad Company were brought in to evaluate the situation and propose a solution. After extensive analysis, they proposed construction of a flyover bridge to extend over the rail line that would connect commuters between the current facility and a side road to the new site.
NC’s award-winning community college system also specifically pledged nearly $2 million in support for Novo Nordisk’s customized training needs for Project Bright Sky.
PICKING THE WINNER
The 2015 Economic Development Deal of the Year recognizes the locations and economic development agencies that landed the highest-impact projects announced between July 1, 2014 and the entry deadline of December 1, 2015.
For the purposes of this award, an “economic development deal” is defined as:
- A project or effort that resulted in the relocation/expansion of a company to a location served by the entering organization;
- A project resulting in the expansion of a company already within the territory served by the entering organization;
- A project or effort that resulted in the demonstrable retention of a company that would have otherwise left, in whole or in part, the territory served by the entering organization;
- Any combination of the above.
Nominees were required to provide official economic impact numbers produced by the RIMS II, IMPLAN or REMI certified analysis methods, including direct, indirect, and induced figures for economic output, job creation and capital investment when available, as well as anticipated new wages; and a narrative explaining how the deal came together, including details on regional cooperation, innovative incentives and training programs in partnership with higher education resources, where applicable.
Judges evaluated the narrative and the economic impact numbers and gave each project a score ranging from zero to 100. The highest-rated entry is our Gold winner and is considered our official Economic Development Deal of the Year; the second, third and fourth place entries win the Silver, Bronze and Honorable Mention awards, respectively.