From the January/February 2017 Issue
PROJECTS: NEXT NGA WEST (ST. LOUIS DEVELOPMENT CORP.); BEST BUY’S E-COMMERCE CENTER (GREATER SAN MARCOS); SHELL ETHANE CRACKER (PENNSYLVANIA DCED); HOTWIRE HQ (GREATER FORT LAUDERDALE); SENTURY TIRE PLANT (GEORGIA DED); HUSQVARNA EXPANSION (ORANGEBURG COUNTY); CONTINENTAL PLASTICS EXPANSION (HUNTINGTON COUNTY EDC)
For over 70 years the City of St. Louis has supported the National Geospatial‐Intelligence Agency (NGA) in its critical mission of delivering geospatial intelligence to warfighters, policymakers, intelligence professionals and first responders both at home and abroad. Many of these missions, such as GPS support, aeronautical safety of navigation and precision targeting, are accomplished from NGA West’s existing facilities in south St. Louis.
In 2012, the NGA began the site selection process for a new facility when it announced that it intended to relocate from its current facilities for a variety of reasons, including both building and facility challenges as well as other broader site security and defensibility implications of the post 9/11 world and current global security climate.
When the selection process was completed earlier this year, NGA opted to stay where it’s been from the start, putting its new facility on a 97-acre site within the Northside Regeneration Area of St. Louis. The project will have an estimated economic impact of $4.6 billion for the St. Louis metro area over the next 10 years.
ST. LOUIS OFFERS MISSION EFFICIENCY
NGA received over 200 respondents to its 2012 RFP and ultimately selected four Missouri sites to proceed through an Environmental Impact phase, including sites in the City of Fenton, the City of Mehlville, St. Clair County, and the City of St. Louis. In the end, the site in St. Louis was judged superior on three key factors:
Mission Efficiency and Flexibility, which includes issues such as finding nearby industry partners, attracting quality staff members and the site’s proximity to the NGA sister installation in Arnold. The North St. Louis site location will also help NGA adapt and continue to meet its mission because of proximity to critical data facilities, Lambert St. Louis International Airport, and numerous centers of business, education, and technology;
Environmental Impact, which takes into account substantial improvements that will be made to the site and noted minor issues in St. Clair County involving wetlands and wildlife habitat; and Federal Government Priorities, which includes a list of regulations and orders intended to improve and redevelop urban areas.
The city gained from several of these, including reducing greenhouse gas emissions with shorter commutes and promoting infill development of blighted areas. Furthermore, this site has the opportunity to maintain morale of NGA employees by offering the least impact on their commute and a work location near desirable amenities like childcare, dining, and entertainment venues. The North St. Louis site also supports future national security needs and can provide security to the facility by locating in an urban populated area.
BEST BUY PICKS SAN MARCOS, TX
In August 2016, Best Buy chose San Marcos, TX as the location for its Texas E-Commerce Sales Operations Center, the consumer electronics giant’s first and only facility of its kind in TX.
The impact of the project on the community is profound, not only creating quality local jobs, but also generating hundreds of millions in taxable sales annually in a previously vacant 20,000 square foot facility. This is the second recent e-commerce project with an extraordinary impact on the San Marcos economy, with a new Amazon Fulfillment Center opening just days after the Best Buy facility was announced.
In early March 2016, Greater San Marcos Partnership received a request directly from a site selection consultant who was looking for sites available to fit her client’s needs. After a few site tours, a turn-key facility in San Marcos was identified as an ideal fit: the site had recently been outfitted for just this kind of opportunity, thanks to another major employer in the city, Grande Communications.
The Best Buy facility ultimately is expected to yield an estimated $1.4 million and $477,000 each year in net sales tax revenue for the City of San Marcos and Hays County, respectively.
The City of San Marcos and Hays County voted in favor of entering into performance-based Chapter 380/381 Agreements with Best Buy that include a 10-year sales tax rebate at 75 percent with two 10-year automatic renewals upon the meeting of the terms of the agreement and a ten-year personal property tax rebate at 50 percent. The company agreed to job hiring investment benchmarks and all incentivized jobs were to pay at least $15 per hour.
From an economic impact perspective, during the next 15 years, this project will have generated an estimated $43 million for the City of San Marcos and $14.4 million for Hays County.
For perspective, currently the largest sales tax generator in San Marcos is the 1.5 million square foot Outlet Mall complex (San Marcos Premium Outlet and Tanger Outlet), which hosts over 14 million unique visitors from around the world each year. The City of San Marcos and Hays County collected about $26 million and $15 million respectively in Sales Tax Revenue for 2015. Now, a previously vacant site will generate approximately five percent of that revenue in only 20,000 square feet.
Grande Communications, the former temporary tenant of the site, helped during the site selection process by touring the site and showing the company all of the upgrades to the building they had made.
As with the Amazon project in 2015, community leaders, partners, and stakeholders came together to secure this win for our residents.
San Marcos also lies along NAFTA Interstate Highway 35 (IH-35), which connects Laredo, TX to Duluth, MN, and is about a 30-minute drive to both Austin and San Antonio. The city is also close to State Highway 130 (SH-130), which allows a speed limit of 85 MPH. The city is connected to major markets in a way that makes e-commerce—including distribution and services/support—a natural fit.
The presence of Texas State University has been a tremendous asset in creating a workforce pipeline for these brand name companies. With more than 38,000 students, plus the talent coming from Austin Community College just 15 minutes north of the city, and Gary Job Corps, the largest job corps program in the nation, companies have recognized San Marcos and Hays County as a very attractive option for future e-commerce operations.
A NEW PETROCHEMICAL HUB EMERGES IN PENNSYLVANIA
On June 7, 2016, Royal Dutch Shell announced it would build its first East Coast ethane cracker plant on a former zinc smelter site in Beaver County, PA. The $6-billion investment will bring at least 6,000 construction jobs at the peak of the five-year construction period, and at least 600 ongoing full-time jobs once the facility is fully operational.
Based on an economic impact analysis conducted by the Robert Morris University School of Business using the IMPLAN v. 3 model, this project is expected to yield unprecedented economic benefits for the state, including an annual economic impact of nearly $1 billion.
In addition to the ethane cracker, the completed world-scale petrochemical complex will include three polyethylene units with storage, logistics, cooling water facilities, water treatment, emergency flares, buildings, and warehouses.
“This critical effort spanned four years, and two administrations, and today I want to congratulate all of those involved…, and thank Royal Dutch Shell for providing this unique and exciting economic development opportunity to the people of Western Pennsylvania,” Gov. Tom Wolf said, at the project announcement.
The facility has been called a game-changer, and not just for its size, scale, and resulting benefits. This project promises to be an anchor for a new petrochemical hub on the East Coast, that’s being built on the abundance of natural gas (and natural gas liquids), extracted from the region’s Marcellus and Utica Shale formations. Ethane is one of the predominant natural gas liquids (NGLs) derived from the “wet gas” found in these two shale formations. Through processing known as cracking, ethane is transformed into ethylene and then converted into polyethylene, which is a major building block in plastics manufacturing. Shell’s production of these industry feedstocks open opportunities for expanded downstream manufacturing and continued job creation.
Leveraging Pennsylvania’s abundant natural gas resources for more than heating and power seems like an obvious conclusion today, but it took visionary leadership, intense coordination and relationship building, and smart development work to realize the full scope of establishing a new petrochemical hub in Southwestern PA. The commonwealth’s location offers direct access to the densely populated and lucrative East Coast market. Shell’s market analysis revealed that 70 percent of all North American polyethylene consumers are located within 700 miles of the site they chose in Beaver County. Strong markets combined with a reliable and abundant source of ethane feedstock, a qualified local labor force ready to work, a welcoming and engaged community, and a coordinated development effort by state, regional, and local officials convinced Shell that Pennsylvania was the right location for their facility in the Appalachian Region.
The project leading up to the final investment decision (FID) spanned the course of five years and was only possible through the dedicated coordination and collaboration between a number of organizations, government entities, and Shell. Leading the coordination was the Governor’s Action Team at the state level, who worked in close collaboration with the Pittsburgh Regional Alliance (PRA) at the local and regional levels.
GREATER FORT LAUDERDALE HOME TO HOTWIRE COMMUNICATIONS HQ
The Greater Fort Lauderdale Alliance’s success in landing Hotwire Communications HQ project represented both a retention and expansion/relocation of the national headquarters of a telecommunications company that services residential markets throughout the U.S. The privately held company has been providing Gigabit Internet service since early 2013. It delivers its content through its own data centers and its private fiber networks across the county.
Hotwire, or as it was referred to before the announcement, Project “Blythe”, was a collaborative effort between the Alliance’s Business Development team, the City of Fort Lauderdale and Enterprise Florida. Hotwire’s decision to relocate its national headquarters from Pennsylvania to Fort Lauderdale will result in the creation of 375 high-skill/high-wage jobs (with an average wage of $51,266, about 115 percent of the private-sector average wage in Broward County) and the retention of 300 employees in Broward County. The project represents an estimated capital investment of $27 million for the purchase of a new facility in the Cypress Creek area of Fort Lauderdale and applicable renovations/ office equipment purchases. Incentives awarded for the project were valued at $1.88 million ($5,000 per job), including 20 percent local financial support. The Capital Investment Tax Credit could be valued up to the Comprehensive Capital Investment of the project.
Hotwire was looking for a central location where it could attract top talent, locate its senior executive team, and which would act as a focal point for its engineering hub and data centers.
The Alliance had to address these aspects of the project in a quick and concise format. Hotwire considered its existing HQ site in Philadelphia as well as Atlanta and Fort Lauderdale before making the decision to move to the HQ to Florida. The Alliance was able to leverage the planned smart growth of the Fort Lauderdale/Hollywood International Airport as a key that helped seal the deal.
Once the new building was ready, Hotwire worked with CareerSource Broward, which is the local workforce development board; the Alliance was able to create a systematic strategy that would provide recruiting, screening and coordinated training at no cost. The ability to do this was another factor in the company’s location decision.
CHINA-BASED SENTURY TIRE CHOOSES GA FOR FIRST U.S. PLANT
The Chinese automotive and aerospace tire manufacturer Sentury Tire is locating its first North American manufacturing facility in LaGrange, GA, creating more than 1,000 jobs and investing $530 million. The project is expected to have a direct economic impacted of $426 million when it reaches full production in 2022. Production at the new Sentury Tire facility in LaGrange is expected to start in 2018 and produce up to 12 million passenger and light-truck tires at full capacity. The plant will supply tires and serve customers in North America and Latin America. [Currently about 75 percent of the company’s sales are in the EU and U.S.]
Sentury Tire will build a new 400-acre, 1.4 million square foot new-generation factory and research center that will create jobs in production, national sales and marketing, warehousing and distribution. The research and development center will employ approximately 100 highly qualified technical personnel. Operations also will include an on-site proving ground, test track, sales and marketing offices and extensive warehousing and distribution facilities.
The top project location decision criteria were an available skilled workforce, an adequate site and superior logistics. The LaGrange site beat out a competing location in Memphis, TN.
Sentury Tire is the fifth-largest and fastest-growing tire manufacturer in China. The company specializes in the advanced manufacturing of automotive and aerospace tires using automated processes and robotics to increase efficiency and minimize production times.
HUSQVARNA GROWS IN SC
Husqvarna’s decision to grow its Orangeburg County, SC manufacturing campus to more than 3 million square feet will make the SC campus the company’s largest facility in the world.
Husqvarna North America is part of the Husqvarna Group, the world’s largest producer of outdoor power products, including robotic lawn mowers, ride-on mowers and chainsaws. The company employs more than 14,000 employees in 43 countries across the globe. The Orangeburg plant hires up to 1,800 in the summer and fall, but at peak production in the winter and spring the company employs nearly 2,500 employees.
The Husqvarna Group has implemented a number of structural changes in order to improve efficiency and reduce costs. In line with these changes, Husqvarna has decided to expand their Manufacturing Operations in Orangeburg with a $69 million investment and the addition of a 513,000 square foot Main Distribution Center.
This expansion consists of an additional building that will serve primarily as warehousing, staging, and storage for the facility. The expansion also includes the acquisition of an additional 134 acres. The facility is expected to be operational in December 2016.
HUNTINGTON COUNTY, IN LANDS A $33.5 MILLION EXPANSION PROJECT
Continental Structural Plastics (CSP) of Indiana broke ground in May for a $33.5 million expansion of their facility in Huntington, IN.
The project involves constructing a 135,000-square-foot addition to their existing 203,000-square-foot facility. The addition will be on six acres and should be completed before the end of 2017. The expansion includes new production lines for structural and Class A components.
A team effort to secure the expansion of CSP’s Indiana facility in the Riverfork Industrial Park in Huntington included support from the Huntington County Economic Development Corporation, the Indiana Economic Development Corporation, the Huntington County Board of Commissioners and the City of Huntington.
CSP, based in Auburn Hills, MI, is a pioneer in composite materials. The company produces lightweight Class A automotive body panels, offer a high strength-to-weight ratio, boost to fuel efficiency and won’t corrode or degrade when chemically exposed.
Their Class A body panels are found on iconic U.S. automobiles such as the Chevy Corvette, Lincoln MKZ, Ford Raptor Pick-ups and the Chevy Volt.
PICKING THE WINNER
The 2016 Economic Development Deal of the Year recognizes the locations and economic development agencies that landed the highest-impact projects announced between July 1, 2015 and the entry deadline of December 1, 2016. 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.