Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, September 3, 1995 TAG: 9509050003
SECTION: CURRENT PAGE: NRV-3 EDITION: NEW RIVER VALLEY
SOURCE: STEPHEN FOSTER STAFF WRITER
DATELINE: CHRISTIANSBURG LENGTH: Long
When it comes to economic development in Montgomery County and elsewhere, it has become the big question - practical, persuasive and politically charged.
For a company thinking about building or expanding on a government's turf, it's only good business to ask: How much is the government willing to give us in incentives?
Each case is different. In the past, if a company called Don Moore, the county's director of economic development, said it was interested in moving here, but was also looking at three other sites and needed to know - right now - how much the county was willing to give, Moore had been hamstrung. He had to check with the Board of Supervisors first.
Not anymore. Two weeks ago, the board approved a set of guidelines. With the company's answers to a few well-placed questions at hand, Moore will be able to assign points to the project and say how much money the county would be willing to spend.
The guidelines weigh seven factors: the number of jobs the company will create, the pay scale, the money it will invest - and later pay taxes on - in real estate, machinery and tools, and the potential for more jobs and further investment in the future. There is an extra category for "discretionary points."
Practically speaking, Moore said, the guidelines will allow him to negotiate with an interested company quickly, without having to double-check with the board on the front end of a project.
Sometimes, when he hears from a company for the first time, the county is already on its "short list" of potential sites, and the company wants answers fast. "If a prospect is not in big hurry, then that's not a big problem," he said. "But if you get in a place ... where you're on a time line," it can make a difference.
Plus, the ease with which the guidelines can be reviewed - there are no convoluted formulas, percentages or weighted numbers to plug in - is a blessing, Moore said.
"It's really pretty simple when you look at it as a whole," he said.
The county's guidelines do not take into account incentives that may come from various state or federal sources. In the economic development game, that, of course, is important. Said Moore: "Usually the trick is to maximize the funds from all sources."
Locally, the effort to provide a framework for figuring up incentives began in February, when the supervisors asked the Montgomery County Regional Economic Development Commission to come up with the guidelines. Abdul Turay, a former Radford University economist who sat on the board, did much of the work formulating the tables.
"I had to scrap all those X's and Y's and O's and had to come up with something simple," said Turay, who now is dean of graduate studies and research at the University of Southern Illinois at Edwardsville. "We tried to make it as simple as possible ... as flexible as possible."
"We talked a whole lot about the relationship of those basic criteria," such as number of jobs and pay scale, Moore said.
For example, International Widgets says it wants to build a plant somewhere in the county. It will hire 75 people at $12.50 an hour plus benefits, invest $6 million in machinery and tools, and pay $1 million for the land. It also says it will probably hire 75 more workers in two years and spend an additional $500,000 on land and $1 million each on machinery and tools. According to the tables, International Widget would be warded:
3 points for the immediate jobs;
0.7 point for potential hires;
15 points for its relatively high wages;
1 point for the initial land investment
0.1 point for potential land investment;
6 points for the machinery and tools investment
0.2 point for future machinery and tools investment;
a possible discretionary award of up to 15 points determined by matters like environmental friendliness, the number of employees who will be hired here, rather than transferred in, and the company's financial stability.
All told, without factoring in discretionary points, International Widgets would receive 26 points, which translates into $370,000 in incentives.
One driving factor, Turay said, was what the competition was doing.
That competition could be North Carolina, or Virginia Beach or even Pulaski County, which has had its own set of board-approved guidelines since November.
Pulaski County Assistant County Administrator Peter Huber said the county's program is geared around the amount of tax revenue a company's move will bring. He echoed Moore's view that the information allows him to react quickly to a company's inquiry about potential incentives from the county.
Pulaski County's guidelines take a somewhat different tack than Montgomery County's, figuring in variables such the percentage of products a company sells outside the New River Valley, the unemployment average of the county and the operating capacity of the county's schools.
Still, the reasoning behind the guidelines is the same: to make economic development efforts run smoothly and successfully. Huber said most locales probably have similar guidelines.
The guidelines are not actually binding; Montgomery's supervisors will have the final word on any set of incentives.
Supervisor Henry Jablonski, who posed several questions when the guidelines were presented by commission Chairman Lu Merritt, said, "In the beginning, no one had an absolute feel on what we could do." One concern he had was whether the guidelines would properly reward high-tech companies, which would not normally invest as much in machinery and tools as manufacturing prospects.
How the guidelines apply to such companies and smaller, start-up operations will be something to review, said Moore, but discretionary points and the basic idea that the guidelines are just that - mere guidelines - give county officials flexibility.
"For other kinds of projects, it does not mean that there will not be any incentives at all," he said.
The document itself probably will be reviewed annually and updated within two years, Moore said.
"The board probably looks at this as a first effort," Jablonski said. "We're trying to develop a ballpark figure."
by CNB