Impact Assessment of State-Level Economic Development Grants

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

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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.

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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

3

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

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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

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I. EXECUTIVE SUMMARY

Virginia offers numerous economic development incentives to

businesses contemplating relocation to or expansion within the state. A

report on the effectiveness of these grant programs conducted by JLARC

in 2002 followed the results of development projects announced in 1997

and 1998. The report revealed that over-performing companies

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

workforce service training grants within two and a half years.

The current update examines development projects announced

over nine years (1999-2007), which includes periods of recession and

expansion, as well as Republican and Democrat control of the

governorship. Job projections resulting from the development projects

exceeded 131,000. A bracketing system was applied to projects for which

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

creation are factored in, however, projections are well exceeded.

Manufacturing companies tended to come closest to meeting metrics

established in performance agreements, while companies creating non-

manufacturing jobs brought the highest net number of jobs to the state.

The state promised $346.32 million in quantifiable grants to the

490 development projects announced within this timeframe. Estimated

expenditures ranged from $204.27 million under the lower bound of the

bracketing system to $234.93 million under the upper bound. Despite the

lower rate of job creation than present in the 2002 report, however,

estimated state-level tax revenues more than matched grant expenditures.

Revenues were estimated for jobs created by direct, indirect, and induced

effects over a two to three year period; as a result, estimates are likely low.

Even so, tax revenues significantly exceed expenditures – estimated state

collections range from $460.52 million under the lower bound to $1.11

billion under the upper bound.

Incentive grants appear to be a revenue-enhancing policy that

provides added benefits for the state in terms of lower unemployment and

the maintenance of a highly ranked business climate. It is in Virginia’s

best interest to maintain these grant programs to more effectively compete

with regional and national competitors. There is room, however, for a

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).

STUDY HIGHLIGHTS

Timeframe: 1999-2007

Development Projects:

490

Total Job Projections:

131, 767

Estimated Job Creation:

Lower Bound - 58,845

Mid-Level - 87,787

Upper Bound - 94,825

Total Grant Awards:

$346.32 million

Total Grant

Expenditures:

Lower- $238.79 million

Mid- $268.61 million

Upper- $275.51 million

State-Level Tax Revenue:

Lower- $460.52 million

Mid- $1,081.08 million

Upper- $1,110.45 million

Net State Revenue: Lower- $78.75 million

Mid- $695.41 million

Upper- $723.55 million

Projects Exceeding Job

Projections: 112

Projects Achieving Job

Projections: 20

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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

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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

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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.

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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

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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

11

The grant is given to localities—which provide matching funds—and then

applied towards site preparation, the expansion of utilities, and

infrastructure development.20

VEDP gives priority to projects in localities

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

million, although the governor may approve a higher payout for projects

that ―are of statewide or regional interest.‖22

One vetting mechanism

applies to businesses that have ―closed, downsized, consolidated, or laid off

employees within the past 30 months‖ prior to applying for a grant,

although such actions do not necessarily preclude these businesses from

receiving funds.23

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

manufacturing companies or associated research and development

operations to support increased production capacity and productivity,

facility modernization, and the development and implementation of

advanced technology.25

Grant payments per project are generally limited to

$3 million, subject to eligibility requirements (including a restriction on

receiving other state-level incentive grants). Grants of up to $5 million are

available for projects meeting more rigorous performance standards. An

increase in grant payments is also possible following the creation of new

jobs.26

VIP grant amounts are based on recommendations by VEDP and

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

In FY 2010, four VIP

grants were awarded to

businesses, totaling $4.85

million. These businesses

announced new capital

investment of $500.5

million and the

anticipated creation of

681 new jobs and the

retention of 150 existing

jobs.

Source: VEDP

The General Assembly has

appropriated more than

$216 million to the Fund

since its inception in

1992.

In FY 2010, sixteen GOF

grants were awarded to


million. These businesses


investments of $288.9

million and the

anticipated creation of

2,998 jobs.

Source: VEDP

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3. Major Eligible Employer (MEE) Grant

VIPA also established the MEE program, a discretionary performance

incentive geared towards existing Virginia manufacturers and non-

manufacturing basic employers.29

Eligibility requirements are more

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

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,

administrative or service sector operations‖ in the state.34

The governor

reserves final approval of each grant awarded based on recommendations

made by VEDP and negotiations conducted by the Secretary of Commerce

and Trade.35

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

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

In FY 2010, no businesses

were awarded MEE

grants.

Source: VEDP

In FY 2010, VEDIG funds

were awarded to one

business, which


investment of $25 million

and the anticipated

creation of 1,200 jobs.

Source: VEDP

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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

services to companies creating new jobs or experiencing technological

change.41

Eligibility requirements ensure that a company is for-profit and

pays a minimum wage of $10 per hour (this requirement may be waived in

some localities due to high unemployment rates). Additionally, only certain

businesses are eligible: manufacturers, distribution centers, corporate

headquarters, call centers, informational technology services, and research

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

Transportation Board (CTB). The program provides funds to localities for

road improvements needed for adequate access for new or substantially

expanding qualifying projects. The award amount is determined by the

eligible capital investment of the company and the estimated cost of the

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)

Administrated by the Virginia Department of Rail and Public

Transportation, RIAP operates in a similar manner to EDAP—funds are

appropriated to construct railroad tracks for new or substantially expanding

industrial and commercial projects. Eligible localities can receive awards of

In FY 2010,721

businesses received funds

from VJIP to train or

retrain employees.

Workforce training

reimbursements totaled

nearly $7 million.

Source: VEDP

In FY 2010, five grants

were awarded for road

improvements, totaling

$2.65 million.

Source: VEDP

In FY 2010, six grants

were awarded for rail

improvements, totaling

$1.31 million.

Source: VEDP

14

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

contributions. TPOF can only be granted to supplement activities

associated with eligible transportation projects, which must meet the

minimum criteria established in the GOF Guidelines. Additionally, projects

must address the needs identified in the appropriate state, region or local

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

the Commission’s discretion to localities in the tobacco producing region

(thirty-four counties and seven cities located in Southside and

Southwestern Virginia). TROF grants support job creation and capital

investments associated with the establishment or expansion of a business.

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

In FY 2010, one TPOF

grant was awarded to a

business, totaling $3

million.

Source: VEDP

In FY 2010, twenty-five

grants and loans from

TROF were provided to


million.

Source: VEDP

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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.

16

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).

17

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.

18

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

Announcement

Ratio of Job Projections to

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

19

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

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).

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

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Nu

mb

er o

f J

ob

s

Year of Announcement

20

Table III-B: Job Creation Performance within Five Years of Project Announcement

Year of

Project

Announcement

Exceeded

Projections

Achieved

Projections

Failed to Meet Projections

TOTAL Created Jobs

Created No

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

21

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

Project

Announcement

Job

Projections

Job Creation

Lower

Bound

% Jobs

Created

Mid-

Level

% Jobs

Created

Upper

Bound

% Jobs

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).

22

Table III-D: Job Creation Performance within Five Years of Project Announcement

(Development Projects Meeting Less Than 75% of Job Projections)

Estimate Percentage of

Job Creation

Total Jobs

Projected

Total Jobs

Created

Number of

Projects

Lower Bound

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

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

Mid-Level

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

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

Upper Bound

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

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

23

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)


Job Creation

Total Jobs

Promised

Total Jobs

Created

Number of

Projects

Lower Bound

75.00 – 80.00% 5,409 4,076 12

80.01 – 90.00% 6,743 5,678 16

90.01 – 99.99% 2195 2,129 10

TOTAL 38

Mid-Level

75.00 – 80.00% 5,409 4,281 12

80.01 – 90.00% 13,613 11,489 49

90.01 – 99.99% 15,905 15,146 38

TOTAL 99

Upper Bound

75.00 – 80.00% 5,409 4,281 12

80.01 – 90.00% 6,143 5,678 16

90.01 – 99.99% 2,195 2,129 10

TOTAL 38


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).

24

Table III-F: Job Creation Performance within Five Years of Project Announcement

(Development Projects Meeting or Exceeding Job Creation Projections)


Job Creation

Total Jobs

Promised

Total Jobs

Created

Number of

Projects

Lower Bound 100% 3,714 3,714 20

over 100% 15,565 25,780 112

TOTAL 132

Mid-Level 100% 3,714 3,714 20

over 100% 15,565 25,780 112

TOTAL 132

Upper Bound 100% 39,694 39,694 122

over 100% 15,565 25,780 112

TOTAL 234


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

projections, however. Approximately twenty-three percent of all

development projects announced between 1999 and 2007 created more

jobs than initially anticipated, resulting in an additional 10,000 jobs

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.

Number of projects

exceeding job creation

projections: 112

Number of additional jobs

created: 10,215

25

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

– eight projects that originally projected 739 jobs but created 2,043 jobs

(see Appendix 3, Table 3F). Plastics and Rubber Products

Manufacturing (sector 326) contained six projects that also met this

threshold of job creation. The performance of one business heavily

influenced this outcome – Essel Propack America undertook four

development projects that anticipated creating 206 jobs but delivered

515 jobs.

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

Appendix 3, Tables 3F-1 and 3F-2). The former belongs to Beverage and

Tobacco Product Manufacturing (sector 312). MillerCoors (then Coors

Brewing) announced a development project in 2006 projecting the

creation of eight jobs – within five years, 162 had been created. The

latter belongs to Machinery Manufacturing (sector 333). In 2005,

STIHL, Inc. projected the creation of 150 jobs through the course of

their development project. Job creation reached 1,000 jobs within five

years (see Section VI.B for a detailed case study of the 2005 STIHL

development project).

Highest Performing

Development Project

(Ratio of Projection to

Creation)

MillerCoors (2006)

Jobs Projected: 8

Jobs Created: 162

Ratio: 20.25

Highest Performing

Development Project

(Most Net Jobs

Exceeding Projections)

STIHL, Inc. (2006)

Jobs Projected: 150

Jobs Created: 1,000

Net Difference: 850

26

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

creation, although their performances were often not as successful as that

of the manufacturing sectors discussed above. Development projects

initiated by businesses in Professional, Scientific, and Technical Services

(sector 541) projected overall job creation of 24,625 jobs (see Appendix

3, Table 3C). Under the lower bound estimate, these projects created

approximately 10,000 jobs – the highest net number of jobs among any

sector, even though this figure represents a forty percent job creation

rate. The upper bound reveals a more positive outcome: an eighty-one

percent 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.

Sector with Highest Net

Job Creation

Professional, Scientific,

and Technical Services

Jobs Projected: 24,625

Jobs Created, Lower

Bound: 9,927

Jobs Created, Upper

Bound: 19,993

27

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-

specific information and then creating a weighted average for each

sector.K

Of the forty-six sectors included in this analysis, six pay

average hourly wages that provide an annual salary higher than the

state-wide median income of $61,064 in 2008.50

The average hourly

wages of these sectors range from $31.48 for Textile Product Mills

(sector 314) to a high of $54.26 for Beverage and Tobacco Product

Manufacturing (sector 312). These six sectors had seventy-seven

development projects that anticipated the creation of approximately

28,000 jobs; applying the bracketing system estimates the creation of

between 13,000 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

Tobacco Product Manufacturing (sector 312), and Meristar

Hospitality in Accommodation (sector 721). The average hourly

wage at Philip Morris was $77.81 across 500 created jobs, increasing

the average salary of that sector significantly. Additionally, Meristar

was the only project in the Accommodation sector; the company paid

an average hourly wage of $43.29. In contrast, the average hourly

wage ($37.57) for the third highest paying sector, Professional,

Scientific, & Technical Services (sector 541), was based on the

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.

Sectors with Highest Average

Hourly Wages

Beverage & Tobacco: $54.26

Accommodation: $43.29

Professional, Scientific, and

Technical: $37.57

Financial Investment: $36.61

Insurance: $32.76

Textile Mills: $31.48

Sectors with Lowest Average

Hourly Wages

Non-Store Retailers: $9.05

Administrative & Support

Services: $9.12

Paper Manufacturing: $10.27

Food & Beverage Stores:

$10.33

28

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

between potential grant recipients (see Appendix 3, Table 3E).

Sectors with higher multipliers provide additional benefits for the

state in terms of jobs created through indirect and induced effects.

Higher total job creation leads to higher state and local tax revenues

in the form of income taxes, sales taxes, and other related taxes.

Many of these sectors with higher multipliers are manufacturing

sectors, which makes sense intuitively. Manufacturing firms require

inputs from many different industries, which in turn create additional

jobs. For example, the multiplier for the Beverage and Tobacco

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

Sector with Highest Economic

Multiplier

Beverage & Tobacco Mfg

Multiplier: 5.29

Sectors with Lowest Economic

Multiplier

Nonmetallic Mineral Product

Manufacturing; Store Retailers

Multiplier: 1.16

29

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.

30

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

Announcement

Quantified Grant Awards

(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.

31

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

32

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.

33

Table IV-B: Aggregate Grant Expenditures for Quantified Grants

Year of Project

Announcement

Lower Bound

(in millions)

Mid-Level

(in millions)

Upper Bound

(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.

34

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

Year of

Project

Announcement

Quantified Expenditures Unquantified

EDAP / RIAP

Expenditures

(in millions)

Unquantified VJIP

Reimbursements

(in millions)

Total Grant Expenditures

(in millions)

Lower

Bound

Mid-Level Upper

Bound

Lower

Bound

Mid-

Level

Upper

Bound

Lower

Bound

Mid-

Level

Upper

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


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

35

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.

http://virginiascan.yesvirginia.org/ResourceCenter/AnnouncementsWeb.aspx

http://www.naics.com/search.htm#naicsdrill

http://www.implan.com/V4/index.php?option=com_docman&task=doc_download&gid=110&Itemid=7

36

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),

37

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

(in millions) $239.72 $460.52 $78.75

Mid-Level

(in millions) $385.67 $1,081.08 $695.41

Upper Bound

(in millions) $386.90 $1,110.45 $723.55


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

38

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.

39

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).

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.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

VA

Un

emp

loy

men

t Ra

te J

ob

Cre

ati

on

Pro

jecti

on

s

Month

Figure V-A: Business and Election Cycle Trends Job Creation Projections

Monthly Job Creation Projections Unemployment Rate

EXPANSION EXPANSION RECESSION

State-Wide Election Cycle

40

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.

41

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).

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

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

0

5

10

15

20

25

30

35

40

45 VA

Un

emp

loy

men

t Ra

te

Pro

mis

ed G

ran

ts (

in m

illi

on

s)

Month

Figure V-B: Business and Election Cycle Trends Grant Awards

Promised Grants (in millions) Unemployment Rate State-Wide Election Cycle

RECESSION EXPANSION EXPANSION

42

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.

43

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.

44

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

45

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

46

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

47

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.

48

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.

49

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

50

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

51

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.

52

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

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

upper bound to 73,000 under the lower bound. Over-performing

companies did create approximately 10,000 more jobs than originally

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.

The second finding is that the economic multiplier of companies in

manufacturing sectors is generally higher than the multiplier associated

with white collar sectors. As a result, a higher number of jobs are created

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.

Such a finding yields positive benefits for the state only if manufacturers

achieve projected job creation numbers. This study reveals evidence of

that: manufacturing sectors had the highest number of over-performing

development projects, in addition to the two most successful projects

completed within the timeframe of this study: MillerCoors (2006) and

STIHL (2005).

However, white collar industries tend to generate the most tax

revenue for the state. This study found that despite lower job creation

rates, the three sectors generating the highest amount of tax revenue for

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.

Due in part to the higher tax-revenue generating sectors, this study

found positive net revenue for the state under all three estimates – $79

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

Key Findings

1. Aggregate job creation

did not meet job creation

projections.

2. Manufacturing sectors

generally have higher

economic multipliers than

white collar sectors.

3. White collar sectors

typically generate more

state-level tax revenue

than manufacturing

sectors.

4. Economic development

grants are revenue-

enhancing for the state.

5. Some companies

continue to pose a risk to

the Commonwealth and its

residents.

53

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

Tobacco Manufacturing sector paid higher wages.

As the case studies of Goodyear and STIHL revealed, economic

development succeeds when a symbiotic relationship exists between

company and locality. Unforeseen changes within industries can impact

the potential for success, however. A positive existing relationship

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.

What the case studies did not reveal, and internet searches did, was

that certain companies receiving grants pose a risk to the Commonwealth

that outweigh the benefits of the economic development and tax revenue

they may generate. Several companies have since violated state laws

against pollution, one was fined by the federal government for animal

cruelty, and several others have had lawsuits brought against them by

localities to clawback grant funds.V

In light of this information, we

recommend a re-evaluation of the process currently in place to screen

grant applicants, as the 2002 report recommended.

This study conducted a limited analysis that could not account for

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).

Key Recommendations

1. Re-evaluate the

screening process for

grant applicants.

2. Include additional

factors, such as increased

cost of public services, in

future evaluations.

3. Do not eliminate GOF

or VJIP; carefully

consider what types of

business or development

other grant programs are

targeted towards.

54

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.

55

APPENDIX 1: GRANT PROGRAM GUIDELINES

Grant GOF VIP

Recipient Locality Business

Payment of

State Funds

Upon entering into Performance Agreement

Locality must request disbursement within

3-4 months of project’s public

announcement

Project must be on file for 36 months prior

to payments (24 months for fiscally

stressed localities)

Payments made in 5 equal, annual

installments

Company

Requirements

Maintain capital investment and jobs

created through ―Performance Date‖ (36

months after date by which locality needs

to request funds)

If ―break-even-point‖ occurs after the

―Performance Date,‖ jobs created must be

maintained through this date

Provide annual notice to VEDP of progress

towards meeting performance goals

Notify VEDP within 90 days of completing

capital investment in ―Initial Company

Notification‖ (VEDP prefers completion

within 5 years of signing of ―Performance

Agreement‖)

Certify whether a net reduction in

employment has occurred one year

following the ―Initial Company

Notification‖

Contractual

Obligation to

Grant Funds

If company does not meet statutory

minimums for capital investment and jobs

created, it must repay 100% of grant

If 90% of predicted value not met,

repayment is proportionate to

underperformance (extension of 15 months

may be granted)

Grant awarded only if company meets

statutory minimum for capital investment

or steady employment in one-year period

Grant not awarded if company does not

reach at least 50% of projected capital

investment and does not reach projected

jobs creation

In general, 75% of each grant is allocated

to capital investment and 25% to jobs

creation – partial achievement of projected

capital investment / jobs creation impacts

grant payment proportionately

Repayment of

Grant

Locality responsible for requesting

repayment of grant and returning money to

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

56

Grant MEE VEDIG

Recipient Business Business

Payment of State

Funds

Project must be on file for 6 years (4

years for fiscally stressed localities)

Payments made in 5 to 7 equal, annual

installments

Project must be on file for 36 months

prior to payments

Payments made in no fewer than 5

installments

Company

Requirements

Notify VEDP within 90 days of

completing capital investment and job

creation

Performance Agreement establishes end-

date for achieving targeted capital

investment and job creation (VEDP

prefers completion within 5 years signing

of Performance Agreement)

Notify VEDP within 90 days of

completing capital investment and job

creation




prefers completion within 5 years

signing of Performance Agreement)

Contractual

Obligation to

Grant Funds

No grant awarded if statutory minimum

for capital investment and job creation

are unmet

No grant awarded if at least 50% of

capital investment or jobs creation

projections are unmet, even if statutory

minimums are attained

Grant awarded on sliding scale if

company attains statutory minimums and

achieves between 50-100% of capital

investment and job creation projections

In general, 50% of MEE is allocated to

capital investment and 50% to jobs

creation – partial achievement of

projected capital investment / jobs

creation impacts grant payment

proportionately


capital investment OR 50% of projected

capital investment projections are unmet


job creation with average salaries at least

50-100% greater than locality’s average

prevailing wage OR 50% of projected

job creation with average salaries at least

50-100% greater than locality’s average

prevailing wage

If company creates capital investment or

job creation above minimums but below

projected goals, grant will be awarded on

sliding scale

Repayment of

Grant − −

MEE Sources: VEDP MEE Guidelines

VEDIG Sources: VEDP VEDIG Guidelines

57

Grant CEMIG VJIP

Recipient Business Business

Payment of State

Funds

2-6 annual installments (may be paid in

1annual installment if significant state or

regional interest exists)

Payment generally not paid earlier than

one year after performance metrics are

met (may be paid upon completion if

significant state or regional interest

exists)

Funding reimbursable 90 days after

trainee is hired (New Jobs Program) or

upon completion of retraining (Retraining

Programs)

Company

Requirements




prefers completion within 3-5 years of

signing; extensions are possible at

VEDP’s discretion)

Submit Reimbursement Form to VEDP

Contractual

Obligation to

Grant Funds

No grant awarded if statutory minimums

for capital investment and job creation

are unmet

No grant awarded if at least 50% of

capital investment or jobs creation

projections are unmet, even if statutory

minimums are attained

Grant awarded on sliding scale if

company attains statutory minimums and

achieves between 50-100% of capital

investment and job creation projections

In general, 50% of CEMIG is allocated to

capital investment and 50% to jobs

creation – partial achievement of

projected capital investment / jobs

creation impacts grant payment

proportionately

New Jobs Program: companies must

create at least 25 jobs within 1 year of

date of first hire and make capital

investment of at least $1 million

Small Business New Jobs Program:

companies must create at least 5 jobs

within 1 year of date of first hire and at

least 5 jobs for three consecutive years, as

well as make new capital investment of at

least $1 million

Retraining Program: companies must

retrain at least 10 full-time employees and

make new capital investment of at least

$500,000

Small Business Retraining Program:

retrain at least 5 full-time employees and

make new capital investment of at least

$50,000

Under all programs: minimum entry-level

hourly wage of $10

Repayment of

Grant

Business returns installments made

before end-date if statutory minimum for

capital investment and job creation is

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

58

Grant EDAP RIAP

Recipient Locality Locality

Payment of State

Funds

For regular access projects, allocations

are expected to be committed by contract

or under construction within two years

from date of Commonwealth

Transportation Board (CTB) approval

For bonded access projects, maximum

time limit for bond is five years

Maximum unmatched allocation to any

project within any fiscal year is $300,000

(funds in excess of $300,000 are matched

dollar-for-dollar from non-program

sources, up to $150,000)

Completed project costs reimbursed after

60-day (maximum) field review and

Department inspection

Company

Requirements

Business must make Qualifying

Investment (cost of land, building,

manufacturing or processing equipment)

Performance Agreement metrics

(Employment and Annual Carload

Performance) reported annually following

date of project acceptance

Contractual

Obligation to

Grant Funds

Qualifying Establishment must provide

locality and VDOT with a preliminary

plan and a letter of request to the

appropriate local governing body

Upon completion, Grantee must report

performance annually on fiscal year

schedule beginning July 1 following date

of project acceptance by Department

Grantees must give Commonwealth a 15-

year contingent interest in portions of

track and facilities built or improved with

the funds, to be exercised upon non-

performance

Landowner or using business must

provide continuous maintenance and

assume liability of tracks and facilities

Repayment of

Grant

Locality must return any funds owed to

VDOT for expenditures not justified by

the investment (voluntarily or by

forfeiture of the surety)

De-allocation of funds is possible if

project is not underway within 2 years of

CTB approval

DRPT repaid its contribution to cost of

construction and materials, less

depreciation, if project tracks are

abandoned, relocated or sold

DRPT repaid its contribution to cost of

access track if: Employment Performance

commitment for first two years or Annual

Carloads for first five years is

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

59

Grant TPOF TROF

Recipient Agency or political subdivision of the

Commonwealth; certain private entities Locality (in tobacco producing regions)

Payment of State

Funds

Disbursement of financial assistance

begins following execution of Financing

Agreement and submission of request for

disbursement to VDOT

May be allowed in one lump sum

Limited to three per county per fiscal year

Grants of less than $50,000 will not be

offered, except for motorsports grants

(which will not be offered at less than

$10,000)

Company

Requirements

Project must meet GOF criteria

Meet bi-annual reporting requirements as

outlined in Financing Agreement

Performance Agreement must be executed

within 90 days

Application for a GOF grant is required

Periodic auditing and verification of the

Performance Agreement by the

Commission

Contractual

Obligation to

Grant Funds

For transportation projects associated with

economic development, recipients must

reach and maintain specified job creation

and capital investment levels within and

through 30 months after disbursement of

funds or until Commonwealth reaches its

―break even‖ point, whichever is later

Entitled to receive disbursement following

written request for funds

Repayment of

Grant

For transportation projects associated with

economic development, private entity

repays if performance criteria unmet

(partial grant or total waiver to repayment

or extend performance period may be

applied to some projects have certain

economic benefits to locality)

If performance metrics are not met, full or

pro-rated repayment of grant occurs

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

60

APPENDIX 2: ANNUAL JOBS COMPARISON TABLES

1999 Development Projects Locality

Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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,

Inc. Botetourt County 200 129 0.65 129 0.65 129 0.65

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,

Inc.a Chesapeake 100 0 0.00 66 0.66 100 1.00

Eternal Technology Corporationa

Chesterfield County 100 40 0.40 40 0.40 40 0.40

Capital One Financial Corp. Chesterfield, Fairfax,

Henrico, & Spotsylvania Co. 3,075 533 0.17 533 0.17 533 0.17

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

City 200 315 1.58 315 1.58 315 1.58

Outsourcing Solutions Inc.a

Henrico County 440 0 0.00 288 0.66 440 1.00

Stanley Furniture Co. and

American of Martinsvillea Henry County 700 0 0.00 459 0.66 700 1.00

61


Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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

Co. 1,375 118 0.09 118 0.09 118 0.09

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,

Inc.a Prince William County 250 0 0.00 164 0.66 250 1.00

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

62


Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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, &

Henrico Co. 7,000 0 0.00 6,706 0.96 7,000 1.00

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,

Inc. Halifax County 100 94 0.94 94 0.94 94 0.94

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

63


Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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

Internationala Nottoway County 100 0 0.00 96 0.96 100 1.00

Von Holtzbrinck Publishing

Services Orange County 50 130 2.60 130 2.60 130 2.60

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

NTELOS Portsmouth 250 11 0.04 11 0.04 11 0.04

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

Supply Tazewell County 249 80 0.32 80 0.32 80 0.32

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



64


Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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


Boehringer Ingelheima

Richmond City 16 0 0.00 14 0.88 16 1.00

65


Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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



66


Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

Interstate Hotels & Resorts / MeriStar

Hospitality

Arlington 270 270 1.00 270 1.00 270 1.00

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


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

67


Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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


Star Scientific, Inc. a


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



68


Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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

Power)

Campbell Co. &

Lynchburg

300 91 0.30 91 0.30 91 0.30

Schrader Bridgeport International Inc. Campbell County 50 55 1.10 55 1.10 55 1.10

Care Rehab and Orthopaedic Products,

Inc.

Charlotte County 50 69 1.38 69 1.38 69 1.38

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 &

Northern Virginia

200 244 1.22 244 1.22 244 1.22

Wachovia Securities LLC Henrico Co. & Richmond

City

1,200 849 0.71 849 0.71 849 0.71

Philip Morris USA Henrico County 450 500 1.11 500 1.11 500 1.11

69

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


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



70

2004 Development

Projects Locality

Projected

Job

Creation

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

Science Applications

International Corporationa (Multiple locations) 4,515 0 0.00 2,872 0.64 4,515 1.00

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

Company, Inc.

Grayson County 151 31 0.21 31 0.21 31 0.21

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

71

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

RD Group Mecklenburg County

55 74 1.35 74 1.35 74 1.35

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


General Dynamics Future Combat

Systems Prince William County 150 70 0.47 70 0.47 70 0.47

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



72

2005 Development Projects Locality Job Creation

Projection

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

Princeton BioMeditech

Corporationa Albemarle County 115 0 0.00 106 0.92 115 1.00

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


Merit Medical Systems Inc.a


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

Corporation Manassas 100 33 0.33 33 0.33 33 0.33

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


Wolseley Newport News 400 0 0.00 0 0.00 0 0.00

73

2005 Development Projects Locality Job Creation

Projection

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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

Inc. Russell County

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,

Inc.a Tazewell County

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,

Inc. Wythe County

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



74

2006 Development

Projects Locality

Job

Creation

Projection

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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

Corporationa

Campbell County 100 0 0.00 69 0.69 100 1.00

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 &

Logisticsa Chesterfield County

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

(HMG) Danville 40 0 0.00 0 0.00 0 0.00

Water World Fiberglass

Pools, N.E. Inc.a

Danville & Pittsylvania

County 100 0 0.00 69 0.69 100 1.00

Arrow Truck Sales, Dex

Division Fairfax County 25 2 0.08 2 0.08 2 0.08

Oran Safety Glass Floyd County 50 128 2.56 128 2.56 128 2.56

E.I. DuPont de Nemours &

Co., Inc.a Franklin County 50 0 0.00 34 0.68 50 1.00

Arista Tubes, UK Franklin County 145 54 0.37 54 0.37 54 0.37

Jennmar Corporation of

Virginia, Inc. Greensville County 70 49 0.70 49 0.70 49 0.70

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

75

Prime Choice Foods, Inc. Lynchburg, Roanoke

Co. & Rockingham Co. 35 33 0.94 33 0.94 33 0.94

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

Transfer, Inc.a Mecklenburg County 85 47 0.55 47 0.55 47 0.55

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

Technologiesa Radford 200 0 0.00 137 0.69 200 1.00

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

Companya

Smyth County;


Swedwood North America Smyth 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

GmbH & Co. KG Wise County 160 68 0.43 68 0.43 68 0.43

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



76

2007 Development

Projects Locality

Job

Creation

Projection

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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,

(CGL) Augusta County 121 177 1.46 177 1.46 177 1.46

Innovative Wireless

Technologies (IWT) Bedford County 50 6 0.12 6 0.12 6 0.12

The Matrixx Group Bedford County;

Bedford City 40 10 0.25 10 0.25 10 0.25

Progress Printing Campbell County 10 150 15.00 150 15.00 150 15.00

Alderman Railcar Services,

Inc. Charlotte County 110 0 0.00 0 0.00 0 0.00

INIT Innovations in Traffic

Systems AG Chesapeake 13 0 0.00 0 0.00 0 0.00

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

Corporation Nottoway County 104 40 0.39 40 0.39 40 0.39

Aerial Machine and Tool

Corp Patrick County 75 188 2.51 188 2.51 188 2.51

77

2007 Development

Projects Locality

Job

Creation

Projection

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

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

America Inc. (IAC)

Russell County 26 0 0.00 0 0.00 0 0.00

Rogers Foam Corporationa

Scott County 50 0 0.00 32 0.64 50 1.00

International Automotive

Components Group North

America Inc. (IAC)

Shenandoah County 35 27 0.77 27 0.77 27 0.77

Gates Corporation Smyth & Washington

Co. 172 78 0.45 78 0.45 78 0.45

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

International Washington County 1,000 1,028 1.03 1,028 1.03 1,028 1.03

Pinnacle Wood Products of

Virginia, Inc. Wise County 200 18 0.09 18 0.09 18 0.09

TOTALSb

5,646 3,008 0.53 3,409 0.60 3,638 0.64



78

APPENDIX 3: JOB PROJECTIONS AND CREATION BY SECTOR

Table 3A: Jobs Comparison Sectors Exceeding Job Creation Projections

Sector Sector Description Projects

Job

Creation

Projections

Direct Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

524 Insurance Carriers &

Related Activities 2 42 757 18.02 757 18.02 757 18.02

711

Performing Arts,

Spectator Sports, &

Related Industries

2 415 856 2.06 904 2.18 931 2.24

236 Construction of

Buildings 1 30 36 1.20 36 1.20 36 1.20

333 Machinery

Manufacturing 14 2,899 3,138 1.08 3,282 1.13 3,288 1.13

312

Beverage & Tobacco

Product

Manufacturing

8 1,300 1,118 0.86 1,415 1.09 1,471 1.13

327

Nonmetallic Mineral

Product

Manufacturing

7 559 551 0.99 608 1.09 630 1.13

326

Plastics & Rubber

Products

Manufacturing

27 2,615 2,485 0.95 2,716 1.04 2,790 1.07

493 Warehousing &

Storage 2 360 304 0.84 373 1.04 404 1.12

445 Food & Beverage

Stores 3 425 275 0.65 439 1.03 525 1.24

551

Management of

Companies &

Enterprises

12 9,421 1,778 0.19 9,526 1.01 9,953 1.06

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 3B: Jobs Comparison Sectors Meeting Standard Grant Repayment Cutoff (75-100% of Job Creation Projections)

Sector

Sector

Description Projects

Job

Creation

Projections

Direct Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

721 Accommodation 1 270 270 1.00 270 1.00 270 1.00

323 Printing & Related

Support Activities 3 329 175 0.53 314 0.95 364 1.11

488 Support Activities

for Transportation 2 306 206 0.67 290 0.95 306 1.00

336

Transportation

Equipment

Manufacturing

31 4,638 4,347 0.94 4,395 0.95 4,397 0.95

444

Building Material

& Garden

Equipment &

Supplies Dealers

3 680 147 0.22 627 0.92 702 1.03

332

Fabricated Metal

Product

Manufacturing

22 2,449 1,985 0.81 2,199 0.90 2,235 0.91

316

Leather & Allied

Product

Manufacturing

1 375 0 0.00 325 0.87 375 1.00

623

Nursing &

Residential Care

Facilities

1 140 0 0.00 121 0.86 140 1.00

483 Water

Transportation 3 586 303 0.52 504 0.86 538 0.92

425

Wholesale

Electronic Markets

& Agents &

Brokers

1 147 0 0.00 126 0.86 147 1.00

451

Sporting Goods,

Hobby, Book, &

Music Stores

1 150 0 0.00 128 0.85 150 1.00

562

Waste

Management &

Remediation

Service

1 165 0 0.00 139 0.84 165 1.00

531 Real Estate 1 30 0 0.00 25 0.83 30 1.00

515 Broadcasting

(excludes Internet) 2 1,775 1,447 0.82 1,447 0.82 1,447 0.82

311 Food

Manufacturing 26 2,927 2,304 0.79 2,378 0.81 2,417 0.83

522

Credit

Intermediation &

Related Activities

2 1,234 33 0.03 991 0.80 1033 0.84

424

Merchant

Wholesalers,

Nondurable Goods

20 3,465 1,626 0.47 2,654 0.77 2,831 0.82

314 Textile Product Mills

4 205 154 0.75 154 0.75 154 0.75




80

Table 3C: Jobs Comparison Sectors Meeting between 50-74.99% of Job Creation Projections

Sector Sector Description Projects

Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

813

Religious,

Grantmaking, Civic,

Professional, &

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

541

Professional,

Scientific, &

Technical Services 59 24,625 9,927 0.40 16,762 0.68 19,993 0.81

523

Securities, Commodity

Contracts, & Other

Financial Investments

& Related Activities 3 1,830 849 0.46 1,213 0.66 1,229 0.67

334

Computer &

Electronic Product

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

443

Electronics &

Appliance Stores 1 1,200 0 0.00 786 0.66 1,200 1.00

561

Administrative &

Support Services 28 11,689 4018 0.34 7,616 0.65 8,618 0.74

339

Miscellaneous

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

325

Chemical

Manufacturing 27 2,536 1408 0.56 1,620 0.64 1,669 0.66

512

Motion Picture &

Sound Recording

Industries 2 496 298 0.60 298 0.60 298 0.60

423

Merchant

Wholesalers, Durable

Goods 17 3,154 1,553 0.49 1,894 0.60 2,003 0.64

315

Apparel

Manufacturing 2 629 373 0.59 373 0.59 373 0.59

321

Wood Product

Manufacturing 25 3,486 1,494 0.43 1,987 0.57 2,086 0.60

452

General Merchandise

Stores 1 1,600 902 0.56 902 0.56 902 0.56

441

Motor Vehicle & Parts

Dealers 7 1,632 897 0.55 903 0.55 907 0.56

335

Electrical Equipment,

Appliance, &

Component

Manufacturing 14 2,064 904 0.44 1,041 0.50 1,109 0.54




81

Table 3D: Jobs Comparison Sectors Meeting Less Than 50% of Job Creation Projections

Sector Sector

Description Projects

Job

Creation

Projections

Job Creation

Lower

Bound Ratio

Mid-

Level Ratio

Upper

Bound Ratio

454

Non-store

Retailers 2 1,125 513 0.46 513 0.46 513 0.46

621

Ambulatory

Health Care

Services 3 1,300 523 0.40 523 0.40 523 0.40

337

Furniture &

Related Product

Manufacturing 19 6,089 1,765 0.29 2,317 0.38 2,575 0.42

518

Internet Service

Providers, Web

Search Portals, &

Data Processing

Services 10 2,910 971 0.33 971 0.33 971 0.33

331

Primary Metal

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

511

Publishing

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

532

Rental & Leasing

Services 2 397 47 0.12 47 0.12 47 0.12

481

Air

Transportation 1 300 15 0.05 15 0.05 15 0.05




82

Table 3E: Economic Multipliers by Sector

Sector Sector Description Multiplier Sector Sector Description Multiplier

327 Nonmetallic Mineral Product

Manufacturing 1.16 337

Furniture & Related Product

Manufacturing 1.93

453 Miscellaneous Store Retailers 1.16 423-

425 Merchant Wholesalers 1.94

454 Nonstore Retailers 1.18 532 Rental & Leasing Services 1.94

451 Sporting Goods, Hobby, Book, &

Music Stores 1.19 332

Fabricated Metal Product

Manufacturing 2.01

711 Performing Arts, Spectator Sports,

& Related Industries 1.19 541

Professional, Scientific, & Technical

Services 2.02

452 General Merchandise Stores 1.25 562 Waste Management & Remediation

Service 2.03

445 Food & Beverage Stores 1.27 524 Insurance Carriers & Related

Activities 2.05

444 Building Material & Garden

Equipment & Supplies Dealers 1.35 336

Transportation Equipment

Manufacturing 2.10

443 Electronics & Appliance Stores 1.41 236 Construction of Buildings 2.12

561 Administrative & Support Services 1.44 326 Plastics & Rubber Products

Manufacturing 2.12

112 Animal Production 1.45 321 Wood Product Manufacturing 2.29

623 Nursing & Residential Care

Facilities 1.46 335

Electrical Equipment, Appliance, &

Component Manufacturing 2.32

441 Motor Vehicle & Parts Dealers 1.47 481 Air Transportation 2.36

523

Securities, Commodity Contracts, &

Other Financial Investments &

Related Activities

1.48 333 Machinery Manufacturing 2.38

315 Apparel Manufacturing 1.52 551 Management of Companies &

Enterprises 2.56

316 Leather & Allied Product

Manufacturing 1.56 518

Internet Service Providers, Web

Search Portals, & Data Processing

Services

2.60

314 Textile Product Mills 1.59 511 Publishing Industries 2.66

811 Repair & Maintenance 1.59 334 Computer & Electronic Product

Manufacturing 2.90

512 Motion Picture & Sound Recording

Industries 1.60 515 Broadcasting (except Internet) 3.08

488 Support Activities for

Transportation 1.61 517 Telecommunications 3.27

493 Warehousing & Storage 1.62 331 Primary Metal Manufacturing 3.34

721 Accommodation 1.67 322 Paper Manufacturing 3.38

813

Religious, Grantmaking, Civic,

Professional, & Similar

Organizations

1.68 221 Utilities 3.59

313 Textile Mills 1.73 311 Food Manufacturing 3.93

323 Printing & Related Support

Activities 1.80 522

Credit Intermediation & Related

Activities 4.17

339 Miscellaneous Manufacturing 1.81 325 Chemical Manufacturing 4.56

531 Real Estate 1.84 483 Water Transportation 4.96

621 Ambulatory Health Care Services 1.89 312 Beverage & Tobacco Product

Manufacturing 5.29

83

Table 3F-1: Highest Performing Development Projects

(Job Creation Ratio)

Sector Date of Project

Announcement Company Name

Projected

Jobs

Jobs

Created

Job Creation

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.

84

Table 3F-2: Highest Performing Development Projects

(Net Jobs)

Sector Date of Project

Announcement Company Name

Projected

Jobs

Jobs

Created

Net

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.

85

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.

86

Table 3H: Grant Awards by Sector

Sector

Aggregate

Grant

Awards

(in millions)

Number

of

Projects

Average

Per-Project

Award

(in millions)

Sector

Aggregate

Grant Awards

(in millions)

Number of

Projects

Average Per-

Project

Award

(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.

87

APPENDIX 4: STATE-LEVEL GRANT EXPENDITURES AND REVENUES BY SECTOR

Sector Sector Description

Lower Bound Mid-Level Upper Bound

Tax

Revenues

Grant

Expenditures Tax Revenues

Grant


Grant

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

Product Mfg $22,797,390 $36,444,204 $354,523,315 $37,549,955 $393,707,859 $37,760,574

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

Mfg $0 $0 $1,857,198 $71,007 $2,162,872 $81,900

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

Mfg $40,182,655 $9,005,852 $42,424,217 $9,343,391 $45,114,535 $9,432,771

327 Nonmetallic Mineral

Product Mfg $8,281,985 $1,839,372 $8,610,592 $2,456,371 $8,922,161 $2,561,607

331 Primary Metal Mfg $2,905,002 $143,246 $3,599,226 $227,905 $3,961,366 $272,496

332 Fabricated Metal Product

Mfg $24,490,676 $5,687,756 $26,197,191 $5,791,543 $27,575,145 $5,809,286

333 Machinery Mfg $50,533,413 $9,489,388 $50,746,706 $9,489,388 $52,948,972 $9,489,388

334 Computer & Electronic

Product Mfg $66,343,856 $10,026,770 $77,213,849 $11,224,653 $87,680,314 $11,277,170

335 Electrical Equip &

Appliance Mfg $15,755,943 $3,305,644 $17,622,585 $3,360,673 $19,328,916 $3,389,657

336 Transportation Equipment

Mfg $61,161,303 $16,816,395 $61,458,839 $16,906,236 $61,864,801 $16,910,175

88



Tax

Revenues

Grant


Grant


Grant

Expenditures

337 Furniture & Related Product

Mfg $16,994,881 $4,946,697 $21,165,336 $6,040,442 $24,794,234 $6,588,844

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

Dealers $14,484,111 $2,232,537 $14,599,224 $2,232,537 $14,645,584 $2,232,537

443 Electronics & Appliance

Stores $0 $0 $8,881,135 $1,269,881 $14,222,366 $1,938,750

444 Bldg Material & Gardening

Stores $2,203,095 $175,500 $8,955,154 $732,956 $10,520,905 $820,335

445 Food & Beverage Stores $3,233,450 $761,129 $4,919,372 $761,129 $6,172,950 $761,129

451 Sporting Goods, Book &

Music Stores $0 $0 $961,357 $259,467 $1,182,033 $303,825

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

Retailers $2,263,182 $1,083,078 $2,263,182 $1,083,078 $2,263,182 $1,083,078

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

Recording $2,187,297 $557,753 $2,187,297 $557,753 $2,187,297 $557,753

515 Broadcasting (except

Internet) $24,950,156 $1,970,328 $24,950,156 $1,970,328 $24,950,156 $1,970,328

517 Telecommunications $137,290,023 $2,966,269 $182,467,568 $4,288,510 $201,117,822 $4,514,561

518 Internet Services & Data

Processing $20,904,513 $2,050,000 $20,904,513 $2,050,000 $20,904,513 $2,050,000

522 Credit Intermediation &

Related $1,467,276 $30,093 $44,062,754 $30,093 $48,606,228 $30,093

523 Securities & Investments $5,208,919 $827,775 $5,541,892 $1,067,352 $7,202,188 $1,077,855

524 Insurance Carriers &

Related $15,641,444 $1,757,846 $15,641,444 $1,757,846 $15,641,444 $1,757,846

89



Tax

Revenues

Grant


Grant


Grant

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 &

Technical $126,611,329 $33,326,033 $200,899,197 $35,324,386 $254,995,487 $36,018,613

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

Services $20,949,033 $3,578,847 $37,372,807 $6,296,362 $44,932,496 $6,875,427

562 Waste Management &

Remediation $0 $0 $2,187,075 $402,091 $2,718,225 $478,680

621 Ambulatory Health Care

Services $4,971,309 $1,036,300 $4,971,309 $1,036,300 $4,971,309 $1,036,300

623 Nursing & Residential Care $0 $0 $656,046 $0 $814,123 $0

711 Performing Arts, Spectator

Sports $2,060,057 $548,874 $2,299,026 $585,123 $2,367,692 $605,869

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 &

Professional Organizations $737,294 $631,578 $737,294 $631,578 $737,294 $631,578

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.

90

APPENDIX 5: TOTAL EFFECT ON EMPLOYMENT AND OUTPUT BY SECTOR

Sector

Lower-Bound Mid-Level Upper-Bound

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 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


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 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 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





91

Sector

Lower Bound Mid Level Upper Bound








316 Induced Effect 0.0 $0.00 Induced Effect 85.7 $9,928,353.20 Induced Effect 100.1 $11,590,780.50














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











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

92

Sector



















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









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



93

Sector







423-


423-


423-


423-






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 Total Effect 0.0 $0.00 Total Effect 1,097.0 $90,096,743.90 Total Effect 1,696.2 $142,100,434.90










451 Indirect Effect 0.0 $0.00 Indirect Effect 4.6 $663,812.60 Indirect Effect 5.6 $797,484.80



94

Sector





















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














95

Sector



















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 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











531 Induced Effect 0.0 $0.00 Induced Effect 7.4 $859,097.30 Induced Effect 9.2 $1,059,222.70


96

Sector









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


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 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

















97

Sector








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






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

98

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).

99

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.

100

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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).

http://discoverdanville.com/DocumentView.aspx?DID=344

http://sogpubs.unc.edu/electronicversions/pdfs/cedb7.pdf

http://www.yesvirginia.org/About_Us/News.aspx

http://leg2.state.va.us/dls/h&sdocs.nsf/fc86c2b17a1cf388852570f9006f1299/d062b14ccb1a11a3852570ae004db66f/$FILE/RD261.pdf


http://leg2.state.va.us/dls/h&sdocs.nsf/By+Year/RD2922007/$file/RD292.pdf

http://www.yesvirginia.org/pdf/FY2008IncentivesReport.pdf

http://www.ltgov.virginia.gov/initiatives/JCC/EconomicallyDistressedAreas/EconDisArea_BusinessIncentivesReport_2008-2009.pdf


http://www.yesvirginia.org/pdf/2010incentivesreport.pdf

http://lis.virginia.gov/cgi-bin/legp604.exe?111+ful+SJ329ER

http://jlarc.virginia.gov/reports/Rpt285.pdf

103

―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


―Virginia Beach Success Grows.‖ StihlUSA.com. http://www.stihlusa.com/stihl-inc.html


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


―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).


http://leg1.state.va.us/cgi-bin/legp504.exe?961+ful+HB306+pdf

http://leg1.state.va.us/cgi-bin/legp504.exe?111+ful+CHAP0815


http://leg1.state.va.us/cgi-bin/legp504.exe?991+ful+CHAP0875+pdf


http://virginiascan.yesvirginia.org/ResourceCenter/AnnouncementsWeb.aspx

http://www.stihlusa.com/stihl-inc.html

http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+2.2-5102.1

http://www.yesvirginia.org/pdf/guides/BusinessIncentivesGuide2011.pdf

http://implan.com/V4/index.php?option=com_kunena&func=view&catid=82&id=52&Itemid=35


http://www.ialr.org/news/74-working-with-goodyear-editorial-danville-register-and-bee


http://www.thecarrollnews.com/view/full_story/4257963/article-AmerLink-now-faces-liquidation?


http://www.thecarrollnews.com/view/full_story/11060564/article-Carroll-settles-with-AmerLink--Pro-Form?


104

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




―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




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


―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


―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


―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 Acts of Assembly, Chapter 815, 6 April 2011, http://leg1.state.va.us/cgi-

bin/legp504.exe?111+ful+CHAP0815 (accessed October 15, 2011).



http://lis.virginia.gov/cgi-bin/legp604.exe?111+ful+SJ329ER

http://jlarc.virginia.gov/reports/Rpt285.pdf

http://www.yesvirginia.org/pdf/guides/BusinessIncentivesGuide2011.pdf

http://www.virginiaallies.org/assets/files/publications/ed_handbook.pdf

http://www.virginiaallies.org/assets/files/incentives/GOFGuidelines.pdf

http://leg1.state.va.us/cgi-bin/legp504.exe?961+ful+HB306+pdf



http://www.virginiaallies.org/assets/files/incentives/VIPGuidelines.pdf

http://www.virginiaallies.org/assets/files/incentives/MEEGuidelines.pdf





105

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


―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



―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


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).

http://www.virginiaallies.org/assets/files/incentives/CEMIGGuidelines.pdf

http://www.yesvirginia.org/pdf/2010incentivesreport.pdf




http://www.yesvirginia.org/About_Us/News.aspx

http://www.census.gov/prod/2010pubs/acsbr09-2.pdf



http://leg2.state.va.us/dls/h&sdocs.nsf/By+Year/RD2922007/$file/RD292.pdf

http://www.yesvirginia.org/pdf/FY2008IncentivesReport.pdf






http://discoverdanville.com/DocumentView.aspx?DID=344


http://www.stihlusa.com/stihl-inc.html

http://www.yesvirginia.org/about_us/NewsArticle.aspx?newsid=568

106

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






See Morgan, ―Analyzing the Benefits and Costs of Economic Development Projects,‖ 8, for a more detailed

explanation of each method. 85


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



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



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,


(accessed November 25, 2011). 95

Author interviews of Patrick Barker and Jeremy Stratton. 96

Accordino, ―Economic Development Incentives in Virginia: Principles and Practices,‖ 5.




http://siteselection.com/ssinsider/bbdeal/bd020513.htm

http://sogpubs.unc.edu/electronicversions/pdfs/cedb7.pdf




107

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).




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

Agenda

• Job projections vs. jobs created

• State-level expenditures vs. revenues

• Cyclical and counter-cyclical trends

• Case studies

• Policy recommendations

• Conclusion

AGENDA

COMPARISON OF JOB PROJECTIONS

AND JOBS CREATED

Data

• Employment information on 388 projects:

• Department of Business Assistance (271)

• Secretary of Commerce and Trade (30)

• National Employer Time Series Database (87)

DATA

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

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Nu

mb

er

of

Job

s Figure 1: Jobs Comparison

Table 1: Job Creation Performance within Five Years of Project Announcement

Year of Project

Announcement

Exceeded

Projections

Achieved

Projections

Failed to Meet

Projections TOTAL

Created

Jobs

Created No

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

Bracketing System

• No employment information for 102 projects

• Bracketing system used to estimate missing

information

• Lower: 0%

• Mid: see table

• Upper: 100%

Year of Project

Announcement

Ratio of Job Projections to

Job Creation

1999 0.655

2000 0.958

2001 0.854

2002 0.840

2003 0.867

2004 0.636

2005 0.922

2006 0.687

2007 0.637

BRACKETING SYSTEM

Year of Project

Announcement

Job

Projections

Job Creation

Lower

Bound Mid-Level

Upper

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

Table 2: Aggregate Job Creation

• 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)


• 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

Year of Project

Announcement

Quantified Grant

Expenditures

(in millions)

Unquantified VJIP,

EDAP, and RIAP Grants

(in millions)

Total Grant

Expenditures

(in millions)

Lower

Bound

Upper

Bound

Lower

Bound

Upper

Bound

Lower

Bound

Upper

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

State Tax Revenues

• Generated in IMPLAN

• Short-term, conservative estimates

• Method of separating state and local taxes:

IMPLAN Category Percent Assigned to State

Revenue

Corporate Profits; Dividends; Income; Severance 100%

Motor Vehicle Licenses 100%

Sales Tax 80%

Other Taxes and Non-Taxes 67%

Property Tax 0%

STATE-LEVEL TAX REVENUES

Table 4: State-Level Expenditures and Revenues

Expenditures

(in millions)

Revenues

(in millions)

Net Revenue

(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

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

VA

Un

em

plo

ymen

t Rate

Job

Cre

atio

n P

roje

ctio

ns

Month

Figure 1: Business and Election Cycle Trends Job Creation Projections

Monthly Job Creation Projections Unemployment Rate

EXPANSION RECESSION EXPANSION


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

0

5

10

15

20

25

30

35

40

45

VA

Un

em

plo

ymen

t Rate

P

rom

ised

Gra

nts

(in

mill

ion

s)

Month

Figure 2: Business and Election Cycle Trends Grant Awards

Promised Grants (in millions) Unemployment Rate

EXPANSION RECESSION EXPANSION


DEVELOPMENT PROJECT CASE STUDIES

Successful 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

SUCCESSFUL DEVELOPMENT

Successful 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

SUCCESSFUL DEVELOPMENT

Mixed Success 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

MIXED DEVELOPMENT

Unsuccessful 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

UNSUCCESSFUL DEVELOPMENT

RECOMMENDATIONS FOR FUTURE EVALUATION OF DEVELOPMENT GRANTS

Limitations to 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

LIMITATIONS OF IMPLAN

Re-Evaluating Existing 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

RE-EVALUATING POLICIES

CONCLUSION

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

KEY FINDINGS

Documents

Impact Assessment of State-Level Economic Development Grants