- Report Published -
|Virginia Port Authority Report on Recommendations Regarding the Establishment of an Economic Development Grant Zone - January 24, 2013|
|Office of the Governor|
|Chapter 846 Enactment Clause 3. (Regular Session, 2012)|
|Transportation and economic development are inseparable subjects. A vibrant, multimodal transportation network is a strong catalyst for investment and job creation. As both foreign and domestic firms consider competing states, cities and counties for new or expanded industrial locations, transportation of people (commuting, corporate travel) and freight is a critical consideration. Of course, a variety of available economic development incentives also represents a priority interest for many companies.|
Over the last 15 years, the competition among states has escalated dramatically in pursuit of marquee economic development projects. Look no further than the automotive industry. Both foreign and domestic automotive manufacturers have fled the "Rust Belt" in favor of the Southeastern U.S. BMW, Hyundai, Mercedes-Benz and others have invested hundreds of millions of dollars in Southeastern states, creating tens of thousands of jobs, and accepting incentive packages that often approach the value of the actual investment. In many cases, proximity to, and support from, a competitive global seaport is a prerequisite for such projects. Considering that an automotive plant location generates a significant multiplier effect as vendors and suppliers seek to locate in proximity, projects of this magnitude can generate tens of thousands of container moves and associated breakbulk/RoRo traffic (see BMW - South Carolina - Port of Charleston). Recognizing the importance of building a customer base by inducing local brick and mortar investment, ports increasingly find themselves drawn into the economic development arena.
In Virginia, the area west of the Port, including parts of Suffolk, Isle of Wight and the Route 460 Corridor, has been identified as a prime location for Port-related investment. Target, QVC, Cost Plus World Markets, Ace Hardware and Green Mountain Coffee are among the existing, or announced, clientele. As Virginia's competing ports - namely Charleston and Savannah - have moved aggressively to execute economic development strategies including, but not limited to, incentivizing specific sites offering port proximity, it has become increasingly apparent that the Virginia Port Authority, in cooperation with the Virginia Economic Development Partnership and various regional and local entities, requires a similar strategy and tools.
Please see the attached spreadsheet of port-related incentives on the East Coast. Our biggest port competitor, South Carolina, has an $8 million dollar discretionary fund for use in attracting port-related industry to South Carolina. Georgia offers between $2,500 and $5,250 per job for port businesses increasing cargo and expanding for locating in Georgia. Florida offers between $5,000 and $9,000 per job for port users expanding or locating in Florida. Maryland uses its Enterprise Zone Program to offer incentives in focus areas to increase investment around the port. They offer both an incentive for real property investment and either $1,500 per job or $9,000 per job if located in a distressed area.
With a total of $4.925 million available year for port tax incentives yearly, Virginia currently has the lowest per-job incentive available for port-related industry expanding or locating in the state. The Virginia International Trade Facility Tax Credit (ITF) allows a $3,500 credit per qualified new job or 2% of the qualified capital investment for port users that increase their cargo through the Port of Virginia by at least 10%. However, there is only $250,000 available in this pot each year. In the first application cycle for tax year 2011, the ITF program capped out with only two applicants. The Virginia Tobacco Commission has not yet funded the increased funding for port users locating or expanding in the Tobacco Region. The addition of the Port of Virginia Economic and Infrastructure Development Zone per-job grant dollars would give the Port of Virginia the tools needed to compete with other ports on the East Coast for jobs and investment by port users.
Proposed Guidelines for the Port of Virginia Economic Development and Infrastructure Development Zone have been drafted by the Virginia Port Authority in partnership with the Virginia Economic Development Partnership as required per the Code and those are also attached for review.