Preparing a site for development is a critical step to retaining or growing jobs and making a capital investment. Montrose Group’s focus is to create a Public-Private-Partnership (PPP) that makes a site attractive for job creation and capital investment while providing a pipeline of tax revenues and other funding for local and state government and schools. Analyzing a site is a critical step for determining whether a specific location is the best spot in the market for a particular company. Different industries need different sites. Energy-intensive heavy manufacturing like chemical factories is going to find sites with access to massive amounts of energy and less residential development more attractive. Companies need to consider a site’s transportation infrastructure and whether that location will be able to serve the trucking or rail transportation business needs. The water and sewer capabilities of the site also matter as no site can develop without these services. How the capital investment will impact water drainage at a site is also relevant as neighbors to new investment can become opponents if the new capital investment has a negative impact on their land. Reviewing the regulatory requirements of the local and state political jurisdiction is very important as some communities may have environmental, workforce, wage rate requirements, labor union construction regulations, and other government regulations impacting the development of a site. Finally, projects need to understand how local, and state economic development incentives can benefit the planned capital investment and job creation at a site and the local and state governments and school districts. Most successful economic development incentive projects don’t just award money to companies in exchange for job creation and capital investment but development revenue flows for local and state governments and school districts.
Kentucky and Ohio offer state programs to encourage the development of new industrial sites. The newly established Kentucky Product Development Initiative (KPDI) is a statewide effort to support upgrades at industrial sites throughout the commonwealth and position Kentucky for continued economic growth. KPDI, a collaboration between the Kentucky Cabinet for Economic Development and Kentucky Association for Economic Development (KAED), includes $100 million in state funding toward upgrades of sites and buildings across the state. KPDI applicants, such as local governments and economic development organizations, may seek funding assistance for the transformative site and infrastructure improvement projects that will generate increased economic development opportunities and job creation for Kentucky residents. Through KPDI, funding is available through a competitive application process, with each of the 120 Kentucky counties eligible for a maximum funding amount calculated based on population. There is a maximum of $2 million per county per project. Applicants are encouraged to submit regional projects, which allow available funding for multiple counties to be combined, increasing the maximum allowed for a given project.
JobsOhio’s Inclusive Project Planning Program recognizes that small and medium-sized distressed communities may not have adequate resources to develop catalytic economic development projects necessary to transform the community and attract private investment. This program offers targeted technical assistance to address gaps in capacity and expertise to generate more actionable projects across the state. JobsOhio identified 98 cities with populations between 5,000 and 75,000 with poverty rates at or above the state’s average poverty rate that are eligible for support from this program. This program provides grants to eligible communities of up to $20,000 and not more than 50% of total planning costs, should the community engage their own vendor(s), and communities may receive support through partnerships with JobsOhio and the JobsOhio regional network partners.
JobsOhio’s Ohio Site Inventory Program (OSIP) offers grants and low-interest loans to support speculative site and building development projects with no identified end user. The primary goal of OSIP is to fill gaps in Ohio’s real estate inventory with real estate targeting near-term sector wins to ensure our state is more competitive for reactive site selection projects. Program goals include: filling gaps in Ohio’s real estate inventory; mitigating developer risks preventing development; and accelerating the process of bringing in-demand projects and sites online. JobsOhio seeks a diverse portfolio of inventory types and locations such as both sites and buildings, small, medium, and large projects, office or R&D, as well as manufacturing, warehousing and distribution, urban, suburban, and rural locations, and developed real estate that aligns with one of JobsOhio’s targeted industry sectors. Other Key OSIP Components require a lead development entity (i.e., community, port authority, private developer, etc.) with loans typically for new construction, and grants will typically support costs associated with demolition, environmental remediation, building renovations, site preparation, and infrastructure improvements.
The state of Ohio, through adoption of the biennial budget, approved new language to expand the eligibility criteria, along with renewed funding, for one of Ohio Development Services Agency’s highly subscribed industrial development programs. The Rural Industrial Park Loan Program (RIPL) promotes economic development across rural areas in the state. The program provides low-interest loans to assist with financing the development and improvement of industrial parks and related off-site public infrastructure improvements and has been an extremely attractive tool in encouraging industrial development in rural communities. The current state operating budget enacted recently expands eligibility for loans from the RIPL to include projects that are located in any rural area, meaning any Ohio county that is not designated as part of a Metropolitan Statistical Area by the U.S. Office of Budget and Management, in addition to those located in a distressed, labor surplus, or situational distress areas under continuing law. Under the expanded definition of “rural,” 48 Ohio counties are now eligible for the RIPL program. The bill provides $15,000,000 each fiscal year for this purpose. The RIPL may finance up to 75% of allowable project costs with loans ranging in size from $500,000 to $2,500,000. Development requires a minimum of 10% equity contribution from the borrower in the eligible project, however, a greater equity contribution may be required based on due diligence. The remaining eligible project costs shall be funded by the borrower either directly or indirectly through third-party investors and/or private lenders. At least 50% of the outstanding loan balance will be forgiven by Development upon successful completion of the project as described in the application and loan agreement. If the RIPL funds represent less than 50% of the total project costs, the percentage of loan forgiveness will be increased to an amount equal to 100% less the percentage of the project being funded by the RIPL.
Indiana is working on several site development programs that can support major economic development projects. The IEDC established its first research and innovation district – LEAP (Limitless Exploration / Advanced Pace) – in Lebanon. The 7,000-acre site in Boone County, which was identified as a strategic location for future industry growth, will better position
Indiana to compete globally for high-tech jobs and help the state deliver strategic, investment-ready sites to industry leaders. In May, Eli Lilly announced plans to anchor the LEAP district, investing $2.1 billion two establish two new manufacturing sites to bolster its global pharmaceutical production.
Indiana launched the Regional Economic Acceleration and Development Initiative (READI), a bold, transformational initiative that will dedicate $500 million in state appropriations to promote strategic investments that will make Indiana a magnet for talent and economic growth. Through this initiative, the state will encourage neighboring counties, cities, and towns to partner to create a shared vision for their future, mapping out the programs, initiatives, and projects that are critical for them to retain talent today and attract the workforce of tomorrow. READI is expected to attract at least $2 billion of local public, private, and philanthropic match funding that will propel investment in Indiana’s quality of place, quality of life, and quality of opportunity. A sampling of IEDC READI projects includes NexusPark, Columbus, $6 million – transforming the former Fair Oaks Mall into a community health and recreation space, complete with shopping, restaurants, and an indoor sports fieldhouse which just got a concrete floor; Toyota YMCA, Princeton, $5 million – a YMCA center in the design phase, set to open in 2024; Boys and Girls Club, Gary, $10 million – the $30 million community center will provide adult education, with the potential for outdoor facilities in the future; and McCord Square, McCordsville, $3.5 million – a multi-use development that will include apartments and infrastructure upgrades to attract new talent and improve quality of life.[i] The Indiana legislature is considering the Governor’s request for continued READI funding and a continuation of the program.
Indiana also permits the creation of Innovation Development Districts (IDD) to spur infrastructure investment tied to transformational projects. An IDD is a unique tool created to support the attraction and expansion of transformational, advanced industry businesses within the state. Designation as an IDD allows for the capture of certain state and local incremental tax revenues which can be invested in support of the IDD and the growth of the state’s high-technology economy. For projects that contemplate a proposed capital investment of less than $2 billion, the executive of the local unit must consent to the designation and execute an agreement with the IEDC outlining the boundaries of the IDD, the proposed use of the incremental revenue captured by the IDD, the amount of property tax increment that will be transferred to the city, town, county, or school, corporations with territory within the IDD, construction management, and demolition costs, costs directly associated with the redevelopment or rehabilitation of a property, FF&E, if non-movable, and permitting costs directly related to redevelopment or rehabilitation outlining the boundaries of the IDD. An IDD may capture all incremental sales, state income, and property tax revenue growth during the term of the designation.
The Indiana Industrial Grant Fund provides assistance to municipalities and other eligible entities as defined under I.C. 5-28-25-1 with off-site infrastructure improvements needed to serve the proposed project site. Upon review and approval of the Local Recipient’s application, project-specific Milestones are established for completing the improvements. IDGF will reimburse a portion of the actual total cost of the infrastructure improvements. The assistance will be paid as each Milestone is achieved, with the final payment upon completion of the last Milestone of the infrastructure project. Eligible infrastructure expenses include: lease, purchase, construction, or repair of real and personal public property; preparation of surveys, plans, and specifications for construction of publicly owned and operated facilities, utilities, and services; construction of airport facilities; construction of tourist attractions; construction, extension or completion of:
- Sewer lines and other drainage facilities
- Roads and streets
- Rail spurs and sidings
- Fiber-optic and other IT infrastructure.
Finally, the IEDC is seeking funding for the development of a separate IEDC fund, the proposed $150 million Strategic Sites and Infrastructure Fund, to pay for upgrades to sites, such as rezoning or building utility connections.