Opinion: Feds will pick 10 places for 10-year investment in economic development
The Atlanta Braves recently signed star third baseman Austin Riley to a 10-year contract.
Good for Riley; he will make $212 million in what’s said to be the most lucrative contract the team has ever signed.
Good for the Braves; the team locks in a key player that it can build around.
Of course, Atlanta is the defending World Series champion so this is really a case of the rich getting richer. We tend not to see last-place teams signing those long-term contracts, even though they’re the ones who need help the most, which brings me to this thought: What if the federal government made a 10-year commitment to help rebuild the economies of communities that have effectively wound up in last place economically?
For at least 10 lucky communities across the United States, it’s about to.
I wrote recently about the CHIPS-Plus Act, which Congress passed and President Joe Biden has now signed. The headline item in the bill – as the name suggests – deals with microchips, and helping the United States “re-shore” a semi-conductor industry that has drifted mostly to Asia. Sen. Mark Warner, D-Virginia, was one of the prime movers and shakers behind that portion of the bill, which fits his long interest in technology issues (which has now also become a national security issue). Mostly I wrote about another less heralded but perhaps just as important part of the bill: a provision for the federal government to designate at least 20 “regional technology hubs” that will get showered with federal research dollars. The goal is to help “spread the digital wealth” by making sure the nation’s tech sector isn’t so concentrated in a relative handful of superstar tech capitals the way it is now. I wrote about how two parts of Virginia – Southwest and Southside – have expressed interest in making a bid for one of these tech hubs, and assessed their chances. (I also pointed out the irony that the House members who represent those communities voted against the bill, with Rep. Morgan Griffith, R-Salem, saying there were too many bad things included to allow him to support the legislation.)
It turns out there’s another provision in the bill that might bring federal dollars – 10 years’ worth – to Southwest and/or Southside. The bill runs 1,054 pages so we might be discovering features of this bill for a long time to come. Many congressional bills, and this one is no exception, are grand amalgamations of many bills. This particular provision comes from the Recompete Act championed by Rep. Derek Kilmer, D-Washington, who represents that state’s Olympic Peninsula, which has seen its timber industry decline. That Recompete Act, in turn, grew out of a proposal from Timothy Bartik, senior economist for the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan. He laid out his original thoughts in a 2020 paper titled “Broadening Place-Based Jobs Policies: How to Both Target Job Creation and Broaden Its Reach.” Serious thoughts often don’t fit easily onto a bumper sticker, so here’s the short version: “Without policy intervention, distressed communities tend to stay distressed,” he wrote in an article for the Brookings Institution. “A 10-year block grant to these communities will empower local leaders to address the lack of job opportunities that keeps these areas persistently distressed.” An even shorter version is that the Recompete Act would set up pilot programs whereby the federal government would make a 10-year commitment to help fund infrastructure and public services to businesses – “business advice for smaller businesses, land development, infrastructure, job training, better information for residents on job opportunities, and support programs to improve job retention.” The Seattle Times editorial board last year called Kilmer’s Recompete Act “a thoughtful approach to helping economically strapped communities reassert themselves as great places to build livelihoods.”
Words such as “land development” and “infrastructure” sometimes hide their practical power: We’re potentially talking money here to clean up old industrial sites or build entirely new institutions that could shape a future economy. Could the Southwest Virginia Energy Authority use some of this money to develop its long-sought energy park to transition the coalfields into an energy capital for other forms of energy? Could this be a way to build the cancer research institute in Halifax County that the General Assembly envisioned a few years ago when it authorized (but didn’t fund) the Henrietta Lacks Life Sciences Center? Could this be a way to do something we haven’t even envisioned yet but which could transform those economies?
Kilmer envisioned $87 billion over five years for all this; what wound up in the CHIPS-Plus Act is $1 billion over 10 years, which still isn’t exactly an inconsiderable sum. Bartik, in a tweet that was called to my attention by an economic development executive in Southwest Virginia, points out that between the $1 billion for the Recompete communities and the $10 billion for the technology hubs, that’s more federal money than the Tennessee Valley Authority or the Appalachian Regional Commission received at their peak funding. “This is perhaps the largest initial commitment to explicit place-based policy in U.S. history,” he tweets. The shortest version yet: This is big stuff.
Anyway, let’s take a closer look at this $1 billion provision to see what it might mean for Southwest and Southside.
The first thing to know is that much of Southwest and Southside appears eligible. The first criterion for eligibility is that a community “has a prime-age employment gap equal to not less than 2.5 percent.” That’s a fancy way of saying a community is economically distressed. The exact details may change by the time the federal government actually gets around to distributing money, but a map Bartik shared showed which counties would currently get defined as “severely distressed.” They include a) all of Southwest Virginia west of Wythe County, b) the Alleghany Highlands counties of Alleghany, Bath and Highland, and c) much of Southside, including Martinsville, Danville and the counties of Patrick, Henry, Pittsylvania, Mecklenburg, Prince Edward, Amelia, Nottoway, Brunswick, Greensville, Emporia, Sussex and Southampton.
The second thing to know is that eligible localities must also have a median household income of $75,000 or less. That’s easy enough. The most affluent community in Southwest and Southside is Roanoke County, where the median household income is $68,948. In the localities listed above, the median household income ranges from $50,300 in Greensville County to $27,063 in Emporia.
The third thing to know is that the rules are a lot more complicated than this, so before any county administrator fires off an application, he or she should actually read the bill and consult the county attorney. There’s also the catchall provision that there may be “additional criteria as the Secretary may establish,” in this case the secretary of commerce.
The main point is that much of Southwest and Southside is probably going to be eligible for these funds. The best way to make a good bid appears to be to join with neighboring localities in similar circumstances. There’s power in numbers. Bartik tells me by email that “if the entire area is distressed, the idea is that the CBSA or CZ should form a consortium to apply.” That refers to “core-based statistical areas,” such as Metropolitan Statistical Areas (such as the Bristol-Kingsport-Johnson City MSA) or the smaller Micropolitan Statistical Areas (such as the ones that cover Wise County-Norton-Dickenson County, Tazewell County-Bluefield, Martinsville-Henry County or Danville-Pittsylvania County). Or, in the case of rural areas that fall outside those, “commuting zones.” Like I said, lots of technicalities here and lots of questions I still don’t know the answers to, such as, could the entire GO Virginia regions that cover Southwest and Southside apply? The big picture is that all these places appear to be in the running for a $1 billion pot of federal money (although, if it’s divided evenly among 10 locations, that’s really $100 million per site, which is still a pretty hefty federal bequest). The bill calls for “at least 10” sites, so there could be more, and sets a minimum award of $20 million.
This means the big questions are a) which localities apply and b) what are their chances of being picked as one of the 10 (or possibly more) winners? That’s harder to answer. The rules on the technology hubs divide things up geographically – so many per each Economic Development Administration zone, so there’s some guarantee that those will be widely dispersed across the country. That’s how I was able to game out that the odds seem reasonably good for Southwest or Southside bids in our EDA zone, which runs from Virginia to Maine. There’s no such provision here, so any Southwest or Southside bids are up against localities from across the country. Politically, the secretary of commerce would be wise to spread those out some but, as you can see from the map, economic distress isn’t evenly distributed. All I know is that there’s a lot of federal money that’s going to be available and somebody somewhere is going to get it. Will we?
By: Dwayne Yancy
Source: Cardinal News