The Data Center Grant Controversy

There’s been recent news about the data center that had been proposed for Page County.  It seems that the Page County Board of Supervisors have voted to discontinue their sponsorship of this proposal, setting the stage for a new round of sturm and angst about a $300,000 grant that was provided by the Commonwealth of Virginia to support its development.  At the heart of the current discussion lies the question, “Who will pay it back?”

Now, I’ve posted fairly extensively on this topic – 10 posts before this one, with the last in December 2010 (check the Page County Data center label at the end of this post if you’d like to read them), and in one of them there is even a link where the local radio show interviewed me on the topic.  I’d like to be able to say that my posts focused mainly on the feasibility of bringing that kind of industry and development to Page County.  I thought it was a folly then and still do, but it might be easy for the champion of the proposal and past county supervisors to think that my posts were personal and directed at them.

You see, in my mind, I can envision this brainstorming session way back when, where some supervisors, some economic development board members, and the new businessman in town got together and decided that tough times called for a big bet – and in their hubris, or naivete, or both, they decided that bringing cutting edge industry, like a data center, to Page County would bring a lot of good paying jobs that would save the local economy, and they talked themselves into it. 

It didn’t work out like they thought it would; there were simply too many factors at work against the concept.

I’ll leave other interested stakeholders – who have made valid observations about the unraveling of this concept – to dissect and distill the lessons that Page County needs to learn from this pursuit.  There are many, and we’ve only just begun that exploration.

Meanwhile, the controversy over the grant is percolating along, having made the front page of the local paper for two or three weeks running.  It seems there was a performance clause, where if the results – new jobs – were not delivered, the grant would have to be repaid.  The supervisors’ activities have accelerated the state’s action on this, and there has been a call for repayment.  The supervisors have passed that bill right along to the project’s champion, just like the mayor on that old show “Carter Country” might have handed something unpleasant along to the sheriff:  “Handle it, Roy!”

If there is a specific performance clause in this grant, someone’s got to pay, I suppose.  I know how important capital is to small firms, and it is likely that this particular infusion into the company at hand created a job or two, just not the ones at the data center.  More likely, they were administrative positions that help run the business and supported marketing activities related to the development of the data center concept.  Also, we know that there were a number of feasibility studies, design drawings and meetings, and engineering studies that were done – all of which seem to be logical expenditures that would have taken place during this adventure.

Now, I’m not apologizing on behalf of anyone here, but the wheels got in motion from group think – the county board, the economic development authority at the time, and the business.  Maybe the burden of repaying the grant is something that all of them are responsible for, not just the entrepreneur. 

That’s just my two cents this morning.  I know that many folks won’t agree with me on this one. 

Investment Questions about Attracting Data Centers to Page County

Some alert readers on the new Page County blog site found a recent article out of Roanoke about the negotiations that surrounded the announcement that Microsoft would be investing $500 million in a data center in Mecklenburg, Virginia. It turns out that the town of Christianburg, Virginia was also considered, but events conspired against that town’s bid. All of this is chronicled in an article titled, “Christianburg’s Miss Brings Pricey Lessons,” located at http://www.roanoke.com/news/nrv/wb/269714.


This article says that the figures aren’t official, but were gathered a review of emails and other communications regarding Christianburg’s pursuit of that deal suggests that “While the county grappled with finding money for basic services such as education, the localities offered to forgo $62 million to $117 million in taxes to attract the facility.” Typically, these deals involve upfront cash, discounts on land and utilities infrastructure, and rebates on tax payments.

What we do know about the eventual deal is that Microsoft will receive upfront payments of $2.1 million from the state, another $4.8 million from the tobacco related community revitalization money, state sales tax exemptions, $50,000 in state hiring and training benefits, $2 million in real estate, $3.95 million for local water and sewer connections, and a 20-year rebate on personal property taxes – the first three years of this benefit were valued at $12 million. All of this for a company whose June 2010 balance sheet shows current assets of $56 billion, including more than $5.5 billion in cash on hand.

Leaving aside for a minute questions about how the Page County data center will bring nearly 100 good paying job to the county, while the Microsoft operation, a 4th generation facility (Page County’s is a 3rd generation facility) will bring 50 jobs estimated at $50,000 annually, imagine how these benefits would impact established businesses in the county that have to pay local taxes. According to this article, the state expects that it would break even on the project by 2021 – but due to the personal property tax waiver, the county would still be paying for these jobs on into the 2030 decade!

Then there are other benefits at the Mecklenburg location: the high-wattage electricity is in place, there is premium broadband already built, other utilities (water and sewer) are ready, and the site is located next to a US highway. If these are the features of a location that Microsoft values, it leaves the suggestion that Page County’s Project Clover site is acceptable open to question. We currently don’t have these assets to offer; they will have to be built.

Christianburg’s story doesn’t end well – we know that Mecklenburg was eventually selected, for one thing. Apparently, during the finalization of the discussions, a small sink hole opened up at the selected site, and the site engineering that would be required to offset these risks were estimated to cost up to $30 million. Christianburg is in karst terrain, just as Page County is. The sink hole will make this site a challenge to market to other businesses.

Using these figures, it’s easy to say that turning down Fibrowatt was an excellent move on the part of our board of supervisors, since it would have required us to compete on these financial terms, with a broader impact to our quality of life, for fewer jobs that probably wouldn’t have paid as well.

But I would also like to find some kind of encouragement for Page County in its pursuit of this kind of industry and those much needed jobs, something I’ve heard referred to as “Page 2.0”. I have limited insight into whether we could make some of the required investments to attract outside business, and the marketing emphasis on the Project Clover land as a potential site seems to miss the mark.

The whole thing has to start with a plan, though – and for now, that is not something we have from current EDA leadership. Our board of supervisors would do well to consider that as the terms for some current EDA members are coming to an end – lengthy service is much appreciated, but at last, it’s simply time for a change in leadership.

The new Page County blog site is http://pagecountyblog.com/,  and of course, my past posts on this topic can be found by clicking the Page County Data Center, Fibrowatt, Project Clover, or Page County EDA labels at the end of this post.

Board of Supervisors Developments

Over on the Lurayva blog, Keith has a post up about one of the outcomes of last night's Board of Supervisors meeting...I've included the post below, with a link following.  No doubt, there will be more information to follow, maybe in the paper today or soon after.

In a suprising move, the Board of Supervisors tonight had voted to eliminate the position of the Economic Development Director, which was held by Tom Cardman. Since Tom Cardman has been let go, the County Administrator position has also been vacated, which will be held by Board of Supervisors Chairman, Johnny Woodward until the position is filled. The budget has not been passed at tonights meeting. It was reported that Tom Cardman had not attended tonights meeting.

http://lurayva.wordpress.com/2010/06/15/tom-cardman-has-been-let-go/

Themes or Memes on Vacation...and Project Clover

For the last two weeks leading up to my vacation, things started falling into place for me to wrap up a number of projects and other initiatives.  For example, in one case, the final report for a long-running project was published while I was away, and in another, we finished a series of cost estimates and sent them along to the client on my last day in the office.

This trend of completing things also was a theme during my vacation - I finished the remaining hikes in my copy of "Best Easy Day Hikes in Shenandoah National Part" and will write about those.  But the hot topic of the day has to be outcomes of the June 1 Page County Board of Supervisors meetings, which I touched on very lightly last week - the Page News and Courier headline has it "Project Clover put on Hold."

The meeting was attended by more than 150 people; there is a photo of the packed meeting hall, as well as a gathering on the courthouse steps featuring signs that say "EDA: Where are the Jobs?" and the like.  Among many local citizens, there is a view that EDA's long-running focus and funding priority on the Project Clover land deal has come at the expense of other important goals and objectives - I share that opinion and have said so here on the blog. 

Other important issues at this BOS meeting were concerns over a school closing in Page County, and recent job cuts at the County level.  Revenues are down, and County leaders are looking at hard choices.  My opinion was that in a ranking of priorities, you'd look at a boondoggle like Clover as a lower priority than other items - it is a project that might even make sense in better economic times, but that's not where things stand today.

As the PNC reports, at one point in the meeting, Chair Johnny Woodward held up the deed and said, "...The EDA budget does not have this in it.  Let's clarify this, the budget they had two weeks ago does not have that payment in it.  Notice how I said two weeks ago.  Their new budget does have it in it.  They think I don't know that, but I do."

Supervisor Jeff Vaughan said," ...This board has considered all the pros and cons, the timing, and the true impact on Page County.  To me, what we have is a mistake - but we have to draw the line sometime and not continue the misery in which we put our County in."

And finally, Supervisor J.D. Cave added,"I'm the lone one here that voted for this project in the beginning.  There are many things in my life that I've done that I'd like to go back and change, but I can't.  This one I can."

These are all rational decisions, and these speeches, along with the BOS vote to postpone the project, were very brave moves by these leaders.  I congratulate the board on their efforts to do the right thing for the County.  The final outcome of the meeting was a vote not to fund Clover, to look for ways to keep from closing the school, and look for funds that will help prevent some of the proposed job cuts. 

As far as the EDA goes, this was a pretty significant no-confidence vote for the current leadership and direction.  A referral to the 2009 EDA plan shows a range of initiatives that attention could now turn to - things that can have both an immediate impact and would set the stage for longer-term growth.  To the extent that's possible, that seems like the right next step for EDA. 

A Quick Note on Some Page County Items

Just time for a brief post today.  I understand that at the BOS meeting last night there was some resolution about Project Clover, the land deal I've written about several times here.  While I don't have full details yet, it does appear the land deal has been ended.

There will be some review and I am sure there are quite a number of loose ends to tie down.  But I think this is a move in the right direction - let's work together and find the best way forward.

Other matters dealt with at the BOS meeting were some school board funding issues, and reconciling some of the County's staff cuts.  I hope these things are also going to work out for the best.

In the meantime, I know these things mean a lot to my friends and neighbors.  I am very glad to hear how they've worked out.  More to come!

Page Co. EDA "Action Spectacular" - Part 5 - final, for now

We are still waiting for our PN&C this week, but I see that there is some news about the Rainwater letter already on line, where Benjamin Weathers reports on Lowell Baughan’s response via interview and written statement. For the final post in this series, let’s take a look at what Baughan had to say about Project Clover and the arguments presented in the attorney letter.


First, while defending the EDA’s authority to defend the land, Baughan disputes the appraisal of Project Clover’s value, which was pegged at $2.5 million versus the negotiated price. The article reports that (emphasis added) Baughan said there was no appraisal conducted before the authority made its decision to purchase the 210 acres. It goes on to say that the price paid was derived from other appraisals.

Baughan’s own comments show how subjective the appraisal business can be: “We based our purchase price, in part, on appraisals of properties in the same general area that were considerably higher,” he said. So on the one hand, Baughan confirms that his actions in this case are irresponsible - no appraisal was conducted before committing to a $7.5 million purchase – and on the other, he wants to debunk a legitimate appraisal based on his own reckoning of the valuation used in this deal.

Honestly, it’s not hard to see anymore why so many Page County citizens and residents have lined up against this transaction!

The paper also reports that Baughan has conceded that the county has “no legal obligation to move forward with the land purchase, but argued as he has in the past that defaulting on the payment would significantly impact the county's credit rating.” Also:

“There is no legal obligation for the county to keep its word, but if they don't, there are serious ramifications,” Baughan said. “If you renege on a pledge of moral obligation, the next time you try to borrow money, you either won't be able to, or the interest rates will be much higher.”

Baughan defends the decision to disenfranchise the County’s citizens, saying that “because no bond was ever issued for the property, no public hearing was ever required.”

These comments won’t do anything to quiet the questions that continue to be raised about Project Clover.  With these responses Baughan seems to suggest that he sought no counsel during the episode leading up to the purchase agreement – that he felt he was smart enough to wrangle an agreement that would be good enough despite all the signs pointing to a bad deal. Although it is unlikely that the Commonwealth Attorney would look into this matter with so many other pressing issues at hand in the State, a civil lawsuit from several parties – not just Rebecca Hudson – just might be justified, as Rainwater's attorneys say in the letter.

The paper closes with another quote, “The allegations made in the attorney's letter regarding actions taken by the EDA are non-specific and without merit,” Baughan said. Actually, it is clear that the attorneys who wrote this letter have a lot of material in their hands, and that material is very specific. In my mind, Baughan’s comments confirm the validity of the questions and opposition to Project Clover.

It will be interesting to see what’s next in this case.  Lowell Baughan should start taking these questions seriously - it's irresponsible to respond these comments so lightly. 

Page Co. EDA "Action Spectacular" - Part 4

In the last couple of posts I mentioned a letter that was recently sent to the Page County Board of Supervisors by attorneys for Charles Rainwater, a Page County resident who apparently owns property near Project Clover. I thought I might take a moment to outline Rainwater’s four concerns as discussed in this letter.


His first issue is a fear that Project Clover will have a negative financial impact on the County. This is due to an “excessive price” of $7.5 million for the acreage. I posted on this topic yesterday – apparently the EDA is going to commission its own appraisal to address this concern. Unfortunately, that will be the fourth appraisal…they are getting to be quite the subjective topic at this point, so how would you reconcile them? Take an average?

Coupled with concerns about the price are concerns about the process that was used to secure the land. I have friends who tell me this is a done deal and it is time to move on. I have also heard that Lowell Baughan has provided a lengthy but curious explanation in the PN&C this week, but I’ll have to wait for my copy.

With reference to the debt obligation, or whatever we should call it, which finances the Project Clover purchase, the County documents say the instrument is not a debt or pledge on the part of the County or even EDA. Who the hell is it a pledge by then? And who really would be foreclosing if it weren’t paid?

As a common citizen, this is very confusing to me, the manipulation that has apparently gone into this situation to get us here. How hard would it have been to have put this to a vote? I’ve heard that this may be partially answered in a PN&C article this week, but I have to wait for my copy.

The attorney argues that the Virginia Constitution requires a public vote on a public obligation of this sort – assuming there really is a public obligation at the heart of this transaction, there is some legal wrangling ahead to figure it all out. In short, this puts the County in deep kimche, whether laws were broken or not. The taxpaying public is going to pay for all of this at the end of the day.

The second concern the letter goes into is the process used to get to this point. The letter discusses frequent closed sessions that were part of the process for negotiating the Project Clover purchase, highlighting the legal procedures that justify these closed sessions – and allegedly were not followed here. The attorney closes this discussion with examples of where the law was supposedly violated, and the recourse and penalties available should Rainwater pursue the matter further.

The third concern is also about closed EDA/Board sessions, except this time, after the purchase was negotiated. The fourth concern is about a possible conflict of interest – maybe several of them – involving the parties involved. The attorney’s letter closes with a request for clarification, a request that the Board of Supervisors take steps to stop the controversial aspects of this situation; it then advises that there may be a recourse to civil action.

So what to make of a letter like this? In truth, the choices to be made about what to do and the roads ahead on this matter are difficult ones. The taxpayers of Page County are going to be stuck with the expenses for Project Clover no matter what happens at this point. And the whole debacle is going to keep any kind of economic recovery away from there for years.

Page Co. EDA "Action Spectacular" - Part 3

First a note about this series.  To the extent I can, I am using public information for the basis of these posts - for example, I quoted extensively from the PN&C yesterday under the assumption that they have done their own fact finding.  I also quote extensively from past EDA strategic plans, which I have downloaded from the Page County site and read for myself.  I've added analysis - just simple math really, since I have avoided learning calculus all my life - where I needed to.  On top of that are anecdotes about my attempts to do business in the County, and then there are my opinions.

This background was necessary because today I want to talk about the valuation of Project Clover.

There is some news on WHSV about a letter that was sent to the Board of Supervisors by an attorney that has been retained by a local Page County citizen who is concerned about Project Clover.  I will post more on the substance of the letter tomorrow, but an appraisal of the value of Project Clover was also included.

The letter mentions an appraised valuation of $2.5 million for the Project Clover land, based on its recent zoning reclassification.  Recall that the EDA/Page County has agreed to pay $7.5 million for this property. 

I've heard that there were other appraisals done, including one by the current owner, as the property was being brought to market.  I understand this showed a lower value, based on the then-current agricultural use of the land.  I haven't seen that appraisal, so I can't state the published value.

I understand that EDA also had an appraisal done; I haven't seen this appraisal either so won't offer the value that was evaluated.  However, it is reasonable to think it must have justified the purchase offer of $7.5 million and provided the basis of the USDA loan application process.

So here we have three valuations, that widely vary.  You could take the high one and justify the $7.5 million.  Or you could take the low one and be exposed for making a bad deal.  Or this new one, which suggests the overpayment was around $5 million.  All of this comparison - the wide range of values - introduces an element of risk to the financial proposition for the County.  If it is a bad deal, the taxpayers are going to be left hanging - either because they have to pay, or in the case of a default, because future projects won't get financing.  How do you resolve a problem like this?

I understand that Lowell Baughan gave a talk at a local fraternal organization following the receipt of the attorney's letter and the appraisal.  He questioned the appraisal methodology and valuation.  He states a preference for a type of appraisal endorsed by MAI, one of several professional associations that advise on appraisal processes and offer a certification for appraisers.  He also questioned the comparables listed in that appraisal, which is fine, they're fair game.

This called to mind some discussions I had recently with a bank when I was thinking about some commercial property in Page County.  The bank had set a price on this property of $1.4 million, and they shared with me a list of a half dozen or so similar properties that they had used as the basis of this price. 

When I did my due diligence on this, I came up with a purchase price of $1.1 million, based on 2x property revenues (an industry standard I found during my research) and the price of a very similar property on the market in another county. 

The bank questioned my findings - they said that comparable properties had to be within 20 miles of the commercial property I was looking at.  That had kept the list small, limited the comparisons to properties that didn't exactly match the one I was looking at, and probably was the source of the inflated valuation.  In the end, the bank ended up buying this property from itself at the asking price of $1.4 million since no bidders came forward at their reserve price...a pity, because that place will sit vacant now until it sells, hardly doing anybody any good, least of all the Page County community.

This annecdote is what came to mind immediately when I learned about Lowell's comments to his fraternal organization.  Comparing values is a fairly challenging proposition - there should properly be a geographic restriction on the search for comparable properties, and allowances need to be made for amenities available on the property being evaluated for comparison purposes. 

I'd suggest this takes industrial properties in H-burg, Woodstock, New Market, Elkton, and Front Royal out of the question for comparison for Project Clover.  They have easy access to good highways, important since the only way into Clover is by truck - rail transport there is transient on the way to the inland port, and no business is going to pay to transfer goods on and off a train unless there is a market at the siding, or raw materials are processed and added to the goods there. 

All this to say, if Lowell Baughan has questions about this valuation, he should get a new one done.  The request for this appraisal should be via public RFP so that it is done on a transparent basis.  The appraisal should evaluate and reconcile the previous ones that come to disparate conclusions.  Questioning this latest one and speculating on the methodology doesn't add any facts that will help the community one way or another in its quest to evaluate whether Clover is a good deal.

If Lowell is the kind of business person he wants us all to believe he is, he needs to take steps like these to repair his credibility with a large share of the County who apparently don't agree with him.     

Page Co. EDA "Action Spectacular" - Part 2

It’s rare that I find myself agreeing with an editorial in the Page News and Courier (PN&C), but I readily admit that the editorial page is the first one I turn to in the paper every week, and that’s exactly the situation I found myself in after the article “Invest in People” was published last week. I’d like to summarize some of the article as my second “action spectacular” post about the Page County EDA.


Essentially, PN&C argues:

“…the one thing that we can all agree on is that the money that is collected through our taxes should be spent wisely on the things we designate as priorities in our community.”

The editor goes on to conclude that the emphasis should be education:

“The dividends on investing in people may produce quicker returns than real estate.”


Some of the issues mentioned in the editorial happened before my wife and I arrived on the Page County scene. But this is quite a summary:

• A landfill deal that cost millions of dollars
• Thousands more lost in a sale of the landfill because of poor management, permit violations, and legal fees
• Millions more to repurchase the landfill
• Thousands again on consultants, legal fees, and staff time to see these transactions through
• The cost of subsidizing another county’s use of the Page County landfill

Most of what I read about the landfill lays the blame for all of these issues at the feet of the Page County EDA. If that is an accurate assessment, it’s quite a track record – I don’t know if the private sector would tolerate these issues for so long…at least in my experience they wouldn’t have!

Notably, Baughan’s letter in the same issue of the PN&C doesn’t mention the landfill track record, and it doesn’t seem to benefit from the hindsight of these things gone wrong. He is focused totally on Project Clover, and argues that everything is okay because the Board of Supervisors approved his actions.

Regarding the EDA’s speculative real estate ventures, PN&C adds:

• The thousands of dollars spent on unused plans and architectural designs for a new office complex that seemingly will never be built
• A $650,000 purchase of nine acres that sits partially in a flood plain and may never be built upon
• The $7.5 million spent on the hope that business will come to an open field along the tracks
• The many dollars lost on interest for those debts

In my business we have pretty straightforward measures for a person’s productivity. The company has to earn enough money to pay salary and benefits, the costs of the roof overhead and utilities, and supplies that support the work, plus profit, which compensates for the risk of being in business. In one of my past companies, that meant I was responsible for keeping twelve people busy – our motto was "Growth is an imperative" - the company made me responsible for $2.5 million in annual revenue as the cost associated with those twelve.

That metric could apply to Lowell Baughan, except that, according to the PN&C, he’s probably cost the County that much per year over the last few years. And it’s a reality of the rural economy, but that amount would easily support twice the number of jobs I had to deliver, or more.

Now, I keep going back to the past strategic plans that the EDA is supposed to be following, and that Baughan cited in his letter to the editor. Referring now to the July 2009 update of the 2008 plan, there are two “priority b” education objectives:

“Department of Economic Development will develop a list of targeted industries and communicate that information to the Technical Training Center and Lord Fairfax Community College in order to provide direction regarding the skills that are needed.

“Encourage the school district to have conversations with students in middle school and high school about topics such as life skills, introduction to different kinds of professions and schooling necessary to achieve success in the areas, importance of completing GED, etc.”

Just as these goals have been moved to the side – to the “priority b” list, it seems that the schools in Page County have been treated as second most important compared to EDA. PN&C estimated that the cost of the poorly conceived and executed projects above amounted to 60 to 75 percent of the cost of the new high schools – and the decision to build them was 66 years in the making!

Perhaps, just maybe, if some attention had been paid to these needs along the way, Baughan’s son would not have been writing his letter of support from Charlotte, NC.  I often hear the remark that the younger generation moves away from Page County in search of opportunities.

All of this is just food for thought, because it doesn’t seem that Project Clover is going to unwind itself with any kind of speed – and it is only going to cost the County more, no matter which direction it goes in from here. But I will close today’s post with the thought that EDA has to take responsibility for the advice it gives the Board – advice that doesn’t seem to have delivered on expectations by any definition.

It's clear that the County has no business trying to engage in speculative real estate deals at this time.  We can't afford it in the first place, and the projects don't deliver the results we need in the second.  And maybe that makes the PN&C editor’s suggestion that, just now, reprioritizing County investment in education is the right way to go.

Page Co. EDA "Action Spectacular" - Part 1

Since I covered the PN&C letter about Lowell Baughan, written by Jay Dedman, a couple of weeks back, it’s fair that I should take a look at the responses that appeared in last week’s paper. First, there is a letter written by Baughan about his role with the EDA, and a couple of letters of support, including one from Baughan’s son. A second item to take a look at is the PN&C editorial this week, which encouraged the Page County Board of Supervisors to invest in people and education.


For a third item related to this topic, I also received news about an updated series of arguments regarding the Project Clover deal, which are contained in a letter to the Board of Supervisors. So my plan is to have a sort of “EDA Action Spectacular” series of posts this week – doing what I can to cover these items. It’s my opinion that EDA and Baughan have probably brought this criticism upon themselves since their identity has become so closely tied to Project Clover – a project I have opposed since first learning about it.

Baughan’s letter, which was headlined “EDA operates only with the approval of supervisors,” argues that the Authority is an arm of County government. He says that the organization develops projects that must be approved by the supervisors, as opposed to taking rogue actions on its own. He proceeds to categorize the actions the EDA took under his chairmanship as full and open, and even specified in the 2004 and 2007 strategic development plans (I have been calling the 2007 plan the “2008 update” on the blog).

I’ve reviewed these documents before and published summaries here. I recall that after reading them I was confused at how these plans can be considered a road map to a speculative* real estate venture such as Project Clover has turned out to be. In 2004, there was an emphasis on six guiding principles:

• Business attraction
• Existing business retention/growth
• Community infrastructure
• Education and workforce development
• Government economic development programs and services
• Transportation

In the update to the plan, published in 2008, there is a note in the executive summary that says, “…the County needs ready-to-go sites complemented with the ability to process permits, licenses, etc. within short turnaround times” in order to attract companies that fit in with the rural character of the County and diversify the economic base.

As I wrote at the time, it’s my opinion that:

‘To me, this is “cart-before-horsing” – among other things, the previous version of the plan called for an assessment to determine what kinds of businesses to target. Was there follow-up on these objectives and initiatives? Without them, I don’t think it’s prudent to land bank this property, betting it is a panacea to future economic development requirements; squirreling it away in a quasi-government EDA that may not have followed up on its own previous goals and objectives is another thing.’

As the letters of support that accompanied Baughan’s letter demonstrate, he has provided valuable service to the County in the past; however, I’d like to learn more about his role as an advocate for the Project Clover purchase – business that, according to him, was conducted in broad daylight with unanimous board approval. How did the board come to the decision that a price of almost $36,000 per acre for Page County farmland was a fair deal for the citizens? Why weren’t the other objectives in the 2004 plan and 2008 update given any attention or priority, when they have been completed at very low costs and would have provided the board with the necessary insight to decide whether Project Clover would be successful. These questions are even more urgent, since Baughan’s letter discloses that the EDA was given authority to spend as much as $9-million on the deal, another $1.5-million over and above the reported purchase price.

Unfortunately, Baughan’s letter does get personal in one section, where he claims that EDA has been “unfairly maligned in various blogs and letters generated by the uninformed.” Dedman’s letter was pretty direct with the questions and criticism, but still, I was surprised by the personal nature of Baughan’s comment, because he serves the taxpayers of this County in a responsible role. The opportunity to serve is a privilege, not a bully pulpit for name calling – the questions and comments he refers to are simply the taxpayers asking for more information so that they can evaluate whether or not to support the EDA.

Here on Hawksbill Cabin, I seek to publish a logical, intelligent and informed discussion about the county lifestyle, framed by my own 30 years of experience in business. But I’m not going to shy away from giving an opinion here and there too. I don’t question Baughan’s integrity, but I do question his judgment and his failure to execute those strategic plans as they were written and approved.

As far as the two letters of support that are included here, they speak to Baughan’s accomplishments as a private citizen. One is written by his son, who lives in Charlotte, NC, and another, by a parishioner at his church. They both reinforce the claim that Baughan is motivated to do the right thing, as exhibited in his commitment to charity and civic organizations. These have an important role in the community, but none of them has the potential to obligate each man, woman, and child member or participant to a $2,100 debt obligation, as Baughan has championed in his role as EDA Chairman.

* speculative – relating to an act of speculation, assuming unusual business risks in hopes of obtaining commensurate gains.

Reprinting the PN&C letter - re: Mr. Baughan

While I've been on the road this week, yesterday I rec'd news on-line about a letter that was in the Page News and Courier, reprinted on the Lurayva blog (link in the blogroll on the right).  It gives voice to a lot of questions I've had over the last couple of years as I've thought about the EDA role.  Kudos to Jay for putting them so straightforward and succinct!  And a tip of the hat to Keith for putting it up on the blog...
---letter follows
 
Last week I opened paper to see a man’s face on front page. Lowell Baughan. I see his name in the paper connected with so many county dealings.

Who is this man? I don’t remember voting for him or hearing he was elected.

A friend told me he’s been head of the EDA for 30 years. He seems to have the ability to spend taxpayer money without direct citizen input.

Why? Is this some kind of untouchable second leadership?

Let’s just be clear. Mr. Baughan wants to spend $7.5-million for 210 acres of farmland (a.k.a Progject Clover), while the county is already struggling to balance it’s budget for this year. Remember the landfill fiasco that we’re still paying for? Clover will weight us down like the new landfill, if we allow it to be purchased. Everyone gets rich but the Page County taxpayers, who will pay for the next 40-years.

So let’s default. We don;t need to borrow more money. Each of us must live within our means and so should we as a county. We’re cutting the school budget to the bone, as well as other necessary services. There are already too many empty industrial parks along I-81. Let’s not add another one.

A friend told me that Lowell’s father was part of the “Byrd Machine“ (look it up on Wikipedia.org) when VA politics was run by a tight group of insiders. As a member of the new generation, those days of crony politics are over.

Mr. Baughan says we can’t default on this proposed loan to Rebecca Graves Hudson. But we only default if Mrs. Hudson sues. As a citizen who’s family has lived here for generations, she could also realize this purchase is a bad deal for the community. She could be a hero. As is, Rebecca will still be paid over $1-million for 38 acres of farmland. Do the math. She’s no victim.

We elect leaders. They make the decisions for us. If I don’t like their decision, I help vote them out of office. So who is Lowell Baughan? I can’t vote him out of office because he’s never been elected. Lowell simply has power to spend $7.5-million of taxpayer money that taxpayers don't want.

Jay D., Rileyville

EDA's 2009 Plan Update, continued

Whenever I take a look at these EDA strategic plans, especially the 2008 and 2009 versions, I see this emphasis on “ready-to-go-sites,” as in priority A.4 from the 2009 plan: “Continue to work on ready-to-go-sites and identify locations in conjunction with the future land use plan.” The status reported here for this item is: “Rezoning of Project Clover proceeding. Related marketing initiatives moving forward.”

Moving on through the Priority A goals, here is A.6:

Identify the sectors and business types that are most conducive to locating in Page County. Ensure that: 1) the list matches the future land use plan and intergovernmental agreements; and 2) the zoning ordinances support the needs of targeted businesses and industries.

…and its status:

Project Clover is in compliance with draft land use plan. Working with Planning office to implement zoning ordinances that are in compliance with environment of county and clear, concise and manageable from business point of view.

What’s missing? The status report doesn’t include any information about the sectors and business types that are good prospects for locating in Page County. If you look at several other Priority A goals, they mention this business identification issue as well…

• A.5 – Identify companion businesses to those existing in the county and target these kinds of organizations to locate in the county.
• A.8 – Develop and implement a marketing program to attract new businesses. Include information about the HUBZone program.

These goals are assigned to the Department of Economic Development…as are most of the Priority A goals. Few if any are assigned to the EDA, and those seem to focus around Project Clover.

I guess what troubles me about the 2009 plan update is the same thing that I have been saying about the whole strategic planning process in the county since I started looking at it. These plans seem to focus on putting logistics support in place, or on putting big money on the table, before we have a good idea of what we are trying to accomplish. Aside from the continuing emphasis on Project Clover as a panacea to all of Page County’s economic concerns, the hard work on analysis is always left for last, so the easy and glamorous work on “big ideas” gets all the attention.

Working as a consultant, and in A-E firms over the last 15 years or so has taught me a lesson – we call this process requirements gathering – you have to know the environment, the stakeholders and interests, and you have to know the issues, not to mention the strengths and weaknesses of the situation – before you commit to a plan.

You can’t propose an answer before you know what the questions are…that’s what I think has happened with the EDA and the Project Clover approach. That’s why Page County has ventured down the pathway of very speculative real estate deals, as opposed to the brass tacks work of learning what your prospects are and selling into your strengths. I read a book a few years ago – “Hope is Not a Strategy” – this stuff is hard work…just seems like we aren't working hard enough on it for some reason.

Someone else said, "If you don't know where you're going, any road will get you there."  Seems like we know where we're going with Page County's EDA - we're going to Project Clover.  As far as what we'll find when we arrive...well that's anyone's guess.

Here's an Amazon link to the book I mentioned:

Page County EDA 2009 Updated Strategic Plan

Today, I’m beginning a review of the 2009 update to the Page County Economic Development Authority’s 2008 Strategic Plan. Past posts in this series have looked at the 2004 plan, and the 2008 plan – the past posts can be found by clicking the EDA label to the right or at the end of this post. The 2009 update begins with a preface, mentioning progress against goals and objectives that were included in the 2008 plan, as well as mentioning the reduction of a full-time position at the County that also supported EDA, which was offset by citizen volunteers, increased involvement from existing members, and collaboration with other organizations such as the Chamber and the Shenandoah Valley Partnership.


As I read this – it’s hardly a plan, it is more a report card on the previous goals and objectives. It’s set up in tables, with the objectives listed in the first column, lead and support roles in the next two, and finally a status shown in the fourth column. There are 24 “priority A” objectives and 11 each of “priority B” and “priority C” objectives.

Most of the objectives are shown with an “in progress” status, although there are four priority a goals shown as “not started yet” –

• A.7. Develop land use plans targeted to areas around the towns taking into consideration existing infrastructure and future infrastructure planning.
• A.9. Develop a “fast tracking” process at the County to secure permits. Pursue in conjunction with the Planning Commission and Zoning/Planning Departments appropriate zoning subdivision plans for industrial parks, business parks, technology parks, etc.
• A.16. Build a portfolio about the County and present it to financial institutions in order to promote and support funding of businesses within Page County.
• A.18. Establish an annual round table discussion between stakeholders…to promote better planning and coordination of business-related training and education in the County.

There are four priority b objectives that have not been started or were deemed not possible, and seven priority c objectives with this status:

• B.1. Promote a unified relationship with the towns…
• B.2. (Not possible due to staff reduction) Have a rep from the Economic Development Department join the Tourism Council.
• B.6. Department of Economic Development will develop a list of targeted industries and communicate that information to the Technical Training Center and LFCC in order to provide direction regarding skills that will be needed.
• B.7. Encourage school district to have conversations with students in middle school and high school…
• C.2. Request tourism funding support from the towns.
• C.4. Explore the possibility of involving citizen volunteers to assist the Department of Economic Development.
• C.5. Research how graduation rates compare to other counties and explore what needs to be done to bring Page County to a competitive level.
• C.6. Educating the County and towns on the importance of including access to utilities with their requirements for development.
• C.7. Engage the Board of Supervisors on roadway transportation issues and obtain direction to move forward.
• C.10. Investigate overlay on roadways to prevent future building within widening areas.
• C.11. Assist in establishing new group (could be an EDA subcommittee)…key issues this group must address are zoning, land use planning, utilities and transportation.

Tomorrow I will take a deeper look at the priority a goals, assessing their progress against the understanding we’d come away with after the previous reviews of the 2008 and 2004 plans. 

The Clover Deal...again

It just keeps coming up, this land deal for Project Clover in Page County. Today I am thinking about an EDA meeting that occurred in January 2010 – the meeting minutes are at http://pageforbusiness.com/archives/35/EDA%20Minutes%201-19-10%20Joint%20Meeting.pdf . For background, last year, the Page County Board of Supervisors authorized the purchase of a 200+ acre plot south or Luray. The BOS worked through EDA to make the purchase, and the price was negotiated at $7.5 million – which works out to roughly $40K per acre.


In previous posts about the Page County Economy, I've mentioned the County's economic development plans – the 2004 and 2008 editions, which outline three goals: develop industry, build tourism, and look at sustainable agriculture - as pathways to the future. Next week I’ll take a look at the 2009 update, which was prepared while the Clover negotiations were happening. From what I read, the BOS and EDA believe the land purchase will contribute to one of these goals, for industrial development.

When I posted on the topic of Project Clover in the past, I reported that I simply haven't found anyone who says buying the land was a good idea. Sure, there is an acknowledgement of the need to do something to attract jobs to the County, with a large share of the workforce commuting out for work in good economic times, but the sentiment seems to be that the price for this land, and the need to raise the money for the deal now - poor timing, may simply be a mistake.

I spent some time this morning trying to come to terms with this price of $7.5 million. I found references to two appraisals that were done in 2007 – the height of the economic boom that inflated prices. One valued the undeveloped farmland at $4,300, and the other speculated that a 20-year value of $105K per acre was realistic, assuming that a fully built out industrial park was a benchmark for land values in Page County. Of these two, you’d go with the lower value since nothing is built here yet.

Now, I also came across the assessment on this property, which includes some improvements, including a house. It values the 210 acres at $1.6 million – just more than $7,000 an acre. Even in the Alexandria heydays for real estate, as a rule of thumb, you’d add 20 percent to the appraisal to just values, yielding a price of about $8,400 per acre. The last reference I would make is a listing for 150 acres I found today on the United Country real estate site, for rolling pastureland in Elkton. The listing price is $1.5 million, or $10,000 per acre.

I just haven’t found anything on line that justifies the purchase price – either in remarks from the EDA, BOS, or these market comparisons. Everything I’m reading says this is a bad deal. Many people in the County agree.

I’m not saying this is the way to go, but at this point it seems the County could save itself a couple of million by bagging this purchase, paying the $1 million they are already obligated to – at least that’s how I understand it, paying a kill fee on the rest of the purchase, and buying the Elkton land. You’d come out $3 million ahead with a plan like this one!

Here’s a link to an old Hawksbill Cabin post, for additional background. You can also check out some of the labels: Page County Economy, Page County EDA, and Project Clover, if you are interested.

http://hawksbillcabin.blogspot.com/2009/08/land-deal-is-too-controversial.html

Page County EDA 2008 Strategic Plan Recap, Part 3 - Business and Industry

This is the third and final recap post on my review of the 2008 update to the Page County EDA’s strategic plan. Today’s post reviews the plan’s “business retention and attraction” section – the material regarding business retention is by far the shorter of these two goals, so we’ll start there.  Later next week, I'll take a look at the 2009 update.

Even a cursory review of this plan update shows that in 2008 the EDA had already vectored itself onto a perceived need to expedite the purchase of “ready-to-go” sites – a concept eventually leading to the Project Clover land deal.

Now on to the review of the plan –

“In order to retain businesses in Page County, public education is needed to let firms know what resources (financial, information, expertise, etc.) are available to leverage their existing efforts and investments.” This quote is the sole reference to existing business in the 1.5 page executive summary of the plan. It is a distinctively noncommittal observation – “public education is needed” – no assignment of responsibility, no data, no performance metrics.

Further back in the plan, where the goal and objectives are listed, the four items listed for retaining existing businesses are basically a repeat of those found in the 2003 plan:

• Expand existing efforts to educate businesses…
• Continue to build relationships with existing businesses…
• Undertake a survey of local businesses…
• Identify companion businesses to those existing in the county…

The first three are given high priority, while this last is rated less important. All were to be done with current staff resources – Chamber of Commerce, EDA, or Board of Supervisors resources – and some with current funding. The middle two above – the relationships building goal and the survey – require program funds for implementation; which is the same status they had in the 2003 plan, if I recall correctly. One thing I would like to see is a status report, not just in this section but in all sections – going back to the old stratagem of “what gets measured gets managed.”

The plan includes a straightforward justification for these simple investments:

• “…existing businesses provide the greatest opportunities to provide new jobs and capital investment.”
• “…business retention is even more critical than business recruitment to the economic viability and growth of the County.”

These are strong statements – and their placement in the plan is significant, appearing as they do before the discussion of goals related to recruiting new businesses. There is a long history of businesses leaving the County or closing outright. And the data shows that more than 60 percent of Page County's workforce commutes to work places not located here. If I were an owner of an existing business in Page County, I’d be asking questions about this – and I’d want to know why, with this kind of wording around the goals, more hasn’t been done to support existing businesses.

It gets to the soapbox point: why all the fuss about a land deal that will cost a lot more money than the small outlay it would take to lay the ground work for future growth, based on what’s already here?

Seems to me, this is another case of low-hanging fruit, along with overlooking the tourist and agriculture sectors as possible investment targets, that was missed somehow by the Board of Supervisors and the EDA. I’d love to see a revisit of these items as part of the way forward for the County.

Page County EDA 2008 Strategic Plan Recap, Part 2 - Agriculture

Continuing the review of the Page County EDA’s 2008 Strategic Plan update today, focused on the topic of sustainable agriculture.

 

The updated 2008 plan summarizes the state of Page County agriculture by highlighting the declining number of farms: from 1,327 farms in 1940 to less than 400 in 2008; 5,800 acres of farmland repurposed between 1997 and 2002; and a decline in the market value of production from $115 million in 1997 to $108.7 million in 2002. As outlined here, the challenges contributing to this decline include: competition from producers elsewhere, the pressure to sell land for development, and rising costs of feed, fuel, and fertilizer.

 

Especially interesting right now is any discussion about poultry farming in the County, since there is a lot of pressure on the folks trying to make a living this way. The farmers own the land and buildings, but the poultry is owned by the large companies – Tyson, Cargill, Pilgrim’s Pride – who are beginning to make better economic decisions about where to locate their operations, with the result that Page County is often not optimal. And when I use the term “better economic decisions” I am referring to the simple fact that these large companies are acting in their own self interest to minimize their costs. The implementation often involves consolidation of farms, suppliers, and processing in close proximity to each other to minimize transportation time and costs – a decision process that does not favor Page County.

 

To be the selected location, economic theory suggests there needs to be a natural advantage, such as a major center of production for feed corn or some other input resource, or a point of intermodal transfer for transportation. Page County has none of these – and the decline of farms and farm production income is the result.

 

On the other hand, these consolidated centers of production are not operated in the most sustainable ways – I’d bet that there are a lot of challenges containing and managing waste materials, and energy use is not a top priority for management. With the Shenandoah River facing stress from other past and present sources in the watershed, there is yet another reason that Page County may not be the best location for these operations. Even so, Page County remains the second largest poultry producer in Virginia.

 

From the poultry industry, the plan turns to sustainable agriculture for two pages. For all the hustle and bustle that I see from week to week on this topic during the summer, the relative lack of importance it is given in this plan is surprising, since the plan sets up the concept of a three-legged stool for the Page County economy – tourism, agriculture, and industry.

 

The plan outlines three strategies for developing sustainable agriculture in Page County, but provides little detail on how to implement them – doesn’t even call for the first step in implementation, an assessment.

 

Here are the three strategies:

• Plant substitute crops – soybeans and hay: soybeans to tap into the bio-diesel market with the side benefit of creating animal feed as a by-product; hay to cater to the growing number of horse farms in Page County.
• Emphasize sustainable approaches – take advantage of the growing demand for local produce and the areas proximity to larger markets in Harrisonburg and Northern Virginia.
• Repurpose resources – create an agri-tourism destination; transition poultry farms to horse farms; and create non-traditional agro-enterprises such as wineries in Page County.

These strategies and sub-strategies offer an excellent summary of current American culture’s relationship with agriculture. Of seven insights, only one of them even acknowledges a connection with food production, and one other considers agricultural production as an input to industry; all seven require major capital investment; and two of them are linked to the other economic stool-leg of tourism.

 

Past blog posts here have considered the economics of hay farming, as well as the sustainable agriculture approaches listed here. I haven’t been able to get further into an assessment of these subjects to determine whether they could be relied upon for a family’s livelihood, as much as I would like to believe they offer that potential.

 

I mentioned the absence of real planning here - at least in this plan - and the absence of any kind of metrics to measure progress. What are the recommendations for developing sustainable agriculture in the 2008 Page County Economic Plan? Fine-sounding concepts, “innovation, communication, and cooperation” are emphasized and a program of forums, engagement, and even an agriculture summit are proposed, but they are given lower priority than educating Page County’s political leadership.

 

Compared to the 2004 plan, this 2008 plan is short on details and imagination. Having completed a review now of tourism and agriculture, the next step is to review the strategy and goals for industry; given the appearance of much current emphasis on that sector – Project Clover, the purchase of developable industrial land – I’m anticipating there will be more detail there. That’s a pity, because as the plan itself says, Page County agriculture is a “$108 million industry” comprised of “400 small businesses.”

 

An industry and small businesses that were not given a priority in the 2008 plan, that is.

 

Page County EDA 2008 Strategic Plan Recap, Part 1

Early in the week I posted a summary of my review of the Page County EDA’s 2004 Strategic Plan – today, we’ll move on to summarize the review I did of the 2008 update. Keep in mind that all of this was done at the time the controversial land deal known as Project Clover was being put together. In checking the original posts, I had a couple of thoughts about tourism, sustainable agriculture and retaining existing businesses – I will summarize those here in the next few days before moving on to the 2009 update of the plan.  And by the way, although I have comment moderation turned on to protect the world from spam - your comments are important and appreciated - so take a moment to comment if you care to!


Back in the dark ages, when I went to business school at USC (note: that's Southern California, not the other USC) the emphasis was on entrepreneurship – and as a result, on how to write a business plan to attract investment and support. It’s been so long now that I didn’t have any of those resources at hand to guide my review of the 2008 update; I vaguely recall that the progress through a plan, no matter how it was organized for presentation, was to read the idea first, skip to the resumes, look at how the plan proposed to execute, and then look at financials.

The Page County plan doesn’t include all of this material, but it does start with a vision statement, so at least we can take a look at that as the central idea of the plan. There are five elements of the vision, and I think it can be assumed that these would pass muster with most County residents:

• Better quality of life for the community – includes better wages, improved infrastructure and amenities, a healthy place to live, and improving employment prospects;
• Job retention and creation – seen as a “fundamental” goal;
• Retain the rural character of the community and natural resource protection – including mountains, groundwater, caves, and rivers, but also farms, woodlands and open spaces;
• Balance the growth between agriculture, tourism, and industry – elsewhere these are referred to as Page County’s three-legged stool of the economy; and
• Strengthen the collaboration between the County and towns – the recognition that cooperation is the only way to ensure successful growth. A rule of thumb is that while the towns have concentrated populations and thus require significant infrastructure, they represent only about 30 percent of the county population.

On looking back on this now, an immediate thought springs to mind – where does Fibrowatt fit in with these goals? It potentially would increase the number of jobs, but would sacrifice two or three of these others.

Continuing the review now, with a discussion of tourism in Page County.

Tourism is the economic driver that nobody questions in Page County – but its role in the County creates conflicts with other industries here from time to time, as we saw with the Fibrowatt case. I’ve heard estimates of the number of visitors at SNP as over a million, and a half million at Luray Caverns. The plan acknowledges this with the quote, “Just a few miles in any direction offers visitors a chance to enjoy the abundance of Page County’s natural resources and a range of recreational activities including camping, canoeing, cycling, fishing, golf, hiking, horseback riding, and photography.”

The plan summarizes the impact of tourism, noting expenditures of almost $51 million in 2007, employment of 654 people, and annual payroll of almost $11 million. An occupancy tax generates a budget that is used to promote tourism in the County, guided by the Chamber of Commerce’s Tourism Council. Mary and I have stopped by the Luray-Page visitors’ center and can vouch for how friendly and knowledgeable the staff is; these functions are now housed at the restored Luray train station, making visits to the County memorable.

A new feature of the 2008 plan is a summary for each initiative, presented in something of a scorecard format; at least it is easily adaptable to results reporting in the next update. For each major section of the plan, there is a table that outlines objectives, assigns the lead role, sets a priority for each objective, identifies support roles, and lists resources.

There are four objectives for Tourism. The only “Priority A” objective here is:

“The Director of the Economic Development Department will work with the Executive Director of the Chamber to develop reporting formats for the marketing and financial updates that will be submitted to the Board of Supervisors on a regular basis.”

As I mentioned in past posts, I see the opportunities with tourism as low-hanging fruit in the overall context of economic development for Page County. There’s no question about the natural resources available, you have a solid base of visitors to work from, and you can easily monitor the impacts of improvement objectives.

If less than $200K in promotional funds is all it takes to maintain tourism traffic at 1.5 million visitors, tourism revenues at $51 million, and creating payroll of 654 employees, does simply adding $20K create the opportunity to increase everything by 10%? If that investment won't improve the statistics by 10%, how much will the impact be? If it only creates 10 more jobs, that still seems worthwhile – especially when you compare it to the $7-million plus being considered for clover, or for the millions of dollars in subsidies that would have been offered to Fibrowatt in exchange for 25 jobs.

Seems like an easy place to start to me.

There are two more posts in this wrap up of the 2008 Economic Development Plan. The Agriculture sector is the one I will take a look at next, followed by retaining existing businesses.

Page County EDA 2004 Strategic Plan Recap, Part 2

By far, the driver of the Page County EDA’s 2004 Strategic Plan was “business attraction” – five pages out of a total of 25. That discussion begins “…one key to a sustained economic future will be Page County’s ability to attract new economic development,” before moving into a discussion of how Page competes with other destinations in the state for this kind of investment.


There is an honest assessment of the probability of success for a plan like this. Apparently Page County has traditionally created marketing plans like this without taking the step to explore what industries are suitable, or where high priority investments should be made. This kind of targeting contributes to a higher probability of success. To do it, the community begins by asking itself questions such as:

-What is our niche?
-What types of businesses do we want to attract?
-What should be our strategic priorities: manufacturing, tourism development and promotion, or retail development?

There is a recommendation to take a key step of a chartering a market study and consensus building effort to answer these questions. The goal is to identify the industrial sectors and business types that would be most beneficial in the County. A second goal outlined in this area is an analysis of the types of export opportunities that might exist based on proximity to the Virginia Inland Port in Front Royal.

The rest of the goals in this section – invest in better communications infrastructure, and the transportation infrastructure issues keeps coming up in various ways – address getting the table stakes together before being dealt in to the big hand. Coming down to earth, there is no assessment of how likely a small county like this, 30,000 or so people, is going to attract the kind of economic development investment needed to do these things, simply the observation that Page County must do them.

A second goal in the document addresses the needs of existing business retention and growth. This section begins with the statement “…Page County’s diversified economy, based on the four ‘legs’ of manufacturing, tourism, retail and agriculture, provides an excellent foundation for growth.” There are two key ironies to beginning this section with a statement like this:

• Elsewhere in the report is a note about the lost jobs in the manufacturing sector; in fact, this trained but idle labor pool is part of ‘being ready’ for future new business arrivals; and

• This strategic goal merits only a page and a half of the study, and two objectives, compared to the coverage of attracting new businesses and the lamentations about transportation infrastructure.

Addressing the recent – at the time, although they have continued since 2004 – job losses in the manufacturing sector, this plan reports, “…the strength of Page County’s local economy has allowed the County’s agricultural, housing, tourism, and retail sectors to continue to grow…”, partially offsetting the impacts. Then there is the bottom line – the requirement to come to an understanding of the needs of existing businesses.

As a business person, I’ve found that sometimes the highest payback comes from doing just a little more with the investments already made. It’s different from a “good money after bad” concept – if the fundamentals for success are there, sometimes the little extra of a renewed approach, new tools and technology, or simply, new management, are all it takes to break loose profitability. So I guess I would have liked to see more attention paid to this section.

The strategies listed here are good ones, although I wonder if there was ever any follow-up: undertake a survey of local businesses to ascertain needs, problems, and general perceptions of the business climate; and survey supplier locations and products purchased, using the information to ascertain the feasibility of recruiting common suppliers to the region.

This is where I would start – from strengths. The tourism sector, while taking a bit of a shot during the recession, has remained robust. I’ve never seen the parking lot at the Caverns as it was in the summer of 2009, and on one Friday I saw no less than four camping families arriving with the tell-tale rectangular cylinder of a tent strapped onto the luggage racks. They are coming here for recreation – make sure they have the highest quality experience. Outfitters and groceries are complimentary – make sure these are the best they can be (we have great outfitters, so I mainly am talking about the groceries here!).

Then there is agriculture. Family farms have really suffered and have been in a bad state for decades, but lately there are some new approaches that seem to work – I’ll write about them soon. A county agricultural marketing extension could develop a plan that builds on the sustainability and “buy local” trends that are hot in the big cities right now. Page County is ideally located to serve DC, Richmond, Roanoke, Charlottesville, Baltimore, Charleston, WV, and even Philly and Pittsburgh. Targeting grocers like Giant, Whole Foods, Wegman’s, and Harris Teeter with micro-ag, and seasonally fresh crops, seems to me to be an opportunity.

My next Page County EDA posts will look at the 2008 update to the 2004 plan, and then I will look at the 2009 update. The original posts that were the source of this post are here: http://hawksbillcabin.blogspot.com/2009/06/page-county-economic-plan-2004.html  

Thanks for reading such a long post.
Cabin Jim

Some Page County EDA Background: The 2004 Strategic Plan

Apologies in advance for those who may remember some of my posts on the Page County economy last year – as the blog begins taking a new look at the role and functions of the EDA, it’s necessary to revisit some of the background, starting with the 2004 Strategic Plan. From those original four posts last June, I am going to summarize into two posts before moving on to the 2008 and 2009 updates to the plan. These background posts will be a little longer than I typically would like, so thanks for staying with me.


This original plan was developed by MarshWitt Associates, based in Roanoke, and funded by the Virginia Department of Housing and Community Development. It starts with a section called "An Economic Vision for Page County" as follows:

"Page County's sustainable high quality of life is the result of a diversified economy based on tourism, industrial development, agriculture, and retail and service industries. Existing jobs are being retained, and new high quality jobs are being created in the County. Job growth is the result of the County's educational system and workforce training partnerships that ensure the available of a trained labor force and the County's investment in water, sewer, and transportation infrastructure that has been planned to accommodate existing and future economic development needs."

When I first wrote on the topic of EDA last year, it seemed to me that much of this vision statement was obsolete, or at least overcome by events. However, the report continues, and is organized around guiding principles and an action plan. The executive summary recommends that the County be proactive in these matters, reviewing the plan and updating it based on changing conditions and priorities.

The report lists six economic development "levers" or economic system components:

• Business attraction
• Existing business retention/growth
• Community infrastructure
• Education and workforce development
• Government economic development programs and services
• Transportation

The Plan describes a "high quality of life" in the county - good land prices and a relatively low cost of living, combined with scenic environment in an area bounded by the National Park, GWNF, and the Guest/Shenandoah River State Park. Looking at the resources that would provide a foundation for executing the plan, there is an appropriate focus on transportation and utility infrastructure, a brief consideration of what low land prices for zoned commercial and industrial properties might mean to development opportunity, and a reference to the qualifications of the Page County work force.

The transportation issue creates some of the most challenging constraints on the Page County economy, and in this summary of past posts, it’s the only one I’ll mention. While the intersection of two US highways in Luray might have served as adequate all the way up to the '50's, once the interstate system was built allowing speedy and fast transportation, much of the traffic moved off of the old two lane roads and onto the new four-laners; in Page County's case, that means across the mountain to I-81, or 30 miles north, to I-66.

Effectively, this eliminates most manufacturing from consideration in an economy such as Page County's; reaching into the dark resources of my economics undergrad I seem to recall location theory that suggested proximity to natural resources is one factor, and proximity to market is the other. With the exception of agricultural and food products, we just don't have a driver that justifies manufacturing business location decisions or further development of a larger scale transportation infrastructure.

We could talk about the rail line that goes through town. There is capacity in that system for Page County commerce, as the trains head up to the inland port in Front Royal.  However, those economic theories emphasize that you don't offload goods from transportation unless you are at the source of production or at the market...suggesting that there are no rail oriented activities to be economically located in the County.

That original June 2009 post went on to look at other issues like electrical infrastructure, the impact of land prices, and goals related to developing the local work force. Tomorrow’s post will take a look at a couple of the economic goals outlined in the 2004 plan.

After reflecting on this for the past year, watching the committment the County made to purchasing Project Clover, and the curious pursuit of the Fibrowatt powerplant, I hope that I am finally getting around to an understanding of the County. As a stakeholder - a property owner and a potential business owner - I am interested in understanding the situation so that I can better find a way to make my own contribution to making positive changes.
A link to the original June post is here: http://hawksbillcabin.blogspot.com/2009/06/page-economic-development-plan-review.html

Page County's EDA: Where'd it go off track?

When I talk to my friends and neighbors in Page County, I often hear stories about how the Economic Development Authority (EDA) has good intentions - lofty goals of improving the overall economic condition of the county and bringing all important jobs here.

I'm also hearing repercussion about the decision to turn down the Fibrowatt proposal.  Senior members of EDA sponsored that organization's proposal, which was brought in direct conflict with the EDA's own strategic goals - sacrificing existing businesses for a new one, does not contribute to sustainable agriculture, and potentially inflicts devastating damage to the area's tourist industry.  It is ironic that they would blame the majority of the county's citizens who came out against the proposal for that plant, for their own failure to attract a suitable prospect.

There is a new website up, there are three new county supervisors, so there is positive energy to create an opportunity to get the organization back on track.  This series of posts, maybe one or two a week, will take a look at some past events - things I have only heard about and frankly don't know the facts of...yet - and compare them to my understanding of EDA's strategic plan. 

Examples of what we'll take a look at are:  the landfill development - why it is considered a drain on the local economy; the purchase of a property for county offices that was found to be undevelopable because it lies in a flood plain; and the Hudson farm purchase. 

I'll start with the letter I wrote last year to the PN&C editor, to refresh my own memory on some of the issues.
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Dear Editor:


Although I’m currently a weekender, I’ve been enthusiastically following the county’s economic development discussion and recently reviewed the 2004 and 2008 Strategic Economic Development Plan. Project Clover’s creation of “ready-to-go” sites isn’t the only business concept in the plan. The tourism and sustainable agriculture sectors are given equal importance to the industrial sector; and, in fact, the plan makes retaining existing business a higher priority than attracting new ones: “…business retention is even more critical than business recruitment to the economic viability and growth of the County.”

There are four business retention goals, including: developing educational programs, building partnerships, surveying the needs of these businesses, and identifying companion businesses for future recruitment. The placement of these goals in the plan is significant, appearing as they do before the discussion of any goals related to recruiting new businesses or ready-to-go sites.

The first three goals are given high priority in the 2008 plan, while the last is rated less important. All were to be done with current staff resources – Chamber of Commerce, EDA, or Board of Supervisors resources – and some with current funding. The middle two above – the “relationships building” goal and the existing business survey – require new program funds for implementation; they are unfinished and in roughly the same status they were in the 2004 version of the plan.

These goals have been on the table for five years. With all the valid points being raised on both sides of the land deal, why can’t such a small investment that would contribute to future growth of existing business be justified, especially when the strategic plan makes it a higher priority? Seems to me, it’s a case of low-hanging fruit, where a small funding commitment, along with a better understanding of the tourism and agriculture sectors as possible development investment targets, could be leveraged in a powerful way. I’d love to see a revisit of these items as part of the way forward for the County.

Best regards,
“Cabin Jim”
Stanley and Alexandria