Virginia needs to get serious about ‘megasites,’ outgoing official says

In 2016, the Virginia Economic Development Partnership, the state’s leading economic recruiter, was in desperate trouble.

 

It was not vetting new corporate prospects and was shoving money and other goodies through the door, according to a scathing report by the Joint Legislative Audit and Review Commission (JLARC), a watchdog for the General Assembly.

 

A leading example was Lindenburg, a Chinese company that got $1.4 million in incentives for a planned manufacturing plant in Appomattox, according to the Roanoke Times. After getting the money, the firm defaulted on its pledge to build the plant. The firm had approached North Carolina officials with the same idea, but they actually checked into the firm and steered clear. 

 

This helped lead to VEDP hiring a ringer in January 2017– Stephen Moret, a top economic development official from Louisiana who promptly started to clean things up.

 

He succeeded, according to business executives, editorial writers and others. “He did a masterful job at raising Virginia’s image,” says Jennifer Wakefield, president and CEO of the Greater Richmond Partnership.

 

But Moret left VEDP last year to become the top executive at Strada Education Network, an Indiana-based firm that promotes business education. Jason El Koubi, another Louisiana official hired by Moret, is now the interim VEDP director. A permanent choice is not expected until this spring.

 

Who is picked will be key to keeping up with the reforms at VEDP.

 

In a lengthy email to the Mercury, Moret wrote: “In collaboration with staff, partners and policymakers, we worked over 18 months or so to implement substantially all of JLARC’s dozens of recommendations, including those related to VEDP’s performance, accountability and risk management deficiencies.”

 

Besides better vetting of new business prospects, the Moret regime emphasized expanding high-level education, especially in computer technology. Moret says that doing so was key to attracting behemoth internet retailer Amazon to Arlington for its second headquarters. Doing so goes beyond merely offering tax incentives and other usual benefits.

 

“The centerpiece of Virginia’s HQ2 bid was the creation of the $1.1 billion Tech Talent Investment Program, which is doubling the statewide number of bachelor’s and master’s degrees in computer science and computer engineering,” Moret wrote.

 

Moret, who has a doctorate in higher education management from the University of Pennsylvania and an MBA from Harvard, also helped create the Virginia Talent Accelerator Program to beef up Virginia’s workforce, especially in manufacturing technology. He started a similar program in Louisiana modeled after one in Georgia.

 

One major shortcoming at VEDP is its failure to push the state into doing a better job at creating so-called “megasites,” which are tracts of land for new businesses that are ready-to-go with infrastructure such as water, sewers, roads and electricity. They can range in size from 250 acres to more than 1,000 acres.

 

“My biggest disappointment is that we were not able to convince state leaders to make substantial investments in prepared development sites several years ago. Over the years, Virginia lost out on many large advanced manufacturing projects,” Moret wrote.

 

One example is Intel, a semiconductor maker that was looking at a site in western Chesterfield County, Wakefield says. “Chesterfield was a finalist but Intel chose Columbus (Ohio),” Wakefield notes.

 

The lack of such sites, Moret said, is one reason other Southern states such as North Carolina and Georgia regularly beat Virginia when it comes to attracting big advanced manufacturing projects.

 

During last year’s gubernatorial campaign, Glenn Youngkin, a Republican who beat Democrat Terry McAuliffe, complained that Virginia was falling behind in jobs creation. Moret wrote that Youngkin “was correct in that assessment.”

 

“While Virginia generally has experienced positive employment growth and relatively low unemployment, the commonwealth has underperformed the leading employment growth states for many years, really going back to (recent) BRAC (Bases Realignment and Closure of military facilities) and sequestration.”

 

He notes that CNBC last year cited Virginia as being the best state in the country for doing business, but that’s in large part to its good educational programs and high quality workforce, he wrote.

 

As far as getting up to speed on super sites, El Koubi, VEDP’s interim director, said former Gov. Ralph Northam put about $150 million for that purpose into his proposed budget. Youngkin added another $14.4 million.

“We believe that amount of funding ($150 million) would be sufficient to bring a handful of mega sites and 10-20 medium-sized sites up to project-ready status, which means that building construction could take place in 12-18 months or less, with all infrastructure improvements in place,” El Koubi said.

 

El Koubi is one of the candidates to be Moret’s permanent replacement and says its board may make a decision this spring.  He notes that Moret recruited him from Louisiana to help give VEDP a makeover. “I’ve known Stephen for more than 25 years,” he says.

Correction: This article has been updated to correct a reference to advanced manufacturing projects and the purpose of the Virginia Talent Accelerator Program. Quotations from Jason El Koubi and the amount of money Northam allocated for site preparation have also been clarified.