Mike Lloyd
As soon as a community has decided to pursue an industrial attraction strategy and create an industrial park, the planning and construction stage begins. How should the community plan and construct an industrial park?
The planning steps depend on the source of funds used to finance construction. In recent years, the U.S. Department of Commerce, Economic Development Administration (EDA), has funded many communities. Because of downsizing in the federal government, however, the future of EDA funding is unsure. Regardless, this fact sheet presumes that EDA funding will continue to be available under the current terms. In 1996 the Ohio legislature passed H.B. 440 and H.B. 442, both of which will provide assistance for industrial park development in areas of the state designated as distressed by the Ohio Department of Development (ODOD).
A community planning on using EDA funding must:
EDA funding for communities in non-distressed parts of the state is available for up to fifty percent of the cost of industrial park projects. Distressed areas qualify for up to eighty percent funding.
With current efforts of the federal government to curtail expenditures, there is serious concern as to the continued existence of the EDA industrial park program. With the passage of H.B. 440 and H.B. 442, the State of Ohio has created additional tools to help distressed areas of the state create new industrial parks. H.B. 440 creates the Rural Industrial Park Loan Program, which provides loans and loan guarantees for communities to construct or to renovate industrial parks and buildings, and to provide necessary infrastructure improvements to industrial areas. This law will sunset on January 1, 1999. These funds are available to "distressed counties," "labor surplus areas," and "situational distress areas" as determined by ODOD or the U.S. Department of Labor. Ten million dollars will be available in this fund.
H.B. 442 creates the Urban and Rural Initiative Fund, which provides additional grant funds for similar projects in locations similar to those required under H.B. 440. In addition, H.B. 442 provides grant dollars for voluntary actions taken to remediate environmental problems in conjunction with the Ohio Environmental Protection Agency. Ten million in funding is provided for fiscal year 1997, and a total of $20 million is provided for the duration of the program. Like H.B. 440, this program sunsets on January 1, 1999. Both programs provide limited assistance for speculative buildings in the targeted areas.
Even with the availability of outside funding from federal or state sources, communities must commit substantial local funds for these projects. Communities need to make tough decisions about the allocation of funds for industrial park projects and be creative in raising funds. Options such as private-public partnerships, land trusts, bond financing, and other financing mechanisms will need to be considered in conjunction with or, in some cases, in lieu of EDA or other public financing.
The community and the engineer designing the industrial park will need to consider the questions found in the Choosing Industrial Attraction as an Economic Development Strategy factsheet. Much of the information used in planning an industrial park is highly technical. Engineers can help determine the best locations for water, sewer, and other infrastructure within the park. Legal assistance may also be valuable as issues such as zoning, annexation, and restrictive covenants may need to be addressed.
In the keynote speech at the 1995 Ohio Development Association meeting, Buzz Canup of Fluor Daniels outlined two points that local communities should consider in making decisions to invest in local industrial parks.1 First is the difference between "wants" and "musts." A business making a decision about where to locate may have many wants--items that would make the location nicer. The list of musts may be shorter, but each item on it is critical. For example, if a company must have an interstate adjacent to the site and your site is 10 miles from the nearest interstate, you're out of luck! Second, companies are speeding up the site selection process. Often a firm takes no longer than 12 weeks to make a decision. For these two reasons, a community that has sites prepared and available is more likely to meet the company's "musts" list and allow a firm to make a timely decision. Communities that decide to pursue industrial attraction should consider the advantages of developing fully serviced industrial sites and parks.
Additional resources on the development of industrial parks is available from the American Economic Development Council, the Economic Development Institute, Economic Development Review, the U.S. Small Business Administration, and the EDA.
1 Canup, Buzz, Fluor-Daniels Corporation, Keynote Speech at the Ohio Development Association Annual Meeting, Columbus, OH, October 11, 1995.
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