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SHOVEL-READY SITES
From Site Selection magazine, May 2017
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How Do You Certify Success?

SHOVEL-READY SITES
Photos: Getty Images
by ADAM BRIUNS

Risk is a tricky thing: Project developers want to avoid it at all costs, it seems. But every groundbreaking still carries some degree of it, no matter how long a shovel-ready site’s checklist may have been. Nevertheless, utilities, metro areas and states continue to do all they can to prep and certify sites to the best of their abilities.

“The number of companies that have given serious consideration to the Select Tennessee’s certified sites is a benchmark of the program’s success,” said Jonathan Gemmen, director of Austin Consulting, in April,

as four new certified sites were announced, bringing the total to 48 since the debut of the program in 2012.

The ultimate test of shovel-readiness, however, is how many of those companies go from consideration to commitment, and what final shape the activity on the sold parcel takes in terms of created jobs and transacted business.

In Tennessee’s case, the numbers are 10 projects, more than 3,900 committed new jobs and over $1 billion of capital investment. That’s a pretty good success rate, in the same state that gave birth to the whole idea of certified sites via TVA’s pioneering work. Among the successes claimed thus far: Hankook’s commitment to a 1,000-job tire plant that was headed toward a launch in Clarksville this spring; and Aerotropolis Logistics Park, described as “100 acres adjacent to Interstate 240 and, within a few miles of the Memphis International Airport, intermodal facilities operated by BNSF as well as CN and CSX, and the International Port of Memphis.”

That site used to be the Mall of Memphis. Developers Huntington Industrial Partners and Johnson Development Associates Inc. bought it in 2012 for $2.7 million, but failed to land a build-to-suit tenant. So in August 2015 they submitted a 15-year payment-in-lieu-of-tax (PILOT) incentive application to the Economic Development Growth Engine for Memphis & Shelby County for the construction of a new Aerotropolis Logistics Park. As reported by the Memphis Business Journal, it was an unprecedented PILOT application because of its speculative nature. EDGE voted to delay approval, so the developers subsequently sold the land in early 2016 for $3.9 million to TAG Truck Enterprises, a dealership for over-the-road trucks that has a handful of sites across the country. The company will open a new $20-million dealership and service site this coming summer on 40 of those 100 acres, and seeks to sell the remainder of the land around it.

The ultimate test of shovel-readiness is how many prospects go from consideration of your site to a full commitment in the form of job creation and commerce. 

Thus a defunct retail site razed a dozen years ago returns to a different stripe of the retail sector, helping TAG consolidate from four area locations to one, where 165 employees will come to work — good jobs, but not new jobs, often a measure of economic development success.

Meanwhile, the site’s original purchasers in March announced a $30-million I-22 Logistics Park spec development on the Mississippi side of the state line.

It just goes to show you: You can certify land all day long. But when it comes to the market, the community and the human beings on top of that land, risk and growth appear to go hand in hand. A January 2017 document revising program requirements for the Missouri Certified Sites program (29 sites) may have put it best in this disclaimer: “No form of certification or review can completely eliminate the risks inherent to real estate development.”

Keeping Track?

How do other programs measure success? A random survey reveals results that are spotty, but telling.

In South Dakota in February, ground was broken in Brandon for the area’s sixth industrial park, the 80-acre Rovang Industrial Park, located on a South Dakota Certified Ready Site adjacent to the Brandon and Corson development parks and the I-90 interchange. “Brandon represents 10 percent of the acres in South Dakota’s Certified Ready Sites,” said Scott Stern, commissioner of the Governor’s Office of Economic Development. “This community is committed to providing the land to grow our economy.”

The area since 1983 has added 320 acres of industrial park property. “During that time, we’ve added 1,400 new jobs and increased assessable property by nearly $60 million,” said Dennis Olson, vice president of the Brandon Development Foundation. 

With some programs it’s too early to judge success just yet. Ohio’s SiteOhio program in February introduced an enhanced GIS mapping program to its young list of sites. Since the first round of applicants for the program (which replaced the state’s former Job Ready Sites program) concluded in early 2016, five sites have passed muster, including two in Springfield and one each in Leesburg, Mansfield and Northwest Ohio’s Troy Township in Wood County. In addition to the typical infrastructure checklist, each site “undergoes a usability audit to ensure the site is intuitively positioned for optimal access.”

A 2014 overview of the former Job Ready Sites program was presented by the same firm that administers Tennessee’s program, Cleveland-based Austin Consulting. Over four award rounds in seven years, 66 projects received funding to become part of the site program. In Oregon, 23 sites have made the cut as part of a certification program launched by the state in 2011.

Like a college graduate with multiple degrees, multiple site certifications don’t guarantee employment. But they do generally make for solid candidates.

Oklahoma’s Site Ready program includes 38 certified sites. Iowa’s Certified Site program has qualified 16 properties. Louisiana’s programs separate business sites and industrial sites. The Georgia Ready for Accelerated Development (GRAD) Program offers more than 60 pre-checked parcels. The Minnesota Shovel-Ready Certified Site program, launched eight years ago with guidance from Moran, Stahl and Boyer, shows 35 sites on its roster. There are currently 110 Build Now-NY sites across New York State, with 31 certified as Shovel Ready sites. But rare is the program that has reported on its track record.

One of the senior statesmen among certified sites programs is North Carolina’s, launched in 2001. A March 2017 report from the Economic Development Partnership of North Carolina — the program’s administrator since a reorganization of responsibilities with the North Carolina Department of Commerce in 2014 — contains a section titled “Program History and Success,” but only addresses success in terms of numbers of certified sites, not in terms of projects landing on them. After input from communities and from respected site selection firm McCallum Sweeney, criteria changes and a recertification process were implemented in 2009.

Searching the state’s complete site and building inventory reveals sites that have made the grade for some programs but not others. In some cases, non-government site certification programs may save government the trouble: The 348-acre Washburn Switch Business Park in Shelby, for instance, is not on the state’s certified site list, but has made the cut as both a CSX Select Site and a Duke Energy Certified Site.

Like a graduate with multiple degrees, such multiple certifications don’t necessarily guarantee employment. But as Austin’s Gemmen observed, they do make for solid candidates. However, though all may claim it’s an honor just to be considered, the ultimate accolade is a shovel moving that super-qualified dirt aside to make way for industry, jobs and growth.

“No form of certification or review can completely eliminate the risks inherent to real estate development.”

— Disclaimer from a state government description of the 29-site Missouri Certified Sites program, January 2017

Adam Bruns
Managing Editor of Site Selection magazine

Adam Bruns

Adam Bruns has served as managing editor of Site Selection magazine since February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.

   



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