< Previous74 NOVEMBER 2018 SI T E S E L E C T IO NIt’s a WrapA fi nal interview with Site Selection was an opportunity for the governor to take stock of progress made in areas discussed in previous interviews about Georgia’s top national business climate. Following are highlights of that segment of the interview.On education: “I asked the question back at the height of the Great Recession, when we were at . percent unemployment — we’re now at . percent — do we have jobs in Georgia that are going unfi lled because we don’t have enough skilled people to take them? e answer was yes. We started the HOPE Career Grant Program, where percent of tuition is paid for through our HOPE scholarship program. We started with four certifi cate or diploma areas and we’re now up to , and I’m sure those will be added to in future sessions of the General Assembly.” On the lm industry: “One of the categories is in the fi lm industry. We wanted permanency associated with the fi lm industry, and the fi rst sign RANKING METHODOLOGYFifty percent of the overall Business Climate Ranking is based on a survey of corporate site selectors who are asked to rank the states based on their recent experience of locating facilities in them. The other 50 percent is based on an index of seven criteria: performance in Site Selection’s annual Prosperity Cup ranking (formerly the Competitiveness Award); total Conway Projects Database-compliant facility locations and expansion projects in 2017; total projects in 2017 per capita; total 2018 projects year to date; total 2018 projects year to date per capita; state tax burdens on mature rms and on new rms according to this year’s Tax Foundation and KPMG Location Matters analysis.It’s a WrapA fi nal interview with Site Selection was an opportunity for the governor to take stock of progress made in areas discussed in previous interviews about Georgia’s top national business climate. Following are highlights of that segment RANKING METHODOLOGYFifty percent of the overall Business Climate Ranking is based on a survey of corporate site selectors who are asked to rank the states based on their recent experience of locating S I T E S E L E C T I O N NOVEMBER 2018 75of that came with the Pinewood Studios project in Fayette County, where they’ve built sound stages and have been very successful. ey’re fi lling them with movie companies that want to use them. We also wanted a workforce made up of Georgians, not crews coming into town from somewhere else. at’s where the Georgia Film Academy came in for teaching those behind-the-camera skill sets.” It’s a collaborative eff ort of the University System of Georgia and Technical College System of Georgia supporting workforce needs of the fi lm and digital entertainment industries. “ e next big area we’re anticipating is on the creative writing side of things,” says the governor. “We want resources for the bright minds who will fi gure out what the next television series will look like. We want them to be here in Georgia and to be Georgians if possible.” e fi lm industry has an economic impact well north of $ billion. It employs more than ,, a third of which are direct Georgia jobs.On workforce and the Quick Start training program: “It continues to be one of the great ingredients available to us, to be able to train prospects’ workers to the skill sets they need without any cost to the company.”On scal soundness: “We have hopefully laid the foundations we needed to — we’re now in excess of $. billion dollars in our rainy day fund,” says Gov. Deal. “I originally set a goal of $ billion. It’s one of those indicators of how fi nancially solvent a state is — along with maintaining our AAA bond rating for consecutive years. Very few states can make that claim.”On whether investors used to thinking of Georgia as consistently having the top business climate should view the state any di erently as new leadership prepares to assume o ce in January : “I don’t think so. My intent was to put the roots down so deep that it would be very diffi cult for anybody to pull them out,” says Deal. “I believe that has occurred. Members of the General Assembly, regardless of party affi liation, supported almost every one of these areas, because they are good for their constituents. When you put politics aside and realize your real purpose is to do the best you can for the future of the citizens that elected you and for their children and families, then I don’t believe you will depart from the principles we have put in place.” of that came with the Pinewood Studios project in Fayette County, where they’ve built sound stages and have been very successful. ey’re fi lling them with movie companies that want to 76 NOVEMBER 2018 SI T E S E L E C T IO NStaying Power: How Winning Communities Keep WinningAmping up engagement with the C-suite nurtures home-grown business expansions.Among successful economic developers it has become a truism that attracting new businesses, while sexy, pales in value in comparison to retaining existing companies and helping them grow. It’s easier and less expensive to keep an existing business than to recruit a new one, and the rewards can be enormous.“Eighty-fi ve to percent of our growth is expansions as opposed to attractions,” says John Urbahns, executive vice president for Greater Fort Wayne, Inc., which promotes economic development in an -county area of northern Indiana.Face-to-face meetings with C-suite executives remain the bread and butter of any retention eff ort. Beyond that, development agencies are crafting individual strategies that play to their region’s strengths and shore by G ARY DAUGHTERSgar y.daug hter s @ site s ele c tion.c omBUSINESS RETENTIONCharleston, South CarolinaPhoto: Getty Images S I T E S E L E C T I O N NOVEMBER 2018 77up weaknesses, with an increasing emphasis on demonstrating support for the needs of individual enterprises.Charleston, South Carolina: Customer CareCharleston County won a major prize in October when MAHLE Behr, a supplier to the automotive industry, announced plans to add a new assembly line to its facility in North Charleston. The $36-million investment is projected to create 115 jobs.“We always love to see new companies locate in North Charleston, but nothing tops seeing an existing company expand their operations within our city,” said North Charleston Mayor Keith Summey.Charleston County Economic Development (CCED), with a staff of 11, devotes two full-time specialists strictly to business retention and expansion. Another staffer kicks in part-time, while executive director Steve Dykes oversees the operation. Dykes says the focus on retention has “paid off in spades.”Since 2013, 26 existing companies have launched expansions in the Charleston region representing $674 million in capital investment and 3,216 jobs. Coming on the heels of a record 17 expansions in 2017, Charleston had accumulated a dozen more through the first 10 months of 2018, accounting for $80 million of investment. The heart of CCED’s retention strategy is its award-winning “Business Concierge Program,” which caters to the needs of local industries. Jennifer Brown, CCED’s director of business retention, calls herself a “case worker” on behalf of area businesses.“Once a company chooses Charleston County,” Brown tells Site Selection, “we hold their hands for the life of the company. We keep tabs on our companies and help where we’re needed. Nothing is too large or too small. If they need welders, we can help them with that. If their parking lot’s flooded or there’s a tree down and they don’t know who to call at the city, we’ll fix that for them.”In some cases, the best offense is a good defense.“We’ve had more than one occasion,” says Dykes, “where we pulled one out of the fire, so to speak — where we had local leadership at a company reveal to us that there were plans afoot that could jeopardize their existence or pull them off to another city or even another country. And we’ve been able to intervene and stave off that type of thing.”78 NOVEMBER 2018 SI T E S E L E C T IO NAnother loud validation of the CCED strategy occurred in September, with the completion of an expansion by Mercedes-Benz Vans, which came to North Charleston in . e $-million project is projected to create some , new jobs, with suppliers adding an estimated jobs around North Charleston.Bowling Green, Kentucky: Workforce DevelopmentBowling Green, Kentucky, is a perennial top- fi nisher among Site Selection’s Top Metros with populations under ,. In , the city tied for second, and for the fi rst months of this year, Bowling Green ranks fi rst in the nation for business expansions per capita.Ron Bunch, president and CEO of Bowling Green Area Chamber of Commerce, initiated a heavy emphasis on business retention when he took the job nine years ago.“One of the fi rst things I did when I came on board,” Bunch says, “was to put existing business retention and expansion programs directly under my leadership.” He devotes some percent of his time to retention and talent development, which he considers to be inextricably linked. “Our focus on talent,” he says, “is our number one tactic for what we do in economic development. at’s what will determine the strength of our existing companies.” e Chamber tracks and publicizes job openings and runs a training consortium that can craft instructional classes for businesses on demand. “Pretty much anything they want,” says Bunch, “if we can build a class for at least people, we will procure it and off er it.” e Chamber raised $. million to launch e Leader in Me in public schools in to teach leadership skills sought by employers to all K- students. Last year, the Chamber and local school systems kicked off SCK Launch, which aims to instill hard skills to make high school graduates immediately employable in a number of sectors.“SCK Launch can help us identify talent in high schools for hiring as soon as students graduate,” Another loud validation of the CCED strategy occurred in September, with the completion of an expansion by Mercedes-Benz Vans, which came to North Charleston in . e $-million project is projected to create some , new jobs, with suppliers adding an estimated jobs around North Charleston.my leadership.” He devotes some percent of his time to retention and talent development, which he considers to be inextricably linked. “Our focus on talent,” he says, “is our number one tactic for what we do in economic development. at’s what will determine the strength of our existing S I T E S E L E C T I O N NOVEMBER 2018 79says Steve Minns, president of the Bowling Green division of Illinois-based Reinhart Foodservice. Reinhart in August launched a $.-million expansion of its Warren County operations, and expects to add workers to its current staff of .Fort Wayne, Indiana: Instilling a Sense of PlaceFor a city of ,, Fort Wayne, Indiana, has punched above its weight this year. With six qualifying expansions gleaned from the Conway Projects Database, Fort Wayne ties for fourth in expansion projects per capita.Fort Wayne’s biggest business retention challenge, Urbahns says, is one common to the Upper Midwest: demographics. e city’s population, he says, has been growing at a paltry . percent, which exacerbates prevailing workforce issues.“Talent is a big challenge for our employers,” says Urbahns. “We’re focused heavily on domestic migration issues to try to position the community as a place where people want to come as opposed to a place people want to move away from. We’ve made a lot of eff orts on quality-of-place improvements within our community because we feel that’s a major piece of migration.”Parkview Field, completed in as a home for the Fort Wayne Tincaps of minor league baseball, has served as a catalyst for downtown renewal, spurring a mini-housing boom.“We’ve seen about $ million of investment since the ballpark went in, with buildings being improved and new ones being built,” says Urbahns. Fort Wayne has turned its attention toward the summer of , and the planned opening of the fi rst of three phases of a $-million public space along the St. Marys River. Minnesota’s Continental Property Group is planning a $-million residential and commercial development along the St. Marys riverfront, characterized by Mayor Tom Henry as “a point of destination for economic development opportunities, job growth and quality-of-life amenities that are attractive to businesses, individuals and families.”For Urbahns, face-to-face time with business leaders off ers a chance to rally interest in propelling Fort Wayne forward.“When we go out and talk to companies, we talk to them not just about their business, but we give them a sense of what’s going on in the community and the ways that they can get involved. We feel as though we’re starting to turn a corner.” says Steve Minns, president of the Bowling Green division of Illinois-based Reinhart Foodservice. Reinhart in August launched a $.-million 80 NOVEMBER 2018 SI T E S E L E C T IO N80 NOVEMBER 2018 SI T E S E L E C T IO NOPPORTUNITY ZONESPay as little as $0 in capital gains on your next decade of investment returns. by SE AN G ARRE T SONe ditor @ site s ele c tion.c omWHAT YOU NEED TO KNOW ABOUT OPPORTUNITY ZONESEconomic development consultant and developer Pegasus Planning and Development is always looking for new ways to revitalize communities and reduce tax liability for investors. e latest tool for investors and community developers is the community development and tax deferment program referred to as Opportunity Zones. In order to attract investors, cities will need to prepare for the potential investment infusions and will need to market their respective Zones for development. Developers, investors, and businesses must be informed of where the Zones are located and how to utilize this new tool in diff erent cities.Opportunity Zones were developed as a response to the uneven economic recovery from the Great Recession from -. While the U.S. national economy is celebrated for its strength and resilience today, far too many communities are still being neglected in the midst of a prolonged economic expansion. S I T E S E L E C T I O N NOVEMBER 2018 8182 NOVEMBER 2018 SI T E S E L E C T IO N e geographic distribution of jobs, businesses, and wage gains during the economic recovery has been highly concentrated in urban areas. As of the end of , less than one-quarter of U.S. counties had re-acquired all of the businesses that were lost to the recession. is regional inequality within the United States has been recognized as one of the defi ning economic challenges of our era. Opportunity Zones are the fi rst major federal eff ort to address this obstacle, and most pundits believe this will pay dividends for communities and investors across the U.S. e Tax Cuts and Jobs Act of established Opportunity Zones in low- to moderate-income census tracts in urban and rural areas. Every state now has designated Opportunity Zones. e IRS just recently published the latest set of rules and regulations for Opportunity Zones (//) and they can be found here - https://www.irs.gov/pub/irs-drop/reg--.pdf.How Opportunity Zones Work e Opportunity Zones program is designed to incentivize patient capital investments in low-income communities nationwide. All of the underlying incentives relate to the capital gains tax. ese incentives are tied to the longevity of an investor’s stake in a qualifi ed Opportunity Fund, providing the greatest return for those who hold their investment for years or more. Opportunity Zones are designed to spur economic development by providing tax benefi ts to investors. First, investors can defer tax on any prior gains until the earlier of the date on which an investment is sold or exchanged, or December , , so long as the gain is reinvested in a Qualifi ed Opportunity Fund. Second, if the investor holds the investment in the Opportunity Fund for at least years, he will be eligible for an increase in basis equal to the fair market value of the investment on the date that the investment is sold or exchanged. is IRS program will allow any taxpayer to defer paying tax on capital gains from the sale of property if those gains are invested in Qualifi ed Opportunity Funds. Further, these investors must devote percent of their assets to businesses located or property used in a low-income community. e Opportunity Zones program off ers three tax benefi ts for investing in designated low-income census tracts through a qualifi ed Opportunity Fund: 1. A temporary deferral of inclusion in taxable income for capital gains that are reinvested in an Opportunity Fund. e deferred gain must be recognized on the earlier of the date on which the Opportunity Zone investment is disposed of or December , . 2. A step-up in basis for capital gains that are reinvested in an Opportunity Fund. e basis is increased by percent if the investment in the Opportunity Fund is held by the taxpayer for at least fi ve years and by an additional percent if held for at least seven years, thereby excluding up to percent of the original gain from taxation. 3. A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least years. is exclusion only applies to gains accrued after an investment in an Opportunity Fund.An Opportunity Fund is easy to create. To become a Qualifi ed Opportunity Fund, an eligible taxpayer self-certifi es — no approval or action by the IRS is required. To self-certify, a taxpayer merely completes a form, which will be released before the end of , and attaches that form to the taxpayer’s federal income tax return for the taxable year. Opportunity Funds:• must be certifi ed by the U.S. Treasury Department. • must be organized as a corporation or partnership for the purpose of investing in Qualifi ed Opportunity Zone Property. • must hold at least percent of their assets in Qualifi ed Opportunity Zone Property. • Qualifi ed Opportunity Zone property includes newly issued stock, partnership interests or business property in a Qualifi ed Opportunity Zone business. • Opportunity Fund investments are limited to equity investments in businesses, real estate and business assets that are located in a Qualifi ed Opportunity Zone. Loans are not eligible for the tax incentives. Opportunity Fund investments in real estate are subject to a substantial rehabilitation requirement.For example: Jane sells her business for a $-million capital gain in December . She fi nds a limited partnership that is seeking S I T E S E L E C T I O N NOVEMBER 2018 83Next >