< Previous178 SEPTEMBER 2018 SI T E S E L E C T IO Nas anyone can do to be pro-business. But the state has to follow. e counties have to follow. Some counties do. Howard County is one. Anne Arundel County is another. Prince George’s has made incredible strides. But other places haven’t quite fi gured out how to be friendly to business. Montgomery County is one of those.”Clinch also believes that reviving the fortunes of the state’s largest city could go a long way toward making Maryland more competitive.“ e country has had an unprecedented period of years of urban growth, and Baltimore as a city has more or less missed out on that because of a variety of issues. e real common area for the state to work together is in how to reverse the problems of Baltimore city. If you could turn Baltimore city into a growing area with even half the growth rate of D.C., the state would be a much better and more competitive place. Some of the last really nice developable properties are in Baltimore.”No. 38: DELAWAREDelaware was ranked the th best state for business, up two spots from . Buoyed by a fi rst-class workforce (No.), the First State is hobbled by high business costs (No. ), access to capital (No. ) and infrastructure (No. ). e state is taking steps to shore up the latter two sore spots. In May the state legislature passed, and Gov. John Carney signed, an angel investor tax credit known as the Job Creation and Innovation Act for Small Technology Companies. Carney, a e view of Maryland as a place to do business has signifi cantly improved under the Hogan Administration.”— Richard Clinch, Director, Jacob France Institute e view of Maryland as S I T E S E L E C T I O N SEPTEMBER 2018 179Democrat, had proposed the credit in his 2018 State of the State address. The new law provides a 25 percent tax credit, up to $125,000, to each angel investor who invests over $10,000 in a qualified Delaware company with fewer than 25 employees. Helen Stimson, president and CEO of the Delaware BioScience Association, says the incentive will make it easier for entrepreneurs to get started. “We are delighted,” said Stimson, “to have this new Angel Investor Tax Credit program to entice investors to support our startup companies. This benefit, coupled with Delaware’s attractive R&D tax credit program, provides key benefits needed to keep our innovators in the state.”In late July, Gov. Carney announced a major infrastructure initiative aimed at eliminating so-called “broadband deserts” in rural parts of the state. The goal is to offer reliable high-speed internet to every Delaware resident and business within two years.“It seems run of the mill, but it’s anything but,” says William Kurt Foreman, president and CEO of the public-private Delaware Prosperity Partnership. Foreman tells Site Selection that the state is “building out broadband access in what were internet deserts in the past to allow companies, residents, and farmers to have a competitive opportunity to operate out of a small town without the handicap of not having good access.”In another bid to modernize Delaware’s infrastructure, the state agreed in April to grant a long-term lease for the Port of Wilmington to international port operator Gulftainer. Gulftainer, based in the United Arab Emirates, wants to invest some $574 million to retool the existing port and build a new container terminal on the Delaware River. Delaware Secretary of State Jeffrey Bullock says the agreement could double the estimated 5,700 port-related jobs in Delaware and could also lead to a doubling of container ship traffic in and out of the port.“This,” said Carney, “is a really big deal.” 180 SEPTEMBER 2018 SI T E S E L E C T IO NWith a boost from shale reserves, Pittsburgh International Airport is ready to soar.ST A TE SPO TLIGHTPennsylvaniaPittsburgh International Airport is enjoying an impressive resurgence, following the gut punch that struck it in when U.S. Airways shuttered its hub and millions of annual passengers vanished. e nadir may have come in when the airport, nearing default, tried to hire a new director but found no qualifi ed takers, according to Rich Fitzgerald, Allegheny County Executive.“With the loss of passengers, the fi nances were so bad that no one really wanted the job,” says Fitzgerald. Today, Pittsburgh International is poised at the brink of a four-year, $.-billion modernization while adding passengers, airlines and nonstop fl ights and pondering a potentially lucrative commercial development of thousands of acres of unused property. What accounts for the turnaround?As it turns out, star-crossed Pittsburgh International — much like airports in Denver, Dallas and Oklahoma City — sits on top of signifi cant reserves of natural gas.“ at,” Fitzgerald tells Site Selection, “really started to change everything.”In , the Allegheny County Airport Authority leased approximately , acres (, hectares) to Pennsylvania-based CONSOL Energy, Inc., and received an up-front bonus payment of $ million. Nineteen-percent royalty fees averaging nearly $. million per month, according to airport spokeswoman Alyson Walls, started fl owing at the beginning of when CONSOL began to draw gas from the ground.“We’re probably looking at about $ million to $ million in on-going royalties over the next by G ARY DAUGHTERSgar y.daug hter s @ site s ele c tion.c omAbove: Pittsburgh International Airport will undergo a $1.1-billion modernization beginning next year.Rendering courtesy of Allegheny County Airport Authority182 SEPTEMBER 2018 SI T E S E L E C T IO Nyears,” says Fitzgerald.“It’s made it possible to for us to make smart investments in our future, and that includes the modernization program,” says Christina Cassotis, the Airport Authority’s CEO.The ambitious modernization, to begin next year, looks to be the most tangible return from the airport’s shale reserves. Built in the 1980s to accommodate 35 million annual passengers, Pittsburgh International expects to set a post-hub high of some 9 million passengers this year. “We have an airport,” says Fitzgerald, “that was built for something that no longer exists.”Smaller Is BetterThe former U.S. Airways terminal will be demolished and replaced by updated ticketing space, security and boarding areas as well as a new parking deck and a reconfigured international arrival concourse. A train that runs between the two existing terminals and costs millions of dollars a year to operate will be eliminated, as will several dozen gates. One of four existing runways might go away. Officials expect to cut per-passenger costs by 25 percent and thus offer lower fees to the airlines.“We are going to be very well situated to absorb aggressive growth going forward,” Cassotis tells Site Selection. “This is really about right-sizing and lowering costs.”Cassotis has held the airport’s leadership role for three years, a period during which nonstop destinations doubled from 37 to 74 while new airlines including Spirit, Frontier and Allegiant entered the market and existing carriers added flights. In 2017, the airport added nonstop flights to Reykjavik, Iceland, and Frankfurt, Germany, plus nonstop service to Montreal and Seattle. Recently, it welcomed two promotional flights from Shanghai and announced the resumption of service to London for the first time in nearly two decades. The four-day-a-week flights by British Airways will commence next April.“The non-stop flight to London will absolutely make a difference in our ability to sell our region and attract increased investment,” says Cassotis. “It’ll bring more tourists into the area. “This community,” she says, “understands really clearly that the airport is an economic generator, because when it doesn’t work at capacity in terms of serving the local market, then everybody suffers. As we’ve brought back flights, we know that this has a huge positive impact on the regional economy.”Filling in the BlanksPittsburgh International Airport sits on 8,800 acres (3,561 hectares), 3,000 of which are undeveloped. Office parks on the property already house call centers and warehousing, and Dick’s Sporting Goods has its headquarters at the end of a runway, complete with its own hangar. Officials are awaiting the completion of a land-use study with the idea of launching commercial development on a much broader scale. “What gets situated on that land,” says Cassotis, “is as impactful as the airline service that comes in. We want to know what should be there, what types of industries will really serve the region well and will help with the region’s goals. Pittsburgh’s economy has diversified into high tech, energy, higher education, healthcare and finance. So, what can we do at the airport with our land in order to see that one and one make three?”Fitzgerald says the expected 2021 completion of Royal Dutch Shell’s $6-billion ethane cracker 10 miles away could have spinoff effects that will knock at the airport’s doors. “Along that corridor between the cracker plant and the airport, we envision that there’s going to be a lot of manufacturing opportunities for us.”To further leverage Pittsburgh International’s shale reserves, the Airport Authority will soon accept proposals for a natural gas microgrid to power the airport and to help lure manufacturing with the promise of cheap energy.“Not only are we going to develop that land,” says Cassotis, “but we’re hoping to offer the people who locate on it a low market rate energy cost. So, it’s a self-perpetuating loop. The industries that lend themselves to caring a lot about lower energy costs are in advanced manufacturing and data, so we think there’s a real opportunity to look at the intersection between that and those who want some proximity to an airport.”Airport CEO Christina Cassotis greets passengers from an inaugural Shanghai charter flight.Photo courtesy of Allegheny County Airport Authority184 SEPTEMBER 2018 SI T E S E L E C T IO NThe Marcellus Shale has been underneath Pennsylvania for eons, but the extraction of natural gas from it is quickly changing the state’s economic landscape. According to the U.S. Energy Information Administration, the shale gas “fracking” boom in Pennsylvania and other Appalachian states has been the chief driver of growth in U.S. natural gas production since . Pennsylvania, the EIA says, now accounts for percent of total U.S. natural gas production.David J. Spigelmyer is president of the Pittsburgh-based Marcellus Shale Coalition, the region’s largest shale development trade association that he helped found a decade ago. Even as natural gas extraction already has a profound impact on the region’s economy, he says the industry is just getting started. (For the complete version of this interview, see the September edition of e Site Selection Energy Report e-newsletter, at www.siteselection.com.)Site Selection: Is the shale industry Pennsylvania’s golden goose?Spigelmyer: Yes. I think it’s fair to say that what’s happened in Pennsylvania as a result of shale gas development is certainly fi tting into that category even though we’re very much in the fi rst inning of a nine-inning game. We’ve got lots of opportunity still ahead of us. A lot of folks were very much focused on the jobs being developed on the upstream side of the business, or the drilling phase of development. And there’s been a fair amount of attention now on the pipeline development side and some of the upscale manufacturing operations around the [Shell] petrochemical facility being built in Beaver County and the Marcus Hook facility in the southeastern part of Pennsylvania.Over the next decade and beyond there will be a very heightened level of attention being paid to the fact that we’ve got some of the more aff ordable energy available of all advanced countries across the world to re-invigorate and grow new manufacturing jobs across not only Pennsylvania but across our country … Today, one in three electrons across the country are being generated with natural gas in our power generation sector.What’s been the effect of the shale boom on manufacturing in Pennsylvania?Spigelmyer: I’ll call it a ring buoy. We’ve thrown the ring buoy out to manufacturing. Natural gas selling in the winter of was at $. a decatherm for an MMBTU. Today that same commodity in Pennsylvania is being sold at less than fi ve dollars at every single utility. And if you’re buying it on an open market, in some cases you’re buying gas for as little as a dollar or two. So, the savings to end-use consumers has been dramatic. At every single utility across the state it’s been a savings of at least percent and it’s been as high as percent on the purchased natural gas costs that go to in-state utilities. What’s been the effect on job creation?Spigelmyer: e eff ect on job creation has been extraordinary. And it’s not just in the upstream side of our business, but it’s also in the supply chain or induced jobs that have been generated. One study that was completed recently by McKinsey was called “Forge the Future,” and as we take a look at advanced manufacturing, increased gas-fi red power generation, petrochemical clusters, export potential, there is the potential of $ billion of GDP growth between now and . More than , new jobs have been identifi ed by McKinsey if we play our cards right and we embrace policies to promote this industry in the Commonwealth of Pennsylvania.Governor Tom Wolf has said Pennsylvania is the only state that does not tax drillers. Is that accurate?Spigelmyer: I think we all know the answer to that, including the governor. In , we that category even though we’re very much in the fi rst inning of a nine-inning game. We’ve got lots of opportunity still ahead of us. A lot of folks were very much focused on the jobs being developed on the upstream side of the business, or the drilling phase of development. And there’s been a fair amount of attention now on the pipeline development side and some of the upscale manufacturing operations David J. Spigelmyer186 SEPTEMBER 2018 SI T E S E L E C T IO Npassed Pennsylvania’s version of a severance tax. We called it an impact fee. It’s generated $. billion that has spread to all counties in the state. It’s been an enormous economic winner to counties across our state as well as the path to fund government programs that had not had a funding path prior to . What Governor Wolf has proposed to do is pancake one tax on top of another, potentially creating an uncompetitive climate for investment in Pennsylvania. As the trade association that represents the upstream and midstream side of our business, we’ve pushed back because we think that’s a short-sighted approach that will lead to less capital investment and will not stimulate but thwart job growth in Pennsylvania. We’re working hard to make sure that those kinds of policies aren’t embraced broadly across the state.At 60 stories and 1,121 feet (341 meters) tall, the new Comcast Technology Center is the tallest building in the City of Brotherly Love, surpassing the 975-ft. Comcast Center completed in 2017. Comcast workers began moving into the massive edi ce — also home to a tech startup accelerator — in late July. Developer Liberty Property Trust reported in April that the project’s cost had risen to $1.5 billion.BOSS IN TOWNBOSS IN TOWNBOSS IN TOWNWhich state programs has the impact fee on drillers benefited?Spigelmyer: There’s a ton of them. The Marcellus Legacy Fund has funded not only road and critical infrastructure projects but greenways and green space, rails to trails, and water and sewer infrastructure. The $1.43 billion of investment has enabled our Department of Environmental Protection to go from 60 compliance inspectors for the industry to nearly 200 today because of the investments made through the impact tax that was imposed in 2012.How is Pennsylvania holding drilling companies accountable for the indirect costs of fracking?Spigelmyer: I would love to have a debate over the indirect costs of fracking, because the indirect cost of fracking is the most affordable energy on the planet that is creating enormous opportunities not only here in our own country but alleviating energy problems across the globe. We have 1.3 billion people across the planet that don’t have the things that we enjoy today. They don’t have affordable or available electricity, which means they don’t have running water, they don’t have sewage, they don’t have refrigeration, they don’t have heating, they don’t have cooling and as a result they have shorter life spans. Natural gas is a tool to change that dynamic long-term. We’ve been hydraulically fracturing natural gas wells in Pennsylvania since the mid-1940s. It’s not a new technology. The new technology is the ability to turn a drill bit horizontally that enables us to produce far more of the geologic formations than we ever thought possible. Hydraulic fracturing is a five-day completion process in the 50- or 60-year life of a natural gas well, and it’s a process that’s been very much beneficial to the public, not harmful.You mentioned that you’re in the first inning of a nine-inning game. Which inning is it for pipeline infrastructure?Spigelmyer: We’re in the early phase of our development of our shale resources. We need to modernize our infrastructure, not only to get gas to critical communities in Pennsylvania, but to get out natural gas resources broadly across the country and potentially abroad. Next >