EDCUtah pushing mega sites to boost appeal for large firms

By Brice Wallace

Utah economic development officials are hoping that mega sites will have mega benefits for Utah.

Speaking at a recent gathering of ULI Utah and NAIOP Utah, a representative of the Economic Development Corporation of Utah (EDCUtah) said the organization’s program to certify and market large sites will bolster the state’s ability to compete for large-scale projects that could mean high capital investment and/or high employment numbers for companies that select the sites.{mprestriction ids="1,3"}

Katherine Morrell, EDCUtah community strategist and manager of the Utah Mega Sites program, listed several companies that Utah had sought but instead put their projects elsewhere. They include Toray Industries, with a 500-job, $1 billion project that ended up in South Carolina; Mitsubishi, a 500-job, $325 million facility in Georgia; Volkswagen, a 2,000-job, $1 billion project in Tennessee; SeverStal, a 650-job, $625 million project in Mississippi; and Teijin, a 220-job, $600 million project in South Carolina.

“This wasn’t because we didn’t have a workforce that suited the area or that we weren’t prepared for them or anything like that,” Morrell said. “It’s because we lacked any available real estate that they were actually looking at. … There are these companies that weren’t looking at Utah. We didn’t have certified sites, so they’d bypass us completely.”

In Utah, the mega site program is designed to decrease risk for potential companies and expedite the site selection process by ensuring that a location has at least 400 acres with 80 percent contiguous buildable area; a limited number of owners, all of whom are willing to commit to the program; existing or future infrastructure at or near the site; a two-year lock on listing price; and defined state and local incentives.

The state’s goal is to have mega sites attract projects that will have up to 1,000 jobs and/or up to $1 billion in capital investment. Morrell said potential mega site projects include data centers, manufacturing plants or transportation/distribution facilities.

An 1,100-acre pilot site in Elberta has advanced to the second stage of a two-stage certification process, along with sites in Eagle Mountain and Salt Lake City’s Northwest Quadrant. In an earlier stage are sites in Iron Springs, Millard County and West Jordan. This spring, Washington City annexed an 840-acre parcel near the St. George Regional Airport with plans of creating a potential “mega site,” according to the St. George News. Potential uses include using a self-driving vehicle test track, manufacturing and aviation-related industry, it said.

EDCUtah offers grants to help pay for the first-stage certification costs. The second-stage costs are born equally by municipalities, landowners and the state.

“We wanted to be proactive in our economic development, and that meant we wanted to choose where these sites were going to go,” Morrell said. “We didn’t want to be reactively searching, last-minute, for a site, especially when we only have a week or two to respond to these large companies.”

Utah isn’t alone in the mega sites realm. South Carolina has several sites, including one as large as 3,882 acres. One site acquired in 1986 by L&C Development Corp., a subsidiary of Lancaster & Chester Railroad, is now home to a Giti Tire manufacturing plant. The $560 million first phase involves 1.8 million square feet and 1,700 jobs on a 220-acre pad that is part of the 1,152-acre location between Charlotte, North Carolina, and Columbia, South Carolina. L&C acquired the site for $900 per acre and sold it for $20,000 per acre.

The mega sites there are a way for the area to rebound from eight to 10 textile facilities closing and the resulting unemployment rate reaching 20 percent, plus children moving away because of a lack of job opportunities, according to Matt Gedney, chief business development officer and vice president of industrial development at holding company Gulf & Ohio Railways.

“There was a big push toward getting large projects. It took a long time, but I think everybody kind of rallied around the idea,” he said.

Gedney noted that several states, including South Carolina and Texas, have established, strong mega site programs as a way of standing out among competition for large projects. “As far as developing a mega site program, you really are trying to create a transformative project for a community,” he said. “These large manufacturers, they’re looking at not just your region of the country. They’re looking all across the country.”

Companies that select mega sites can be very specific about what they’re looking for, but their economic benefits are large, he said. “You have a company, they’re investing $500 million or $1 billion or more, they’re planning on being there for 30 or 40 years, so they’re going to get that site just right, that building just right,” Gedney said.

States without mega site programs likely are working at a disadvantage, he said. “If you don’t have an inventory of sites, you can’t put something in front of the company, so I think there are a lot of missed opportunities from the mega site front,” he said.

A concern raised during the event’s question-and-answer period focused on workforce and the effects that a mega site company could have on local labor availability. Gedney cited one example where a new company prompted an existing business to boost its starting pay by 20 percent as a way to keep workers.

“These mega factories are very confident in their brand and the quality of the work environment that they’re going to have in the community, [and] they see that they will be able to pull some [employees] from the existing industry,” he said. “There’s going to be some churn. It happens. But I think that ultimately it’s better for the community. … I think you’ll see some growth in wages from companies that maybe underpay their employees.”

Morrell said EDCUtah understand the concerns of local officials in rural areas who wonder where 1,000 new workers at a mega site will come from. “A lot of them say, ‘OK, if they’re high-enough paying, then I think my kids can move back, which is ideally what I want and what they want,’ but it is definitely a concern with us,” she said.

For that reason, EDCUtah would prefer to see mega sites that have a higher investment rate and lower employment count — something akin to Facebook’s data center in Eagle Mountain, a $750 million project expected to employ fewer than 100 people.

“That’s a perfect fit for a rural community where you have high-paying jobs, high investment, but not a large drain on what’s already existing,” Morrell said.

“If they are higher-paying jobs, they should be able to recruit the people that they need. However, we don’t want to unintentionally bankrupt the existing businesses that are already there. We don’t want to have them compete for everything with a mega site. We want it to be a catalyst and a benefit to the community, not to unintentionally destroy what they already have.”{/mprestriction}