Businesses want to keep energy costs down and utilities want to see load grow. That’s the bottom line in economic development. But that’s not all there is to it. Communities and businesses have varying goals that require a careful match to find the right fit.
To help grow and improve their communities, public power utilities are playing a bigger role in economic development programs, and site selectors are welcoming their input.
Why Utilities Should be Involved
“All economic development is local, and it all relies on a site or building. And every site or building is going to be served with utilities,” said site selector and economic development consultant Janet Ady. “Utilities are one of the key stakeholders in the economic development team.”
Ady noted that utilities play a big role in not only assessing the physical readiness of a site, but also in making sure that all the stakeholders at the table are aware of the process, aligned with the same goals, and coordinating.
“When a utility is involved earlier rather than later, that is ideal. Because, sometimes, local economic development partners aren’t aware of the sites or buildings that have the most capacity or redundancy. And they might recommend a building that’s not ideal or not even suitable,” said Ady. “By getting utilities involved earlier, they can have the engineering team assess what the requirements are and help ensure that the site or building that’s chosen it the most suitable.”
“The key to utility partners being involved with economic development groups is forming a working relationship,” shared Lori Huguley, director of economic development for the city of Opelika, Alabama. The city is served by multiple electric providers, including public power utility Opelika Power Services, and has been recognized as a Best Performing Small City by the Milken Institute. It is on Forbes' list of America's Best Small Cities for Jobs and Site Selection Magazine's Top MSA's for Attracting Business.
“In the economic development world, we are constantly in motion. Whether we are recruiting new business to our area, taking care of our existing businesses, or responding to requests from various sources for information about our communities, we are on the go. Response timeframes have been condensed, so it is crucial to have relationships with the various utility entities to be in a position to reach out for vital information that companies need to compete pro-forma for a business plan,” added Huguley.
Casey Crabtree, director of economic development at Heartland Consumers Power District, a wholesale power company serving public power communities in the Midwest, also sees benefit to utility involvement in economic development groups. “When we have somebody from the utility on the [economic development] board, that’s where we see success. They know the details about where to put a prospective business, what it takes to get in there,” he said.
Crabtree stressed that it is important for utility representatives to be at the table “all the time” and early in the process, to relay any key details before a project gets rolling that might require getting service to a difficult or less than ideal spot.
“Operational costs are usually one of the critical deciding factors when companies are evaluating sites for a new facility,” said Huguley. “If we have a good relationship with our utility partners, then we know that we can count on them to be present [during prospect visits] and work with us and the company to provide the information they need.”
“If a client is looking for 50 acres to put in a manufacturing operation, they can’t wait six months for you to go out and get the site ready,” noted Brenda Daniels, manager of economic development at ElectriCities of North Carolina. To help public power communities in the state vie for businesses, the joint action agency has a site certification program that assesses sites to be “shovel-ready” — including conducting engineering reviews and making sure that utility hookups are available or adjacent to the site. “That eliminates three to six months out of their time looking for a site that is ready to go,” said Daniels.
The idea of certifying sites as shovel-ready has taken off and is increasingly an area where utilities are heavily involved. Ady estimated that more than half of all states have either a statewide program for certification or one that is sponsored by a utility.
She agrees that “the concept of a certified site is solid,” but noted that there is not a standard definition from state to state, which means companies still have to gather a lot of information.
“By reducing uncertainty and risk, you are making the deal more likely,” said Ady.
Evidence of a site’s readiness can include having completed property title searches, conducting a basic flood zone check, doing archaeological testing, and ensuring that utility access is available, said Ady. The utility access piece can get detailed in terms of how much capacity or redundancy is available to a site, or how long it would take and how much it would cost to bring service to a building.
“Increasingly, it is not just about the site and building itself, but the whole environment or community in which it is located,” said Ady.
“These deals happen very fast, communities need to have all the data possible available that a prospect wants during the selection process. They want to know what electric rates are, what the population is, what kind of skilled labor is available, what the average wage is for those skill sets — a lot of detailed information that a company needs to make a decision,” said Tom Gray, economic development advisor for Grand River Dam Authority, a joint action agency that serves communities in Oklahoma.
According to Gray, “When leadership is not on the same page — in terms of direction they want to take their community — there is chaos, inability to accomplish goals and objectives, because not everybody is working toward a common goal.”
Gray works with GRDA’s member communities to help develop a plan for setting community goals. The process starts with a survey of the community’s high school students to get a sense of what perceptions they have of the community – including what they like about it, and whether they plan to stay in or return to the community after graduating from high school or college.
Gray noted that every community has a “vault” — those community members and leaders who take interest in the community. Gray said these leaders should always be included in the visioning process.
He advises that communities create vision plans that are concise and actionable. “If a community can’t get their visioning plan active, if they aren’t working towards it immediately, more often than not it ends up on a shelf,” said Gray.
Electric Cities of Georgia also hosts economic development events, including a summit for community leaders they have hosted for 14 years, and a new educational program, Edge Development, to help community leaders create a comprehensive economic development strategy. Participants include representatives from the utility commission board, city councils, planning and zoning staff, downtown and business district representatives, and heads of utility departments.
Daryl Ingram, senior vice president and chief external officer at ECG, says these programs help by getting everyone in the same room and show “communities that they have immense authority of where and how development progresses.” Ingram explained how all city departments and community leaders help shape the feel of a community – from what types of activities the parks and recreation department sponsors to public works ensuring there are enough trash cans in public spaces to signs that can be helpful for tourists.
“In our experience, the greatest challenge communities face is alignment of efforts. Everybody has a pathway within their industry; everybody attends their own conferences. Every community must have champions that can effectively break down the silos,” he said. “If you bring everyone together, and coalesce all your department heads with the same return on investment mindset, good things will happen.”
“Investor-owned utilities are very motivated for development, just like we are. They are strategic in being a resource for the chamber of commerce and development authorities and having representation on these boards,” said Ingram. “[Public power utilities should] also have representatives on those boards. You have to maximize your position of influence … You have to be strategic in working closely with the local economic development agency.”
“Previously, there was a mindset that public power communities, since they are local government, that their dollars should not be used for marketing. Today’s societal desire for corporate engagement is powerful. If you look at a public power community’s competitors (IOUs), you will see strong community engagement — sponsoring little league baseball, local parades, concerts. You give more to the community than anyone else as a public power utility — you are lighting up the ball parks, you are hanging holiday arrangements, you are engaged in so much more — and if you’re not telling that story, it begs the question, why not?” said Ingram.
Ingram notes that this work has paid off, with Georgia not only consistently being ranked a top state for businesses, but that public power communities in the state, about 10 percent of the state’s municipalities, have consistently won more than a quarter of statewide project announcements in the past few years.
“What’s good for our communities is good for our utilities,” said Heartland’s Crabtree. “Growth doesn’t happen on its own. By getting utilities involved early in the process, we have been able to facilitate growth that otherwise would not have happened.”
Show Me the Talent
Communities focused on economic development noted that a ready workforce is often the number one concern for prospective businesses.
“Public and private investment and the creation of jobs is the prerequisite to load growth,” said Ingram. “Workforce is indirectly tied to your meters; it starts with quality of life that retains and attracts people, which attracts housing. If you can attract housing, then retail and commercial development will follow. If you are retaining and attracting people, then you are also building a workforce. If you have a workforce, then companies will grow and find you.”
“Companies now are more likely to start with, ‘Show me the talent, then go ahead and show me the sites,’” said Ady. “In the old days, it used to be, ‘If you build it they will come.’ Now, it is, ‘Show me that there are people there, and I’ll locate my business there.’”
For rural communities, matching the workforce to the business is more about quality than quantity.
Crabtree noted that “in the rural Midwest, it can be difficult for us if someone wants 100 jobs in one of our smaller communities, because we don’t have a huge labor market.” In the areas Heartland serves, a tight labor market means that unemployment is often lower than three percent, and it is more common the residents are underemployed and have skills beyond the jobs that are offered. “It is not about counting jobs, it is about increasing quality of life,” he said.
That’s why Heartland offers incentives to encourage load growth as well as a strong workforce. According to Crabtree, the associated load growth can help utilities pay for other things that the communities need to increase quality of life. For one large business that brought in a significant number of jobs, Heartland offered a housing incentive in which new employees who build or buy a house can receive $5,000 toward closing costs.
Setting Your Community Apart
“A community shouldn’t base their own positioning based on what someone else is doing. It’s good to have economic diversity within an area,” said Ady. “It is incumbent on the communities to figure out what projects are a good fit for them based on where they want to see their communities go in the future.”
Ady said that there are countless ways for a community to differentiate itself and should start by identifying its assets and resources, which can include buildings, recreational trails, low cost of living, or community festivals.
Gray arranges for community leaders to meet with industry representatives in small groups to talk about any factors that might be impeding the industry’s growth in the area, and for the community leaders to express how the industry’s presence would fit in with their community vision.
To familiarize GRDA’s community members with the process, Gray enlisted Ady in reviewing sample proposals in a mock site selection. The process included hosting Ady in tours of potential sites, and having each area compile community, site, and rate information into a proposal. Ady graded and met with each community to review areas for improvement. And more recently, GRDA brought in subject matter experts to help members create or enhance their websites and social media profiles to include economic development information.
The Public Power Advantage
“Utility directors, along with [the utility’s] governing body, have the ability to structure a rate that can be attractive for a company,” said Gray. “Investor-owned utilities will undercut public power every time, because … they will provide an introductory rate to prospective companies below what it costs them to generate and deliver electricity. But, unbeknownst to the rest of their customers, those other customers are subsidizing that economic development rate to the prospective company that they’re luring in,” said Gray. “The case we have to make when one of our public power communities is competing with an IOU community is that if [the IOU] comes in with a low-ball figure, more often than not it will be short term, two to three years typically, and then it will go up to well above what the public power community can offer.”
“Over the long run, [public power] is low cost and it’s constant,” said Gray, who noted that GRDA’s efforts to improve efficiency on its generation and transmission system, including significant investment in a combined cycle gas plant, means it has been able to avoid raising rates “any significant amount” for 10 years.
“Public power, just by its nature, is going to be aligned with what the city’s goals are,” said Ady. “There is a value proposition there about the growth, which is really for the benefit of the municipality and for all of the residents.”
“We’re not some far away utility, we are the community. That’s a huge advantage,” said Ingram. “[Industries] like being able to have direct access to the executives of the community, to the mayor. Companies want to be ingrained in the community. They are looking for an opportunity to tell the world that they are giving back to their community. Public power communities are in a great position to meet that need,” said Ingram.
Daniels at ElectriCities of North Carolina concurred, stating that companies often are “looking for the community to embrace them. To take them in, as if they have been there for a long time, and be very open and frank with them.”
And this frankness is easier in a public power community, said Daniels, as a company can easily “go and talk to the mayor or the town manager about an issue that you have in town – you might go to church with them or you might see them in a restaurant” and can talk one-on-one.
“One of the great things with public power is, we’re willing to invest in our communities. If we don’t invest in them, who will?” asked Crabtree.