Evaluation of the Appalachian Regional Commission’s 

Infrastructure and Public Works Program Projects 

June 2000 

810 Conodoguinet Drive 

Camp Hill, PA 17011 

717-763-1101/fax 717-763-1232 

jonbrandow@brandow.com 

and 

Economic 

Development 

Research Group 

10 High Street, Suite 620 

Boston, MA 02110 

617-338-6775/fax 617-338-1174 

gweisbrod@edrgroup.com 
1 

CONTENTS 

Acknowledgments............................................................................................................................3 

1. Introduction.................................................................................................................................4 

 1.1 Purpose....................................................................................................................................4 

 1.2 ARC’s Infrastructure and Public Works Program ..................................................................4 

 1.3 Methodology...........................................................................................................................7 

 1.4 Coverage of This Study ..........................................................................................................9 

2. Overview of Projects..................................................................................................................10 

 2.1 Project Types ........................................................................................................................10 

 2.2 Project Locations ..................................................................................................................10 

 2.3 Project Demographic Settings (Metropolitan vs. Non-Metro Projects)................................11 

 2.4 Project Area Distress Levels.................................................................................................12 

 2.5 Project Budget Levels...........................................................................................................13 

 2.6 Summary Project Sample Overview.....................................................................................14 

3. Overall Program Impact Measures ............................................................................................15 

 3.1 Direct Effects: Anticipated vs. Actual Results .....................................................................15 

 3.2 Indirect and Induced Effects .................................................................................................18 

 3.3 Job Impacts: Direct, Indirect and Induced Effects................................................................20 

 3.4 Personal Income: Direct, Indirect and Induced Effects ........................................................22 

 3.5 Effects on Public and Private Investment .............................................................................23 

 3.6 Effects on Tax Revenues ......................................................................................................27 

 3.7 Benefit/Cost Analysis ...........................................................................................................28 

4. Evaluation of Impacts by Project Type......................................................................................33 

 4.1 Water/Sewer Projects............................................................................................................33 

 4.2 Industrial Park Projects.........................................................................................................39 

 4.3 Business Incubator Projects ..................................................................................................41 

 4.4 Access Road Projects............................................................................................................44 

5. Localized Project Impacts..........................................................................................................46 

 5.1 Economic Diversification .....................................................................................................46 

 5.2 Distressed Community Impacts ............................................................................................53 

 5.3 Site and Facility Reuse..........................................................................................................56 

 5.4 Support for Existing Business Opportunities........................................................................57 

 5.5 Strategic Investment Efforts .................................................................................................62 

 5.6 Support for Traditional Industries.........................................................................................64 

 5.7 Mitigation of Environmental Problems/Quality-of-Life Factors..........................................64 

 5.8 Summary...............................................................................................................................67 
2 

6. Economic Conditions in Project Areas......................................................................................68

 6.1 Growth Analysis ...................................................................................................................69 

 6.2 Area Growth and Relative Project Impacts ..........................................................................71 

 6.3 Economic Vitality .................................................................................................................73 

 

7. Issues and Recommendations for Program Improvement .........................................................77 

 7.1 Consideration of Impacts on Downtown Commercial Districts...........................................77 

 7.2 Follow-Up Technical Assistance and Operational Gaps ......................................................78 

 7.3 Zoning and Land Control Issues...........................................................................................79 

 7.4 Opportunities for Improvement to Future Program Evaluations........................ ..........80 

Appendix A. Site Visit Narratives .................................................................................................83 

Appendix B. Methodology: Infrastructure and Public Works Project Selection.........................100 

Appendix C. Methodology: Impact Analysis ..............................................................................103 

Appendix D. Methodology: Economic Vitality Analysis ...........................................................111 

Appendix E. Methodology: Distressed County Analysis ...........................................................113 

Appendix F. Project List and Contacts .......................................................................................116 

Endnotes ......................................................................................................................................122 

Appendix G. Economic Trend Tables .................................................................(Access Database) 

Appendix H. Economic Vitality Tables...............................................................(Access Database) 

Appendix I. The Project Database and Interview Guide .....................................(Access Database) 
3 

 Acknowledgments 

This report was prepared by a team composed of Jon Brandow of the Brandow Company 

and Glen Weisbrod, Margaret Collins, and Jinevra Howard of Economic Development 

Research Group. Greg Bischak, Senior Economist at ARC, provided substantial guidance 

for the overall project, and contributed numerous recommendations to improve the 

analysis, organization and readability of the report. 

The consultant team acknowledges the invaluable assistance, cooperation and active 

participation of ARC staff, LDD staff, and local government and development officials 

and agencies. These individuals developed archival information, educated us about ARC 

procedures, programs and objectives, and filled in the critical local detail and context that 

brought the interview process to life. The consultant team is particularly appreciative of 

the contributions and time committed by two members of ARC’s staff: Greg Bischak, 

Senior Economist, and Mark Spencer, Regional Planner; and for the generous hosting by 

development staff in locations selected for site visits, including George Schanzenbacher 

(Olean, NY), Betty Cochran (Bradford, PA), Rich Wood (Harrison County, WV), Susan 

Matlock (Birmingham AL), and Dirk Reys (Spartanburg, SC). We also thank those who 

helped fill in the details and context of projects in their areas through the interviews and 

site visitations conducted for this report (see Appendix F). 
4 

1. Introduction 

1.1 Purpose 

The Appalachian Regional Commission (ARC) conducted this evaluation of 

infrastructure and public works projects in order to determine the extent to which these 

projects have achieved their originally stated objectives. In addition, as part of the 

Commission’s on-going performance evaluation process, the ARC wanted to assess how 

these project investments have contributed to attaining the Commission’s strategic 

objectives. 

These infrastructure projects represent a range of different types of projects typically 

funded by the Commission including, industrial parks and sites, water and sewer systems, 

access roads, and business incubators. The ARC selected a sample of 99 completed 

projects that were funded in part by the Commission in the 1990s. The sample of projects 

was drawn to reflect the Commission’s current strategic funding priorities for 

infrastructure projects, and to represent the approximate proportions of each of the 13 

Appalachian states’ efforts for the several types infrastructure projects. The ARC also 

wanted to discern unforeseen impacts, trends among types of projects and to assess the 

wider economic impacts in the local communities. 

The project evaluation focuses on key performance measurements and outcomes: 

• the number of jobs projected and actually created or retained upon project 

completion; 

• the leveraging rates for other project-related funds, including state, local, other federal 

and private investment; 

• a determination of the agency’s relative funding contribution; 

• a calculation of the job creation rate attributable to ARC’s investment once the impact 

other funds is considered; 

• the diversification effects of the projects on the local economic base; 

• the indirect economic effects attributable to the project; 

• the impacts on the local tax base resulting from the projects; 

• an impact/cost analysis of the projects; and 

• quality-of-life improvements provided to residential households served by the water 

and sewer projects. 

1.2 ARC’s Infrastructure and Public Works Program 

Since 1965, ARC has assisted in funding and developing a wide range of programs in the 

Appalachian Region, including highway corridors; community water and sewer facilities 

and other physical infrastructure; health, education, and human resource development; 

economic development programs, local capacity building and leadership development. 

Congress provided the authority for ARC to fund and develop such projects under Title II 
5 

of the Appalachian Regional Development Act of 1965. The rationale for ARC’s Area 

Development program is to provide the basic building blocks that will enable 

Appalachian communities to create opportunities for self-sustaining economic 

development and improved quality of life. 

The ARC’s infrastructure and public works projects are designed to create and retain 

jobs, serve new and existing businesses, and promote public health. The above listed 

project objectives form the basis for the evaluation criteria used in this report. These 

infrastructure objectives are part and parcel of the Commission’s broader strategic plan 

that guides ARC’s investment in projects that contribute to one or more of the following 

goals: 

1. a highly educated and skilled work force; 

2. physical infrastructure for economic development and improved quality of life; 

3. community and civic leadership development; 

4. dynamic, entrepreneurial local economies; 

5. a healthy work force. 

In general, the projects that were evaluated relate to the second and fourth goals set forth 

in the Commission’s strategic plan, with the business incubator projects exemplifying 

investments to promote dynamic, entrepreneurial local economies. 

The sample projects are distributed over 13 states and represent 76 different primary 

impact areas, both non-metropolitan and metropolitan. In addition, these projects are 

distributed among counties of varying economic status, with projects in distressed 

counties qualifying for higher direct funding and lower matching requirements. ARC 

designates counties as one of four types: distressed, transitional, competitive, or 

attainment.*

 Projects in distressed areas are eligible for 80 percent ARC funding, 

transitional for 50 percent and competitive for 30 percent, while attainment counties are 

not eligible for ARC project funding. In addition, projects in distressed counties do not 

have to submit estimates for projected jobs, although in most cases such estimates were 

available. 

The Infrastructure Program funds a variety of projects which have been classified into 

four basic categories for the purposes of this report: access roads, industrial parks, 

business incubators and water/sewer projects. These classifications were developed to 

enhance the analysis of projects, but the classifications are subject to some overlap.1

 

* Distress designations are developed annually by the ARC and are based on county poverty rates 

and three-year unemployment rates that are 150 percent of or more than the national average and 

per capita market income that is two-thirds or less than the national average. The other economic 

designations likewise compare county economic performance with national rates, ranging from 

attainment counties that meet or exceed the national averages on these measures; to competitive 

counties that meet the national averages on unemployment and poverty rates but have 80 percent 

or less of national per capita market income; to transitional counties that are simply a residual 

category. 
6 

All projects in three categories—access roads, industrial parks, and business incubators— 

were considered economic development projects. Water and sewer projects were divided 

among economic development and residential development projects, although virtually 

all residential projects also demonstrate some level of direct or indirect economic 

development impact. 

Industrial Parks: Twenty-two industrial park projects (22 percent of the sample) 

accounted for 23 percent of the total ARC investment reflected in the sample. Industrial 

park project grants tended to be smaller than the average sample project.

Business Incubators: Eleven business incubator projects (11 percent of the total 

analyzed sample) accounted for 9 percent of the total ARC investment reflected in the 

database. Business incubator project grants tended on average to be larger than the 

representative sample project.

Access Roads: Fifteen projects (15 percent of the sample) accounted for 11 percent of 

the total ARC investment reflected in the sample. Industrial access road project grants 

tended to be larger than the average sample project.

Water/Sewer Projects: Fifty-one water and sewer projects (52 percent of the sample) 

accounted for 57 percent of the total ARC investment reflected in the sample. Water and 

sewer projects tended to be smaller than the average sample project. Some water/sewer 

projects are residentially-oriented and not economic development-related. While these 

non-development projects are profiled individually, they do not represent the main thrust 

of analysis in this report. 

The Sample: This analysis covers projects initiated between 1990 and 1997. Projects 

initiated before 1989 were not included because they were considered to be less relevant 

for assessment of the current form of the program, and because detailed ARC records 

were no longer available for those years. Projects initiated after 1997 were not examined 

because not enough time had passed to observe the subsequent new business occurring at 

their sites 

It is important to note that this report analyzes only a portion of ARC infrastructure and 

public works project investments. For example, a total of 1,155 water and sewer projects 

were developed from 1990 to 1997 and 519 were ultimately completed and closed. Thus, 

the final sample of 51 water and sewer projects represents 10 percent of all closed water 

and sewer projects during the period examined. The final sample was selected to focus on 

economic development-related projects and to assure reasonable representation of 

projects by type, geographic distribution and other factors. In addition, the final sample 

selection attempted to focus on infrastructure and public works projects that were the 

most important fields of ARC infrastructure investment. Some categories were also 

excluded or modestly sampled due to diminishing interest of many states (e.g., downtown 
7 

revitalization projects) or complex, multiple-objectives where assessment went beyond 

the scope of this project (e.g., telecommunications, solid waste). A more detailed 

comparison of the universe of infrastructure and public works investment with the sample 

projects used in this report can be found in Appendix B. 

1.3 Methodology 

Project development was essentially divided into six phases: 

1. Project Selection & Classification. The first phase identified projects and classified 

them. This involved a review of ARC records and a computerized classification of 

selected projects into a database for future ARC use. This database is included as 

Appendix I, which is available as an electronic Access database supplement to this report. 

2. Direct Interviews. One to four interviews were conducted for each project, most often 

with local or regional development staff, local government and civic leadership and 

private sector representatives. The results of these interviews were integrated into a 

project profile covering the following key topics: 

• project area distress data; 

• project data and budget information; 

• project fiscal and economic impact analyses; 

• economic trend analyses of primary impact counties; 

• economic vitality analyses of primary impact counties; 

• interviewee information; 

• qualitative project objectives and outcomes; and 

• impact comments and discussion. 

The interviews and analysis of the results provided essential documentation of the nature 

of the projects and their direct economic effects. These in-depth interviews were 

conducted by the consulting team with selected local officials, development staff and 

private sector representatives. Interviews were conducted via telephone and relied upon 

formal interview guides and procedures. The interview instrument is in Appendix I.

In addition to phone interviews, eight site visits were made to validate project results and 

to develop more detailed case studies. Narratives of these site visits can be found in 

Appendix A of this report. Site visits were selected to reflect a reasonable representation 

of project types, regional geography and area demographics. 

3. Baseline Economic Analysis: Background economic information on the baseline 

economic conditions was developed for each of the 76 primary impact counties with 

project investments. This phase of the analysis developed county-level economic profiles 

in order to detail the general economic conditions of project areas. In addition, the 

performance of project counties was compared to national trends based on broader 

measures of economic well-being including, economic diversification, entrepreneurial 
8 

vitality and business growth. In most cases the size of the project investment was too 

small to definitely link to the changes in the local economy, but in several cases it was 

possible to identify local economic changes that corresponded to project impacts.2

 In 

general, however, the baseline economic analyses situates the project impacts within 

economic trends of the counties, particularly the extent of economic diversification and 

entrepreneurship. Detailed tables reflecting these analyses are available in Appendices G 

and H, electronic Access database supplements to this report. 

4. Analysis of Project Outcomes: This phase of the research analyzed project outcomes 

by comparing the anticipated and actual project outcomes in terms of the key 

performance measures used by ARC: new and retained businesses served, new and 

retained jobs, and new and existing households served. In addition, this part of the 

research examined the leverage rates of ARC dollars invested in terms of other public and 

private dollars invested. Furthermore, through the results of the project interviews, the 

research was able to compile data on additional private investment that was stimulated by 

the projects. 

5. Fiscal and Economic Impact Analysis. This phase of work modeled the economic 

impacts of projects on their core counties. The economic impacts were measured either 

by new jobs and personal income generated from business attraction and expansion, or by 

existing jobs and personal income retained by saving businesses that would otherwise 

have been forced to close down or move out. Additional economic impacts on leveraging 

private sector investment and fiscal impacts on increasing local tax revenues were also 

documented. For each of these impact measures, the ratio of impacts per dollar of ARC 

investment and per dollar of total public investment were assessed. Relative ratios of 

benefits and costs were also examined. 

6. Qualitative Objectives and Outcomes. In addition to these quantitative outcomes, the 

interviews conducted with economic development officials and various community 

leaders in each community served by the projects helped identify certain key trends and 

commonalities among project types. A great many cases were cited as examples in which 

the projects generated qualitative objectives and outcomes not readily measured by the 

usual performance measurements. This phase of the research provided yet another facet 

of the evaluation and offers a unique and important contribution to the overall evaluation 

process that is often overlooked in purely quantitative approaches. 

The resulting report was designed to meet two goals for the Commission: (1) to assist 

ARC in its internal evaluation of past program performance, identifying opportunities for 

future improvement, and (2) to facilitate the public’s understanding of the benefits of 

ARC’s infrastructure investments. 
9 

1.4 Coverage of This Study 

Three additional points should be noted about the coverage of the projects and analysis in 

this study: 

The report does not cover all of ARC public works investments through the 

program. Projects included in the evaluation sample were limited to those funded from 

1990 to 1997.3

 Those funded earlier were often without sufficiently detailed records, 

while more recently funded projects were in general not mature enough to allow for 

reasonable observation of implementation and impacts. 

The report is primarily concerned with economic development impacts. The 

principal focus of the study is on job creation, business service, income growth, economic 

diversification, tax revenues, and changes in total business output that can be attributed to 

ARC investments. While residential water and sewer projects receive some analysis and 

discussion of quality-of-life impacts, changes in public health that may have resulted 

from various projects are not quantified. 

Some indicators provide a context for local and project analysis but do not provide a 

basis for inferring project cause and effect. The report provides a variety of traditional 

and innovative economic indicators for project impacts, including growth trends, business 

retention, job replenishment, business vitality, and industrial diversification. In general, 

these indicators provide a context for project analysis and a better understanding of the 

project area economies and their needs. In many instances, these analyses also inform 

qualitative discussions of how some projects affected land use and development patterns, 

or, for example, entrepreneurial vitality in the primary impact areas. The economic 

diversification and job growth analysis, however, does provide measures of how projects 

affected the existing economic conditions. 
10 

2. Overview of Projects 

This section breaks down projects into various categories and explains general trends 

among those categories, including project types, locations, demographic settings, distress 

levels of project counties, and project investment levels. This section sets the stage for a 

detailed evaluation of impacts and trends among projects. 

2.1 Project Types 

Of the 99 projects analyzed, 87 reflected objectives and outcomes directly related to 

economic development, while the remainder were residential water or sewer projects that 

related to quality-of-life objectives. Thirty-nine water and sewer projects were directly 

related to economic development, by design or outcome or both. Some water and sewer 

projects were integral pieces of economic development efforts—for example, sewer lines 

on which industrial location was contingent—while others had more secondary economic 

development purposes. In total, the sample encompassed 99 projects: 

• 51 water/sewer projects; 

• 22 industrial parks; 

• 11 business incubators; and 

• 15 access roads. 

2.2 Project Locations

There is a clear concentration of project types in various states as shown in Table 2.1. 

More than half of all industrial park projects were concentrated in three states 

(Pennsylvania, Kentucky, and Mississippi). Nearly three-quarters of all incubator projects 

were located in Pennsylvania, New York, and Maryland. Access road projects were 

overwhelmingly concentrated in Mississippi (9 of 15), while Kentucky, Georgia, and 

Alabama accounted for almost half of the most common type of project, namely, water 

and sewer projects. 

Because the ARC project award process is generally generated from the locality up, 

rather than top-down, it seems clear that the distribution of project types and geographical 

concentrations is more reflective of local priorities and opportunities than any 

overarching policy scheme. The degree to which the sample of projects falls within 

common strategic parameters is more a testimony to unified need and outlook among 

applicant areas than any policy discipline from ARC itself. 
11 

Table 2.1 

Project Spread by State and Type 

State Industrial Park Incubator Access Road Water/Sewer Total 

Alabama 2 1 0 8 (5 ED) 12 

Georgia 1 0 0 7 (7 ED) 8 

Kentucky 3 0 0 10 (6 ED) 13 

Maryland 0 2 0 0 2 

Mississippi 3 1 9 4 (2 ED) 17 

North Carolina 0 0 0 4 (4 ED) 4 

New York 0 3 2 1 (1 ED) 6 

Ohio 2 0 2 1 (1 ED) 5 

Pennsylvania 6 3 1 1 (1 ED) 11 

South Carolina 1 0 1 1 (1 ED) 2 

Tennessee 1 0 0 5 (5 ED) 6 

Virginia 1 0 0 4 (3 ED) 5 

West Virginia 2 1 0 5 (3 ED) 8

Total 22 11 15 51 (39 ED) 99 

Considered on a sub-regional basis, the northern part of the Appalachian region had the 

highest number of industrial park and incubator projects; the central portion was most 

concerned with water and sewer improvements for economic development purposes; and 

the southern portion focused on water projects and industrial access roads. 

2.3 Project Demographic Settings (Metropolitan vs. Non-metro Projects)

Of 406 ARC counties, 109 counties are classified as metropolitan, and the other 297 

counties are classified as non-metropolitan. Twenty-five sample projects were developed 

in metropolitan ARC counties, so the sample was distributed between metro and nonmetro counties in identical proportions to that found in the Appalachian Region. Of the 

metro county sample projects, only one (Marion, TN) was in a community designated as 

distressed prior to project development. Throughout the Region, only two metropolitan 

counties are designated as both distressed and metropolitan (the other is Fayette County, 

PA). 

As shown in Table 2.2, the metro/non-metropolitan distribution of projects in the sample 

generally corresponded to the spread in ARC counties, although some states 

demonstrated a higher propensity for metropolitan project development. Four states—

Maryland, New York, Ohio, and South Carolina—funded projects in metro areas at a rate 

10 percent greater (or more) than the actual distribution of metro area counties. 

Among the metropolitan projects, nine were water/sewer, six were industrial park, four 

were access road, and six were business incubator projects. This lower emphasis on 

water/sewer projects seems natural. The lack of emphasis on rural incubators reflects the 
12 

inherent difficulties of scale for rural incubator efforts. But in a broader sense, the gap 

also reflects the Region’s considerable lag in start-up activity and lower entrepreneurial 

survival (see Section 6). 

Table 2.2 

Appalachian Region (406 Counties) 

Non-metro/Metropolitan Project Distribution 

 ARC Counties Projects 

State Metro NonMetro % NonMetro Metro NonMetro % NonMetro 

Alabama 14 23 62% 5 7 58% 

Georgia 13 24 65% 0 8 100% 

Kentucky 5 44 90% 2 11 85% 

Maryland 2 1 33% 2 0 0% 

Mississippi 0 22 100% 0 17 100% 

North Carolina 9 20 55% 2 2 50% 

New York 5 9 64% 3 3 50% 

Ohio 8 21 72% 3 2 40% 

Pennsylvania 20 32 62% 4 7 64% 

South Carolina 5 1 17% 2 0 0% 

Tennessee 13 37 74% 1 5 83% 

Virginia 3 20 87% 0 5 100% 

West Virginia 12 43 78% 1 7 88%

Total/Average 109 297 73% 25 74 75% 

2.4 Project Area Distress Levels

Distress designations are an integrated barometer of economic well-being maintained by 

the ARC. Every year the Commission determines the economic status of the 406 counties 

in the Appalachian Region, with each county assigned to one of four economic 

categories: distressed, transitional, competitive, or attainment. The designations are based 

on three economic measures that are benchmarked to national averages for the poverty 

rate, three-year average unemployment rate and per capita market income (i.e. per capita 

income less transfer payments). Distressed counties are eligible for additional funding 

and lower matching requirements (20 percent), with matching funds requirements rising 

for transitional (50 percent) and competitive counties (80 percent), and with attainment 

being deemed ineligible for funding. 

The economic status of project counties was evaluated for the sample and compared with 

the distribution for the Appalachian Region as a whole. In general the sample set of 

project counties was found to be representative of ARC’s distress rankings for 399 of the 

406 counties based on fiscal year (FY) 1988 designations. The four-level designation 
13 

system was implemented only as of FY1997, so the application of these categories to 

FY1988 data is really a retrospective projection of the criteria. 

• Of the 399 counties in the database as of 1988, 90 (23 percent) were distressed, 289 

(72 percent) transitional, 16 (4 percent) competitive, and 4 (1 percent) attainment. 

Seven counties that were not designated as ARC counties in 1988 were excluded 

from this analysis. 

• By contrast, among the 76 project sample counties, 18 (24 percent) were distressed in 

1988, 57 (75 percent) transitional, and 1 (1 percent) competitive. None were in the 

attainment category. In other words, the concentration of distress was only slightly 

greater in project counties than in non-project areas. To use the ARC’s scale of 

distress designations (1 being distressed, 2 transitional, 3 competitive, and 4 

attainment), non-project counties had a 1988 average distress designation of 1.83, 

while project counties had an average distress rate of 1.80. 

As a matter of ARC policy, no projects were developed in “attainment” counties. Thus, 

only competitive county projects are underrepresented in this sample (see Appendix E for 

more details). Project impacts on distressed areas are discussed more fully in section 5.2. 

2.5 Project Budget Levels 

The total ARC investment in the 99 reviewed projects was $32,433,047. For the most 

part, original ARC allocations were maintained, even when project costs increased. 

Twenty-four projects (24 percent of the total in the sample) were developed in counties 

designated as distressed at the time of the grant. Because of the location of multiple 

projects in some counties, these projects represented 18 of the 76 project counties (24 

percent) of the sample. The total ARC investment in distressed county projects was 

$6,404,885 or 20 percent of the total ARC investment represented by the sample. 

Seventy-five projects in 58 counties designated as “transitional” accounted for the 

remaining $26,028,162 (80 percent) of the investment represented by the database. 

Non-metropolitan counties in the ARC Region accounted for $23,676,124 or 73 percent 

of the total ARC investment in the project sample. These funds covered 74 projects in 54 

counties. Metropolitan ARC counties received $8,756,922 or 27 percent of the 

investment represented in the sample. Twenty-five projects were located in 22 

metropolitan counties. By contrast, of the 406 ARC counties, 27 percent are classified as 

metropolitan and 73 percent as non-metropolitan—a virtually identical breakdown. 

Further analysis of project geography and metro/non-metro breakdowns is detailed in 

following sections. 

 

1

 More detailed information on methodology utilized to evaluate the progress of project counties relative to 

distress designations can be found in Appendix E. 
14 

2.6 Summary Project Sample Overview 

While the variety and complexity of ARC investments discourage any notion of an 

“average” project, the sample of investments selected for analysis can be said to be 

generally representative. The sample: 

• covers all states in the ARC region; 

• reflects a metropolitan/non-metropolitan mix almost identical to the Region as a 

whole; 

• includes project counties reflecting all eligible economic designations; 

• incorporates a robust distribution of projects in the four major classifications—water/ 

sewer, access road, industrial park and site, and business incubator; 

• is weighted most heavily toward water and sewer projects, reflecting the mix of 

investments in the universe of public works and infrastructure projects; and 

• includes both very small and very large investments, in addition to many of “average” 

scale. 
15 

3. Overall Program Impact Measures 

In order to accurately measure the overall impacts of ARC’s infrastructure and public 

works projects, it is important to divide these projects into two categories. 

1) Economic development projects: These are public investment projects 

intended to promote business development by attracting new jobs or retaining 

(saving) threatened existing jobs. 

2) Residential projects: These are public investment projects intended to improve 

basic public health and quality of life by providing basic water and/or sewer 

services to residential areas that have lacked them. 

Most of the projects (87 of 99 studied) were economic development projects—aimed at 

promoting economic development. The impacts of those projects were measured in 

terms of jobs (new or retained), personal income (wages) associated with those jobs, 

private investment leveraged by the public funding, and tax revenue associated with 

new private investment. This chapter reviews the overall findings for each of those 

measures, as well as ratios of impacts per public dollar spent on these projects. 

For the 12 residential projects, the number of households served is also measured. 

Those projects were not intended to directly attract business and jobs, and hence showed 

no immediate impacts on those measures. However, they did in some cases also improve 

the local capacity for future economic development, and those types of qualitative 

impacts are noted in the individual project discussions in Appendix I. 

3.1 Direct Effects: Anticipated vs. Actual Results 

Goals. In the initial project applications for funding, local applicants are required to 

estimate the number of jobs to be created or retained, the number of businesses to be 

served or retained, and the number of new or existing households to be served directly by 

the project. The job and business goals were applicable for industrial and commercial 

projects, while the household goals were applicable for residential water/sewer projects. 

Measures of Anticipated vs. Actual Impact. The aggregate results far exceeded 

projections in each of those impact measures, as shown in the following table: 
16 

Table 3.1 

Direct Impact: Aggregate Projections and Results

Projected 

Outcomes 

Actual 

Outcomes 

Actual as a 

Percent of Goal 

Economic Development Projects 

 New businesses served 142 415 292% 

 Retained businesses served 559 626 112% 

 New jobs 15,884 23,377 147% 

 Retained Jobs 8,693 16,387 189% 

Residential (Public Health) Projects 

 New households served 1,929 4,553 236% 

 Existing households served 13,076 14,488 111% 

The “new jobs” fulfillment rate is noteworthy for two reasons. First, unlike certain other 

federal programs, ARC investments do not always require a guarantee of job creation 

before granting the funds, so projections of job impact can be somewhat speculative. 

Second, there is a natural inclination for applicants to “stretch the envelope” on job 

projections in order to enhance the perceived likelihood of project funding. 

Of course, it would be possible for a handful of wildly successful projects to distort 

aggregate totals, even if the majority of projects failed to meet or even approach 

projections. But this didn’t seem to be the case for the sample reviewed for this report. In 

fact, in every category for which projections were made, between 72 percent and 100 

percent of all projects with projections in those categories (jobs created and households 

served, respectively) met or exceeded expectations. 

Portion of Projects Meeting Goals. Twenty-four projects—most of them residential 

water and sewer investments—did not submit initial projections regarding jobs created, 

jobs retained, or businesses served. Ten of these eventually showed “unanticipated 

results” or impacts in one or more categories. All projects with initial projections were 

measured for achievement of projections. The portion of projects meeting or exceeding 

each of the major goals is summarized as follows: 

• New businesses served: 59 projects of 72 (82 percent) met or exceeded expectations.

• Retained businesses served: 36 projects of 46 (78 percent) met or exceeded 

expectations.

• Jobs created: 58 projects of 81 (72 percent) met or exceeded expectations. 

• Jobs retained: 31 projects of 38 (82 percent) met or exceeded expectations. 
17 

• Households served: 23 projects of 23 with projections (100 percent) met or exceeded 

expectations. 

• Existing households served: 27 projects of 27 (100 percent) met or exceeded 

expectations. 

These results should be seen as based on fairly rigorous success standards because 

several types of project outcomes were excluded from meeting the “minimum success” 

thresholds: 

• projects that approached but did not reach projections; 

• projects that had large impacts but were nonetheless below projections; and 

• projects such as recent industrial parks that are still in “immature” stages. 

Eighty-three of the eighty-seven economic development projects studied achieved 

significant, measurable outcomes. Included are all industrial park, business incubator, and 

access road projects, as well as 35 of 39 (non-residential) water and sewer projects. The 

other four projects either had an anticipated business cancel its plans or had an existing 

business subsequently close up (or move out). 

While variations and shortfalls certainly exist for some measures in some categories, the 

general conclusion is that each project classification met or exceeded statistical 

projections. As the site visit narratives show (see Appendix A), viewing projects of all 

types within their economic and social contexts offers a better understanding of the 

project impacts and the value of the initial investment. 

Results by State. As the table below indicates the results on businesses, jobs and 

households served largely reflect differences in the mix of projects. The following 

analysis is useful mainly as information about the project mix within a state, not as a 

scorecard or yardstick for comparison between states.4

 In addition, the table is useful in 

the review of individual projects within the context of a state’s total ARC program 

investment. 

Within each state, the number and dollar value of total investments varied, as did the 

impacts generated from the project. For example, South Carolina’s high job impact 

numbers were almost all generated by a single very large project. By contrast, 

Maryland’s projects include a large proportion derived from workforce development and 

technical assistance efforts. The types of projects reflect state priorities that determined 

both the scale of required investment and the nature of outcomes. For instance, incubators 

were a high priority in New York, while access roads were a high priority in Mississippi. 
18 

Table 3.2 

Direct Impact: Results by State

 ARC Businesses Jobs Households 

No. Investment Served Retained New Retained Served

 Alabama 12 $3,042,220 93 51 3,873 2,400 2,002 

 Georgia 8 $1,450,150 42 8 2,816 335 388 

 Kentucky 13 $3,835,265 42 250 1,747 1,000 8,800 

 Maryland 2 $724,000 26 101 835 8,219 0 

 Mississippi 17 $3,557,290 22 9 2,534 365 770 

 North Carolina 4 $680,418 22 1 1,391 100 0 

 New York 6 $1,055,000 49 1 1,160 62 0 

 Ohio 5 $1,023,657 5 3 1,310 1,117 0 

 Pennsylvania 11 $3,017,321 48 15 1,174 360 900 

 South Carolina 2 $2,695,000 2 0 3,600* 0 0 

 Tennessee 6 $2,081,546 24 133 1,350 1,719 5,587 

 Virginia 5 $3,010,215 6 31 288 250 150 

 West Virginia 8 $6,260,965 34 23 1,299 460 444 

 Total 99 $32,433,047 415 626 23,377 16,387 19,041 

 

* includes 3,000 jobs at BMW plant in Greenville-Spartanburg, South Carolina (project 11163)

3.2 Indirect and Induced Effects 

Whereas “direct effects” refer to the growth of businesses located at the project site that 

benefit directly from the project completion, “indirect and induced effects” refer to 

additional economic growth typically located elsewhere in the community that follows as 

a consequence of the direct effects. These additional effects are commonly analyzed in 

studies of localized economic impacts associated with business relocation and expansion. 

Methodology: 

Definitions. The economic development projects were intended to either, (a) support the 

growth or attraction of new business activity that otherwise would not occur in the area, 

or, (b) support the retention of existing business activity that was economically 

threatened and which would otherwise decline or move out of the region. The former 

lead to “new” jobs and income, and the latter lead to “retained” jobs and income. 

Treatment of New Activity. For the new jobs and income, we can distinguish three 

classes of impacts: 

• Direct effects. The business activity of the output, jobs and income directly 

related to the project are the “direct economic effects” of the project. 
19 

• Indirect effects. In addition, projects have broader impacts elsewhere in the 

community such as expanding business for local suppliers of products or services 

that service the new businesses. The additional output, jobs, and incomes for such 

suppliers are typically referred to as “indirect economic effects.” 

• Induced effects. Another impact is the so-called induced effect which includes the 

expansion of local commercial business as a result of income re-spent by persons 

working at the new businesses (the direct new hires) and suppliers (the indirect 

employment effect). 

The additional indirect and induced effects are often referred to as "multiplier effects." 

The total effect on jobs and associated income is thus the sum of the direct project effects 

and the indirect and induced effects. Since most of these local areas are characterized by 

significant unemployment, and relatively low labor force participation rates, it is 

reasonable to expect that the additional jobs and income go to local residents, and are not 

merely replacing jobs and income from other existing business activities. 

Treatment of Retained Activity. This study does not estimate indirect or induced effects 

associated with business retention since it is unclear whether or not all of the business 

losses would actually occur without the public investment. If the retained jobs and 

income would indeed be lost without further public investment, then there could be 

potential negative indirect and induced effects—leading to additional job loss for existing 

businesses elsewhere in the local area. Nonetheless, the uncertainty about how to treat 

retained businesses and jobs meant that the prudent approach was not to attribute such 

indirect and induced effects to retained businesses. 

Methodology for Analysis. The measures of direct, on-site impacts on business 

attraction and retention came directly from interviews with local officials, who were 

asked to report the actual number of affected businesses and jobs, and to estimate the 

associated personal income, including existing or saved jobs. For cases in which there 

were no reliable estimates of income effects, data from the state labor agency and the US 

Bureau of Labor Statistics were used to indicate the average wage per worker (based on 

separate data by county and by industry).5

The measures of indirect and induced effects were developed using the Impact Analysis 

for Planning (IMPLAN) economic model.6 It is important to note that multiplier effects 

differ by industry and by area. Industries (types of business) can have larger or smaller 

indirect and induced effects, depending on the portions of dollars going to pay workers 

and to buy different types of equipment and supplies. Locations can have larger or 

smaller indirect and induced effects, depending on the portion of suppliers and consumerserving businesses located within the area. For these reasons, employment, income and 

business sales data for the year 1997 were obtained by industry, for each of the counties 

associated with the 99 projects studied. In cases in which projects involved multiple 

counties, impacts were estimated for the multi-county area. The IMPLAN model was 

then run to calculate employment, income, and business sales multipliers associated with 

growth or shrinkage of each industry in each county. For each project, the types of 
20 

business (industry) associated with the business expansion or attraction were identified, 

and the applicable multipliers were then applied. For projects in which the specific types 

of business were not all known, multipliers representing an average of the area’s 

dominant industries were applied. 

3.3 Job Impacts: Direct, Indirect and Induced Effects

New Jobs. A total of 23,377 new jobs were directly created as a result of the ARCfunded projects. These direct effects include only jobs at the sites served directly by the 

ARC-funded infrastructure and public works investments. In addition, it is estimated that 

another 20,954 new jobs were created away from the project sites by indirect effects on 

off-site suppliers and induced effects on consumer re-spending of additional worker 

incomes. These indirect and induced effects follow as a consequence of the directly 

created new jobs. (See Appendix C for further discussion of the calculation of indirect 

and induced effects.) All of these new jobs (both direct and indirect/induced effects) 

were created because of the projects. 

Retained Jobs. Another 16,387 existing jobs were directly retained or saved as a result 

of the ARC-funded projects. It is reasonable to assume, based on project application 

data, that those directly-affected jobs would most likely have been lost without the 

projects. The extent of their indirect effects on supplier businesses and induced effects 

on consumer-serving businesses is less clear. Those businesses had already existed 

before the projects were implemented. If the projects had not been implemented without 

ARC funding, the directly affected businesses may have responded by closing or by 

relocating, or they may have survived in their current locations by adjusting products and 

services for other markets. If we assume that all of the business activity associated with 

indirect (supplier) and induced (consumer) sales would indeed have disappeared, then it 

would be reasonable to add indirect and induced effects associated with the retained jobs. 

While that is a distinct possibility, this study adopted a more conservative approach that 

counted additional indirect/induced effects based on new jobs, but not any additional 

indirect/induced effects based on retained jobs. 

 

Total Jobs. The estimated total number of job impacts of the ARC-funded sample 

projects was 44,331. This includes direct new jobs and indirect/induced new jobs. It does 

not include the retained jobs, nor estimates of indirect/induced effects for retained jobs. 

This total impact can be broken down by project type, as follows: 

• 7,998 total jobs created from 22 industrial park projects (average of 364 each); 

• 3,869 total jobs created from 11 business incubator projects (average of 352 

each); 

• 3,723 jobs created from 15 access road projects (average of 248 each); and, 

• 28,741 jobs created from 39 water/sewer projects (average of 737 each, but this 

drops to 598 when the large BMW project is excluded). 
21 

Table 3.3

Total Overall Job Impacts

No. of 

Projects 

Retained 

Jobs 

Direct 

New Jobs 

Indirect & 

Induced 

New Jobs 

Direct + 

Indirect/Induced 

New Jobs 

Project Type 

 Access Road 15 1,093 2,366 1,357 3,723 

 Business Incubator 118,338† 2,220 1,649 3,869 

 Industrial Park 22 1,272 4,444 3,554 7,998 

 Water/Sewer-Business 395,684 14,347 14,394 28,741 

 Water/Sewer-Residential 12 0 0 0 0

 Total 9916,387 23,377 20,954 44,331 

Area Rating (pre-project) 

 Distressed 24 2,779 1,758 828 2,586 

 Transitional 75 13,608 21,619 20,126 41,745

 Total 99 16,387 23,377 20,954 44,331 

 

State

 Alabama 122,400 3,873 3,089 6,962 

 Georgia 8 335 2,816 1,331 4,147 

 Kentucky 131,000 1,747 745 2,492 

 Maryland 2 8,219 835 631 1,466 

 Mississippi 17365 2,534 1,112 3,646 

 North Carolina 4 100 1,391 902 2,293 

 New York 662 1,160 449 1,609 

 Ohio 5 1,117 1,310 789 2,099 

 Pennsylvania 11360 1,174 903 2,077 

 South Carolina 2 0 3,600* 8,714 12,314 

 Tennessee 61,719 1,350 602 1,952 

 Virginia 5 250 288 228 516 

 West Virginia 8 460 1,299 1,459 2,758

 Total 99 16,387 23,377 20,954 44,331 

Note: No estimates are made of the indirect and induced effects of retained jobs. 

† Retained jobs refer to the Hagerstown Technology Innovation Center that provided technology 

assistance to businesses located outside the incubator. 

* includes 3,000 direct jobs at BMW plant (project 11163) and their multiplier effects 

These numbers reflect differences in the average size and scale of the projects, and not 

necessarily project success. A full breakdown of the job impacts is shown in Table 3.3. 

Table 3.3 also shows that average job creation was relatively greater for the projects in 

transitional areas than for the projects in fully distressed areas. That reflects a 

combination of two factors: 
22 

• attracting business is harder in the more distressed areas, and hence the average 

number of jobs created per project is smaller in those areas; and 

• most of the residential projects were in the distressed areas and were aimed at 

public health rather than immediate economic development. 

3.4 Personal Income: Direct, Indirect and Induced Effects

Additional Income. Personal income derived from wages from newly created jobs has a 

variety of local economic impacts. While the impacts of economic development projects 

are often tracked in terms of job creation, the most tangible benefit to people in the target 

areas comes from the enhancement of their incomes. Another advantage of measuring 

program impact in terms of personal income is that the income measure reflects 

differences between the creation of high-paying jobs and the creation of low-paying jobs. 

Because counties in which these projects occurred were characterized by high 

unemployment and low income levels, it is reasonable to assume that essentially all of the 

additional income created (directly or indirectly) by these projects flows to existing 

residents of the county. 

Measurement. The estimates of direct effects on retained wages (from saved jobs at 

existing businesses) and on new income (from new jobs attracted) came from interviews 

with local officials, and were supplemented when necessary with average wage data from 

the U.S. Bureau of Labor Statistics. The estimates of indirect and induced effects on 

personal income came from the IMPLAN model.7

Overall Results. Table 3.4 shows a breakdown of the retained wages as well as the new 

(direct) wage income and indirect/induced income impacts, by project type, area 

classification and state. Overall, it shows that the 87 (case study) economic development 

projects helped to directly retain $440.7 million of existing wages at threatened jobs, 

attract $576.9 million of new wages at the project sites, and led to a net expansion of 

$950.3 million of personal income. As with the job impacts, the personal income 

impacts were largest for the water/sewer (rather than industrial park and business 

incubator) projects and for the transitional rather than distressed counties. 

Wage Levels. The new jobs directly generated by these ARC-funded projects were 

primarily industrial rather than commercial or service jobs, and thus would be expected to 

have wage levels higher than the overall average in those counties. An attempt was made 

to document these differences. However, it was concluded that it was not possible to 

accurately measure such differences in wage levels for this study. The reason is that the 

project information on directly generated jobs and payroll from ARC-supported projects 

did not sufficiently distinguish levels of part-time and full-time jobs. Published countywide data on wage rates (from the U.S. Department of Commerce’s “County Business 

Patterns” database), on the other hand, do adjust wage statistics to reflect hourly or fulltime rates. Thus, there was not sufficient consistency in the definition of pay per job to 

allow for a comparison of project and overall wage rates. Nevertheless, there was a clear 
23 

consensus, indicated in the local interviews, that the ARC-funded projects had indeed 

broadened available job opportunities and provided desirable types of jobs. 

Table 3.4 

Total Overall Personal Income Impacts

 Income Income from New Jobs 

No. of 

Projects 

From 

Retained Jobs

Direct Wage 

Income

Indirect & 

Induced Income

Total Direct+ 

Indirect/Induced

Project Type 

 Access Road 15 39,198,400 56,255,240 29,001,911 85,257,151 

 Business Incubator 11 272,665,760 57,057,400 40,464,049 97,521,449 

 Industrial Park 22 27,314,000 110,695,400 59,141,697 169,837,097 

 Water/Sewer-Business 39 101,504,000 352,855,900 244,770,069 597,667,969 

 Water/Sewer-Residential 12 0 0 0 0

 Total 99 440,682,160 576,863,940 373,377,726 950,283,666 

Area Rating (pre-project) 

 Distressed 24 45,600,000 35,404,800 13,371,656 48,818,456 

 Transitional 75 395,082,160 541,459,140 360,006,070 901,465,210

 Total 99 440,682,160 576,863,940 373,377,726 950,283,666 

 

State

 Alabama 12 $39,448,000 $91,094,000 $55,616,572 $146,710,572 

 Georgia 8 $8,664,000 $55,420,000 $21,329,680 $76,749,680 

 Kentucky 13 $16,600,000 $28,743,000 $12,860,748 $41,645,748 

 Maryland 2 $270,149,760 $25,082,400 $19,011,569 $44,093,969 

 Mississippi 17 $8,590,000 $61,826,740 $26,648,846 $88,475,586 

 North Carolina 4 $2,226,000 $33,352,000 $16,346,684 $49,698,684 

 New York 6 $920,000 $19,405,000 $7,753,080 $27,158,080 

 Ohio 5 $40,218,400 $47,678,400 $15,433,443 $63,111,843 

 Pennsylvania 11 $9,466,000 $23,446,000 $13,253,678 $36,699,678 

 South Carolina 2 $0 $126,600,000 $147,778,200 $274,378,200 

 Tennessee 6 $28,000,000 $27,616,400 $10,950,426 $38,566,826 

 Virginia 5 $6,000,000 $6,000,000 $2,377,300 $8,377,300 

 West Virginia 8 $10,400,000 $30,600,000 $24,017,500 $54,617,500

 Total 99 $440,682,160 $576,863,940 $373,377,726 $950,283,666 

Note: See text for discussion of indirect and induced effects of retained jobs 

3.5 Effects on Public and Private Investment 

Overview. ARC does not fully fund any infrastructure or public works projects. Rather, 

ARC co-funds projects which also have some other federal funding assistance. The other 

federal funding is predominantly from the Economic Development Administration, the 
24 

Farmer’s Home Administration of the U.S. Department of Agriculture, the U.S. 

Department of Housing and Urban Development (through Community Development 

Action Grants) or the Federal Highway Administration of the U.S. Department of 

Transportation. In addition, most of those other federal programs also require some state 

or local matching funds. This section reviews these funding patterns in two parts. First, 

the mix of public funding is described. Then the leveraging of private sector funding is 

analyzed. A full breakdown of the public funding by project type, area distress level, and 

state is shown in Table 3.5. 

Table 3.5 

Total Public Investment Made

No. of 

Projects ARC $ Fed $ State $ Local $ Total Public $ 

Project Type 

 Access Road 15 $3,425,970 $2,165,763 $1,130,000 $3,370,525 $10,092,258 

 Business Incubator 11 $2,984,123 $4,272,400 $990,760 $3,887,485 $12,134,768 

 Industrial Park 22 $7,561,457 $9,948,802 $10,329,541 $9,909,451 $37,749,251 

 Water/Sewer-Business 39 

 

$14,599,922 $9,775,336 $4,769,900 $17,816,010 $46,961,168 

 Water/Sewer-Residential 12 $3,861,575 $2,324,000 $0 $4,024,956 $10,210,531

 Total 99 

 

$32,433,047 $28,486,301 $17,220,201 $39,008,427 $117,147,976 

Area Rating (pre-project) 

 Distressed 24 $6,404,885 $1,712,986 $0 $7,590,199 $15,708,070 

 Transitional 75 $26,028,162 $26,773,315 $17,220,201 $31,418,228 $101,439,906

 Total 99 $32,433,047 $28,486,301 $17,220,201 $39,008,427 $117,147,976 

 

State

 Alabama 12 $3,042,220 $7,134,526 $80,000 $7,155,433 $17,412,179 

 Georgia 8 $1,450,150 $2,256,000 $269,000 $957,610 $4,932,760 

 Kentucky 13 $3,835,265 $2,926,422 $2,278,000 $7,023,636 $16,063,323 

 Maryland 2 $724,000 $2,172,000 $0 $730,100 $3,626,100 

 Mississippi 17 $3,557,290 $2,005,040 $60,000 $2,803,888 $8,426,218 

 North Carolina 4 $680,418 $651,900 $651,900 $565,029 $2,549,247 

 New York 6 $1,055,000 $1,350,000 $1,245,760 $1,979,454 $5,630,214 

 Ohio 5 $1,023,657 $1,995,763 $338,891 $1,073,242 $4,431,553 

 Pennsylvania 11 $3,017,321 $3,712,400 $8,435,832 $5,862,038 $21,027,591 

 South Carolina 2 $2,695,000* $0 $595,000* $4,089,935* $7,379,935* 

 Tennessee 6 $2,081,546 $130,250 $0 $634,992 $2,846,788 

 Virginia 5 $3,010,215 $1,300,000 $665,818 $2,873,255 $7,849,288 

 West Virginia 8 $6,260,965 $2,852,000 $2,600,000 $3,259,815 $14,972,780

 Total 99 $32,433,047 $28,486,301 $17,220,201 $39,008,427 $117,147,976 

*includes BMW plant infrastructure: $2,195,000 ARC, $595,000 state, $3,555,731 local = $6,345,731 

total.
25 

Public Funding Mix. Because of the typical mix of public funding in ARC projects, 

ARC cannot take full credit for the economic impacts of any of its projects. It can, 

however, take credit for helping to leverage other federal, state, and local funds, as well 

as private funds. Overall, ARC funding for these projects totaled $32,433,047, which is 

28 percent of the total public cost ($117,147,976) for these projects. Other federal 

funding averaged 24 percent of project cost, while states invested an average of 15 

percent, and local funding averaged 33 percent of the total. Viewed another way, each 

dollar of ARC investment helped to make possible a package of $2.61 in other public 

funding, adding up to $3.61 of total public funding. 

Overall, the ARC portion of total public funding was: 

• 33 percent of all public funding for access road projects; 

• 25 percent of all funding for business incubator projects; 

• 20 percent of all public funding for industrial park projects; 

• 31 percent of all public funding for water/sewer projects serving business sites; and 

• 38 percent of all public funding for water/sewer projects serving residential areas. 

The ARC portion of public funding was 41 percent for projects in distressed areas and 26 

percent for projects in transitional areas. All together, these figures show that ARC 

funding has played a relatively larger role in those areas that are most in need—especially 

economically distressed areas—and in those projects that are most critical for basic 

household and business operation such as water and sewer services. 

Private Investment Leveraged. Of the 87 economic development, non-residential 

infrastructure projects, 34 were initiated with records of commitments for private sector 

investment. Other projects were initiated with expectation of private sector investment, 

but no record of a specific amount for it. The records of initial commitments indicate a 

total $862 million, of which $400 million was attributable to one single project (the new 

BMW plant in South Carolina). Excluding that one project, there was an original 

commitment for $462 million of related private sector investment. 

Local interviews and data collection conducted for this project showed that these projects 

actually had an even larger impact on private investment at their sites. This investment 

included new or renovated buildings and other business facilities. The actual private 

sector investment associated with (or resulting from) these projects totaled $3.075 billion, 

of which nearly half was attributable to the single BMW plant. Excluding that one 

project, the total actual private investment was $1.675 billion. Details of the private 

investment are shown in Table 3.6. 

The corresponding level of public funding for these economic development projects, 

excluding the BMW case, was $26.4 million of ARC funds and $101.6 million of total 

public funds. Thus, there was $16.65 of private investment for each dollar of total public 

funding. 
26 

It is notable that these private sector leveraging rates vary dramatically among types of 

projects for at least two reasons. First, because of the nature of various project types there 

is relatively large variation in the amount of permanent private investment. In some 

cases, such as business incubator facilities, there is little substantial permanent private 

investment. On the other hand, there is substantial private investment associated with 

access roads and most non-residential water/sewer projects. Second, the variation in the 

maturity and timeline of projects affects the amount of private investment. For example, 

industrial parks may not yet have moved to full-scale marketing of the facilities. 

Table 3.6 

Private Investment Leveraged

 Project-Related Funding 

No. of 

Projects 

ARC Funding 

$ 

Total Public 

Funding $ 

 Original Private 

Commitments 

Total Private 

Investment 

Stimulated by 

Projects 

Project Type 

 Access Road 15 $3,425,970 $10,092,258 $47,830,080 $121,400,000 

 Business Incubator 11 $2,984,123 $12,134,768 $4,255,000 $81,065,000 

 Industrial Park 22 $7,561,457 $37,749,251 $220,360,000 $677,727,000 

 Water/Sewer-Business 39 $14,599,922 $46,961,168 $589,926,000 $2,195,350,000 

 Water/Sewer-Residential 12 $3,861,575 $10,210,531 $0 $13,100,000 

 Total 99 $32,433,047 $117,147,976 $862,371,080 $3,088,642,000 

Area Rating (pre-project) 

 Distressed 24 $6,404,885 $15,708,070 $10,000,000 $118,477,000 

 Transitional 75 $26,028,162 $101,439,906 $852,416,080 $2,970,165,000

 Total 99 $32,433,047 $117,147,976 $862,416,080 $3,088,642,000 

 

State

 Alabama 12 $3,042,220 $17,412,179 $112,326,000 $499,985,000 

 Georgia 8 $1,450,150 $4,932,760 $71,545,000 $160,000,000 

 Kentucky 13 $3,835,265 $16,063,323 $2,000,000 $113,827,000 

 Maryland 2 $724,000 $3,626,100 $800,000 $56,000,000 

 Mississippi 17 $3,557,290 $8,426,218 $9,950,000 $131,450,000 

 North Carolina 4 $680,418 $2,549,247 $2,000,000 $65,700,000 

 New York 6 $1,055,000 $5,630,214 $1,105,000 $17,180,000 

 Ohio 5 $1,023,657 $4,431,553 $33,530,080 $85,100,000 

 Pennsylvania 11 $3,017,321 $21,027,591 $188,700,000 $410,450,000 

 South Carolina 2 $2,695,000* $7,379,935* $420,000,000* $1,429,000,000* 

 Tennessee 6 $2,081,546 $2,846,788 $10,000,000 $72,050,000 

 Virginia 5 $3,010,215 $7,849,288 $0 $6,000,000 

 West Virginia 8 $6,260,965 $14,972,780 $10,460,000 $41,900,000 

 Total 99 $32,433,047 $117,147,976 $862,416,080 $3,088,642,000 

*Each figure for South Carolina includes the following funding for the BMW plant: $2.195 million ARC, 

$6.345 million total public funding, $400 million of original private commitment for project and $1.4 

billion of total private investment leveraged by the project.
27 

3.6 Effects on Tax Revenues 

For a distressed area, the attraction or expansion of business activity can also bring about 

more tax revenue which can help pay for such things as improvements to local schools 

and public services. For that reason, there is interest in examining the likely tax impact 

of these projects. 

Tax revenues can be affected by economic development in several distinct ways: 

• The additional private investment can lead to increased local property tax revenues; 

• The additional wages can lead to additional state income tax revenue; 

• The re-spending of wages on consumer purchases can also lead to additional state and 

local sales tax revenues; and 

• The additional business income can lead to additional business income tax revenues. 

Additional jobs and population growth can also lead to offset increases in public 

expenditures for schools, police, fire, and other public services. However, in the case of 

Appalachian communities with relatively high unemployment, it can be expected that 

these projects will primarily serve the existing area population and hence have relatively 

little effect on attraction of new population, though there can be some additional costs of 

police/fire protection services associated with new or expanded business activity. Such 

cost impacts are, however, very specific to local situations, and hence are not addressed 

here. 

Results. The estimated project impacts on annual tax collections are as follows: 

• state income tax revenue of $14.3 million ($12.1 million excluding BMW project); 

• state/local sales tax revenue of $13.9 million ($11.2 million excluding BMW project); 

and 

• local property tax revenue of $29.2 million ($14.6 million excluding BMW project). 

A breakdown of the tax revenue impacts by project type, area classification, and state is 

shown in Table 3.7. The differences among states in sales and income taxes primarily 

reflect the levels of personal income impact, as well as state differences in average sales 

and income tax rates. In addition, the differences in property tax impacts reflect the 

degree of local tax exemption offered as part of the public incentive package to attract 

some businesses. In some places, some or all of the projects were exempted from local 

property taxes. 
28 

Table 3.7 

Additional Tax Revenues Generated

No. of 

Projects 

State/Local Sales 

Tax Revenue 

Local Property 

Tax Revenue 

State Income 

Tax Revenue 

Project Type 

 Access Road 15 1,719,884 1,939,421 1,543,356 

 Business Incubator 11 3,911,416 415,289 3,744,297 

 Industrial Park 22 823,864 5,543,353 961,324 

 Water/Sewer-Business 39 5,874,940 21,189,054 6,669,570 

 Water/Sewer-Residential 12 1,525,280 70,844 1,380,004

 Total 99 $13,855,384 $29,157,961 $14,298,551 

Area Rating (pre-project) 

 Distressed 24 $3,165,661 1,309,182 $2,341,364 

 Transitional 75 $10,689,723 27,848,779 $11,957,187

 Total 99 $13,855,384 $29,157,961 $14,298,551 

 

State

 Alabama 12 $824,426 $3,085,325 $880,072 

 Georgia 8 $1,719,172 $199,840 $1,378,925 

 Kentucky 13 $1,536,635 $350,933 $1,692,414 

 Maryland 2 $134,607 $0 $55,558 

 Mississippi 17 $2,484,208 $999,279 $2,082,959 

 North Carolina 4 $599,342 $415,160 $109,526 

 New York 6 $214,381 $570,689 $216,818 

 Ohio 5 $4,039 $1,522,161 $4,730 

 Pennsylvania 11 $3,712,761 $4,611,640 $3,809,653 

 South Carolina 2 $1,743,301 $15,575,000 $3,113,230 

 Tennessee 6 $421,840 $1,068,530 $419,954 

 Virginia 5 $133,420 $46,100 $156,263 

 West Virginia 8 $327,252 $713,304 $378,450

 Total 99 $13,855,384 $29,157,961 $14,298,551 

3.7 Benefit/Cost Analysis 

Measurement Approach. The purpose of ARC project funding for infrastructure and 

public works projects is to transfer federal funds to targeted local projects, in order to 

promote improvements to the economic development and quality of life for areas that are 

considered to be economically depressed (classified as either distressed or transitional). 

In the parlance of benefit/cost analysis, the focus of this funding is to bring about desired 

distributional impacts. In this sense, if a business is attracted to invest in and locate 

activities in a depressed area, then it is a desired benefit even if that business activity was 

attracted from elsewhere in the United States (presumably in a less depressed area). 
29 

Given the desire to attract business activity, “success” can be measured in terms of jobs, 

income, or private investment. There is no single benefit/cost ratio that is directly 

applicable. Rather, it is useful to assess the returns on investment for the economic 

development projects in terms of several measures: 

• public cost per job created; 

• private sector investment leverage (ratio of private investment per public dollar); 

and 

• personal income created per public dollar spent. 

For the residential projects, the primary impacts are the provision of a basic quality of life 

through access to community water and sewer service, and associated public health 

improvements. Case studies with local interviews were conducted to assess how the 

residential public works projects affected the communities, but the results are qualitative 

rather than quantitative benefit/costs measures. 

To assess the impacts associated with economic development (non-residential) projects, 

two perspectives were used for analysis: 

• ARC investments were compared with actual results for the entire project in which 

the investment was made. This type of ratio is commonly used in program 

evaluations. But ARC is only one of several public investment sources used in a 

project financing package. As a result, this type of ratio is accurate only if all of the 

project results depended exclusively on the ARC funding, and none would have 

occurred without it. 

• To correct for this problem, investment ratios were also developed that compared the 

total public funding with actual results, and credit is assigned to ARC based on its 

share of total public investment. This method delivers a much better understanding of 

actual return on public investment, and eliminates the common problem of “double 

dipping” among the claims of partnering programs in development projects. 

A further discussion of this approach and its differences from other forms of benefit/cost 

analysis is provided in Appendix C. 

Results for Economic Development Projects. The findings on non-residential, 

economic development project results are summarized in Table 3.8. Three columns of 

numbers are shown: 

1) The first column shows the project results in terms of private investment, jobs, and 

income. Only impacts generated by the 87 economic development projects are 

shown, so that they can be compared with the public costs for those same projects. 
30 

2) The second column shows results comparing total impacts with ARC dollars spent. 

As previously noted, this comparison is most useful if it is assumed that the project 

results would not occur without the ARC funding. 

3) The third column shows results comparing total impacts with total public dollars 

spent. Since the ARC funding is always accompanied by additional public funding 

for other aspects of the project, the total public dollars are always greater than the 

ARC dollars alone. The measure of total public dollars combines ARC funds, other 

federal funds, state funds, and local public funds and treats them all as one package 

of funding. The resulting ratio thus represents the “average impact” of public 

funding for these projects. This measure is most useful when it is recognized that 

the marginal impact of the ARC dollars cannot be accurately distinguished from the 

marginal impact of other public dollars invested in these projects. 

Table 3.8 

Ratio of Total Results per Public Dollar 

for Economic Development (Non-Residential) Projects 

 Project Impact Ratio per ARC $ Ratio per Public $

Total Private Investment $ 3.075 billion 

($ 1.675 billion)*

107 : 1 

(58 : 1)*

29 : 1 

(16 : 1)*

Jobs 

 New Jobs: Direct 23,377 $1,222/job $4,574/job 

 New Jobs: Total 44,331 $ 645/job $2,412/job 

 Total New + Retained Jobs 60,718 $ 470/job $1,761/job 

Income 

 From New Jobs: Direct $ 577 million 20 to 1 5.4 to 1 

 From New Jobs: Total $ 950 million 33 to 1 8.9 to 1 

*The $1.675 billion reflects the $3.075 billion total minus the BMW project, which had a 

disproportionately high level of private investment ($1.4 billion) 

Note: All ratios are based on non-residential project funding: ARC $28.6 million, total public $106.9 

million; see text for important limitations on interpretations of these ratios.

The results are impressive. Findings are as follows: 

• Total private investment stimulated. Overall, there was nearly $29 of private 

investment per dollar of public investment in economic development projects. Even 

deleting the single large project, it was $16. The rate is so high largely because of the 

nature of the public works projects, in which an access road, sewer line, water line, or 

industrial park development improvement is made that may attract other businesses to 

the location. 

• Job creation rate. Overall, the economic development projects studied here cost 

$2,412 per new job created, including indirect and induced job creation. If jobs saved 

are also counted, then the average cost drops to $1,761 per job (new and retained). 
31 

• Personal income. The new jobs led to increased personal income for residents of the 

affected counties. The ratio was approximately $9 of annual personal income to $1 

of a one-time public funding investment for economic development projects. 

Table 3.9 shows how the leveraging of public dollars differs among the four types of 

projects. This is shown first in terms of ratios per ARC investment and second in terms 

of ratios per total public investment.8

 Because of the unusually large private investment 

impact of the Greenville-Spartanburg BMW project on the water and sewer category, the 

project category is analyzed both with and without investments and impacts related to 

that single project (#11163). The analysis is useful as a presentation of alternative 

perspectives on viewing ARC investment impact, not as a comparison of the two sets of 

figures. In general, it shows that rates of private sector leverage tend to be highest for the 

water/sewer and industrial park projects. Public costs per job tend to be lowest for 

water/sewer projects. 

Table 3.9 

Breakdown of Results per Public Dollar by Project Type 

for Economic Development (Non-Residential) Projects

 ARC $ 

Invested 

ARC % 

of 

Public $ 

Public Dollars per 

New Job 

Public Dollars per 

New + Retained 

Job* 

Private Dollars per 

Public Dollar

 Using 

ARC $ 

 Using 

Total 

Public $ 

Using 

ARC $ 

 Using 

Total 

Public $ 

Using 

ARC $ 

 Using 

Total 

Public $ 

Access Road $3,425,970 34% $1,448 $4,266 $920 $2,711 $35.44 $12.03 

Incubator $2,984,123 25% $1,344 $5,466 $771 $3,136 $27.17 $ 6.68 

Industrial Pk. $7,561,457 20% $1,701 $8,494 $945 $4,720 $89.63 $17.95 

Water/Sewer $14,599,922 31% $1,078 $3,273 $508 $1,634 $150.3 $46.75 

w/o BMW $12,404,922 34% $1,093 $3,579 $725 $2,374 $64.12 $19.58 

Nonresidential 

projects $28,571,472 27% 

 

 $1,222 

 

 $4,574 

 

 $645 

 

 $2,412 $107.6 

 

 $28.76 

All projects $32,422,047 28% $1,387 $5,011 $731 $2,643 $95.23 $26.37 

*retained job totals exclude Hagerstown Technical Innovation Center

Breakdown of Overall Results for All Projects. Table 3.10 differs from the preceding 

tables in that it shows the ratios of total results for all 99 projects, including the 12 

residential projects. Some of the residential projects did leverage private investment, but 

none of them had immediate measurable impacts on jobs and associated income. Thus, 

the ratios of overall results shown here indicate slightly lower ratios for private sector 

leverage and income creation (26:1 instead of 29:1), and slightly higher ratios for cost per 

job ($2,643 instead of $2,412). 

The breakdown also reflects differences by project type. Rates of income creation as well 

as private sector leverage tended to be higher for the water/sewer and industrial park 

projects, and lower for the business incubator and access road projects. They were also 

higher for projects in transitional areas and lower for projects in distressed areas. 
32 

Table 3.10 

Results per Total Public Dollars 

for all Economic Development & Residential Projects

Public $ 

per Direct

New Jobs 

Public $ 

per Total

New Jobs 

Total Income 

per Public $ 

Direct Private 

Investment 

per Public $ 

Project Type 

 Access Road $4,266 $2,711 $8.45 $12.03 

 Business Incubator $5,466 $3,136 $8.04 $6.68 

 Industrial Park $8,494 $4,720 $4.50 $17.95 

 Water/Sewer-Business $3,273 $1,634 $12.73 $46.75 

 Water/Sewer-Residential 0 0 0 0

 Average $5,011 $2,643 $8.11 $26.37 

Area Rating (pre-project) 

 Distressed $8,935 $6,074 $3.11 $7.54 

 Transitional $4,692 $2,430 $8.89 $29.28

 Average $5,011 $2,643 $8.11 $26.37 

 

State

 Alabama $4,496 $2,501 $8.43 $28.71 

 Georgia $1,752 $1,189 $15.56 $32.44 

 Kentucky $9,195 $6,446 $2.59 $7.09 

 Maryland $4,343 $2,473 $12.16 $15.44 

 Mississippi $3,325 $2,311 $10.50 $15.72 

 North Carolina $1,833 $1,112 $19.50 $25.77 

 New York $4,854 $3,499 $4.82 $3.53 

 Ohio $3,383 $2,111 $14.24 $28.68 

 Pennsylvania $17,911 $10,124 $1.75 $19.57 

 South Carolina $2,050 $599 $37.18 $193.63 

 Tennessee $2,109 $1,458 $13.55 $25.31 

 Virginia $27,254 $15,212 $1.07 $0.76 

 West Virginia $11,526 $5,429 $3.65 $2.80

 Average $5,011 $2,643 $8.11 $26.37 
33 

4. Evaluation of Impacts by Project Type 

This section provides an analysis of how projected results compare to actual results for 

the major types of projects: industrial park, business incubator, access roads, and 

water/sewer service. As noted earlier, the first three categories were considered to be 

classic economic development projects. Water and sewer projects were divided among 

economic development and residential development projects, although virtually all 

residential projects also demonstrate some level of direct or indirect economic 

development impact.9

This section examines the outcomes for the 79 projects classified in the “economic 

development” category including all industrial park, business incubator, and access road 

projects, as well as 35 of 51 water and sewer projects. To create a balanced view of ARC 

investments, the analysis was developed along a dual track: 

• First, ARC investments were compared with actual results for the entire project in 

which the investment was made. This methodology is commonly used in program 

evaluations, including many at the state and federal level. But each public program 

investment in development project is commonly only a part of a larger package, thus 

it is difficult to unambiguously attribute the proper share of the impacts. 

• To develop a more accurate view of the specific ARC funding impact, investment 

ratios were also developed which limited the ARC “share” of a given impact to that 

portion of public investment provided. This method delivers a much better 

understanding of actual return on public investment, and eliminates the common 

problem of “double dipping” among the claims of partnering programs in 

development projects. This method is referred to as the “ARC Credit” method 

elsewhere in the report. 

Furthermore, this section provides an analysis and examples of qualitative objectives and 

outcomes of projects that were common among project types. The examples are meant to 

be illustrative, not exhaustive. These illustrations often relied on the extensive interview 

process developed with local sponsoring agencies, user firms, and other development or 

governmental stakeholders involved in the application and implementation process. The 

interviews “fleshed out” the raw projection and impact on each project, facilitating the 

identification of common themes among projects. 

4.1 Water/Sewer Projects 

ARC invested in a variety of water and sewer projects, ranging from water and sewer 

system development targeted at unserved and underserved residential communities to 

sewer lines for specific industrial users. In addition, there was a variety of water and 

sewer improvements designed to impact both business and residential development, 

including industrial parks. 
34 

Fifty-one water and sewer projects (52 percent of the total) accounted for 31 percent of 

the total ARC investment reflected in the sample. Thus, water and sewer projects tended 

on average to be smaller than the average sample project. 

As Table 4.1 indicates, water and sewer projects performed well, generally meeting or 

exceeding aggregate projections. Projections for new businesses, jobs, and households 

served were exceeded at a greater rate than those for service to existing entities, probably 

because of the open-ended nature of the former. Residential projects exceeded projections 

for both new and existing households. New businesses were served at almost four times 

the projected rate, and new jobs were created at a rate about 62 percent over projections. 

Table 4.1 

Water/Sewer Projects: Aggregate Projections and Results 

 Projected Actual Actual/Projection 

New businesses served 48 191 3.98 

Retained businesses served 447 443 0.99 

New jobs 8,850 14,347 1.62 

Retained jobs 6,504 5,684 0.87 

New households served 1,928 4,553 2.36 

Existing households served 12,136 13,148 1.08 

In addition to these quantitative outcomes, the interviews conducted with economic 

development officials and various community leaders in each community served by the 

projects helped identify certain key trends and commonalities among water and sewer 

projects. Many cases were cited as examples of situations in which water and sewer 

projects generated other qualitative outcomes not readily measured by the usual 

performance measurements, including the following: 

• facilitated growth and increased commercial activity; 

• supported expansion of new and existing industries; 

• provided incentives for investment by industries reliant on high-quality water; 

• addressed environmental concerns about new development; 

• encouraged collaboration between municipalities; and 

• provided residential amenities such as convenience, cost savings and community 

preservation. 
35 

Examples of the facilitation of growth and increased commercial activity 

• Campbell County, TN: The Careyville/Jacksboro Water Treatment Plant (#10853) 

brought the wastewater treatment plant of Careyville, TN, into compliance with state 

and federal standards, spurring the creation of 600 new jobs—a six-fold increase in 

the town’s employment base. The new jobs have driven a 33 percent increase in the 

town’s population. 

• Greenville-Spartanburg Metro, SC: The largest and most successful project evaluated 

during the course of this review was the BMW Sewer project (#11163) in Greer, SC, 

which provided $2.2 million to support a BMW plant with 1,000 initial jobs. 

• Clay County, NC: The Hayesville Water & Sewer Improvements project (#11151), 

which was intended to support a nursing home, is thought to have led to the 

development of a strip mall and auto-related uses on greenfield sites on the outskirts 

of town. (Local observers also consider this project to be responsible for high 

vacancy rates and disinvestment downtown.) 

• The Jellico Inflow/Infiltration project (#11098) resolved sewage backup problems in 

the ailing downtown area, thereby attracting new business and jobs downtown. 

Examples of support for expansion of new and existing industries. These projects 

provided for communities that were previously unable to get fire insurance because of 

incapacity for sprinkler systems. 

• Winston County, AL: The Arley Water System improvement project (#10489) 

enabled the expansion of three existing furniture makers from a total of 175 to 600 

employees; these firms were previously unable to grow due to insurance problems. 

• Pontotoc, MS: Similarly, the Ecru Industrial Park project (#10901) funded water 

mains needed for industrial sprinkler systems, enabling the creation of 137 blue-collar 

jobs paying an average of $11.50 an hour. 
36 

Examples of incentives for investment by industries reliant on high-quality water 

• Winston County, MS: The Noxapater Water Improvements project (#10904) retained 

and expanded a manufacturer of white industrial gloves used in auto spray painting. 

The factory had been planning to relocate because rust in the local water supply (from 

old galvanized pipes) was discoloring their product. Seventy new and retained jobs 

were secured by the project. 

• Polk County, TN: The Benton Water System improvement project (#11080) 

improved water quality by replacing old metal lines, resulting in the attraction of five 

new businesses with 100 jobs to Benton, TN. The new businesses included a French 

company that bottles local water for sale to upscale markets. The project also allowed 

the local utility to expand their services to adjacent areas, providing additional 

revenues that result in cost savings for customers within the service area. 

• Marion County, TN: Local economic development officials in Jasper, TN doubled the 

size of an ARC-funded water storage tank (#11082) from 25,000 to 50,000 gallons, 

and secured an additional $35,000 from an abutting town. This allowed the town of 

Jasper to attract new industries with 385 new jobs, far exceeding the initial target of 

100 jobs. 

Examples of projects that addressed environmental issues related to new development. 

These projects allowed communities to grow for the first time in many years. 

• Powell County, KY: The Clay City, KY Wastewater Treatment project (#11091) 

removed a moratorium on development imposed because of environmental violations. 

Fifty new houses have been built. 

• Boyd County, KY: The Boyd County Rural Sanitary Sewer System project (#11204) 

lifted an embargo on development resulting from restrictions on new package sewer 

plants in an unincorporated area west of Ashland, KY. This project enabled over $35 

million in new investment and 950 new jobs. A new 2,000-acre regional industrial 

park is now being developed in Ashland. 

• Putnam County, WV: The Winfield, WV Sewer Extension project (#11013), which 

supported 110 service-sector jobs, also sparked the development of 150 new houses, 

resulting in the first increase in the population of this rural West Virginia 

community's population in over 30 years. The project has boosted property values and 

local taxes, supporting better schools and public services. The area is now one of the 

fastest-growing corridors in the country and Toyota is planning to locate a new 

production facility in the vicinity. 
37 

Examples of projects that encouraged collaboration between municipalities. Many of 

these projects resulted in regionalization of public water and sewer, achieving cost 

savings and operational efficiencies. 

• Powell County, KY: The Powell County Water Treatment Plant (#10845) resulted in 

the regionalization of three local sewer districts in Eastern Kentucky. The project 

represented a major step forward in achieving economies of scale in delivery of 

public services in the region. 

• Winston County, MS: The Noxapater Water Improvements project (#10904) resulted 

in the merger of the Choctaw, MS Water Association and another local water 

association to achieve greater economies of scale in development of a new treatment 

plant. 

Projects that fostered confidence in distressed communities. ARC support of water 

supply and sewer improvements fostered confidence in distressed communities, which 

led to new investment in residential development, increased property values, and, in 

many cases, development of new businesses. 

• Bibb County, AL: The Harrisburg Water System improvements project (#10756) 

provided a water storage tank to a threatened community in Alabama’s “tornado 

alley” leading to the development of new housing. 

• Blount/St. Clair Counties, AL: The Blount Mountain Water Extension project 

(#10817) has resulted in a 30 percent increase in the population of Oneonta, AL. 

• Pulaski County, KY: The Nelson Valley Water System Extension project (#11142) 

sparked development of 125 new houses in this distressed Kentucky community, 

where the population has begun to increase for the first time in 30 years. 

• Dickenson, VA: The Clintwood/Skeetrock water project (#11165) has encouraged 

investment in permanent, stick-built housing in a distressed Virginia community, 

reversing a 30-year population decline. 

• Lincoln County, KY: The Crab Orchard Water & Sewer Project (#11169) spurred 

development of 26 new homes in this Western Kentucky community. A $1 million 

retail development is planned which will be the first of its kind in the town. 
38 

Examples of projects that provided residential amenities such as convenience, cost 

savings and community preservation. In distressed community projects, including 

several discussed here, water and sewer projects are not required to directly generate 

business investment and jobs. 

• Blount/St. Clair Counties, AL: The Blount Mountain Water Extension Project 

(#10817) provided public water service to 180 customers in Oneonta, AL, who 

previously had to haul water as they could not afford expensive filtration systems. 

• Choctaw County, MS: The Choctaw Water Improvements project (#10902) provided 

a reliable supply of water to residents of Ackerman, MS, where the unreliable water 

supply created hardship for residents, making simple household tasks tedious and 

leaving many households without water during peak times. 

• Roane County, WV: The Long Ridge Water Project (#11148) provided water and 

sewer service to 55 customers in Walton, WV, where wells had dried up because of 

depletion of the aquifer, which was caused by extensive drilling for oil and gas. 

• Dickenson County, VA: The ARC grant for the Clinton/Skeetrock water project 

(#11165) has reduced the water bill of low income residents in the isolated Skeetrock 

community to an affordable $25 to $30 a month. 

• Rockcastle County, KY: ARC support of the Rockcastle Waterline Extension 

(#11200) helped to keep water service affordable for residents of two rural Kentucky 

communities, many of whom were paying up to $100 a month to get water hauled. 

Local observers say that the affordable water supply has helped to promote a higher 

level of household and personal hygiene. 

• Wayne County, WV: The Kenova, WV Buffalo Creek Water Extension project 

(#12128) has allowed 200 households to wash laundry at home that previously had to 

use laundromats. 

• Jefferson, AL (non-distressed) King Point Water Line Extension (#10988): ARC 

investment enabled a $100 million private investment in a new coal mine and 

provided public water to the community’s 200 households, many of whom previously 

had to haul water because wells were contaminated with mud and iron. 

• Jackson County, GA (non-distressed): The Braselton Wastewater Improvements 

project (#10839) generated 1,387 jobs in this Georgia community for people in the 

local area who were previously faced with commutes of up to three hours a day. 
39 

4.2 Industrial Park Projects

Depending on the needs of a specific project, ARC industrial park investments will cover 

almost any aspect of site development, utility infrastructure, paving or building 

construction, or rehabilitation for multiple users. 

Twenty-two industrial park projects (22 percent of the total) accounted for 17 percent of 

the total ARC investment reflected in the sample. Thus, industrial park project grants 

tended to be smaller than the average sample project. 

Table 4.2 

Industrial Park Projects: Aggregate Projections and Results 

 Projected Actual Actual/Projection 

New businesses served 53 83 1.57 

Retained businesses served 69 69 1.00 

New jobs 4,434 4,444 1.00 

Retained jobs 1,395 1,272 0.91 

Existing households served 910 1,310 1.44 

As Table 4.2 indicates, industrial park projects performed well, generally meeting or 

exceeding aggregate projections. Projections for new businesses, jobs and households 

served were exceeded at a greater rate than those for service to existing business and jobs, 

probably because of the open-ended nature of the former. Infrastructure for at least one 

industrial park project even managed to serve a number of households. New businesses 

were served at a rate about 57 percent above projections. While most projections were 

“only” met, it is important to emphasize the relatively short “on-line” period of several 

parks in the sample projects and the extensive marketing period usually needed for such 

developments, especially outside “hot” development areas. Five of the projects applied 

after 1993, with online marketing for most beginning two to three years later. 

In addition to these quantitative outcomes, the interviews conducted with economic 

development officials and various community leaders in each community served by the 

projects helped identify certain key trends and commonalities among industrial park 

projects. Many cases were cited as examples where industrial park projects generated 

other qualitative outcomes not readily measured by the usual performance measurements, 

including: 
40 

• Provided opportunities for workers with modest as well as higher skills; 

• Provided high job outputs in high-growth sectors; 

• Stimulated cluster development impacts; and 

• Stimulated brownfields’ reuse and development. 

ARC’s industrial park projects supporting opportunities for workers with modest as 

well as higher skills. 

• Madison County, AL: In Huntsville, AL, the Industrial Park Infrastructure project 

(#9994) produced 650 blue-collar jobs in an area where jobs for highly skilled 

engineers were growing but few opportunities had been available for less skilled bluecollar workers. 

• Marion County, WV: In contrast, the West Virginia Hi-Tech Consortium Incubator 

Project (#11493) has supported 310 jobs that have gone to highly skilled, mainly nonlocal people. Although the indirect benefits of increased jobs and income in the 

community have trickled down through the service sector, there is still high structural 

unemployment among blue-collar workers. 

Industrial park projects strategically located within high growth corridors that 

produced more jobs than expected. 

• Lumpkin County, GA: The Lumpkin County Industrial Park (#11028) in the high 

growth Georgia 400 corridor has produced 600 new jobs, far exceeding projections of 

75 jobs. 

• Muskingum County, OH: The East Muskingham Water System Improvements 

(#11092) for the Zanesville, OH, Airport Distribution Park unleashed development 

potential for this fast-growing area. Although only five jobs were projected, the 

project supported the recruitment of four new businesses with 306 jobs. 

• Mercer County, WV: The Gardner Industrial Turnpike project (#10998) provided 

water and sewer service to a rapidly developing area that has become a locus for 

institutional uses. To date, 220 jobs have been created in this area, exceeding 

projections of 150 jobs by almost 50 percent. 
41 

4.3 Business Incubator Projects 

ARC investments in business incubators primarily include the development of buildings 

suitable for multi-enterprise business start-up purposes.10 Eleven business incubator 

projects (11 percent of the total) accounted for 26 percent of the total ARC investment 

reflected in the database. Thus, business incubator project grants tended to be larger than 

the average sample project. 

As Table 4.3 indicates, incubator projects performed well, meeting or exceeding 

aggregate projections in every case, even when adjusted for very high retention estimates 

of one incubator. Because incubators do not traditionally require or expect permanent 

private investment, impacts were not calculated for this category. It is noteworthy, 

however, that actual results exceeded projections in every other category. Actual results 

for new businesses ran more than three times projections. Retained businesses served 

were double the projection—and were much higher when the results of the Hagerstown 

Technical Innovation Center (TIC) were included. New jobs created with the investment 

numbered almost five times projections, and retained jobs numbered 50 percent over 

projections, even without including TIC totals. 

Table 4.3 

Business Incubators: Aggregate Projections and Results 

 Projected Actual Actual/Projection 

New businesses served 34 111 3.26 

* Retained businesses served 2 104 52.00 

Excluding Hagerstown TIC 2 4 2.00 

New jobs 458 2,220 4.85 

* Retained jobs 92 8,338 90.63 

Excluding Hagerstown TIC 92 138 1.50 

New households served 0 0 N/A 

Existing households served 0 0 N/A 

*Hagerstown TIC totals include non-tenant technical assistance 

N/A = not applicable 
42 

The entrepreneurial vitality analysis in Table 4.4 suggests overwhelmingly that ARC’s 

focus on entrepreneurship is right on the mark, since the Region fares poorly in start-up 

activity measures relative to U.S. patterns. Notably, start-up activity and performance 

appear slightly better, on the whole, among project areas that developed incubator 

projects. 

Table 4.4 

Entrepreneurial Vitality in Incubator-Assisted Counties 

U.S.=100 

State County Start-up Rate Start-up Survival 

AL Jefferson 120 98 

MD Allegany 75 116 

MD Washington 88 105 

MS Itawamba 79 87 

NY Cattaraugus 62 102 

NY Chautauqua 54 119 

NY Cortland 78 109 

PA Erie (2) 62 111 

PA McKean 60 125 

WV Marion 90 97 

Sample Average 77 101 

Five of the ten incubator counties had higher start-up activity rates than the sample 

average, and seven of ten had higher-than-average start-up survival rates. Notably, the 

same five counties (representing six of the eleven incubator projects) were located in a 

low-start-up area of the Region that includes southern New York and the northern tier of 

Pennsylvania. A sixth county in the corridor, Cortland, New York, barely topped the 

sample average for start-up activity with a 78 rating compared with the average of 77. 

The identification of need in these areas is extremely well deserved. But overall, the 

sample incubator projects were concentrated in a handful of states and far behind what 

the vitality indices indicate is needed. A larger or different sample of incubator projects 

from the 29 in ARC’s files (of which 18 were closed and 11 selected for this study) may 

have yielded different conclusions. 

In addition to these quantitative outcomes, the interviews conducted with economic 

development officials and various community leaders in each community served by the 

projects helped identify certain key trends and commonalities among business incubator 

projects. Several cases were cited as examples where business incubator projects 

generated other qualitative outcomes not readily measured by the usual performance 

measurements, including the following: 

• Generated higher graduation rates, yielding higher job creation; 

• Played a vital work force development role—not just a home for start-ups; and 
43 

• Provided technology and intensive services that paid off. 

Incubator projects providing technology-intensive and deep technical assistance 

services 

• Washington County, MD: The Hagerstown Technical Innovation Center (#11000) has 

provided technical support that has generated an estimated $55 million investment in 

advanced equipment and plant among the region’s manufacturing sector. Officials 

claimed to have generated over 8,000 new jobs in this rapidly growing county. 

• The Birmingham BEC (#10751) has created an unusually deep role for itself in 

addition to traditional incubator services, including the formation of mentor groups 

and boards, web site design for tenants, and pursuit of and connection to venture 

capital investors. 

Incubator projects that serve as a vital training resource for local people 

• Training and placement have been provided for 260 disabled people in the J.M. 

Murray Center Incubator (#99991). 

• Chautauqua County, NY: Tenants of the Riverside Industrial Center (#11158) in 

Jamestown, NY, have partnered with the Department of Labor, which provides 

training grants for metal workers in support of the center’s tenants. 

• Erie County, PA: The Uniflow incubator (#11692) has focused on work-force 

development. There are now just 40 jobs there but over 150 workers have been 

trained by minority-owned firms with the express purpose of moving employees on to 

better jobs. In addition, the incubator is home to the county’s workforce development 

consortium. 
44 

Higher graduation rates yielded higher job creation: Incubator projects with high 

tenant-graduation rates appeared to support more long-term jobs than incubators with 

long-term tenants. As successful tenants are launched from projects with high turnover, 

incubator premises can be recycled to other small firms that will follow suit. 

• The J.M. Murray Center in Cortland, NY (#12232) has launched eight successful 

businesses that provide a total of 260 jobs, including one very successful mobile busfleet-washing operation. 

• Jefferson County, AL: The Birmingham Assistance Network (#10751) has nurtured 

25 growing firms that have spawned 250 jobs in the city. 

4.4 Access Road Projects 

Access road projects funded a variety of paving efforts, including access to specific 

industrial user sites, access to multi-user industrial parks, and connector roads, sometimes 

between towns, which opened up new commercial land use. Fifteen projects (15 percent 

of the total) accounted for 34 percent of the total ARC investment reflected in the sample. 

Thus, industrial access road project grants tended to larger than the average sample 

project. 

Table 4.5 

Access Road Projections and Results 

 Projected Actual Actual/Projection 

New businesses served 7 30 4.29 

Retained businesses served 13 10 0.77 

New jobs 1,942 2,366 1.22 

Retained jobs 232 1,093 4.71 

Existing households served 30 30 1.00 
45 

As Table 4.5 suggests, industrial access road projects performed well, meeting or 

exceeding aggregate projections. New businesses were served at a rate more than four 

times projections, while retained businesses projected exceeded the actual number 

surviving and served. However, both new and retained jobs assisted by the projects came 

in far above projections. 

As detailed in section 4 of this report, ARC investments in access road projects paid off 

with very significant leveraging rates not attained by other development classifications. 

Specific road access projects for industrial parks had a particularly high rate of job 

creation per dollar spent. 

Access roads with high payoffs 

• Clermont County, OH: ARC’s investment in an access road improvement project 

(#8851) for the Clermont County Industrial Park in Miami, OH, produced 1,120 jobs 

and investment of $37 million, a rate of about $267 per job, or $1,408 per job using 

the “ARC Credit” method (see pages 29-31). This investment leveraged a $37 million 

private investment that created 300 new jobs and retained another 820 jobs. 

• Lee County, MS: ARC’s contribution to the project to widen Eason Blvd. in the same 

county (#10937) generated 450 new jobs in Tupelo, MS, a rate of $444 per job or 

$905 per job using the average job-per-public-dollar method. The Turner Industrial 

Park Access Road project (#10934) catalyzed 600 new jobs paying an average of 

$25,000 a year. This computes to a rate of $850 per job or $1,512 per job using the 

“ARC Credit” method. 
46 

5. Localized Project Impacts 

This section first examines the economic diversification effects of the projects on the 

counties’ industry and employment mix. Most of these projects involved some form of 

manufacturing diversification, although a number of projects involved tourism and prison 

development. In addition, this section examines the effects of projects in distressed 

counties and attempts to identify cases in which projects may have contributed to tangible 

progress in distressed counties. Finally, a framework is developed to examine the other 

qualitative objectives that these projects had on the local economies, including: 

• Reuse of vacant or underutilized sites, including abandoned industrial and 

commercial sites in areas ranging from traditional rural manufacturing centers to 

urban downtowns; 

• Support for existing business opportunities, including bird-in-hand and speculative 

development investments; 

• Strategic investments, including projects designed to carry out larger regional 

visions or to nurture strategic industry clusters; 

• Support for traditional industries that continue to be the mainstay of many project 

counties; 

• Mitigation of environmental problems, largely in rural communities; and 

• Other quality-of-life factors, including work force development opportunities, 

public health, and education. 

5.1 Economic Diversification 

Economic diversification is a key objective of the Commission because increasing the 

number of industries in a local economy helps stimulate overall growth and decrease over 

dependence on any one sector. To assess progress in project areas, a diversification 

analysis was performed for each project location. 

In order to examine the differences in a county’s industry mix relative to the rest of the 

nation, industrial “location quotients” were computed to show the concentration of 

establishments or employment in a particular industry of the county relative to the rest of 

the nation. If a particular industry accounts for a larger share of the county’s employment 

than that industry accounts for nationally, the location quotient will be greater than 1. If 

the industry accounts for less of the county’s employment than it does nationally, it will 

be less than 1. This analysis provides a view of a county’s economic specialization within 

a given industry and the change in economic specialization over time. Moreover, a 

county’s industry specialization can be examined in relation to national industrial trends 
47 

to determine if the industry in question is expanding or declining in employment and 

output.11

It is a matter of debate whether a well-diversified or balanced industry mix is necessarily 

a good thing. Indeed, many economic developers would suggest that heavier 

concentrations of high value-added jobs in manufacturing and in the so-called “traded 

services” are desirable. Nonetheless, reliance on a particular industry does make a county 

vulnerable to sudden or long-term changes in demand for the industry’s product. Thus, 

the results of this diversification analysis must be understood within this broader context 

and limitations, and, most important, within the local context of each project area. 

Counties covered by this project evaluation provide an array of examples, both dependent 

and diversified. In some (Buchanan, VA, at 74.74; Dickenson, VA, at 52.81), mining 

concentrations reflected overwhelming dependence on traditional extractive industries at 

the beginning of the measurement process (1990). In Dickenson, mining concentration 

was cut by more than 40 percent by 1996, while manufacturing, retail, and services 

employment all increased, largely as a result of ARC investment. Other economies, such 

as Cattaraugus County, NY, began and ended the measurement period with more balance 

among sectors, despite relatively high concentrations in manufacturing, transportation, 

and, less so, mining. 

Diversification Effects by Major Sectors 

 

Mining. Eighteen project areas began the 1990 analysis with mining employment 

concentrations at least double the U.S. average (2.00). By 1996, eleven of these (61 

percent) had reduced mining concentrations, nine of them significantly. (Dickenson 

concentrations were down to about 31.) Three of the original 18 (Muskingum, OH; 

Cambria, PA; Campbell, TN) lowered mining employment concentrations below the 2.00 

threshold. Since five of the original 18 could not be measured in 1996 because of 

confidentiality restrictions imposed by the U.S. Bureau of Census, the actual results are 

likely somewhat more impressive. Interestingly, 13 of the 18 diversified into increased 

manufacturing during the same period—but only one above 2.00. Because of the nature 

of mining operations, this trend toward decreased mining dependence may be seen as an 

inevitable and largely positive long-term phenomenon, despite short- to mid-term 

dislocations, the effects of which should not be minimized.12

Despite the general trend away from mining, one project used ARC resources to increase 

reliance on mining. In Jefferson, AL, ARC investment enabled a $100 million private 

investment in a new coal mine that created 822 jobs for miners paying annual wages of 

$36,000 to $45,000 (King Point Water Line Extension in Jefferson County, AL; #10988). 

The project also provided public water to the community’s 200 households, many of 

whom previously had to haul water because wells were contaminated with mud and iron. 
48 

Manufacturing. Twenty-five projects areas (county or multi-county areas) registered 

manufacturing concentrations of 2.00 or greater in 1990. Only 12—a much smaller 

percentage than in mining—lowered manufacturing concentrations by 1996. Nonetheless, 

diversification within the manufacturing sector did take place in a number of areas 

(projects in Harrison County, WV, and Johnson County, TN, provide two examples 

discussed in more depth elsewhere in the report). 

The project sample reflects a general trend of high growth during the 1990-96 period 

often found in areas with high manufacturing concentrations. Indeed, job growth 

exceeded national patterns in 56 percent of all project areas, with 14 of the initial 25 

project areas with high manufacturing concentrations (also 56 percent) exhibiting higher 

aggregate rates for all sectors than the U.S. average. However, eight of thirteen areas (62 

percent) did not decrease manufacturing concentrations. For the 56 project areas that had 

above-average manufacturing concentrations in 1990, 33 (59 percent) showed average or 

higher overall growth during the six-year measurement period. Not a single project area 

which began with higher-than-average manufacturing concentrations ended with lowerthan-average levels.13 

Nineteen project areas registered lower-than-average manufacturing concentrations in 

1990. Of these, only nine (48 percent) exceeded national job growth averages. And of the 

sixteen project areas which began and ended with below-average manufacturing 

concentrations, only seven (44 percent) reflected higher-than-average growth in 

aggregate for all sectors. In both cases, two of the high overall job-growth scorers also 

moved from below-average to higher-than-average manufacturing concentrations. 

The high concentration of manufacturing jobs among ARC investment projects has 

contributed to significant growth in the manufacturing sectors of many project counties 

during the 1990-1996 period. Nonetheless, because of the variations in the industrial 

gains and losses that comprise total growth figures in each county, it is not possible to 

quantify growth in absolute terms, but it is possible to calculate the “project jobs” relative 

to overall growth patterns in each county in the 1990-96 period. The results are nothing 

short of impressive, as discussed earlier in this chapter. 

Service Sectors. Only eight project areas showed higher-than-average service-sector 

concentrations. In seven of these, higher-than-average concentrations are the result of 

sector growth since 1990. In the same period, service concentrations have increased in 

only 43 areas despite the national explosion of firms and jobs in this sector. These 

findings suggest the need for increased analysis and attention to development of traded 

services. 

Retail. Forty of the seventy-six project areas showed average or higher retail 

concentrations in 1990; 45 were at or above national average concentrations by 1996. It is 

clear from interviews, as well as some individual growth patterns, that some ARC 
49 

projects helped stimulate significant retail growth, moving some areas into positions as 

regional retail centers (Cattaraugus, NY; Campbell, TN; Rowan, KY; Cherokee, SC). 

Finance, Insurance and Real Estate. Only five project areas showed concentrations in 

finance, insurance and real estate sectors at higher-than-average levels in 1990. Only six 

(8 percent) did by 1996. Two areas dropped out of high concentration classifications, and 

three entered. While an analysis of financial gaps is beyond the scope of this project, 

these figures indicate that easy access to capital and financial services may be a concern 

in many areas of the Region. 

In general, the diversification analysis of these sample projects indicates that ARCfunded projects clearly assisted counties in diversifying their economies. County-level 

diversification often reflected a perceived need to move away from high levels of 

dependence on (and decline of) traditional industries, most often in mining, textiles and 

low value-added wood products. In other situations (Cherokee, SC, and Powell, KY are 

highlighted below), development efforts created entirely new economic environments for 

rural counties and, in the case of Cherokee, a regional retail center. 

In most situations, ARC investments focused on value-added manufacturing growth. 

While these investments fell within already high manufacturing concentrations in many 

areas, they rarely added to industries on which counties were already highly reliant. 

Rather, ARC investments spawned new industrial firms and clusters (aerospace in West 

Virginia, auto in South Carolina, fabricated metals in Tennessee and others), aiding 

stabilization efforts within the high-value, high-multiplier manufacturing sector. In 

almost every case, industrial park and business incubator development created the 

conditions for a wide variety of new and expanding firms to thrive in several different 

industries. 

Business incubators, water projects that opened new residential areas, and some industrial 

projects played an ongoing role in community diversification efforts. Cambria County, 

PA, for example, unexpectedly became home to multiple, large service-sector operations. 

Medical and high-value service businesses—industries new to the area—were nurtured in 

the Birmingham incubator. Rural Virginia counties (see below) were suddenly found 

attractive by telemarketing and other service firms. In addition to those summarized in 

the highlight boxes, other projects were clearly and successfully designed to make 

diversification inroads on the economic development map of their areas. 

In sum, the project sample clearly reflected successful efforts to move local economies in 

the Region away from traditional reliance on often declining industries and into new, 

high-value areas. Most often this move occurred within the manufacturing environment. 

But, as a review of the project profiles suggests, a substantial number brought new retail 

and, in some cases, value-added service vitality to ARC counties. 
50 

Diversification examples 

• Powell County, KY: The Powell County Water Treatment plant (#10845) helped 

three small rural Kentucky farming communities make a transition from dependence 

on farming to new roles as bedroom suburbs for the rapidly growing West Point 

metro area. 

• Steuben County, NY: The Hornell Commercial Center project (#11155) funded a 

sewer extension in support of a major regional mall in upstate New York. The project 

brought 600 new jobs, which helped to compensate for employment losses in glass 

manufacturing. The mall and the related commercial and leisure development that the 

project has generated have made Steuben a regional commercial center. Local 

observers believe that the project gave the city the competitive advantage necessary to 

subsequently attract a major high-tech manufacturing operation from France. 

• Cattaraugus County, NY (#10621): Access road investment by the ARC helped build 

this area’s role as a regional commercial center (see discussion in the site visit in 

Appendix A). 

• Cherokee, SC: Carolina Outlets Infrastructure project (#12414) supported a large and 

growing factory outlet development with 600 to 700 jobs, which added a regional 

retail pull to the town of Gaffney (see the site visit write-up). 

• Johnson County, TN: The N.N. Ball & Roller Company project (#12372) supported a 

metal fabrication operation that helped to diversify the economy of Mountain City 

away from dependence on textiles and wood. The new jobs that resulted from the 

project offer wages 20 to 25 percent higher than those paid by the traditional 

industries. The project also established a toehold in metal fabrication, which has been 

followed by marketing efforts focused on attracting related industries. 

• Lee County, MS: ARC-funded improvements to Eason Blvd (#10937) supported a 

hospital expansion that created 300 new jobs in healthcare, a rapidly developing 

industry in Tupelo, MS. 

With the help of ARC-funded projects, other areas have similarly established themselves 

in new industries, which have in turn helped to leverage investment in similar operations. 
51 

Other diversification examples 

• Dickenson County, VA: The Dickenson County Industrial Development project 

(#10929) supported a Nexus call center, which will employ 550 people within three 

years. This helped Virginia’s Cumberland Plateau Local Development District to 

attract three other large call centers with a total of 400 jobs. Training grants of over 

$500,000 have been leveraged to train former manual workers in telephone 

communication and computer skills and to establish the region as a center of 

excellence for labor-intensive telecommunications industries. 

• Buchanan County, VA: The ARC’s support for infrastructure at the Slate Creek 

industrial site (#11166) helped Grundy, a Virginia coal mining closure community, to 

recruit two new call centers—an airline reservation office and a market research 

operation—with a total of 165 new jobs. This support has helped Buchanan County 

attract additional call centers in other locations. 

• Diversification away from textiles is also evident in the effects of the BMW project 

(#11163) in the Greenville-Spartanburg metropolitan statistical area, which has 

spurred ongoing attraction of foreign-owned firms (as detailed in the site visit in 

Appendix A). The area has exhibited very strong growth patterns largely because of 

in-migration and the location of large new plant sites. This induced growth will most 

likely stimulate other entrepreneurial activities and help diversify the economy. 

• Harrison County, WV (#10381): ARC investment has helped transform a sleepy rural 

airport into a dynamic center for aerospace maintenance, overhaul, and conversion, as 

detailed in the site visit write-ups. 

In addition, two recurring trends in diversification efforts are worth noting: tourism and 

prison development. 

Tourism Development

In the southern parts of the Appalachian Region, tourism has provided a key means of 

economic restructuring from agriculture and heavy manufacturing into growth tourism 

and related service industries. Wastewater system improvements have supported major 

tourist developments, as shown by the highlighted cases. 
52 

Tourism diversification 

• Jackson, GA: The Braselton Wastewater project (#10839) enabled the location of a 

major resort developed around the Chateau Elan Winery and restaurant. The project 

also supported two manufacturing firms which have provided a combined total of 

1,265 new jobs, more than offsetting losses resulting from the contraction and then 

closure of a Mitsubishi plant. 

• Towns County, GA: The Young Harris Wastewater System Improvements project 

(#11043) supported the Brasstown development, a privately run resort at a new state 

park with 200 jobs. Development also facilitated the construction of seasonal, upscale 

housing. The Hiawassee Sewer System Improvements Project (#11027) supported the 

development of the Chatuge resort with 75 jobs at the site of Georgia’s Mountain 

State Fair in Towns County, replacing jobs lost in the textiles industry. 

• Winston County, AL: The Arley Water System Improvements (#10489) enabled the 

expansion of three existing furniture manufacturers, adding 425 manufacturing jobs. 

This project also spurred development of new lakeside seasonal housing, which has 

increased the population by 25 percent during the winter months. 

• Pulaski, KY: The Garland Road Water Line Extension (#11170) was designed to 

serve 171 new households, but has also been a key factor in sparking a $6 million 

investment toward the development of a new resort complex with almost 200 

additional part-time dwellings and demand for related services. 

• Tourism has also increased as an offshoot of other projects, including the retail 

project in Cherokee, SC, and road improvements for a furniture mart in Tupelo, MS 

(#11102). 

Prison Development 

Projects that have supported new prisons have produced numerous good-paying jobs, 

often with significant local spin off to other businesses in the community. Depending on 

levels of outsourcing, prisons often have high local job multipliers because they are large 

consumers of goods and services such as food, laundry, maintenance, health care, and 

insurance. 
53 

Prison development 

• Belmont County, OH: The Fox-Shannon Industrial Park Improvements project 

(#10574) in Belmont, OH, funded a road originally designed for a UPS facility with 

34 jobs. When the opportunity to compete for a new state prison presented itself, 

however, local officials entered a successful bid for the prison, using the site, which 

has generated 500 high-paying jobs, principally for blue-collar workers. 

• McDowell County, NC: The McDowell County Water and Sewer project (#10882) 

helped to attract a prison with 435 direct jobs, which have induced another 300 jobs 

in the local area. 

• Habersham County, GA: The Demorest Water System improvements (#10842) 

enabled the expansion of a state prison in Habersham County, providing 200 jobs 

paying $15.00 to $20.00 an hour. The increased employment from the prison and a 

paper mill (which was able to expand because of the project) is believed by local 

observers to have also spurred the development of 150 new houses in the community. 

• In Forest County, PA (#10392) a sewer line extension made possible the planned 

development of a state prison which will provide numerous good-paying jobs in the 

area. 

5.2 Distressed Community Impacts 

To discover the trends within both the sampled and unsampled distressed counties an 

analysis traced the progress of the most distressed ARC counties in both groups. Of the 

90 ARC counties that were in the distressed category in 1988, 22 (24 percent) moved up 

to the transitional category by FY2000.14 Among the project counties, 18 were distressed 

in 1988, approximately the same proportion as of all ARC counties. While a direct causal 

relationship should not be imputed, the sampled distressed project counties clearly 

improved at a greater rate than did unsampled distressed counties. 

Another analysis traced the progress of ARC counties that were deemed transitional in 

FY1988 in both the sampled and unsampled groups. Of the 289 ARC counties that were 

in the transitional category in 1988, 39 (13 percent) dropped to distressed, 232 (80 

percent) remained transitional, 14 (5 percent) moved into competitive, and 4 (1 percent) 

moved to attainment rankings by FY2000.15 

Among the sampled counties, 58 were transitional in 1988. By FY2000, 8 of these had 

dropped to distressed, 44 maintained transitional rankings, and 6 improved their ratings to 

competitive. The overall rate of the sampled group decreased from 2.00 to 1.97. While 
54 

the sampled group declined overall, the drop was slightly less than the decline identified 

among the all-ARC group of transitional counties. 

In the case of counties starting out as either distressed or transitional, it’s worth stressing 

that no causal relationship can be ascertained.16 An analysis of the projects in counties 

that moved from “distressed” to “transitional” designations suggests, however, that 

project investments in several of these progressing counties were significant contributing 

factors in elevating county status. In at least four cases, demonstrable impacts included 

the retention or creation of 5 percent of the total number of jobs in these counties. 

Project counties moving from distressed status to transitional status 

• Bibb County, AL (#10756): ARC funding went toward a water project that did not 

directly bear on the economy but contributed to a renewed sense of optimism 

regarding the community’s future. The project served 295 households, including 20 

new homes. 

• Pulaski County, KY (#11142/#11170): Funding covered two water supply projects 

that improved life for more than 500 homes and spurred the development of 40 new 

homes—and also assisted in the creation of a resort community now under 

development. 

• Grainger County, TN (#11083): This water filtration project serviced existing 

residential communities and also facilitated substantial new housing development and 

58 businesses. New businesses have been attracted to the community since the project 

was funded. The project accounted for 185 new jobs and 685 retained jobs; the 

county supports about 2,500 jobs in total. 

• Marion County, TN (#11082): This multi-faceted infrastructure project satisfied key 

demands of an incoming metals manufacturer. The project (including the location of 

other businesses) has resulted in almost 400 jobs—almost 7 percent of the total 

number of jobs in this small county. 

• Polk County, TN (#11080): Water system improvements resulted in the location of 

five new businesses and almost 100 new residential units in the area. One hundred 

new jobs were created and 300 retained in this county, which supports only about 

2,400 jobs in total. 

• Wayne County, WV (#12128): A recently completed water pipeline project brought 

service to more than 200 homes in a community with many contaminated wells. This 

project brought this community in line with the progress that had been experienced in 

the rest of the county. 
55 

Other counties moved from transitional to competitive rankings with the aid of ARC 

investment projects: 

Projects in transitional counties that moved to competitive status 

• Madison County, AL (#9994): This infrastructure project was a key element in the 

creation of a supplier-focused industrial park, which has created 650 jobs in the 

county since 1988. This is a significant development despite the relatively modest 

scale of impact (direct jobs account for 3.2 percent of net job growth in 1990-96, and 

total jobs created by the project account for 6.4 percent) in this county of 102,000 

jobs. 

• Habersham County, GA (#10800): The water extension project facilitated service to 

both business and residential communities. It resulted in 465 new jobs and 65 retained 

jobs (only the retained jobs were originally anticipated). Direct job creation and 

retention resulting from the project accounted for 28.4 percent of the county’s net 

growth from 1990 to 1996. 

• Buncombe County, NC (#11376): Extension of water and sewer lines to an industrial 

park has resulted in the creation of 420 new jobs. These and indirect jobs created by 

the project accounted for more than 9.9 percent of the net job growth in the county 

from 1990 to 1996. 

• Clermont County, OH (#8851): This access road project has opened up new 

commercial areas, facilitating the creation of 300 jobs and the retention of more than 

800—about 2.4 percent of total county net job creation in 1990-96. 

• Spartanburg County, SC (#11163): This sewage treatment project was instrumental in 

the development of a BMW plant, which has created 3,000 jobs in the metropolitan 

county of 104,000 total employment. Direct employment accounted for 8.9 percent of 

total net job growth in the bi-county area in 1990-96, while direct and indirect jobs 

created account for a whopping 34.5 percent. 

• Putnam County, WV (#11013): This sewer project unexpectedly sparked the 

development of 150 new homes and 60 new jobs, as well as 50 retained jobs, in this 

county of about 13,000 total jobs. Project impacts (accounting for 1.6 per cent of total 

net job growth 1990-96) were but one factor in a growth explosion that witnessed a 

65 percent increase in county jobs between 1990 and 1995. 
56 

5.3 Site and Facility Reuse 

For many traditional manufacturing areas, particularly those concentrated in the northeast 

areas of the Region, project priorities include the cleanup of abandoned industrial 

property and often-contaminated brownfield sites. ARC-investments supported the 

recycling of several industrial sites, often providing high-quality blue-collar jobs in 

industries new to their areas and often for dislocated workers. 

In general, these projects put back into productive use sites that had been symbols of 

community blight for long periods, a value difficult to reflect in “jobs created” or 

“businesses served” measures. 

Site reuse examples 

• The Aliquippa Industrial Park project (#11679), on the former site of LTV’s 

Aliquippa Steel Works, has attracted a gypsum plant with 190 jobs paying $25,000 a 

year. 

• Erie, PA’s Veschecco Industrial Park (#11692) is a recognized national leader in 

brownfield development and the attraction of suburban industries back to the city. 

The Uniflow Incubator in Erie has concentrated on nurturing firms and agencies 

focused on workforce development issues. 

• Rehabilitation and productive value-added reuse of aging industrial buildings are 

evident at several ARC investment sites in Pennsylvania, including the Mifflin 

County business park, the Bradford (McKean County) Multi-Tenant Complex 

(#10828), and the Franklin Area Industrial Complex in Venango County (#10865). 

In several instances, incubator projects involving the refurbishment of existing buildings 

in blighted downtown areas have sparked area renewal. A few cases are highlighted 

below as illustrations of the qualitative benefits generated by incubators. 
57 

Incubators revitalizing urban centers 

• The J.M. Murray Center (#99991) improved the area around a formerly vacant 

building in Cortland, NY. 

• In Cattaraugus County, NY, an ARC-funded incubator project (#10564) was located 

in a previously abandoned area. The refurbished building contributed to the 

revitalization of the area, which has enjoyed a renaissance and vast increase in land 

values since the project was completed. 

• The Birmingham Assistance Network Project in Jefferson County, AL (#10751) 

renovated a vacant downtown retail building as an incubator for service and lightmanufacturing firms; this project is leading a revitalization effort in a blighted 

segment of downtown Birmingham. 

5.4 Support for Existing Business Opportunities 

Traditional development opportunities are most often classified as one of two types. The 

first is the “bird-in-hand” effort, which facilitates the location or expansion of specific 

businesses willing to commit to a site. The second is a speculative development effort 

that seeks to prepare a building or site—or enhance the attraction of an area—by 

investment in infrastructure, construction or building rehabilitation. Both types of 

opportunities cut across the four project classification types. And both are well 

represented in the project database mix. 

Facilitation of Bird-in-Hand Site Locations or Existing Business Expansions 

ARC Infrastructure Program investment projects regularly facilitate bird-in-hand 

relocations or existing business expansions, in line with the most traditional economic 

development practices. Overwhelmingly, bird-in-hand projects were implemented as 

anticipated, with firms following through on job-creation commitments. Even where this 

wasn’t the case, other users or anticipated developments made the most of the original 

investment in all but a handful of cases. 
58 

Examples of bird-in-hand development 

• Barmet Industries, an aluminum recycling facility, was sited in Tuscarawas County, 

OH (#10922), creating 144 new jobs with the help of an ARC-funded sewer line. 

• In Cullman County, AL, two water and sewer projects (#10488 and #10572) brought 

services to a new Wal-Mart and a Louisiana Wood Chip plant, enabling the creation 

of over 1,100 new jobs and opening additional acreage to development. 

• A Towns County, GA (#11027) wastewater project created 75 jobs at a newly 

developed Crown Plaza Hotels resort complex. 

• In Madison County, AL (#99994), road and utilities investment assisted Acustar in 

bringing 650 direct jobs and more in attracted suppliers. 

• Infrastructure improvements for Veriform, an aluminum products manufacturer, 

facilitated 385 new jobs in Marion County, TN (#11082). 

• A project in Union County, MS (#10617) brought water and sewer service to a new 

Wal-Mart Food Distribution Center and created 925 jobs. 

• A 70-job, 80-bed nursing home in Clay County, NC (#11151) was developed with a 

sewer project funded by the ARC. 

• A sewer project was developed to serve a proposed BMW plant in GreenvilleSpartanburg, SC (#11163), bringing thousands of direct and indirect jobs to the area. 

The sewer system also serves the city of Greer. 

• In Chautauqua County, NY, the Metal Tech project (#11158) aided construction to 

expand an incubator, creating 60 new jobs and retaining another 60 in the area. 

• In Jackson County, GA (#10839), a wastewater treatment plant was developed to 

serve both Mitsubishi Electronics and the Chateau Elan winery, creating 354 jobs and 

over $90 million in private investment. Although Mitsubishi has since closed, the 

winery and other new and retained businesses have far surpassed job projections. 

• A Boyd County, KY, sewer project (#11204) enabled 50 existing employers to add 

more than 950 jobs over a two-year period. 

• In Johnson County, TN (#12372), site and sewer improvements for an NN Ball & 

Roller factory brought 50 jobs to the area, helping to diversify the economy away 

from dependence on textiles and wood. 
59 

Not all bird-in-hand projects were as successful as planned since company and industry 

downturns cannot always be anticipated. Two cases stand out. In Lee County, MS 

(#11145), an access road for the Bryce-Toga plant failed to live up to expectations when 

Bryce-Toga changed production plans and scaled down its investment. In Choctaw 

County, MS (#10936), an access road was intended to service the Package Corporation of 

America’s Utility Pole Mill, but a downturn led to the plant’s closure. 

In some cases the original bird-in-hand evaporated—but the basic sensibility of the 

project or project site turned out to be sound. Bird-in-hand projects sometimes led 

directly to services critical to the development of new businesses or relocations 

unforeseen when the project originated. 

Unforeseen positive outcomes from bird-in-hand projects 

• In Clermont County, OH, the James River Corporation, the intended user of an access 

road project (#8851), closed its operation but the building was taken over by 

Structural Dynamics Research Group, which expanded from 820 to 1,120 jobs. 

• A Belmont, OH, Industrial Park project (#10574) was intended to serve a UPS 

facility, which was to have been the park’s first tenant. In the end, local officials 

decided to use the site to compete for a large state prison complex, which provides 

500 jobs. 

• Jamestown, NY (Chautauqua County): An access corridor (#10513) was provided to 

locate a candy manufacturer (which has since folded) in a multi-tenant building. In its 

place, five new businesses were attracted to the complex. 

• Caldwell County, NC (#12204): A sewer project for Kincaid Chair looked 

disappointing when Kincaid curtailed expansion plans. However, 40 new jobs have 

been created in five other new, small businesses that use the sewer line. 

• Cambria County, PA (#11396) Industrial Park Infrastructure: The original targeted 

firm never developed operations, while a significant new firm (McAneny Foods) was 

attracted to the site. Unexpectedly, two service companies are also moving regional 

facilities into the park and new acreage is being developed. 

• Lee County, MS Turner Industrial Park Access Road (#10934): The road was funded 

to serve Bassett Manufacturing, creating up to 400 jobs. Bassett moved in, as 

expected, but went out of business because of competitive pressures. However, four 

other firms were recruited and original employment projections were exceeded. 
60 

Investment in Speculative Development Efforts 

Like a number of other federal and state development programs, ARC infrastructure 

investments have also recognized the need for speculative development efforts, especially 

the creation of industrial park space and businesses incubators. Most projects were 

developed without specific commitment from firms to locate. A number of projects 

classified as water and sewer projects actually contributed to industrial park 

developments. 

Although the maturation period for speculative development is longer than that usually 

found in bird-in-hand projects, the success of ARC investments in speculative projects is 

quite clear. In some cases, such as the Buchanan County project summarized below, 

project impacts exceeded other growth patterns in the area. For projects that have had 

time to mature, results were generally at or above projections. Overly optimistic 

projections for some industrial parks (see the second box below) should not minimize the 

very real gains that have been made in difficult local conditions. 

Selected successful speculative development projects 

• Cattaraugus County, NY (#10621): An unusually flexible use of ARC funds was 

reflected in the development of a road linking two New York towns—Olean and 

Allegany. The road created an entire commercial corridor now populated by 

industrial, retail, and professional operations, implementing an original vision of the 

New York Economic Development Zone. As a result, the corridor is now an 

economic center with a diverse economic base. Direct project jobs accounted for 

more than one-third of the net job growth in the county in 1990-96.

• A 242-acre industrial park was developed in Clark County, KY (#11141). Fourteen 

business have located on-site as a result of the sale of multiple speculative buildings. 

• Buchanan County, VA (#11168): An ARC project brought water and sewer lines to a 

small industrial park in this distressed county. The park has become home for two call 

centers (exceeding job projections) and created a base of activity that has helped the 

county market to others. 

• An incubator designed for larger start-ups in Itawamba County, MS (#10354) has 

hosted five firms (three graduates) and helped generate 155 current jobs, including 

one tenant with 60 jobs at present. 

• Project #10572 served the development of one speculative industrial park in Cullman 

County, AL. The speculative park has also sparked the development of a nearby 

private-park development served by the same water and sewer investment. 
61 

Less successful speculative development projects. Not all speculative projects are as 

successful as originally projected (or as quickly as hoped), but most still generate 

significant job numbers in otherwise difficult situations.

• A project in Rowan County, KY (#12151) provided water for an industrial park in 

this (now) distressed county. The park has attracted one major business to the location 

but has fallen behind projections. A speculative building developed on-site remains 

vacant. 

• A water/sewer project in Stephens County, GA (#10855) was part of a 200-acre 

industrial park effort that has located six firms and facilitated the development of 90 

new jobs. While the project has fallen far short of original job projections (725), it has 

contributed growth in a county that saw a net decline of jobs in 1990-96. 

• Beaver County, PA (#11679): Like many brownfield developments, this speculative 

effort in the historic steel town of Aliquippa is projected to pay off handsomely after 

a slow start. Although far behind original optimistic job projections, the site is now 

developing a home for a major gypsum operation that will bring 300 jobs to the area 

and, as important, productively use a portion of a site that has been a symbol of 

community blight for several years. 

• Rockcastle, KY (#11587): This distressed county industrial park water project has 

only recruited only one site since the park went online in 1995, although an option 

has been developed for another eight acres. Even the limited number of jobs 

developed (47 direct) account for more than 15 percent of the county’s 1990-96 net 

growth. Moreover, slow marketing of industrial park space should be anticipated for 

this policy-driven investment in distressed rural area.

 

• A 300-acre site with 20-30 parcels in Luzerne County, PA (#10887) was developed as 

a white-collar, back-office business park. This project represents a non-traditional 

diversification approach which has only begun to pay off with the siting of a single 

facility since 1994, creating about 10 percent of the jobs originally projected for the 

park. Local agencies have been placing priority on more intensive manufacturing 

demand at other sites, but are now beginning to concentrate on marketing the business 

park. 

A handful of areas used “speculative” infrastructure to capitalize upon high growth 

potential. While representatives from higher growth counties are clearly happy with past 
62 

ARC assistance, several express concerns that they have “developed themselves” out of 

an opportunity for future grants because of the higher economic status. 

Higher growth speculative development projects 

• Habersham County, GA, water project (#10842): Assisting the county’s move to 

competitive status, the project was designed to accelerate the economy in the highest 

growth section of the county. The project served a mix of industrial, agricultural and 

residential users. Jobs assisted ran about five times initial projections. 

• The Vista Industrial Park water/sewer project in Buncombe County, NC (#11376) 

assisted a speculative venture that has attracted eight firms with over 400 jobs. While 

less labor intensive activities have dampened job totals, numbers of firms and 

investment are impressive. Equally so is the development of the rest of the corridor 

now served by the water and sewer lines, including additional industrial locations and 

the development of a new (private) industrial park. This county has also moved up to 

“competitive” status since the project was initiated. 

• The Greenville-Spartanburg BMW sewer project (#11163) has spurred levels of 

success that local development officials fear will mask continuing needs in the 

metropolitan area. 

• The Birmingham BAN/BEC incubator (#10751) in Jefferson County, AL, is trying to 

expand into a new facility, but staff is worried that the 2000 census will move 

Jefferson County into a competitive or attainment category that would constrain 

future ARC investment in its still-blighted local area. 

5.5 Strategic Investment Efforts 

The majority of ARC Infrastructure Program investments appear to have been made 

without regard to overall strategic focus. Many of these investments were aimed at site or 

market-specific need or opportunity, as are most development projects. However, an 

impressive number of projects were consciously aligned with regional strategies, or 

developed industry clusters at the strategic core of the area economies. 

For the most part, it is clear that projects developed as part of broader strategic planning 

efforts not only are highly successful by most common measures, but also receive 

focused attention from local officials and service providers (not just sponsoring agencies) 

that maximize success and create synergy with other area development efforts. The 

Benedum, WV, Airport project has clearly created a public-private partnership toward the 

development of regional cluster. The Hagerstown TIC has demonstrated that rural area’s 

potential as a manufacturing magnet and center. The two Erie, PA, incubators have 

focused attention on the industrial redevelopment of an urban core. 
63 

Examples of strategic development projects 

• The Benedum Airport project in Harrison County, WV (#10381) was developed with 

a specific vision of redefining the area as an aerospace center. Direct project impacts 

amount to more than 18 percent of the county’s net growth in 1990-96, while direct 

and indirect jobs generated account for 49 percent of net growth. 

• The Hagerstown Technical Innovation Center (#11000) identified a strategic need for 

ongoing technology assistance to regional manufacturers, adding an attractive service 

and marketing element to a traditional business incubator model. Direct project 

impacts amount to almost 15 percent of the county’s net growth in 1990-96, while 

direct and indirect jobs generated account for 26 percent of net growth. 

• An industrial park project (#11110) in Tishomingo County, MS, was developed to 

create long-term opportunities that capitalized on the area’s river port asset, part of a 

long-range plan for development of about 1,000 acres on the Ten-Tom Waterway. 

• Two projects in Erie County, PA (#11197 and #11162) were designed and 

implemented to create training and employment opportunities for urban workers in 

Erie’s high-poverty core, including an effort to lure suburban manufacturing firms 

back to the city with the promise of a plentiful and reliable workforce. 

• Lee, MS: The Coley Road Improvements project (#11102) supported an expansion of 

the Tupelo Furniture Mart, the second largest of its kind in the United States. Direct 

project impacts amounted to 10 percent of the county’s net growth in 1990-96, while 

direct and indirect jobs generated accounted for 16.5 percent of net growth. 

• A water project in Winston County, AL (#10489) enabled the expansion of three 

firms in the region’s core furniture manufacturing cluster to grow from 175 to 600 

employees. Direct project impacts amounted to almost 18 percent of the county’s net 

growth in 1990-96, and direct and indirect jobs accounted for 24 percent of net 

growth. 

• A project in McKean County, the Multi-Tenant Complex (#10828), has capitalized on 

cluster locations by sponsoring networking and shared equipment use among tenant 

woodworking firms. Along with the particleboard project, direct jobs from ARC 

investments are responsible for 33 percent of net job growth (1990-96) in the county. 

All jobs stemming from ARC projects account for 58 percent. 

• Project #9994 in Madison County, AL, revolved around development of a 

horizontally integrated industrial complex anchored by Acustar, a Chrysler 

automotive component producer. Sixteen firms and 650 jobs, most related to Acustar, 

have located at the site. 
64 

5.6 Support for Traditional Industries 

A number of ARC-funded projects have been used to support traditional industries. 

Although some projects in extractive, resource-based industries produced relatively few 

direct jobs, they were often seen by local leadership as critical to many more jobs in 

related industries. 

Examples of support for traditional industries 

• Tishomingo County, MS: The Tishomingo County Access Road project (#9711) 

funded a road to a limestone quarry in Iuka. The project retained just 25 jobs but 

supported an additional 30 jobs in a related operation and over 100 jobs in materials 

transport. 

• In Cullman County, AL, the Hanceville Industrial Park project (#10488) provided 

infrastructure for a $45 million chip board plant, generating 175 direct jobs and 

providing employment for an estimated 750 timber cutters and 250 truck drivers. 

• Similarly, the Marion Smith Access Road project (#10892) provided funding for a 

wood chip mill in Choctaw County, MS, with a regional job multiplier locally 

estimated at four indirect and induced jobs to each direct job. 

• Jefferson County, AL: The King Point Water Line Extension (#10988) enabled a 

$100 million investment in a new coal mine that created 822 jobs for miners paying 

annual wages of $36,000 to $45,000. The project also provided public water to the 

community’s 200 households, many of whom previously had to haul water because 

wells were contaminated with mud and iron. 

5.7 Mitigation of Environmental Problems/Quality-of-Life Factors 

Projects have addressed long-standing infrastructure issues that provide basic necessities 

and correct problems caused by environmental repercussions such as the effects of 

mining. Correction of these problems is often a prerequisite to economic revitalization. 

Among these projects, the viability of some funded communities is questioned by even 

the leadership of the communities themselves. In others, provision of basic services led to 

significant new economic opportunities facilitated by the same project. 
65 

Examples of projects that mitigated environmental problems 

• Dickenson, VA (#11165): The project provided a public water supply system to a 

community in which the aquifer had been depleted and wells were either dry or 

contaminated due to coal mining. 

• In Nauvoo, Walker County, AL, (#10757) ARC funds installed an elevated 300,000- 

gallon water storage tank without which the existing water system—and the 

community, according to local leaders—would have “shut down.” 

• Powell, KY (#11091): This Clay City wastewater project was needed to correct 

environmental violations which would have imperiled the safety of town residents 

and required a moratorium on development. Since the project, 50 new houses have 

been built. 

• A pumping station in Clay County, MS (#11111) provided public water to 100 

households that relied on hauled water or contaminated wells. Service to existing 

customers was also upgraded, making it possible for the first time to bathe or to wash 

a car any time of day. 

• In Polk County, TN (#11080), improvements brought the water system into 

compliance with state standards, creating a growth spurt that was partially a result of 

the development of a water bottling firm with 100 new jobs, and the expansion of 

water service to nearby towns. 

• Wayne, WV (#12128): ARC funded construction of 8.5 miles of water line to supply 

public water to 203 homes in the Kenova area. Previously, people relied on wells, 

half of which were contaminated. The need had been recognized for 20 years. 

• A Boyd County, KY, sewer project ended a moratorium on development and created 

the basis for 950 new jobs from existing firms as well as a 200-acre industrial park 

development (#11204). 

• A water and sewer project in Walker County, AL (#10997) served a community that 

did not have the necessary clean water to serve its citizens or attract basic business 

services. As a result of the project, the core needs of the community are being met, 

including the ability to sustain basic requirements of commerce. Several businesses 

have been attracted, generating commerce and services to the population in a town 

characterized by one official as "just hanging on" prior to project implementation. 
66 

Community quality of life. Other projects have reduced commuting time and expenses 

for residents by bringing jobs to communities where residents had been previously 

required to travel long distances for employment. Of course, these investments were 

primarily focused on development impacts, not convenience. 

• Jackson County, GA: The Braselton Wastewater Improvements project (#10839) 

generated 1,387 jobs in this Georgia community for people in the local area who were 

previously faced with daily commutes of up to three hours. 

• Rockcastle County, KY: At the Rockcastle Industrial Park (#11587), jobs paying 

$14/hour have been created for Kentucky workers who were previously faced long 

commuting journeys to access quality employment opportunities. 

Other quality-of-life improvements. A number of local development representatives 

pointed to indirect quality-of-life improvements for community residents that resulted 

from ARC economic development investments. 

• Home ownership is a major means to accumulate wealth for many lower income 

households. High-quality blue-collar jobs created by ARC projects have enabled 

many in low-income households to become first-time homeowners. In Lee County, 

MS, local officials credit the Turner Industrial Park Access Road project (#10934) 

with catalyzing 600 new jobs paying an average of $25,000 a year, enabling many 

lower income people to buy their own homes for the first time. 

• Cullman County, AL: Some ARC-funded projects have indirectly provided health 

insurance to previously uninsured workers for the first time. The Cullman 

Infrastructure Improvements project (#10572) brought 1,000 new quality jobs in 

manufacturing and services into this Alabama community, most of which have full 

benefits and provide health insurance coverage to many local families for the first 

time. 

• Increased household incomes associated with ARC projects have motivated a greater 

proportion of people in some communities to seek higher education. In Marion 

County, TN, the Jasper Veriform Industrial Location project (#11082) provided 385 

quality jobs in an aluminum siding plant paying an average of $30,000 a year. Local 

representatives indicate that the increased incomes that resulted are responsible for 

higher enrollment at the local junior college. 
67 

Support for the creation of new local blue-collar jobs is an important development 

objective for areas experiencing high-tech industry growth where many of the new jobs 

accrue to highly skilled people from outside the region. For example, in Huntsville, 

Alabama, workforce demand spawned by NASA-related industries has largely been fed 

by qualified engineers from outside the region. The ARC-funded Industrial Park 

Infrastructure Project (#9994) produced 650 blue-collar jobs for less skilled workers, 

paying annual wages of $11.5 million. In contrast, the West Virginia Hi-Tech 

Consortium Incubator Project (Marion County, WV; #11493) assisted 310 jobs that have 

gone to highly skilled, mainly non-local people. Although indirect benefits of increased 

jobs and income in the community have trickled down through the service sector, there is 

still high structural unemployment among blue-collar workers. 

5.8 Summary 

The variety of characteristics, impacts, and common themes throughout the sample is 

impressive. In general, bird-in-hand, speculative, strategic, and quality-of-life projects 

have been solidly successful in their own right. Moreover, the basic strategy of the 

projects is sound enough and flexible enough so that in most cases where original plans 

went awry, new development options surfaced and were implemented with significant 

impact. 

Projects that resulted from broad strategic planning, area targeting or careful recruitment 

efforts appear to yield the largest results. The BMW marketing effort in SpartanburgGreenville and cluster development project in Clarksburg, West Virginia, represent only 

two of the most visible examples. 
68 

6. Economic Conditions in Project Areas 

The goals of ARC investments are not just to create jobs and income, but also to improve 

economic competitiveness, self-sufficiency, and entrepreneurial vitality in areas of need. 

Thus, this report attempts to measure the extent to which the local project areas are 

fostering economic diversification, economic vitality, and entrepreneurial success. 

These measures are included as a baseline for comparison, rather than as a direct 

reflection of project impacts or consequences. In some cases, job growth or 

diversification analyses clearly reflect high job creation resulting from an ARC 

investment (e.g., Greenville-Spartanburg sewer project). In other cases, an assessment of 

economic vitality and entrepreneurial success can demonstrate the need for the services 

offered by business incubators, or the actual impact of an incubator (e.g., Bradford, PA 

incubator). By and large, though, the analyses of conditions in project areas should be 

viewed as context for the projects themselves and a guide to current development needs 

—not as a direct reflection of sample projects themselves. 

Table 6.1 

Growth & Entrepreneurial Vitality Measures 

Type Years Source Rate type Description 

Job growth 1990-96 CBP* % growth % change 90-96 

Job growth rate 1990-96 CBP U.S.=100 Benchmarked change 

Diversification 1990-96 CBP U.S.=1.00 Sector benchmarks 

Start-up activity 1996-99 Credit data U.S.=100 Starts per total firms 

Start-up survival 1996-99 Credit data U.S.=100 Retained firms 0-3 years 

Firm retention 1996-99 Credit data U.S.=100 All retained firms 

Job replenishment 1996-99 Credit data U.S.=100 Growth measure among 

retained firms 

*CBP: U.S. Census Bureau’s County Business Patterns 

A set of economic analyses was developed for the project counties and, in some cases, 

larger impact areas. The analyses were developed from two different sources and cover 

widely varying time frames and widely varying measures. Growth and diversification 

analyses were developed for each project impact area, as defined by local interviewees, 

for the years 1990-96 using the Census Bureau’s County Business Patterns.17
69 

The several vitality analyses were developed with a variety of private-sector credit 

reporting databases, and cover the reporting years 1996-99.18 

Because projects in the database were initiated and completed over a ten-year period, and 

because projects have widely divergent maturity periods and impact missions, the real 

value of the economic and vitality analyses is the view they offer not of project impacts 

themselves but of the areas in which the projects were developed. For this reason, the 

aggregate analysis of economic and vitality measures is relatively brief, but the numbers 

developed for local areas may assist in the development of strengths and weakness at all 

local levels. 

The categories of economic data analysis are summarized in Table 6.1. Since all but one 

of the analyzed projects were in distressed or transitional counties, vitality trends are 

likely lower than for the Region as a whole. On the other hand, economic development 

project applications naturally appeared to be received mainly from areas that perceived 

opportunity; thus, areas with the lowest levels of vitality may also have been excluded 

from project investments and thus the analysis. 

6.1 Growth Analysis 

The growth analysis measures job growth in each project area in 1990-96, and is 

developed in two different forms. In order to give an absolute indication of growth, job 

growth is described as a percentage of 1990 totals. Second, the job growth percentage for 

each project area was benchmarked against the corresponding U.S. job growth rate where 

U.S. equals 100. That is to say, project areas with growth superior to that of the United 

States scored over 100, while underperforming areas scored below 100. 

As shown by Table 6.2, 42 of the 76 project areas had job growth rates superior to U.S. 

job growth patterns for the years 1990-96. Of these, 25 also performed better than U.S. 

trends in both the firm retention and job replenishment categories. 

While the sample size makes regional comparisons difficult, it’s worth noting that a 

cluster of project areas in the mid-Atlantic ARC states of Pennsylvania, New York, 

Maryland, and Virginia reflected far lower 1990-96 growth patterns than the overall 

sample. In general, a higher proportion of rural areas in the database indicated betterperforming job growth patterns than did those in metro areas. 

Project areas performing above the U.S. average included ten counties designated as 

distressed at the point of project initiation. (Note that the job growth rate measures the 

percentage of absolute growth, so a distressed county with a relatively high growth rate 

could have serious problems and still evidence high relative growth.) 
70 

Table 6.2 

Project Area Growth Patterns (1990-96)

State Total Project Areas # w/ Job Growth 

>U.S. 

% Growth Areas 

Alabama 8 6 75% 

Georgia 6 5 83% 

Kentucky 10 7 70% 

Maryland 2 1 50% 

Mississippi 10 4 40% 

New York 4 1 25% 

North Carolina 4 3 75% 

Ohio 5 4 80% 

Pennsylvania 8 2 25% 

South Carolina 2 1 50% 

Tennessee 5 2 40% 

Virginia 4 0 0% 

West Virginia 8 6 75% 

All Metro 22 13 59% 

All Rural 44 29 66% 

All Project Areas 76 42 56% 

Five of these counties have currently moved to “transitional” designations. Projects in 

these counties all began in 1995 or earlier, so these project impacts may have had time to 

mature in time to be reflected in the 1996 County Business Patterns data. Of the counties 

that began with distress designations and registered higher-than-average growth rates, 

nine also showed overall retention rates over 100. Five of these counties—Gilmer, GA; 

Grainger TN; Lincoln and Rockcastle, KY; and Wayne, WV—also reflected job 

replenishment rates higher than the U.S. average (see the explanation of job 

replenishment in Section 6.3). 

Also noteworthy are the truly impressive growth rates of the 19 project areas that 

claimed more than twice the national job growth rate in the 1990-96 period. Ten of these 

areas were in the southern states of Alabama, Georgia, and Mississippi. Thirteen of these 

areas were rural, while only six were the beneficiaries of metropolitan spillover, with 

three of these in Alabama. 
71 

6.2 Area Growth and Relative Project Impacts 

In order to assess the relative impact of ARC investments, the direct job impacts of 

projects in the sample were compared with the total net job growth of primary impact 

counties 1990-96. Although time frame discrepancies between the net job growth 

measurement period and various projects make this an imperfect measure, nonetheless it 

is a reasonable yardstick of relative impact. 

Sixty-five of the seventy-six project counties qualified for this assessment. Counties with 

only non-economic development water and sewer projects were excluded. Four 

categories of relative impact were established: 

Highest relative impact was registered in counties where projects stimulated more than 

100 direct jobs and accounted for more than 10 percent of total job growth as reflected in 

the 1990-96 measurement. Thirty-four counties reached both thresholds. 

>10% of net growth;<100 direct jobs(11 counties) >10% of net growth;>100 direct jobs (34 counties)

Cambria PA Belmont OH Habersham GA Polk TN

Choctaw MS Boyd KY Harrison WV Pontotoc MS

Dickenson VA Buchanan VA Itawamba MS Powell KY

Forest PA Campbell TN Jackson GA Rowan KY

Johnson TN Cattaraugus NY Lee MS Stueben NY

Luzerne PA Chautauqua NY Lumpkin GA Towns GA

Monroe KY Cherokee SC Marion WV Union MS

Rockcastle KY Clark KY Marion TN Venango PA

Scott VA Clay NC McDowell NC Washington MD

Stephens GA Cortland NY McKean PA Winston AL

Winston MS Cullman AL Mercer WV

Grainger TN Mifflin PA

<10% of net growth;<100 direct jobs (8 counties) <10% of net growth; >100 direct jobs(12 counties)

Allegany MD Alcorn MS Lauderdale AL

Blount AL Beaver PA Logan WV

Caldwell NC Buncombe NC Madison AL

Gilmer GA Clermont OH Muskingum OH

Lowndes MS Erie PA Tuscarawas OH

Putnam WV Grnville.-Sprtnbg. SC

Russell KY Jefferson AL

Washington OH

Table 6.3 Relative Impacts: Area Growth and Direct Project Jobs
72 

A second tier of high impact was indicated for 11 counties where direct project jobs did 

not reach 100 percent but where the achieved totals accounted for more than 10 percent 

of net 1990-96 job growth. 

Another 12 project counties reflected more than 100 direct jobs from ARC investments, 

but direct job totals were less than 10 percent of net county job growth in 1990-96. 

The relative impacts were considered most modest in those eight counties that were less 

than “100 jobs created” and less than the “10 percent net growth” threshold attributable to 

ARC projects. 

In sum, the relative impacts of investments in primary project counties are significant in 

both depth and breadth. Forty-nine percent of the counties examined met both “high 

impact” thresholds. Job impacts exceeded 10 percent of net job growth in 69 percent of 

the counties examined, and exceeded 100 direct jobs in 68 percent. 

The same measurements, when applied to total (direct and indirect) jobs generated by 

projects, are even more impressive. Fifty-two counties (80 percent of those examined) 

show project impacts greater than 10 percent of net job growth. Forty-four (68 percent) 

met both the net growth and total jobs thresholds. 

Geographic Variation of Growth 

• Naturally, there are individual stories behind each of these relative impact measures. 

Some reflect exactly what appears at face value: large projects with major impacts on 

both robust regions (Spartanburg-Greenville, SC) as well as those that are more 

modest in size and growth experience (e.g., McKean, PA). 

• Ten of the measured counties experienced negative net job growth during the 1990-96 

measurement period, making ARC projects all the more significant in terms of 

regional impact. These counties were Buchanan, VA; Chautauqua, NY; Choctaw, 

MS; Cortland, NY; Dickenson, VA; Itawamba, MS; Luzerne, PA; Scott, VA; Union, 

MS; and Venango, PA. 

• Projects in relatively large metropolitan environments created significant numbers of 

jobs but by their nature did not reflect a 10 percent impact on the project county. 

Incubator projects in Erie, PA, and Birmingham, AL (Jefferson County) fell into this 

category. In others, even projects generating fewer than 100 jobs exerted a major 

impact on counties with small projects (Forest, PA; Dickenson, VA) and, in some 

cases, in larger counties with relatively stagnant growth (Cambria, PA). 
73 

6.3 Economic Vitality 

Each segment of the four economic vitality analyses was developed through a variation 

of the “firm life” methodology. A more detailed description of the methodology can be 

found in Appendix D. 

Four measures were included in the vitality analysis: 

• Entrepreneurial Activity, as measured by a comparison of start-up rates across the 

United States with rates in each project area. The results of each local area were 

compared with U.S. results where U.S. equals 100. 

• Entrepreneurial Survival rates were developed for each project area. The percentage 

of surviving young firms in each area was then benchmarked against U.S. patterns 

where U.S. equals 100. Together with the entrepreneurial activity rate, the resulting 

entrepreneurial survival rate creates a quantifiable measure of entrepreneurial vitality 

in each project area. 

• Firm Retention Rate supplements the entrepreneurial survival rate and tracks all firms 

across the United States and within each project area in the 1996-99 period. 

• Job Replenishment Analysis compares the number of jobs lost by failed firms in the 

firm retention analysis with those added by survivors over the same period. The 

replenishment rate serves as an important supplement to the firm retention rate, which 

can reflect high scores in areas with relatively stagnant economies, as well as those 

that have more robust economic conditions. In general, high retention and 

replenishment rates signal economic vibrancy even in areas that are not business 

migration leaders or “hot spots” for start-up activity. 

Findings. Generally, the vitality analysis identified entrepreneurship as the clearest need 

in most project counties. Of the seventy-six project areas, only six met or exceeded U.S. 

start-up rates of activity for the years 1996-99, including only one county classified as 

rural. Two of the higher performing areas were in Alabama; the others were in West 

Virginia, Tennessee, and Mississippi. 

Nineteen of the twenty counties in the sample currently designated as distressed counties 

reflected start-up activity rates below the U.S. average of 100. 

Of even greater concern, 61 of the 76 project areas indicated start-up rates at least 10 

percent below national patterns (scoring 90 or less). Mississippi counties in the sample 

scored remarkably well in this analysis. Moreover, survival rates of young firms (0-3 

years in operation as of 1996) were somewhat better than overall rates; 28 project areas 

had start-up activity rating less than 91 and young firm survival rates that were lower 

than the U.S. average. By themselves, high entrepreneurial survival rates may not be as 
74 

impressive as they first seem; when coupled with low start-up activity and overall 

growth, higher survival rates may merely reflect a lack of competition. 

In this regard, 33 project areas reflected job growth (1990-96) below U.S. averages and

lower-than-average start-up activity rates. Of these areas, 19 also had job replenishment 

rates lower than the U.S. average. All four of the Virginia project counties as well as four 

of Pennsylvania’s eight project areas appear in this higher risk category. 

Table 6.4 

Project Area Entrepreneurial Patterns (1996-99)

State Project 

Areas 

Start Activity 

>90% of U.S. 

% of 

Areas 

Survival>U.S. 

(firms 0-3 

years.) 

% of 

Areas 

Alabama 8 2 25% 2 25% 

Georgia 6 0 0% 3 50% 

Kentucky 10 0 0% 4 40% 

Maryland 2 0 0% 2 100% 

Mississippi 10 7 70% 6 60% 

New York 4 0 0% 4 100% 

North Carolina 4 0 0% 2 50% 

Ohio 5 1 20% 5 100% 

Pennsylvania 8 0 0% 7 88% 

South Carolina 2 1 50% 0 0% 

Tennessee 5 2 40% 3 60% 

Virginia 4 0 0% 2 50% 

West Virginia 8 2 25% 2 25% 

All Metro 22 6 27% 13 59% 

All Rural 44 9 20% 29 66% 

Distressed 20 5 25% 7 39% 

Non-distressed 56 10 18% 35 60% 

All Project Areas 76 15 20% 42 55% 

The prevalence of a low level of entrepreneurial activity in project areas strongly 

suggests a need for an increased focus on start-up assistance. Indeed, these findings 

highlight the important contribution of the relatively small number of incubator projects 

in stimulating entrepreneurial activity. Areas such as McKean and Erie, PA, which have 

recognized their gaps in start-up activity and actively used ARC resources to target startup efforts, should be applauded. Other areas that have exhibited very strong growth 

patterns largely because of business in-migration and activity surrounding the location of 

branch plant sites should also be encouraged to add focus on entrepreneurialism, which 

can serve as an offset to future surprises from absentee-owned firms. 
75 

The overwhelming majority of project areas demonstrated higher-than-average firm 

retention rates for the period 1996-99. However, the firm retention measure can by itself 

be deceiving, in some cases masking high start-up “churn” levels and in others a 

generally stagnant economy. Thus, a better look at the vitality of existing businesses in 

the area can be developed by screening areas with high retention for high replenishment

rates as well. This screening reduces to 50 percent the number of areas with aboveaverage performance. Rural Virginia project areas again stand out as a weak spot. Overall 

performance is reasonably matched in both metro and rural, distressed and non-distressed 

areas. 

Table 6.5 

Project Area Business Retention (1996-99) 

State Project 

Areas 

Retention 

>U.S. 

% Replenishment >U.S. 

& Retention >U.S. 

% of 

Areas 

Alabama 8 4 50% 2 25% 

Georgia 6 4 67% 4 67% 

Kentucky 10 9 90% 6 60% 

Maryland 2 2 100% 2 100% 

Mississippi 10 8 80% 5 50% 

New York 4 4 100% 2 50% 

North Carolina 4 4 100% 2 50% 

Ohio 5 5 100% 5 100% 

Pennsylvania 8 7 88% 3 38% 

South Carolina 2 2 100% 1 50% 

Tennessee 5 3 60% 1 20% 

Virginia 4 1 25% 0 0% 

West Virginia 8 7 88% 5 63% 

All Metro 22 18 82% 11 50% 

All Rural 54 42 78% 27 50% 

Distressed 18 15 83% 12 67% 

Non-distressed 58 45 78% 26 45% 

All Project Areas 76 60 79% 38 50% 

The relatively positive rates of job growth, firm retention and the vitality of existing firms 

may be a pleasant surprise for observers of the Region. However, while the overall news 

is good, there are causes for concern. Indeed, 33 project areas registered below-average 

scores in both entrepreneurial activity and job replenishment. This “at risk” group, which 

contains only seven FY2000 distressed areas, combines low growth among existing firms 

with low start-up activity—a combination that calls for attention. 

Individual growth and vitality scores for each primary project area are available 

electronically in a separate Access database. 
76 

Summary 

In sum, four important points can be discerned from the overall trends reflected in the 

economic analyses: 

• ARC investments demonstrate very significant impacts on local project areas relative 

to overall growth patterns. Of 65 areas for which measures could be developed, 34 

project investments yielded both 100 direct jobs and 10 percent of all net job growth 

in the primary impact area between 1990 and 1996. Another 11 counties can attribute 

to ARC investments fewer than 100 jobs but more than 10 percent of all net job 

growth in the sample. 

• Perhaps as important for the future, entrepreneurial activity rates are generally very 

low and in need of serious, concentrated attention. 

• While diversification is an important ingredient of regional vitality, job growth 

patterns in the project areas were most positive among those areas that began with 

large manufacturing sectors and then maintained their manufacturing base (and often 

diversified within them). A reasonable conclusion points to the continued importance 

of nurturing and diversifying within the Region’s manufacturing sector. 

• Basic retention rates are positive, but retention rates coupled with the significant job 

replenishment indicator suggest a low level of growth among existing firms in many 

areas. These findings merit additional policy consideration. 
77 

7. Issues and Recommendations for Program Improvement 

This report is fundamentally concerned with the evaluation of projects. As such, this 

discussion and the modest recommendations are submitted as a reflection on issues that 

arose from the evaluation of the 99 projects. These observations are not meant as a total 

assessment of the program, its priorities, or its delivery system. 

7.1 Consideration of Impacts on Downtown Commercial Districts 

During the course of interviews with grantees and other local representatives, concern 

was expressed that some projects have supported uncontrolled “sprawl” development that 

has led to the loss of jobs and population in small town centers. 

Issues of sprawl and development 

• Clay County, NC: The Hayesville Water/Sewer Improvements project (#11151), 

which was intended to support a nursing home, is thought to have led to the 

development of a strip mall and other auto-related uses on greenfield sites on the 

outskirts of town. Local observers consider this project to be responsible for high 

downtown vacancy rates. Officials identified a significant level of downtown 

disinvestment and relocations of businesses from older downtown properties. 

• Greenville-Spartanburg Metro area, SC: Perhaps the largest and most successful 

project evaluated during the course of this review was the BMW sewer project 

(#11163) in Greer, SC, which provided $2.2 million to support a BMW plant with 

1,000 jobs. Since then, employment at the plant has been expanded to 3,000 jobs 

with an annual payroll of $120 million, and two additional expansions have been 

announced. The region has become a locus for investment by BMW’s suppliers, 15 of 

whom have located in the area, creating 1,500 additional jobs. But the rapid 

development of greenfield sites that this growth has spurred has brought about traffic 

congestion and burdened the area with the costs of additional infrastructure. 

Improvements are now planned to ease traffic flow from employment centers and 

commercial strips, improvements which may also negatively affect existing small 

downtown commercial activity. 

Conversely, in at least two cases represented in the sample, ARC funds have been used to 

replace existing infrastructure in city centers, and traditional commercial downtown areas 

have been the targeted beneficiaries. At least 13 examples of downtown revitalization 

assistance were contained in the universe of projects, but for reasons discussed in 

Appendix B, were not included in the sample of assessed projects.
78 

Cases of revitalization of downtown development 

• The Jellico Inflow/Infiltration project (#11098) resolved sewage back-up problems in 

the ailing downtown area, attracting new business and jobs downtown. 

• The Birmingham Assistance Network incubator (#10751), now the Enterprise 

Development Center, consciously located in a blighted section of downtown 

Birmingham in order to spur community development. Results have been extremely 

modest so far, despite the enormous success of the incubator itself. 

7.2 Follow-Up Technical Assistance and Operational Gaps 

Projects in the smallest, most rural communities often don’t live up to their broadest 

potential because of a lack of local technical resources. For example, a residential water 

project might open up commercial or industrial opportunities if local agencies had the 

resources and technical advisors to figure out just what to do. Several local interviewees 

suggested that an additional cost of technical assistance could be tacked onto an original 

grant pending completion of the physical project. The need for operational funding and 

other follow-up support for industrial park and especially incubator projects often arose, 

particularly in areas with lower growth or not connected to technically innovative 

projects. This is not to say that the results of projects in such areas are not beneficial—in 

most cases they are. But even more might be made of them with ongoing technical 

assistance. 

Cases needing technical assistance or operational support 

 

• In Nauvoo (Walker County, AL #10757) there is a recognized need and opportunity 

to use land opened up by a residential project for an industrial park. But the vision 

apparently continues to languish because of a lack of local capacity and political 

understanding of the process. 

• The highly successful Hagerstown Junior College Technical Innovation Center in 

Washington County, MD (#11000) almost failed to survive its early years because of 

a lack of operational support. 

• In Clay County, KY (#12257), sites were funded and developed in 1996 but still lay 

dormant for lack of water and sewer lines. A $6 million expansion to the system—the 

need for which was known ahead of site funding—will be completed in the summer 

of 2000 along with construction of a $500,000 spec building (50,000 sq. ft.) on the 

site. Recruitment to the site should start in autumn 2000. 
79 

Technical Assistance and Operational Support (continued) 

• Where follow-up needs have been identified, ARC has been receptive to providing 

necessary follow-up support to take advantage of developing opportunities. In 

distressed Powell County, KY (#10845), development has outpaced the additional 

water treatment capacity created by the original project. As a result, treatment plant 

capacity once again needs to be expanded. ARC monies have been secured for this 

program and to provide an additional reservoir for the three-town district. 

• In at least one case (Forest County, PA, sewer line; #10392) the impact of a sewer 

line extension on existing businesses was not clearly understood. In this case the 

creation of the line was important for the community and businesses, but a limited 

number of users elevated usage costs above sustainable levels for at least some 

businesses. On the other hand, the sewer line also made possible the current 

development of a state prison that will provide a wealth of good-paying jobs to the 

area. 

• A sewer extension project in Scott County, VA (#12183) is allowing the county to 

take commercial advantage of a strategic geographic position—but the need for the 

same project could have been identified, in the view of local officials, 20 years ago 

with a modest level of technical assistance. 

7.3 Zoning and Land Control Issues 

In a few cases, projects in which ARC has invested appear to have triggered a heightened 

level of land speculation. To some extent, such pressures are inevitable, although preproject attention to zoning controls might mitigate excessive and unwanted effects. 

In the case of the Birmingham BEC incubator project, its role as a speculative trigger is 

modest compared with the building pressure from adjacent downtown areas. In the case 

of the BMW facility in Greer, South Carolina, it is not surprising that land costs have 

soared around the high-growth corridor and rippled through the metro area, encouraged 

by both the BMW and FBI facilities (and no doubt increased by recent funding for a 

connecting four-lane expressway). External development issues raised by both of these 

projects are detailed elsewhere. 

At least two other project areas appear to have experienced unwanted speculative 

pressures, at least partially resulting from the projects under review. 
80 

Examples of speculative pressures 

• The very productive Benedum Airport project in Harrison, WV (#10381) coincided 

with the development of a nearby FBI lab facility that together triggered modest, yet 

unwanted, land speculation in the area. 

• Despite vibrant development and full buildings generated by their ARC-funded 

projects, development officials in Cattaraugus County, NY (#10564 and #10621) 

suggest that a lack of understanding and unified local perspective on the need for 

better zoning controls has frustrated development of an industrial district. In the nowimproved corridor, property costs have escalated far beyond reasonable industrial 

rates. 

7.4 Opportunities for Improvement to Future Program Evaluations 

Project Closeout Process. Currently, ARC has application information on expected 

public funding and private investment as well as closeout information on actual public 

funding. Remaining information on actual private investment could be substantially 

enhanced if this information is automatically collected as part of the project closeout 

process. 

Tracking Quality of Jobs. There is a strong public policy interest in providing highquality, good-paying jobs for economically depressed areas. Currently, many federal, 

state, and local economic development programs have made some efforts to track the 

number of jobs that they have helped create or retain. However, there is a remaining 

need for ARC to work with other federal, state, and local agencies to devise better data 

collection methods for assessing the quality of jobs, the associated wage rates, and even 

the extent of part-time vs. full-time hours associated with these jobs. 

Recommendations 

The Commission’s investments and priorities have—and will continue to be—

fundamentally driven by three factors: 

• Internal policy objectives such as investment focus on at-risk areas, stimulation of 

entrepreneurship, and development of strategic industry clusters; 

• Identification of objectives and opportunities by local and district-level development 

entities within the Region; and 

• State priorities and fiscal constraints. 
81 

Recognizing these overriding factors, the comments that follow are offered to inform the 

program and its investment process. 

1) The Region’s administrative approach to the Program deliberately streamlines the 

development process by making commitments and following through without adding 

administrative burdens to either the Commission or its grantees. The current system is 

highly regarded by local development professionals and should be maintained. 

2) The Infrastructure Program’s ability to fund limited residential-only and speculative 

development projects is also highly valued. The Program’s ability to provide flexible 

economic development investments without demanding a bird-in-hand is prized 

among economic development professionals. Looking at the projected and actual 

impact results, speculative economic development investment and residentiallytargeted investments appear to have generally paid off. 

3) A number of counties will likely have “developed themselves” out of future grants 

because of a higher economic status by the 2000 census. The Commission should 

consider promoting the “pocket of distress” concept to permit applications from 

distressed portions of those counties, which should be balanced against overall 

funding constraints of the Program and the local investment of these better-situated 

areas. 

4) Small, rural communities often cannot pursue opportunities opened by projects in 

their areas because they lack technical resources. The Commission should consider 

providing funds for such an “add on” to grant applications from small or distressed 

areas. 

5) Certain valuable projects, often in remote and distressed areas, are unlikely to be selfsufficient for several years. Follow-up operational support should be selectively 

considered, particularly in areas not poised for high growth. It is important to 

condition this support with an evaluation of the project sponsor’s plan to develop selfsufficient operations. In general, this costly assistance would be best used for critical 

strategic effortssuch as the development of much-needed “full-service” incubators. 

6) Along these lines, the performance of project areas relative to entrepreneurial activity 

is nothing less than alarming, especially in the northern Pennsylvania and southern 

New York corridor. Of the seventy-six project areas, only five met or exceeded U.S. 

start-up rates of activity for the years 1996-99, including only one county classified as 

rural. Moreover, 33 project areas register below-average scores in both 

entrepreneurial activity and job replenishment. This “at risk” group, which contains 

only seven FY2000 distressed areas, combines low growth among existing firms with 

low start-up activitya combination that calls for attention and is recommended as 

one focus for future Program projects. 
82 

7) Project objectives can be frustrated by lack of unified local perspective on local 

issues, including the following. 

• Project buy-in should probably include commitments from non-recipient agencies 

(e.g., area zoning commissions) in a position to influence project outcomes. 

• Concern surfaced that some projects encouraged uncontrolled “sprawl” 

development that led to the loss of jobs and population from small town centers. 

In a few cases, projects appear to have triggered a heightened level of land 

speculation. Several projects suggest the need for broader policy reviews of 

motivation and options prior to funding. 

• Consideration of regional (and regionalization) impacts was rarely addressed 

ahead of project implementation. For example, local sewer projects should 

commonly be assessed in light of regional sewer system consolidation options. 

• Commercial- and retail-focused projects should consider impacts on commerce in 

adjacent (usually ARC) areas. 

• Should an economic project that will primarily create a competitive advantage to 

a community or county near a state border because of tax benefits be encouraged? 

Such a question is difficult to answer in the abstractbut efforts should be made 

to identify and grasp these and other likely indirect impacts before the investment 

is implemented, not after the fact. 

8) Only eight project areas indicated service-sector concentrations higher than the U.S. 

average. In seven of these, higher-than-average concentrations were the result of 

sector growth since 1990. In the same period, service concentrations increased in only 

43 of 76 project areas despite the national explosion of firms and jobs in this sector. 

These findings suggest increased attention to development of traded services and 

projects targeting their development. 

9) High manufacturing concentrations often correlated with high growth in the same 

period, suggesting that the Commission continue its primary focus on manufacturing 

and other value-added development segments. 

10) Data collection might be refined to include close-out information on actual private 

investment related to ARC-funded projects. In addition, ARC could explore with 

other federal, state, and local agencies how to devise better data collection methods 

for assessing the quality of jobs, the associated wage rates, and even the extent of 

part-time vs. full-time hours associated with these jobs. 
83 

Appendix A. Site Visit Narratives 

Site visits were made to eight projects in five ARC locations encompassing the north, 

central, and southern segments of the Region. While the visits provided testimony as to 

the accuracy of project reports via paper and telephone, they also facilitated a broader 

sense of the impact and context of projects within the larger scope of an area’s economy 

and development efforts. 

The site visit reports are intended to provide additional context and color to a handful of 

verified projects. Site visits were intended to develop the type of background that is 

somewhat representative of the projects in the sample. Thus, the format of the site visit 

reports is designed as descriptive vignettes that attempt to bring the projects to life within 

their larger purpose. 

Site visits included: 

Bradford, McKean County, PA 

• Bradford Area Multi-Tenant Center, #11398 (Industrial Park) 

• Bradford Enterprise Development Center, #10828 (Business Incubator) 

Olean, Cattaraugus County, NY 

• Cattaraugus Economic Development Zone Infrastructure, #10621 (Access Road) 

• Cattaraugus Incubator Phases I & II, #10564 (Business Incubator) 

Greer/Gaffney, Greenville/Spartanburg/Cherokee Counties, SC 

• BMW Sewer Improvement, #11163 (Water & Sewer) 

• Prime Outlets Infrastructure, #12414 (Access Road) 

Birmingham, Jefferson County, AL 

• Birmingham Business Assistance Network (now Entrepreneurial 

Development Center) Tilman Levenson Building, #10751 (Business 

Incubator) 

Bridgeport, Harrison County, WV 

• Benedum Airport-Air Center Project, #10381(Industrial Park) 
84 

Bradford Multi-Tenant Center #11398 

Bradford, PA 

Bradford Enterprise Center #10828 

Bradford, PA 

In the northern tier of McKean County near the New York border lies Bradford, a rugged 

traditional manufacturing center beset by difficult times. Over the years, the city has been 

hit by a series of dislocations, including downsizings at the Zippo lighter plant and the 

closure of the giant Pennzoil refinery. These are relatively recent events not reflected in 

the 1990-96 growth figures from County Business Patterns. 

Bradford, PA, Multi-Tenant Center 

For several years, Bradford and development efforts elsewhere in McKean County have 

struggled to focus resources on traditional core industries such as value-added wood 

products while looking for a means to expand the powder metals industry, vital to the rest 

of north central Pennsylvania, into the county. At the same time, Bradford’s 

Redevelopment Authority has long identified the need to encourage entrepreneurial 

efforts in this county. The focus on entrepreneurial growth is both a diversification 

measure for an area traditionally dependent on dominant employers and a response to the 

start-up lag in the county. Whether as a function of unmet demand or development 

assistance or both, the area’s start-up survival rate registers 25 percent above U.S. 

averages, and overall firm retention is 13 percent above. Still, Bradford is commonly 

recognized as a troubled center of unemployment and poverty within the more vital North 

Central Pennsylvania Local Delivery District. 
85 

The Multi-Tenant Center at Work 

Within this context, the Bradford Multi-Tenant Center reflects an interesting crosssection of the area. Situated behind a residential area, this series of older buildings is 

home to the Redevelopment Authority as well as a series of local enterprises in wood 

products and other industries. As part of the ARC investment, the buildings are uniformly 

spruced up, with new windows, roofs, vents and plumbing. Painted exteriors yield a clean 

look to the gritty environment. 

One tenant, a maker of redwood spas, busily measures out parking lot space for the 

erection of new production space; the existing buildings themselves are filled. There is 

obvious activity at another wood products firm and a maker of hunting equipment. 

Smaller back buildings are used for storage and distribution. Representatives of the 

Redevelopment Authority comment with obvious pleasure on the extensive levels of 

networking and equipment sharing among tenants involved in wood products 

manufacturean industry with a regional reputation for secretive ways. 

Across town, a “lease” sign is attached to the standing incubator, but development 

officials proudly note that the “old” 40,000-sq.-ft. incubator, developed with ARC funds, 

is fully occupied. Two incubator tenants, a polymer-coating manufacturer and a maker of 

ferrite electronic modules, have grown into the entire space. The floors are stocked high 

with five-gallon containers of coating ready for shipment. An original incubator graduate 

moved out to larger space in the city accommodating the other, growing tenants. 
86 

Across the road from the ARC incubator, a new one rises to meet demand. 

The lease sign itself advertises a building being erected 200 yards away, a new incubator 

necessitated by the lack of expansion space for graduates. The newest 35,000-sq.-ft. 

building is also being erected with ARC funding. The access road developed for the 

original incubator also serves the second, as well as a large Zippo lighter plant that 

supports 500 jobs. The access road also opened up property that previously could not be 

developed and that was recently sold to a private developer with a good track record for 

strip commercial development in the city. An adjacent playground, furnished by the city 

on property donated for use by Zippo, is also served. 
87 

Olean Road Access #10621 

Olean, NY 

Olean Multi-Tenant Center #10564 

Olean, NY 

Things don’t look bad in downtown Olean. The area is a “winner” in the rural 

regionalization sweepstakes, with it economy anchored by half a dozen large, long-term 

manufacturers, including several Fortune 500 companies. Core firms include Dresser 

Rand, Dexter, Conap (specialty chemicals), Cooper Dale Tile (formerly American 

Olean), ABX Ceramics and Cutco/Elcast, a maker of specialty knives that carries on a 

historic regional tradition of fine cutlery producers. 

To be sure, there are difficultiesa few vacant storefronts and persistent obstacles in the 

way of efforts to save historic buildings such as the downtown’s old theater now being 

developed as a chain drug store. But overall, the downtown appears vibrant, boasting 

active commercial and office buildings at its older core and an aging but bright and 

bustling strip center at one edge of town. In line with developments in a number of wellplaced rural towns in rural areas, Olean has developed into a regional commercial center 

attracting shoppers from a 50-mile radius. (A local development official notes that 

consumers come from as far as Bradford, PA, discussed above). New development adds 

to the feeling of vitality: Jamestown Community College is developing a permanent 

campus in the middle of downtown (a $15 million-plus investment) and the Olean 

General Hospital is undergoing a $30 million expansion. 

The entire commercial corridor was made possible by the road. 

The ARC investment in a critical access road, Constitution Street, opened opportunities 

for an entirely new commercial and multi-use district. Four parcels were developed by 

the Economic Development Zone (EDZ) as manufacturing, services, and professional 

space, while an entire strip commercial center was developed at an adjacent parcel. Other 

private development ensued along the road frontage. The remainder of the frontage is 
88 

owned by St. Bonaventure University, which anchors one end of the road. The University 

seems to have no current plans for development outside of a single hotel development. 

Efforts by the EDZ to create interest in other joint projects have not been fruitful. 

At the end of the developed (Olean) portion of the ARC-financed road lies University 

Commerce Center, an EDZ-owned 12,500-sq.-ft. expandable building in need of rear 

paving (a Department of Housing and Urban Development application is in). The Center, 

so named by the EDZ as a friendly nod toward St. Bonaventure, is designed for larger, 

heavier industrial use. One of the tenants, Advanced Monolithic Ceramics, outgrew its 

original site at the Kirkpatrick Incubator. AMC now has 50 employees and is still 

expanding as a maker of ceramic capacitors. Paragon Foods, a macaroni packager, is a 

for-profit spin-off of a sheltered workshop. The ultimate build-out at the Commerce 

Center is projected at 30,000 sq. ft. The building is in nice shape, although its exterior 

was slightly damaged by a heavy ice storm last year. 

The EDZ’s University Commerce Center 

The access road project also incorporated the Allegheny River Trail and a five-mile bike 

trail and stimulated an upgrade and extension of 28th Street, which now cuts across from 

downtown through a newly developed BJ’s Warehouse Club to Constitution Street. 

The Kirkpatrick Economic Development Center, an EDZ incubator funded by a separate 

ARC grant, is fully occupied. A lease for the only currently vacant module was recently 

signed. Space has turned over several times since construction, accounting for about 20 

firms and 70 jobs. The incubator currently hosts a diverse mix of businesses: amusement 

rental, industrial supply, a camera shop, a maker of industrial hygiene products, a 

painting contractor, a cutlery manufacturer, and an adjacent day care center. Parking and 

tenant areas were recently upgraded with funds developed from a refinancing. Rents for 

1500-sq.-ft. modules range from $4 to $8/sq. ft. Flex spaces are easily altered in the 

beamless building. Since the incubator was developed, so has property across the street, 
89 

now siting a credit union, a convenience store, and a gas station. Lots along the road are 

now being priced at up to $100,000/acre. 

The EDZ’s Kirkpatrick Incubator is fully rented. 

With a vigorous downtown and stable manufacturing base, the community appears 

positioned for future growth supported by a new middle school, an expanded regional 

hospital, and multiple institutions of higher learning that are investing in new 

development. Despite the success of the incubator in Olean, start-up rates remain low 

throughout Cattaraugus County (62 percent of the U.S. average), although start-up 

survival and overall retention rates are somewhat above average. By both government job 

growth measures and job replenishment rates alike, overall job growth appears sluggish, 

emphasizing the need for continued efforts to aid start-ups and expansions among 

existing firms. 
90 

Greenville-Spartanburg BMW Water/Sewer #11163 

Greer, SC 

Carolina Prime Outlets Access Road #12414

Gaffney, SC 

Located in South Carolina’s thriving upstate region, these two widely differing projects 

have each demonstrated a significant benefit to local economies. The BMW project in 

particular plays no small role in the boast of local developers that the upstate now 

accounts for about 30 percent of the annual new investment and job growth in South 

Carolina. Interestingly, both projects developed amid a note of controversy. 

The BMW assembly plant 

In 1992 when the BMW project was begun, the host county, Greenville, was designated 

as a competitive county and was eligible for only 30 percent funding by ARC. In 2000, 

Greenville county is considered an attainment county, while neighboring Spartanburg 

county is designated as a competitive county. The development of Greer’s BMW has 

been an unquestionable boon to the entire metropolitan area. Currently employing about 

2,000 in the production of BMW’s Z sports model, the facility is in the process of 

building out capacity to gear up for production of BMW’s sport utility vehicle, projected 

to increase employment by another 1,000. These figures do not include the large web of 

BMW suppliers and jobs spawned by the plant, which encourages suppliers to locate 

close to the mother site. Figures provided by BMW and the state indicate that the BMW 

“community” in South Carolina encompasses at least 33 major suppliers, including 22 

that chose to locate new operations in South Carolina (two-thirds in the immediate area). 

BMW anticipates that at least five additional new firms will develop facilities in the state 

to service the sport utility vehicle (SUV) facility. According to BMW, its in-state 

suppliers have created about 2,500 jobs and pumped $425 million into BMW-related 

facilities around the state. The state Office of Information estimates that the suppliers 
91 

support about 5,000 jobs overall. The supplier train extends through Georgia as well as 

North Carolina. 

At the same time, the project—in which ARC invested only a portion of public funds and 

incentives—has come under criticism as an example of ARC expenditures which were 

too focused on a single large firm, and one which could afford fewer incentives at that. 

Several other external benefits accrued to the region: 

• The Greenville-Spartanburg Jetport extended a runway to 11,000 feet in order to 

accommodate parts shipments for BMW—but the extension has also facilitated 

marketing the airport as a central cargo facility, resulting on ongoing negotiations 

with at least two major express carriers. 

• The same water system improvements developed for the BMW project also serve the 

entire Greer area, including its 54 percent low-moderate income population (1990 

census). 

• Siting the BMW facility has, in the eyes of local development officials, played a 

significant role in generating further interest in the area among foreign investors. In 

1991, for example, the upstate region hosted 60 international firmstoday’s figure 

stands at 116. Foreign firms are not only locating facilities at an impressive clip, but 

also investing in industrial land development activities. One business park in the area 

is wholly owned by German (non-BMW) development interests. 

The BMW Visitor Center and Museum 

The wealth and vitality generated by the project has sparked revitalization of longdormant downtown areas in the two counties. Plans for a 56-acre executive conference 

and convention center build-out in Greenville are under way, largely driven by state and 

private resources. Demand from expansions and marketing efforts is so high that two new 
92 

business/industrial parks spanning 1,400 acres are under development, including a 

technology park. The latter effort aligns with the regional focus on further development 

of its technology cluster, including its existing textile-related chemical, industrial 

machinery manufacture and plastics sectors. These lower job-producing but high-value, 

high-wage industries reflect a regional effort to offset sporadic but ongoing dislocations 

in the basic textile industry, especially its clothing-related segments. 

Part of the area’s success appears to result from the close cooperation of regional 

development players, including several county-level Chambers of Commerce and the 

Public Works Commission of the bi-county city of Greer, which has invested over $100 

million in new infrastructure since 1992, yielding an ongoing spurt of new residential and 

commercial development. (The city considers applications for an average of ten new 

subdivisions per month.) All this translates into an unemployment rate that has hovered 

as low as the 2 percent rangeeven as the metro area’s 340,000-person work force 

expands at a rate of 1.5 percent per year. The average manufacturing wage has climbed to 

over $10.50/hour, about a third above mid-nineties levels. In response to expanding 

opportunities, the work force reflects considerable mobility and “churn,” with employees 

moving on to new jobs and better offers often enough to warrant comment from 

development officials. 

In sum, job growth was higher than the U.S. average by 14 percent in 1990-96. Notably, 

despite the continuing advances in manufacturing, sector growth in the same period was 

only 1 percent—testament to advancing technology and, more ominously, the continuing 

decline of the area’s historic textile base. 

Near the end of this project, BMW announced yet another expansion—an investment of 

$53 million during 2000 in an information technology center and parts warehouse. The 

18,000-sq.-ft. info-tech center will house all of the plant's communications and data 

systems as well as services for video conferencing, Internet, intranet, and other 

communications. The 90,000-sq.-ft. warehouse will allow BMW workers to preassemble some parts before moving them into the plant. A conveyer belt will connect the 

new warehouse to the assembly line so parts will roll into the plant as needed. 

Cherokee County Prime Outlet Center 

At the other end of South Carolina’s Upstate region, the ARC invested in a commercial 

project that the state itself wouldn’t fund because of the retail nature of the businesses 

involved. Cherokee County Chamber officials (in Gaffney) and the Local Delivery 

District argued, however, that the access road and related improvements required for the 

proposed Carolina Prime Outlet Center would generate new wealth in this rural county 

that had yet to feel the impact of growth from the Spartanburg-Greenville axis. In fact, 

the Prime Outlets appear to have succeeded in reinventing Gaffney as a regional retail 

anchor, developing 80 new outlet stores and nearby supporting hotels and services where 

virtually no commerce had previously existed. The Outlets and related services today 

support about 700 jobs. A large-scale truck stop projected to employ 75 is under 
93 

construction. Most impressively, the outlet’s 2.5 million annual customers are said to 

travel an average of more than 60 miles to Gaffney. 

Cherokee County’s Prime Outlet Center 

A windshield survey of downtown Gaffney—about two miles from the Outlet site—

suggested an aura of vitality, with only a handful of vacant storefronts, some undergoing 

rehabilitation. To move things along, a downtown improvement program is under way, 

funded by the state; Cherokee County’s eligibility is based on its state classification as 

“under-developed” (the third-lowest of four possible designations). While the quality of 

jobs at the outlet are generally modest, the development—along with traditional anchor 

firms such as Nestles Frozen Foods, Temkin Bearings, and smaller mainstays in 

fiberglass, textiles, and feminine hygiene products—seems to have played a role in tiding 

over this rural county until the concentric impact of Greenville-Spartanburg widens. Just 

recently, development of a 380,000-sq.-ft. distribution facility was announced just inside 

the county line—a relocation from Greenville County and perhaps an omen of things to 

come. 
94 

Birmingham Entrepreneurial Center #10751 

Birmingham, AL 

It’s a quick ride from the Pickwick Hotel, in the heart of Birmingham’s restaurant district, 

to the Birmingham Entrepreneurial Center (BEC), a former retail building converted into 

Birmingham’s premier incubator for service and manufacturing start-ups. The efforts of 

the incubator’s leadership in the shadow of Birmingham’s skyscrapers are a tale of two 

cities—one enormously successful, the other surviving on the margins. 

The physical plant of the 30,000-sq.-ft. incubator itself is impressive, from the sunny, 

user-friendly design to the bright, energetic staff. Occupancy is virtually 100 percent 

except for space on temporary hold for an upcoming tenant expansion. Thirty companies 

are currently housed in the BEC building. BEC staff puts together an annual impact 

statement of the incubator, including continuing analysis of graduate sales. By their 

reckoning, annual impact of the facility’s efforts has reached $82 million in area sales, 

including $39 million in direct sales revenue by tenants and former tenants. BEC staff is 

concerned that as graduates increase, these impacts become harder to track. 

Birmingham Entrepreneurial Center 

Despite strong economic growth in the Birmingham region, the BEC is experiencing 

continued and growing demand for space among qualified applicants who come in the 

door better prepared financially and with more realistic attitudes than in the BEC’s early 

years. Staff reports a “higher yield” among the 60-80 applicants it now sees each year 

than was produced from the 140 or so it screened annually in the start-up phases of the 

incubator. 

The wide range of support services offered by the BEC, including the development of 

web sites, mentoring and investor interest, appears key to its attraction among start-ups 

with real growth potential. An open house last year attracted five venture capital firms, 

not all of them local. Part of the pull seems to be the clusters around which much of the 

incubator’s space has developed: software development (currently eight tenants) and 
95 

health care services (four tenants), including a pharmaceutical distribution firm that 

recently received a $3 million equity infusion, a connection facilitated by BEC staff. 

While not limited to these or other industry-specific efforts, the incubator does actively 

seek tenants with significant growth opportunities that it will be able to graduate in 3 to 5 

years. 

The increasing number of qualified applicants and the desire to relocate graduates in the 

same core city area have combined to increase the BEC’s determination to secure 

additional space. The search is actively under way, and discussions are in progress for a 

number of sites ranging from 10,000 to 50,000 sq.-ft. A trashed-up land parcel adjacent to 

the existing incubator is also being considered. As discussed in greater detail below, 

efforts to secure this and all nearby sites are significantly impeded by land speculation in 

the area. 

Tenant module at the Birmingham Entrepreneurial Center 

The BEC’s four full-time staff members work with a budget of $600,000, which is 75 

percent self-supporting. The Economic Development Partnership of Alabama is a major 

contributor. Full self-sufficiency is planned within a couple of years. The incubator has 

won considerable local and national recognition, including the award of three PriceWaterhouse Tenant and Graduate of the Year prizes, and boasts two African-American 

graduates recognized as Birmingham Small Businessperson of the Year. The incubator is 

used as a model for several visiting facilities: The consultant team’s site visit was 

scheduled just before a visit from two Florida incubators. 

The other side of the story concerns the BEC’s indirect role—not among tenants, but as a 

hoped-for community development catalyst. 
96 

Like most metropolitan areas, Birmingham is beset with demographic and economic 

contrasts. The metro area’s 70-30 white-black population ratio is reversed inside this city 

of 270,000 (metro area 1 million). In contrast to a vibrant downtown core and increasing 

numbers of suburban commuters, the edges of downtown continue to display all the 

symptoms of long-term blight: vacant buildings and blocks, trash-strewn lots, and a 

handful of aged for-sale signs. It is in this latter area that the BEC chose to locate. 

From the beginning, the BEC (then the Birmingham Assistance Network or BAN) 

measured its progress on a dual track—as a traditional incubator serving its direct tenant 

base and other entrepreneur clients, and as a community development vehicle for this 

outlying portion of downtown. 

Downtown development efforts appear to have had a tougher time than in many similar 

cities, in part because there is a very limited history of any substantial residential 

population in the immediate downtown area. Efforts in the commercial core, buoyed by 

University of Alabama acquisitions (the university now owns 96 blocks of the downtown 

area), have been energetic and the subject of much concentrated attention. The core of the 

city center is also kept vital by a large hospital complex and Birmingham’s role as the 

second largest banking center in the South. 

However, a development vacuum continues to dominate the landscape on the south side 

of the city, home to the BEC, which had hoped ten years ago that its location would spur 

other activity in this slice of the downtown. Instead, private landholders have largely sat 

on their deteriorating properties, waiting to cash in on a boom to come. Although the city 

has actively annexed property to expand its jurisdiction over the past 20 years (to positive 

economic effect), there seems to be no such corresponding aggressive movement to 

encourage the development process in the BEC section of the old city. 

The BEC continues to see a dual role for itself that includes that of development catalyst, 

but it is having difficulty finding parties with which to negotiate over property, much less 

come to realistic terms. BEC leadership is looking to ARC for further investment to 

extend its mission and impact, and on the face of it, the incubator’s success certainly 

warrants a positive response. At the same time, a difficult and open question remains as 

to whether ARC policy should push development of an area that local and state officials 

have the resources, but not the will, to pursue. Of course, this is only an issue insofar as 

the community development aspectclearly a secondary oneis considered in any 

future BEC application. As for the incubator itself, success appears to be breeding 

success, and future investment should continue to pay off handsomely. It is clear that the 

BEC’s direct tenant support activities, mentoring, and nurturing of non-tenant 

entrepreneurs have contributed to Jefferson County’s start-up activity rating—a full 20 

percent above the national average. 
97 

Benedum Airport Infrastructure #10381 

Bridgeport, WV (Harrison County) 

Flying low over the mountains of north central West Virginia in a small Beechcraft, the 

Benedum Airport is at first hard to discern from other rural airports. The runway is longer 

than most, the outbuildings larger and more numerous—but not much stands out. Inside 

the terminal, the feeling of low-level activity is reinforced: baggage handling is manual, 

and the single paste-up schedule board announces only 17 daily flights—8 in, 9 out. 

An auto tour quickly dispells the notion of a sleepy airport complex. Straddling the 

airport’s lengthy runway are facilities housing giants of the aerospace industryPratt & 

Whitney, Bombardier and Northrop Grumman. The aerospace facilities, all engaged in 

non-competitive maintenance, overhaul, and repair of commercial and military vehicles, 

have blasted past projections made in 1989 when the ARC was asked to invest in a new 

runway required for the Bombardier facility. Since then, 200 projected jobs have become 

600 with more on the way. The pre-existing Pratt & Whitney facility, which routinely 

invests $2 million annually in its facility, is completing an additional $7 million 

expansion to accommodate a new $300 million corporate jet overhaul contract and is 

looking to build an additional hangar to attract heavy overhaul businesses from the 

corporate jet segment of its market. An ARC application has been developed to assist in 

this effort. 

Benedum Airport now hosts an impressive aerospace complex. 

A battery of large earth-moving vehicles works industriously to the east of the runway. 

These are army guardsmen, attached to the Fixed Wing Training unit sited at Benedum. 

An Army representative estimates that $25-$30 million has been contributed in earthmoving work for the airport complex. And noteworthy work it is. The Army training unit 
98 

schools its charges by literally moving mountains. Its first task was to step into the 

runway extension program when Federal Aviation Administration funding fell short, 

creating the earth infrastructure for the runway. It continued working on airport projects 

and is now in the process of whittling a 1,450-foot mountain down to 1,200 feet, using 

the fill to level out the valleys surrounding the airport to create new industrial sites. 

The Army is literally moving a mountain to create new sites for cluster growth. 

When three envisioned phases are completed by 2005, the airport’s development arm, the 

Mid-Atlantic Aerospace Center (MAAC), will be the owner of more than 200 acres of 

prime industrial property served by all utilities, a taxiway to all sites and a straight fourlane access road to I-79 less than three miles away. The MAAC is gearing up for a 

marketing effort for acreage coming on line, and, toward that end, is engaged in the 

development of a Foreign Trade Zone designation for the site. 

The original motivating firm for ARC project was Short Brothers, an aerospace 

overhauler. That firm has since been bought by Bombardier, which remains an important 

player—but only one of many—in what appears to be the successful nurturing of a core 

regional industrial cluster. The current cluster picture is rounded out by the location of 

two important non-profit players on airport property: the Byrd National Aerospace 

Educational Center, which provides skilled workers to aerospace firms on and off site, 

and more recently, the Byrd Institute of Flexible Manufacturing, which chose Benedum 

as a growing center of technology-based firms. 

In the mid-1980s, local development officials identified an opportunity to develop a onestop aerospace center serving the East Coast and the mid-Atlantic region in particular. 
99 

The vision was prescient, as industry consolidation pushed vehicle owners toward just 

that solution. Officials of private firms in the complex remain delighted with the vision, 

which they profess has helped them enormously—as well as by local and congressional 

cooperation and encouragement of the effort. 

It’s not a stretch to conclude that the outstanding growth of this area (52 percent above 

the U.S. average in 1990-96), the maintenance of manufacturing levels in the face of 

huge dislocations in traditional industries, and high levels of firm retention (104) and job 

creation among surviving firms (109) are not at least in part a result of this effort. While 

the area has clearly benefited from the development of a large 2,000-job FBI facility as 

well, these job figures were not included in the economic analyses, which cover only the 

private sector. 

Next on the agenda for the aerospace complex is the development of a four-lane access 

road direct to I-79. The Army Guard has already prepared the airport roadbed, and the 

state highway department has budgeted funds for the connector, which will bring I-79 

within three miles of the airport and its aerospace complex. In addition to enhancing 

existing and proposed industrial sites at Benedum, the connector will ease serious traffic 

congestion that has developed in and around Bridgeport as a result of overall growth. 

Some innovation centers funded as incubator projects have supported thousands of new 

and existing jobs through technology-intensive and deep technical and networking 

services. 
100 

Appendix B. Methodology: Infrastructure and Public Works Project 

Selection 

The 99 projects analyzed for this report were selected from files representing 1,544 ARC 

investments in the Infrastructure and Public Works Program between 1990 and 1997. The 

project scope called for the selection and assessment of approximately 100 projects that 

would offer the representative picture of ARC investment, and especially projects with an 

economic development focus. The original project universe in the ARC’s files included 

• 69 access road projects (17 closed) 

• 410 water projects (186 closed) 

• 267 sewer projects (111 closed) 

• 478 water and sewer projects (222 closed) 

• 123 industrial park projects (37 closed) 

• 29 incubator projects (18 closed) 

• 168 miscellaneous projects 

Most notably, the number of total water and sewer projects developed in 1990-97 (1,155 

total, 591 closed) dominates the investment and the ultimate number (51) used for this 

assessment. The original numbers were pared down to focus on economic-developmentrelated projects and to ensure reasonable representation of project types, geographic 

distribution and strategic focus. Some categories were excluded or modestly sampled 

because of declining strategic interest of many states (e.g., downtown revitalization), 

while others had complex, multiple objectives (such as telecommunications and distance 

learning). Finally, others posed difficult evaluation problems and increased the 

complexity and cost of the research (e.g., solid waste projects and public safety). 

Goal 2 projects (infrastructure and public works) that were excluded from the evaluation 

for these and a variety of other reasons included 13 downtown revitalization projects, 31 

solid waste projects, 20 community facility projects, 52 telecommunications and distance 

learning projects, 22 housing projects, 12 rail spur projects, 12 public service projects 

(principally fire safety), 6 recycling projects, and a couple dozen odds and ends. 

Excluding the odds and ends (such as technical planning grants and a few gas lines), the 

other categories would have added 168 projects to the 1,376 projects which fell into the 

four basic categories for a grand total of 1,544 projects (both open and closed). Thus, 

roughly 1,500 projects received ARC investments under the Infrastructure and Public 

Works Program during the 1990-97 period. 

The process of narrowing the original universe to the target of 100 projects included the 

following steps: 

• Only closed projects were considered, narrowing the universe to 663 potential 

projects. 
101 

• Due to the large number of Water and Sewer projects (1,155 total, 591 closed), only 

projects of these types that began in 1992 were considered. 

• To the extent possible, water and sewer projects that envisioned economic 

development impacts received priority. 

• Attempts were made to ensure enough representation from all project classifications 

(industrial parks, access road, incubator) to ensure a robust assessment of each type. 

• Efforts were made to ensure geographical representation from all states in the ARC 

Region. 

This process left 115-120 project names and numbers. No “lead” information existed for 

several; that is, ARC data sheets were not received for them. After validating discussion 

with interviewees, a number of multi-phase projects were combined for database 

purposes. For example, an incubator project that received two rounds of ARC investment 

was considered as a single project for analysis purposes. 

This process left 104 separate projects in the database for analysis. Original 

documentation was reviewed and interviews conducted for each. Multiple interviews 

were conducted for most. Each of the counties in which projects were developed was 

subjected to a variety of economic trend, vitality, and impact measurements. Project 

participants were, on the whole, rather forthcoming, assisting the analysis process 

immensely. 

Of the 104 projects from the original database, 99 were confirmed as implemented and 

suitable for evaluation. One (#11808, the Clough Pike Industrial Corridor Access Road in 

Clermont County, Ohio) remains in the design stages and was excluded from analysis. A 

second (#10530, South Carolina’s Clemson Technology Incubator) was excluded in an 

attempt to align “apples and apples” for this evaluation; the project was the only one in 

the database that had no bricks-and-mortar objective or outcome. Three were discarded 

because of non-implementation. 

 One industrial project (#10858; Harrison, VA) lost the prospect for which it was 

developed. 

 One water project (#11029; Burke, NC) was not implemented because the 

applicant did not have the water capacity to supply the envisioned new system. 

 One sewer project (#11017; Chautauqua, NY) became unnecessary because of a 

regional sewer system consolidation. 
102 

Of the total of 99 projects analyzed, 87 reflected objectives and outcomes directly related 

to economic development, while the remainder were residential water or sewer projects 

that related to quality-of-life objectives. Thirty-nine water and sewer projects were 

directly related to economic development, by design or outcome or both. Some water and 

sewer projects were integral pieces of economic development efforts—for example, 

sewer lines on which industrial location were contingent—while others had more 

secondary economic development purposes. The 99 utilized projects were distributed in 

these classifications: 

• 51 water/sewer projects 

• 22 industrial parks 

• 11 business incubators 

• 15 access roads 

In sum, the available projects ultimately selected for assessment in this report are 

represented in the following table: 

Project Type Sample Years Total ‘90-97 Total Closed Sample Size

Access Roads 1990-97 69 17 15 

Industrial Parks/Site 1990-97 123 37 22 

Incubators 1990-97 29 18 11 

Water/Sewer 1992 1,155 591 51 

Total 1,376 663 99 
103 

Appendix C. Methodology: Impact Analysis 

Comparison with Other Studies 

Types of Studies. There are two major types of program impact or evaluation studies for 

economic development programs focusing on infrastructure and public works 

investments: 

• Statistical estimates of net economic changes. This type of study measures 

pre/post changes in economic activity (employment, sales, and/or income) in the 

affected area. Usually there is some attempt to estimate net impacts from the 

observed (gross) changes by controlling for other (exogenous) factors affecting 

the local economy during that period. This is typically accomplished through 

comparison of changes in the affected counties to some “control group” of other 

roughly similar counties that received no such funding. A series of statistical 

analyses are then used to control for underlying changes in economic trends over 

the study periods and to determine if the intervention had a measurable effect. 

This type of analysis alone can provide estimates of net change over time in the 

project areas. However, such methods cannot establish causality, or how the 

implementation of projects actually interacted with other local economic activities 

and economic development efforts to affect the results for local communities. 

 

• Program performance (case study) evaluations. This type of study focuses on 

documentation of how individual and entire sets of funded projects succeeded in 

affecting local economic activity. Usually such studies examine how the funded 

projects led to changes in local land development, private investment, mix of 

business and jobs, and levels of taxes. This study is typically accomplished 

through case study interviews (covering local private sector and public sector 

participants and observers), together with review of available local documents. 

This type of analysis can provide much insight into the causal effects of projects 

and how project implementation actually interacted with other local economic 

activities and economic development efforts to affect local communities. 

However, it focuses primarily on actual observed results and not on the estimation 

of how local economies might otherwise have changed under hypothetical 

situations in which the projects never occurred. As such, this type of analysis is 

most useful for evaluating program performance and identifying how it might be 

improved in the future. 

This study most closely resembles the latter class of studies, which includes the 

Economic Development Administration’s (EDA) public works evaluation EDA Public 

Works Program: Performance Evaluation (Rutgers, NJIT, Columbia, Princeton, NARC, 

and Univ. of Cincinnati: May 1997). For that reason, there is particular interest in the 

similarities and differences between this ARC study and that earlier EDA study. 
104 

Direct, Indirect, and Induced Economic Impacts 

Regardless of whether economic impacts are measured in terms of jobs, income, or 

business sales, these impacts can be classified into three categories: 

• Direct economic effects are the changes occurring at the project site as a direct 

consequence of the public investment, project, or program. This is represented as 

the net increase in business activity associated with new relocations of business to 

the project site, expansion of existing businesses at that site, or new business startups there. 

• Indirect economic effects are the broader effects on business activity for off-site 

suppliers to the directly affected businesses. This can include production, 

distribution, and transportation for suppliers of goods and services. 

• Induced economic effects are further shifts in spending on food, clothing, shelter, 

and other consumer goods and services, as a consequence of the change in 

workers and payroll of directly and indirectly affected businesses. 

The “direct effects” are measured through monitoring of program outcomes and local site 

interviews. The “indirect” and “induced” business impacts are often referred to as 

“multiplier effects.” These multiplier effects are estimated through input-output (I-O) 

economic models that are calibrated for each local county. The I-O models incorporate 

inter-industry purchase/sales patterns (reflecting prevailing industry structures and 

technologies) and estimates of the extent to which local suppliers provide various 

products and services. 

When a project leads to direct increases in jobs and income, the multipliers indicate the 

corresponding indirect and induced increases in jobs and income. These additional 

effects do represent real net gains in local business activity (jobs and income) as long as 

the area is able provide additional workers for the new jobs without shifting workers 

away from other existing economic activities. This assumption is generally reasonable 

when the study area is a county with above-average unemployment. That is indeed the 

situation for these distressed and transitional counties within the Appalachian Region. 

To estimate the indirect and induced (“multiplier”) economic effects for each project, this 

study used the IMPLAN model system. IMPLAN, which stands for “Impact Analysis for 

Planning,” is now the most widely used input-output economic modeling system in the 

United States, with a client list of 500 public and private agencies including several 

federal agencies and numerous state agencies. It utilizes U.S. Commerce Department 

(“National Income and Product Accounts”) data on inter-industry technology 

relationships (also known as input-output structural matrices), countywide employment 

and income data from the Bureau of Economic Analysis (BEA) and Bureau of Labor 

Statistics (BLS), and its own industry and county-specific estimates of local purchasing 

rates (“regional purchase coefficients”). It is enhanced over most other input-output 
105 

models in that it also includes coverage of public sector activity and consumer activity 

(reflected in its “social accounting matrix”). The industry detail is at the level of 528 

industries and is based on categories of the BEA that correspond to 3- and 4-digit groups 

in the Standard Industrial Classification (SIC) system. 

For this study, the direct job and income effects on business attraction, location, and 

retention in the local counties were documented and then assigned to specific SIC groups, 

based on information from interviews with local public and private sector representatives. 

The IMPLAN model was then calibrated for each local county, and run given the direct 

effects on specific SIC groups in each of those counties. The result was an estimate of the 

indirect and induced (and overall) job and income impacts for each project on its own 

local county. 

Fiscal Impacts 

Changes in government revenues and expenditures are referred to as “fiscal impacts.” 

They can result from economic impacts (direct, indirect, or induced effects on 

employment, income, and business sales), as well as demographic impacts (changes in 

birth, death, or migration rates). If it is assumed that these commercial and industrial 

projects primarily create jobs and enhance incomes for existing residents of 

economically-depressed counties and do not attract major in-migration into these areas, 

then there will be relatively little change in government expenditures (for schools, public 

safety, local services, etc.). However, the additional business activity and income can 

lead to significant impacts on local sales and property tax receipts, as well as potential 

impacts on state sales, income, and business tax receipts. 

For this study, estimates were made of the impact on personal income, sales, and property 

tax revenues. The following methods were used: 

• To estimate state income tax revenues, information was collected from each 

state’s revenue department on total state income tax revenues, average tax rate 

and average taxable portion of total personal income. This was compared with 

the BEA data on total personal income by state, and ratios were calculated 

indicating the relationship between total state income tax revenues and total state 

personal income. These ratios were then applied to provide approximate 

estimates for the change in state income tax revenues resulting from project 

impacts on personal income from new jobs (including direct, indirect, and 

induced effects). 

• To estimate state and local sales tax revenues, information was collected from 

each state’s revenue department and from each county on the applicable sales tax 

rate, as well as the average taxable portion of total retail sales. Additional 

information was collected from the BEA on total retail sales as a portion of 

personal income by state, and ratios were calculated indicating the relationship 

between total state sales tax revenues and total state personal income. These 
106 

ratios were then applied to provide approximate estimates for the change in state 

and local sales tax revenues resulting from project impacts on personal income 

and corresponding retail sales levels. 

• To estimate local (county and municipal) property tax revenues, information 

was collected from each county (and/or from the state revenue department) on 

the applicable local property tax rates for commercial property. These rates 

were then applied to the reported level of private sector investment associated 

with each project (which in theory should also be reflected in increased property 

values). In many cases, the local interviews did provide information on the level 

of property tax revenue resulting from the private investment and enhanced 

property values. Often, the reported actual figure and the estimated one were 

roughly comparable. However, in some cases, the local interviews indicated that 

partial or total property tax exemptions were made for investments in the project 

areas. In all cases where there was a difference, the interview-reported taxrevenue figure took precedence over the estimate. 

No estimates were made of the impact on corporate taxes because of the nature of 

specific differences in profitability, deductions, and write-offs among specific businesses. 

Difference from Traditional Benefit/Cost Analysis. This analysis is designed to 

provide insight into the types and magnitudes of impacts occurring as a result of the ARC 

funding of infrastructure and public works projects. It does not provide traditional 

benefit/cost ratios, reflecting the economic efficiency or pay-back from public 

investments. Such an approach is not appropriate here, for several reasons: 

• Purpose. A basic purpose of the ARC programs has been to address an issue of interregional “equity” in terms of economic opportunities and living conditions among 

parts of the United States, and not just to maximize “efficiency” in terms of national 

return on investment. 

• Benefits. The projects funded by these programs are intended to represent not just 

increases in personal income for residents of economically depressed areas, but also 

creation of new jobs and expanded job opportunities in local areas of relatively high 

unemployment. These projects can also serve to reduce dependence on public 

assistance, increase quality of life, improve local community functions, and enhance 

health. Some of these latter types of benefits are discussed in project case study 

narratives, rather than in the summary counts of job and income changes. 

• Time streams of effects. The public costs of these projects are one-time capital 

investments, which come from existing federal, state, and local government budgets 

that are predominantly earmarked for economic development programs. The public 

investments and matching private sector investments are measured in this study. The 

benefits of these programs, on the other hand, are streams of income (and community 
107 

quality-of-life improvements) which may continue for many years. Since all of the 

projects studied here were completed within recent years, only the current annual

impact is shown in this report. The full benefit, though, is the continuing stream of 

benefits over time. It is not possible to accurately represent the current value of that 

benefit stream, since we have no reliable basis for estimating how new businesses 

will subsequently grow or decline over time. 

• Focus on understanding roles of ARC investments. A focus of this study was on the 

collection of information from local public sector and private sector representatives 

regarding the nature of local outcomes from ARC public works expenditures—how 

the ARC investments helped leverage other public and private sector investments; 

helped to make possible increases in local job opportunities and income; and caused 

other intended or unintended local impacts. This study was seen as providing useful 

insight for improving program design and application in the future. The study was 

designed to avoid speculative projections (such as how employment at the project 

sites will grow in the future), estimation of hypothetical situations (such as how the 

county economies would have been different if these projects had not been 

implemented), or assignment of relative credit for program success (such as whether 

the ARC funding was more critical than other public funding sources in allowing 

project implementation). 

For all of these reasons, it was neither possible nor desirable to engage in estimation of 

life-cycle costing, discounted present values of future benefits, or attribution of relative 

credit for net impacts. The impact measures shown in this report are thus intended to 

represent indicators of relative program impacts rather than strict economic efficiency 

ratios.

Comparison with the EDA Public Works Program Performance Evaluation 

This ARC study was defined primarily to meet ARC's particular needs for program 

evaluation and thus included both similarities and differences from the EDA study, which 

actually predates this study by nearly three years. The following is a summary 

comparison of the two reports. 

 

Programs. The EDA Public Works Program has some similarities with, and differences 

from, the ARC Infrastructure and Public Works Program. They are superficially similar 

in that both provide grants for access roads, sewer, water, and industrial park facilities. 

Both focus on economically depressed counties, though the EDA program is national 

while the ARC program focuses on the unique and long-suffering Appalachian Region. 

The EDA program also includes funding for harbors/ports and vocational/technical 

schools, which are not covered in the ARC program. The EDA program focuses on job 

creation, while the ARC program focuses on both job creation (commercial and industrial 

development) and public health (through residential water and sewer projects). Both 

programs require a “but for” justification—that is, they are intended to meet a funding 

gap by covering only a portion of total project costs and requiring that other public and 
108 

private funds make up the difference. However, the ARC program also requires that 

another federal agency (typically EDA, HUD, or USDA) also provide economic 

development funding and overall project administration. 

Evaluation Approach. The EDA study and this ARC study have some similarities: 

• Approach. Both used a large number of case studies. 

• Measures of local area distress. Both reported some measures of local area 

distress. 

• Measures of direct economic effects. Both monitored the estimated vs. actual 

levels of direct public and private investment and direct job creation/retention. 

• Measures of indirect and induced economic effects. Both estimated subsequent 

impacts on indirect and induced jobs, using input-output multipliers derived from 

IMPLAN models for each specific county. 

• Measures of tax impacts. Both estimated effects on the local property tax base 

(based on private sector investments). 

• Benefit and cost indicators. Both estimated ratios of total jobs created per dollar 

of spending by the specific program and per total public investment. 

However, there are also some significant differences: 

• Measures of local area distress. The EDA study measured local area distress in 

terms of published labor force and socioeconomic characteristics, including both 

city and county data. This ARC study examined local distress in terms of a 

broader set of business trends for the affected counties, including changes in ARC 

distress ratings over time, changes in ratings of economic concentration and 

diversification, and indicators of business growth/decline trends and economic 

vitality trends (including indicators of entrepreneurial start-up and survival rates 

and business retention rates). 

• Measures of direct economic effects. The EDA study measured direct project 

effects in terms of temporary construction jobs, permanent jobs and investments 

(including pubic and private investments directly associated with the projects and 

leveraged as a consequence of the projects). This ARC study focused specifically 

on the economic benefits of the completed projects and thus did not cover 

temporary construction jobs. It did, however, also cover permanent jobs and 

investments made, and also measured direct effects on increasing local wage 

income. It also included qualitative assessments of individual project effects on 

economic diversification. 

• Measures of indirect and induced economic effects. The EDA study applied 

IMPLAN models for each affected county but calculated and applied all-sector 

average employment multipliers since it lacked information on the SIC codes of 

the directly affected businesses. These models were used to estimate indirect and 

induced economic effects associated with retained (saved) jobs as well as new 

jobs. This ARC study also applied IMPLAN models for each affected county, but 
109 

it calculated and applied separate income multipliers as well as employment 

multipliers, and estimated those multipliers for specific SIC codes corresponding 

to each project (whenever possible). It also took the more conservative approach 

of applying the multipliers to estimate indirect and induced effects only in 

connection with the newly created local jobs and not for the retained (saved) local 

jobs (where the actual loss is less certain). 

• Measures of tax impacts. The EDA study estimated the addition to the local 

property tax base to be the same as the level of private sector investment. This 

ARC study investigated the local property assessment rate (as a percentage of 

total valuation) and the extent of temporary or partial abatements in order to 

refine the estimates of actual change in local property tax base. Local property 

tax impacts were then calculated, based on a combination of local government 

sources regarding either actual tax collections or actual property tax rates and 

estimated valuations. In addition, this ARC study also estimated impacts on local 

and state sales taxes and income taxes, based on applicable local tax rates and 

estimates of changes in income and taxable retail spending. 

• Other measures of program impacts. The EDA study included a statistical 

analysis of EDA and non-EDA counties, in which regression equations were 

estimated to determine whether there was a statistically significant relationship 

between EDA spending in a county and countywide growth in employment and 

income. That study found that there was indeed a positive relationship, though it 

could not distinguish between the impact of the EDA dollars and the impact of 

other public and private dollars that were invested at the same time. This ARC 

study did not include any such statistical analysis but did include qualitative 

analyses of project impacts on reuse of vacant/underutilized sites, support for 

speculative building development, support for industry clusters, effects on land 

use patterns and environmental quality, and perceived quality of life. 

• Benefit and cost indicators. Most of the EDA study results were presented in 

terms of ratios of jobs and private investment per million dollars of EDA funding 

(although the effect on total jobs per million dollars of total project investment 

was also calculated). This ARC study, on the other hand, presented results in 

terms of the ratios of jobs, income, and private investment per ARC dollar and per 

total public dollar spent. It explicitly avoided allocating all of the credit for 

project benefits to ARC or any other single funding source, even if that funding 

source was necessary to make the entire project possible. 

Findings. The EDA study and this ARC study provided largely different measures of 

program success. Few of the reported impact measures were comparable. One exception 

is the ratio of total public cost per directly created permanent job. That cost was $4,857 

in the EDA study and $4,574 in this ARC study. These two numbers are roughly 

equivalent, suggesting that similar levels of economic impact were resulting per dollar of 

public works spending from both programs. The comparisons of total economic impacts 

per dollar of specific EDA or ARC program spending is largely meaningless, since it 

assumes that all of the credit goes to the specific program and none to the rest of the 

public expenditures from other programs. If the comparison is done, though, the result is 
110 

a ratio of $3,058 EDA dollars or $1,222 ARC dollars per directly created permanent job. 

This difference almost completely results from the fact that EDA spending accounted for 

nearly two-thirds of the total public spending on its projects, while the ARC spending 

accounted for just one-fourth of the total public spending on its projects. It thus reflects 

the different roles of the two project funding sources rather than any differences in 

program effectiveness. 
111 

Appendix D. Methodology: Economic Vitality Analysis 

Each segment of the four economic vitality analyses was developed through a variation 

of the Firm Life methodology. This form of longitudinal analysis is developed with the 

use of 12 to 16 different private sector credit-reporting databases. 

Most economic analysis looks at changes in a total area over time. For example, most 

publicly available government data may compare how many firms operated in an area 

three years ago and then at some earlier point. The difference between the snapshots is 

represented as an area growth pattern. But the analysis offers no way of understanding 

the experience of individual firms or groups of firms—how many survive, die, grow, or 

decline. 

The Firm Life analysis fills this critical gap. The methodology takes 1996 “pictures” of 

the U.S. economy and each local project area, then breaks out firms in a variety of 

categories. The progress of each group of firms is tracked by area and industry over time. 

The vitality analyses demonstrate what happened to those original firms during the period 

under review: how many started, survived, or failed. The Firm Life analysis can compare 

local and national success rates, start rates, and growth patterns of survivors in any 

industry and any area. The national databases used for comparison is composed of 

information on almost 15 million firms. 

Four measures were included in the vitality analysis: 

• Entrepreneurial Activity, as measured by start-up rates across the United States and in 

each project area. Unduplicated firms reporting less than one year of operation were 

summed through the databases for three years. The totals were compared with all 

firms in the most current database for the United States and each project area, reduced 

by the number of firms for which age information was unknown. The results of each 

local area were benchmarked against U.S. totals where U.S. equals 100. 

• Entrepreneurial Survival rates were developed for each project area. Because of the 

small number of start-up operations (less than one year of operation by 1996) in many 

project areas, the analysis was developed for firms reporting 0-3 years of operation in 

1996. This subset was developed for the United States and all 76 project areas. The 

77 groups of firms were then tracked for three years through 1999 and survivors 

identified. The percentage of surviving young firms in each area was then 

benchmarked against U.S. patterns where U.S. equals 100. 

Along with the Entrepreneurial Activity rate, the resulting Entrepreneurial Survival 

rate creates a quantifiable measure of entrepreneurial vitality in each project area. 

• The methodology of the Firm Retention Rate corresponds to the Entrepreneurial 

Survival rate. However, instead of the 0-3 year subset, all firms across the United 

States and within each project area were tracked through the 1996-99 period. Once 
112 

again, survivors were identified and the percentage of surviving young firms in each 

area was benchmarked against U.S. patterns where U.S. equals 100. 

• The findings of the Firm Retention rate are supplemented by incorporating Job 

Replenishment analysis, which compares the number of jobs lost by failed firms in 

the firm retention analysis with those added by survivors over the same period. The 

Job Replenishment analysis deliberately excludes business in-migrants and start-up 

operations after 1996 from calculations. The result is a “pure” view of the growth and 

vitality of surviving firms—the bedrock of most economies. The Replenishment Rate 

also serves as an important supplement to the Firm Retention Rate, which can reflect 

high scores in areas with relatively stagnant economies as well as those that create 

conditions for retention and growth. In general, high Retention and Replenishment 

rates together signal economic vibrancy even in areas that are not business migration 

leaders or “hot spots” for start-up activity. 
113 

Appendix E. Methodology: Distressed County Analysis 

Distress designations are an integrated barometer of economic well-being maintained by 

the ARC. Every year the Commission determines the economic status of the 406 counties 

in the Appalachian Region, with each county assigned to one of four economic 

categories: distressed, transitional, competitive, and attainment. The designations are 

based on three economic measures that are benchmarked to national averages for the 

poverty rate, three-year average unemployment rate, and per capita market income (i.e., 

per capita income less transfer payments). Distressed counties are eligible for additional 

funding and lower matching requirements (20 percent), with matching funds 

requirements rising for transitional (50 percent) and competitive counties (80 percent), 

and with attainment being deemed ineligible for funding. 

Project counties’ economic status was evaluated for the sample and compared with the 

distribution for the Appalachian Region as a whole. In general the sample set of project 

counties was found to be representative of ARC’s distress rankings for 399 of the 406 

counties based on FY1988 designations. The four-level designation system was 

implemented only as of FY1997, so the application of these categories to FY1988 data is 

really a retrospective projection of the criteria. 

As a matter of ARC policy, no projects were developed in “attainment” counties. Thus, 

only competitive county projects are missing from this sample. Project impacts on 

distressed areas are discussed more fully below. 

To recap, distress rankings were analyzed for 399 of the 406 counties contained in an 

historical database provided by the ARC. Base year designations (FY1988) were 

compared with current year (FY2000). 

• Of the 399 counties in Appalachia as of 1988, 90 (23 percent) were distressed, 289 

(72 percent) transitional, 16 (4 percent) competitive, and 4 (1 percent) attainment. 

Seven counties that were not designated as ARC counties in 1988 were excluded 

from this analysis. 

• By contrast, among the 76 project counties, 18 (24 percent) were distressed in 1988 

and 57 (75 percent) were transitional. Only one was competitive, and none were in 

the attainment category. In other words, the concentration of distress was only 

slightly more severe in project counties than in non-project areas. To use the ARC’s 

scale of 1-4 distress designations (one being distressed), non-project counties had a 

1988 average distress designation of 1.83, while project counties had an average 

distress rate of 1.8. 

• By FY2000, the distress concentration of the two groups was virtually even (1.84 for 

the non-project area and 1.82 for project counties—a 1 percent differential). The total 

ARC group of counties had improved its rating 0.01 or about one-half of 1 percent, 

while the project group improved its average rating by 0.06 or about 3.4 percent. 
114 

All ARC Counties Project Counties 

 FY1988 FY2000 FY1988 FY2000 

distressed 90 107 18 19 

transitional 289 260 57 50 

competitive 16 22 1 6 

attainment 4 10 0 1 

total 399 399 76 76 

A separate analysis traced the progress of the most distressed ARC counties in both the 

non-project and project groups. Of the 90 ARC counties that were in the distressed 

category in 1988, 22 (24 percent) moved up to the transitional category by FY2000. In 

rating terms, the 1.00 1988 designation of this group improved to 1.24. 

1988 Distressed ARC 

Counties 

1988 Distressed Project 

Counties 

 FY1988 FY2000 FY1988 FY2000 

distressed 90 68 18 12 

transitional 22 6 

competitive 0 0 

attainment 0 0 

total 90 90 18 18 

Among the project counties, 18 were distressed in 1988, approximately the same 

proportion as in all ARC counties. By FY2000, six of these improved their ratings to 

transitional, improving the project group’s average from 1.00 to 1.33. 

While a direct causal relationship should not be imputed, the most distressed project 

counties clearly improved at a greater rate than did distressed non-project counties. 

Another analysis traced the progress of ARC counties that were deemed transitional in 

FY1988 in both the non-project and project groups. Of the 289 ARC counties that were in 

the transitional category in 1988, 39 (13 percent) dropped to distressed, 232 

(80 percent) remained transitional, 14 (5 percent) moved into competitive, and 4 

(1 percent) to attainment rankings by FY2000. In rating terms, the 2.00 1988 designation 

of this group dropped to 1.94. 
115 

1988 Transitional ARC 

Counties 

1988 Transitional Project 

Counties 

 FY1988 FY2000 FY1988 FY2000 

distressed 39 8 

transitional 289 232 58 44 

competitive 14 6 

attainment 4 0 

total 289 289 58 58 

Among the project counties, 58 were transitional in 1988. By FY2000, 8 of these had 

dropped to distressed, 44 maintained transitional rankings, and 6 improved their ratings to 

competitive. The overall rate of the project group decreased from 2.00 to 1.97. While the 

project county group declined overall, the drop was slightly less than the one identified 

among the all-ARC group of transitional counties. 

Figures for counties that began in the competitive and attainment categories are as 

follows (only one in the project group was in these categories): 

All ARC Counties 

 Competitive FY1988 Attainment FY2000 

FY1988 FY2000 FY1988 FY2000 

distressed 0 0 

transitional 6 0 

competitive 16 5 3 

attainment 5 4 1 

total 16 16 4 4 

In the case of counties starting out as either distressed or transitional, it is worth stressing 

that no causal relationship can be ascertained. At the same time, it seems indisputable that 

those counties that began with lower distress designations and received project assistance 

performed better over the 12-year period than those that did not. It could be that the 

projects had a substantial impact in this differential, and it is clear from the interview 

process that ARC-assisted projects were a major factor in some cases. It also seems to be 

the case that project applications emanate from—and may be approved for—counties that 

are experiencing or anticipating growth opportunities. But in this case as well, the ability 

to recognize and fund such opportunities is worth recognizing. 
116 

Appendix F. Project List 

Project ID State County Start 

Year 

Project Name 

10756 AL Bibb 1991 Harrisburg Water System Improvements 

10817 AL Blount / St. Clair 1991 Blount Mountain Water Extension 

10488 AL Cullman 1990 Hanceville Industrial Park 

10572 AL Cullman 1990 Cullman Infrastructure Improvements 

10988 AL Jefferson 1992 Kings Point Water Line Extension 

10751 AL Jefferson 1991 Birmingham BAN Tilman Levenson Building 

10978 AL Lauderdale 1992 Florence-Lauderdale County Port Development 

9994 AL Madison 1988 Huntsville Industrial Park Improvements 

10997 AL Walker 1992 Parrish Sewer Line Extension 

10758 AL Walker 1991 Eldridge Water Service Extension 

10757 AL Walker 1991 Nauvoo Water System Improvements 

10489 AL Winston 1992 Arley Water System Improvements 

10993 GA Gilmer 1993 Ellijay-Gilmer County Water Line 

10800 GA Habersham 1995 Clarkesville Water System Improvements 

10842 GA Habersham 1991 Demorest Water System Improvements 

10839 GA Jackson 1992 Braselton Wastewater System Improvements 

11028 GA Lumpkin 1992 Lumpkin County Industrial Park Water and Sewer Improvements 

10855 GA Stephens 1991 Toccoa Industrial Park Water/Sewer Lines 

11027 GA Towns 1992 Hiawasee Sewer System Improvements 

11043 GA Towns 1992 Young Harris Wastewater Improvements 

11204 KY Boyd 1991 Boyd Rural Sanitary Sewer System Phase I 

11141 KY Clark 1992 Winchester / Clark County Industrial Park 

12577 KY Clay 1996 Clay / Leslie Industrial Park Expansion 

11169 KY Lincoln 1992 Crab Orchard Water and Sewer 

10313 KY Monroe 1992 Gamaliel Wastewater System 

11091 KY Powell 1992 Clay City Wastewater Plant Improvement 

10845 KY Powell 1990 Powell County Water Treatment Plant 

11170 KY Pulaski 1991 Garland Road Water Extensions 

11142 KY Pulaski 1992 Nelson Valley Water System 

11587 KY Rockcastle 1994 Rockcastle Industrial Park - Phase 2 

11200 KY Rockcastle 1991 Rockcastle Waterline Extension 

12151 KY Rowan 1995 Highway 32 Industrial Park 

11118 KY Russell 1992 Russell Springs Sewer Extension 

11037 MD Allegany 1992 Allegany County 

11000 MD Washington 1992 Hagerstown Junior College Technical Innovation Center 

12047 MS Alcorn 1995 Alcorn County South Industrial Park Improvements 

10936 MS Choctaw 1994 Package Corporation of America's Utility Pole Mill Access Road 

10892 MS Choctaw 1991 Marion Smith Industrial Access Road 

10902 MS Choctaw 1991 Choctaw Water Improvements 

11111 MS Clay 1992 White Station Water Distribution Extension 

10354 MS Itawamba 1989 Fulton-Genesis Project 

11104 MS Itawamba 1993 Fulton MS Industrial Road 

10934 MS Lee 1991 Turner Industrial Park Access Road 

11445 MS Lee 1994 Lee MS-Bryce-Toga Industrial Access Road 

11102 MS Lee 1992 Coley Road Improvements 

10937 MS Lee 1991 Eason Blvd. Intersection Improvements 

9874 MS Lowndes 1987 Columbus - Lowndes County Riverside Industrial Park Access 

10901 MS Pontotoc 1991 Ecru Industrial Park Improvements 

9711 MS Tishomingo 1990 Tishomingo County / Midway Access Road: Phases 1 & 2 
117 

Project ID State County Year Project Name 

11110 MS Tishomingo 1992 Northeast MS Industrial Park Water Facility - Phase I 

10617 MS Union 1996 Union County / New Albany Water-Sewer 

10904 MS Winston 1991 Noxapater Water Improvements 

11376 NC Buncombe 1993 Vista Industrial Center Water and Sewer 

12204 NC Caldwell 1995 Gamewell Industrial Sewer Project 

11151 NC Clay 1994 Hayesville Water and Sewer Improvements 

10882 NC McDowell 1992 McDowell County Water and Sewer Extension 

10621 NY Cattaraugus 1994 Cattaraugus Economic Development Zone Infrastructure 

10564 NY Cattaraugus 1990 Cattaraugus Incubator Phases I & II 

11158 NY Chautauqua 1992 Riverside Industrial Center Foundry Renovation 

10513 NY Chautauqua 1990 Jamestown North Main Street Reconstruction 

12232 NY Cortland 1996 J.M. Murray Center Incubator 

11155 NY Stueben 1992 Hornell Commercial Center Water and Sewer Extension 

10574 OH Belmont 1990 Fox-Shannon Industrial Park Improvements 

8851 OH Clermont 1983 Clermont County Industrial Access Road 

11092 OH Muskingum 1992 East Muskingum Water System Expansion 

10922 OH Tuscarawas 1991 Barment Industries Sewer Extension 

11224 OH Washington 1992 Marietta Food-4-Less Access Road 

11679 PA Beaver 1994 Aliquippa Industrial Park (LTV) Project 

11396 PA Cambria 1993 Cambria County Industrial Park Infrastructure 

11692 PA Erie 1994 West Erie EZ-Veschecco Industrial Park 

11197 PA Erie 1992 Erie PA Uniflow Project 

10392 PA Forest 1989 Marienville Sewage Improvements 

10887 PA Luzerne 1991 CAN DO Corporate Center Infrastructure 

10828 PA McKean 1991 Bradford Enterprise Development Center 

10674 PA McKean 1990 Allegheny Particleboard Industrial Park 

11398 PA McKean 1993 Bradford Area Multi-Tenant Center 

11195 PA Mifflin 1992 MCIDA Plaza Renovation 

10865 PA Venango 1991 Franklin Area Industrial Complex Renovations 

12414 SC Cherokee 1996 Carolina Factory Shops Infrastructure 

11163 SC Grnville.-Spartanbg. 1993 BMW Sewer Improvement 

10853 TN Campbell 1992 Careyville / Jacksboro Water Treatment Plant Improvement 

11098 TN Campbell 1992 Jellico Inflow / Infiltration 

11083 TN Grainger 1992 Rutledge Wastewater Treatment 

12372 TN Johnson 1995 NN Ball & Roller Co. 

11082 TN Marion 1992 Jasper Veriform Industrial Location 

11080 TN Polk 1992 Benton Water System 

11166 VA Buchanan 1992 Slate Creek Industrial Site 

11165 VA Dickenson 1992 Clintwood / Skeetrock Water Project 

10929 VA Dickenson 1991 Dickenson County Industrial Development Project 

12183 VA Scott 1996 Holston Regional Sewer System Extension 

12508 VA Wise 1996 Esserville Sewer Line Replacement 

12350 WV Brooke 1996 Three Springs Business Park 

10381 WV Harrison 1990 Benedum Airport - Air Center Project 

12352 WV Logan 1996 SW Regional Jail / Industrial Park Water Project 

11493 WV Marion 1994 WV Hi-Tech Consortium / Incubator 

10998 WV Mercer 1992 Gardner / Turnpike Industrial Water and Sewer 

11013 WV Putnam 1992 Winfield Sewer Extension 

11148 WV Roane 1992 Long Ridge Water Project 

12128 WV Wayne 1995 Kenova Buffalo Creek Water 
118 

Project Contacts 

James Akins 10901 Ecru Industrial Park Improvements Pontotoc MS 

Thelma Anderson 10313 Gamaliel Wastewater System Monroe KY 

Donald Baker 10929 Happy Valley Industrial Development Project Dickenson VA 

 11165 Clintwood/Skeetrock Water Project Dickenson VA 

Jerry Balding 11163 BMW Sewer Improvement Grnville.-Spartanbg. SC 

Diane Balmer 11027 Hiawassee Sewer System Improvements Towns GA 

Ronnie Bell 10934 Turner Industrial Park Access Road Lee MS 

Phyllis Benson 10902 Choctaw Water Improvements Choctaw MS 

 10904 Noxapater Water Improvements Winston MS 

 10936 PCA Utility Pole Mill Access Road Choctaw MS 

 11111 White Station Water Distribution Extension Clay MS 

Darrell Beshears 11170 Garland Road Water Extensions Pulaski KY 

Eugene Bishop 11110 NE MS Industrial Park Water Facility - Phase I Tishomingo MS 

Barbara Bonz 10993 Ellijay-Gilmer County Water Line Gilmer GA 

Hale Booth 11080 Benton Water System Polk TN 

 11082 Jasper Veriform Industrial Location Marion TN 

Larry Bossolt 11692 West Erie EZ-Veschecco Industrial Park Erie PA 

Ann Bowen 11082 Jasper Veriform Industrial Location Marion TN 

Rebecca Bradley 11679 Aliquippa Industrial Park (LTV) Project Beaver PA 

Henry Braselton 10839 Braselton Wastewater System Improvements Jackson GA 

Gwen Brown 11098 Jellico Inflow/Infiltration Campbell TN 

Bobby Brown 10488 Hanceville Industrial Park Cullman AL 

John Brunner 11200 Rockcastle Waterline Extension Rockcastle KY 

Mary Buckelew 10988 Kings Point Water Line Extension Jefferson AL 

Ron Budash 11396 Cambria County Industrial Park Infrastructure Cambria PA 

Chris Burke 11163 BMW Sewer Improvement Grnville.-Spartanbg. SC 

Robert Calvert 10936 PCA Utility Pole Mill Access Road Choctaw MS 

Tony Cannon 11163 BMW Sewer Improvement Grnville.-Spartanbg. SC 

Buzz Cardolofus 11200 Rockcastle Waterline Extension Rockcastle KY 

Sammy Carter 10904 Noxapater Water Improvements Winston MS 

Keith Carter 10988 Kings Point Water Line Extension Jefferson AL 

Rick Cauthen 11163 BMW Sewer Improvement Grnville.-Spartanbg. SC 

Andrew Chaffin 11165 Clintwood/Skeetrock Water Project Dickenson VA 

 11166 Slate Creek Industrial Site Buchanan VA 

 10929 Happy Valley Industrial Development Project Dickenson VA 

Betty Cochran 10828 Bradford Enterprise Development Center McKean PA 

 11398 Bradford Area Multi-Tenant Center McKean PA 

John Coggin 11445 Lee MS-Bryce-Toga Industrial Access Road Lee MS 

David Cole 10998 Gardner/Turnpike Industrial Water and Sewer Mercer WV 

Jo Cook 11200 Rockcastle Waterline Extension Rockcastle KY 

Linda Cox 10756 Harrisburg Water System Improvements Bibb AL 

Jack Creeley 10354 Fulton-Genesis Project Itawamba MS 

John Creighton 11376 Vista Industrial Center Water and Sewer Buncombe NC 

Juniata Crumley 10842 Demorest Water System Improvements Habersham GA 

Terry Dailey 11151 Hayesville Water and Sewer Improvements Clay NC 

Stewart Darcy 11142 Nelson Valley Water System Pulaski KY 

Bernadette Debias 10887 CAN DO Corporate Center Infrastructure Luzerne PA 

Donna Dias 11170 Garland Road Water Extensions Pulaski KY 

Mona Dockard 10313 Gamaliel Wastewater System Monroe KY 

Bobbie Jean Dodd 10758 Eldridge Water Service Extension Walker AL 

Glen Duckworth 10617 Union County/New Albany Water-Sewer Union MS 

Rob Dunn 10882 McDowell County Water and Sewer Extension McDowell NC 

Penny Eddy 10674 Allegheny Particleboard Industrial Park McKean PA 

Lonnie Edenfield 10855 Toccoa Industrial Park Water/Sewer Lines Stephens GA 

Sam Erwin 12204 Gamewell Industrial Sewer Project Caldwell NC 
119 

Wanda Farmer 10489 Arley Water System Improvements Winston AL 

Susie Figg 10845 Powell County Water Treatment Plant Powell KY 

Charlie Ford 9874 Riverside Industrial Park Access Lowndes MS 

Mark French 11028 Industrial Park Water and Sewer Improvements Lumpkin GA 

Tom Gallagher 12232 J.M. Murray Center Incubator Cortland NY 

Richard Galloway 9994 Huntsville Industrial Park Improvements Madison AL 

Larry Gerard 11043 Young Harris Wastewater Improvements Towns GA 

Greg Giacelli 10934 Turner Industrial Park Access Road Lee MS 

Shelia Glasco 11043 Young Harris Wastewater Improvements Towns GA 

James Griffin 11155 Hornell Commercial Center Water and Sewer Ext. Stueben NY 

Joe Griffith 10892 Marion Smith Industrial Access Road Choctaw MS 

Joseph Griswold 10865 Franklin Area Industrial Complex Renovations Venango PA 

Sammy Hammons 11587 Rockcastle Industrial Park - Phase 2 Rockcastle KY 

Glenna Hampton 11587 Rockcastle Industrial Park - Phase 2 Rockcastle KY 

Perry Hand 11102 Coley Road Improvements Lee MS 

John Hardy 9874 Riverside Industrial Park Access Lowndes MS 

Richard Harris 11037 Allegany County Allegany MD 

Don Hassel 10845 Powell County Water Treatment Plant Powell KY 

 11091 Clay City Wastewater Plant Improvement Powell KY 

Ginger Helms 12183 Holston Regional Sewer System Extension Scott VA 

Bobby Hodge 9711 Midway Access Road: Ph. 1 & 2 Tishomingo MS 

Sean Hogan 11155 Hornell Commercial Center Water and Sewer Ext. Stueben NY 

Ron Holloway 10993 Ellijay-Gilmer County Water Line Gilmer GA 

Willie Holmes 10902 Choctaw Water Improvements Choctaw MS 

Larry Homan 11104 Fulton MS Industrial Road Itawamba MS 

Jerry Hood 10839 Braselton Wastewater System Improvements Jackson GA 

Teresa Hooker 10901 Ecru Industrial Park Improvements Pontotoc MS 

 11104 Fulton MS Industrial Road Itawamba MS 

 10354 Fulton-Genesis Project Itawamba MS 

Lyle Hunter 10998 Gardner/Turnpike Industrial Water and Sewer Mercer WV 

Jim Inman 12414 Carolina Factory Shops Infrastructure Cherokee SC 

Clyde James 12151 Highway 32 Industrial Park Rowan KY 

Tim Kearney 11037 Allegany County Allegany MD 

Will Kelly 12372 NN Ball & Roller Co. Johnson TN 

Phil Kerrick 11141 Winchester/Clark County Industrial Park Clark KY 

Brenda Kincaid 12204 Gamewell Industrial Sewer Project Caldwell NC 

Greg Kit 11083 Rutledge Wastewater Treatment Grainger TN 

Claude Kreiger 11166 Slate Creek Industrial Site Buchanan VA 

Brookes Krocke 9994 Huntsville Industrial Park Improvements Madison AL 

Jan Kurth 10513 Jamestown North Main Street Reconstruction Chautauqua NY 

 11158 Riverside Industrial Center Foundry Renovation Chautauqua NY 

Frank Langan 10817 Blount Mountain Water Extension Blount / St. Clair AL 

Heidi Lauthrey 11224 Marietta Food-4-Less Access Road Washington OH 

Doug Leather 11000 Hagerstown Jr. College Technical Innovation 

Center 

Washington MD 

Albert Lester 12128 Kenova Buffalo Creek Water Wayne WV 

Glen Long 10937 Eason Blvd. Intersection Improvements Lee MS 

Zell Long 11102 Coley Road Improvements Lee MS 

Chris Marschner 11000 Hagerstown Jr. College Technical Innovation 

Center 

Washington MD 

Jack Martin 10978 Florence-Lauderdale County Port Development Lauderdale AL 

Barbara Mathis 11027 Hiawassee Sewer System Improvements Towns GA 

Susan Matlock 10751 Birmingham BAN Tilman Levenson Building Jefferson AL 

Steve McAneny 11396 Cambria County Industrial Park Infrastructure Cambria PA 

Larry McCallum 12047 South Industrial Park Improvements Alcorn MS 

Peter McCord 11163 BMW Sewer Improvement Grnville.-Spartanbg. SC 

Zell McCullough 10937 Eason Blvd. Intersection Improvements Lee MS 

Don Meyer 10574 Fox-Shannon Industrial Park Improvements Belmont OH 

Bonnie Mills 11083 Rutledge Wastewater Treatment Grainger TN 
120 

Sam Minor 10489 Arley Water System Improvements Winston AL 

 10978 Florence-Lauderdale County Port Development Lauderdale AL 

Stephen Moore 10572 Cullman Infrastructure Improvements Cullman AL 

Vaughn Morris 11142 Nelson Valley Water System Pulaski KY 

William Morse 10855 Toccoa Industrial Park Water/Sewer Lines Stephens GA 

Lloyd Naylor 11148 Long Ridge Water Project Roane WV 

Robert Nelson 10757 Nauvoo Water System Improvements Walker AL 

Kevin O'Donnell 10887 CAN DO Corporate Center Infrastructure Luzerne PA 

Ray Oliverio 11493 WV Hi-Tech Consortium/Incubator Marion WV 

James Paige 10513 Jamestown North Main Street Reconstruction Chautauqua NY 

Jim Palmer 11679 Aliquippa Industrial Park (LTV) Project Beaver PA 

Patsy Patterson 10617 Union County/New Albany Water-Sewer Union MS 

Robert Ploehn 11197 Erie PA Uniflow Project Erie PA 

 11692 West Erie EZ-Veschecco Industrial Park Erie PA 

Robert Postal 11195 MCIDA Plaza Renovation Mifflin PA 

Fred Raider 11148 Long Ridge Water Project Roane WV 

John Rayburn 11028 Industrial Park Water and Sewer Improvements Lumpkin GA 

Ken Rea 12372 NN Ball & Roller Co. Johnson TN 

Barbara Rector 11092 East Muskingum Water System Expansion Muskingum OH 

Dirk Reys 11163 BMW Sewer Improvement Grnville.-Spartanbg. SC 

 12414 Carolina Factory Shops Infrastructure Cherokee SC 

Glen Rhodes 10882 McDowell County Water and Sewer Extension McDowell NC 

Don Rigby 12350 Three Springs Business Park Brooke WV 

Rick Roberts 12352 SW Regional Jail/Industrial Park Water Project Logan WV 

Larry Robinson 10922 Barment Industries Sewer Extension Tuscarawas OH 

Bill Roger 10842 Demorest Water System Improvements Habersham GA 

John Romano 11013 Winfield Sewer Extension Putnam WV 

Susking Roy 12232 J.M. Murray Center Incubator Cortland NY 

Laura Rubino 11679 Aliquippa Industrial Park (LTV) Project Beaver PA 

Jim Rudloff 11092 East Muskingum Water System Expansion Muskingum OH 

Bob Rusiewski 10674 Allegheny Particleboard Industrial Park McKean PA 

Danny Ryan 9711 Midway Access Road: Ph. 1 & 2 Tishomingo MS 

Don Rychnowski 10564 Cattaraugus Incubator Phases I & II Cattaraugus NY 

Connie Sansone 11013 Winfield Sewer Extension Putnam WV 

George Schanzenbacher 10564 Cattaraugus Incubator Phases I & II Cattaraugus NY 

 10621 Cattaraugus Econ. Dev. Zone Infrastructure Cattaraugus NY 

Betty Scott 11445 Lee MS-Bryce-Toga Industrial Access Road Lee MS 

Cabe Sexton 10853 Careyville/Jacksboro Water Treatment 

Improvement 

Campbell TN 

Philip Shelton 11169 Crab Orchard Water and Sewer Lincoln KY 

Bill Shot 11118 Russell Springs Sewer Extension Russell KY 

Boyer Simcox 11224 Marietta Food-4-Less Access Road Washington OH 

David Sinney 8851 Clermont County Industrial Access Road Clermont OH 

Joe Sisler 11204 Boyd Rural Sanitary Sewer System Phase I Boyd KY 

Onzie Sizemore 12577 Clay/Leslie Industrial Park Expansion Clay KY 

Jim Skidmore 10381 Benedum Airport - Air Center Project Harrison WV 

Glen Skinner 12508 Esserville Sewer Line Replacement Wise VA 

 12183 Holston Regional Sewer System Extension Scott VA 

Gary Smith 10381 Benedum Airport - Air Center Project Harrison WV 

Peggy Smith 10572 Cullman Infrastructure Improvements Cullman AL 

Carter Smith 11163 BMW Sewer Improvement Grnville.-Spartanbg. SC 

Nicky Smith 11204 Boyd Rural Sanitary Sewer System Phase I Boyd KY 

Carl Snodgrass 12508 Esserville Sewer Line Replacement Wise VA 

Dave Spencer 10381 Benedum Airport - Air Center Project Harrison WV 

Jeff Stagerwold 10865 Franklin Area Industrial Complex Renovations Venango PA 

Jan Starkey 10922 Barment Industries Sewer Extension Tuscarawas OH 

Richard Sutherland 10488 Hanceville Industrial Park Cullman AL 

Joe Swafford 12577 Clay/Leslie Industrial Park Expansion Clay KY 
121 

Debbie Swiggert 11080 Benton Water System Polk TN 

Woodie Swofford 11098 Jellico Inflow/Infiltration Campbell TN 

Lawrence Taylor 11158 Riverside Industrial Center Foundry Renovation Chautauqua NY 

Marcel Thomas 10997 Parrish Sewer Line Extension Walker AL 

Don Threadgill 10892 Marion Smith Industrial Access Road Choctaw MS 

Sam Tolbert 10800 Clarkesville Water System Improvements Habersham GA 

Matt Van Sant 8851 Clermont County Industrial Access Road Clermont OH 

Morris Vaughn 11170 Garland Road Water Extensions Pulaski KY 

Franklin Wallace 10853 Careyville/Jacksboro Water Treatment 

Improvement 

Campbell TN 

David Warner 12350 Three Springs Business Park Brooke WV 

Lanna Watkins 10574 Fox-Shannon Industrial Park Improvements Belmont OH 

Gwen Weaver 11151 Hayesville Water and Sewer Improvements Clay NC 

Shelia Wheeler 12128 Kenova Buffalo Creek Water Wayne WV 

Del White 12151 Highway 32 Industrial Park Rowan KY 

Dan White 12352 SW Regional Jail/Industrial Park Water Project Logan WV 

Mac Williams 11376 Vista Industrial Center Water and Sewer Buncombe NC 

Jonnie Wires 10758 Eldridge Water Service Extension Walker AL 

Jim Witt 11104 Fulton MS Industrial Road Itawamba MS 

Rich Wood 10381 Benedum Airport - Air Center Project Harrison WV 

Mary Wood 10800 Clarkesville Water System Improvements Habersham GA 

Rich Wood 11493 WV Hi-Tech Consortium/Incubator Marion WV 

Joel Woolford 11118 Russell Springs Sewer Extension Russell KY 

John Wooten 12204 Gamewell Industrial Sewer Project Caldwell NC 

Jack Wright 10757 Nauvoo Water System Improvements Walker AL 

Jack Wright 10817 Blount Mountain Water Extension Blount/St. Clair AL 

Jack Wright 10997 Parrish Sewer Line Extension Walker AL 

Farley Wright 10392 Marienville Sewage Improvements Forest PA 
122 

Endnotes 

 

1

 There is considerable overlap between project classifications, and case-by-case judgements had to be 

made on the most appropriate classification of several projects in the database. Part of the explanation of 

this overlap lies in the practical purpose of the specific project funding need, since part of the ARC 

program’s generally acknowledged role in the economic development community is to satisfy funding gaps 

that other programs cannot. Thus, ARC’s investments might fund site preparation in one case, rehab of an 

older industrial building in the next, an industrial access road in a third and a sewer line to an industrial 

park in a fourthall depending on the specific project and funding gaps it may face. This flexibility of the 

ARC program is generally recognized by recipients as one of the program’s strengths, which is designed to 

leverage other state and federal funding resources, such as those in the Economic Development 

Administration, Department of Housing and Urban Development and the Rural Development 

Administration (formerly Farmer’s Home). 

2

 Because of the wide array of start and end dates and, just as important, the relatively recent completion of 

many projects under review, it was not generally possible to use the time-series to evaluate long-term 

impacts from the projects. 

3

 A handful of projects were excluded as detailed above, but the timeframe parameters applied to potential 

projects were the single largest excluding factor. 

4 For instance, the residential projects will by definition have positive values for the number of households 

served, but zeros for the numbers of businesses served (and associated jobs). The opposite is true for the 

economic development projects. Thus, 5 of the 13 states have zero totals for the number of households 

served, because all of their projects were economic development (rather than residential) projects. 

5

 The U.S. Bureau of Labor Statistics ES-202 series data provides average wage per worker for workers 

subject to unemployment insurance. These data are available for commercial and industrial sectors of the 

economy for every individual county. In roughly half of the cases in which reliable payroll data were not 

available on local wage impacts of the projects, the ES-202 data for the year 1996 were multiplied by 

reported job impacts to estimate corresponding wage impacts.

6

 See Appendix C for a further discussion of the calculation of indirect and induced effects, and details of 

the IMPLAN model. 

7

 These multipliers reflected the ratio of total wage impacts to direct wage impacts, and were specific to 

both the county and industries in which direct effects occurred. See the Appendix C for a further 

discussion of the calculation of indirect and induced effects, and details of the IMPLAN model. 

8

 Retained jobs estimated by the Hagerstown TIC are excluded because of their difficult-to-calculate nature. 

9

 There is overlap in the practical purpose of these projects, since part of the ARC’s role is to satisfy 

funding gaps which other programs cannot. Thus, the same basic investment decision methodology might 

fund site preparation in one case, rehab of an older industrial building in the next, an industrial access road 

in a third, and a sewer line to an industrial park in a fourthall depending on the specific project and 

funding gaps it may face. Nevertheless, a discussion of various project classifications is useful as a means 

of exploring statistical and more subjective impacts as well. 

10 In at least one case, however, which was not included in the sample evaluation in an effort to maintain 

an “apples and apples” evaluation, ARC investment covered working capital for incubator operations. 

11 Of course, the deeper the level of industry detail, the more effective the analysis. In this case, project 

resources permitted an analysis at the “one-digit” Standard Industrial Classification level. This level of 

detail indicates, for example, the relative dependence of an area on mining, but cannot reflect a shift, such 
123 

 as from apparel to transportation equipment. At the level of one-digit sectors, shifts in economic 

concentrations were measured between the following: Agriculture, Mining, Construction, Manufacturing, 

Public Utilities/Transportation, Wholesale Trade, Retail Trade, Fire-Insurance-Real Estate, and Services. 

12 These figures include extraction operations; other related (but not directly resource-dependent) 

industries, such as mining equipment, are included in manufacturing and other totals. 

13 These findings support those from the Brandow Company’s 1999 Retention Index of the States that 

retention levels are highest among manufacturing firms nationally. 

14 In rating terms, the 1.00 1988 designation of the non-sample group improved to 1.24. By FY2000, six of 

the sample group improved their ratings to transitional, improving the project group’s average from 1.00 to 

1.33. 

15 In rating terms, the 2.00 1988 designation of this group dropped to 1.94. 

16 Many of the unsampled counties probably had ARC-funded infrastructure projects, although most of 

these are still open, or have been complete for a number of years. At the same time, the sampled counties 

performed better over the 12-year period than the unsampled counties. It could be that the projects had a 

substantial impact in this differential. On the other hand it may be the case that sampled projects came from 

counties that were experiencing or anticipating growth opportunities. But in such cases, the ability to 

recognize and fund such opportunities is worth recognizing. 

17 Economic growth patterns were measured for all primary impact counties for the years 1990-96 

regardless of the actual completion date of the project or projects within them. 

18 Because of inevitable and varied lags in business reporting, it is more accurate to say that the vitality 

analyses cover a three-year period ranging from 1995 to 1999. Original attempts to perform the vitality 

analyses from earlier periods were discarded because of concerns regarding data integrity.