school will be a key component to prepare its future workforce, and a complementary policy
direction that is equally important is to retain those young people graduating from area colleges and
universities to stay and work within the region.

One clear hurdle for stimulating local economic activity is below-average wages. Below-average
household wages significantly limits the disposable income and overall spending power of a
household. Wages in the region are relatively low. In 2013, the average wage in the state as a whole
was $944 per week compared to just $684 in the region (72.4% of the state average). The disparity
between the state and the region is getting worse. In 2003, the region’s average wage was 73.8% of
the state’s. The lower average wage is due to both the structure of employment, with the region
having fewer high salary professional and managerial jobs, and the fact that comparable positions
pay lower wages in the region than in the more urban areas of the state. Variations in the cost of
living (especially housing costs) partially offset the wage differential.

All six counties continue to be dominated by the same general industry mix of health care and social
services (19%), government (15%), retail trade (13%), and manufacturing (11%). Together, these
four sectors represent 58% of all employment within the Southern Alleghenies region. This is
significant because it indicates an unbalanced economy which is dependent on external trade to
supply the goods and services that are not being adequately provided by the underrepresented sectors.
However, location and transportation infrastructure are two existing strengths of the region, and the
growth of transportation and warehousing is logical. The locational advantage also strengthens retail
trade, health care, and other local market area dependent sectors.

Unemployment and underemployment continue to be significant issues within the region. As of
2013, the Southern Alleghenies region had an average unemployment rate of 8.2%. With the
exception of Blair County, the Southern Alleghenies region maintains rates of unemployment
slightly above both the state (7.4%) and national (7.4%) averages. Relatively higher unemployment
rates within the Southern Alleghenies region indicate that the local economies may be struggling to
adequately provide jobs for those currently residing and relocating to the region. As a result,
retaining the current population and attracting future residents will likely remain a challenge for
several of the region’s counties.

Distressed Designation and County Economic Status

The Appalachian Regional Commission (ARC) uses an index-based county economic classification
system to identify and monitor the economic status of Appalachian counties. The system involves the
creation of a national index of county economic status through a comparison of each county's
averages for three economic indicators—three-year average unemployment rate, per capita market
income, and poverty rate—with national averages. The resulting values are summed and averaged to
create a composite index value for each county. Each county in the nation is then ranked, based on its
composite index value, with higher values indicating higher levels of distress.

19


Southwestern Pennsylvania Commission

Pittsburgh, Pennsylvania

Counties: Allegheny, Armstrong, Beaver, Butler, Fayette, Greene, Indiana, Washington,
Westmoreland

Southern Alleghenies Planning and Development Commission
Altoona, Pennsylvania 16601
Counties: Bedford, Blair, Cambria, Fulton, Huntingdon, Somerset

SEDA-Council of Governments

Lewisburg, Pennsylvania

Counties: Centre, Clinton, Columbia, Juniata, Lycoming, Mifflin, Montour, Northumberland,
Perry, Snyder, Union

When evaluating and selecting projects for ARC assistance, Pennsylvania seeks projects that:

¢ Enhance new business start-ups and job creation;
Improve the entrepreneurial vitality of the state;
Support targeted community investment,
Demonstrate readiness to proceed;

Articulate significant financial need, and

Reflect a geographical distribution of ARC funds.

In addition, the ADC staff analyzes the relative need of each project applicant to determine the
available financial resources. This is accomplished via site visits and interviews with appropriate
members of the project team. The ADC also seeks input from central and regional commonwealth
staff, along with other public and private funding partners before making final recommendations.

Pennsylvania believes that a successful ARC project demonstrates partnerships with other public and
private investors and can show a strong case for ongoing sustainability.

Conclusion

Pennsylvania remains committed to providing Appalachian citizens and communities with the
resources needed to promote self-sustaining economic development. As a partner with the ARC, the
commonwealth will invest its own staff time, energy, and dollars to leverage the federal resources of
the Commission. Together, Pennsylvania and ARC can make a difference in the quality of life of our
neediest citizens and the communities in which they live, work, and play.

36


sectors. In recent years, other industries in the manufacturing sector have declined including
furniture, pressed and blown glass, and glassware. This has been influenced by outsourcing, as well
as technology. Despite this downturn, manufacturing is anticipated to continue as a prime contributor
to the region’s economic well-being. Technology advancements will affect employment; however,
manufacturing is anticipated to have a strong presence. Despite these statistics, manufacturing is
anticipated to continue to be a prime contributor to the northeastern Pennsylvania regional economy.

In 2010, the not seasonally adjusted unemployment rate in the seven-county Northeastern
Pennsylvania region was 9.7 %, as compared to the nation, which was 9.6%, and the state, which
was 8.5%. From 2010 to 2014, the regional not seasonally adjusted unemployment rate decreased to
7.0% as compared to the nation and state, which decreased to 6.2 % and 5.8%, respectively. In 2013,
the not seasonally adjusted unemployment rate in the seven-county Northeastern Pennsylvania region
was 9.1%, as compared to the nation and state, which were both 7.4%. In July 2015, the not
seasonally adjusted unemployment rate in the region was 6.7% as compared to the nation with 5.6%
and the state with 5.9%.

According to the Pennsylvania Department of Labor & Industry, Center for Workforce Information
& Analysis, the East Stroudsburg Metropolitan Statistical Area (MSA), which includes Monroe
County, has experienced the highest not seasonally adjusted unemployment rate among all of the
MSAs in the state from September 2011, if not before, to May 2014. During the same period, the
Scranton — Wilkes-Barre — Hazleton MSA, which includes Lackawanna and Luzerne counties, along
with Wyoming County, has experienced either the second or third highest not seasonally adjusted
unemployment rate among all of the MSAs in the state.

There were positive developments recently in the region including the on-going enhancements at The
Commonwealth Medical College. Redevelopment of the Hawley Silk Mill as a multi-use facility
continues with a focus on education, technology and business development. The region’s higher
education facilities continue to expand their curricula and physical resources. Expansions to several
incubators progressed. The potential implications arising from the presence of the Marcellus Shale in
contiguous counties presents complementary business opportunities and new jobs. Entrepreneurial
enhancements expanded throughout the region. In particular, Lackawanna, Luzerne, and Monroe
counties experienced growth in new business start-ups at their incubator facilities. Wayne County
Business Technology Center has opened their facility in Honesdale.

Northeastern Pennsylvania is positioned for growth and prosperity due to numerous economic
development opportunities and drivers. A medical school, The Commonwealth Medical College, and
two gaming venues have provided new jobs. Logistics facilities, as a result of the region’s
proximity to the metropolitan areas of Philadelphia and New York City, continue to expand. Natural
gas drilling activity in the Marcellus Shale formation has had a positive effect within the region.
Recreational activities, in primarily the Pocono Mountains region, have attracted visitors from all
over the Northeastern United States. These new jobs, along with relatively low housing costs, have
contributed to an increase in diversity within the region.

Major activities within the region include continued major investments at Schuylkill Highridge Park.

13


IV. Pennsylvania’s Opportunities

Governor Wolf is committed to an aggressive agenda of stimulating business growth and attraction
to create Jobs That Pay and develop a high quality workforce by training Pennsylvania residents in
order to grow the commonwealth’s economy through partnering with the public and private sectors —
including the Appalachian Regional Commission.

Pennsylvania’s Appalachian communities are working to attract and retain new businesses, create
new job opportunities, and improve their overall quality of life. The commonwealth’s plan for
continued development of our Appalachian region integrates tools for both community and economic
development. Our goals and objectives remain closely aligned with the newly-refined ARC goals.

Pennsylvania is blessed with unrivalled resources. We are home to the second largest energy
resource field in the world with our abundant natural gas, oil, and timber. Our agricultural industry,
established manufacturing base, and work ethic sets Pennsylvania apart. Every region of
Pennsylvania boasts a dynamic mix of major corporations, small businesses, and emerging
opportunities such as biotech and life sciences, innovative healthcare industries, value-added energy,
local food products, advanced manufacturing and places people want to visit. Combine all of this
with our world class higher education institutions and our proximity to close to one-half of our
nation’s population and the possibilities for Pennsylvania are limitless.

‘To foster these opportunities, the Wolf Administration and the Pennsylvania Department of
Community and Economic Development will focus on these themes as part of our Jobs That Pay
priority.

¢ Stimulate business growth and attraction

© Foster an economic climate that encourages the creation, expansion, and retention of
successful businesses. .

© Utilize state community and economic development programs in a cohesive and cost-
effective manner to assist in the creation and retention of jobs that pay in areas of
greatest need within the commonwealth.

© Maximize performance of Pennsylvania’s economic development service provider
network.

o Promote business-driven workforce training to bridge the skills gap.

© Integrate and streamline delivery of financial and technical business assistance.

o Focus statewide, comprehensive infrastructure development efforts on roadways,
water and sewer ways, pipelines, power grids, fiber optics, cellular phone service, etc.

o Formulate policies and strategies to assist small and high-growth businesses.

o Leverage Pennsylvania's economic development programs to grow industry.

o Capture up-stream, mid-stream, and down-stream shale gas development
opportunities.

23


A sagging economy has offset many of the gains realized in our Appalachian communities. Our
small businesses, which create the majority of our jobs in Pennsylvania still require technical
assistance and access to capital in order weather these economic storms. Citizens and employers
need improved infrastructure, including access to broadband. And our local leaders need the tools to
help us continue the revitalization of this great commonwealth.

With this plan, Pennsylvania reaffirms its commitment to a successful partnership that will raise the
level of community and economic revitalization across our Appalachian region.


PA Strategy (5.2.9) Assist community leaders and officials in eliminating barriers to local governance
and growth and provide resources and technical assistance that enhance the
performance and capacity of local governments.

PA Strategy (5.2.10) Support targeted and specific strategies in coordination with local governments,
school districts, non-profits, land banks and development authorities to improve
unoccupied, vacant buildings and open empty lots that constitute the growing
problem of blight.

PA Strategy (5.2.11) Support efforts to address blight planning and code enforcement in coordination
with PA’s Act 47 community recovery plans.

State Objective 5.3: Pennsylvania will have citizens, local leaders, and community organizations capable of
working with local, state, and federal resources to effect positive economic change and
advance local, civic capacity.

PA Strategy (5.3.1) Initiate training activities to increase the skills of individuals and organizations to
effectively identify community needs and develop plans to improve economic
viability.

PA Strategy (5.3.2) Promote youth leadership activities to introduce our young people to the concepts

associated with active community involvement.

Pennsylvania’s Appalachian Organization

Governor Wolf’s vision of a Government That Works includes effective partnership with federal
agencies and organizations that help us improve the economic revitalization of our communities.
Pennsylvania’s Department of Community and Economic Development administers the ARC
program and is the lead agency for economic growth and advancement. The Appalachian
Development Center (ADC) is based within the Department’s Office of Technology and Innovation.
The Office’s Deputy Secretary serves as the Governor’s alternate to the ARC and oversees the
operation of the ARC program. The Center is also responsible for activities and services provided by
Pennsylvania’s seven Local Development Districts (LDDs).

The ADC is responsible for coordinating ARC-related projects with other state and federal offices
such as the Pennsylvania Department of Transportation, Pennsylvania Department of Environmental
Protection, Pennsylvania Department of Labor and Industry, U.S. Department of Agriculture — Rural
Development, Economic Development Administration, Small Business Administration, the
Department of Housing and Urban Development, and others.

Generally, ARC projects are generated from Pennsylvania’s seven LDDs. The districts provide a
local venue for communities and citizens to submit applications for community and economic
development projects. The LDD board members prioritize these projects and submit their
recommendations to the Department of Community and Economic Development. Projects submitted
to ARC for funding are selected on the basis of local endorsement and adherence to the goals and
objectives established by Governor Wolf.

34


Distressed and At-Risk Counties

Distressed counties are the most economically depressed counties. They rank in the worst 10% of the
nation's counties.

Currently, Pennsylvania has no distressed counties as defined by ARC. However, Pennsylvania does
have a significant number of citizens living in distress. According to recent ARC data, Pennsylvania
has the third highest number of distressed areas (113) of any Appalachian state and the eight highest
number of citizens (324,998) living in economic distress.

Pennsylvania has one county designated at At-Risk in FY 2016 — Forest. With a 2014 estimated
census population of 7,518, Forest County had the third smallest population of any county in the
state. It is also one of the state’s most rural counties. The county’s population has a per capita of
$13,646, which is only slightly over 48% of the U.S. per capita income. Almost 50% of the county’s
land mass is part of the Allegheny National Forest. In 2013, the county had six manufacturing firms,
which employed 210 persons. Forest County’s unemployment rate in July, 2015 was 7.9%, the
highest county rate in northwest Pennsylvania, and above the 5.5% rate for the state.

Attainment County Designation

Attainment counties are the economically strongest counties. Counties ranking in the best 10% of the
nation's counties are classified attainment. Pennsylvania has no counties classified as Attainment.

Competitive and Transitional County Designations

Transitional counties are those transitioning between strong and weak economies. They make up the
largest economic status designation. Transitional counties rank between the worst 25%and the best
25%of the nation's counties.

As of the date of this plan, the majority of Pennsylvania’s ARC counties (46) are designated as
transitional counties: Armstrong, Beaver, Bedford, Blair, Bradford, Cambria, Cameron, Carbon,
Centre, Clarion, Clearfield, Clinton, Columbia, Crawford, Elk, Erie, Fulton, Huntingdon, Indiana,
Jefferson, Juniata, Lackawanna, Lawrence, Luzerne, Lycoming, McKean, Mercer, Mifflin, Monroe,
Northumberland, Perry, Pike, Potter, Schuylkill, Snyder, Somerset, Sullivan, Susquehanna, Tioga,
Union, Venango, Warren, Washington, Wayne, Westmoreland, and Wyoming.

Competitive counties are those that are able to compete in the national economy but are not in the
highest 10%of the nation's counties. Counties ranking between the best 10%and 25% of the nation's
counties are classified competitive. Allegheny, Butler, Montour, Washington, and Westmoreland
counties are Pennsylvania’s competitive counties.

20


IV. Goals, Objectives and Strategies

The following ARC goals, plus Pennsylvania’s state objectives and strategies reflect the
partnerships and initiatives that will continue to advance Pennsylvania’s Appalachian region.

Goal 1 — Economic Opportunities
Invest in entrepreneurial and business development strategies that strengthen Appalachia’s
economy.

State Objective 1.1: Pennsylvania will foster an economic climate that encourages the creation, expansion,
and retention of successful businesses, especially in areas of greatest need.

PA Strategy (1.1.1) Target increased technical and financial assistance to Pennsylvania’s manufacturing,
information technology, biotechnology, and related business sectors by providing,
technology and innovation assistance.

PA Strategy (1.1.2) Support the transfer of new processes and product technologies that increase
productivity and create new entrepreneurial opportunities.

PA Strategy (1.1.3) Support strategic alliances with institutions of higher education, local economic
development organizations, and private sector representatives. to encourage joint
entrepreneurship and business development activities.

PA Strategy (1.1.4) Grow venture capital investments to support early stage and emerging technology
firms.
PA Strategy (1.1.5) Provide targeted incentives, technical assistance, tax credits and other risk-reduction.

activities designed to encourage business formation, development and job growth.

PA Strategy (1.1.6) Accelerate technology transfer to commercialize new products and services.
State Objective 1.2: Businesses in Appalachian Pennsylvania will have access to a broad range of

regionally-based and need-driven economic development assistance for the
purpose of market expansion and diversification resulting in increased sales
and job growth.

PA Strategy (1.2.1) Promote one-on-one consulting in the field of international business development,
government marketing, business financing, and other activities offered in
conjunction with PA’s Partnerships for Regional Economic Performance (PREP).
This may include efforts to strengthen the coordination of PA’s economic
development delivery system in a cohesive and cost-efficient manner.

PA Strategy (1.2.2) Utilize internet-based technologies to deliver training and instruction for business
creation and expansion.

PA Strategy (1.2.3) Pennsylvania’s economic development strategy will include regional initiatives
developed through the strategic planning process of the Local Development
Districts. This may include workforce development, planning, e-commerce,
telecommunications, broadband, energy independence, local foods, etc.

26


The inter-relationship between the ADHS and economic development in Pennsylvania cannot be
understated. The movement of goods is vital to successfully meeting the domestic and demands of
customers — both domestically and internationally. Accessibility is especially important in more remote
areas that typically do not have high-traffic volumes or congestion, but where improvements in accessibility to
other transportation facilities or destinations can create a more competitive business environment.

The ease of moving people — both workers and tourists — is also critical to the economic health of rural
communities. As an example, the growing Pennsylvania Wilds depends on the ability to allow visitors from
inside and outside of the state to safely and efficiently travel to our most remote areas to enjoy the natural
assets of the region.

22


Pennsylvania’s Local Development Districts:

Local Development Districts of Pennsylvania

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Northwest Pennsylvania Regional Planning and Development Commission
Oil City, Pennsylvania
Counties: Clarion, Crawford, Erie, Forest, Lawrence, Mercer, Venango, Warren

North Central Pennsylvania Regional Planning and Development Commission.
Ridgway, Pennsylvania
Counties: Cameron, Clearfield, Elk, Jefferson, McKean, Potter

Northern Tier Regional Planning and Development Commission
Towanda, Pennsylvania
Counties: Bradford, Sullivan, Susquehanna, Tioga, Wyoming

Northeastern Pennsylvania Alliance

Pittston, Pennsylvania
Counties: Carbon, Lackawanna, Luzerne, Monroe, Pike, Schuylkill, Wayne

35



According to 2013 averages, the region’s per capita income is $21,682 which is 24% lower than
Pennsylvania State ($28,502) and 22% lower than per capita income for the U.S. ($28,155) as a
whole. The median household income in the region between 2008 and 2012 varied from about
$36,500 to just under $45,250. The U.S. median household income is $53,046, Forest County has the
lowest median household income ($36,686) in the region, while Erie County has the highest
($45,249). At 14.8%, the region’s average percentage of persons below poverty level is 1.7% higher
than the state’s rate and .1% lower than the U.S. rate. Clarion County has the highest poverty rate in
the region at 18.3%, and Warren County has the lowest rate at 12.6%.

The annual 2014 unemployment rate for the Region was 4.9%, which is lower than the rate for
Pennsylvania (5.8%), and the U.S, (5.9%). The most recent unemployment rate (July 2015) for the
region was 5.6%, which was higher than the state’s rate of 5.4% and higher than the U.S. rate of
5.3% for the same period. Forest County has the highest rate at 7.6%. (Comparatively, Forest
County’s poverty rate of 12.8% is the second lowest in the region)

The area’s top occupations include office and administrative support occupations, sales and related
occupations, production occupations, food preparation and serving related occupations, and
healthcare practitioners and technical occupations. Among these top occupations, office and
administrative support occupations, food preparation and serving related occupations, and healthcare
practitioners and technical occupations are most often required to staff companies within key
industries in this region. Regarding manufacturing specifically, top occupations include machine tool
cutting setters, operators, tenders, metal and plastic, miscellaneous assemblers and fabricators, and
machinists. Within the manufacturing industry sector, the industries that are expected to experience
the highest growth include railroad rolling stock manufacturing, machine shops; turned product; and
screw, nut, and bolt manufacturing; and other fabricated metal product manufacturing.

In 2014, health care and social assistance employment accounted for 17.6% (an increase from 2009);
manufacturing employment accounted for 16.05% (a 1.95% decrease since 2013); government
accounted for 12.93% (a decrease from 2009); and retail trade accounted for 11.84% (a slight
increase from 2009).

Among these top four industries, manufacturing has experienced the most change, losing over 9,000
jobs between 2004 and 2009 but also gaining 3,000 back in five years since. The health care and
social assistance sector, on the other hand, has grown steadily since 2004, adding more than 7,000
jobs in 10 years.

Among the occupations with the highest projected job growth from 2014-2019 in the region, about
40% require a credential, 6% an associate’s degree, and 18% a bachelor’s degree or higher. Over
70% of these jobs require some type of training, which is mostly on-the-job-training.

SOUTHERN ALLEGHENIES REGION

The Southern Alleghenies region is comprised of six counties (Bedford, Blair, Cambria, Fulton,

Huntingdon, and Somerset) in south-central Pennsylvania. The majority of the region remains rural and

forested with a land area of 3,400 square miles and a population of 456,872 (American Community
17


served as a barrier to long-term economic growth. The most recent severe flooding event occurred in
2011 from Tropical Storm Lee when over 12 inches of rainfall over 5 days was recorded.

The region has a favorable geographical location and is in close proximity to 50% of the U.S.
population. Much of this consumer market is within four to eight hours driving distance from the
heart of the Region. It also has an abundance of land potentially available for development; seven
institutions and numerous satellite sites of higher education; and significant deposits of mineral
resources. The north and east sections of the SEDA-COG region are home to a portion of Marcellus
and Utica Shale, geological formations that contain high concentrations of natural gas deposits.
These shale plays continue to receive a considerable amount of attention as new technologies were
developed to less expensively extract the natural gas. Forest resources are extensive, providing
timber for the wood industry. The region also has a natural setting that favors the increasingly
important tourism and recreation sectors of the economy, particularly along the river corridors.

The SEDA-COG LDD covers a land area of 6,296 square miles, which represents 14.1% of
Pennsylvania’s total land area of 44,742 square miles. In contrast, the region's 2010 Census
population of 691,365 represents only 5.4% of the total population of Pennsylvania. The 2010
Census population density in the region is 109.4 persons per square mile, compared to a statewide
density of 283.4 persons per square mile. When comparing the 2000 Census population to the 2010
Census population, Lycoming County experienced a decline while Northumberland, Montour, and
Mifflin remained relatively unchanged. Lycoming lost 3,933 people, a 3.3% decline.
Northumberland lost 28 people, a 0.0% decline while Montour and Mifflin experienced only a slight
increase of 31 (0.2%) and 196 people (0.4%) respectively.

According to the 2013 U.S. Census Bureau’s County Business Patterns (the most recent version of
County Business Patterns available), manufacturing jobs accounted for about 13% of all jobs in the
region. It should be noted that the SEDA-COG region is more dependent on the manufacturing sector
than is the state as a whole at 10.4%.

SEDA-COG’s 12-month non-seasonally adjusted annual average unemployment rate in July 2015
was 5.1%, This figure is lower than both the state (5.4%) and national average (5.6) for the same
timeframe. Clinton County has the highest annual average unemployment rate in the region at 6.5%.
Northumberland County has the second highest annual average unemployment rate in the region at
5.8%. Centre and Montour counties have the lowest and second lowest annual average
unemployment rates in the region with 3.9 and 4.3 respectively. The presence of Penn State
University in State College, Centre County and Geisinger Health Systems in Danville, Montour
County significantly impact the low unemployment rates in those counties.

NORTH CENTRAL REGION

North central Pennsylvania is rural, non-farm, and small-town in character. Manufacturing
(especially powdered metals and metal fabrication), forest products, limited oil and gas extraction,
tourism, and transportation/distribution services (especially in the Interstate 80 corridor of Clearfield
and Jefferson counties) are major employment sectors of the region. Employment is concentrated in

9


PA Strategy (3.7.3)

PA Strategy (3.7.4)

Pennsylvania’s Department of Transportation will adhere to all federal statutes to
ensure accountability of funds and cooperate with contiguous member states.

Continue to allocate resources for development and improvement of local access
roads for economic and community activities.

Goal 4 — Natural and Cultural Assets

Strengthen Appalachian’s community and economic development potential by leveraging
the region’s natural and cultural heritage assets.

State Objective 4.1: Pennsylvania will increase community and economic activity by preserving,
developing, and marketing local strategic assets.

PA Strategy (4.1.1)

PA Strategy (4.1.2)

PA Strategy (4.1.3)

PA Strategy (4.1.4)

PA Strategy (4.1.5)

PA Strategy (4.1.6)

PA Strategy (4.1.7)

Develop initiatives to support tourism expansion, including heritage and eco-
tourism development, through assessments, technical assistance, and marketing
campaigns.

Promote asset-based development opportunities by encouraging economic and
community development organizations to utilize their historical, environmental, and
cultural resources.

Promote regional development, preservation and entrepreneurship along PA’s vast
river network, greenways, forests, trails, and other natural assets.

Promote asset-based entrepreneurial development based upon historical, cultural,
structural, and geographic resources.

Increase domestic and international leisure travel to the commonwealth to grow the
tourism industry’s economic impact

Collaborate with industry stakeholders and partners to develop and implement
cooperative marketing initiatives,

Preserve the natural, cultural, and heritage assets that abound throughout
Pennsylvania and educate citizens on the value of our Appalachian region,

Goal 5 - Leadership and Community Capacity

Build the capacity and skills of current and next-generation leaders and organizations to
innovate, collaborate, and advance community and economic development.

State Objective 5.1: Pennsylvania will provide planning, technical assistance, management services and
complimentary resources to local governments and community and economic
development organizations to promote efficient and effective local leadership and
improved civic capacity.

32


State Objective 2.3: Appalachian residents and business owners will have access to institutions of higher
learning as well as alternative educational institutions that promote entrepreneurship
and innovation as well as continuing education.

PA Strategy (2.3.1) Promote the development of critical job skill training programs to address
workforce shortage issues.

PA Strategy (2.3.2) Expand or establish technical training centers designed to improve workforce skills
in rural Appalachia.

PA Strategy (2.3.3) Support initiatives that adequately prepare students to successfully perform in
postsecondary education environments.

State Objective 2.4: Pennsylvania will foster an integrated health-care system designed to provide
Appalachian children, adults, and elderly citizens with access to quality care at a
reasonable cost.

PA Strategy (2.4.1) Continue to support the J-1 Visa program as a tool to recruit physicians to our
neediest areas.

PA Strategy (2.4.2) Employ the use of the latest technological resources such as remote monitoring
devices to lower health care costs while maintaining a high degree of quality care.

PA Strategy (2.4.3) Analyze specific health care needs of Appalachian residents for the purpose of
directing resources to combat illness, disease, and spiraling costs.

PA Strategy (2.4.4) Support organizations specializing in addressing the health care needs of rural areas
to identify and develop wellness programs and other activities to combat areas of
health-distress.

PA Strategy (2.4.5) Identify chronic illnesses and conditions affecting a growing segment of
Appalachian residents and target resources to address these needs.

State Objective 2.5: Pennsylvania will reduce and/or eliminate barriers that hinder successful
participation in the workforce by willing individuals seeking employment
opportunities throughout Appalachia,

PA Strategy (2.5.1) Support community initiatives that provide transportation, child and adult
daycare, disability assistance, health and wellness efforts, and related services
that help more individuals succeed in the workplace.

Goal 3 — Critical Infrastructure
Invest in critical infrastructure — especially broadband; transportation, including the
Appalachian Development Highway System, water/wastewater systems.

State Objective 3.1: All Appalachian communities will have access to safe drinking water; sanitary sewer
and waste disposal systems; housing; diversified energy and other basic infrastructure.

PA Strategy (3.1.1) Support efforts to provide a safe and secure water/sewer system for residents of
Appalachia through collaborative projects with state and federal agencies such as
EDA, USDA, PennVest, etc.

29


AGE

Pennsylvania has a higher percentage of Appalachian citizens over the age of 65 (17.3%) than all
other member states except North Carolina (17.4%). An aging workforce, coupled with increased
concerns about access to affordable health care, continues to reinforce the need for efforts to reach
parity with the rest of the nation.

Percent Ages 65 and Over,
2009-2013

|| US.AVERAGE: 13.4 PERCENT
‘APPALACHIAN AVERAGE: 18.5 PERCENT
EBB 15 percent or areater

[EE] 134 pereentto 149 percent

71 hese than $3.4 percent

Map Title: Percent of Population in the Appalachian Region Ages 65 and Over, 2008-2018

Data Source: U.S. Cansus Bureau, 2009-2013 American Community Survey.

EDUCATION

Tn Appalachian PA, 10.3% of the Appalachian population over the age 25 has a high school diploma
—the lowest percentage of the ARC member states. Of persons between the ages of 25-64, 27% have
a bachelor’s degree or more.

LABOR FORCE

According to the U.S. Census Bureau, 2009-2013 American Community Survey, Appalachian
Pennsylvania had 2.3 million persons ages 25-64 in the civilian labor force. The employment rate of
those individual was 93.1% and the unemployment rate 6.9%.


Il. Overview and Assessment of Appalachian Pennsylvania

Fifty-two of our sixty-seven counties are located within the Appalachian Region. It is a region
dominated in many respects by one large central city of national prominence, Pittsburgh, but also
contains much smaller communities and rural areas in varying degrees of distress. Many of these
communities are still struggling to identify and develop an economic structure that will hopefully
provide the vibrancy needed to provide good jobs, physical infrastructure, and social structure in
order to sustain growth and entrepreneurial development.

POPULATION
According to the U.S. Census Bureau, Pennsylvania has a population of 12,731,381. Of that number,
nearly 5.8 million people call Appalachia their home, the highest by far, of any ARC state. They live,

work and play in a land area of 36,444 square miles, also the highest of any of the 13 member states.

However, the negative population change across Appalachian Pennsylvania reflects the outmigration
that impacts us in many ways — workforce, health care, civic capacity, education, etc.

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Survey, 2009-2013 5-Year Estimates). All six counties continue to be dominated by the same general
industry mix of: health care & social services (19%), government (15%), retail trade (13%), and
manufacturing (11%). The cities of Altoona and Johnstown are well known for offering
comprehensive health care services through UPMC Altoona, the Tyrone Regional Health Network
(TRHN), and Conemaugh Health Systems. Bedford, Huntingdon, and Somerset counties all possess
more prominent accommodation and recreation industries, due to popular tourist destinations such as
the Omni Bedford Springs Resort, Raystown Lake, Seven Springs Mountain Resort, and Hidden
Valley Four Seasons Resort. Cambria County has developed a small alternative energy cluster
through wind farm construction and wind turbine component manufacturing.

Due to the limited shale drilling activity that has occurred within the region, the majority of shale-
related economic impacts have stemmed from support activities by existing companies, or the
establishment of shale-related businesses within the region due to the proximity to areas with heavy
drilling activity.

The current state of the national economy, combined with the workforce and population
demographics of the Southern Alleghenies Region, continues to produce challenging circumstances
for local businesses, particularly those within the prominent manufacturing industry. The past decade
has seen slow population decline in most counties and the region as a whole, which can in the
majority of cases, be attributed to the lack of higher-paying employment opportunities. With the
exception of Fulton and Huntingdon counties, the Southern Alleghenies population has decreased
slightly between 2000 and 2013, with the biggest losses experienced by Cambria (6.7%) and
Somerset (3.4%) counties.

Compared to the state as a whole, the region is older. The median age for the region is 42.7,
compared to 40.7 for the state as a whole. Persons over 55 years of age represent 33% of the
residents in the region, compared to 29% for the state. Moreover, the region has experienced a
significant net loss among its working aged adults. Between 2000 and 2013, the region lost roughly
25,000 (or 13%) of its population aged 20 to 54 years. On the other hand, the region experienced
growth among its senior population (aged 55 and over). Between 2000 and 2013, the region added
22,400 seniors representing a growth rate of 33%.

The region is weil positioned in terms of higher learning institutions present within the six counties.
Educational attainment is a key indicator for a region’s workforce talent and educational assets that
can lead to technological innovation. As technology and knowledge-based industries become more
central to the national and global economies, the high skill level of the regional labor force is one of
the key drivers of job growth. At the individual level, one’s educational levels are closely linked to
higher. wages and employment rates. However, despite the presence of the region’s colleges and
universities, college enrollment for the Southern Alleghenies region’s 18 to 24 year olds still lags
behind the state as a whole. Slightly less than half of the region’s residents over 25 years of age hold
high school diplomas, compared to 37% for the state as a whole. These figures are significantly
higher than the national average of 28.1%. Furthermore, the percentage of the region’s residents aged
25 and older with college degrees is 24.4%, compared to 35.2% for the state and 36.6% for the
nation. The region’s ability to advance the educational attainment for its young people beyond high

18


The region’s economy benefits from its wealth of colleges and universities, which also support
employment growth in high-skilled and high technology occupations. The region has nearly three
dozen colleges and universities, enrolling 121,968 students (2014).

Today, there are approximately 113,000 individual business establishments of all sizes in all
industries in southwest Pennsylvania, including large national companies such as Alcoa, Inc., H.J.
Heinz Co., BNYMellon Financial Corporation, PPG Industries, Inc., U.S. Steel, PNC Bank, Consol
Energy, WESCO International, Inc., Mylan and Dick’s Sporting Goods, In 2014, total non-farm
employment was 1.18 million workers. Sectors cited by workforce and economic development
agencies as key growth opportunities include advanced manufacturing, financial and back office
services, information technology, and life sciences. Energy and transportation remain important parts
of the regional economy as well due to continued, but shrinking, demand for coal as a regional export
commodity and the emerging Marcellus and Utica Shale industries.

Along with its urban base, southwest Pennsylvania has significant agricultural resources. The
agricultural industry remains a vital aspect of the region’s economy, way of life, and cultural
heritage. The region has approximately 9,700 working farms and employs 1.5% of the workforce.
Local foods have become a focal point for many communities and there are 175 farmers markets
across the region.

An estimated 200 miles of commercially navigable water along the Ohio, Monongahela, and
Allegheny Rivers provide a valuable inland navigation system for raw materials, as well as bulk and
manufactured goods into and through the region. With more than 200 river terminal operators in the
region, the Port of Pittsburgh is one of the busiest inland ports and one of the 20 busiest ports of any
kind in the nation.

Overall regional population growth is estimated at approximately 337,000 by 2040, which is well
under 1% per year. Each county’s population is projected to grow somewhat over this 25-year period.
The rate of growth in households is determined by both the change in population and the change in
household size. With a projected decline in household size and growth in population, the number of
households in the region is projected to grow faster than population. Approximately 183,000 new
households are projected by 2040. Regional employment is projected to grow by approximately
300,000 jobs through growth in retail trade, services, and other sectors.

CENTRAL REGION

The 11-county region served by the SEDA-COG LDD (Centre, Clinton, Columbia, Juniata,
Lycoming, Mifflin, Montour, Northumberland, Perry, Snyder, and Union counties) is predominantly
rural, and is situated in Pennsylvania’s heartland. Scattered across the region are a number of mostly
small urban centers. Its topography, chiefly the Susquehanna River system and the ridges of the
Appalachian Mountains, have markedly influenced the region’s economic development. The urban
centers are overwhelmingly found along the Susquehanna and its tributaries where most of the
region's economic activity, development, and growth have also occurred in thé form of industry,
commerce, and services. These same centers are subject to significant periodic flooding, which has

8


* Develop PA’s Innovation Economy

oO

fe}

Grow venture capital investments to support early stage and emerging technology
firms.

Accelerate technology transfer to commercialize new products and services.
Ensure that the variety of technology-based economic development organizations
throughout the commonwealth work collaboratively to fully leverage the wealth of
research, capital, and support services available to build a comprehensive
infrastructure that supports company formation and growth.

Serve pre-revenue, emerging and mature technology companies; universities engaged
in research and development with commercial potential; community organizations
that focus on technology infrastructure, training and facilities; and investment
partners.

Revitalize Pennsylvania's manufacturing economy.

e Expand Pennsylvania Worldwide

fe}

eo}

Highlight opportunities for international investors to invest and expand within the
commonwealth.

Provide transaction-based technical assistance and marketing services to
Pennsylvania companies to develop their exports and expand their presence in
foreign markets.

Utilize exporter mapping tool to provide statewide visibility of the entire
Pennsylvania exporter business community.

Expand the authorized trade representative network in new and emerging markets.
Increase Office of International Business Development (OIBD)-facilitated export
sales for Pennsylvania companies.

Increase Office of International Business Development (OJBD)-facilitated Foreign
Direct Capital Investments (FDI) to the commonwealth.

« Embrace PA’s Assets

°

fe}

Increase domestic and international leisure travel to the commonwealth to grow the
tourism industry’s economic impact.

Utilize effective marketing campaigns that incorporate the use of social media tools
to drive traffic to visitPA.com, the official tourism web site for Pennsylvania and its
mobile version.

Collaborate with industry stakeholders and partners to develop and implement
cooperative marketing initiatives.

Provide informative materials visitors need to plan and enjoy Pennsylvania’s unique
destinations, activities, and attractions.

Create a conversation with our target audiences, to engage them and tell them the
positive story of Pennsylvania as a place to live and do business through promotion,
advertising and event-management.

Support the smart development of Pennsylvania’s energy resources, including coal,

natural gas, water, oil, and timber.
24


COMMONWEALTH OF PENNSYLVANIA
OFFICE OF THE GOVERNOR

HARRISBURG

THE GOVERNOR

April 15, 2016

Mr. Scott Hamilton

Executive Director

Appalachian Regional Commission
1666 Connecticut Avenue NW
Washington, DC 20009-1068

Dear Mr. Hamilton:

I am pleased to submit Pennsylvania’s Appalachian State Development Plan. This plan
has been developed to reflect the new goals of the Appalachian Regional Commission and the
objectives and strategies the Commonwealth will utilize to advance our partnership with ARC
and local organizations across our 52 Appalachian counties.

I am also pleased to forward our FY 2016 State Strategy Statement. This strategy details
the efforts planned by the Commonwealth and our partners to reach the goals and objectives set
forth in our plan.

Thank you for the work of the Commission and the able staff who work with us to
improve the quality of life and economic conditions in Appalachian Pennsylvania. Should you
have any questions related to our State Plan or Strategy, please do not hesitate to contact my
alternate, Ms. Sheri Collins.

Sincerely,

Tom [0

TOM WOLF
Governor


scheduled to be built in 2016-2017. Hundreds of workers will be employed in these three projects.

Elk and McKean counties have seen an increase in tourism at popular locations at Kinzua State Park
in McKean County where a new $7 million visitor center is being built in 2015. The Elk Country
Visitors Center near the village of Benezette in Elk County continues to put up impressive numbers
as over 200,000 people visited the center in 2014.

Regional employment has been stable from July 2014 to July 2015. In July 2014 the regional
civilian labor force was 110,300 with 6,900 unemployed for a regional unemployment rate of
6.3%. In July 2015 the regional civilian labor force was 104,900 (a loss of 5,400 workers from
July 2014) with 6,700 unemployed for a regional unemployment rate of 6.4%. Manufacturing,
especially powdered metals and metal fabrication, has steadily improved over the past twelve
month period. An uptick in the extractive industries, most notably in oil and natural gas
production, has also seen a modest increase in activity, but not so in coal mining or forest
products. WhiteWave, a food products processing company recently announced that it would
locate in the DuBois area and planned to hire 100 people.

Improving demand for automobiles, trucks, and lawn/garden equipment nationally has helped the
powdered metal industry in 2014-2015. This has increased the demand for powdered metal parts
for companies making those products. Elk County has benefitted from this increase in demand as
it has roughly 70 companies involved in powdered metal parts manufacturing and had the lowest
unemployment rate in the six-county region at 5.7 % in July 2015, just below the state rate of
5.9% and at the same as the national rate of 5.6% (non-seasonally adjusted rates).

The forest products cluster continues to be stagnant due to the nation’s continued slow housing
recovery and reduced foreign demand. Foreign demand for dimension cut lumber used in
furniture has shifted from black cherry and red oak to lighter toned woods such as.ash, maple,
and poplar. This has caused weak pricing in black cherry and red oak timber and kept this part of
the forest products cluster weak in north central Pennsylvania. Demand for fine white paper has
remained firm and the region’s sole paper mill remains a steady employer and user of lesser
grade raw timber species.

The region is participating in the slow but steady improving national economic recovery.
Unemployment in July 2015 ranged from a low of 5.7% in Elk County to a high of 7.7% in
Cameron County. Most county unemployment rates were about two to three tenths of a point
higher in July 2015 than in July 2014. Stability was the key economic word to > describe the region
from mid-2014 through mid-2015.

NORTHEASTERN REGION

The seven-county Northeastern Pennsylvania region is a 4,476 square mile area that includes Carbon,
Lackawanna, Luzerne, Monroe, Pike, Schuylkill and Wayne counties. Its major urban centers are
primarily concentrated in the 87 miles stretching from Carbondale in Lackawanna County through


five major clusters: telecommunications, manufacturing, forest products, oil and natural gas
exploration/production, and transportation/ distribution. These clusters occur in different counties.

Economic transformation/consolidation continues to affect Potter County in a significant way.
Telecommunication-related jobs continue to be important in this county. Zito Media is providing
cable television, telephone, and internet service to many small communities in north central
Pennsylvania and continues to expand a major broadband service build-out that will enable most of
western and central Pennsylvania to connect to high speed internet service, when completed. Potter
County is continuing to notice stable activity with Marcellus Shale natural gas drilling and well site
construction work. Drilling permit applications and well site development work have remained
stable-to-slow in 2014 and in early 2015. Hiring and business activity (supplies, fuel, hotel rooms,
etc.) continue to be weaker than the 2010-2011 period. The forest products industry remains stable
but slow.

McKean, Cameron, Elk, Jefferson, and Clearfield counties are seeing an increase of activity in the
extractive industries as energy prices have contributed to employment gains in the oil and natural gas
(Marcellus Shale deposit) extraction and exploration business, Cameron, McKean, and Clearfield
counties are the most active with new natural gas drilling activity in the region. Elk, Jefferson, and
McKean Counties have seen an increase in drilling for oil in 2014 and early 2015. Coal mining
activity has slowed in Clearfield and Jefferson counties where most of the region’s coal deposits
exist. Clearfield, Jefferson, and Elk Counties have benefitted from the formation of Penn Highlands
Healthcare. Penn Highlands Healthcare continues to consolidate healthcare and hospital/medical
services in a system with nearly 3,800 employees, 363 physicians, and 556 inpatient beds.

Growth in the transportation/distribution cluster along the Interstate 80 Corridor in Clearfield and
Jefferson counties has remained stable in 2014-2015 due to an increase in the shipping business for
goods hauled by the trucking industry and lower fuel prices. The slow but steady nationwide increase
in economic activity has benefitted both shippers of products and the manufacturers that make them.
It is estimated that trucking firms in Clearfield County employ around 2,000 people and close to
1,500 in Jefferson County. This cluster remains:a steady employer in 2015, yet is below the
economic activity peak experienced in 2006-2007 when a shortage of truck drivers was a major
worry in this industry cluster. Truck traffic from the natural gas exploration and production
companies on regional highways continues to be very visible yet below the activity seen in 2013.
Trucks hauling drill pipe, pumping equipment, sand, water, etc. are less visible than in 2013 as lower
natural gas prices slow development and production activity in 2015.

The region is currently experiencing a construction boom of approximately $1 billion in three
projects, The U.S. Army Corps of Engineers will be spending roughly $248 million on the
rehabilitation of the dam at the East Branch Reservoir in Elk County between 2015 and 2019. The
National Fuel Gas Northern Access Pipeline Project will cost approximately $410 million between
2015 and 2017 on a 97 mile natural gas pipeline between the Clermont area of McKean County and
western New York to provide natural gas to Canadian customers. Seneca Resources will be spending
around $350 million in the Clermont area of McKean County between 2014 and 2020 to drill and
develop natural gas wells that will connect to the National Fuel Gas Northern Access Pipeline

10


PA Strategy (3.4.2) Develop initiatives such as training programs, consulting, and demonstration
projects to increase the readiness of industry groups and businesses to engage in e-
commerce.
PA Strategy (3.4.3) Sponsor demand aggregation programs to encourage private sector investment of
broadband technology.
State Objective 3.5: Pennsylvania will provide communities with the resources needed to spur locally

driven community and economic development.

PA Strategy (3.5.1)

PA Strategy (3.5.2)

PA Strategy (3.5.3)

PA Strategy (3.5.4)

Support revitalization efforts that re-use brownfields and existing infrastructure to
create new businesses, homes, and community resources.

Promote infrastructure investment that compliments and utilizes the region’s natural
beauty, landscape, and historical/cultural heritage.

Improve and expand our intermodal methods of transportation via planning and
infrastructure to move people and goods more effectively and maximize the region’s
access to domestic and international markets.

Support community infrastructure improvements designed to retain major
employers or newly formed companies.

State Objective 3.6: Pennsylvania will invest in the future by turning existing infrastructure into vibrant
new business, cleaning up the environment, and creating lively towns and
neighborhoods.

PA Strategy (3.6.1)

PA Strategy (3.6.2)

PA Strategy (3.6.3)

Clean up Pennsylvania's polluted streams and improve the health of our rivers and
streams affected by runoff from mines and other pollution, restoring these waters to
full use for our communities and outdoor enthusiasts.

Reclaim abandoned mines and toxic waste sites for productive uses.

Invest in alternative energy production including wind farms, solar cells, and
alternative fuels.

PA Strategy (3.6.4) Pennsylvania will support programs that preserve working farms, open space and
natural areas, and improve state parks and infrastructure that support fish and
wildlife habitat so tourists and Pennsylvanians can fully enjoy these treasures again.

PA Strategy (3.6.5) Restore communities and expand affordable housing by improving community
parks, and investing in housing and community redevelopment.

State Objective 3.7 Pennsylvania’s businesses, citizens, and visitors will have a safe and efficient

highway system to promote global commerce and provide safe travel throughout the

region.

PA Strategy (3.7.1)

PA Strategy (3.7.2)

Identify for completion, critical Appalachian Development Highway System
(ADHS) interchanges and priority miles.

Effectively and efficiently continue to develop the ADHS by soliciting input from
local private and public officials.

31


PA Strategy (3.1.2) Promote multi-county approaches and partnerships with public and private sector
entities to manage solid waste disposal, water and wastewater treatment. Support
waste recycling and new disposal technologies.

PA Strategy (3.1.3) Provide housing and redevelopment assistance to ensure a basic standard of living
and improved economic potential for our communities.

PA Strategy (3.1.4) Encourage investment and innovation in low-carbon infrastructure, such as smart
grid, natural gas, renewables, and biomass to allow new and existing business to
operate with a lower carbon footprint and make them more competitive in the global
economy.

PA Strategy (3.1.5) Promote investments in pipelines, power grids, fiber optics, cellular phone service
and other ancillary infrastructure.

State Objective 3.2: There will be a new or renewed active industrial site, business park or business
incubator within a reasonable commute of all Appalachians for enhanced job creation
and business development opportunities.

PA Strategy (3.2.1) Support programs which create site-ready properties focused on generating
economic growth in needy areas and tailored to local and regional current and
emerging opportunities.

PA Strategy (3.2.2) Stimulate business infrastructure development along Pennsylvania’s Appalachian
Development Highway System (ADHS) corridors.

PA Strategy (3.2.3) Coordinate regional planning efforts to serve commercial and industrial purposes.

PA Strategy (3.2.4) Engage in infrastructure and construction activities that will generate value-added

job creation and business expansion. This may include but is not limited to business
incubators, multi-tenant facilities, industrial parks and ancillary infrastructure needs
such as parking and access roads,

State Objective 3.3: Pennsylvania will rebuild our communities by focusing on housing, site acquisition,
preparation, and redevelopment.

PA Strategy (3.3.1) Support Main Street projects that will lead to physical improvements in downtown.
business districts.

PA Strategy (3.3.2) Provide resources to encourage improvements in Appalachian residential
communities.

PA Strategy (3.3.3) Support activities that promote the availability of affordable housing. This includes

concerted efforts in areas affected by shale gas development.

State Objective 3.4: Pennsylvania will bridge the digital divide in the Appalachian region by delivering
broadband and other telecommunications resources to residents and businesses.

PA Strategy (3.4.1) Support the deployment of affordable access to advanced communications through
the use of multiple technologies.

30


HEALTH

Combined with other factors, individual health is a prime indicator of quality of life and impacts
economic vitality. In the early 1960s, living standards in Appalachia, as measured by the health and
well-being of the population, were well below those of the rest of the nation and they remain so
today. One of the most basic measures of a region’s health is the mortality rate of its population. The
region’s mortality rate declined rapidly during the 1960s and1970s, as did the US’s, due to improved
medical care and preventative care. Infant mortality rates, in particular, dropped by more than two-
thirds in Appalachia, moving much closer toward parity with the rest of the nation. Today, however,
overall mortality rates are up in the region, even as they continue to fall in the rest of the country.
One reason for Appalachia’s increased mortality rates could be risirig rates of obesity; other possible
explanations include lack of access to care and the region’s aging population.

Of Pennsylvania’s 67 counties, 48 are considered rural. Of the 48 rural counties, 11 counties (23%)
exceeded the average state incidence rate for all cancers during the 5-year period of 2002-2006.
Warren and Carbon are the rural Appalachian counties that had the highest incidence rates for all
cancers. In terms of mortality rates, 17 rural counties (35%) exceeded the average state mortality rate
for all cancers. The Appalachian counties of Wayne, Carbon, and Potter are the rural counties that
had the highest mortality rates.

REGIONAL PROFILES
SOUTHWEST REGION

The southwest region spans nine counties—Allegheny, Armstrong, Beaver, Butler, Fayette, Greene,
Indiana, Washington, and Westmoreland—and 529 municipal governments. Geographically, the
region covers 6,745 square miles. It is served by Southwestern Pennsylvania Commission (SPC)
Local Development District (LDD).

With a regional population of 2,574,959 (U.S. Census 2010) residents, this is the largest
metropolitan area in the 13-state ARC footprint. In terms of population, the region would be the 36th
largest state in the country.

Regional population has declined; however, regional employment levels continue to improve. The
unemployment rate is 5.4 % in the Pittsburgh MSA (June, 2015, BLS).

The income per capita in Pittsburgh is 1.7% less than the Pennsylvania average and 3.8% less than
the national average. The median household income in Pittsburgh is 27.4% less than the
Pennsylvania average and 31.2% less than the national average.

Manufacturing employs 7.3% of the regional labor force. The services sector, including education
and healthcare services employs the bulk of the region’s workforce. Financial services, education,
government enterprise, retail trade, and transportation /warehousing are also important industries.

7


Pennsylvania’s Appalachian Development Highway System (ADHS'

The purpose of the ADHS is to provide a highway system which, in conjunction with the Interstate
System and other Federal—aid highways in the Appalachian region, will open up an area or areas with
a developmental potential where commerce and communication have been inhibited by lack of
adequate access. In Pennsylvania, the 551.5-mile Appalachia Development Highway System consists
of seven routes, identified as Corridors M (US 22), N (US 219), O (US 220/I-99), O-1 (US 322), P
(US 220/I-180), P-1 (Central Susquehanna Valley Thruway), T (I-86), U and U-1 (US 15).

All Appalachian corridor project needs in Pennsylvania are developed in the identical manner as
regular federal projects through an integrated and consensus reaching programming process
involving input from metropolitan planning organizations, rural planning organizations, the State
Transportation Commission, elected officials, the Governor’s Office, and the general public. Project
need is based largely on levels of traffic, safety concerns, and economic development initiatives.
Once consensus is reached within Pennsylvania on the need for a project, available ADHS funds are
programmed based on project readiness, schedule, and financial constraints. Since the passage of
MAP-21, the most recent federal transportation funding legislation, federal funds designated for the
ADHS are not solely specific to the ADHS system and can be utilized for other transportation needs.

If project needs require an alignment change to the ADHS, approval must come from the
Appalachian Regional Commission. After receiving proposed alignment changes, the Commission
will review and approve proposed changes to the ADHS that open up an area or areas for
development inhibited by lack of access while maintaining connectivity to the Interstate System
and/or other ADHS designated corridors. Alignment changes must be made within the ADHS
mileage constraints set by Congress.

Every Appalachian Development Highway System project must be detailed in the Cost to Complete
Estimate and approved by ARC and FHWA. The Cost to Complete Estimate is required by ARC
and the Federal Highway Administration every five years. The most recent estimate was completed
in 2012.

Construction is underway on Corridor N (Somerset County) and is just beginning on the
Susquehanna River Crossing for Corridor P-1. Significant portions of Corridor M, Corridor O,
Corridor U, and Corridor U1 have been constructed. Furthermore, one entire corridor of the ADHS
System in the commonwealth is complete: Corridor T in Erie County.

The commonwealth’s portion of the Appalachian Development Highway System is estimated to cost
more than $3.1 billion to complete, based on the 2012 Cost to Complete Estimate. Federal
authorizing legislation, Moving Ahead for Progress in the 21 Century (MAP-21), did not continue
the dedicated funding for the ADHS System. As such, Pennsylvania will utilize available ADHS
funds to meet the challenge of completing the ADHS System which coincides with the state’s efforts
to ensure economic stability in the Appalachian Region of Pennsylvania.

21


PA Strategy (1.2.4)

PA Strategy (1.2.5)

PA Strategy (1.2.6)

PA Strategy (1.2.7)

PA Strategy (1.2.8)

PA Strategy (1.2.9)

PA Strategy (1.2.10)

PA Strategy (1.2.11)

PA Strategy (1.2.12)

Pennsylvania will expand its commercial presence worldwide, develop strategic
international alliances and attract international companies, This includes
opportunities for international investment and expansion within the commonwealth.

Expand the Pennsylvania authorized trade representative network in new and
emerging markets.

Support efforts to facilitate increased Foreign Direct Capital Investments to the
commonwealth

Provide technical, financial, and infrastructure assistance to those communities
facing the loss, or employment downturn, of a region’s major employer.

Support initiatives to promote business development in the advanced
manufacturing, biotech research, life sciences, alternative energy, agro-food
processing, digital media, and pre-fabricated housing segments.

Support business development activities that promote the expansion of supply chain
activities among businesses capable of serving the energy sectors.

Pennsylvania will support activities designed to grow our ports and intermodal
assets.

Promote regional partnerships and joint activities among government, business, and
nonprofit organizations to reach common goals.

Pennsylvania will promote market diversification efforts for coal-impacted
industries and individuals affected by market changes.

State Objective 1.3: Appalachian residents will have access to enhanced entrepreneurial opportunities.

PA Strategy (1.3.1)

PA Strategy (1.3.2)

PA Strategy (1.3.3)

PA Strategy (1.3.4)

Support regional entrepreneurial ecosystems designed to promote collaboration
among public/private service providers.

Support web-based initiatives designed to provide prompt and practical
entrepreneurial information to citizen and business owners.

Encourage business ownership as a career vocation to students by supporting youth
entrepreneurship activities.

Support activities such as business plan competitions and incubation programs to
fuel the expansion and growth of entrepreneurial activity.

State Objective 1.4 Pennsylvania will expand the market for clean, indigenous energy resources, and
enhance energy diversity and energy security, while stimulating economic development
and job creation in an environmentally responsible manner.

PA Strategy (1.4.1)

PA Strategy (1.4.2)

PA Strategy (1.4.3)

Promote energy security and job creation through the support of advanced energy
technologies.

Foster economic development by encouraging the transfer and commercialization of
innovative energy technologies and the use of fuels indigenous to PA.

Support energy independence and economic development by fostering the smart
27


ll. Executive Summary

Governor Tom Wolf believes that Pennsylvania’s best days are ahead — where a dynamic and
growing economy will offer opportunities and help strengthen our citizens and communities. The
basic priorities that drive our efforts throughout Appalachian Pennsylvania, as well as the rest of the
commonwealth, are the keystone to our vision and plan. Governor Wolf is committed to a thriving
Pennsylvania that has:

© Schools That Teach
e Jobs That Pay
© Government That Works

This plan embodies these principles and sets in motion the goals, objectives, and strategies to
help us reach them.

Pennsylvania has one of the largest rural populations in the nation; however, Appalachian
Pennsylvania is still vulnerable. As the commonwealth works to meet the demands of this century,
our Appalachian communities and residents must position themselves to be full partners in the
changing world economy.

A vibrant rural community is a place of opportunity. It works cooperatively with its neighbors to
address the many issues that span political boundaries, in order to enhance the quality of life.

A vital rural community offers its young and mature workers alike the education needed to meet the
challenges of changing economies, and works to help provide its citizens with economic
opportunities that offer incomes adequate to support their families. A healthy rural economy should
sustain rather than strain the natural environment.

Above all else, a strong rural community is made up of individuals and businesses who are
committed to their community and who are active and willing participants in community efforts to
undertake positive change.

Pennsylvania’s plan for our 52 Appalachian counties has been created to target resources and
assistance to the communities and citizens empowered to make a difference where they live, work,
and play. This state plan, as mandated by the Appalachian Regional Commission (ARC) Code, has
been developed to complement Governor Wolf's plan to revitalize Pennsylvania’s Jobs That Pay
economy through innovation, improved job creation, and an educated workforce.

Despite the success of the partnership established by Pennsylvania and the ARC ~ there is still work
to accomplish. Manufacturing has long been the heart of many communities in Pennsylvania and
the growth of our middle class, but today Pennsylvania stands at a crossroads. We have a $2.3
billion deficit, a sluggish economy, and have been near the bottom of the country in job creation
since 2011.


New employment opportunities will come from development of the Sterling Business & Technology
Park in Wayne County, the Humboldt Industrial Parks in the Hazleton Area of Luzerne County, the
Pocono Mountains Corporate Center in Monroe County and the Mt. Pleasant Corporate Center and
Jessup Business Center in Lackawanna County. Also, additional business locations in Luzerne and
Lackawanna counties were created as a result of major land development and construction work by
privately-owned developers. During August 2015, Kahr Firearms Group opened its facility in
Blooming Grove Township, Pike County. The 40,000 square foot facility will have 50 to 60
employees, once it is in full operation. Also in Pike County, All Fresh Farms, LLC, an indoor
hydroponic production and packaging operation that specializes in growing lettuce mixes, kales, and
basil is establishing a new facility in Greene Township that will create at least 200 new jobs. On June
30, 2015, in Penn Forest Township in Carbon County, a new ‘E-ZPass Only’ interchange opened at
mile marker 87 on the Pennsylvania Turnpike’s Northeast Extension. This interchange, which
provides access to SR 903, could lead to residential, retail, and industrial development.

The Pocono Mountains provide many recreational activities that attract visitors to the region.
According to a 2014 Visitor Report about the Pocono Mountains from Longwoods Travel
USA, there were an estimated 25.6 million total person-trips that consisted of 9.3 million in
overnight trips and 16.3 million day trips during 2014. Total spending that resulted from overnight
visits was $1.4 billion and total spending that resulted from day visits was $964 million.

Significant development is occurring in several downtown districts in the region’s largest cities.
Major revitalization continues in the cities of Scranton, Pittston, and Wilkes-Barre where millions of
dollars in private/public capital have been invested.

Over the past several years, significant attention and priority has been given to entrepreneurial-
related projects to help new to market businesses. Strong attention has also been placed on
establishing knowledge based, technology-led economic development. This is extremely important
from an economic development, youth retention, and image-related perspective.

NORTHERN TIER REGION

Pennsylvania’s Northern Tier is a geographic region consisting of five rural counties: Bradford,
Sullivan, Susquehanna, Tioga, and Wyoming, The Northern Tier encompasses about 4,000 square
miles and is home to approximately 182,600 residents. The region has natural affinities to the
Southern Tier of New York State, as it borders four adjacent New York counties and is influenced by
the employment centers of Binghamton, Elmira, and Corning. Similarly, strong relationships exist
with the economic centers of Williamsport, Pennsylvania to the southwest and the Scranton/Wilkes-
Barre region of Pennsylvania to the southeast. The Northern Tier region is cascaded with gorgeous
rural countryside and thriving small towns and communities. Each of the five counties that constitute
the Northern Tier is known for the flourishing business and industries that drive their economy. In
addition to the counties, the region includes 166 separate municipalities and 19 public school
districts, resulting in one local government for approximately every thousand residents.

According to the Pennsylvania Department of Labor and Industry, Center for Workforce Information

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The Marcellus Shale development is affecting not only local businesses and individuals, but also
businesses statewide, nationwide, and internationally. The local impact has been, however, one of
major proportions. According to the Marcellus Shale Education and Training Center, supplies and
services are often purchased locally, such as items and equipment used for road and well paid
construction, local construction and trucking services, motel rooms, and other services which are not
specialized to the natural gas industry. Many businesses throughout the region have increased their
sales as a result of the Marcellus Shale development and the business it has spurred in the
community, In addition, local infrastructure has seen more investment to make it viable for
responsible development, but is also still an important need.

Throughout the past several years, the conversation about natural gas has stretched far beyond just
production of the vast resource. Residents and businesses see the value in the low-cost energy and
would like to utilize it to run their businesses and homes more efficiently and to utilize the gas where
itis produced, rather than shipping it out of the region. Some areas of the region already have access
to natural gas through various carriers, but a significant portion of the region still does not have a
way to utilize their natural gas. Several projects are underway to enhance and bring natural gas
infrastructure to the region. Electricity generation from local natural gas is a current project
throughout the region. Additionally, projects to promote utilization and transportation of liquefied
and compressed natural gas are also underway.

NORTHWEST REGION

Bordered on the north by New York and on the west by Ohio, the Northwest Region is comprised of
Clarion, Crawford, Erie, Forest, Lawrence, Mercer, Venango and Warren counties. The 2014 census
population estimates indicate that the region has a population of 709,844 which is a .93% decrease
from 2010 (716,501). This trend of population loss has been persistent since the 1970’s.

The region is highly diversified in terms of urban and rural. For example, 2014 census estimates
indicate that Erie is Pennsylvania’s fourth largest city, while Forest County is the third smallest
county in terms or population. Approximately 80% of the population is located in the western
portion of the region, with heavy concentrations in and around the City of Erie, the Shenango Valley
in Mercer County and the City of New Castle in Lawrence County. The eastern portion of the region
is predominately rural and forested.

The Northwest Region’s population has a higher percentage or persons over 65 years of age than the
national average. According to 2014 Census estimates, 17.8% of the region’s population is 65 years
of age and over. The Region’s 65 and over population is projected to increase by 10% by the year
2019.

According to the US Census Bureau, 87.6% of the region’s residents over 25 years of age are high
school graduates. An estimated (average) 17.9% of all residents in the region hold a bachelor’s
degree. The commonwealth’s overall dropout rate is 1.7%. Within the eight counties of the
northwest Pennsylvania region, the rate is 1.33%.

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Table of Contents

I. Letter of Transmittal

IL Executive Summary

Ill. Overview and Assessment of Appalachian Pennsylvania

Population

Age

Education

Labor Force

Health

Regional Profiles & Priorities

Areas of Distress

Appalachian Development Highway System (ADHS)

IV. Pennsylvania’s Opportunities
V. Goals, Objectives and Strategies

Goal 1 - Economic Opportunities

Goal 2 - Ready Workforce

Goal 3 - Critical Infrastructure

Goal 4 - Natural and Cultural Assets

Goal 5 - Leadership and Community Capacity

eoec5eee

VI. Pennsylvania’s Appalachian Organization


Strengthen PA’s Core Communities

°

Assist in the improvement of the physical and economic assets of communities
through programs that support housing and residential development, downtown
improvement, business development, and construction of community facilities and
infrastructure.

Serve as the principal advocate for the commonwealth’s local governments and work
to eliminate red tape by solving problems at the local level.

Attain more effective delivery of housing and community development services.
Provide resources and technical assistance that enhance the performance and capacity
of local governments.

Adopt a targeted and specific economic development strategy in coordination with
local governments, school districts, non-profits, land banks, and development
authorities to improve unoccupied, vacant buildings, and open empty lots that
constitute the growing problem of blight.

25


Commonwealth of Pennsylvania

Appalachian Development Plan

2015-2018

Tom Wolf, Governor

March 23, 2016

Prepared by:

PA Department of Community and Economic Development
Appalachian Development Center

Commonwealth Keystone Building

400 North St, 4 Floor

Harrisburg, PA 17120


PA Strategy (5.1.1)

PA Strategy (5.1.2)

PA Strategy (5.1.3)

PA Strategy (5.1.4)

PA Strategy (5.1.5)

Utilize the Governor’s Center for Local Government Services and other
organizations to provide training and program coordination to local officials in
areas such as administration, finance, management, land use planning,
transportation, zoning, energy conservation, security, broadband, and community
and economic development. This may also include activities that promote regional
consolidation of services.

Provide technical assistance and research support for communities affected by the
expanding shale gas industry as well as a declining coal industry.

Community and economic development service providers will be encouraged to
provide staff with professional development training.

Provide consolidated technical assistance to community and economic groups for
the purpose of developing and administering projects in the region,

Provide adequate resources, tools and equipment for local governments, nonprofit
organizations and other eligible entities to effectively serve the citizens of
Appalachia.

State Objective 5.2: Pennsylvania will empower community leaders throughout the region to serve as
sparkplugs and forward thinkers to mobilize their communities and champion
constructive community and economic development projects and activities.

PA Strategy (5.2.1)
PA Strategy (5.2.2)
PA Strategy (5.2.3)

PA Strategy (5.2.4)

PA Strategy (5.2.5)
PA Strategy (5.2.6)
PA Strategy (5.2.7)

PA Strategy (5.2.8)

Support local and regionally-based leadership development programs to encourage
cooperation and collaboration as well as strategic planning and information sharing.

Partner with state and federal organizations to disseminate information on the types
of resources available to small and rural communities.

Utilize models such as the Appalachian Community Learning Program (ACLP) and
the Pennsylvania Downtown Center to increase civic capacity.

Promote the principles of asset-based development to encourage local leaders to
integrate the natural, cultural, historical and energy resources in community and
economic development activities/projects.

Support initiatives designed to educate Appalachian residents on the benefits and
methods of effective energy conservation.

Support regional and community based efforts to retain wealth generated by
businesses and individuals associated with the growing shale gas industry.

Promote the creation and growth of community foundations and seek partnerships
to direct resources to our neediest projects and areas.

Assist in the improvement of the physical and economic assets of communities
through leadership and capacity initiatives that support housing and residential
development, downtown improvement, business development and community
facilities,

33


PA Strategy (1.4.4)

development of the natural gas extraction industry and supporting businesses.

Support initiatives to capture up-stream, mid-stream, and down-stream shale gas
development opportunities.

Goal 2 — Ready Workforce

‘Improve the education, knowledge, skills, and health of residents to work and succeed in

Appalachia.

State Objective 2.1: Pennsylvania will align job training and education with economic development and
labor demand in sectors the promise growth and advancement,

PA Strategy (2.1.1)

PA Strategy (2.1.2)
PA Strategy (2.1.3)

PA Strategy (2.1.4)

PA Strategy (2.1.5)

PA Strategy (2.1.5)

Promote workforce development in a manner that is coordinated with high schools,
community colleges, apprenticeships, post-secondary institutions, and Workforce
Development Boards.

Support the work of Career Technology Centers as an important option for training
citizens for real world placements.

Support efforts to recruit college graduates back to Pennsylvania to help grow our
workforce, especially in the high-tech sectors.

Support initiatives to ensure that our educational institutions have access to the
latest and most advanced equipment, curriculum and training aids to support
Schools That Teach.

Support educational activities that provide students and workers with necessary
basic and soft skills needed to meet the requirements of employers in all sectors.

Promote educational and workforce initiatives that help Appalachian citizens
acquire a strong foundation of science, technology, engineering, arts and math
(STEAM) skills.

State Objective 2.2: Appalachian residents will receive advanced skills training to acquire and maintain
family-sustaining jobs.

PA Strategy (2.2.1)

PA Strategy (2.2.2)

PA Strategy (2.2.3)

PA Strategy (2.2.4)

Utilize Pennsylvania’s community college system and other educational institutions
to improve the workforce training delivery network along with other public/private
providers.

Promote employer-led consortia and industry partnerships to identify critical job
vacancies and needed skills.

Promote the use of high-technology tools and resources for the education of
students as a means to deliver workforce training.

Train Appalachian residents in the methods needed to develop and expand our
natural, cultural, historical, agricultural, and energy-related resources.

28


the Wyoming Valley to Nanticoke and then following Interstate 81 south to Hazleton and Pottsville.
The major cities within this belt are Scranton and Wilkes-Barre.

According to the U.S. Census Bureau, the population of northeastern Pennsylvania in April 2010 was
1,028,926 and in July 2014 the estimated population was 1,015,692. This population decline was
concentrated in Wayne County (-2.7%), Monroe County (-2.1%), Pike County (-2.1%), Schuylkill
County (-1.7%) and Carbon County (-1.2%). Lackawanna and Luzerne counties also experienced a
percent decrease with -0.8% and -0.7%, respectively.

Overall, the region continues to experience a relatively high median age. According to July 1, 2014
population estimates from the U.S. Census Bureau, the median age in the United States was 37.7
years, in Pennsylvania, it was 40.7 years, and the average in the region was 44.5 years.

Housing costs within the region are lower than the state and nation. According to 2011 - 2013
American Community Survey 3-year estimates from the U.S. Census Bureau, the region has a
lower median housing value and median rent than the state and nation.

According to the U.S. Department of Commerce, Bureau of Economic Analysis, the 2013 per capita
personal income in the region ($38,166) was below that of the state ($46,202) and the nation
($44,765).

Northeastern Pennsylvania enjoys a diversified economic base. The region continues to be extremely
competitive and successful as a location for warehousing and distribution centers, back office call
centers, medical and health-related office facilities and processing centers, and food processing and
distribution. Employment reflects diversification efforts and is not concentrated in any business
sector.

Northeastern Pennsylvania’s business base is overwhelmingly dominated by small businesses.
According to 2013 “County Business Patterns” from the U.S. Census Bureau, there were 22,074
businesses in the region and 73.6 percent of them employed between 1 and 9 people. The single
largest industry sectors by employment are: 1) Health Care and Social Assistance 2) Retail Trade and
3) Manufacturing. Employment in the Manufacturing sector is dominated by Electronics, Fabricated
Metal Products, Plastics and Rubber Products, Food, and Chemical industries. In 2013, the nation
had 73.3 percent of its businesses employed between 1 and 9 people and the state had 71.2 percent.

According to 2013 “County Business Patterns” from the U.S. Census Bureau, the region, at 12.1
percent, has a higher percentage of workers employed in the Manufacturing industry as compared to
the state and nation with 10.4 percent and 9.5 percent, respectively. From 2000 to 2013, regional
employment in the manufacturing sector decreased by -19,200 or -31.6 percent. This percentage
decline is identical to that of the nation and is lower than the state percentage decrease of -32.4
percent. From 2008 to 2013, regional employment in the manufacturing sector decreased by -8,944
jobs or -17.7 percent. This percentage decrease is higher than that of the state (-15.5 percent) and the
nation (-13.9 percent). Historically, most of the decreases in employment were attributed to the
decline in the region’s needle trades, tobacco products, and textile mill products manufacturing

12


and Analysis, as of July 2015, the Northern Tier region’s unemployment rate was 6.2 %, which is
higher than the statewide 5.4% unemployment rate.

In contrast, one year ago in July 2014, the unemployment throughout the Northern Tier region was
6.0%, higher than the state’s 5.5% employment rate. The Northern Tier region’s civilian employment
for July 2015 was 92,100, noting an increase in 700 jobs from the previous month as well as increase
in 1,300 jobs from civilian employment one year ago (July 2014).

The Northern Tier region had a smaller increase in population than both the state and the nation in
the 1990s as well as the 2000s. According to the 2010 US Census, the region had a total population
of 182,663, which was a 0.9% increase from 2000. The region was 96.3% white, non-Hispanic, and
49.6% male.

Some of the largest industries in the Northern Tier region include agriculture, manufacturing, oil and
gas, and health care. Dairy farming and veal production are the predominant types of agriculture in
the region. The cattle ranching and farming sector comprises establishments primarily engaged in
raising cattle, milking dairy cattle, or feeding cattle for fattening. These types of agriculture make up
88.4% of sales and 91% of the animal production sector of the region. In the entire agriculture,
forestry, fishing and hunting industry in the region, the cattle ranching and dairy farming sectors
make up 18.6% of the sales volume and 15.1% of the employment.

As of the 4% quarter, 2014, in the Northern Tier region, health care and social assistance accounted
for the highest employment base at 9,680 employees across the region. Retail trade accounted for
7,626 employees, education services accounted for 5,159 employees, and accommodation and food
services accounted for 4,204 employees. The Pennsylvania Department of Labor estimates that from
2012-2022, infrastructure repair and construction is expected to see the most employment growth in
the region, with a 4.1% increase. Additionally, health related industry growth is expected to grow by
up to 4.0%.

Manufacturing employs a significant portion of workers in the Northern Tier region. Paper
manufacturing is by far the largest sector of the manufacturing industry, bringing in 52.5% of the
sales volume and 31.7% of manufacturing employees. The paper manufacturing sector includes
paper mill activities and manufacturing of converted paper products such as boxes, bags, and
stationery. The transportation equipment manufacturing sector is the second-largest sector in the
manufacturing industry and is responsible for 12.2% of the sales volume and 13.8% of
manufacturing employees. This sector includes manufacturing of motor vehicles and motor vehicle
parts, manufacturing of aerospace parts and railroad rolling stock, and shipbuilding.

In recent years, the region has experienced many economic changes with the emerging oil and gas
industry cluster. Over the past 10 years, the Marcellus Shale natural gas exploration has grown
exponentially, The region is located at the very center of the natural gas drilling that is taking place
in the Commonwealth of Pennsylvania. It has already had and will continue to have a significant
impact on population, economic development, and the overall identity of the region.

15