Program Evaluation of the Appalachian Regional Commission’s 

Infrastructure and Public Works Projects 

Developed for the 

Appalachian Regional Commission 

1666 Connecticut Avenue, NW 

Washington, DC 20009-1068 

October 2007 

Developed by: 

BizMiner/Brandow Company Inc. 

2601 Market Street 

Camp Hill, PA 17011 

services@bizminer.com 

EDR Group 

2 Oliver Street 

Boston, MA 02109 

info@edrgroup.com 
Contents

Executive Summary............................................................................ i 

1. Introduction................................................................................... 1 

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

3. Overall Economic Impact Measures................................................. 15 

4. Evaluation of Impacts by Project Type............................................. 41 

5. Localized Project Impacts............................................................... 61 

6. Economic Conditions in Project Areas............................................. 82 

7. Key Findings, Issues and Recommendations.................................. 98 

Appendices: 

Appendix A: Site Visit Narratives....................................................... 107 

Appendix B: Methodology: Project Selection...................................... 127 

Appendix C. Methodology: Impact Analysis........................................ 131 

Appendix D: Methodology, Economic Vitality Analysis......................... 137 

Appendix E: Methodology, Distressed County Analysis....................... 139 

Appendix F: Project List................................................................... 141 

Appendix G. Interview Contact List.................................................... 144 

Electronic Appendices 

Appendix H. Electronic Impact-Interview Database 

Appendix I. Project Impact-Interview Project Thumbnails 

Appendix I. Project Area Economic Condition Thumbnails 

Appendix J. Project Area Economic Condition Spreadsheet Details 
Evaluation of the Appalachian Regional Commission’s Infrastructure and 

Public Works Program Projects 

Executive Summary 

During 2006, the Appalachian Regional Commission (ARC) conducted an 

evaluation of infrastructure and public works projects to determine if projects 

achieved their original objectives. In addition, as part of the Commission’s ongoing performance evaluation process, the ARC assessed how these project 

investments contributed to attaining the Commission’s strategic objectives. 

The report is primarily concerned with economic development impacts; the 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, 

changes in public health and quality of life that may have resulted from various 

projects are not quantified. 

Projects Evaluated: 

The ARC initiated and closed over four hundred investment projects during the 

period 1999-2005. Of these, 104 were selected for close review during the study 

process, including 33 industrial park and site projects; 51 water and sewer 

projects (32 with primarily economic development impacts); 3 access road 

projects; 5 business incubator projects; 8 telecommunications projects; and 4 

housing projects. Of the total of 104 projects analyzed, 78 (75%) reflected 

objectives and outcomes directly related to economic development. Remaining 

projects had mainly residential or community quality of life objectives 

In total ARC invested $29.4 million in these projects. Additional funds were 

invested by various other federal, state and local development agencies. 

Project files and interviews with local stakeholders formed the basis for 

evaluation of each project, including statistical checks and subjective discussion 

of project impacts. 

Project Impact Assessment of Outcomes 

The sampled projects created a total of 17,645 direct new jobs as a result of the 

ARC-funded projects. In addition, 9,580 existing jobs were directly retained 

(saved) as a result of the ARC-funded projects. It is important to note that these 

impacts reflect only jobs created by sample pool projects, about one-quarter of 

the total program project investments made by ARC. Thus, the total number of 

jobs created or retained by program project investments was much higher than 
ii

tabulated in the report. The tabulated jobs were overwhelmingly developed 

among the 78 projects which suggested a primarily economic develop focus. 

These economic development projects generated $638.8 million in new annual 

wages from direct newly created jobs, and helped to directly retain $325.2 million 

of existing annual wages at threatened jobs. 

Project job creation led to a net expansion of $1.3 billion of annual personal 

income (including indirect effects). Put another way, for a one-time public 

investment in these economic development projects, there was $9.28 of annual 

recurring personal income per public dollar invested. 

The 78 non-residential infrastructure projects leveraged total private investment 

of $1.7 billion, a ratio of $75 to $1 of investment. The estimated project impacts 

on annual tax collections include an estimated $13.3 million in annual state 

income tax revenue, annual state and local sales tax revenue of $16.6 million; 

and annual local property tax revenue of $14.2 million. 

Project Category Impacts 

The 21 sampled industrial park projects created 8,812 direct new jobs and 

retained 968. Nevertheless, new jobs and businesses served were slightly lower 

than projected levels in part due to the project development and maturation 

process. Actual jobs retained were also slightly lower than projected numbers. 

The five sampled business incubator projects created 688 direct new jobs and 

retained 115. Actual results for new businesses were 6% above projected levels, 

while the number of retained businesses served met projections. The number of 

new jobs created was 71% above projections, while the number of retained jobs 

was slightly below projections. 

The three sampled access road projects created 200 direct new jobs and 

retained 1,185. The number of new businesses served was greater than 

projected, while the number of retained businesses served exceeded projections 

by 40%. The number of retained jobs came in below projections. 

The 32 sampled non-residential water/sewer projects created 6,966 direct new 

jobs and retained 7,160. The number of new direct jobs created was more than 

twice the projected number, while the number of new businesses served was 

almost 44% over the projected total. 

Of twelve industrial site projects, ten had been at least partially implemented 

by the end of the evaluation process. The implemented projects created 100 

direct new jobs (21% lower than projected) and retained 152. Actual businesses 

served and retained met projected levels. Jobs retained were slightly higher than 
iii

projected. Of the other two projects, one was a planning-only project, the other 

delayed. 

The five economic development-oriented telecommunications projects in the 

sample created 128 direct new jobs. Actual businesses served were more than 

three times projected levels. New jobs were created 19% above projected levels. 

The projects also served 600 households. 

Table 1 

Ratio of Total Results per Public Dollar 

for Non-Residential Economic Development Projects

Project Impact Ratio per ARC $ Ratio per Public $

 

Direct Private Investment $942 million* 42:1 6.4:1 

Total Private Investment 

(including indirect) $ 1.7 billion* 75 : 1 12 : 1

Jobs 

 New Jobs: Direct 17,645 $1,274/job $8,102/job 

 Retained Jobs: Direct 9,580 $475/job $2,803/job 

Income 

 From New Jobs: Direct $ 634.4 million 28 to 1 4.4 to 1 

 From Retained Jobs $ 325.2 million 71 to 1 12 to 1 

 

* All ratios are based on non-residential project funding: ARC $22.5 million, total public $140.5 million. 

* Totals include large impact resulting from a single project (Huntsville, AL Research Park) 

Project Area 

In addition to the project-specific analysis, the report looked at economic vitality 

measures in project areas, offering context of ongoing strengths, weaknesses 

and potential needs which could be addressed by future projects and programs. 

The report indicated some serious gaps in the Region’s current ability to grow in 

the direction of the US economy, as evidenced in the area diversification

analysis. 

One measurement used was the proportion of local company sales by sector. 

We used this measure to assess industry mix relative to national patterns. In 

general, technology, finance and other traded services are under-strength in far 

more than half of the project areas. 

The vitality analysis also found disturbing lags among longer term Regional firms. 

The mature firm growth analysis measured the growth of longer-term project 

area firms of various sizes against growth of their peers throughout the US. 

Among other findings, concentrations of mature firms in the smallest sales 

category analyzed are 10% higher than US averages in 43 of 91 areas; and 20% 
iv

higher in 19 areas. In order words, mature firms are smaller in project areas (and 

the Region) than in the US as a whole. 

Mature firms also grow at a much slower rate than the national average, 

suggesting that additional resources devoted to retention assistance programs 

would be helpful. 

Entrepreneurial vitality was measured over three time series during the 1999-

2005 period. The results indicated that startup rates are 81% of the US average 

in all project areas. Startup rates are less than 80% of the US average in 60 

project areas, and less than 50% of US levels in 15 project areas. 

As was the case in 2000 infrastructure evaluation, the entrepreneurial vitality 

analysis indicates strongly that ARC’s entrepreneurship assistance should be 

retained and strengthened to encompass entrepreneurial assistance efforts in 

addition to the current incubator focus. 

Strategic Impacts 

Statistical impacts are of course important as measurement tools, but program 

effectiveness should be considered in light of the progress on strategic objectives 

which address Regional concerns. Local project impacts of the projects assessed 

in the sample pool indicate progress on a number of Regional objectives. 

Economic diversification was enhanced by the projects, as reflected through 

industry development which targeted previously under-represented sectors, 

including distribution, tourism, healthcare, prison development and commercial 

diversification. Reuse of vacant or underutilized sites and revitalization of 

surrounding areas was the core focus of some of the most successful projects, 

and a by-product of others. Support for traditional industries that continue to 

be the mainstay of many project counties was evident in the choice of industrial 

retention projects. Speculative development efforts, while not always matured 

or successful, helped attract new businesses to project areas. Work force 

development resulted from new and additional skill demands which surfaced 

during by job creation efforts. Entrepreneurial support was evident in the 

several business incubator projects that focused business community and 

educational institution efforts on a felt Regional need. 

In addition, non-economic community service impacts were evident in 

projects that developed senior housing and service centers and created focal 

points for social and community activity. Regional technology services were 

enhanced by both economically-driven and community based projects that 

included the development or extension of high speed internet access to underserved rural areas.
v

The assessment also resulted in these additional observations: 

Measured outcomes indicate a reasonable investment strategy. All project 

classifications appeared to fall within reasonable and accepted job cost 

parameters. In general, there is a clear efficiency to utilizing projects that serve 

multiple firms as most (except industrial site projects) are likely to do. 

Costs associated with development of incubators are undertaken with the 

understanding that the most meaningful job creation accrues in later stages. 

Because of the stark problems of entrepreneurship faced by many counties in the 

Region, the solid new job return on investment of incubators is specifically noted. 

Projects made progress on strategic objectives. While statistical measures 

are important, progress on strategic objectives which address the weaknesses of 

the Region are at least as critical to the investment process. Sample pool 

projects had real impact on their host communities, often far beyond (and 

sometimes in different directions) than originally anticipated. 

There is a highly favorable perception of the ARC program. The Region’s 

administrative approach 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. Project stakeholders consistently commented 

on the ease of working with the ARC, and several noted with approval the ARC’s 

ability to invest in planning and feasibility studies necessary to subsequent 

projects. Representatives of almost three-quarters of all projects in the sample 

pool (and 76% of all economic development project) expressed the opinion that 

their specific projects would not have been undertaken or completed without 

ARC participation. 

Additional focus on telecommunications investments and traded services 

would be a good idea. Sixty-four percent of all project areas report 

communications sector sales concentrations (area based firms) that are less than 

50% of the US average. Seventy-five percent of all project areas reported sales 

concentrations of area-based Financial Services and related firms at least 20% 

below national levels. As manufacturing declines across the economy, valueadded traded services (that is, services which are likely to bring in dollars from 

outside the area in which a company is located) become critical value-added 

generators for the local economy. 

A variety of stakeholders expressed the need for more rural broadband access 

and telecommunications investment by the ARC. This envisioned focus was at 

least as pervasive as expressions of interest regarding more traditional 

infrastructure needs. 
vi

Consider simultaneous telecommunications and bricks-and-mortar 

investments in single sites. The frequent emphasis placed by project 

stakeholders on the impact of telecommunications enhancements for businesses 

in rural areas suggests that ARC consider simultaneous investments (bricks-andmortar and telecommunications) at single sites. From urban locations with routine 

broadband and cable access, it’s easy to forget the relative advantage of 

businesses in connected areas over those which are not so favored. The 

attraction of rural sites, and the added likelihood of success for businesses at 

those sites, is greatly enhanced by state-of-the-art telecommunication 

infrastructure. On a case by case basis, ARC should consider enhancing the 

competitive advantage of its bricks and mortar investments with corollary 

telecommunications project investments as well. 

Consider retention growth investments. Mature project area firms grew more 

slowly than the national rate of that peer group (using annual reported sales as a 

benchmark). Moreover, the separate entrepreneurial activity analysis indicated 

that many Appalachian areas coupled the “mature firm growth” lags with sluggish 

entrepreneurial activity. These findings call for the development of the 

programmatic efforts aimed at the growth of mature regional firms. 

Consider expanding investments in entrepreneurship. Entrepreneurship lags 

extensively throughout host areas of projects in the sample pool. This is the case 

in the current evaluation round as it was in the last. Some progress has been 

made in some locations, but the Region’s distressed, at-risk and transitional 

areas still reflect sluggish long-term entrepreneurial activity. 

The good news is that focused efforts to address this problem appear to work. 

Incubators were among the most successful projects in this evaluation, as they 

were in the 2000 evaluation round. Incubators sustain new businesses, help 

create jobs, and appear to retain the firms and jobs they create in the areas 

served. Additional investment with entrepreneurial targets -- incubator and 

technical assistance -- is highly recommended. 
1

Evaluation of the Appalachian Regional Commission’s Infrastructure and 

Public Works Program Projects 

1. Introduction 

 

1.1 Purpose 

The Appalachian Regional Commission (ARC) conducted this evaluation of 

infrastructure and public works projects to determine if projects have achieved 

their originally stated objectives. In addition, as part of the Commission’s ongoing performance evaluation process, the ARC wanted to assess how these 

project investments have contributed to attaining the Commission’s strategic 

objectives. 

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, retained business growth, entrepreneurship, and 

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. 

It is important to note that while reporting mandates are an important impetus for 

this report (and occupy much of the space in it), the more significant impacts are 

those which can be seen on the strategic advances made by ARC investments. 

Statistical impacts are clearly one measure of success, and an important one. 

But often, more subjective results, such as those discussed in Chapter 5, offer a 

better flavor of strategic progress made as a result of the investments. 

1.2 Coverage of This Study 

This project follows a 2000-2001 evaluation of programs funded under the 

Commission’s Infrastructure and Public Works Program. 
2

As with the previous study, the infrastructure projects evaluated in this round 

represent a range of projects typically funded by the Commission including 

industrial parks and sites, water and sewer systems, access roads, and business 

incubators. Housing and telecommunications projects were added to the mix in 

the current evaluation round. 

From a pool of over 400 closed projects, ARC selected a sample of 124 

completed representative projects that were funded in part by the Commission 

between 1998 and 2004, and that were completed in various years between 

1999 and 2005. This initial pool was developed to reflect the Commission’s 

current strategic funding priorities for infrastructure projects, and to represent 

projects from each of the 13 Appalachian states. ARC also wanted to discern 

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

economic impacts in the local communities. The initial pool was narrowed to 104 

projects for the final report, representing 91 different project impact areas.[i]

The project evaluation focuses on key performance measurements and 

outcomes: 

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

completion; 

• Leveraging rates for other project-related funds, including state, local, other 

federal and private investment; 

• Determination of the agency’s relative funding contribution; 

• Calculation of the job creation rate attributable to ARC’s investment once the 

impact other funds is considered; 

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

• Indirect and induced economic effects attributable to the project; 

• 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 

housing and water and sewer projects. 

1.3 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, 
3

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 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. 

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: 

• Increase job opportunities and per capita income in Appalachia to reach parity 

with the nation 

• Strengthen the capacity of the people of Appalachia to compete in the global 

economy 

• Develop and improve Appalachia's infrastructure to make the Region 

economically competitive 

• Build the Appalachian Development Highway System to reduce Appalachia's 

isolation 

In general, the projects that were evaluated relate to the goals set forth in the 

Commission’s strategic plan, with a focus on the first and third. The new housing 

and telecommunications project categories address community, as well as 

economic development objectives, as well as work force development objectives. 

The sample projects are distributed over 13 states and represent more than 90 

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. [ii] (An additional class of “atrisk” counties is utilized to differentiate among transitional areas, but is not used 

for funding eligibility purposes.) Projects in distressed counties are eligible for 80 

percent ARC funding, transitional for 50 percent and competitive for 30 percent, 

while attainment counties are generally 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. 
4

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

into six basic categories for the purposes of this report: access roads, industrial 

parks, industrial sites, business incubators, water/sewer, telecommunications 

and housing projects. These classifications were developed to enhance the 

analysis of projects, but the classifications are subject to some overlap. [iii]

All projects in four categories—access roads, industrial parks, industrial sites and 

business incubators— were considered economic development projects. Water 

and sewer projects were divided among economic development and residential 

development projects, as are telecommunications projects. For purposes of 

clarity in the economic impact analysis (Chapter 3), residential projects were 

further divided into (a) community development projects and (b) housing 

development projects. The reason for this is to separate non-economic 

development water and sewer, and telecommunications projects, where impacts 

may be widespread in a community and may also foster job creation, from 

projects that are solely designed to provide specific housing units. Project counts 

are summarized below by classification: 

Industrial Parks: Twenty-one industrial park projects (20 percent of the 

sample) accounted for 21 percent of the total ARC investment reflected in 

the sample. Industrial park project grants tended to be very slightly larger 

than the average sample project. 

Industrial Sites: Twelve industrial site projects (12 percent of the sample) 

accounted for 11 percent of the total ARC investment reflected in the 

sample. Industrial site project grants tended to be slightly smaller than the 

average sample project. 

Business Incubators: Five business incubator projects (5 percent of the 

total analyzed sample) accounted for 6 percent of the total ARC 

investment reflected in the database. Business incubator projects were on 

average significantly larger than the representative sample project. 

Access Roads: Three access road projects (3 percent of the sample) 

accounted for 2 percent of the total ARC investment reflected in the 

sample. Industrial access road project grants tended to be smaller than 

the average sample project. 

Water/Sewer Projects: Fifty-one water and sewer projects (49 percent of 

the sample) accounted for 53 percent of the total ARC investment 

reflected in the sample. Water and sewer projects tended to be larger than 

the average sample project. Nineteen of the water/sewer projects were 

residentially-focused 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. [iv]
5

Housing: Housing projects accounted for four projects in the sample (4 per 

cent), and 2 per cent of the total investment in the project sample pool. 

Housing investments were significantly smaller, on average, than the 

typical ARC investment. 

Eight telecommunications projects accounted for 8 per cent of the sample 

and five per cent of the total investment in the sample pool. The typical 

project in this category was also smaller than the average project overall. 

[v]

During the course of the analysis, it became clear that the classification of 

several projects was ambiguous, and that a handful was probably misclassified. 

For example, a telecommunications project in an incubator might be classified as 

either, and the assignment of water-sewer classifications to industrial park 

projects seemed like a very gray area. One incubator project appeared to us to 

be more of a multi-tenant industrial site re-use, etc. To adjust these in mid-course 

would have required policy discussions and revisions that are beyond the scope 

of this project. As a result, we maintained all of the original classifications and 

mentioned discrepancies only where they are germane to the discussion. 

Similarly, we used the original projections for all projects, even those that were 

essentially planning or feasibility, where projections for new jobs or households 

served had been originally made by the applicant. These (two) cases are noted 

in the discussion, and calculations affecting investment costs and returns are 

discussed both with and without the outcomes utilized for pure planning projects. 

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 414 

projects were developed, completed and closed from 1998 to 2004. Thus, the 

final sample of 104 projects represents 25 percent of all closed 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. New 

categories, such as housing and telecommunications, were included on a 

disproportionate basis in order to develop an initial category assessment with 

reasonable critical mass. Some categories were also excluded due to diminishing 

interest of many states (e.g., downtown revitalization projects). 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. 

1.4 Methodology 

Project development was essentially divided into six phases: 
6

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. Interviews were conducted for each project, most often with 

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

private sector representatives. 

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. Interviews 

lasted from 20-45 minutes, and the focus of discussion often varied based on the 

responses of the interviewees. In some cases, multiple interviews were 

conducted with one or more local stakeholders. 

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 interview instrument itself can be found in Appendix I. 

In addition to phone interviews, six 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 primary project impact 

area. This phase of the analysis developed county-level economic profiles in 

order to detail the general economic conditions of project areas. In addition, the 
7

performance of project counties was compared to national trends based on 

broader measures of economic well-being including, economic diversification, 

entrepreneurial 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. [vi] In general, however, the baseline 

economic analyses situate 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 ratios 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. Several 

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 an 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 public understanding of 

the benefits of ARC’s infrastructure investments. 
8

1.5 Overview of Report 

The remainder of this report is organized in six more chapters and is supported 

by 9 appendices, seven printed and two electronic. 

Chapter 2 presents the 104 projects that are in the sample for this evaluation. 

Chapters 3 and 4 evaluates the economic impact of projects by classification 

(economic development and residential), state, project type and county 

designation. Chapter 3 concentrates on documenting the benefit cost of ARC 

investments as well as overall as indirect and induced impacts. Chapter 4 

analyzes outcomes by project type. 

Chapter 5 examines localized project impacts by county and Chapter 6 analyzes 

the impacts of ARC projects in the context of economic conditions of project 

areas. 

Chapter 7 presents observations and recommendations by the consulting team. 

These are cumulative, incorporating recommendations made in the 2000 

program evaluation. 

This study includes the following appendices: 

Appendix A: Site Visit Narratives [iv]

Appendix B: Methodology of Project Selection 

Appendix C: Methodology of the Impact Analysis 

Appendix D: Methodology of the Economic Vitality Analysis 

Appendix E: Methodology of Distressed County Analysis 

Appendix F: Project List 

Appendix G: Contact List 

Appendix H: Database and Project Thumbnails (Electronic) 

Appendix I: Economic Vitality Analysis Detail (Electronic) 

Notes 

--------------------------------------------------------------------------------------------------------------------------------- 

[i] 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. 

[ii] 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 
9

simply a residual category. In FY 2007 ARC converted its standard economic indicators into an 

index-based system. 

[iii] A handful of projects were excluded as detailed above, but the timeframe parameters applied 

to potential projects were the single largest excluding factor. 

[iv] Residential projects met ARC criteria for investment in community-projects. In the case of 

projects that primarily serve residential households, the outcome measure is the number of 

households served. These households must be in counties that are designated by ARC as 

“distressed” or show compelling need, such as the location of the project in a “distressed county” 

of a transitional county, as disaster relief or to address a mandate of the Federal EPA or a state 

health or environmental agency. See Appendix H for definitions of economic status by county, 

and Appendix A of ARC Project Guidelines: 

http://www.arc.gov/index.do?nodeId=1028#Residential. 

[v] Both the Housing and Telecommunications project categories were new to this evaluation, and 

were not included in the prior (2000) assessment of Infrastructure Project Program impacts. 

 [vi] Six full site visits and two drive-by visits were conducted to supplement the evaluation derived 

from written records and phone interviews. 
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. 

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 representative of the Region as 

a whole, slightly weighted toward non-metro areas; 

• Includes project counties reflecting all eligible economic designations, with 

weight given to distressed counties; 

• Incorporates a robust distribution of projects in the major project 

classifications - water/ sewer, access road, industrial park and site, business 

incubator, telecommunications and housing; 

• Includes a majority of water and sewer projects, reflecting the mix of the 

universe of project investments; and 

• Includes both very small and very large investments, in addition to many of 

“average” scale. 

2.1 Project Types 

Of the 104 projects analyzed, 78 (75%) included primary objectives directly 

related to economic development, while the remainder involved housing, 

telecommunications or water-sewer projects that related only to residential or 

quality-of-life objectives. Thirty-two water and sewer projects (of 51) were directly 

related to economic development, by design or outcome or both. Six of eight 

telecommunications also included direct economic development objectives. 

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 104 projects: 

• 51 water/sewer projects 

• 21 industrial parks 
11

• 12 industrial sites 

• 5 business incubators 

• 3 access roads 

• 8 telecommunications 

• 4 housing 

2.2 Project Locations 

There is a reasonable spread of project types in various states as shown in Table 

2.1. All states include at least one water-sewer project. The five incubator 

projects are in five different states. Despite concentrations in Pennsylvania and 

Tennessee, nine different states host the 33 industrial park and site projects. The 

eight telecommunications projects are in five different states. Only the housing 

projects are concentrated in a single state; all four are in KY, and this is simply 

due to the fact that only KY housing projects were funded as the category was 

initially tested by ARC. 

Because the ARC project award process is commonly 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. 

 

Table 2.1 Project Spread by State and Type 

 

 Access Incubator Ind. Park Telecomm Water- Housing Total 

 & Ind. Site Sewer 

AL 1 2 6 9

GA 3 1 4 8

KY 4 11 4 19

MD 3 2 1 6

MS 1 1 1 1 5 9

NC 2 7 9

NY 2 3 5

OH 1 4 2 7

PA 1 7 1 1 10

SC 2 2

TN 6 1 4 11

VA 1 2 3

WV 3 3 6

Total 3 5 33 8 51 4 104

 
12

For the most part, it is difficult to meaningfully identify regional project 

preferences. North Carolina, for example, shows a “preference” for water and 

sewer projects, but since every one of the seven included economic development 

outcomes, it is not particularly useful to separate this category from industrial site 

development as a local “preference”. 

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

Of 410 ARC counties, 109 counties (27%) were classified as metropolitan in the 

1999 census designations; which were used as the “pre-project” designations for 

this report. The other 301 counties are classified as non-metropolitan. Twenty-six 

sample projects (25%) were developed in metropolitan ARC counties, while 71 

projects (68%) were entirely within rural counties. Seven projects were 

developed in areas with both metro-based and rural counties. Clearly, the sample 

was closely aligned with the balance of metro/rural counties within the Region. Of 

the metro county sample projects, only two (both in Fayette County, PA) was in a 

metro area county designated as distressed prior to project development. 

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. 

Three states—Alabama, Georgia and South Carolina—funded projects in metro 

areas at a considerably higher rate than the Regional distribution of metro area 

counties. (This was true of South Carolina in the 2000 evaluation as well.) 

 

Table 2.2 Project Spread by Metro-Rural Designation 

 

 Metro Rural Both Total % Metro % Rural % Both 

AL 4 5 0 9 44% 56% 0%

GA 4 3 1 8 50% 38% 13%

KY 0 18 1 19 0% 95% 5%

MD 2 1 3 6 33% 17% 50%

MS 0 9 0 9 0% 100% 0%

NC 3 5 1 9 33% 56% 11%

NY 2 3 0 5 40% 60% 0%

OH 1 6 0 7 14% 86% 0%

PA 5 5 0 10 50% 50% 0%

SC 2 0 0 2 100% 0% 0%

TN 3 8 0 11 27% 73% 0%

VA 0 3 0 3 0% 0% 0%

WV 0 5 1 6 0% 83% 17%

Total Sample 26 71 7 104 25% 68% 6%

Region 109 301 n/a 410 27% 73% n/a

 Note: Classifications reflect 1999 Census designations 
13

Among the metropolitan projects, twelve of the 26 were water/sewer, eight were 

industrial park, four were industrial site, one was an access road and a business 

incubator project. (The proportion of metro incubator and access road projects 

was down from the 2000 review.) The increased emphasis on rural incubators 

reflects a need for focus on entrepreneurship that was identified in the original 

study, despite a continuing lag in the Region’s start-up activity, as discussed later 

in the report (see Section 6). 

In the final sample pool, 74% of all projects were located in either rural or mixed 

metro-rural areas, while in the region overall, the percentage of rural counties is 

73%. 

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 410 counties in the Appalachian Region, with each county assigned 

to one of five economic categories: distressed, transitional, transitional/at-risk, 

competitive, or attainment. Multi-county project areas may also be assigned 

combination indicators, including multi-county with no distressed county, and 

multi-county with 1+ distressed counties. 

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 those with a poverty rate and a three-year 

unemployment average of 150% of the United States average and a per capita 

income that is 67% or less of the national average (or if a county poverty rate is 

twice the national poverty rate then it only needs to meet one other of these 

distress criteria). ARC classifies counties as “transitional” if one or more of these 

indicators are worse than the U.S. average. The third type of county where 

projects in this evaluation are located are “competitive” counties, where the rates 

of poverty are even or less than the US average, unemployment rates are 100% 

or less of U.S. average and per capita income is at least 80% of the national 

average. 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.1

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

compared with the distribution for the Appalachian Region as a whole. 

 

1

 In FY 2007 ARC converted its standard economic indicators into an index-based system. 
14

Of the 410 ARC counties, 91 (25 percent) were classified as distressed in the FY 

2004 ARC designation, 289 (70 percent) as transitional, 22 (5 percent) 

competitive, and eight (2 percent) as attainment. 

Among the 104 projects evaluated, 36 project impact areas were classified as 

either distressed single counties prior to project development; another eight 

projects were in multi-county impact clusters that included at least one distressed 

county. As a result, 42% of all projects in the sample included distressed county 

impacts. An additional 50 projects (48%) were located in transitional counties. By 

2004, 16 of the areas designated with distressed had moved to higher 

classifications, usually transitional or at-risk. Results among these areas are 

discussed more fully in later in the report (Section 5.7 Distressed Community 

Impacts). 

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

Project impacts on distressed counties are discussed more fully in section 5.2. 

2.5 Project Budget Levels 

The total ARC investment in the 104 reviewed projects was $29,413,336. For the 

most part, original ARC allocations were maintained, even when project costs 

increased. The average ARC project investment was just over $282,100. 

Individual project investments ranged from $10,265 to $1,160,000 million. The 

median investment was $200,000. 

The total ARC investment in projects areas with distressed counties was 

$14,041,332 or 48% of the total ARC investment (up from 20% in the prior 

evaluation). Of this, more than $11 million went to projects directly based in 

individual distressed counties. Transitional counties accounted for $13,651,781 

(46 percent) of the investment represented by the database. 

Non-metropolitan counties in the ARC Region accounted for $22,540,440 or 77 

percent of the total ARC investment in the project sample. Metropolitan ARC 

counties received $6,872,896 or 23 percent of the investment represented in the 

sample (compared to 27% in metro areas in the 2000 evaluation). Two of the 

metro area projects (total investment: $544,000) were in a distressed county. The 

percentage of non-metro investment is slightly higher than the proportion of nonmetro Regional counties overall. 
15

3. Overall Economic Impact Measures 

To accurately measure the overall impacts of ARC’s infrastructure and public 

works projects, it is important to understand the context and objectives of the 

different types of programs that are addressed in this evaluation. For these 

purposes, the 104 projects studied in this evaluation are organized into three 

categories, as reported below. 

• Economic development projects: Investment made for projects in this 

category is intended to promote business development by attracting new jobs 

and save existing jobs that are in danger of being lost. Seventy-eight of the 

104 projects are counted in this category. 

• Community development projects: The objective of public investment 

made in this category is to improve basic health and/or quality of life in a 

community. In most cases these goals were met through providing water and 

sewer services to communities or by enhancing telecommunications. Though 

the principal objectives of these projects were not aimed at attracting 

investment, improvements in basic infrastructure often enhanced the 

attractiveness of areas for private sector business investment and housing 

investment. Twenty-two projects are counted in this category. 

• Housing Development: The objective of public investment in this category is 

to construct or rehabilitate housing for low- and moderate-income residents. 

These projects do not generate jobs. Four projects are counted in this 

category. 

Measurements Used. For the 78 economic development projects, project 

impacts are 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. In addition, 

these measurements, along with the number of households served, are reported 

in the impact analysis of the 22 community development projects. The impacts of 

the four housing development projects are also reported in terms of households 

served.

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. 
16

Measures of Anticipated vs. Actual Impact. Results show that actual impacts 

approach, but do not match, projections for retained businesses served, new 

jobs, and retained jobs. These aggregate results are generally linked to the 

performance of a handful of large projects that for a variety of reasons have not 

matured in the three to five years since ARC investments were expended. 

Job and Business Development. Overall, 70% of economic development and 

community development projects met or exceeded expected generation of new 

jobs, including 55 of 78 economic development projects and one of two 

community development projects. Twenty community development projects and 

the four housing development projects did not submit projections of jobs created 

with their applications. 

In total, 87% of predicted new jobs have been realized to date for economic 

development projects. Two of the projects, one for an industrial site and the other 

for an industrial park, were funded for planning and engineering. To date, these 

projects have not been developed. [i] Discounting them, the percent of direct job 

attainment would be 92% for the seventy-six other economic development 

projects. 

Another reason that job generation falls short of predictions is that seven other 

industrial park projects projected to generate a cumulative 9,485 jobs have 

generated only 2,119 jobs to date, a shortfall of 7,366 jobs. The cumulative 

shortfall of new jobs for the 78 economic development projects is 2,735. 

Interviews concerning several of the industrial park projects mentioned above 

indicate that crucial supporting infrastructure development needed to attract 

private investment trailed the ARC funded project in implementation. These 

additional infrastructure developments are now underway or were recently 

completed. Additionally, two of these industrial park projects ran into unforeseen 

environmental issues during construction and must be reduced in size. Further 

discussion of these and other industrial park projects is provided in Chapter 4. 

The relationship of retained businesses served (102% of expectations2

) to jobs 

saved (88%) indicates that ARC investments were able to prevent local business 

closures; however, they were unable to protect all of the jobs in those 

businesses, at least in the short-term. 

Data gathered from community development projects shows that the number of 

businesses served and jobs saved fell short of predicted outcomes due to the 

slow ramp-up of one of two projects that predicted job impacts. 

 

2

 In other words, after projects were completed, more businesses said that they remained at their current 

locations because of ARC projects, than were predicted to relocate or close if the projects were not 

implemented. Of the evaluation sample, five projects reported retaining more businesses than anticipated 

(projects in NY, SC, MD, NC and PA) and two projects reported retaining fewer businesses (in NY and 

MD). 
17

Households Served. Through review and evaluation of 22 community 

development and four housing development projects, 84% of projected new 

households served were documented, though 100% of existing households 

predicted to benefit were served. Overall, 17 of 22 (77%) community 

development projects met or exceeded expectations for additional households 

served. In this category too, one of the funded water and sewer projects was to 

fund administrative and design work; though the ARC part of the project has 

successfully been completed, the water infrastructure is not yet built. If this 

project were excluded, the result would be 88% of new households served for 21 

projects. Two other projects account for more than 1,000 households falling 

below predictions for being served (1,194 households projected and 150 served). 

It is important to look at the contexts in order to understand the outcomes of 

these projects. First, implementation of a water and sewer project was delayed 

because the construction company went bankrupt, but this project is back on 

track. Though delivery is delayed, this project is expected to produce anticipated 

benefits. Second, implementation of a telecommunications development led 

other service providers to offer internet services in the project area. As a result, 

the community benefit was not derived directly through the ARC-funded project. 

Housing development projects served 95% of predicted new households. In 

this case, three of four projects met expectations; the other fell short because 

significantly less federal, state and local dollars were spent than originally 

planned. Nonetheless, project proponents consider the outcome successful; the 

new housing broadened the local tax base, and it has improved quality of life for 

the many families that didn't have heating systems, potable water and sanitary 

facilities, or water in their houses. 

Table 3.1 below presents aggregate measures for core outcomes of economic 

development, community development and housing development projects 

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 391 581 151% 

Retained businesses served 126 128 102% 

New jobs 20,380 17,645 87% 

Retained jobs 10,847 9,580 88% 

Community Development Projects

New households served 5,620 4,703 84% 

Existing households served 871 871 100% 

Housing Projects

New households served 210 200 95% 
18

These findings for economic development projects and retained jobs are 

noteworthy for two reasons. First, 71% of all economic development projects met 

or exceeded their goals, and high percentages of expected jobs were created 

(87%) and retained (88%), despite several large projects that have not yet 

generated anticipated results. Commission investments do not always require a 

guarantee of job creation before granting the funds, so projections of job impact 

can be somewhat speculative. Second, applicants may be inclined to “stretch the 

envelope” on job projections in order to enhance the perceived likelihood of 

project funding. Throughout the evaluation process, including reviews of project 

closeout documents and interviews with project proponents and other local 

economic development representatives, there were no indications that regional 

jobs were relocated to account for the created job outcomes. 

In the analysis, reported results from economic development, community 

development and housing development projects are compared to expected 

outcomes at application stages of ARC grants. Consequently, these results 

should be seen as based on fairly rigorous success standards; several types of 

project outcomes are considered to have fallen short of meeting or exceeding 

expected outcomes: 

• Projects that approached but did not reach projections; 

• Projects that had large impacts but nonetheless fell below projections; 

• Projects such as recent industrial parks that are still in “immature” stages; and 

• ARC grants that fund planning related work, but where implementation of 

projects relies exclusively on other agencies. 

Though not primary measures for accomplishments, some economic 

development projects reported households served and community development 

projects reported new and retained jobs and businesses. This is because a 

portion of water and sewer projects are classified as “economic development,” 

consistent with these projects’ primary objectives, and these projects provide 

services to households. Other water and sewer construction, as well as access 

road and telecommunications projects that are classified as community 

development projects attracted businesses due to the new or improved 

infrastructure. [ii] These additional accomplishments are summarized below: 

• 13 economic development projects reported serving 6,732 new households; 

• 5 economic development projects reported serving 4,352 existing households 

(4 of these projects also serviced new households); and 

• 2 community development projects reported 19 new businesses served and 

150 jobs created. 
19

It is 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; this 

did not seem to be the case for the sample reviewed for this report. Moreover, 

unlike the previous study, which funded sewer improvements to support a new 

BMW plant, this evaluation did not include a single project of that magnitude 

(although the impacts of the Huntsville Research Park were quite large). 

Results by State. As Table 3.2 indicates, the results on businesses, jobs and 

households served is largely a reflection of 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. For 

example, housing development projects will have a positive impact on 

“households served” and zero job impacts. Water and sewer projects in the 

community development category will lag behind industrial park development in 

job creation or businesses served. 

State-by-state characteristics are useful in the review of individual projects within 

the context of a state’s total ARC program portfolio. Within each state, the 

number and dollar value of total investments varied, as did the impacts 

generated from the projects. For example, Kentucky’s 19 projects included four 

housing development and 11 water and sewer projects. By contrast, seven of 10 

projects in Pennsylvania were to support development of industrial parks or 

industrial sites; another project funded site plans for an industrial park. 

Maryland’s projects included include two for telecommunications, and in Alabama 

seven of nine projects were investments in water and sewer systems. The types 

of projects reflect state priorities that determined both the scale of required 

investment and the nature of outcomes. 

Table 3.2 Direct Impact: Results by State

No. 

ARC 

Investment 

Businesses 

Served 

Businesses 

Retained 

New 

Jobs 

Retained 

Jobs 

Households 

Served 

Alabama** 9 $1,805,085 45 6 4,999 353 2,341 

Georgia 8 $1,826,112 18 2 620 69 150 

Kentucky * 19 $5,815,568 187 8 1,425 660 9,741 

Maryland 6 $1,764,971 21 2 285 1,666 1,000 

Mississippi 9 $1,857,537 13 6 1,670 150 921 

North Carolina 9 $1,584,289 65 10 806 2,100 200 

New York 5 $900,000 4 62 105 1,657 145 

Ohio 7 $2,300,000 30 1 347 46 83 

Pennsylvania 10 $1,650,134 129 5 2,309 764 55 

South Carolina 2 $1,500,000 6 7 1,705 1,800 0 

Tennessee 11 $3,563,496 6 7 1,918 40 903 

Virginia 3 $1,035,000 23 20 320 100 405 

West Virginia 6 $3,811,144 68 0 1,286 175 914 

Total 104 $29,413,336 615 136 17,795 9,580 16,858 

** Includes 4,040 direct jobs from the Huntsville (AL) Research Park. 

* Excludes 75 hospital jobs added following replacement of the Jackson Water Storage Tank in Jackson, 

Kentucky due to ambiguous causality between the project and new jobs. This project is listed in the 
20

“community development” category and is located in a single distressed-county. Exclusion is consistent 

throughout tables.

3.2 Indirect and Induced Effects 

”Direct effects” refer to the growth of businesses located at the project site that 

benefit directly from the project completion, and “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 generally lead to “new” jobs and income, and the latter 

generally 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. 

• 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). 

Together, 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 replacing jobs and income from 

existing business activities. 
21

Indirect and induced impacts were not calculated for retained activity. Following 

the methodology of the previous evaluation, 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 multiplier impact—

leading to additional job loss for existing businesses elsewhere in the local area. 

Nonetheless, to be conservative, indirect and induced effects to retained 

businesses and jobs were not attributed due to the uncertainty of the scale of 

losses and resultant multiplier that would occur without public investment. 

Methodology for Analysis: When possible, measures of direct, on-site impacts of 

business attraction and retention came directly from interviews with local officials, 

who were asked to report the actual number of affected businesses and jobs. 

They were also asked to estimate associated personal income, including existing 

or saved jobs. For cases without reliable estimates of income effects, data from 

the state labor agency and the US Department of Commerce were used to 

indicate the average wage per worker (based on data by county and by industry). 

The measures of indirect and induced effects were developed using the IMPLAN 

modeling package.3

 

Multiplier effects differ by industry, by state and by county. Business can 

generate varying levels of indirect and induced effects depending on the portions 

of dollars going to pay workers, and to buy different types of equipment and 

supplies. In addition, the impacts based on specific locations vary, depending on 

the portion of suppliers and consumer-serving businesses located within each 

county. For these reasons, multipliers were calculated for each of the counties 

associated with the 104 projects studied. In cases in which projects involved 

multiple counties, impacts were estimated for the multi-county area. For each 

project, the types of industry associated with the business expansion or attraction 

were identified, and the applicable multipliers were then applied. (See Appendix 

C for further discussion of indirect and induced methodology applied to this 

study.) 

 

3

 IMPLAN stands for “Impact Analysis for Planning” and 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 

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 509 industries, and is based on categories 

of the US Bureau of Economic Analysis (BEA), which correspond to 2 to 5-digit groups in the North 

American Industrial classification System (NAICS). 
22

3.3 Job Impacts: Direct, Indirect and Induced Effects

New Jobs. A total of 17,795 new jobs were directly created as a result of the 

ARC-funded projects. These direct effects only include jobs at the sites served 

directly by the ARC-funded infrastructure and public works investments. In 

addition, it is estimated that another 25,341 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. All of these new 

jobs (both direct and indirect/induced effects) were created because of the 

projects. 

Retained Jobs. Another 9,580 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 pre-dated the projects’ that were implemented. If the projects had not 

been implemented with 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 is 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 and induced effects based on new jobs, but not any additional 

indirect and induced effects based on retained jobs. 

 

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

sample projects was 43,136. This estimate includes direct new jobs, and indirect 

and induced new jobs. It does not include the retained jobs, or estimates of the 

multiplier effects for retained jobs. It also does not include construction job years 

for housing and rehabilitation work. The total impact can be broken down by 

project type, as follows: 

• 22,815 total jobs created from 21 industrial park projects (average of 1,086 

each); 

• 2,583 jobs created from 12 industrial site projects (average of 123 each); 

• 1,357 total jobs created from 5 business incubator projects (average of 271 

each); 

• 636 jobs created from 3 access road projects (average of 212 each); 

• 15,515 jobs created from 51 water/sewer projects (average of 304 each, or 

485 each if calculated using only the 32 economic development projects in 

this classification) and; 

• 230 jobs created from 8 telecommunications projects (average of 29 each) 
23

Table 3.3 Total Overall Jobs Impacts by Project Type, Area Rating and State

No. of 

Projects 

Retained 

Jobs 

Direct 

New 

Jobs 

Indirect & 

Induced 

jobs 

Direct, Indirect 

& Induced 

Jobs 

Project Type

Access Road 3 1,185 200 436 636 

Business Incubator 5 115 688 669 1,357 

*Industrial Park 21 968 8,812 14,003 22,815 

Industrial Site 12 152 1,001 1,582 2,583 

Telecommunications 8 0 128 102 230 

Water/Sewer 51 7,160 6,966 8,549 15,515 

Housing Development 4 0 0 0 0 

Total 104 9,580 17,795 25,341 43,136 

Area Rating (pre-project)

Multi-County with 1+ 

Distressed County 8 350 726 396 1,122 

Multi-County with No 

Distressed County 3 0 225 334 559 

*Single Competitive 5 1,300 5,940 8,735 14,675 

Single Distressed 36 718 2,457 3,687 6,144 

Single Transitional 52 7,212 8,447 12,189 20,636 

Total 104 9,580 17,795 25,341 43,136 

State

*Alabama 9 353 4,999 4,172 9,171 

Georgia 8 69 620 674 1,294 

Kentucky 19 660 1,425 1,126 2,551 

Maryland 6 1,666 285 249 534 

Mississippi 9 150 1,670 3,383 5,053 

North Carolina 9 2,100 806 820 1,626 

New York 5 1,657 105 216 321 

Ohio 7 46 347 382 729 

Pennsylvania 10 764 2,309 6,459 8,768 

South Carolina 2 1,800 1,705 2,272 3,977 

Tennessee 11 40 1,918 3,252 5,170 

Virginia 3 100 320 148 468 

West Virginia 6 175 1,286 2,188 3,474 

Total 104 9,580 17,795 25,341 43,136 

 * Includes 4,040 direct jobs from Huntsville (AL) Research Park . 

Impacts on Areas of Economic Distress. The ARC projects in this evaluation 

are concentrated in distressed and transitional jurisdictions. These are the ARC 

counties experiencing the greatest extent of poverty in Appalachia, as described 
24

in section 2.4. Ninety-nine of the 104 projects evaluated were in distressed or 

transitional counties, and generated the following impacts: 

• 44 projects in distressed counties created 7,266 new jobs (direct, indirect and 

induced) and supported the retention of 1,068 jobs; [iii] and 

• 55 projects in transitional counties created 21,195 jobs (direct, indirect and 

induced) and supported the retention of an additional 7,212 jobs [iv]

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 on the previous page. 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 counties, and greater again for projects in more 

competitive counties. That reflects a combination of three factors: 

• Attracting business is harder in the more distressed counties; hence the 

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

• 21 of the 26 community and housing development projects were in the 

distressed counties and were aimed at public health providing housing rather 

than immediate economic development. 

• Localized multiplier impacts are higher in areas with more developed 

economies than in areas of greater economic distress. This is because more 

local establishments are available in stronger economies to be business 

suppliers and to attract consumer spending. 

3.4 Personal Income: Direct, Indirect and Induced Effects

Additional Income. 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 
25

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.

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

the new (direct) wage income and indirect and induced income impacts, by 

project type, county classification and state. Overall, the 100 projects in this 

evaluation (excluding the four housing development projects) led to $1.3 billion 

dollars of new wages annually, of which $639 million are from jobs directly 

attributable to ARC projects; $693 million are attributable to additional business 

spending (indirect) and consumer spending (induced) generated by projects. 

Of these impacts, direct jobs from the 78 economic development projects 

generated $634 in annual wages and an additional $692 million from indirect and 

induced effects. In addition, these economic development projects helped to 

directly retain $325 million in existing wages for threatened jobs in the ARC 

region. Industrial park projects led to more than half of the new wages, while 

water and sewer projects were responsible for more than 70% of retained 

personal income.

As with jobs, wage impacts are disproportionately seen in transitional and 

competitive counties. The proportion of personal income in distressed counties of 

Appalachia is 19% of direct impacts of new jobs and 16% of impacts when 

factoring in indirect and induced effects. As discussed above, distressed regions 

have smaller economies than either transitional or competitive counties, and 

therefore have fewer opportunities to benefit by indirect and induced spin-off 

impacts of business-to-business sales and consumer spending. Overall, 45% of 

direct wage impacts from new jobs are in transitional counties, and 37% are in 

competitive counties. After indirect and induced impacts are factored, the share 

of total personal income in competitive counties rises to 39% and remains at 45% 

in transitional counties. Roughly 77% of retained wages are in transitional 

counties. 

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

were primarily industrial rather than commercial or service jobs. Average wages 

are about $36,000 for direct jobs; wages derived from indirect and induced 

impacts pay an average of $27,000. Data did not distinguish levels of part-time 

and full-time jobs, or benefits packages, if any, associated with these jobs. As 

found in the evaluation of ARC programs in 2000, however, local interviews 

reveal a clear consensus that the ARC-funded projects had indeed broadened 

available job opportunities and provided desirable types of jobs. 
26

Table 3.4 Total Overall Personal Income Impacts

Project Type

No. of 

Projects 

Income from 

Retained 

Jobs Direct Income 

Indirect/Induced 

Income 

Direct, Indirect 

& Induced 

Income 

Access Road 3 $49,980,899 $7,666,122 $12,009,189 $19,675,311

Business Incubator 5 $2,425,439 $15,403,157 $15,497,914 $30,901,070

Housing Development 4 $0 $0 $0 $0

*Industrial Park 21 $27,180,890 $329,205,192 $403,202,608 $732,407,800

Industrial Site 12 $4,339,482 $29,905,609 $39,652,508 $69,558,117

Telecommunications 8 $0 $2,577,679 $2,178,604 $4,756,284

Water/Sewer 51 $241,304,313 $254,017,375 $220,523,916 $474,541,293

Total 104 $325,231,023 $638,775,134 $693,064,739 $1,331,839,875

Area Rating (pre-project)

Multi-County with 1+ 

Distressed County 8 $18,333,153 $32,550,525 $9,265,954 $41,816,479 

Multi-County with No 

Distressed County 3 $0 $8,422,808 $8,745,840 $17,168,648 

*Single Competitive 5 $36,113,090 $233,951,301 $283,697,239 $517,648,539 

Single Distressed 36 $19,789,666 $87,170,042 $80,611,568 $167,781,608 

Single Transitional 52 $250,995,114 $276,680,458 $310,744,138 $587,424,601 

Total 104 $325,231,023 $638,775,134 $693,064,739 $1,331,839,875 

State

*Alabama 9 $9,589,021 $189,280,909 $152,442,708 $341,723,619 

Georgia 8 $1,128,419 $19,912,557 $16,593,807 $36,506,365 

Kentucky 19 $27,200,568 $65,296,165 $22,670,969 $87,967,134 

Maryland 6 $69,503,190 $6,577,520 $7,761,135 $14,338,655 

Mississippi 9 $5,314,310 $58,210,662 $96,771,836 $154,982,497 

North Carolina 9 $60,177,101 $20,013,491 $19,392,254 $39,405,745 

New York 5 $62,171,853 $4,065,290 $6,384,966 $10,450,257 

Ohio 7 $1,486,184 $9,640,784 $7,923,434 $17,564,218 

Pennsylvania 10 $20,760,732 $93,637,808 $183,338,089 $276,975,897 

South Carolina 2 $58,180,889 $58,342,080 $52,293,193 $110,635,272 

Tennessee 11 $1,021,488 $59,749,557 $72,089,644 $131,839,201 

Virginia 3 $1,906,919 $6,102,140 $4,040,038 $10,142,178 

West Virginia 6 $6,790,349 $47,946,171 $51,362,666 $99,308,837 

Total 104 $325,231,023 $638,775,134 $693,064,739 $1,331,839,875 

* Includes 4,040 direct jobs $155.3 million direct income from Huntsville (AL) Research Park . 
27

3.5 Effects on Public and Private Investment 

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

Rather, ARC participates in projects which also have some other federal funding 

assistance. The other federal funding is predominantly from the Economic 

Development Administration, Rural Development of the U.S. Department of 

Agriculture, the U.S. Department of Housing and Urban Development, or the 

Federal Highway Administration of the U.S. Department of Transportation. Most 

of these other federal programs also require some state or local matching funds. 

This section reviews such funding patterns in two parts. First, the mix of public 

funding is described. Then the leveraging of private sector funding is analyzed. 

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 $29.4 million, which is 17% of the total public cost for these projects 

($172.7 million). Other federal funding averaged 20% of project cost, while states 

invested an average of 18%, and local funding averaged 45% of the total. 

Viewed another way, each dollar of ARC investment helped to make possible a 

package of $4.87 in other public funding, adding up to $5.87 of total public 

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

level, and state is shown in Table 3.5. 

Overall, the ARC portion of total public funding was: 

• 32% of all public funding for access road projects; 

• 22% of all funding for business incubator projects; 

• 14% of all public funding for industrial park projects; 

• 20% of all public funding for industrial site projects; 

• 37% of all public funding for telecommunications projects; 

• 17% of all public funding for water/sewer projects serving business sites (14% 

for projects classified as “economic development” and 27% for “community 

development” projects); and 

• 8% of all public funding for housing development. 

The ARC portion of the total mix of public funding was 18% for projects in 

distressed counties, 18% for projects in transitional areas and 8% in competitive 

areas. All together, these figures show that ARC funding has played a relatively 

larger role in those areas that are most in need, and in basic infrastructure 
28

projects critical to households and business operations, such as water, sewer, 

roadways and telecommunication services. 

Table 3-5. Total Public Investment Made 

No. of 

Projects ARC $ Federal $ State $ Local $ Total Public $ 

Project Type

Access Road 3 $599,100 $0 $900,000 $383,538 $1,882,638 

Business Incubator 5 $1,777,500 $2,552,588 $30,000 $3,704,521 $8,064,609 

Housing Development 4 $633,848 $3,950,352 $1,464,791 $1,796,051 $7,845,042 

*Industrial Park 21 $6,106,020 $8,458,241 $6,542,029 $22,354,341 $43,460,632 

Industrial Site 12 $3,329,843 $288,000 $1,143,000 $12,279,530 $17,040,373 

Telecommunications 8 $1,345,759 $1,000,000 $196,712 $1,061,663 $3,604,133 

Water/Sewer 51 $15,621,266 $18,148,900 $21,221,320 $35,851,378 $90,842,864 

Total 104 $29,413,336 $34,398,081 $31,497,852 $77,431,021 $172,740,290 

Area Rating (pre-project)

Multi-County with 1+ 

Distressed County 8 $3,035,665 $6,969,947 $6,977,568 $5,092,604 $22,075,784 

Multi-County with No 

Distressed County 3 $646,971 $0 $43,139 $720,826 $1,410,936 

*Single Competitive 5 $1,073,251 $500,000 $1,242,400 $11,282,725 $14,098,376 

Single Distressed 36 $11,005,667 $11,344,118 $14,700,464 $19,727,848 $56,778,098 

Single Transitional 52 $13,651,781 $15,584,016 $8,534,281 $40,607,018 $78,377,096 

Total 104 $29,413,336 $34,398,081 $31,497,852 $77,431,021 $172,740,290 

State

*Alabama 9 $1,805,085 $1,030,000 $550,000 $7,425,333 $10,810,418 

Georgia 8 $1,826,112 $579,348 $1,118,305 $3,420,320 $6,944,085 

Kentucky 19 $5,815,568 $15,699,952 $13,525,738 $9,348,373 $44,389,631 

Maryland 6 $1,764,971 $600,000 $336,139 $2,678,118 $5,379,228 

Mississippi 9 $1,857,537 $0 $496,212 $10,809,534 $13,163,283 

North Carolina 9 $1,584,289 $2,000,000 $1,517,583 $3,680,602 $8,782,474 

New York 5 $900,000 $1,305,200 $1,100,000 $1,603,886 $4,909,086 

Ohio 7 $2,300,000 $3,785,363 $2,090,345 $5,152,299 $13,328,007 

Pennsylvania 10 $1,650,134 $2,675,000 $1,790,700 $10,333,075 $16,448,909 

South Carolina 2 $1,500,000 $2,746,500 $0 $8,999,700 $13,246,200 

Tennessee 11 $3,563,496 $1,700,600 $1,320,000 $9,784,144 $16,368,240 

Virginia 3 $1,035,000 $0 $1,480,000 $673,268 $3,188,268 

West Virginia 6 $3,811,144 $2,276,118 $6,172,830 $3,522,370 $15,782,462 

Total 104 $29,413,336 $34,398,081 $31,497,852 $77,431,021 $172,740,290 

Private Investment Leveraged. Of the 78 economic development projects, 27 

were initiated with records of commitments for private sector investment. The 

related private sector investment from these 27 projects at the time of project 

application was $319 million. An additional $68 million was anticipated for a 
29

single community development water and sewer project. Local interviews and 

data collection conducted for this project showed that these projects actually 

engendered significantly larger private investment at project sites than projected. 

Direct investment for new or renovated buildings and other business facilities 

totaled $942 million for the 27 economic development projects, nearly three times 

the initial projections, with an additional $5 million for the community 

development water and sewer project. In total, ARC projects leveraged $948 

million in direct in direct private investment compared to original project 

commitments of $387 million, and also generated an additional $756 million of 

indirect private sector impacts. When including both direct and indirect impacts, 

private sector investment leveraged by this sample of ARC projects includes 

almost $1.7 billion for economic development projects and $7 million dollars for 

community development projects. Details of the private investment are shown in 

Table 3.6. The column, “Anticipated Private Commitments” shows the levels of 

private investment projected at the time of application, while the three columns 

that follow, “Actual Direct Investments, Actual Direct Private Investment [and] 

Indirect Private Investment, report private sector contributions leveraged by ARC 

funding. 

 

The corresponding level of public funding for these 78 economic development 

projects was $22.5 million of ARC funds and $143 million of total public funds. 

Thus, there was $11.86 of private investment for each dollar of total public 

funding. 

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

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

types causes relatively large variations in the amount of permanent private 

investment. In some cases, such as roadways, housing and business incubator 

facilities, there is not substantial permanent private investment. On the other 

hand, there is substantial private investment associated with industrial parks and 

water and sewer projects targeted for economic development. 

Second, the variation in the maturity and timeline of projects affects the amount 

of private investment. For example, private investment may not have had time to 

follow the development of publicly financed access roads. 
30

Table 3.6 Private Investment Leveraged (In $000's) 

 

ARC 

Funding $ 

Total 

Public 

Funding $ 

***Anticipated 

Private 

Commitments 

Actual Direct 

Private 

Investment 

Indirect 

Private 

Investment 

Total 

Private 

Investment 

Project Type 

Access Road $599.1 $1,882.6 $0.0 $0.0 $0.0 $0.0 

Business Incubator $1,777.5 $8,064.6 $0.0 $0.0 $0.0 $0.0 

Housing 

Development $633.8 $7,845.0 $0.0 $0.0 $0.0 $0.0 

**Industrial Park $6,106.0 $43,460.6 $193,700.0 $604,450.0 $526,947.7 $1,131,397.7 

Industrial Site $3,329.8 $17,040.4 $54,400.0 $87,741.2 $111,073.0 $198,814.3 

Telecommunications $1,345.8 $3,604.1 $6,015.0 $6,000.0 $1,168.6 $7,168.6 

Water/Sewer $15,621.3 $90,842.9 $132,900.0 $248,600.0 $116,447.4 $365,047.4 

Total $29,413.3 $172,740.3 $387,015.0 $946,791.2 $755,636.6 $1,702,427.9 

 

Area Rating (pre-project) 

Multi-County with 1+ 

Distressed County $3,035.7 $22,075.8 $2,000.0 $0.0 $0.0 $0.0 

Multi-County with No 

Distressed County $647.0 $1,410.9 $3,500.0 $120,000.0 $30,978.3 $150,978.3 

**Single Competitive $1,073.3 $14,098.4 $126,800.0 $537,800.0 $437,638.8 $975,438.8 

Single Distressed $11,005.7 $56,778.1 $10,400.0 $63,275.0 $83,702.5 $146,977.5 

Single Transitional $13,651.8 $78,377.1 $244,315.0 $225,716.2 $203,317.0 $429,033.3 

Total $29,413.3 $172,740.3 $387,015.0 $946,791.2 $755,636.6 $1,702,427.9 

 

State 

**Alabama $1,805.1 $10,810.4 $151,400.0 $618,500.0 $480,603.2 $1,099,103.2 

Georgia $1,826.1 $6,944.1 $120,500.0 $162,000.0 $62,774.6 $224,774.6 

Kentucky $5,815.6 $44,389.6 $0.0 $0.0 $0.0 $0.0 

Maryland $1,765.0 $5,379.2 $2,500.0 $2,500.0 $3,311.5 $5,811.5 

Mississippi $1,857.5 $13,163.3 $3,200.0 $3,200.0 $6,744.9 $9,944.9 

North Carolina $1,584.3 $8,782.5 $9,500.0 $10,100.0 $10,698.0 $20,798.0 

New York $900.0 $4,909.1 $0.0 $0.0 $0.0 $0.0 

Ohio $2,300.0 $13,328.0 $7,600.0 $8,741.2 $5,623.8 $14,365.0 

Pennsylvania $1,650.1 $16,448.9 $53,515.0 $67,275.0 $95,506.9 $162,781.9 

South Carolina $1,500.0 $13,246.2 $0.0 $0.0 $0.0 $0.0 

Tennessee $3,563.5 $16,368.2 $36,800.0 $71,400.0 $86,435.9 $157,835.9 

Virginia $1,035.0 $3,188.3 $0.0 $0.0 $0.0 $0.0 

West Virginia $3,811.1 $15,782.5 $2,000.0 $3,075.0 $3,937.7 $7,012.7 

Total $29,413.3 $172,740.3 $387,015.0 $946,791.2 $755,636.6 $1,702,427.9 

* Table does not include $90 million in retained private investment documented from interviews.

** Includes $525 million direct and $423 million indirect private investment from Huntsville (AL) 

Research Park . 

*** Anticipated Private Investment refers to private investments anticipated at time of application
31

Second, the variation in the maturity and timeline of projects affects the amount 

of private investment. For example, private investment may not have had time to 

follow the development of publicly financed access roads. 

3.6 Effects on Tax Revenues 

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

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 3 $239,647 $1,000,000 $201,062 

Business Incubator 5 $333,687 $0 $397,381 

Housing Development 4 $0 $11,563 $0 

Industrial Park 21 $8,270,268 $8,745,557 $6,442,191 

Industrial Site 12 $842,393 $445,738 $563,349 

Telecommunications 8 $57,604 $48,480 $68,714 

Water/Sewer 51 $6,808,989 $3,950,409 $5,589,097 

TOTAL 104 $16,552,588 $14,201,747 $13,261,794 

Area Rating (pre-project) 

Multi-County with 1+ 

Distressed County 8 $667,497 $45,601 $1,015,636 

Multi-County with No 

Distressed County 3 $225,122 $1,388,640 $216,637 

Single Competitive 5 $5,529,272 $8,461,726 $4,888,389 

Single Distressed 36 $2,061,635 $186,085 $2,280,329 

Single Transitional 52 $8,069,062 $4,119,695 $4,860,803 

TOTAL 104 $16,552,588 $14,201,747 $13,261,794 

State 

Alabama 9 $4,852,491 $10,582,575 $3,540,270 

Georgia 8 $532,215 $1,784,946 $512,156 

Kentucky 19 $1,432,156 $11,563 $2,097,942 

Maryland 6 $80,826 $21,623 $247,293 

Mississippi 9 $2,032,287 $123,557 $868,944 

North Carolina 9 $469,583 $81,098 $600,631 

New York 5 $106,774 $1,000,000 $169,459 

Ohio 7 $250,295 $12,075 $329,188 

Pennsylvania 10 $1,804,594 $4,022 $2,338,665 

South Carolina 2 $1,452,902 $0 $1,246,877 

Tennessee 11 $2,404,467 $528,250 $48,049 

Virginia 3 $87,416 $0 $167,406 

West Virginia 6 $1,046,582 $52,038 $1,094,914 

TOTAL 104 $16,552,588 $14,201,747 $13,261,794 

 * Includes $8.3 million tax revenue from the Huntsville (AL) Research Park . 
32

• 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. 

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

• State income tax revenue of $13.3 million; 

• State/local sales tax revenue of $16.6 million; and 

• Local property tax revenue of $14.2 million. 

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 

differences in average sales and income tax rates among states. 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. 

Home areas of twenty projects in this evaluation also extended some form of tax 

abatements or tax incentives to private sector users. Most often, tax breaks are 

in the form of property tax abatements, given to projects locating in low-income 

and high unemployment areas targeted by states for economic development. 

The values of these tax breaks are not presented in Table 3.7, but are noted in 

the electronic Appendix H. 

3.7 Benefit/Cost Analysis 

Measurement Approach. The purpose of ARC project funding for infrastructure 

and public works projects is to invest 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 troubled (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). 
33

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 community development and housing development projects, the primary 

impacts are the provision of a basic quality of life through access to quality 

housing, and community water and sewer service with associated public health 

improvements. Local stakeholder 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: 

1. 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. ARC is only one of several public investment sources 

used in a project financing package, however. 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. 

2. 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. 

Investment Impacts of Projects. The effectiveness of ARC in leveraging private 

investments, and generating jobs and personal income are summarized in Table 

3.8. This table is presented in three parts. First it shows results for all projects. It 

then shows the results for the 78 economic development projects (Section 3.8-1), 

followed by the 22 community development projects (Section 3.8-2). Given the 

objectives of each set of projects, it is not surprising that economic development 

projects produce significantly greater results than those focused on basic 

services for communities. Water and sewer projects, and housing projects, 

however, are often funded with broader purposes than local economic 

development. These include basic health and quality of life objectives, which will 

be discussed in Chapters 4 and 5. 
34

Table 3.8 Ratio of Total Results per Public Dollar for all Projects

Project Impact 

Ratio per 

ARC$ Ratio per Public$ 

 

Total Private Investment 

(including indirect) $1,702,427,863 58 : 1 10 : 1 

**($754.2 Million) (26:1) (4.4:1) 

Jobs Project Impact ARC$ per job Public$ per job 

New Direct Jobs 17,795 $1,653 $9,707 

New Total Jobs 43,136 $682 $4,005 

Total New and Retained Jobs 52,716 $558 $3,277 

 

Income Project Impact 

Ratio per 

ARC$ Ratio per Public$ 

Direct Income $638,775,134 22 : 1 3.7 : 1 

Total New Income $1,331,839,875 45 : 1 7.7 : 1 

Table 3.8-1 Economic Development Projects 

Project Impact Ratio per ARC$ Ratio per Public$ 

Total Private Investment 

(including indirect) $1,695,010,391 75 : 1 12 : 1 

**($746.7 Million) (33:1) (5:1) 

Jobs Project Impact ARC$ per job Public$ per job 

New Direct Jobs 17,645 $1,274 $8,102 

New Total Jobs 42,911 $524 $3,331 

Total New and Retained Jobs 54,491 $412 $2,623 

Income Project Impact 

Ratio per 

ARC$ Ratio per Public$ 

Direct Income $634,443,857 28 : 1 4.4 : 1 

Total New Income $1,326,171,298 59 : 1 9.3 : 1 

Table 3.8-2 Community Development Projects 

Project Impact 

Ratio per 

ARC$ Ratio per Public$ 

Total Private Investment 

(including indirect) $7,417,472 1.2 : 1 0.3 :1 

Projects that Generated Economic Impacts 15:1 8:1 

 Averages for Two Projects that Generated Jobs 

Jobs Project Impact ARC$ per job Public$ per job 

New Direct Jobs * 150 $3,203 $6,441 

New Total Jobs 225 $2,135 $4,294 

* Excludes 75 hospital jobs added following replacement of the Jackson Water Storage Tank in 

Jackson, Kentucky due to ambiguous causality between the project and new jobs. This project is 

listed in the “community development” category and is located in a single distressed-county. 

Exclusion is consistent throughout tables.\ 

**The $754.2 million in Table 3.8 and the $746.7 million in Table 3.8.1 reflect total Private 

Investment minus the disproportionately high investment for the Huntsville (AL) Research Park. 

Summaries of jobs and income include the large impacts from the Research Park. 

Note: “Total” jobs and “total” income include indirect and induced spin-off effects. 

Table 3.9-1 below separates the value of economic development investments and community 

development projects. 
35

Table 3.8 presents results in three columns: 

• The first column shows the project results in terms of private investment, jobs, 

and income. 

• 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. 

• The third column shows results comparing total impacts with total public 

dollars spent. Since the ARC funding is almost always accompanied by 

additional public funding for other aspects of the project, the total public 

dollars are always greater than the ARC dollars alone. (This is not true of the 

limited ARC planning and feasibility grants.) 

The measure of total public dollars combines ARC funds, and other federal 

funds, state funds, and local public funds, treating 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. 

These results demonstrate the following: 

Private Investment Stimulated. Overall, $58 of private investment was 

leveraged for every dollar of ARC investment; $10 was leveraged for each public 

sector dollar regardless of source. For the 78 economic development projects, 

the ratio of private sector to ARC investments was $75 to $1, and the private 

sector invested $12 for each dollar that came from either a federal, state or local 

public sector source. These public sector projects are designed to enhance 

regions’ attractiveness for business development and thereby attract private 

investment. 

Community development projects, on the other hand, are designed to improve 

local quality of life for residents. For these projects, economic development is a 

secondary but often obtainable goal. For community development projects, $1.18 

of private investment has been documented for every ARC dollar invested. When 

all public sector investment is considered, $.34 of private funds has been 

invested per public dollar as of these project reviews. However, if just the two 

community development projects that have generated jobs are examined, the 

ratio of private investment is $15 for each ARC dollar, and $8 of private 

investment was generated for each dollar of public funds. 
36

Job Creation Rate. Overall, the economic development projects studied here 

cost $3,331 per new job created, including indirect and induced job creation. If 

jobs saved are also counted the average cost drops to $2,623 per job (new and 

retained). For ARC, each new job cost $524 of Commission funds and $412 

when including retained jobs. 

Personal Income. The new jobs for economic development projects led to 

increased personal income for residents of the affected counties. The ratio was 

approximately $9.28 of annual personal income to $1 of a one-time public 

funding investment for economic development projects. The ratio of annual 

personal income to ARC investment was about $59 for every one-time dollar 

invested by the Commission. 

Table 3.9 shows how the leveraging of public dollars differs by type of project 

and by project goal. This is shown in terms of ratios per ARC investment and 

ratios per total public investment for (1) all projects, (2) economic development 

projects and (3) community development projects, though investment per job is 

only relevant for Water and Sewer projects in this classification. 

The analysis is useful as a presentation of alternative perspectives on viewing 

ARC investment impact by broad project objectives. Not unexpectedly, economic 

development projects show more robust private sector leveraging, and a 

significantly lower cost of jobs per ARC and overall public sector investment than 

found for community development projects. Among economic development 

projects, leveraging impacts are highest for Industrial Park projects, followed by 

Industrial Site, and Water and Sewer projects. For community development 

projects, measurable economic development impacts were found only for Water 

and Sewer projects, where private investment was attracted though the primary 

objective of these projects was “households served.” 

Table 3.9 Results per Public Dollar by Project Type 

 Public Dollars per 

New Job 

Public Dollars per 

New + Retained Jobs

Private Dollars 

(including indirect) 

per Public Dollar Project Type – All 

Projects ARC $ ARC % of Public$ Using 

ARC$ 

Using 

Public$ 

Using 

ARC$ 

Using 

Public$ 

Using 

ARC$ 

Using 

Public$ 

Access Road $599,100 32% $2,996 $9,413 $329 $1,034 $0 $0 

Business Incubator $1,777,500 22% $2,584 $11,722 $1,208 $5,479 $0 $0 

Housing Development $633,848 8% $0 $0 $0 $0 $0 $0 

*Industrial Park $6,106,020 14% $693 $4,932 $257 $1,827 $185 $26 

Industrial Site $3,329,843 20% $3,327 $17,023 $1,217 $6,230 $60 $12 

Telecommunications $1,345,759 37% $10,514 $28,157 $5,851 $15,670 $5 $2 

Water/Sewer $15,621,266 17% $2,243 $13,041 $689 $4,006 $23 $4 

Total $29,413,336 17% $1,653 $9,707 $558 $3,277 $58 $10 

* Includes 4,040 direct jobs from the from Huntsville (AL) Research Park. 

Impacts of direct private investment are $32 per dollar of ARC funding and $5.5 per public dollar 
37

Table 3.9-1 Breakdown of Results per Public Dollar by Project Type for Economic Development, Community 

Development and Housing Development Projects 

Public Dollars per 

Direct New Job 

Public Dollars per All 

New + Retained Jobs 

Private Dollars 

(including indirect) 

per Public Dollar 

Table 3.9-1 Breakdown of

Results per Public Dollar

by Project Type for 

Economic Development, 

Community Development

and Housing Developmen

Projects 

ARC $ ARC% of 

Public$ 

Using 

ARC$ 

Using 

Public$ 

Using 

ARC$ Using Public$

Using 

ARC$ 

Using 

Public$

Economic Development Projects

Business Incubator $1,777,500 22% $2,584 $11,722 $1,208 $5,479 $0 $0

*Industrial Park $6,106,020 14% $693 $4,932 $257 $1,827 $185 $26

Industrial Site $3,329,843 20% $3,327 $17,023 $1,217 $6,230 $60 $12

Telecommunications $808,297 28% $6,315 $22,553 $3,514 $12,551 $9 $2

Water/Sewer $9,854,795 14% $1,446 $10,214 $439 $3,101 $36 $5

Access Road $599,100 32% $2,996 $9,413 $329 $1,034 $0.00 $0.00

Total Economic 

Development Projects 

$22,475,556 16% $1,274 $8,102 $428 $2,723 $75 $12

Community Development Projects 

Telecommunications $537,461 75% N/A N/A N/A N/A $0.00 $0.00

Water/Sewer $5,766,471 27% $38,443 $141,484 $25,629 $94,323 $1.29 $0.35

Total Community 

Development Projects 

$6,303,932 29% $42,026 $146,266 $28,017 $97,511 $1.18 $0.34

* Includes 4,040 direct jobs from the from Huntsville (AL) Research Park. 

Impacts of direct private investments generated by economic development projects are $32 per 

dollar of ARC funding and $5.5 per public dollar 

Impacts of direct private investment attributed to community development projects are $.79 per 

dollar of ARC funding and $.29 per public dollar 

Breakdown of Overall Results for All Projects. Table 3.10 shows the ratios of 

total results for all 104 projects by state and by the area rating of economic 

distress when the project was approved. The breakdown also reflects differences 

by project type. In looking at the state-by-state listing, it is important to keep in 

mind that (1) project objectives (economic, community or housing development), 

(2) project mix (industrial park, industrial site, access road, telecommunications, 

business incubator and housing), and (3) economic status of project areas 

(distressed, transitional and competitive) drive outcomes. Rates of income 

creation as well as private sector leverage tended to be higher for industrial 

parks, industrial sites and economic development portion of water/sewer projects 

than other projects, whether they are economic or community development 

initiatives. In addition, impacts are more dynamic in competitive counties than in 

transitional counties, and are stronger in transitional counties than in distressed 

counties. This latter finding reflects that the difficulty of job creation increases 

with the intractability of poverty. 
38

Table 3.10 Results per Total Public Dollars by Place of Project

Area Rating 

Public$ per 

Direct Jobs 

Public$ per Total 

+ Retained Jobs 

Total Income 

per Public $ 

Private 

Investment 

per Public $ 

Multi-County with 1+ 

Distressed County $30,407 $14,997 $1.89 $0.00 

Multi-County with No 

Distressed County $6,271 $2,524 $12.17 $107.01 

*Single Competitive $2,373 $883 $36.72 $69.19 

Single Distressed $23,109 $8,274 $2.96 $2.59 

Single Transitional $9,279 $2,814 $7.49 $5.47 

Total $9,707 $3,277 $7.71 $9.86 

State

*AL $2,163 $1,135 $31.61 $101.67 

GA $11,200 $5,095 $5.26 $32.37 

KY $31,151 $13,824 $1.98 $0.00 

MD $18,874 $2,445 $2.67 $1.08 

MS $7,882 $2,530 $11.77 $0.76 

NC $10,896 $2,357 $4.49 $2.37 

NY $46,753 $2,482 $2.13 $0.00 

OH $38,409 $17,197 $1.32 $1.08 

PA $7,124 $1,726 $16.84 $9.90 

SC $7,769 $2,293 $8.35 $0.00 

TN $8,534 $3,142 $8.05 $9.64 

VA $9,963 $5,613 $3.18 $0.00 

WV $12,273 $4,325 $6.29 $0.44 

Total $9,707 $3,277 $7.71 $9.86 

* Includes 4,040 direct jobs from the from Huntsville (AL) Research Park . 

Importance of ARC Support. The core question in any evaluation of economic 

development programs is to determine the extent to which outcomes can be 

related to the programs being examined. The discussion above relates outcomes 

in terms of ARC dollars and the portfolio of public investments by federal, state 

and local agencies in combination with ARC. We asked interviewees to rate the 

importance of ARC investments for making the projects in their counties possible, 

and to determine how much of the impact can be attributed to the Commission. 

Multiple interviews were conducted for many projects in this evaluation. 

Interviewees included project proponents; local public and private sector 

economic and community development leaders not directly connected with 

projects; and staff of sponsoring organizations who replaced initial project 

proponents and therefore do not have a personal or job related reason to defend 

past projects. Overall, interviews validated the following: 
39

• ARC support made 73% of all projects possible, including 76% of economic 

development, 68% of community development projects, and all housing 

projects; 

Table 3.11 Jobs Created as a Result of ARC Involvement 

Project Type 

Total New 

Jobs 

Jobs Attributable to 

ARC Involvement 

Percent 

Attributable 

to ARC 

Access Road 636 636 100% 

Business Incubator 1,357 1,001 74% 

Industrial Park 22,815 22,299 98% 

Industrial Site 2,583 1,992 77% 

Telecommunications 230 101 44% 

Water/Sewer 14,508 5,603 39% 

Total 42,129 31,632 75% 

Interviewees answered “don’t know” for projects including 1,007 jobs. 

Totals include new direct, indirect and induced jobs

• 87% of interviewees for economic development projects said that the projects 

improved local quality of life; and 

• 92% of community development and housing development respondents also 

said that these projects improved local quality of life. 

From the “people on the ground” in communities where ARC projects were 

implemented, the implication of these findings are that 75% of project related 

new jobs would not have occurred without ARC intervention. As Table 3-11 

shows (previous page), reliance on ARC appears strongest for jobs generated 

from industrial park and access roads, and weakest for telecommunications and 

water and sewer projects. 

Though interviewees indicate 31,632 new jobs in Appalachia can be attributed to 

ARC projects, this is an undercount. Interviews indicate that six additional 

projects, accounting for an additional 7,288 jobs were facilitated due to ARC. 

Although interviewees said that these projects would have happened anyway, 

they noted that they would have been delayed for years; further, it is possible that 

the economic benefits now seen would still be incubating. Of projects not 

counted in Table 3-11: 

• 3 water and sewer projects would have happened without ARC. Two would 

have been delayed (and therefore resulting economic development would 

have been delayed); 
40

• 2 industrial parks were developed more quickly with ARC support than would 

otherwise have been possible. Interviews from one of these projects 

indicated that the delay would have been 5-10 years; 

• Interviewees concerning a business incubator said that without ARC there 

would have been construction delays, resulting in lost contracts and slower 

economic development in the area; and 

• Interviewees concerning an industrial site reported that development of the 

site would have been more difficult if ARC support were not available. 

If the jobs generated from projects that faced long-term delays without ARC 

support are added to the totals in Table 3-11, then 92% of all new project related 

jobs are attributable to ARC according to local economic developers, including 

100% of jobs generated by incubator and industrial site projects, 99% from 

industrial park projects and 80% from water and sewer development. 

Notes 

-------------------------------------------------------------------------------------------------------------------------------- 

[i] These ARC projects have been successfully completed but the actual developments have not 

yet been implemented. 

[ii] Of the 51 water and sewer projects in this evaluation, 32 are classified as “economic 

development and 19 are classified as “community development.” 

[iii] For this report, multi-county projects with at least one distressed county are counted as 

“distressed.” 

[iv] All multi-county projects with no distressed county were “transitional” at the time of 

application.
41

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, water/sewer service, telecommunications and housing. As noted earlier, 

the first three categories were considered to be classic economic development 

projects. Water-sewer and telecommunications projects were divided among 

economic development and residential development projects, although virtually 

all residential projects (aside from housing) also demonstrate some level of direct 

or indirect economic development impact. [i] 

The discussion examines the outcomes for the 78 projects classified in the 

“economic development” category including all industrial park, business 

incubator, and access road projects, as well as 32 of 53 water and sewer 

projects, and five of the eight telecommunications projects. (Non-economic 

projects in these categories are treated separately, as are housing 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 a development project is commonly one piece of a larger 

package. Thus, it is difficult to unambiguously attribute the proper share of the 

impacts, and the tendency is often to “claim” credit for total impacts for each 

piece of the investment portfolio sponsored by various agencies. 

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/Share” 

method elsewhere in the report. 

On a more subjective level, the reality probably lies somewhere in. While the Full 

Credit method exaggerates the importance of any agencies credit share, the 

ARC Share approach likely understates it. With that in mind, the importance of 

stakeholder assessments of the criticality of ARC investments to projects 

(detailed in Section 3.7) should not be underestimated, including the finding that 

interviewees felt that ARC support made 73% of all projects possible. 

This section also provides 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 
42

interview process developed with local sponsoring agencies, user firms, and 

other development or governmental stakeholders involved in the application and 

implementation process. The interviews provided context for the raw projection 

and impact of each project, and facilitated the identification of common themes 

among projects. 

4.1 Water/Sewer Projects 

ARC invested in a variety of water and sewer projects, ranging from sewer lines 

for specific industrial users to water and sewer system development targeted at 

un-served and under-served residential communities. In addition, there were a 

variety of water and sewer improvements designed to impact both business and 

residential development, including industrial parks. 

Fifty-one water and sewer projects (49 percent of the total) accounted for 53 

percent of the total ARC investment reflected in the sample. Thus, water and 

sewer projects tended on average to be slightly larger than the average sample 

project. Of the 53 projects in this classification, 32 had at least partial significant 

economic development objectives (i.e., were not purely residential in conception) 

 

Table 4.1 Water & Sewer Projects: Aggregate Projections and Results 

 

 Projected Actual Difference to Date 

New Businesses Served 226 322 96 

Businesses Retained 89 91 2 

Jobs Created 3,636 6,966 3,330 

Jobs Retained 7,858 7,160 -698 

Households Served 5,493 7,035 1,542 

HH Served (non-planning projects) 5,237 7,035 1,798 

 

As Table 4.1 indicates, water and sewer projects performed very well, meeting or 

exceeding aggregate projections in every case except for a shortfall in retained 

jobs. Projections for new businesses, jobs, and households served were 

exceeded by substantial margins. 42% more new businesses were served than 

originally projected, and 92% more new jobs were created. 28% more 

households were served than anticipated. 

Because of the integrated economic development and residential nature of many 

water-sewer projects, it is difficult to accurately pull out measures such as cost 

per job used to assess other classifications; If the per job cost is higher, but a 
43

substantial number of residences are served, is there an offset? This is a policy 

issue beyond the scope of this project. 

In the project sample pool, 19 of the water-sewer projects were assessed to be 

strictly residential, while the other 32 were in part or whole economic 

development oriented. Table 4.2 breaks out results of these two types of project 

foci, barring overlapping results and yielding a better picture of how the primary 

objectives were satisfied. Since many of the projects overlapped residential and 

economic objectives and results, these are imperfect, subjective classifications. 

However, by analyzing the investment results of the water and sewer projects in 

three parts -- overall, and within the residential and economic development subcategories, we hope to provide a more realistic perspective on ARC return on 

investment. 

 

Table 4.2 Water & Sewer Projects: Residential and ED-based Projects and Results 

 

 Projected Actual Difference to Date 

Residential (19) 

Households Served 5,041 4,574 -467 * 

HH Served (non-planning projects) 4,785 4,574 -211 ** 

 

Economic Development (32) 

New Businesses Served 217 313 96 

Businesses Retained 81 83 2 

Jobs Created 3,276 6,816 3,540 

Jobs Retained 7,858 7,160 -698 

 

Note: Projections and Results to no sum to table 4.1 due to sub-category screening 

* The shortfall is largely due to a single project which has not performed as projected to date 

** One planning-only project projected 256 new jobs 

After segregating the water-sewer projects by residential and economic 

development-focus, the major differences in outcomes are two-fold: 

• Actual new jobs created now are now 208% of the number of new jobs 

projected 

• The outcome of households served is reversed. Projections now exceed 

actual households served, indicating that economic development projects with 

ancillary residential outcomes are more effective (or may simply tend to 

downplay outcome expectations of what are considered secondary project 

impacts). 
44

 As shown in Table 4.3, aggregate results for the economic development project 

sub-group of water-sewer projects show that ARC investment per job was 

$1,446, and $10,214 by the ARC share calculation method. Investment for newly 

created and retained jobs was about half in each category. Costs per job 

remained relatively low but increased significantly when the costs and results of 

all 51 projects were included for the water-sewer group as a whole. 

Since economic development-focused water-sewer projects performed so well in 

ancillary services provided to residents, the cost per household under the full 

credit calculation method was actually lower when all projects (not just 

residentially-based projects. However, when the ARC share calculation was 

used, residential-only project were more cost effective serving households with 

water and sewer ($4,640 per household) than was the total water-sewer project 

group ($7,658). The difference is due to the smaller percentage of ARC 

investment in the economic development projects, and hence the smaller “claim” 

on results. 

 

Table 4.3 Water & Sewer Projects: Residential and ED-based Projects and Results 

 

 Calculation Method 

Residential (19 projects) Full Credit ($) ARC Share ($)

Cost per Household Served 1,557 4,640

 

Economic Development (32 projects) 

New Businesses Served 31,485 207,432

All Businesses Served 24,886 164,192

Jobs Created 1,446 10,214

All Jobs Created or Retained 689 4,006

 

All Projects (51) 

Cost per Household Served 1,387 7,658

New Businesses Served 48,513 267,834

All Businesses Served 37,824 208,820

Jobs Created 2,243 13,041

All Jobs Created or Retained 1,106 6,105

 

Of the 51 water-sewer projects, forty met or exceeded economic and residential 

projections, 27 of 32 economic development projects in the classification (84%) 

satisfied projections, while 68% of the residential projects fared as well. (28% of 

the economic development projects exceeded projections, compared to 21% of 

the residential projects.) Among the economic development projects that 

experienced shortfalls, two (Watkins Glen Second Street-NY and Andrews 

Wastewater Treatment Plant-NC) were recently completed only in 2005. The 
45

third (County Line Industrial Park-AL) was completed in 2002; its outcomes 

shortfall is apparently due to properties sold as a result of the project 

improvements but which have yet to be built upon. Residential projects 

experiencing shortfalls have more varied end-date time frames. One had not 

made outcome projections. There was no discernible geographic pattern to 

projects which did not, as of yet, satisfy their outcome projections. 

Local projects in several states tended to group around an economic 

development or residential focus. All six projects in Alabama, all seven in North 

Carolina and all three in New York were economic development-oriented. Both 

water-sewer projects in Oh and both in VA were residential. Other states like 

Kentucky (four ED and seven residential) split the focus of their projects. 

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 trends and situations in 

which water and sewer projects generated other qualitative outcomes not readily 

measured by the usual performance measurements. 

It is worth remembering the very basic needs (taken for granted almost 

everywhere else) that traditional residential water-sewer projects address in 

Appalachian areas: 

• At least three projects were designed in part to bring potable water and fire 

protection to schools (Reform Water System Improvements-AL; Breathitt 

County Water Line-KY; Carrs Fork/ Littcarr Water Extension-KY). 

• Four other projects were addressed to basic needs of fresh water for 

communities which did not have water clean enough to drink or do laundry 

(Lick Creek/Mingo County Water-WV; Slate Creek Water-VA; Stoney 

Fork/Red Bird/Saylor Hollow Water-KY; Whitley County Water-KY) 

• Other residential projects analyzed their experiences as a positive step 

toward broader community revitalization: 

• The Salt Lick Sewer Collection project (KY) was understood by stakeholders 

as a step toward business development over and above the almost 500 

residences served. Credit for development of a new school and private 

investment in a new bank were directly attributed to the project, which was 

also seen as a vehicle that improved regional cooperation. 

• Another project (Whitley County Water-KY) experienced lower than 

anticipated bids, and used the in-place funding to extend the scope of the 

project, increasing the number of households served by 15% with the original 

funding. 
46

Interviews with stakeholders from the economic development-based projects in 

the water-sewer classification indicated a number of interesting commonalities: 

At least seven of the economic development sewer-water project were primarily 

concerned with servicing a single larger bird-in-hand business, and did for a total 

of over 3,300 new and retained jobs. Six of the seven met or exceeded job 

projections, suggesting again that the bird-in-hand project type is a significant 

success indicator (Taylorsville Industrial Water-NC; Icard Water ImprovementNC; Big Flats Sewer Improvement-NY; Dushore Borough/ Cherry Township 

Water Extension-PA; Valley Head Sewer System-AL; Upper Potomoc River 

Commission Sewage Treatment-MD). The seventh (Andrews Wastewater 

Treatment-NC) fell short of projections due to the closure of a large apparel 

manufacturer. However, the project managed to serve other businesses and 

impact over 600 new and retained jobs in other firms, making the ARC share of 

cost per job for that project just a little over $5,000. 

Three projects significantly exceeded new jobs projections by helping to attract 

unanticipated business through infrastructure improvements. Together these 

projects had projected 410 new jobs created, while reported results included 

1,825 new jobs created. These included the Brasleton Water Expansion-GA (a 

new chicken processing plant and tripled population since 2000); the Brushfork 

Sewer Project-WV (attracting a 300-job telecommunications firm); and the 

Northeast MS Regional Water Supply Facilities Improvement-MS, which 

attracted businesses employing up to 300 workers to the North Lee Industrial 

Park. 

Two KY areas reported very positive results from prison-related projects 

(Paintsville/Honey Branch Wastewater; McCreary County Prison Infrastructure) 

including the creation of 800 jobs and the retention of another 250. Both areas 

reported related spin-off business development, including restaurants, fuel and 

convenience stores, hotel development and an increase in airport activity near 

Paintsville. 

Significant, broader development spin-offs resulting from projects originally 

focused on service to industrial businesses were also related by stakeholders in 

at least four additional project areas, including Pickens County 18 Mile Creek 

Sewer-SC; Dawsonville Water System Improvements-GA; Elkin Sewer 

Extension-NC; and Gaffney/Clary Wastewater Treatment Plant-SC. 

• The Gaffney project was industrially focused but realized broad retail and 

educational impacts, including an expansion of the local community college. 

• The Pickens County project far exceeded its job creation goals, including 850 

new high quality jobs as well as unforeseen restaurant and hotel 

development. 
47

• The Dawsonville project spurred development of a new high school, 

restaurants and helped the tourism community. 

• On a reduced budget, the Elkin project served the businesses and created 

the jobs it set out to assist, and also set the stage for new community college 

development. 

In addition: 

• The need for future telecommunications projects was expressed (unsolicited) 

by interviewees from four of the 32 economic-development-based projects. 

• Representatives from nine projects were unable to confirm budgeted dollars 

(six from ED projects and three residential), while another three ED project 

representatives were unable to confirm whether or not the projects had 

resulted in private investment. One project did not establish original outcome 

projections. 

• In many cases, local project sponsors sold their results short by not closely 

tracking ancillary development, including residential and retail development 

resulting from projects which were primarily industrial in conception, or 

economic development results from projects which had a primary residential 

or community focus. In general, lack of resources were held responsible for 

this lack by interviewees; incentives built into the program may have resulted 

in better impact tracking and reporting. 

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-one industrial park projects (20 percent of the total evaluated project 

pool) accounted for 21 percent of the total ARC investment reflected in the 

sample. Thus, industrial park project grants were very slightly larger (by about 

$8,000) than the average sample project. 

As Table 4.4 indicates, industrial park projects performed quite modestly in 

aggregate, at least to date. It is, however, important to remember that industrial 

parks tend to be speculative, and that development and marketing take 

considerable time. In this sample, only four projects have had five or more years 

to germinate. Eleven were not completed before 2003 and seven had only two 

years to develop. The retained job projections are on the mark, and indirect jobs 
48

produced are far above projections, even at this relatively early date. These 

results fall notably short of the industrial park projects reviewed in the 2000 

evaluation, but, as a group, they are much less mature as well. The vast majority 

of earlier park projects were more than five years old at the time of the original 

evaluation. 

Despite unmet projections and the development time frame, however, the return 

to date on industrial park projects is impressive. Using the absolute method, one 

new job has been created for each $693 invested by ARC. Even more important, 

using the “ARC Share” method, only $4,932 was invested for each job created. 

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 examples where industrial park 

projects generated other qualitative outcomes not readily measured by the 

traditional performance measurements, including: 

• Providing higher quality jobs and income than were usual in project areas 

(Browder Switch Industrial Park-TN; Macedonia [now Roane] Industrial ParkTN; Washington County Industrial Park-TN). 

• Doubling as incubator efforts or where projects helped pinpoint the need for 

startup financing (Upper Kanawha Valley-WV; Victory Road Business ParkPA; Cambria Iron Works Complex-PA). 

 

Table 4.4 Industrial Park Projects (21): Aggregate Projections and Results 

 

 Projected Actual Difference to Date 

Businesses Served 80 57 -23 

Businesses Retained 0 1 1 

Jobs Created 14,125 8,812 -5,313 

Jobs Retained 1,068 968 -100 

Indirect Jobs n/a 14,003 n/a 

Households Served 3,000 3,000 0 

 

• Making substantial improvements to residential areas as well as the direct 

economic development project objectives (Tompkinsville Industrial Park-KY; 

Morehead Industrial Park-KY). 

• Stimulating and feeding from cluster development; (National Printing 

Innovation Center and Upper Kanawha Valley Industrial Park-WV; the Fuel 

Cell Technology Center and Logan-Hocking Industrial Park-OH). 
49

• Focusing on brownfield reuse and development. (Cambria Iron Works 

Complex-PA). 

• Confirming that a bird in hand was the single most consistent indicator of 

project success to date. It was clear from the interviews that the best results 

from larger park development projects are achieved by beginning with a birdin-hand (Greenville Hardin-TN; Huntsville Research Park-AL; Coaldale 

Business Site-PA; Monroe Industrial Park-PA; Washington County Industrial 

Park-TN). Projects that began with a bird-in-hand tended to succeed while 

others tended not to (although this was certainly not always the case). Once 

bird-in-hand development begins, speculative development becomes realistic 

and possible (Macedonia [now Roane] Industrial Park-TN). 

In addition a significant number of interviewees: 

• Pointed out demand for broadband access development as critical to further 

business investment in their areas (Morehead Industrial Park-KY; LoganHocking Industrial Park-OH; Monroe Industrial Park-OH; Macedonia [now 

Roane] Industrial Park-TN; Morehead Industrial Park-KY). This envisioned 

future project focus was at least as pervasive as expressions of interest 

regarding more traditional infrastructure needs. 

• Demonstrated spotty record keeping, poor access to project files or 

incomplete projections and results. This often resulted from staff turnover 

issues, and was apparent in at least five of the 21 projects in this 

classification. 

4.3 Industrial Sites 

The twelve industrial site projects in the sample received $3,329,843 in ARC 

investment, for an average project cost of just over $277,000, very close to the 

average sample project cost of $282,280. Four of the projects closed in 2001 or 

earlier; three closed in 2002, one in 2003 and four as late as 2004. Later 

projects, in particular, are likely to report results that are lower than eventual 

impacts. 

While the industrial site projects out-performed projections for businesses 

served, businesses retained and jobs retained, the number of jobs created was, 

at the time of the evaluation, less than 50% of the aggregate projection. 

However, 1,000 jobs of the shortfall from projections emanates from the Fayette 

County PA planning project, which began with first stage environmental plans for 

three sites as the start of a broad, long term site development strategy. Although 

only one firm has been located on the sites to date, that investment has included 
50

a private sector commitment of $51 million. It is still anticipated that the more 

robust job projections will come to fruition. 

 

Table 4.5 Industrial Site Projects (12): Aggregate Projections and Results 

 

 Projected Actual Difference to Date 

Businesses Served 13 16 3 

Businesses Retained 7 8 1 

Jobs Created 2,265 1,001 -1,264 * 

 without planning projects 1,265 1,001 -264 

Jobs Retained 130 152 22 

Indirect Jobs n/a 1,582 n/a 

Households Served 292 200 -92 

 

* Includes one pure planning project that projected 1,000 new jobs 

Having said that, it is still somewhat disappointing to note that half of the 

industrial site projects report results for jobs created that fall below projections. 

Site projects with shortfalls are spread among large and smaller projects, and 

cover the range of time periods since the projects were closed. 

As result, ARC investment figures do not demonstrate the same level of return in 

this classification as some others. Using the full credit method, $3,327 in ARC 

funds was required for each job. However, using the proportional methodology, 

each job required an ARC investment of $17,023. Naturally, these figures will be 

reduced dramatically if the projects develop over time, especially the Fayette 

County (PA) site plans. 

Nevertheless these projects created jobs (both new and retained) at a very 

efficient clip. One note: The relatively large average size of firms created by 

these projects (135 employees) suggests a focus on large firms that likely did not 

emanate from the project area. Smaller investments in locally controlled firms 

might also be in order, considering the findings on mature firm growth and 

entrepreneurial activity levels in Section 6. 

• Of the twelve projects, six completely met or exceeded goals (Cumberland 

Rolling Mill Infrastructure-MD; Johnson City Utility Line-TN; Endless 

Mountains Industrial Building-PA; Hocking County infrastructure-OH; Fort 

Payne Distribution Center-AL; Grundy County Industrial Building-TN). Three 

substantially attained projected goals (Monroe County Industrial Building-MS; 

Jenkins Industrial Site-KY; Rock Springs Industrial Park-GA); and two (in 

addition to the Fayette PA planning project) have not yet approached their 

projected job creation or businesses served goals (Central Garrett Industrial 

Park-MD; Hardy County Industrial Building-WV). 
51

• Interviewees for two projects could not confirm whether or not there had been 

private investment as part of, or resulting from, the project. 

• Five of the twelve projects had made no initial projections for “businesses 

served”. Two of the partially attained projects failed to make prior projections 

for the number of businesses to be created or served. 

Because of the similarity in focus (and resulting ambiguities in classification 

selections) it also makes sense to look at the outcomes of industrial site and 

industrial park projects as one: 

 

Table 4.6 Aggregated Industrial Park & Site Projects (33): Projections and Results 

 

 Calculation Method 

 Per: Full Credit ARC Share 

Jobs Created $962 $6,159 

Jobs Created and Retained $863 $5,529 

 

As discussed earlier, a variety of reasons resulted in jobs shortfalls, including a 

planning-only project, the timing of this evaluation relative to development 

timeframes and, we suspect, some overly optimistic application projections. 

Despite those shortfalls, the combined industrial park and site investment per job 

created was just over $6,000, for jobs which several interviewees enthusiastically 

described as very high quality relative to others in their project areas. 

4.4 Business Incubator Projects 

ARC investments in business incubators primarily include the development of 

buildings suitable for multi-enterprise business start-up purposes. [ii] Five 

business incubator projects (five percent of the total) accounted for six percent of 

the total ARC investment reflected in the database. Thus, business incubator 

project grants tended to be about $73,000 (26%) larger than the average sample 

project. Larger projects create additional demands on return data, a factor that 

intensifies among incubator-based firms, which tend toward conservative startup 

employment. 

As Table 4.7 indicates, incubator projects met or exceeded aggregate projections 

in every case. Actual newly created jobs created exceeded projections by 71%. 
52

 

Table 4.7 Incubator Projects (5): Aggregate Projections and Results 

 

 Projected Actual Difference to Date 

Businesses Served 52 55 3 

Jobs Created 403 688 285 

Indirect Jobs n/a 669 n/a 

 

What is impressive about the results to-date of incubator projects is that four of 

the five were completed only in 2004-2005. In other words, the actual results 

reported have been developed in 1-2 years, much more accelerated than might 

be anticipated. The apparent demand and rapid success of this entrepreneurship 

service underscores findings about gaps in startup activity that (as discussed in 

Section 6) are consistent in both the 2000 review as well as the current one. With 

a high level of assurance we point to this remark from the earlier study: 

The entrepreneurial vitality analysis 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. 

ARC incubator job (and business) investments also appear to be efficient, 

especially given the slow ramp up nature of the program and the short 

development time frame since project completion. Using the “full credit” method, 

there was one job created for every $2,584 invested by ARC. By the same 

method, $32,318 was invested for each new business served. By the 

proportional method, new incubator jobs required an investment of $11,722, and 

each newly created business a heftier $146,629. 

Table 4.8 presents a mixed picture of startup activity in the incubator project 

areas. It needs to be emphasized that incubators rarely demonstrate measurable 

area results in the short term, and that these incubators, in particular, have had 

precious little time to develop. [ii] 

What is most notable about these startup activity rates (two in distressed 

counties and two at-risk) is that in every case there was a clearly identified (if 

intuited) need for the project; activity indices had dipped and a focus on 

entrepreneurial activity was in order. In four of the cases, the clearly positive 
53

impact of the incubator (as shown in jobs created and businesses served results) 

have not had sufficient time to spread through the projects area, or in some 

cases, show up in the measurements. In the single longer-term project, in VA, 

the startup activity index has moved significantly back up toward US levels since 

project completion in 2001. As a matter of correspondence, (not necessarily 

causality) it’s worth noting that the same three-county project area has moved 

from a designation of multi-county with 1+ distressed county to no distressed 

counties. 

 

Table 4.8 Incubator Project Areas: Trailing Startup Activity (US=1.00) 

 

 Startup Index Rates Project 

 1998-2000 2000-2002 2002-2004 2005 Completion

Colbert, AL 0.95 0.73 0.73 0.72 2005 

Kemper, MS 0.91 0.55 0.23 0.00 2004 

Athens, OH 0.68 0.65 0.71 0.60 2004 

Fayette, PA 0.64 0.55 0.52 0.52 2005 

Lee-Scott-Wise VA 0.86 0.58 0.71 0.72 2001 

 

* Two decimal indices show relation to US startup activity rates, where US=1.00 

and 0.90, for example, reflects 10% below the US rate. 

In addition to these quantitative outcomes, the interviews conducted with 

economic development officials and various community leaders in each 

community served by the projects identified some important issues among even 

this small number of projects: 

• Four of the five incubator projects reported results well over projections (new 

businesses served, jobs created or both), including two projects completed in 

2004 and one in 2005. This finding, perhaps more than any other, expresses 

the region’s thirst for startup assistance as a tool geared toward increased 

entrepreneurial vitality. 

• Projects which already reported fulfillment of goals included two distressed 

counties (Athens, OH and Kemper, MS) and two more classified as at-risk 

(Fayette, PA and Colbert, AL). 

• One of the projects (in an at-risk county, the Shoals Entrepreneurial Center in 

Colbert AL) involved a second expansion of an existing incubator. Another, 

the Kemper County Incubator, also involved an expansion of an existing 

incubator. 

• Interviews for two of the five projects indicated deficiencies in record-keeping, 

reporting and/or development of original projections. 
54

• One project reported a distinctly higher job quality from the incubator project 

than normally seen in the area (OH University Innovation Center in Athens, 

OH). 

4.5 Access Road Projects 

The sample included only three Access Road projects, largely due to the 

additional housing and telecommunications categories in this evaluation round. 

Access road projects funded both access to specific industrial user sites and 

access to multi-user industrial parks. In each of the three cases, the project was 

designed to serve multiple businesses. The three projects (three percent of the 

total) accounted for two percent of the total ARC investment reflected in the 

sample. Thus, industrial access road project investments were on average 

$83,000 (29%) smaller than the average sample project. 

As Table 4.9 suggests, industrial access road projects performed well in the 

business served categories, as well as new jobs created. Actual retained jobs fell 

far below projections, but this appears to be due mainly to an industry cyclical 

downturn, rather than any specific local conditions. (The firm in question 

remained in the area but cut its work force substantially.) 

Table 4.9 Access Road Projects (3): Aggregate Projections and Results 

 Projected Actual Difference to Date 

Businesses Served 1 2 1 

Businesses Retained 10 14 4 

Jobs Created 198 200 2 

Jobs Retained 1,651 1,185 -466 

Indirect Jobs n/a 436 n/a 

ARC investments in access road projects paid off with significant leveraging 

rates. Since the nature of access road projects is often to improve conditions for 

existing businesses, it is worth looking at both new and retained jobs in light of 

investment. 

By the full credit method, one job was created for each $2,996 of ARC 

investment; the investment was $9,413 figured by the proportional method. 

Similarly, each job required an investment of $329 (or $1,034 by the proportional 

method) when including both new and retained jobs. 
55

Interviews probing the three access road project revealed some correspondence 

with other industrially-related classifications: 

• Bird-in-hand projects were most successful (Prescott Avenue Industrial 

Access Road in Chemung, NY), Improvements to existing occupied sites with 

additional space spurred new and unanticipated business location (Louisville 

Winston County Access Road-MS). 

• One project designed mainly for a bird-in-hand customer fell short in its 

original objective due to an industry downturn, but service to a second 

industry (wineries) spurred an unanticipated boost in area tourism and likely, 

economic diversification efforts (Hammondsport Industrial Access Road-NY). 

• One project area was unable to confirm project funding from existing records. 

4.6 Telecommunications 

Before beginning the review of telecommunications projects, it is worth 

mentioning that an unusual number of stakeholders representing industrial park, 

industrial site, incubator and other economic development projects 

spontaneously expressed the desire for telecommunications enhancements, or 

telecommunications project investments, in their areas. Those thoughts seem 

particularly important in the context of the clear lines that can be drawn between 

some of the telecommunications projects discussed here and enhanced area 

business operations. We suggest some future tie-in between traditional and 

Telecommunications projects in the conclusions to this report (Section 7). 

Telecommunications, a new project category, was represented by 8 projects in 

the sample. Of these, five were judged to have had primary or critical economic 

development impact projections. 

As a group, the telecommunications projects accounted for an ARC investment 

of $1,345,579, or 5% of the total sample pool investment. The eight projects 

themselves were 8% of the pool. The average telecommunications project 

investment was $168,220 or 41% smaller than the average sample pool project 

investment. 

Unfortunately, the economic development-based project with the largest ARC 

investment had to be excluded from the results calculations because no 

projections had been develop prior to implementation, and, no results had been 

collected. One of the two non-economic development-based projects were also 

excluded for projection purposes, since no household impacts were either 

projected or reported. 
56

As Table 4.10 reflects, the ED-based telecommunications projects exceeded 

projections for both the numbers of business served and jobs created. The 96 

jobs created shown in the table is understated, because one project sponsor 

(which accounts for 15% of the businesses served) did not track job creation or 

retention. Note the relatively large number of households also served (600), in 

this case by a single project. (The other ED-based projects did not track 

households served, although they were, in fact, served in some cases.) 

 

Table 4.10 ED-Based Telecommunications Projects (5): Projections and Results 

 

 Projected Actual Difference to Date 

Businesses Served 53 163 110 

Jobs Created 81 96* 15 

Households Served 600 600 0 

 

Non-ED project (1) 

Households Served 1000 1000 0 

 

* sums four projects; one did not collect jobs data; non-ED projects created another 32 jobs (total 128). 

Of the eight telecommunications projects, three have already met their goal 

levels for businesses served, job created or retained and households served. 

Three have exceeded their goals. One, completed in 2005, has satisfied 

residential but not business objectives; and one never established any real goals. 

The ED-based projects received $500,977 in ARC investments (37% of the total 

telecommunications investment). This works out to a “full ARC credit” cost of 

$3,073 per job created, and a proportional share investment of $15,338. (The 

per-job investment rises to $8,420 if the excluded project is folded into the 

investment total.) This also works out to a cost of $383 per household by the full 

credit method, and $3,165 by the proportional method, using data from only the 

two projects that had household projections and results. 

When the data for households served (connected) includes both ED-based and 

the non-ED project with results data, the total of 1600 households served works 

out to $393/household using the full credit method and $1513 when the 

proportional calculation is applied. 

Interviews with project stakeholders also indicated that: 

• The projects themselves focused on a variety of extremely creative efforts, 

including re-use of an older industrial building for telecenter operations (Blue 

Ridge Telecenter Development-NC); tele-radiology development that allows 
57

rural x-rays to be transmitted anywhere in the world (Hancock County Picture 

Archiving-TN); distance learning access (Western MD Regional Video 

Switched Network-MD) and two projects targeted toward startup enterprise 

services (Epworth Broadband Initiative-GA; Garrett Information Center-MD). 

• Four projects met or exceeded goals on an extremely short timeline (projects 

closed in 2004 or 2005), including Hancock County Picture Archiving-TN; 

Blue Ridge Telecenter-NC; NC Mutual Endeavor-NC; CANA-PA; Another 

closed in 2005 and has already largely met both residential and businesses 

objectives and as well (Epworth Broadband Initiative-GA). 

• Follow-up investigation of private funding and development impacts of the 

projects were not rigorously undertaken in at least two areas (in addition to 

the third which had not established goals). 

4.7 Housing 

The second of the two new categories in this evaluation was housing projects. 

These projects focused directly (solely) on residential housing development, as 

opposed to other project classifications which sometimes included ancillary 

housing impacts or benefits to residential households. 

The four housing projects included in the sample (and all housing projects in the 

closed pool from which they were selected) were located in the state of 

Kentucky. In all, the projects were designed to create 210 new residences and 

to-date fell just short of the goal, reporting 200. All were closed in time for final 

construction impacts to be reasonably reported. One of the projects invested in a 

transitional housing shelter which also served as a broader-based community 

center. 

As a matter of investment, the housing projects required $3,669 of ARC 

investment by the full credit calculation method, but $39,725 by the proportional 

credit method. The latter figure will no doubt be the source of some discussion as 

to the value of the investment. As part of that discussion, it would be worth 

examining in depth the Safe Harbor Transitional Housing and community center 

project in Wheelwright, KY. This project created 20 residential units (of a smaller, 

transitional nature than any others) while assisting the development of a 

community center and centralized services that received what can only be 

described as rave reviews by stakeholders. The relative cost of that investment 

was $1,120 per unit by the full credit methodology, and $3,745 by the 

proportional method. This was a small project, and certainly not easily replicated 

elsewhere, but the lessons of multi-function investment with a strong housing 

component should not be lost. 
58

There are two ways to look at this data. The first option looks primarily at the 

numbers. Given this, there is a very wide range of per unit investment costs -- 

from $3,745 to $85,391. Despite the variance, these are (for the most part) 

known costs with known results, unlike many economic development 

investments. (The project with the highest per unit ARC investment, Irvine 

Downtown, benefited from a significant increase in ARC funding from the original 

application request.) The wide fluctuations in costs suggest the need for tighter 

policies regarding desirable per unit costs. The positive outcomes for the multiunit housing also suggest the need for some policy guidance regarding the 

desirability, and fiscal trade-offs, of various types of housing investments. 

Table 4.11 shows the detail of all four housing projects in the sample, reflective 

of this first ARC effort. 

 

Table 4.11 Housing Projects (4): Return on Investment 

 

 Housing Units Investment per Unit 

 Projected Actual Full Credit Proportional Credit

Clifty Heights Elderly Rental Housing 10 10 4,000 48,917

Safe Harbor Transitional Housing 

 (in community center) 20 20 1,120 3,745

Fed. of Appalachian Housing Enterprises 

 (low income housing) 150 140 3,082 33,709

Irvine Downtown Project (elderly housing) 30 30 4,667 85,391

Total 200 200 3,169 39,225

 

The other perspective is more one of economic development. In the same way 

that roads and sewer lines developed for industrial purposes can also spur 

housing development as an ancillary impact, it’s also clear from this set of 

projects that housing development can also generate or contribute to other 

developments and services worth considering. For example, the Safe Harbor 

Transitional Housing project clearly served as an anchor for centralization of 

services and expanded use of the Wheelwright community center. By the 

accounts of interviewees, it also enhanced conditions for downtown development 

and had a direct impact on the retail situation downtown (through the housing 

and expansion of community center services that attracted more people into 

town). The Irvine Downtown Elderly Housing project was given direct credit by 

stakeholders for sparking downtown revitalization. (Perhaps coincidentally, both 

of these projects involved multi-unit housing types.) If these important indirect 

impacts are to be considered in the funding process, they should be recognized 

and, if possible tasked with quantifiable goals. 
59

Only four housing projects were included in the sample, but based on 

stakeholder interviews and reported data, the results, including broader impacts, 

were impressive: 

• Three of the four projects satisfied projected outcomes. The fourth 

(Federation of Appalachian Housing Enterprises-KY) fulfilled 93% of its 

objectives, but also cut originally funded costs by 42%. 

• Two projects involved traditional new construction housing and did well. Two 

others, however, took more creative approaches. Safe Harbor Transitional 

Housing project in KY, renovated a portion of a community facility to meet 

local needs for transitional housing. The Irvine Downtown Project-KY applied 

funds to acquire and rehabilitate three downtown buildings as low income 

senior housing which sparked private downtown investment (not originally 

projected). 

• At least two of the projects resulted in significant and largely unanticipated 

community or economic development activity. The Clifty Heights Elderly 

Rental project (KY) sparked the development of a Boy’s Club, Girl’s Club and 

a Domestic Abuse Violence Center, as well as a second effort in a nearby 

area modeled on the project. The Irvine Downtown project triggered other 

downtown revitalization and an estimated additional $600,000 in local 

spending reported by local businesses, as well as the rehabilitation of a 

downtown grocery store, movie theatre and dry cleaner. 

4.8 Efficiency Summary 

Before leaving this section on project results, it’s worth taking a look at the 

relative return on investment of various project classifications, keeping in mind 

that projects reviewed are a sample at a given point in time. 

 

Table 4.12 Return on New Job Investment by Project Type 

 

Project Type Calculation Method 

 Full Credit ($) ARC Share ($) 

 New Jobs New Jobs 

Access Road 2,996 9,413 

Incubator 2,584 11,722 

Industrial Park 693 4,932 

Telecommunications *6,315 *22,553 

Industrial Site 3,327 17,023 

Water/Sewer 1,446 10,214 

 

 * Cost per job elevated by one non-reporting ED project. 
60

All project types are within reasonable and accepted cost parameters for new 

jobs when using the ARC share calculation method, and certainly even more so 

by the full credit method. In general there is a clear efficiency to utilizing projects 

that serve multiple firms, as most except industrial site project are likely to do. 

Additionally, however, it’s worth noting the job creation costs of incubators, 

whose primary service purpose is to nurture enterprises early in their formation, 

often with the understanding that meaningful job creation would come down the 

road. For that reason, and because of the stark problems of entrepreneurship 

faced by large segment of the Region, the solid new job investment of incubators 

is specifically noted. 

Notes 

-------------------------------------------------------------------------------- 

 [i] 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. 

 

[ii] For a detailed explanation of the startup activity index, please see Chapter 6.3. For immediate 

purposes, however, it is probably enough to know that the index compares national and local 

entrepreneurial activity rates, using a US benchmark of 1.00. Index scores below 1.00 are below 

the national average by the corresponding percentage. 
61

5. Localized Strategic Project Impacts 

Although reporting mandates create the need for statistical impact analysis which 

occupies much of this report, it would be a mistake to lose sight of the strategic 

purposes of development investments. While statistical impacts are one measure 

of success, broader, often more subjective results describe progress on strategic 

objectives at least as dramatically. 

This section looks at various projects that fulfilled specific development 

objectives in the Region and among various local project areas, and identifies 

common approaches among project toward those needs. The identified 

objectives (both implicit and explicit) that are examined include: 

• Economic diversification efforts targeted previously under-represented 

sectors in the local economy, with the aim of strengthening the economic 

base of the community. 

• Reuse of vacant or underutilized sites, including abandoned industrial and 

commercial sites in areas ranging from traditional manufacturing centers to 

urban downtowns; 

• Support for traditional industries that continue to be the mainstay of many 

project counties; 

• Speculative development efforts; 

• Projects that contributed to area work force development efforts 

• Projects with significant non-economic community service Impacts 

• The effects of projects in distressed counties and attempts to identify cases in 

which projects may have contributed to tangible progress in distressed 

counties. 

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 risky dependence on any one sector. To assess progress 

in project areas, a diversification analysis was performed for each project 

location. Results of this analysis on a project-by-project area basis are discussed 

in Section 6.1 of this report and detailed for each area in the appendices. 

So that the diverse measures included in the economic analysis can be easily 

digested, they are presented for each project impact area in an indexed format 
62

that compares the project area to the corresponding US average. In each case, 

the US average equals 1.00, and the relative measure for the project area is 

above or below 1.00 in the same proportion. For example, a project area index of 

1.10 indicates that the project area is 10% above the US average; if 0.90, it is 

10% below. This methodology is discussed in greater detail in the introduction to 

Section 6: Economic Conditions in Project Areas. 

 

Table 5.1 Aggregated Project Area Economic Concentrations 

 

 Business Count Employment Reported Sales 

 1998 2004 1998 2004 1998 2004 

Agriculture 0.81 0.94 0.82 0.80 1.02 1.07 

Mining 1.77 1.57 2.24 1.87 1.15 0.72 

Construction 1.01 1.08 0.97 0.94 1.43 1.21 

Manufacturing 0.98 1.00 1.34 1.26 0.75 0.73 

Transport-Commun. 1.05 1.05 0.88 0.95 0.81 0.58 

Wholesale 0.85 0.88 0.83 0.83 0.81 ** 1.90 

Retail 1.18 1.15 1.07 1.10 1.51 1.21 

Finance-Ins-Real Estate 0.86 0.88 0.74 0.74 0.93 0.80 

Services 0.96 0.96 0.90 0.95 1.24 1.15 

 

 

** The large sales index increase is due to a single firm; backing out that data, the 2004 Sales Index remains 

at about 0.80. 

The aggregate analysis emphasizes the heavy reliance of project areas on the 

mining section, but also shows that significant movement was made toward US 

concentration levels between 1998 and the beginning of 2005. By the same 

token, the indices indicate concerns in at least three important sectors: 

• The number of business operations in the manufacturing sector is on par with 

US concentrations. The aggregated project results exhibit a continued high 

level of employment dependency on the sector, one that has dropped since 

1998 and appears to be moving toward US levels. The real concern here is 

that the sales of region-based manufacturers are still far below US levels, 

suggesting a heavy employment reliance on branch operations controlled 

from outside the project areas. (A lower-value industry mix may be a 

contributing factor, but, is unlikely the dominant one.) High levels of locally 

controlled sales may provide greater long-term stability. 

• While the business count index in the energetic transport-communications 

sector is 5% above US concentration levels, average establishment size is 

smaller than the US average, accounting for lower (but improving) 

employment indices. However, the sales index again reflects a major 
63

concern; already low in 1998, it plunged to 42% below the US concentration 

level by 2005, suggesting a lack of dynamism among locally based firms and 

a probable increase in operations controlled from outside the project areas. 

• The Finance-Insurance-Real Estate sector has been consistently and 

significantly under-represented. The business count index has moved very 

slightly toward US levels since 1998, but the proportion of project-area 

employment engaged in this sector remains 26% below the US average. The 

sales index has fallen significantly and is now only 80% of the US level, 

indicating weakness among locally controlled firms and a likely increase in 

control of businesses from outside the project areas. 

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 socalled “traded services” are desirable. Nonetheless, reliance on a particular 

industry (or extreme weakness in it) does make a region vulnerable. The point of 

the aggregate analysis here is to underscore the importance of projects which 

are geared toward, or result in, significant diversification of the specific project 

area or the larger region. 

County-level diversification efforts reflected a perceived need to move away from 

high levels of dependence on (and decline of) traditional industries, most often in 

mining or textiles. In other situations, development efforts created entirely new 

economic environments for rural counties. 

In most situations, ARC investments focused on value-added manufacturing 

growth. However, a new twist in this evaluation round was the emphasis put by 

several areas on distribution, health care and community revitalization in the form 

of projects that affected retail vitality. When investments fell within already high 

manufacturing concentrations, they rarely added to industries on which counties 

were already highly reliant. Rather, ARC investments went into varying local area 

industrial operations, aiding stabilization efforts within the high-value, highmultiplier manufacturing sector. The higher quality of jobs resulting from ARC 

investments was an often-heard theme in the interview process. In a wide 

majority of cases, industrial park and business incubator development created 

the conditions for a variety of new and expanding firms to thrive in several 

different industries. Business incubators, water projects that opened new 

residential and commercial sites, and some industrial projects played an ongoing 

role in community diversification efforts. 

In sum, the project sample clearly reflected successful efforts to move local 

economies in the Region away from traditional reliance on often declining 

industries. 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. 
64

Healthcare Development 

Projects in three different classifications focused on assistance to the healthcare 

industry as a means of elevating the level of local care and augmenting 

economic stability in their respective project areas: 

• Coaldale Site Development (Schuykill County, PA): This project enabled the 

local hospital, the largest employer in the industrial park, to expand 

operations including the emergency center, improving medical access for 

county residents and creating 40 new jobs to date. (The county has high 

manufacturing and mining indices, and lower than average service 

employment concentrations, which this project helped elevate toward national 

norms.) The project included development of an access road to circumvent 

nearby residential neighborhoods, improving the quality of life. 

• Hancock County Picture Archiving Communications system (Sneedville, TN): 

This project involved the acquisition of tele-radiology equipment for a new 

hospital facility in Sneedville. An estimated private investment of over $6 

million was leveraged by the project, which could create a regional customer 

attractor due to the technology involved. Thirty-two medical-related jobs were 

created in an area with very high employment indices in both manufacturing 

and agriculture. 

• Icard Water Improvement/Carolina Health Care Center (Burke, NC): This 

project involved water system improvements needed for new nursing home 

investment in the community. As a result of the project, over 240 jobs were 

retained and 115 new jobs created, mitigating the county’s strong 

dependence on manufacturing without decreasing manufacturing jobs. 

• Jackson Water Storage Tank Replacement (Breathitt County, KY): This 

project was a contributing factor in the addition of 75 hospital jobs in a 

distressed county as a by-product of a larger effort to serve over 2300 

households with an improved water system. Already strong service sector 

employment received a boost, helping to balancing high employment indices 

in retail, mining and transport-communications. 

Distribution 

Several projects focused --or inadvertently created -- new warehouse and 

distribution centers in at least one distressed and three at-risk project areas. 

• Fort Payne Distribution Center Utilities (DeKalb County, AL) involved the 

extension of utility lines to a new wholesale distributor. Stakeholders had 
65

focused on locating new “clean” industries on the site and were successful in 

creating 200 new jobs to date. Results of the project have helped to elevate 

the low wholesale and distribution employment indices in the county area. 

• Monroe County Industrial Building (Monroe County, MS): This project focused 

on manufacturing, but resulted in the development of a warehousing and 

assembly furniture facility (private investment $3.2 million) and the creation of 

100 new jobs. The area already shows a high manufacturing employment 

index (1.85) but a transportation-communications employment index 36% 

below the US level, which should receive a boost from this development. 

• Morehead 801 Industrial Park Water Storage Tank (Rowan County, KY): This 

project included the development of a water tank needed to serve a 75-acre 

industrial site whose largest tenant is a Family Dollar distribution center 

utilizing over 200 trucks per day. The project retained 410 jobs in an area with 

a low (0.48) transportation-communications employment index. 

• Tompkinsville Industrial Park Development (Tompkinsville, KY): The 

development of this industrial park includes plans (not yet implemented) for a 

medical supply company projecting 50 wholesale jobs. In this instance, the 

area already reflects strong wholesale and manufacturing indices. 

Tourism Development 

 Tourism development has taken hold as a diversification strategy in many parts 

of the Appalachian Region. Although these are often secondary objectives and 

almost always unaccompanied by outcomes, significant numbers of projects 

(almost 10% of the sample) include tourism in their discussion of the impacts of 

various projects: 

Tourism diversification efforts and impacts include: 

• Brushfork Sewer Project (Mercer County, WV): This sewer project connected 

almost 600 customers and helped clean the local river, a tourist destination, 

which was being used as a sewage dump, obviously enhancing the area’s 

tourism attraction efforts. 

• Dawsonville Water System Improvements (Dawsonville, KY) was designed to 

assist a major tourism project (the Thunder Road Racing Museum) 

• Hammondsport Industrial Access Road (Hammondsport, NY): This access 

road project including servicing the needs of the area’s important and growing 

wine (and winery tour) industry. 
66

• Robbinsville Sewer Line Extension (Robbinsville, NC): This water-sewer 

project extended a sewer line south of town, serving general residential and 

commercial needs in this distressed county, which is experiencing modest but 

discernible tourism growth. Stakeholders feel that the project was an 

important one to businesses involved in the tourism industry. 

• Tompkinsville Industrial Park Development (Tompkinsville, KY): This primarily 

industrial-focus project is credited by stakeholders as creating a new push for 

downtown revitalization and tourism. 

• Watkins Glen Second Street Water/Sewer Upgrade (Watkins Glen, NY): The 

project upgraded systems serving residential and commercial customers, 

reportedly increasing the area’s Main Street and tourist attraction efforts, 

which include a natural gorge (park) attraction as well as a regional wine 

industry and a NASCAR racetrack and annual rally. 

Prison Development 

Projects that have supported new prisons have produced numerous well-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. Prison development examples from the 

project pool include: 

• Paintsville, KY: The Paintsville-Honey Branch Wastewater project was an 

$8.8 million project (ARC investment: $400,000) that involved the 

development of a wastewater treatment plant and more than nine miles of 

sewer line to serve a new federal prison at the Honey Branch Industrial site. 

The prison has created 400 new jobs in this multi-county area (including 

distressed counties), and additionally diversified the local economy by 

creating a demand for supplies from the prison, as well as retail and service 

amenities for visiting families. Airport activity has reportedly increased as well. 

The fact that the industrial site is now properly served also resulted in the 

relocation of an existing oil services firm which would have otherwise moved 

from the area. This area had been heavily over-represented in the mining 

sector and far behind the US concentration levels in services prior to this 

project. 

• McCreary County, KY: The McCreary County Prison Infrastructure project 

developed a new sewer system to serve a one thousand bed federal prison. 

The prison has created 400 new jobs in this distressed county. It has spurred 

hotel and restaurant development as well, and stakeholders are optimistic 

about current plans for additional retail and service outlets. This area had 
67

heavy representation in the manufacturing sector and a low service sector 

business count index before this project. 

Other Industrial and Commercial Diversification Projects 

Some of the most interesting projects did not fall into common categories, but 

involved a variety of outreach and diversification efforts toward companies and 

industries that were unusual for their area or the Region. These fell generally into 

industrial and commercial categories: 

Examples of other industrial-related diversification: 

• Brushfork Sewer Project (Mercer WV): In addition to enhancing area tourism, 

this project involved the location of a new telecommunications firm in an area 

with a low communications sales index and a sector employment index that 

had dropped since 1998 to 17% below US levels in this at-risk project area. 

• Endless Mountains Industrial Building Renovation (Sullivan County, PA): This 

project involved rehabilitation of an existing facility into a multi-site 

manufacturing complex. Results included the location of a bio-medical 

company unique to the area. 

• Jenkins Industrial Site Infrastructure (Letcher County, KY): This project 

involved improvement to an industrial park, resulting in the location of a data 

processing center and a gas industry service firm, as well as at least one 

commercial business, enhancing diversity but not yet making progress on 

very weak area manufacturing indices. 

• Logan-Hocking Industrial Park (Hocking, OH) included the development of a 

new industrial park. While the park itself is experiencing modest development 

(two companies to date), a third (alternative fuels) firm has developed as site 

near the industrial park as a result of the project, including five related 

buildings. 

• The Rock Springs Industrial Park Improvements project (Walker County, GA) 

has attracted a $10 million investment from a Japanese food processor and 

construction of an automotive parts facility in an area heavily dependent on 

textile manufacturing. 

Examples of other commercial-related diversification: 

• The Gaffney-Clary Wastewater Treatment Plan Upgrade (Cherokee, SC) was 

an industrially-focused project that also resulted in unanticipated retail and 

educational spin-offs. 
68

• The Winder Sewer System Expansion Project (Barrow County, GA) was 

largely a housing project that has resulted in added commercial development 

activity and the planned location of a new “big box” regional store. 

• The Salt Lick Sewer Collection System (Salt Lick, KY) developed a 

wastewater collection and treatment system focused on household service, 

but which has resulted in additional downtown and educational development, 

including a new school, a new downtown bank and other downtown 

commercial enterprises that would not have otherwise located there. 

• The Madison County Water System Improvements project (Madison, GA) 

enabled investment from two diverse sources -- a downtown supermarket and 

a higher educational institution (total investment of $9 million from both). The 

new school created a demand for housing and retail development, including a 

mini-mall and pharmacy. The mini-mall alone supports fifty new jobs. 

• Taylorsville Industrial Water (Taylorsville, NC): This project developed a 0.9 

mile water line extension to serve a commercial area. The project leveraged 

$3 million in private investment, including the development of a regional WalMart facility and 135 new jobs (in an area with a wholesale business count 

index 25% below US levels and an even lower wholesale sector employment 

concentration index). Transport-Communications employment indices are 

also very low, and the retail employment index is 19% less than the US 

average concentration. 

Re-Use Projects 

Almost by their nature, projects involving rehabilitation and re-use of existing 

facilities, most often industrial, provide a venue for diversification efforts. 

Invariably, the projects enhance not only immediate employment and serve 

tenant firms, but augment the general desirability of the larger surrounding area 

by putting abandoned buildings or vacant brownfield sites to productive use. 

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. 

Our project pool included at least five projects within this specialized re-use 

category, two of them in distressed counties: 
69

• Blue Ridge Tele-center Development (Alleghany County, NC): Possibly the 

ultimate in re-use is the rehab of an older industrial plant into a high 

technology service -- precisely the format applied to this telecommunications 

project, whose objective is to provide daily technical assistance to project 

area firms (twelve to date). The project is credited with creating 46 jobs in a 

technology field, in an area with very low business count, sales and 

employment industries in the corresponding sector. 

• Cambria Iron Works Complex Repair and Rehabilitation (Johnstown, PA): A 

more traditional re-use project, the Cambria Iron Works re-use rehabilitated a 

heavy industry facility (listed on the national historical register) into a suitable 

home for smaller machine shop and carpentry firms. Although the project has 

not yet attained its stated job creation objectives, it is on its way since its 2004 

completion. 

• Cumberland Rolling Mill Infrastructure (Cumberland, MD): This project 

improved the infrastructure of a commercial development built on the site of 

an older primary metals facility and railroad property in a low-income 

neighborhood. The retail-oriented development now includes a supermarket 

and a variety of locally owned small retail and service operations which have 

created 200 new jobs. The availability of localized services has enhanced 

neighborhood quality of life. 

• Fay-Penn Business Center Improvement Over-run (Fayette, PA): This project 

helped transform an abandoned plastics molding facility into a multi-tenant 

building which is fully operational and occupied. The site (two tenants and 93 

jobs, significantly exceeding projections) is strategically situated on a viable 

industrial strip across from the local campus of Pennsylvania State University. 

• Irvine Downtown Project (Irvine, KY): This project took a different approach to 

re-use, converting three older downtown buildings into thirty one-bedroom 

units for low-income seniors. While the focus of the project was the re-use 

itself and the provision of elderly housing, its strategic location appears to 

have had a significant impact on the downtown area, reportedly sparking 

$600,000 in new downtown spending and spurring new businesses supported 

in part by the results of the project. Project stakeholders testified that the town 

is “now being brought back to life” as a result of the residential rehabilitation 

and re-use. 

• Reltoc Building Renovation (Colbert, AL): The creation of the Shoals 

Entrepreneurial Center in an old industrial building slated for demolition was 

an explicit effort to put new entrepreneurial life into a community and create a 

diversification effort to combat the area’s historic reliance on troubled 

segments of the textile industry. Plans call for up to ten light manufacturing 

enterprises (five have located to date) in an area that struggles with a startup 

activity index 27% below the national level. 
70

5.2 Support for Traditional Industries 

In an effort to shore up long-term businesses or a traditional industrial base, 

several projects were developed to serve company-specific retention needs. 

Some of these in fact served a single firm, while others were developed, or 

naturally served, to extend infrastructure improvements to multiple firms. In all, 

the projects summarized below created more than 700 jobs and retained over 

1,700, all in transitional or (one) distressed county. In more than one case, the 

major business to be served suffered a significant reduction in force during or 

shortly after project completion. 

• Big Flats Sewer system Improvements (Chemung, NY): This project assisted 

three businesses, including the long term are mainstay Corning. Overall, the 

project retained 222 jobs and created 10, primarily as a result of an expansion 

of Corning’s Science Products Division, a technology-edged segment of the 

business. The project also facilitated further development of a nearby retail 

district. 

• Dushore Borough/Cherry Township Water Extension (Sullivan County, PA): 

This project assisted an expansion of a large dry cleaning equipment 

manufacturer in this smaller jurisdiction. As an ancillary motivation, the water 

line improvements also affected fifty-five households. 

• Greenville Hardin Industrial Park (Greenville, TN): This project was designed 

to help locate a large truck component manufacturer in a local industrial park, 

creating 300 jobs over a five-year period, and attracting $15 million private 

investment. 

• Hammondsport Industrial Access Road (Hammondsport, NY): This project 

was primarily designed to serve a large aircraft component manufacturer that 

downsized at the start of the project but remained in the area. The access 

road fulfilled secondary purposes, including service to residential communities 

and the regional winery tourism industry. 

• Hardy County Industrial Building (Hardy, WV): This project brought a new 

player into the region’s traditional wood products industry, creating new 

cluster activity in the local area. Development is still short of projections. 

• Johnson City Utility Line Relocation (Johnson City, TN): The project helped 

capture a private investment of over $12 million and 250 new jobs from an 

appliance manufacturer (including headquarters). The larger vitality impact of 

the project has reportedly increased business interest in the area and 

encouraged community morale. 
71

• Mountain City Sewer Line Extension (Mountain City, TN): This project 

primarily served a local glove manufacturer which was able to temporarily 

maintain operations, reportedly as a result of the assistance from this project, 

but closed a few years later. The project also extended sewer service to 

approximately 50 new residential households as well as commercial property. 

This was perhaps the only project in the sample of which a stakeholder 

conceded that “...in hindsight the town had water and sewer needs (that 

should have been) met instead”. 

• Prescott Avenue Industrial Access Road (Chemung County, NY): This project 

primarily served a large longer-term glass manufacturer, facilitating expansion 

and the addition of fifty new jobs. The company invested an estimated $90 

million. The access road also facilitated the development of another 

(unrelated) commercial brownfield site. 

• Valley Head Sewer System (Valley Head, AL): This project enabled a textile 

plant -- the only large manufacturer in the area -- to retain and create over 

400 local jobs, averting a major rupture in the county economy. 

5.3 Speculative Development Efforts 

Speculative development efforts -- relying on the “build it and they will come” 

perspective -- are often controversial. Difficult projects look like a waste of time 

and money after the fact, but successful projects look like genius at work. Our 

sample pool included a mix of speculative site projects that returned strong, 

mixed and (to-date, at least) weak results. 

For our purposes, what defines a speculative development effort? It is the 

development of a site for the sole purpose of selling or renting to industrial users 

who are not on the horizon at the time that the scope of the project is determined. 

This would exclude re-use projects, even brownfields, which have other 

important community revitalization purposes, such as blight eradication. It also 

excludes more predictable commercial, retail and residential development efforts, 

even when those projects call for greenfields development. We are not insisting 

that this is the only proper definition for speculative development, but it is the one 

we utilize here to develop an apples-to-apples perspective on a category of 

projects undertaken in this sample pool. 

Reported job creation and businesses served in the following speculative 

projects were at or above projections, regardless of the project completion year. 
72

• Macedonia Industrial Park Phase I (Roane, TN): This project was only 

completed in 2004, but already claims fulfillment of 80% of it job creation 

objective (401 of 500 projected jobs). Additional spin-off jobs have been 

created and the larger park project also improved road infrastructure in the 

area. Experience has been solid enough so that a speculative building is now 

being constructed in the park. This is a transitional county. 

• Mount Hope South Industrial Park (Fayette (WV): This project was conceived 

in a distressed county which has now advanced to at-risk designation. New 

job creation has exceeded projections by several multiples (125 projected, 

500 actual). Private investment has been substantial. Direct spin-offs and 

induced benefits are reportedly substantial. ARC investment returned one 

new job for less than $3500 per job. 

• Northeast MS Regional Water Supply Facilities (Lee, MS): This project 

created area-wide water treatment improvements, but with the specific 

intention of job creation. Stakeholders are firm that the local (North Lee) 

industrial park would not exist without the benefits of this project. Business 

growth since has far exceeded expectations, including five new firms (rather 

than the projected two) with 1200 jobs (four times the projection for this 

project). This is a transitional county. 

• Pickens County 18 Mile Creek Regional Sewer (Pickens, SC): This was 

another water-sewer project with specific (non-residential) development 

projections. Stakeholders say that in the last 18 months, the area has 

attracted $50 million in private investment as a result of project-driven 

improvements, resulting in 850 new jobs with sixteen additional businesses 

locating to the area. This effort veers slightly from our definition since existing 

business (and jobs retained) were also served. This is a transitional county. 

The following projects have been partially developed. They report outcomes 

somewhat below projections, but completion time frames may be recent or 

experience to date may be generating cause for optimism among stakeholders: 

• Belmont County Fox Commerce Park (Belmont OH): This project was 

completed in 2003 and reports 109 new jobs created of the originally 

anticipated 300. Stakeholders state that the park will meet the goal of filling 

the park completely within ten years. Five companies are currently under 

negotiation to locate in the park and would bring an additional 261 jobs. This 

is a transitional county. 

• County Line Industrial Park/Smoke Rise Sewer (Blount, AL): This project 

anticipated 185 new jobs and reports only ten. Stakeholders attribute much of 

the difference to a shortfall in funds, so that only a portion of the original 

project scope could be completed. There was some internal debate about 
73

whether to complete the industrial park or sewer segment first, and 

disagreement continues about the decision that was made. One company has 

located on the site, and two other sites have been sold but not developed, 

possibly as a result of the uncompleted sewer project segment, which (when 

completed) may alter the outlook for the industrial park. This is a transitional 

county. 

• Crestwood Industrial Park Expansion (Luzerne, PA): This project was 

completed in 2002 in a transitional county. The larger project included access, 

water-sewer improvements, storm management, utility services, as well as 

the construction of seven buildings, including three speculative buildings. The 

project anticipated 1200 new jobs and ten new businesses. It was fueled by 

the perception that the area is woefully short of developable land. 

Stakeholders report the actual creation of 413 jobs and three new businesses 

as a result of the project. Despite the substantial outcomes shortfall, the ARC 

investment has yielded one new job per $4941 by the more conservative ARC 

share calculation. 

• Hardy County Industrial Building (Hardy, WV): This project anticipated 200 

new jobs and reports twenty since project closure in 2001. A single wood 

products firm has local in the speculative multi-tenant building. Results of this 

project are largely classified as ambiguous because of stakeholder assertion 

that additional wood cluster operations are showing vitality and may positively 

impact future development. This is a transitional county. 

• Central Garrett Industrial Park Improvements (Garrett, MD): This project was 

completed in 2002. Stakeholders report one business retained (66 retained 

jobs plus an expansion) and one new business located at the site. Outcomes 

for retained jobs have been satisfied, but new jobs were originally projected at 

85 and have been reported at 35 to-date. Much of the return appears to have 

been from an expansion of the large business retained, including private 

investment of $2.5 million. The expansion was to a new, commanding lot on 

the site, freeing up an older, cramped facility for re-marketing. The retained 

firm is an international manufacturer of technology components, a valuable 

asset to the diversity of the county. Using the ARC share calculation, the ARC 

has invested over $52,000 per new job in this project. This is a transitional 

county. 

The following projects report little or no achievement of outcomes to-date, 

despite project completion dates early enough to raise some concern: 

• Meadow Ridge Business Park (Greene, PA): This speculative business park 

site improvement project reports no post-project development despite a 

projection for 522 new jobs. The original business park to be served already 

had road and water done by time funds were available. As a result, the 
74

project scope changed; funds were used to grade twelve acres for 

development. No jobs or businesses have been attracted as a direct result of 

project, but stakeholders expect future attraction. Results have likely been 

depressed since the project was only completed in 2004. This is a transitional 

county which had a distressed designation at the time of project approval. 

• Columbia/Adair County Industrial Park (Adair (KY): This project (completed in 

2004) was designed to provide eleven building sites at the Adair Industrial 

Park in at-risk Adair County. Stakeholders state that there has been no 

private investment to date because industry is not in a growth mode. 3,000 

jobs were originally projected. This is an at-risk county, and was classified as 

transitional in the pre-project phase. 

• Tompkinsville Industrial Park Development (Monroe KY): The industrial park 

improvement project was completed in this distressed county in 2002. 

Projections included three new businesses and 263 new jobs created. There 

are uncompleted plans for a distribution startup that could add fifty jobs within 

two years. Stakeholders seem optimistic about longer term efforts to market 

the 75 acre park. 

5.4 Workforce Development and Job Quality 

Several projects resulted in positive impacts on local work force training and 

upgrades, including: 

• Belmont County Fox Commerce Park (Belmont, OH): This industrial park 

project created usable development property in an area which had little. Five 

businesses have already been located on the site and more are in 

negotiations. Several have brought jobs requiring locally-based training 

programs. 

• Bessemer Airport Water Main Extension (Jefferson, AL): Expansion and 

improvement of water service in this community resulted in the creation of 

hundreds of new jobs and attraction of an ITT Institute job training facility to 

the newly served area. 

• Browder Switch Industrial Park Infrastructure (Marion, TN): Infrastructure 

improvements to an industrial park helped locate a new industrial tenant, 

sparked private investment and required work force training to match the skill 

sets required by the for new area heavy manufacturing industry. 

• Kemper County Incubator Expansion (Kemper, MS): Stakeholders attribute 

the local community college training programs, in part, to the success of this 

incubator project (and vice versa). 
75

• Mount Hope South Industrial Park (Fayette, WV): Additional work force 

development programs have been established to satisfy the requirements of 

the 550 jobs already created by this successful industrial park project. 

• Mountain Empire Regional Business Incubator (Lee-Scott-Wise, VA): This 

very successful incubator project, serving 43 companies, has required the 

development of new work force skills and training programs to provide them. 

• Rock Springs Industrial Park Improvements (Walker, GA): This project helped 

locate an automotive parts manufacturer in this transitional county industrial 

park. The park is adjacent to the Northwest Technical College, which provides 

technical training, including the Quickstart program which served many of the 

employees hired by the new company. 

In addition, several stakeholders noted that improved conditions generated by 

ARC investments tended to result in higher-quality jobs and employment. A 

sampling of these includes: 

• Belmont County Fox Commerce Park (Belmont, OH): Stakeholders of this 

industrial park project commented on the higher quality jobs and wages paid 

by businesses attracted as a result of this project. 

• Monroe Industrial Park Building (Monroe, OH): The new business serviced by 

this project (metal and powder coating) increased incomes and provided jobs 

which stakeholders report have enhanced quality of life. 

• Pickens County 18 Mile Creek Regional Sewer (Pickens, SC): This sewer 

project sparked extensive levels of development activity, creating 850 new 

jobs, far over projections. Stakeholders report that many of the new jobs are 

“high tech and high paying”. 

• Greenville Hardin Industrial Park (Greenville, TN) reports jobs paying wages 

about 20% above the anticipated average wage for 300 new jobs at a 

transportation equipment manufacturing plant. 

• Washington County Industrial Park Water & Sewer Line Extension 

(Washington, TN) enabled the location of a large manufacturer and 375 new 

jobs. Stakeholders report on the high quality of employment and positive work 

force and community relations fostered by the employer. 
76

5.6 Community Service Impacts 

In addition to projects focused on the development or expansion of medical 

facilities (discussed in the section 5.1 Economic Diversification segment on 

Healthcare Development) several projects enhanced community services efforts 

in their local areas, including: 

• Clifty Heights Elderly Rental Housing (Pulaski, KY) constructed a rental 

housing complex for elderly, low-income families. Stakeholders report that 

spin-off community development from this project includes a Boys and Girls 

club and a Domestic Abuse Violence Center and an after-school. A 

community center has opened next to the project. 

• Hardy County Industrial Building (Hardy, WV): This developing industrial park 

project was successful in catalyzing follow-up work (and an ARC grant) to 

open a successful day care center in the industrial park. 

• Irvine Downtown Project (Estill, KY): Created thirty senior housing units from 

three older downtown buildings, sparking a business renaissance in the 

downtown area. The project focused on a small town where one-third of the 

main street block had been condemned. The new population triggered 

$600,000 in additional sales for long-term downtown shops. 

• Jefferson Water & Sewer Extension (Ashe, NC): The project renovated a 

school building which was converted into a one stop family services center. 

The former high school building now houses Family Central (including a day 

care center), North Carolina Cooperative Extension, an alternative school for 

at-risk youth, the Literacy League, New River Behavioral Health Care 

(developmentally disabled services), Joblink Center and the Employment 

Security office. 

• Safe Harbor Transitional Housing (Floyd, KY): This project renovated a 

portion of a community facility for use as transitional housing for low income 

individuals and families. The center is now used not only for emergency 

shelter, but also for or receptions and weddings, etc. Stakeholders content 

that it is “really the center of the community”. Low-income residents were 

hired to work on the project, which also utilized locally-purchased materials. 

• Stoney Fork/Red Bird/Saylor Hollow Water (Bell, KY): This water-sewer 

project was designed to served 180 households, but stakeholders reported 

unanticipated positive impacts on the local senior citizen and child 

development centers. 

• Winder Sewer System Expansion (Barrow, GA): This residential project was 

designed in part to serve a senior housing community and medical complex. 

The project has been slow taking hold but is now in the development process, 
77

and expected to have a major impact on area neighborhoods, senior housing 

and medical facilities. 

5.7 Distressed Community Impacts 

Thirty-six projects in the sample pool (35%) were developed in 32 single county 

impact areas which were classified as distressed in the pre-project stage. 

Another eight were identified multi-county impact areas that included at least one 

distressed county prior to project implementation. In all, 42% of all sample 

projects impacted distressed counties. The projects covered 40 different project 

impact areas with at least partial distress designation. 

Of the forty project areas represented in the sample pool, sixteen (40%) 

improved their distress designation in the post-project review; that is, 40% of the 

distressed county projects moved from distress designations to either the 

“higher” at-risk or transitional categories between project initiation until after 

project closure. (The years varied depending on the timing of each project.) 

 

Table 5.2 Distressed Pre-Project/Post-Project Designations 

 

 Pre-Project Distress Post-Project Designations Improved % Improved

 

Single 

County

Multi-County 

1+ Distressed 

Single 

Distressed Multi-County At-Risk Transitional 

 1+ Distressed No Distress 

AL 1 1 0 of 1 0%

KY 12 3 9 2 1 3 4 of 12 33%

MS 4 2 2 1 2 1 3 of 6 50%

NC 1 1 1 1 0 of 1 0%

OH 3 2 1 1 of 3 33%

PA 2 2 2 of 2 100%

TN 4 3 1 1 of 4 25%

VA 2 1 1 2 3 of 3 100%

WV 3 1 2 1 1 2 of 4 50%

Total 32 8 20 4 3 11 2 16 of 40 40%

 

Among the single county impact area projects, two (Monroe, OH and Greene, 

PA) were elevated form distressed to the higher transitional classification, while 

another ten moved from distressed to at-risk designations (Pike, Rowan and 

Lincoln, KY; Monroe and Tishomingo, MS; Fayette, PA; Pickett, TN; Buchanan 
78

and Wise, VA; and Fayette, WV). Although the number of original distress 

designations in each state was relatively small, Table 5.2 indicates that 

Mississippi, Pennsylvania, Virginia and West Virginia all experienced upward 

mobility in at least half of their project areas that began with distress 

designations. Kentucky, which started the process with the most distressed 

counties in the sample pool (12) also had the most (4) that were re-classified 

upward in the post-project period. 

There were significant outcomes in distressed counties as well. Table 5.3 details 

more than 3,400 new jobs created and over one thousand retained, as well as 

345 new businesses served, mainly in Kentucky. As the site of all four of the 

sample pool housing projects, Kentucky also had the largest number of 

households served, both new and existing. 

In the four states with the greatest movement out of distress designations among 

project pool areas, Kentucky, Mississippi, Virginia and West Virginia benefited 

most significantly to-date from these specific projects. Projects in Pennsylvania 

did not significantly affect the two counties that moved from distressed to at-risk 

and transitional during the time period under review. 

 

Table 5.3 Project Outcomes in All Pre-Project Impact w/ Distress* 

 

 Jobs Created Business Served Households Served 

 Created Retained New Retained New Existing 

AL 0 50 0 0 95 0 

KY 1,425 660 186 8 6,554 3,177 

MS 355 150 2 6 40 820 

NC 57 53 39 0 0 0 

OH 40 0 1 0 83 0 

PA 78 15 3 2 0 0 

TN 42 40 0 1 903 0 

VA 320 100 23 20 405 0 

WV 866 0 67 0 864 0 

Total 3,183 1,068 321 37 8,944 3,997 

 

While no causal relationship can be ascertained, an analysis of the projects in 

counties that moved from “distressed” to “at-risk” or “transitional” designations 

suggests that project investments in several of these were significant contributing 

factors in elevating county status. A review of impacts of economic development 

projects in areas moving from distressed to higher classifications follows. Nine 

projects areas of the sixteen which progressed from distressed designations 

developed projects with a core economic development component. (Projects 

which did not have identifiable economic development objectives or outcomes 
79

are not reviewed here, even if they were sponsored in areas which progressed 

from distress to a higher classification.) Of the nine, at least three reported 

impacts which had a significant role in elevating county distress designations. 

Highest Relative Impacts: 

• Morehead 801 Industrial Park Water Storage Tank (Rowan, KY): This project 

brought 500 new jobs to this formerly distressed county, including a large 

Family Dollar distribution center. The project also retained 410 jobs. It is 

estimated that the project impacts increased the private sector employment in 

the county by almost 5%. 

• The Mountain Empire Regional Business Incubator Project (Lee-Scott-Wise, 

VA) has attracted several tenants and helped create 320 new jobs (retaining 

100) while serving 46 new and longer-term businesses. Added skills training 

was required to satisfy the requirements of many of the new jobs. The project 

has created or retained about 2% of private sector employment in the three 

county area. The project itself is located in distressed Wise County, where the 

impact is projected as more than 4% of private sector employment. 

• Mount Hope South Industrial Park (Fayette, WV): This project has had a clear 

and measurable impact. This industrial park has exceeded expectations and 

helped create 550 new jobs in the county, which calculates to approximately 

4.8% of the private sector employment total. 

Mid-Level Or Unknown Impacts: 

• Monroe County industrial Building (Monroe, MS): Although this project 

developed as more of a storage and assembly facility than the manufacturing 

plant that stakeholders had hoped for, the area nonetheless benefited from 

the creation of one hundred new jobs. The newly created jobs account for a 

little under 1% of private sector employment in the project area. 

• Monroe Industrial Park Building (Monroe, OH): This project constructed a 

manufacturing building to serve a single business startup in the industrial 

park. The project developed forty new jobs and a private investment of about 

$1.2 million, accounting for about 0.6% of the private sector employment in 

the project area. 

• Phelps/ Buskirk Sanitary Sewer System (Pike, KY): This project extended 

sanitary sewage to more than 900 homes and 177 businesses. Unfortunately, 

there were no job impacts projected, or job outcomes reported in the file or by 

stakeholders, limiting the opportunity to assess the impact of this project on 

the county’s progress. 
80

Low-Level Impacts to Date: 

• Meadow Ridge Business Park (Greene, PA): This site development effort 

resulted in no newly created jobs to-date. 

• Keystone Opportunity Zone Site Development Plans (Fayette, PA): This 

planning project has not yet been implemented and has resulted in no newly 

created jobs to-date. Another project in the same county, the Fay-Penn 

business Center Improvement, produced 78 new jobs and retained fifteen, 

affecting a small proportion of the county work force. Note that 

implementation was not part of the project investment scope in this instance. 

• Upper Kanawha Valley Technology Center (Fayette-Kanawha, WV): While 

this technology center and incubator has shown little job impact to date, 

stakeholders are optimistic that the planned National Printing Innovation 

Center will generate support and spin-off businesses that will utilize the 

Center. In the meantime, the project appears to have had little influence on 

the change in distress designation in the area. 

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

Many 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. Projects designed primarily to mitigate these sorts of 

environmental problems fell into the water-sewer category in this evaluation 

round, and are largely reviewed in that section. 

However, other projects contribute to community quality of life in less noticeable 

ways, by reducing 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, but they are worth noting: 

• Safe Harbor Transitional Housing (Floyd, KY) developed an emergency 

housing and community services facility which is now used for a very wide 

array of community services, events and celebrations. Area residents had 

previously traveled up to 30 miles to reach similar services. 

• Western MD Regional Video Switched Network (Allegany-GarrettWashington, MD): One of the tangible benefits cited to this rural 

telecommunications projects in low-income areas is reduced fuel due to less 

required travel. 
81

• Cumberland Rolling Mill Infrastructure (Allegany, MD): This successful 

commercial project has developed retail and service outlets much closer to 

lower income residents, who were previously forced to travel a significant 

distance for basic shopping and services. 

• Monroe County Industrial Building (Monroe, MS): Prior to the project, county 

residents largely had to travel considerable distances to work. The new 

development reduced their commute and drew in workers from other areas, 

increasing spending in the project area. 

• Huntsville Infrastructure/Research Park (Madison, AL): Conversely, this wildly 

successful project in a competitive county reports traffic congestion problems 

due to large-scale development and business activity, and the need for future 

projects to alleviate congestion. 
82

6. Economic Conditions in Project Areas 

Long range goals of ARC investments include the encouragement of economic 

diversity, competitiveness, self-sufficiency, and entrepreneurial vitality in areas of 

need. Thus, this evaluation attempts to measure the extent to which the local 

project areas are fostering economic diversification, economic growth vitality, and 

entrepreneurial success. 

Because it is so difficult to draw a straight line from specific projects to overall 

area vitality, these measures are included as baseline indicators of progress over 

the impact period, rather than as a direct reflection of project impacts or 

consequences. The various time periods for project start, dates, end dates and 

the necessary project maturation time frames (which in themselves vary between 

projects and classifications) also cloud any attempt to draw a causal relationship 

between projects and statistical area progress. In some cases, growth or 

diversification analyses clearly reflect high job creation resulting from an ARC 

investment (e.g., Huntsville Research Park, an earlier phase of which was 

included in an earlier evaluation round). In other cases, the vitality assessment 

may highlight the need for particular types of assistance (for example, to facilitate 

entrepreneurship, or work in a more focused way on retained firm growth). 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. 

Note: It would be misleading to interpret evaluations of individual or aggregate 

projects areas as Regional metrics, or (regardless of classifications by state or 

otherwise) as reflective of anything but the project areas themselves. 

The measures of economic conditions in projects areas were based on these 

metrics: 

• Economic Diversification: The assessment developed an economic 

diversification index at three different points in time. The index measures the 

percentage of a given sector against the area economy as a whole, and then 

compares that percentage to the same national measurement. The index was 

developed at the sector level for three economic bellwethers: business 

counts, employment and reported sales. 

• Business Scale and Growth: The evaluation measured the scale of business 

operations in each area by employment and class category at different points 

in time, and assessed whether the area mix was moving toward or away from 

US patterns which promote “normal” interaction and growth. In addition, firms 

which were operating at the start of the time series in 1998 were separately 

tracked in order to assess whether their growth patterns over the 1998-2004 
83

analysis period matched, exceeded or fell behind national patterns for 

retained firms. 

• Startup Activity: Entrepreneurial activity in each area was measured for three 

different time periods: 1998-2000; 2000-2002; and 2002-2004. In each case, 

identified startups (defined as firms reporting one year or less of operation) 

were compared to all firms in the area which reported the number of years 

they had been in business. The analysis included only area-based firms, not 

branch operations. The resulting startup rate was compared to national norms 

for each period. 

So that the diverse measures included in the economic analysis can be easily 

digested, they are presented for each project impact area in an indexed format 

that compares the project area to the corresponding US average. In each case, 

the US average equals 1.00, and the relative measure for the project area is 

above or below 1.00 in the same proportion. For example, a project area index of 

1.10 indicates that the project area is 10% above the US average; if 0.90, it is 

10% below. 

The index indicates different measures, and “high” is not always “good”. In some 

cases, the index is simply intuitive – an entrepreneurial vitality index above 1.00 

indicates that the project area startup rate is above US averages, and can 

generally be taken as a positive reflection of area vitality. In most cases, 

however, index measures used in this section (and in the corresponding project 

area-specific thumbnail reports in the appendices) simply indicate a proportion of 

firms in a sector, a sales category or an employment category that is lower or 

higher than the US concentration in the corresponding category. The meaning of 

the index in these cases is purely subjective. For example, a concentration of 

1.20 in manufacturing employment (20% above national concentrations) could be 

positive or negative, depending on the situation and development objectives of 

the individual project area. In other words, the most meaningful interpretations 

are at the local level. Broader points that can be drawn (entrepreneurial vitality 

for example) are developed in this section, but the reader is encouraged to 

review the appendices for more detail and interpretation in each project area. 

Where sales data is developed, it reflects only the reports of firms based in the 

project area. Sales attributable to branch operations are reported through 

headquarters, so branch operations based outside the project area will usually 

report local employment, but not local sales. This mechanism limits the full view 

of economic activity in an area (especially areas, such as some ARC counties, 

which significantly rely on “foreign” branch operations). Partly for this reason, 

business count and employment indices (which include all business 

establishments) are included in the diversification analyses. These different 

perspectives can also be read jointly as an indicator of reliance on operations 

based outside the project area. For example, if manufacturing employment and 
84

business count indices are significantly higher than 1.00, and the sales index is 

significantly below 1.00, it is a likely indication that branches are reporting high 

local employment levels but attributing sales elsewhere – in other words, that the 

area may be reliant on firms based outside the area. 

The employment and sales class index also display area results which are 

relative to the spread of all US firms. While this spread will normally differ 

somewhat from the average, it’s worth noting that the most important differences 

may occur at the top and bottom of the scales, which indicate if an area is overly 

reliant on very small or very large firms. Of particular interest are the “survivor” 

patterns, which indicate the seven-year growth levels of firms which were in 

operation at the start of the time series (1998) and maintained operation through 

the end (first quarter of 2005). Areas in which survivor firms actually increased 

their index concentration of very small firms may need to add focus on growth 

assistance to mature local companies, since their “survivors”, as a group, 

indicate less growth vitality than the national average. 

A set of economic analyses was developed for project impact areas: 

Growth, diversification and entrepreneurship analyses were developed using a 

variety of private sector credit reporting and other business databases for each 

project impact area, as defined by local interviewees, for the years 1998-2004. 

 

Table 6.1 Economic Analysis Series 

 

 Times Series Measurement Major 

 Indication 

Sector Concentrations 

 Business Count 1998 2002 2004 US = 1.00 diversity 

 Employment 1998 2002 2004 US = 1.00 diversity 

 Reported Sales 1998 2002 2004 US = 1.00 diversity 

 

Size Category Spread 

 Sales Class 1998 2004 * Survivors US = 1.00 vitality 

 Employment Class 1998 2004 * Survivors US = 1.00 vitality 

Startup Activity 1998-2000 2000-2002 2002-2004 US = 1.00 vitality 

 

* Businesses in operation in 1998 which maintained operations through 2004 

Because projects in the database were initiated and completed over an elevenyear period (1993-2004), and because projects have widely divergent maturity 
85

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. [I] Since 

almost all of the analyzed projects were in counties currently designated as 

distressed or transitional, 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. 

Unlike the economic vitality analysis in the previous evaluation, measures were 

developed to assess not just general growth, but to focus on strategic ARC 

objectives, including area economic diversity, the development of robust patterns 

of growth among area firms, and the incubation of a strong entrepreneurial 

culture. 

Needless to say, these are difficult objectives to measure. This effort included the 

following analysis: 

6.1 Diversification Analysis 

Tables and discussion in this section reflect measurement in 91 differentiated 

project areas in order to avoid duplication of measures in areas that sponsored 

more than one project in the sample pool. 

 

Table 6.2 Project Area Economic Concentrations Less Than 50% of US Average 

 

 Business Count Employment Reported Sales 

 1998 2004 1998 2004 1998 2004

Agriculture 21 16 30 22 19 10

Mining 34 28 39 42 57 40

Construction 5 2 10 8 5 6

Manufacturing 5 3 16 17 36 39

Transport-Commun. 1 1 22 17 59 58

Wholesale 5 2 30 20 20 16

Retail 0 0 0 1 2 3

Finance-Ins-Real Estate 2 1 54 39 60 66

Services 0 0 2 1 2 1

 
86

The diversification analysis measures business counts (firms and branches), 

employment and reported sales (of locally-based firms) in each project area for 

three different points in time: 1998, 2002 and 2004. Each snapshot was broken 

out for the nine SIC sectors and indexed against the proportion of the same 

sector in the US economy as a whole, where the US average equals 1.00. 

Tables 6.2 and 6.3 show the number of project areas that fall into relative poles 

of the diversification index of each measure. The first row of the Business Count 

index in Table 6.2, for example, shows that 21 areas reported less than 50% of 

the US concentration of agricultural sector establishments in 1998; By the 

beginning of 2005, only 16 project areas showed that level of imbalance. 

Conversely, Table 6.3 indicates that the number of project areas with more than 

150% of the US concentration of agricultural establishments increased from 17 in 

1998 to 23 by the end of 2004. Together, these suggest an increase in the 

concentration of agricultural establishments in a variety of project areas. 

The analysis suggests a number of diversification-related trends in various 

sectors. Note that aggregated project area results are reviewed in Section 5.1 of 

this report. 

Agriculture: The number of areas with a relatively heavy reliance on the 

agricultural sector (including agricultural services) is increasing. Of particular 

note, the number of area with very high sales concentrations has increased 

rapidly. The study did not develop an analysis of whether this reflects croprelated or value-added sector services with export/traded service potential, but 

this might be worth exploring. 

 

Table 6.3 Project Area Economic Concentrations More Than 150% of US Average 

 

 Business Count Employment Reported Sales 

 1998 2004 1998 2004 1998 2004

Agriculture 17 23 18 20 35 48

Mining 34 30 34 30 22 20

Construction 8 9 7 7 46 46

Manufacturing 9 7 38 29 14 7

Transport-Commun. 15 14 6 9 5 5

Wholesale 0 0 3 5 9 17

Retail 5 5 6 6 39 16

Finance-Ins-Real Estate 0 0 1 1 2 4

Services 0 0 0 0 30 37

 

Note: Detailed results for all project areas are displayed in the appendices. 
87

Mining: The number of areas with low business count and sales concentrations 

decreased, while low concentration employment areas increased slightly. High 

concentration areas remained relatively static relative to US averages. In short, it 

appears that mining-dependent areas largely remained so, while low 

concentration areas moved slightly toward US levels of activity, probably due to 

related services or cyclical activity. 

Construction: Low concentration areas decreased slightly, although there was 

an increase of one low concentration sales area. The number of high 

concentration business count and employment areas also remained relatively 

stable. The most interesting aspect of the construction analysis was the finding 

that just over one-half of all project areas (46) reported construction sales 

concentrations more than 150% of the US average. This relatively heavy reliance 

on construction sales -- coupled with the much more normalized business count 

and employment indices -- could suggest three possible phenomena. First, there 

may be relatively high levels of construction activity in a large number of project 

areas, possibly stimulated in part by the projects themselves. Second, areabased firms may be engaging in relatively high levels of “exported” sales, that is, 

branching outside their base areas. And third, since employment (including 

branch employment) levels are closer to US concentrations, but sales levels are 

developed from area-base firms only, the strength of locally owned companies in 

this sector is strongly indicated. The reasons for this continued strength over 

time, and the particulars of sector industries, are beyond the current scope, but 

would be worth further investigation. 

Manufacturing: In general, there are reductions at the extreme index poles in 

the manufacturing sector. Low business count concentration areas have 

decreased very slightly, and low employment areas (17) have remained stable. 

The number of areas with high concentrations of manufacturing business 

operations, employment and sales has all decreased, although 29 areas (32%) 

still indicate very high manufacturing employment dependency. This concern is 

compounded by the very high (and increasing) number of areas that indicate low 

manufacturing sales (43%). Since the (low) sales data emanates from locally 

based firms, and the (high) employment data includes branch operations, it is 

likely that widespread reliance on manufacturing operations controlled from 

outside each area persists. This mixed blessing makes the findings of the 

Entrepreneurial Vitality Index (below) all the more critical. 

Transport-Communications: The diversification indices indicate significant 

weaknesses in the nationally dynamic transportation and communications 

industries. While 15 project areas report high concentrations of business 

operations and a smaller but increasing number (9) report high employment 

concentrations, only five indicate correspondingly high sales indices. This 

suggests few industry magnet areas, and fewer still with a core of locally based 
88

firms. More disturbingly, while only one area reports an unusually low 

concentration of sector business operations, 64% of all project areas report sales 

concentrations that are less than 50% of the US average. This sector is clearly 

struggling and in need of attention, based on this regional sample. 

Wholesale: Wholesale reports far fewer extreme trends than most other sectors. 

A relatively large number of project areas continues to report employment and 

sales indices less than 50% of the US average (20 and 16 respectively, of the 91 

areas) but in both cases the number of low concentration areas decreased 

significantly between 1998 and 2004. Particularly high indices are concentrated 

in the sales index (17 areas or 19%, up from nine areas in 1998), indicating that 

locally based sales vitality is surpassing business count, employment and as a 

result, most likely, branch operations as well. 

Retail: Likewise, the project areas show relatively little reliance at the extremes 

in the retail sector. Very few areas report business count, employment or sales 

indices at 50% or less of the US average. A slightly higher but still modest 

number of project areas indicate extraordinarily high business count and 

employment indices in the retail sector. A larger number of areas (16) indicate 

very high retail sales concentrations, but this is remarkably down from 39 areas 

reporting more than 150% of the US sales concentration in 1998. The reasons 

behind the drop ― and whether it represents positive diversification or some less 

desirable dynamic ― is unclear. It is possible that the shift reflects larger retail 

trends toward national chains, rather than local ownership, but this is only a 

guess. Further investigation is warranted. 

Finance-Insurance-Real Estate: Along with manufacturing and transportcommunications, the FIRE sector indicates the most troubling diversification 

indices. The sector indicates very little activity at the higher concentration 

extreme in any of the three diversification measures. There is also only a single 

area that reports less than 50% of the US business count index (although 54 

report less than 80% of the US concentration). Of greatest concern, though, are 

the 43% of project areas that report sector employment concentrations less than 

50% of the US average, coupled with a whopping 73% of all project areas that 

report sales concentrations that lag by the same amount or more. At best, this 

suggests sector operations heavily reliant on outside interests. More likely, it 

demonstrates an extreme lag in sector vitality in a high proportion of regional 

counties. Notably, the number of project areas which fall into this low sales index 

category increased by 10% (six additional areas) since 1998. As is the case in 

the communications sector, future focus on development here could be critical to 

vitality and diversification efforts. 

Services: While the service sector does not indicate much activity at the 

extremes of the diversification indices, there is very high number of project areas 

(37, an increase of 23% from 1998) which report locally-based sales 

concentrations of 150% or more above the US level. While this may be a positive 
89

dynamic for local control, it could also suggest a lack of outside interest and 

investment from the more innovative segments of the sector. 

Table 6.4 displays project area sales concentrations by state which are more 

than 20% above and below US levels. More concentrated areas are shown for 

agriculture, mining and manufacturing, Appalachia’s most traditional industry 

sectors, and those in which the most concern over disproportionately heavy 

representation have been voiced in the past. (Note that the sales index does not 

reflect sales attributable to branches based outside the project area.) The table 

also displays project areas by state which report sales concentrations less than 

80% of the US level, also in selected sectors of concern: again, manufacturing, in 

addition to the more emerging growth sectors of transport-communications and 

finance-insurance-real estate. 

 

Table 6.4 Project Areas by State: Sales Concentrations of Area-Based Firms 

 

 Project Areas 2004 Sales 

 in Sample pool > 120% US Concentration < 80% US Concentration 

 Agriculture Mining Manufacture Manufacture * Trans-Comm ** F.I.R.E.

AL 8 5 0 4 3 6 6

GA 8 6 0 1 5 7 6

KY 17 8 8 0 14 14 15

MD 4 3 1 0 3 4 3

MS 9 9 0 4 3 8 7

NC 9 6 0 4 3 8 8

NY 3 2 1 1 1 3 3

OH 6 6 3 1 2 6 6

PA 8 6 2 1 6 6 8

SC 2 2 0 0 0 1 2

TN 8 5 0 3 4 4 7

VA 3 1 3 0 1 3 2

WV 6 1 3 0 6 4 5

Total 91 60 21 19 51 74 78

 

* Transportation-Communications 

** Finance-Insurance-Real Estate 

Kentucky, Mississippi, Ohio and Virginia maintain large proportions of project 

areas significantly reliant on resource-based economies (agriculture and mining). 

The characterization of resource-based economies is not meant as a criticism of 

the strength of these sectors, but rather as a signal of potential dependence on 

them relative to these areas weaknesses in higher value-added growth sectors. 

Thus, the fact that eight of 17 Kentucky project are heavily reliant on mining 

and/or agriculture is most important when coupled with the data indicating that 
90

fourteen of those same counties show weak sales concentrations in 

manufacturing and transport-communications, while 15 report sales deficiencies 

in FIRE. Unfortunately, that same correlation is apparent in other resource-reliant 

states, at least when looking at the 91-area project sample pool. 

By the same token, virtually all states suffer from relative sales weakness in the 

emerging transport-communications and FIRE sectors. Alabama, Mississippi, 

North Carolina, New York, Ohio, South Carolina and Virginia report relatively 

minor levels of weak project area manufacturing sales. But in transportcommunications, all states except South Carolina and Tennessee report more 

than 50% of their project area with lagging sales indices, and in FIRE Virginia 

reports the lowest lagging proportion of 67%. Based on the sample pool, the 

weakness in robust, area based transport-communications and FIRE sales are a 

problem in almost every state of the Region. 

6.2 Sales and Employment Class Trends 

The Sales Class and Employment Class analyses reflect the relative 

concentration of firms of various sizes in project areas relative to US norms. All 

areas are represented at virtually all scales of and employment and sales, but the 

mix and trends among classifications add detail to the picture of area vitality and 

dynamism. 

For each project area, the number of total business operations (employment 

class analysis) and firms (sales class analysis) in each category was developed. 

The percentage of these operations relative to the total was then compared to 

US concentrations in order to show the relative importance of that class of firms 

to the areas economic life. Detailed results for all project areas are displayed in 

the appendices. 

The smallest sales class analyzed was firms reporting under $200,000 annual 

sales. The largest sales class analyzed was over $100 million annual reported 

sales. Only data from locally based firms was utilized. Data from non-reporting 

firms was excluded from the sample. 

The smallest employment class utilized in the analysis was 1-4 full time 

equivalent employees. The largest class developed was 250-plus employees. 

Branch operations were included in the employment analysis. And again, data 

from non-reporting firms was excluded from the sample. 

In general, the analysis of the poles of the Employment Class and Sales Class 

indices indicates significantly higher than average (US) representation among 

both the smallest and largest business operations. 
91

The firms that we began tracking in 1998 and that were still in business in 2004 

we refer to here as “mature” or “survivor” firms. The mature firms we reviewed in 

Appalachian areas grew less than the national rate of that peer group (using 

annual reported sales as a benchmark). We also found that, in an uncomfortable 

number of cases, the proportion of mature firms in Appalachian areas which fell 

into very small sales classes actually increased over time. Moreover, we saw 

(from the separate entrepreneurial activity analysis) that many Appalachian areas 

coupled the “mature firm growth” problems with sluggish entrepreneurial activity. 

Among the smallest sales class firms, the number of project areas reporting high 

concentrations of the smallest firms, while still high at 27 areas, declined 

significantly between 1998 and the start of 2005. The number of areas reporting 

high levels of the smallest establishments by employment doubled, but the 

overall number of areas (four in 1998, eight at the end of 2004) was relatively 

low. 

 

Table 6.5 Project Areas: Business Class Concentrations 

 

 Sales (Firms) Employment (Establishments) 

 1998 2004 Survivors 1998 2004 Survivors 

Smallest Business Class 

> 110% US Average 42 27 43 4 8 26

 

> 120% US Average 8 1 19 0 0 4

 

Largest Business Class 

> 110% US Average 11 9 13 39 33 22

 

> 120% US Average 8 7 11 29 25 20

 

 

The number of areas reporting high concentrations of the largest firms by sales 

remained stable overall, with a decrease of only two project areas indicating 

more than either 110% or 120% of the US concentration. Many project areas 

reported higher concentrations of the large employment operations, but the 

number of areas qualifying in this category (more than 150% of the US 

concentration level) declined about 15% between 1998 and 2004. 

In sum, the 1998 and 2004 snapshot analyses (that is, the then-current picture) 

of both employment and sales class trends create a picture of project areas more 

dependent on very small and large firms than the US average, but moving toward 

US norms over time in both sales and employment measures. The decline in the 

number of project areas with high concentrations of large firms by employment is 
92

likely indicative of decline in branch operations, since the decline is not matched 

by the decline in high level sales firms. 

However, the analysis of sales and employment class trends among survivor 

firms tells a different story. Here the analysis deals with the same project areas, 

but the “survivor” group includes only those firms (or, in the employment class 

analysis, establishments) which were operating in 1998 and maintained 

operations throughout the time series, until at least the beginning of 2005. 

In general, survivor firms indicate lower levels of sales and employment growth 

than the “snapshot” firms, which include newer operations. In this case, the 

sample indicates increased numbers of project areas which report unusually 

small survivor firms (43 or 47%, compared to the snapshot of the same time, 

which shows only 30% of project areas with smallest sales category 

concentrations 110% over the US level). Even more disturbing, while the 

snapshot indicates only one project area with a smallest sales category index of 

more than 120% of the US average, 19 areas report that level among survivor 

firms. This means that higher proportions of mature firms in project areas have 

fallen behind relative to their peers at the national level. To the extent that it has 

not, the region would benefit from a retention analysis that enhances its 

assistance to mature area firms. The number of project areas reporting high 

concentrations of firms in the largest sales class (13) pales next to the number 

reporting high levels of retained firms in the smallest sales category (43). The 

trend is less pronounced, but consistent, where the index filter is raised to 120%. 

In the employment class index, the number of project areas reporting high 

concentrations of survivor firms in the smallest employment class has increased 

650% (from four to 26), while the project areas reporting high concentrations of 

larger firms has dropped dramatically (from 39 areas to 22). This suggests that 

the relatively sluggish performance of retained firms (when compared to their 

peers nationally) cuts across both locally based firms and branch operations. 

Table 6.6 below looks at selected small sales class index measures by state and 

highlights particular areas of concern. Just as the broader analysis identified 

survivor (retained firm) sales growth as a potential problem, the state analysis 

identified concentrated areas where survivor sales appear to lag. Georgia, 

Mississippi, North Carolina, New York and Tennessee all include unusually high 

percentages of projects areas with smallest sales survivor indices more than 

110% of the US concentration. Except for North Carolina, the same states report 

very high percentages of project areas with indices more than 120% of the 

national level. (By “high” in this sense, we mean well above the project sample 

area average, which was itself quite elevated, as discussed above.) 
93

 

Table 6.6 Project Areas by State: Sales Class Concentrations 

 

 Project Areas Sales (All Firms) Sales (Survivors) 

 in Sample pool Smallest Class > US Conc. Smallest Class > US Conc. 

 > 110% > 120% > 110% > 120%

AL 8 2 0 3 1

GA 8 6 0 6 2

KY 17 6 1 5 3

MD 4 0 0 0 0

MS 9 2 0 8 3

NC 9 2 0 5 1

NY 3 0 0 2 1

OH 6 4 0 2 1

PA 8 0 0 4 2

SC 2 0 0 1 1

TN 8 4 0 5 3

VA 3 0 0 0 0

WV 6 1 0 2 1

Total 91 27 1 43 19

 

6.3 Entrepreneurial Activity 

Entrepreneurial Activity is 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 

indexed against U.S. results where U.S. equals 100. 

Startup activity calculations are focused on area-based entrepreneurship only; 

newly developed branch operations were not included in the calculations. Firms 

identified as startups (reporting one year or less of activity) are compared to all 

firms in the area that report an age or years of business activity (approximately 

70% of all firms). 

Startup activity was measured in three different time series: 

• 1998-1999 covering the period Jan 1998 through December 1999 

• 2001-2002 covering the period Jan 2001 through December 2002 

• 2003-2004 covering the period Jan 2003 through December 2004 

For each time series, firms falling into the startup definition (reporting one year or 

less of activity) were identified in each quarter. The identified quarterly startups 

were tracked until the end of the end of the time series in which they fell (of the 

three above). Those startups that maintained operations through the end of that 

time series were then compared to the number of all firms in each project area 

for which an age could be identified. The resulting startup activity rate was then 
94

compared to the US national startup activity rate for the same period, creating 

the two decimal Entrepreneurial Activity Index for the area, which is reported for 

each project area in detail in the appendices. 

 

Table 6.7 Project Area Entrepreneurial Activity 

 

 1998-1999 2001-2002 2003-2004 

 

US Startup Rate 13.3% 11.4% 10.8% 

All Project Areas 11.3% 9.1% 8.7% 

Project Area Index 0.85 0.80 0.81 

 

> 110% US Average 11 5 8 

> 100% US Average 16 7 10 

< 100% US Average 75 84 81 

< 80% US Average 35 72 60 

< 50% US Average 3 12 15 

 

 

The top portion of Table 6.7 displays raw startup rates and percentages for both 

the US and the aggregated 91 project areas involved in the study. The third row, 

“Project Area Index” uses the two decimal index to compare the startup activity 

rate in project areas to the US. In general, there is a lag in project areas of about 

21%, dropping four points from the 1998-99 level. 

In fact, even during the period of highest relative (and absolute) startup activity, 

the vast majority of projects areas lagged behind US entrepreneurial patterns. In 

1998-99, only 16 areas reported startup rates at or above the US average, and 

that number dropped to 10 areas (only 11% of the total) by the end of 2004. 

Importantly, the average area levels were buoyed by five highly rated areas, 

including three in Georgia (Bartow, Barrow and Jackson counties) and one in 

Alabama (Madison and Jefferson counties). 

Despite the average project activity rate of 0.81, almost two-thirds of all project 

areas report entrepreneurial activity rates that are less than 80% of the US 

average. This is an improvement from the 2001-2002 time series (72 project 

areas, or 79% of the sample scored below 80% of the US rate), but significantly 

worse than 1998-99, when only 35 of the project areas (38%) were at this level. 

The number of project areas with the weakest entrepreneurial activity rates is 

also increasing. In 1998-99, only 3% of the project areas indicated startup activity 

less than 50% of the US average, but this group rose to twelve projects area in 
95

the 2001-02 time series (13%) and to fifteen project areas (16% of the sample) in 

2003-04. 

The conclusion, carried over and reinforced from the prior evaluation, is that 

entrepreneurial activity is weak and requires additional, patient focus in order to 

stimulate ongoing activity and growth. 

Obviously, the large increase in the number of project areas with deficient 

entrepreneurial activity rates translates into similar increases on a state-by-state 

basis. That increase in low-performing areas is particularly evident in Kentucky, 

Maryland, Mississippi, Ohio, Pennsylvania and West Virginia. All of those states 

reported very high increases (in the 2002-2004 time series) in the proportion of 

project areas with an Entrepreneurial Index less than 80% of the US level. All but 

Ohio also indicated high rates of increase in project areas with indices less than 

50% of the US average. Every state project area reported less than 80% of the 

national startup activity level in Maryland, Mississippi, Pennsylvania and West 

Virginia. Over half of all project areas in Kentucky, Ohio and Pennsylvania 

reported less than 80% of national level activity in both 1998-99 and 2002-04 

time series. Every project area in Pennsylvania reported below 80% in both 

analyses. Georgia and Tennessee showed slight decreases in the proportion of 

project areas reporting low entrepreneurial activity rates. 

 

Table 6.8 Project Areas by State: Entrepreneurial Activity 

 

 Project Areas 1998-1999 2002-2004 

 in Sample pool Less than US Concentration Less than US Concentration 

 < 80% < 50% < 80% < 50%

AL 8 1 0 4 1

GA 8 1 0 0 0

KY 17 8 0 14 2

MD 4 0 0 4 0

MS 9 1 0 9 3

NC 9 3 0 4 0

NY 3 1 0 1 0

OH 6 4 1 5 0

PA 8 8 2 8 6

SC 2 0 0 0 0

TN 8 4 0 3 1

VA 3 1 0 2 0

WV 6 3 0 6 2

Total 91 35 3 60 15

 

It appears likely that areas reporting both low entrepreneurship indices and 

disproportionately high concentrations of low sales firms among the more mature 

business population (survivors) should be the focus of some particular concern. 
96

(We are not concluding broad problems here, but suggesting a risk potential that 

warrants further review.) A filter was applied to indicate project areas reporting 

both a survivor sales class index of the lowest sales-level firms that is at least 

10% above US norms and startup activity indices below the project area average 

of 0.81 (19% below US levels). Twenty-seven project areas (30% of the total) fit 

both of these criteria, which together suggest difficulty in new vitality and mature 

firm growth. Interestingly, only nine are classified as distressed by the ARC while 

two are at-risk and thirteen are listed as transitional. Three others are in mixed 

designation areas, of which two include at least one distressed county. 

 

Table 6.9 Survivor Growth and Startup Concern Areas 

 

State County Survivor Low Sales US 02-04 Startup Distress Classification 

 Index >1.10 Index <0.81 

AL DeKalb 1.17 0.62 Transitional 

GA Union 1.23 0.80 Transitional 

KY Estill 1.40 0.73 Distressed 

KY Letcher 1.23 0.64 Distressed 

KY Breathitt 1.27 0.77 Distressed 

KY * 1.16 0.66 Multi w/ 1+ Distressed 

KY Bath, Rowan 1.11 0.66 Multi w/ No Distressed 

MS Tishomingo 1.20 0.77 At-Risk 

MS Monroe 1.23 0.56 At-Risk 

MS Webster 1.29 0.63 Distressed 

MS Noxubee 1.17 0.34 Distressed 

MS Winston 1.16 0.61 Distressed 

MS Kemper 1.44 0.23 Distressed 

MS ** 1.14 0.63 Multi w/ 1+ Distressed 

MS Prentiss 1.10 0.39 Transitional 

NC Surry 1.16 0.54 Transitional 

NC Alleghany 1.21 0.64 Transitional 

NC Alexander 1.17 0.76 Transitional 

NY Schuyler 1.24 0.67 Transitional 

OH Athens 1.14 0.71 Distressed 

PA Greene 1.21 0.51 Transitional 

PA Sullivan 1.15 0.36 Transitional 

PA Schuylkill 1.12 0.43 Transitional 

PA Bedford 1.25 0.43 Transitional 

TN Marion 1.18 0.48 Transitional 

WV Mingo 1.11 0.53 Distressed 

WV Hardy 1.22 0.37 Transitional 

 

* Bath, Breathitt, Carter, Clark, Clay, Elliott, Estill, Fleming, Floyd, Harlan, Jackson, Knott, Letcher, 

Lewis, Perry, Powell, Rowan 

** Chickasaw, Choctaw, Clay, Lowndes, Monroe, Noxubee, Oktibbeha, Webster, Winston 
97

Looking at Table 6.9 (previous page), it is clear that these areas of concern fall 

into certain state clusters, especially in Kentucky (5 of 17 project areas), North 

Carolina (3 of 9 project areas), Pennsylvania (4 of 8 project areas) and especially 

Mississippi (8 of 9 project areas). Other states, including Maryland, South 

Carolina and Virginia have no project areas that fit both these criteria of concern. 

It is unknown whether these (and other sub-regional) patterns apply to the 

general ARC county population. 

Notes 

-------------------------------------------------------------------------------- 

 [I] Raw data analyzed for this report is sourced from an array of the nation's private business 

databases, reporting agencies and government statistical sources. None of these raw data 

sources creates the final metrics reflected in the report. Census and other government data is 

used incidentally to inform and test projections for non-reporting firms. 
98

7. Issues and Recommendations for Program Improvement 

The core of this report is in the assessment of ARC investments relative to 

project outcomes. That investigation, including subjective discussions with 

stakeholders, also suggested a modest list of recommendations as a reflection 

on issues that arose from the evaluation of the 104 projects. These observations 

are not meant as a total assessment of the program, its priorities, or its delivery 

system. 

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 distressed and at-risk 

areas, and stimulation of entrepreneurship, 

• Identification of objectives and opportunities by local and district-level 

development entities within the Region; and 

• State priorities and fiscal constraints. 

Recognizing these overarching factors, the comments that follow are offered to 

inform the program and its investment process. 

* Measured Outcomes Indicate Reasonable Investment Strategy 

All project classifications appeared to us to fall within reasonable and accepted 

job cost parameters using the ARC share calculation method (and certainly by 

the full credit method). In general, there is a clear efficiency to utilizing projects 

that serve multiple firms, as most except industrial site project are likely to do. 

Costs associated with the development of incubators, whose primary service 

purpose is to nurture enterprises early in their formation, are undertaken with the 

understanding that the most meaningful job creation will come in later stages. For 

that reason, and because of the stark problems of entrepreneurship faced by 

large segment of the Region (below), the solid new job return on investment of 

incubators is specifically noted. 

While the telecommunications projects in the sample pool appeared to be highly 

effective and popular among stakeholders (including among those who have not 

yet applied for any) the nature of these projects call for attention to meaningful 

ways to project and measure outcomes. This is a difficult process which would 

benefit from some intensive thought. 

While the housing projects reviewed generally fulfilled their projections and, in 

several cases, triggered community revitalization beyond expectations, there are 
99

no historic guidelines to assess housing costs (as there are for job creating 

economic development efforts, for example). The ARC appears not to have 

developed any guideline in-house, either. The classification would benefit from a 

housing cost policy which addresses issues such as per unit dollar guidelines, 

and inclusion and assessment of indirect (e.g., area business) impacts. 

Projects Made Progress On Strategic Objectives 

While statistical measures are important, progress on strategic objectives which 

address the weaknesses of the Region are at least as critical to the investment 

process. As Chapter 5 suggests, projects in the sample pool had real impact on 

their host communities, often far beyond (and sometimes in different directions) 

than originally anticipated. Specific job projections aside, the effect of the project 

pool overall on a range of strategic objectives important to the Region’s future 

should not be minimized, including: 

• Economic diversification stabilizing local economic conditions; 

• Reuse of vacant or underutilized sites and consequent revitalization of 

surrounding neighborhoods; 

• Support for traditional industries that continue to be the backbone of many 

project counties; 

• Successful speculative development efforts; 

• Enhancement of local work force development; 

• Significant non-economic community revitalization impacts; 

• Tangible progress in distressed counties. 

Highly Favorable Perception of the ARC Program

The Region’s administrative approach to the Program consciously 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. Project stakeholders consistently commented on the ease of 

working with the ARC, and several noted with approval the ARC’s ability to invest 

in planning and feasibility studies necessary to subsequent projects. However, as 

discussed in more detail below, a disturbing number of project areas appeared to 

retain only partial information regarding project development or outcomes, a 

situation which will weaken the program if not remedied. 
100

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-inhand is prized among economic development professionals. Looking at the 

projected and actual impact results, investments targeted for residential and 

speculative economic development (though less convincingly in this evaluation 

round) appear to have generally paid off. 

Importantly, representatives of almost three-quarters of all projects in the sample 

pool (and 76% of all economic development projects) expressed the opinion that 

their specific projects would not have been undertaken or completed without 

ARC participation. This widespread assessment indicates a valued and 

discerning eye for critical project investments by ARC staff. 

File-Keeping Protocols Would Benefit From Attention 

Through the interview process, there were indications that project files in several 

areas had not received the preliminary or follow-up attention required to help 

ARC fully understand results of its investments. In most cases, these deficiencies 

were partial, although in several cases significant. Interviewees (who were 

identified as key regional or local project contacts) were sometimes bereft of 

information on projects or unable to locate files. 

In all, we noted information deficiencies of varying levels in 35 projects (34%), 

including: 

• 6 projects with limited or no original impact projections; 

• 13 which could not confirm key budget information; 

• 14 could not confirm the existence or volume of private investment resulting 

from the project; 

• 9 which could not confirm job impacts; and 

• Many which could not confirm wages or other job quality indicators resulting 

from the projects. 

While one state (MS) appeared to have limited information on as many as five 

projects and several were unable to respond completely for three or four, there 

was no discernible geographic pattern among areas with deficient projects. There 

were three information-deficient projects in two different LDDs, but that is not to 

say that the LDDs themselves were the responsible record-keeping entity. 
101

This is a complex situation: On the one hand, ARC is lauded by development 

professionals because it ties a minimum of administrative burden to its 

investments. On the other hand, it is clear that projection and outcome files must 

be kept if the ARC is to learn from its successes and disappointments. We 

strongly suggest that a file-keeping protocol which aligns with, and does not add 

to the requirements of, ARC’s common funding partners, be developed and 

strictly applied. 

It’s also worth noting that the 2000 evaluation round made some related findings: 

Data collection might be refined to include closeout 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. 

In the meantime, the ARC has also identified this issue and has entered into 

discussions with other basic funding agencies to address it (through the venue of 

OMB and an interagency coordinating council). In light of limited resources and 

the unlikelihood of added incentives to grant recipients in the field, the simplest 

effective solution might simply involve follow-up from the ARC at project closeout in order to ascertain impacts to date. 

Project Classification System Should Be Reviewed 

At several points in the evaluation process, it became clear that project 

classifications were often ambiguous, to the extent that the designations 

themselves should be revisited. 

Most common was the overlap between industrial site, industrial park and 

development-related water-sewer projects, which could themselves take place in 

the service of an industrial park or site (and were in some cases specific to 

them). In other situations, it was difficult to understand the decision to designate 

a project as an industrial park versus site; both appeared suitable, and the 

classifications appeared to be without apparent difference. One 

telecommunications project took place in an incubator, serving incubator clients, 

and could have been classified as either. Access road projects are, almost by 

definition, specifically related to large industrial site or park development efforts, 

and access road costs are often folded into projects that adopt those 

classifications. 

In short, the categories without a difference might be merged, and differences in 

function that most likely affects outcomes (for example, re-use projects where 

costs might be higher and job development lower, but in the service of the 

additional virtue of blight reduction) might be considered as new designations. 
102

Consider Expanding Telecommunications Investments and Focus on 

Traded Services 

As noted in Chapter 6 of the report, 64% of all project areas report 

communications sector sales concentrations (area based firms) that are less than 

50% of the US average. This sector is apparently struggling and, in view of its 

national growth numbers, provides an opportunity for ARC districts. 

While Chapter 6 also notes progress in the broad (often lower-value) services 

sector in project areas, the communications data suggest that traded services 

continue to lag significantly throughout the region, as we originally pointed out in 

the 2000 evaluation round: 

In the same (1990-2000) 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 

(the desirability of) increased attention to development of traded 

services and projects targeting their development. 

This is an important area for strategic focus; as manufacturing declines across 

the economy, value-added traded services (that is, services which are likely to 

bring in dollars from outside the area in which a company is located) become 

critical value-added generators for the local economy. And it is in these services, 

in particular, that project areas and, we project, the Region, is weak. 

In support of this notion, we found that 75% of all project areas reported sales 

concentrations of area-based Financial Services and related firms at least 20% 

below national levels. The jointly lagging communications and financial services 

industries suggest that the regional lag in traded services has, if anything, 

deepened. 

That prelude underscores the need expressed by a variety of stakeholders for 

rural broadband access and additional telecommunications investment by the 

ARC. This envisioned future project focus was at least a pervasive as 

expressions of interest regarding more traditional infrastructure needs. It is 

particularly noteworthy that in one telecommunications project area, the ARC 

investment was credited with the success of a local incubator, including the 

repatriation of a local business which had previously relocated to an urban area 

with broadband access. 

In addition, investments targeted toward area-based firms in these sectors would 

help balance local economies and strengthen the region in the country’s two 

highest growth sectors. 
103

Consider Simultaneous Telecommunications and Bricks-and-Mortar 

Investments in Single Sites 

The frequent emphasis placed by project stakeholders on the impact of 

telecommunications enhancements for businesses in rural areas suggests that 

ARC consider simultaneous investments (bricks-and-mortar and 

telecommunications) at single sites. From urban locations with routine broadband 

and cable access, it’s easy to forget the relative advantage of businesses in 

connected areas over those which are not so favored. The attraction of rural 

sites, and the added likelihood of success for businesses at those sites, is greatly 

enhanced by state-of the art telecommunication infrastructure. Investment in 

sites without that access will be increasingly hindered by the lack of high speed 

connections. On a case by case basis, ARC should consider enhancing the 

competitive advantage of its bricks and mortar investments with corollary 

telecommunications project investments as well. 

This added focus would aid in general business development efforts, but in 

particular with new traded services initiatives, due to the disproportionately heavy 

reliance of traded services firms on cutting edge connections. 

Consider Retention Growth Investments

Because we think what we have to say about the growth problems of mature 

firms could be significant, we’ve decided to briefly review that Chapter 6 

discussion here. 

Here’s what we did: We took the universe in each project area in 1998, and 

tracked those firms (and only those firms for this analysis) through 2004. We did 

the same thing for all identified firms doing business throughout the US in 1998. 

The firms that we began tracking in 1998 and that were still in business in 2004 

we refer to here as “mature” or “survivor” firms. 

Then we looked at the growth patterns of the groups of mature firms. We found 

that the mature firms in Appalachian areas we reviewed grew less than the 

national rate of that peer group (using annual reported sales as a benchmark). 

We also found that, in an uncomfortable number of cases, the proportion of 

mature firms in Appalachian areas which fell into very small sales classes 

actually increased over time. Moreover, we saw (from the separate 

entrepreneurial activity analysis) that many Appalachian areas coupled the 

“mature firm growth” problems with sluggish entrepreneurial activity. 

Here are the details: 
104

Nineteen of 70 project areas reported very small sales category survivor (mature) 

firm concentrations that were at least 120% of the US average. This means that 

higher proportions of mature firms in project areas have fallen behind relative to 

their peers at the national level. This stark concern suggests added project focus 

on retention and growth assistance to existing firms, with the awareness that 

assistance should be reviewed for viability of the candidate firms, especially 

given some of the ARC’s recent experience with traditional firm projects (e.g., 

Mountain City Sewer, Hammondsport Access Road). 

Areas reporting both low entrepreneurship indices and disproportionately high 

concentrations of low sales firms among the more mature business population 

(survivors) should be the focus of some particular concern. Twenty-seven project 

areas indicate both a survivor sales class index of the lowest sales-level firms 

that is at least 10% above US norms and startup activity indices below the 

project area average of 0.81 (19% below US levels). 

At least 30% of all project areas showed small sales survivor concentrations at 

least 110% of the US level and startup activity indices 20% below US levels. That 

finding calls for a review of concerns in such areas and the development of the 

programmatic efforts aimed at the growth of mature regional firms. 

Consider Expanding Investments in Entrepreneurship

As detailed in the Section 6 Economic Vitality Analysis, entrepreneurship lags 

extensively throughout the sample pool. This is the case in the current evaluation 

round as it was in the last. Some progress has been made in some locations, 

there are further declines in others, but the conclusion is inescapable; the 

Region’s distressed, at-risk and transitional areas appear to bear the burden of 

sluggish long-term entrepreneurial activity. 

Second -- the good news -- is that focused efforts to address this problem work. 

Incubators were among the most successful projects in this evaluation, as they 

were in the 2000 evaluation round. Incubators sustain new businesses, help 

create jobs -- and appear to retain the firms and jobs they create in the areas 

served. 

Once again, ARC dollars targeted at incubators (new and expansions) paid off. 

Once again, representatives of incubator projects expressed the need for 

ongoing operational and technical assistance. 

Additional investment with entrepreneurial targets -- incubator and technical 

assistance -- is highly recommended for consideration. 

In the 2000 evaluation round, we noted the value of follow-up technical and 

operational assistance to various projects, but especially incubators: 
105

Certain valuable projects, often in remote and distressed 

counties, are unlikely to be self-sufficient 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 self-sufficient operations. In general, this costly 

assistance would be best used for critical strategic efforts--such 

as the development of much-needed “full-service” incubators. 

While we found incubators that were on sure economic footing this time around, 

there were others that --despite strong tenancy records -- had been forced to cut 

staff and/or services. In addition to broader incubator efforts, we continue to 

believe that follow-up assistance -- whether emanated by the ARC or state 

entities -- is a critical piece of the ongoing struggle to enhance entrepreneurial 

activity and success in Appalachia. 

Other Prior Concerns 

At least three other recommendations that were noted in the earlier (2000) 

evaluation round did not surface in any of the project sample reviews this time, 

which is in itself worth noting: 

• In 2000 we noted that: 

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 have progressed from distress status as a 

whole, but retain significant distressed portions. 

ARC has since developed a “pocket of distress” policy which was implemented in 

2002. The fact that the abandonment of distressed pockets in otherwise thriving 

counties was not raised by a single stakeholder this time around is in itself an 

indicator of some success. 

• We also suggested in 2000 that “project buy-in should probably include 

commitments from non-recipient agencies (e.g., area zoning commissions) in 

a position to influence project outcomes”, largely in an effort to avoid sprawl 

consequences from projects. With the exception of traffic issues in a 

competitive county with a large and hugely successful technology park 

(Huntsville, AL), sprawl did not arise as an issue in our discussions with 

stakeholders this time. We are informed by ARC staff, however, that it 

remains a concern in areas that are close to competitive or attainment 

counties (e.g. North GA, eastern panhandle of WV). 
106

• Finally, as the result of repeated concerns expressed by stakeholders, we 

asked this question at the end of the 2000 evaluation round: 

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. 

Again, despite the border proximity of some projects, this issue arose in only one 

discussion this time -- and that was from a stakeholder eyeing commerce from 

across state lines that could be captured as a result of the project under review. 

ARC staff suggests that the pirating issue still exists, but may simply not have 

been prominent in the sample pool. We bow to the Commission’s expertise and 

experience. 
107

Appendix A: Site Visit Narratives 

Site visits were made to eight projects in six 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: 

• Ohio University Innovation Center (Athens, OH) 

• Garrett Information Enterprise Center (McHenry, MD) 

• Garrett Industrial Park - drive-by only (Accident, MD) 

• Fay-Penn Business Center Over-run (Uniontown, PA) 

• Keystone Opportunity Zones Site Development Plans (Fayette County, PA) 

• Irvine Downtown Housing (Irvine, KY)) 

• Johnson City Utility Line Relocation (Johnson City, TN) 

• Mountain Empire Regional Business Incubator (Wise, VA) 

• Morehead 801 Industrial Park Water Storage Tank (Morehead, KY) 

Individual write-ups follow. 
108

* Ohio University Innovation Center (Athens, OH) 

Situated in the midst of distressed Athens County, the Innovation is a sparkling 

center of creative economic activity in a lovely setting. The Center has supported 

over 150 jobs and two dozen new businesses. Current tenants are focused on 

several high-tech enterprises, outsourcing an estimated $500,000 annually to 

other county businesses. 

The nine current incubator enterprises include management and utility and 

environmental consultants, electronic workforce development services, cellbased diagnostics and therapeutic product development, online print 

development and distribution services, IT services and solar energy. At least four 

additional firms (computer network management, engineering software, 

electronic print design and drug discovery) reside off-site but receive substantial 

incubator services. Entrepreneurs emanate about 50% from Ohio University 

faculty, and 50% from the community. (There is better experience in retaining 

community-based entrepreneurs in the area.) 

Façade of the Ohio University Innovation Center 

There are also two longer-term anchor tenants (one a biomedical spin-off 

enterprise from university faculty) and nine firms receiving full incubator services. 

The other anchor tenant is the IT Alliance of Appalachian Ohio (ITAAO), the lead 

southeast Ohio organization for the information technology community. 
109

Now in its third physical facility, the incubator boasts a 76% graduation rate with 

a three-to-four-year maximum tenancy (outside of the anchor tenants). Due to 

expansion, one anchor tenant is currently looking for space outside the 

Innovation Center. Pressure from Innovation Center tenants has produced the 

first moves toward private commercial land development in the county in several 

years. In the past, two graduating tenants developed their own buildings in order 

to move out. The University has invested in two companies in the Innovation 

Center complex. 

Parking Lot of the Ohio University Innovation Center 

The Center Director, Linda Clark, asserts that the Center has helped diversify the 

county economy away from historic timber, government and retail dependencies, 

bringing a much higher quality of forward looking jobs to the area. For the first 

time, the Center has allowed Athens to host national businesses, including 

FamilyWorks software and Diagnostic Hybrids, both of which have been served 

by the Center in different capacities. 

The Center also helped attract venture capital, which was absent from the region, 

and reduced the level of regional parochialism by creating an informal working 

partnership between the university, the county, the city and the Chamber to find, 

service, graduate and relocate new businesses. 

The Center has experienced staff cuts, but is largely self-sufficient. Some staff 

work is supplied by students (who also work with selected firms). The IT Alliance 
110

manages an internship program, reimbursing technology companies up to three 

thousand dollars for intern costs. 

Physically, the Innovation Center is a well designed, inviting facility, beautifully lit 

with much natural light and warm wooden panels. The building also benefits from 

solar efficiency, and social exchange between tenant companies and employees 

seems friendly and natural in the soaring entry foyer and common kitchen and 

conference areas. 
111

* Garrett Information Enterprise Center (McHenry, MD) 

Like the university area in Athens, the town of McHenry appears more vital and 

upscale than the rest of Garrett County. Situated at one end of Garrett College, 

up the hill from a built-up but tidy and attractive recreational waterfront and 

downhill from the overlooking ski area, the Garrett Information Enterprise Center 

(GIEC) is a nicely proportioned low building with thirteen current incubator 

tenants. ARC investment helped create the GIEC as a regional 

telecommunications powerhouse, with what is one of the few T-1 lines in the 

area. 

Entryway to the Garret Information Enterprise Center 

Part-time Director Lydia Reiser is clear that the T-1 line is the reason for the 

success of the GIEC, and the most critical locational factor for its tenants. In fact, 

Reiser tells of one tenant (an international insurance reseller software developer) 

who left the incubator for Frederick MD due to the lack of a high-speed 

connection, only to return after installation of the T-1 line. 

The thirteen tenants are an eclectic but technology-driven bunch, from the local 

publications to the offices of an electronically -modulated whitewater sports 

center, marketing firms, business supply services, utility consultants, graphic 

design and IT. The mix of service companies at GIEC has increased the diversity 

of the area economy and complemented development efforts by other 

organizations geared toward industrial land development. It has also served to 
112

create an additional value-added economic leg that lessens the county’s reliance 

on lower-paying tourism jobs. 

High Speed Connection Center - Garret Information Enterprise Center 

The GIEC is “almost self-sufficient” but struggling with one part-time staff person. 

The incubator no longer provides consulting and planning advice, but offers a full 

complement of physical services (including the T-1 line, janitorial, copying, 

common conference and eating areas) in a beautiful setting for under $11/sq. ft. 

(Suites are available from 300-1250 sq. ft.) Due to financial constraints, the GIEC 

does not stipulate a maximum tenancy period. The director pointed out that a 

large growth challenge for incubator tenants is workforce development, including 

training of technologically adept employees. The GIEC relationship to Garrett 

College is invaluable in this regard and continues to develop. 

The GIEC has clearly had marked success in a somewhat limited environment. 

The more significant access to academic staff, spin-off and resultant technology 

entrepreneurship at the Ohio University facility is obvious. But within those builtin constraints, the GIEC incubator is doing a job that needs to be done. 

The bottom line advantage for the emerging businesses at the GIEC is the 

unique T-1 line asset, for which ARC provided the only federal investment. 
113

Central Garrett Industrial Park Overview 

Although it was not developed as a formal site visit, a stop at the Central Garret 

Industrial Park up the road in Accident, MD suggested progress on the industrial 

front as well. 

Central Garrett Industrial Park - Phenix Technologies Entry
114

The park includes three anchor tenants, including a large machine shop, a 

container systems manufacturer and an international manufacturer of electric 

motor test, insulation test, high current, voltage, iron core loss and other test 

equipment. ARC’s substantial investment in site development projects here is 

clearly part of the current progress and future anticipated growth on the site. 

Central Garrett Industrial Park - Marketable Lot

The park’s largest tenant has moved from a building which is currently being 

marketed to as larger, modern site across the road. The ARC investment in 

additional lot development offers the park a menu of options to market to firms 

seeking a location an easy drive from both east-west and north-south interstate 

connections. 
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* Fay-Penn Business Center Over-run (Uniontown, PA) 

One of the remarkable things about the site visit undertaken in Fayette County 

has little to do with the actual projects at hand. Uniontown itself, the county seat, 

has undergone an astonishing transformation in the past few years, in part under 

the sponsorship of the Fay-Penn Economic Development Council, the recipient 

organization of ARC investments in both a local multi-tenant building and a 

separate site planning grant within the project pool. From a prior state which 

could be characterized as depressed and bedraggled, downtown Uniontown now 

sparkles with a beautifully restored theatre, refurbished office buildings, new 

retail outlets and a wonderful little plaza perfect for reading or napping on a warm 

day. (The visiting consultant was pleasantly astonished at the transformation.) 

In this round, ARC investments were given over to less glamorous but critical 

nuts and bolts projects that may cement the county’s progress, which is already 

evidenced in its elevation from pre-project distressed to current at-risk status. 

Fay-Penn Business Center Frontage

The Fay-Penn Business Center Improvement Over-run project (a multi-tenant 

building misclassified in ARC files as an incubator) sits on state route 119 across 

from the local Penn State University campus. The east side of the strip is home 

to the Center and a variety of other large and small industrial properties, most 

busily engaged in various manufacturing processes. 
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The Business Center currently supports four tenants and 93 industrial jobs, 78 of 

them directly resulting from the ARC investment in rehabilitating this former 

plastics molding facility purchased at sheriff’s sale. In addition to clearing out old 

utility infrastructure and cleaning, the project improved interior areas badly 

damaged by water leakage and installed new metal roofing throughout. 

Manufacturing space was improved and parking areas resurfaced. The 

impression of the facility is of a newer, clean and efficient space being 

productively used. 

Fay-Penn Business Center Working Rear

Although weather and topography prevented an actual survey of sites in their 

initial implementation stages, Fay-Penn representatives also reported on 

progress stemming from an ARC investment in development plans for three 

different industrial sites in the county: the Springhill site near route 119 North in 

North Union Township (a former strip mining operation two miles from the PA 

Turnpike and five from I-68); the Keystone Opportunity Zone Brownfield site near 

route 199 and the Mon-Fayette expressway with on-site rail access; and the 

Lamont Furnace site near 199 and SR 40, also with existing rail access. All three 

sites are along the Pittsburgh-Charleston, WV corridor and well positioned to 

take advantage of markets and industrial activity in the tri-state (PA-WV-MD) 

region. The Lamont Furnace site has, even at this early stage of development, 

attracted “significant heavy industry interest” according to Fay-Penn 

representatives during review of the site plans. 
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* Johnson City Utility Line Relocation (Johnson City, TN) 

The Johnson City Utility Line Relocation project is a good example of how the 

numbers don’t always tell the whole story. The project (a utility line relocation) 

reads like a solid expansion assistance investment with good return numbers 

(250 new jobs). But the site visit revealed a model of agency and private sector 

cooperation and a much larger impact than the file report indicated. 

The project invested in infrastructure that permitted the expansion of American 

Water Heater, Johnson City’s largest manufacturer, to expand its existing in-town 

facility. 150,000 square feet of industrial space was added the existing 350,000 

sq. foot plant, helping to increase local production from 5100 to 8300 units per 

day, and is currently rated as the most efficient jot water heater plant in the world. 

Since then, the company has continued to purchase adjacent, abandoned 

industrial property (11 acres) and plans yet another expansion. Yet another 

abandoned industrial building (a former Burlington factory) has been purchased 

and converted to warehouse use by the company. 

American Water Heater- Johnson City

However, expansion only tells part of the story. As an American Water Heater 

representative said emphatically at the site visit, “the project actually kept the 

company in Johnson City”. Without the expansion, which was critical for 

company efficiency, the company would have relocated outside the city, 

impacting the 850 workers employed before the expansion. Neither the impacts 
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in the report narrative nor any file material indicate these 850 retained jobs. The 

company utilizes a base of about fifty local suppliers for goods and services and 

has worked regularly with the North East TN training board to assure workforce 

development. (The company designates skills and designs the programs, which 

are then delivered by the non-profit agency.) 

In addition, the project overcame significant concerns to expand the plant and 

maintain positive working relationships with the surrounding community. The 

expansion design could only be accomplished by closing one of the major streets 

in the neighborhood, which itself engendered significant change for the 

community. Traditional concerns regarding property values near an industrial 

facility were also voiced, both publicly and privately, despite the motivation of 

retained and expanded manufacturing jobs. (Sixty-seven per cent of the 

company’s workforce comes from the home county, Washington.) 

Recreational Improvements- Johnson City

At the end of the day, the concerns were overcome. The city and company 

invested time and money to assure a well-masked site and a series of traffic 

improvements (including a series of speed bumps and the area’s first traffic 

roundabouts) that have actually improved the neighborhood. City and 

development officials indicate that the area housing stock has improved since the 

project and, in fact, mere steps away the neighborhood appears serene and quite 

middle class. The company runs 24-hour security around the plant and through 

the neighborhood, enhancing residential security as well. There is no apparent 
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noise from the manufacturing site, which is set back and well screened from the 

street. Truck traffic is carefully routed, and a new recreational area, including a 

softball field, playground and picnic pavilion, has been carved out. Wherever 

possible (as at an abandoned school’s parking lot) older, unused properties have 

been incorporated into the contiguous industrial facility. In all, the project extends 

for nine city blocks, with warehouse space covering the area of the closed former 

street. 

Expansion Neighborhood Screening- Johnson City

Today, American Water Heater is the only one of the three major manufacturers 

in its field without a manufacturing facility in Mexico. 
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* Mountain Empire Regional Business Incubator (Wise, VA) 

The Mountain Empire Regional Business Incubator (serving Lee, Scott and Wise 

counties in VA) is a large, low building originally constructed as a locally-owned 

discount goods store - “like a mom and pop Sam’s Club” which was vacant for 

ten years before the incubator was developed, according to a local development 

official involved in the process. The incubator has experienced several ups-anddowns, and is currently anchored by both a call center with a noticeably young 

employee pool, and a sheltered workshop which pays rent and provides 

maintenance services for the entire building. The ARC investment is critical to 

maintaining the operational balance of the incubator, which is valuable but 

precarious. A second, smaller satellite has recently opened in downtown Norton, 

which boasts two new tenants. 

Pioneer Center Facade

Because of the remaining 3000 sq. feet of spaced in the building, tenure policies 

are more flexible than in most incubators. The area SBDC director is also the 

incubator manager, assuring the availability of tenant business counseling 

services. 

The incubator is nicely put-together, but without the high-level design of the Ohio 

University Innovation Center in Ohio or even the Maryland’s Garret Enterprise 

Center Athens Ohio. The difference can also be felt in the tenant core, which is 

less high-tech and heavily populated with non-profit organizations which provide 
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much needed services, but whose essence is not, at heart, entrepreneurial. This 

is not really a criticism of the MERBI, but a perhaps only a comment on the 

struggle of rural incubators which are not graced with on-site college or university 

connections. 

Pioneer Center Lobby

Nevertheless, the incubator has several interesting tenants, including repatriated 

entrepreneurs who had left the area for larger environs, and a developer of child 

filter software who had moved into the facility because of its high-speed 

connections (and then outgrew them and installed its own T-1 line). The same 

entrepreneur has since branched out (in the incubator) and established a second 

entity into the field of fiber optic installation. At least one other incubator tenant 

(who refurbishes and sells vintage arcade games and parts) has also used the 

incubator as a base for addition lines of business (in this case, rehabilitating old 

movie theaters in the areas, with current plans for a new multiplex as well). 

Economic development officials fully understand the frustrations of breathing life 

into incubators in these situations, but the value is clear to them, both from the 

local services provided by tenants and the less frequent but real breakthrough 

tenants who bring new dollars into struggling areas such as Wise, Lee and Scott 

counties. 
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* Morehead 801 Industrial Park Water Storage Tank (Morehead, KY) 

The Morehead (KY) 801 Industrial Park may be the only site around with a rustic 

but beautifully updated log cabin office on a pastoral pond, acres of 

(disappearing) rolling pasture land and hundreds of high-level manufacturing 

jobs. The park’s home in Rowan County, Kentucky has progressed from 

distressed to transitional status and, from the activity around the park, through 

Morehead’s commercial district and from the discussion with the local 

development chief, the trajectory seems to be continuing upward. 

Morehead 801 Industrial Park Water Tank

From the road, the industrial park’s most notable feature and landmark is an 

enormous water tower, the object of ARC investment in this project from the 

sample pool. The tank’s 400,000 gallon capacity fueled the growth of a 450-

employee Family Dollar distribution complex which “wouldn’t be here without it” 

according to local stakeholders. The tank also serves the nearby Ellington 

industrial complex, which is in the process of selling 10 of its 65 acres. On the far 

side of the Ellington complex, implementation is about to begin on the 

construction of a regional airport serving private and charter flights. A near-term 

Announcement of a Wal-Mart Supercenter, will likely be made before this report 

is published. 
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The capabilities of the park provide a buffer against downturns beyond local 

control. The sudden and unexpected closure of a large, absentee-owned apparel 

manufacturer (with less than 24-hours notice) surprised even the local plant 

manager. But months later, the Morehead-Rowan County EDC is about to close 

a deal to give new life to the plant, converting it into a multi-tenant building which 

will start by housing multiple businesses owned by the same local entrepreneur. 

Morehead 801 Industrial Park 

Although utilizing the remainder of the space as an incubator has some appeal, 

the EDC is considering the development of a new incubator building, a prospect 

that will be given a potential boost with the inauguration of a Morehead State 

University robotics and industrial education program within the industrial park, as 

well as a 35-acre campus of the Community Technical College (planned for 

2008), doubling the size of the college’s current downtown facility. In addition to 

existing high-speed connections at the park, the EDC is about to sell two acres to 

a new company that will provide high-speed wireless setups to park tenants and 

the community at large. 
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Morehead 801 Industrial Park Log Cabin Office

The unique lay-out of the industrial park make it the perfect site for the 

impressive combination of local entrepreneurship (like the expanding machine 

shop), large scale manufacturing, technology services, education, workforce 

development and economic development administration, a potential which 

appeared on the site visit to be handled admirably by local development efforts. 
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* Irvine Downtown Housing (Irvine, KY)) 

All evidence is gone of the gas explosion which ripped off the backside of several 

downtown buildings in Irvine, KY. In its place, Irvine boasts the Renaissance 

Apartments, a complex of fully occupied 30 independent living units for lowincome elderly. Most of the residents are from Irvine itself, and, with rents of 

$303 (and actual payments after subsidies in the $120-$130 range) in a place 

that they can stay for the rest of their lives. 

Renaissance Apartments Facade

The façade of the apartment complex is graciously designed, and a set of older 

men sits on the front patio, conversing the early autumn sun. It’s a far cry from 

the “before” photos hanging on the wall of the bright, comfortable lobby. In them, 

the back of the building is completely exposed, with debris and possessions 

strewn about, looking exactly like what it was -- the aftermath of a destructive 

explosion that destroyed all but the shell of the (now connected) buildings. 
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The struggling downtown area around the apartments has received a significant 

boost from the complex and the ARC investment in it - new gift, framing, arts and 

crafts shops and a luncheonette have opened, benefiting from not only the 

resident shopping but visiting families out for a stroll on the main street and into 

the shops. The area’s community development director estimates incremental 

spending impacts at $600,000. 

The units themselves are small but comfortable, with stylish restored brick 

accents, providing well for the needs of the single, almost all elderly residents. 

While the living is independent, the staff at the complex works closely with health 

care providers to coordinate services and notify providers when they are needed. 

Renaissance Apartments - Typical Unit

As staff members noted throughout our tour and interview process, some of the 

current residents were brought in from cars serving as homes, and one moved 

into the facility from a make-shift shelter “under the bridge” into town. As one of 

only two elderly housing complexes in the entire county, the need was obvious, 

and so are the results. 
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Appendix B: Methodology: Project Selection 

The 104 projects analyzed for this report were selected from files representing 

394 closed projects with ARC investments in the Infrastructure and Public Works 

Program between 2000 and 2006. 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 an 

array of projects in twenty-four different categories: 

For the purposes of this evaluation, especially given the limited number of 

projects which would be evaluated, these aggregated into fifteen categories, of 

which seven were used in the actual selection process, with a focus on economic 

development-related categories and the new housing and telecommunications 

classifications. These seven classifications were selected for the types of 

outcomes suggested by their classifications, as well as a desire on ARC’s part to 

include new project areas like housing and telecommunications in the investment 

evaluation process. The number of projects in a classification also played a part, 

since any category with too few projects could not be subjected to a reasonable 

scale of evaluation. 

 

Table B.1 Closed ARC Projects- Selection Pool 

 

Project Classification Closed Projects

Access Road ** 5

Business Incubator ** 7

Community Facility 9

Downtown Revitalization 7

Energy 1

Environmental-Solid Waste 2

Flood Related 5

Gas Line 7

Housing Development ** 32

Industrial Park Development ** 35

Industrial Site Development 25

Technical Assistance 9

Telecommunications ** 15

Telemedicine 1

Water-Sewer ** 234

Total 394

 ** utilized for project pool evaluations
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It was determined early on to avoid a strict final selection of projects by their 

proportion in the closed project universe; otherwise, the evaluation would be 

almost completely dominated by water-sewer projects (two -thirds of the 

narrowed project total). The original number of water-sewer projects was pared 

down to focus on economic-development-related projects (32 of them, 

eventually) 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 posed difficult evaluation problems and increased the 

complexity and cost of the research (e.g., solid waste projects and public safety). 

We also excluded the odds and ends (such as technical planning grants and a 

gas line). In the end, the seven aggregated and selected categories 

encompassed 353 projects, from which the final sample pool of 104 was 

selected. 

Since it was considered by both ARC and the consultant team to review enough 

projects in conceptually important categories to evaluate the category as well as 

individual projects, higher proportions were identified for a number of economic 

development classifications and telecommunications (some of which had 

important economic development impacts as well). The percentage of housing 

projects eventually selected was less than the category’s proportion in the closed 

project pool, but this was considered a balance between the desire to evaluate 

this new project classification against the geographical concentration and noneconomic development focus of all of the projects in it. 

The process of narrowing the group of 353 projects to the target of 100 projects 

(eventually 104) included the following steps: 

* To the extent possible, water and sewer projects that envisioned economic 

development impacts received priority. Thirty-two of the fifty-one water and sewer 

projects evaluated projected economic development outcomes. 

* Attempts were made to ensure enough representation from all project 

classifications to ensure a robust assessment of each type. 

Of the total of 104 projects analyzed, 77 reflected objectives and outcomes 

directly related to economic development, while the remainder were residential 

water-sewer, housing or telecommunications projects that related to quality-of-life 

objectives. Thirty-two 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 104 utilized projects were distributed in 

these classifications: 

* 51 water-sewer projects 
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* 21 industrial parks 

* 12 Industrial sites 

* 5 business incubators 

* 3 access roads 

* 8 telecommunications 

* 4 housing 

* Efforts were made to ensure geographical representation from all states in the 

ARC Region. This resulted in the following distribution: 

* Alabama: 9 

* Georgia: 8 

* Kentucky: 19 

* Maryland: 6 

* Mississippi: 9 

* North Carolina: 9 

* New York: 5 

* Ohio: 7 

* South Carolina: 2 

* Tennessee: 11 

* Virginia: 3 

* West Virginia: 6 

While the high number of Kentucky projects included is due to a variety of 

factors, including project mix and distress designations, it should be noted that 

Kentucky also sponsored all 34 of the housing projects in the original pool, and 

that as all four housing projects selected for review were naturally also Kentucky 

projects, weighting the sample. 

* Efforts were made to assure representative distribution among rural and 

metropolitan areas. In the final sample pool, 74% of all projects were located in 

either rural or mixed metro-rural areas, while in the region overall, the percentage 

of rural counties is 73%. 

* Efforts were made to assure representative distribution among distressed 

counties. Distress selection is discussed separately in Appendix E. 

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 many. Each of the counties in which projects were 
130

developed was subjected to a variety of economic trend, vitality, and impact 

measurements. 

More detailed information on project selection and categories is available in 

Section 2 of the report. 
131

Appendix C. Methodology: Impact Analysis 

This study documents how individual and entire sets of projects supported by 

ARC affected local economic activity, including changes in local land 

development, private investment, mix of business and jobs, and levels of taxes. 

The analysis was accomplished by reviewing project data collected on-site by 

ARC at the time of application and the time of project closeout and case study 

interviews (covering local private sector and public sector participants and 

observers), together with available local documents and economic data. The 

objectives of this analysis are to provide insight into the causal effects of projects, 

and to determine how project implementation actually interacted with other local 

economic activities and economic development efforts to affect local 

communities. 

The analysis is most useful for evaluating program performance and identifying 

how it might be improved in the future. It reports actual observed results, as 

opposed to estimating how local economies might have changed under 

hypothetical situations. 

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 direct 

consequences of the public investment, project, or program. Direct economic 

effects are 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 start-ups there. 

* Indirect economic effects are the broader effects on business activity for off-site 

suppliers to the directly affected businesses. Indirect economic effects 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 that are a consequence of the 

change in workers and payroll of directly and indirectly affected businesses. 

“Direct effects” are measured through monitoring program outcomes and through 

local site interviews. The “indirect” and “induced” business impacts are often 

referred to as “multiplier effects.” These multiplier effects are established through 

interviews of observed impacts and are also estimated through input-output (I-O) 

economic models that are calibrated for each local county. I-O models 
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incorporate inter-industry purchase and sales patterns (reflecting prevailing 

industry structures and technologies) and estimates of the extent to which local 

suppliers provide various products and services. As such, impacts calculated 

from models tend to be higher in counties that have stronger economies and are 

populated with local establishments capable of supplying other businesses and 

meeting local consumer demand. For projects in counties with poorly developed 

economies, more business-to-business sales and consumer spending “leak” out 

of local areas than for counties with more strongly developed economies. 

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 inputoutput 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”). IMPLAN is enhanced over most other input-output 

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 509 industries and is based on categories of the BEA that correspond to 

four to six-digit groups in the North American Industrial Classification System 

(NAICS). 

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 NAICS groups based on information from interviews with local public and 

private sector representatives. The IMPLAN model was then calibrated for each 

county and run given the direct effects on specific NAICS groups in each of those 

counties. For multi-county projects, multi-county models were constructed. The 

result was an estimate of the indirect and induced (and overall) job and income 

impacts for each project on its own local county. 

ARC owned IMPLAN models for each of the 410 Appalachian counties based on 

the 2000 economy. After discussions between the Project Team and 
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Commission staff, it was decided not to incur the expense of purchasing a new 

set of county models. Instead, county-specific multipliers were adjusted based on 

changes in county economies between the years 2000 and 2004, using the 

following techniques: 

1. Construct county specific 1-digit multipliers from 2000 IMPLAN data set in 

hand (employment, wages and sales [output] for manufacturing, 

Transportation, Construction and Utilities; Services or Trade, depending 

on the project). 

2. Using U.S. County Business Patterns, establish location quotients for the 

years 2000 and 2004 (most recent available) of county to state for 

applicable sectors. 

a. Calculate percent of sector employment in county in each year; 

b. Calculate percent of sector employment in state in each year; and 

c. Divide county percent by state percent in each year, for a Location 

Quotient (LQ). 

3. Divide the LQ 2004 by the LQ 2000 to calculate the change in Location 

Quotient between 2000 and 2004. 

4. Multiply the factor calculated in Step 3 (above) by the 2000 multiplier (see 

Step 1) to approximate an updated multiplier. 

Below, this approach is illustrated using the example of an Industrial Park 

project in Bartow County, Georgia. 

Step 1 Identify County, State, Project and Appropriate Multiplier (indirect plus induced effects) 

State: Georgia 

County: Bartow 

Project Bartow County Industrial Park 

Bartow County 2000 MFG Multiplier for 

Employment Derived from IMPLAN 2.33 

Step 2 Calculate County’s Share of Appropriate Economic Sector in State Economies, 2000 and 

2004. 

Years 2000 2004 Source 

Georgia MFG Employment 518,063 432,512 County Business Patterns 

Georgia Total Employment 3,483,500 3,452,451 County Business Patterns 

Percent Manufacturing 14.87% 12.53% 

 

Bartow County MFG Employment 9174 8336 County Business Patterns 

Bartow County Total Employment 26550 28216 County Business Patterns 

Percent Manufacturing 34.55% 29.54%
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Steps 3 & 4 Calculate Location Quotients within State for Appropriate Sectors for Counties 

in 2000 and 2004 and Calculate the Change in the LQ’s. Apply the Change to the Appropriate 

2000 Multiplier from Step 1. 

MFG Location Quotient Bartow/Georgia 2.32 2.36 

Change in L/Q,2000-2004 (LQ 2004/LQ2000) 1.015 

Estimated updated MFG employment multiplier (2000 MFG 

Multiplier x change in L/Q) 

2.36 

This methodology was used for every project with the exception of two that 

involved federal prison jobs. These projects were in Martin County and McCreary 

County in Kentucky. As County Business Patterns data does not track for 

government jobs, BEA data were used for these projects to find the amount of 

employment. However, when applying the multiplier and location quotient 

change, the multipliers were way too high to be credible because the scale of job 

increase created an abnormally large LQ change. Therefore, the project team 

used the most recent county level IMPLAN data in its procession for Appalachian 

states where there are federal prisons to develop county multiplier effects 

created by these two projects. 

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 information was 

compared with the BEA data on total personal income by state; 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). 
135

* 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; ratios were calculated indicating the relationship 

between total state sales tax revenues and total state personal income. These 

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 if 

applicable) on the germane 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 tax-revenue figure took precedence over the estimate. 

No estimates were made of the impact on corporate taxes due to 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 payback from 

public investments. Such an approach is not appropriate here, for the following 

reasons: 

* Purpose. A basic purpose of the ARC programs has been to address an issue 

of inter-regional “equity” in terms of economic opportunities and living conditions 

among parts of the United States, not just to maximize “efficiency” in terms of 

national return on investment. 

* Benefits. The projects funded by these programs are intended to represent not 

only 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 
136

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 quality-of-life improvements) which may continue for 

many years. Since all of the projects studied here were completed within recent 

years, only current annual impacts are 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 viewed as providing useful insight for improving program 

design and application in the future. It 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 assuming 

benefits not yet in place due to project delays or other obstacles. 

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. 
137

Appendix D: Methodology, Economic Vitality Analysis 

Each segment of the economic vitality analysis was developed through a 

longitudinal analysis with the use of up to 28 different private sector creditreporting 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 - a “snapshot” taken at 

multiple points in time, as reflected in the Impact Area Diversification trends 

section of the project area thumbnail reports. These and other snapshots 

represent an important element of economic vitality analysis, but do not offer any 

way of understanding the experience of individual firms or groups of firms—how 

many survive, die, grow, or decline. 

Longitudinal analysis fills this critical gap. The Sales Class Spread and 

Employment Class Spread methodology takes “snapshots” of the economy 

nationally and within each local project impact area for 1998 and 2004, then 

breaks out firms by sales class and establishments by employment class. Nonreporting firms are discarded. (This includes 4.2% of all establishments that do 

not report employment and 2.5% of all firms that do not report sales.) The 1998 

sub-group is tracked over time to identify the changes in size class composition 

over time of the survivor members of the group. The result is the longitudinal 

“survivor” data in both the Sales Class Spread and Employment Class Spread 

data. 

Entrepreneurial Activity, as measured by start-up rates across the United States 

and in each project area. Unduplicated firms reporting one year or less of 

operation were summed through the databases in two years increments. 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. This allowed a consistent startup 

activity benchmark, discarding data from unknown firms and comparing rates of 

startup activity in different periods. To reiterate, the two decimal index does not

compare the startup rates of a given area at two different points in time, but 

rather, the US and local startups rates over the same time series. (The startup 

rates of a given area at two different points in time can also be reviewed on a 

percentage basis in the original data sheets, however.) 

The national databases used for comparison is composed of information on over 

25 million business establishments. So that the diverse measures included in the 

economic analysis can be easily digested, they are presented for each project 

impact area in an indexed format that compares the project area to the 

corresponding US average. In each case, the US average equals 1.00, and the 

relative measure for the project area is above or below 1.00 in the same 
138

proportion. For example, a project area index of 1.10 indicates that the project 

area is 10% above the US average; if 0.90, it is 10% below. 

The index indicates different measures, and “high” is not always “good”. In some 

cases, the index is simply intuitive – an entrepreneurial vitality index above 1.00 

indicates that the project area startup rate is above US averages, and can 

generally be taken as a positive reflection of area vitality. In most cases, 

however, index measures used in this section (and in the corresponding project 

area-specific thumbnail reports in the appendices) simply indicate a proportion of 

firms in a sector, a sales category or an employment category that is lower or 

higher than the US concentration in the corresponding category. The meaning of 

the index in these cases is purely subjective. For example, a concentration of 

1.20 in manufacturing employment (20% above national concentrations) could be 

positive or negative, depending on the situation and development objectives of 

the individual project area. In other words, the most meaningful interpretations 

are at the local level. Broader points that can be drawn (entrepreneurial vitality 

for example) are developed in this section, but the reader is encouraged to 

review the appendices for more detail and interpretation in each project area. 

Where sales data is developed, it reflects only the reports of firms based in the 

project area. Sales attributable to branch operations are reported through 

headquarters, so branch operations based outside the project area will usually 

report local employment, but not local sales. This mechanism limits the full view 

of economic activity in an area (especially areas, such as some ARC counties, 

which significantly rely on “foreign” branch operations). Partly for this reason, 

business count and employment indices (which include all business 

establishments) are included in the diversification analyses. These different 

perspectives can also be read jointly as an indicator of reliance on operations 

based outside the project area. For example, if manufacturing employment and 

business count indices are significantly higher than 1.00, and the sales index is 

significantly below 1.00, it is a likely indication that branches are reporting high 

local employment levels but attributing sales elsewhere – in other words, that the 

area may be overly reliant on firms based outside the area. 

The employment and sales class index also display area results which are 

relative to the spread of all US firms. While this spread will normally differ 

somewhat from the average, it’s worth noting that the most important differences 

may occur at the top and bottom of the scales, which indicate if an area is overly 

reliant on very small or very large firms. Of particular interest are the “survivor” 

patterns, which indicate the seven-year growth levels of firms which were in 

operation at the start of the time series (1998) and maintained operation through 

the end (first quarter of 2005). Areas in which survivor firms actually increased 

their index concentration of very small firms may need to add focus on growth 

assistance to mature local companies, since their “survivors”, as a group, 

indicate less growth vitality than the national average. 
139

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 407 counties in the Appalachian Region, with each county assigned 

to one of five economic categories: distressed, at-risk 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 greater matching funds 

requirements rising for at-risk, transitional and competitive counties, 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 the 407 counties. Base year designations (FY2002) were compared 

with current year (FY2006). 

Of the 410 counties in Appalachia as of 2002, 122 (30 percent) were distressed, 

258 (63 percent) transitional, 18 (4 percent) competitive, and 12 (3 percent) 

attainment. By 2006, three counties that were designated as ARC counties in 

2002 were excluded from the regional designation. Of the 407 counties defined in 

the Region in 2006, distress designations had decreased as a percentage of the 

whole, largely due to the creation of a new, fifth at-risk category that lay between 

distressed and transitional. As a result, the number of transitional counties 

diminished by 38, while the number of distressed counties was reduced by 45. 

An almost corresponding number of counties (83) fell into the new at-risk 

classification. 

By contrast, among the 104 project impact areas, 44 (42 percent) were 

distressed or included distressed counties in 2002, and 52 (50 percent) were 

transitional. Five were competitive, and none were in the attainment category. In 

other words, the concentration of distress was significantly higher in project 

counties than in non-project areas. There were lower percentages of transitional 

counties than in the Region overall. 

By FY2006, the distress concentration among project areas had dropped to 33%, 

compared to 19% of all ARC counties. Both projects are and Regional distress 

concentrations had lowered considerably, although project area progress still 

lagged behind the larger region. 

Among the projects in the sample pool, four were in multi-county areas that 

progressed from including at least one distressed county to no distressed 
140

counties. Eleven were in areas that moved up from distressed county status to 

at-risk status; and three from distressed to transitional status. That is, 17 of 45 

projects which began in distressed counties (38%) moved to a higher status by 

2006. 

 

Table E.1 ARC Counties and Sample Pool Area Distress Classifications 

 

 Appalachian Region Project Pool 

 2002 2006 2002 2006

Attainment 12 8 0 1

Competitive 18 21 5 3

Transitional 258 220 52 46

At-Risk 81 18

Distressed 122 77 36 26

Multi Cty. 1+ Distress 8 4

Multi Cty. No Distress 3 6

Total 410 407 104 104

 

 Appalachian Region Project Pool 

 2002 2006 2002 2006

Attainment 3% 2% 0% 1%

Competitive 4% 5% 5% 3%

Transitional 63% 54% 50% 44%

At-Risk 20% 17%

Distressed 30% 19% 35% 25%

Multi Cty. 1+ Distress 8% 4%

Multi Cty. No Distress 3% 6%

Total 100% 100% 100% 100%

 

A separate analysis traced the progress of the most distressed ARC counties in 

both the non-project and project groups. Of the 122 ARC counties that were in 

the distressed category in 2002, 11 (9 percent) moved up to the transitional 

category by FY2006, while 35 (34%) progressed to the new at-risk classification. 

In total, 38% moved to a higher status by 2006, the same percentage as the 

sample pool. 

Of course, there is not much of an immediate cause and effect argument that can 

be made, there being too many unknowns (among the project pool and all 

distressed ARC areas), including distressed counties outside the project pool 

which also received ARC and/or other investments, geographical and other 

considerations that may have had a profound impact on specific distressed 

counties, and other considerations. 
141

 

Appendix F. Project List 

 

ProjectID State County StartYear Project Name 

13483 AL DeKalb 1999 Fort Payne Distribution Center Utilities 

11685 AL Jefferson 1994 Bessemer Airport Water Main Extension, Revision 

14207 AL Colbert 2002 Reltoc Building Renovation 

13369 AL Talladega 1999 New Well & Distribution System 

13144 AL Madison 1998 Huntsville Infrastructure/Research Park 

13028 AL Blount 1999 County Line Industrial Park/Smoke Rise Sewer 

12983 AL Pickens 1998 Reform Water System Improvements 

12942 AL DeKalb 1998 Valley Head Sewer System 

12660 AL Lawrence 1997 Moulton Sewer Line Extension 

13073 GA Bartow 1998 Bartow County Industrial Park 

13866 GA Walker 2001 Rock Springs Industrial Park Improvements 

13102 GA Union 1998 Blairsville/Union County Industrial Park 

13135 GA Jackson 1998 Braselton Wastewater Expansion 

13406 GA Dawson 1999 Dawsonville Water System Improvements 

13417 GA Barrow 1999 Winder Sewer System Expansion 

13418 GA Madison 1999 Madison County Water System Improvements 

14870 GA Fannin 2004 Epworth Broadband Initiative 

6302-C23/05 KY Floyd 2002 Safe Harbor Transitional Housing ($25,000) 

6302-19-05-C20 KY multiple 1998 Irvine Downtown Project 

6302 KY multiple 1997 Federation of Appalachian Housing Enterprises FAHE 

11278 KY Bath-Rowan 1993 Salt Lick Sewer Collection System 

13084 KY Pike 1998 Phelps/Buskirk Sanitary Sewer System 

13125 KY Breathitt 1998 Jackson Water Storage Tank Replacement 

13136 KY Letcher 1998 Jenkins Industrial Site Infrastructure 

13138 KY Rowan 1998 Morehead 801 Industrial Park Water Storage Tank 

13163 KY Knott 1998 Carrs Fork/Littcarr Water Extension 

13192 KY Whitley 1998 Whitley County Water 

13201 KY Martin-Floyd-Johns 1998 Paintsville/Honey Branch Wastewater 

14611 KY Breathitt 2003 Breathitt County/KY 30 Water Line, Phase I 

6302 KY Pulaski 1998 Clifty Heights Elderly Rental Housing 

13987 KY Bell 2001 Stoney Fork/Red Bird/Saylor Hollow Water, Overrun 

13797 KY McCreary 2000 McCreary County Prison Infrastructure 

13630 KY Lincoln 2000 McKinney Water Extension 

13621 KY Monroe 2000 Tompkinsville Industrial Park Development 

13533 KY Floyd 1999 David Wastewater Improvements 

13358 KY Adair 1999 Columbia/Adair County Industrial Park 

13482 MD Allegany 1999 Cumberland Rolling Mill Infrastructure 

12932 MD Allegany 1998 Allegany Business Center Engineering & Soil Feasibility 

13162 MD multiple 1998 Western MD Regional Video Switched Network 

13385 MD Allegany 1999 Upper Potomac River Commission Sewage Plant Upgrade 

13762 MD Garrett 2000 Central Garrett Industrial Park Improvements 

13444 MD Garrett 1999 Garrett Information Enterprise Center Equipment Project 

13628 MS multiple 2000 Golden Triangle Airport Radio Communications System 

13002 MS Lee 1998 Northeast MS Regional Water Supply Facilities Improvements 

13001 MS Noxubee 1998 Brooksville Sewer System Improvements 

12467 MS Winston 1996 Louisville/Winston County Access Road, Overrun 

13424 MS Tishomingo 1999 Tishomingo County Water District Study & Improvements 

14187 MS Monroe 2002 Monroe County Industrial Building 
142

14191 MS Prentiss 2002 Prentiss-Alcorn Water System Improvements 

14383 MS Kemper 2002 Kemper County Incubator Expansion 

13160 MS Webster 1998 Walthall Wastewater Treatment & Sewage Collection 

12011 NC Graham 1995 Robbinsville Sewer Line Extension 

14197 NC Surry 2002 Elkin Sewer Extension to I-77 

14299 NC Alleghany 2002 Blue Ridge Telecenter Development 

14059 NC Burke 2001 Icard Water Improvement 

13862 NC Alexander 2001 Taylorsville Industrial Water 

13487 NC Cherokee 1999 Andrews Wastewater Plant & System Improvements 

13322 NC Caldwell 1999 Billy Branch Sewer Line 

13117 NC Ashe 1998 Jefferson Water & Sewer Extension 

14303 NC multiple 2002 NC Mutual Endeavor to Connect Communities in Appalachia 

13026 NY Steuben 1998 Hammondsport Industrial Access Road 

13384 NY Chemung 1999 Big Flats Sewer System Improvements 

14278 NY Schuyler 2002 Watkins Glen Second Street Water/Sewer Upgrade 

13053 NY Chemung 1998 Prescott Avenue Industrial Access Road 

14022 NY Steuben 2001 Troupsburg Wastewater Collection & Treatment Plant 

14002 OH Athens 2003 Ohio University Innovation Center 

13629 OH Monroe 2000 Monroe Industrial Park Building 

13566 OH Hocking 2000 Logan-Hocking Industrial Park 

13530 OH Belmont 1999 Belmont County Fox Commerce Park 

13203 OH Hocking 1998 Hocking County Infrastructure Project 

13142 OH Meigs 1998 Dexter Rural Water Line Extension 

12997 OH Athens 1998 Athens Water Treatment Plant Improvements 

13038 PA Greene 1999 Meadow Ridge Business Park 

13311 PA Sullivan 1999 Dushore Borough/Cherry Township Water Extension 

13318 PA Luzerne 1999 Crestwood Industrial Park Expansion 

13343 PA Butler 1999 Victory Road Business Park 

13584 PA Cambria 2000 Cambria Iron Works Complex Repair and Rehabilitation 

13644 PA Fayette 2000 Fay-Penn Business Center Improvement,Overrun 

13712 PA Fayette 2000 Keystone Opportunity Zones Site Development Plans 

14154 PA Sullivan 2002 Endless Mountains Industrial Building Renovation 

14862 PA Bedford 2004 CANA High Speed Internet Access in Bedford County 

14160 PA Schuylkill 2002 Coaldale Business Site Development 

12242 SC Pickens 1998 Pickens County 18 Mile Creek Regional Sewer 

13759 SC Cherokee 2000 Gaffney/Clary Wastewater Treatment Plant Upgrade 

13977 TN Pickett 2001 Pickett County Water Line Extension 

14941 TN Hancock 2004 Hancock County Picture Archiving Communications System 

13990 TN Washington 2001 Washington Cnty. Industrial Park Water-Sewer Line Extension 

13717 TN Roane 2000 Macedonia Industrial Park-Phase One 

13438 TN Grundy 1999 Grundy County Industrial Building Renovation 

13432 TN Greene 1999 Greeneville Hardin Industrial Park 

13381 TN Johnson 1999 Mountain City Sewer Line Extension 

13379 TN Hancock 1999 Sneedville Utility District Water Line Replacement 

13083 TN Washington 1998 Johnson City Utility Line Relocation, American Water Heater 

12775 TN Greene 2000 Mosheim Wastewater Treatment Plant Expansion, Revision 

14079 TN Marion 2001 Browder Switch Industrial Park Infrastructure 

12677 VA Buchanan 1997 Slate Creek Water 

13364 VA multiple 1999 Mountain Empire Regional Business Incubator 

13456 VA Wise 1999 Indian Creek Water 

13624 WV Mingo 2000 Lick Creek /Mingo County Water, WV 

13860 WV multiple 2001 Upper Kanawha Valley Technology Center 

12701 WV Wyoming 1999 Mullens Sanitary Sewer 

12953 WV Fayette 1998 Mount Hope South Industrial Park 
143

12957 WV Hardy 1998 Hardy County Industrial Building 

13205 WV Mercer 1998 Brushfork Sewer Project 

 
144

 

Appendix G. Interview-Contact List 

 

Project ID ProjName FirstName Last Name Position 

6302 Clifty Heights Elderly Rental Housing Faye O'Dell former Program Specialist 

6302 Clifty Heights Elderly Rental Housing Ed Massey Executive Officer 

6302 Federation of Appalachian Housing Enterprises Faye O'Dell former Program Specialist 

6302 Federation of Appalachian Housing Enterprises Sarah Morgan Chief Program Officer 

11278 Salt Lick Sewer Collection System Mark Collier Grant Writer 

11278 Salt Lick Sewer Collection System Brad Frazelle Mayor 

11685 Bessemer Airport Water Main Ext., Revision Jack Wright Director of Comm. Development 

11685 Bessemer Airport Water Main Ext., Revision Troy Post 

12011 Robbinsville Sewer Line Extension Bobby Cagle Mayor 

12242 Pickens County 18 Mile Creek Regional Sewer William Nicklaus Director Environmental Servs. 

12242 Pickens County 18 Mile Creek Regional Sewer Ray Farley 

12467 Louisville/Winston Cnty. Access Rd., Overrun Phylis Benson Project Analyst, EDD 

12660 Moulton Sewer Line Extension Nora Millican Director of Grants and Loans 

12677 Slate Creek Water James Baldwin Director of Planning 

12701 Mullens Sanitary Sewer David Cole Executive Director 

12701 Mullens Sanitary Sewer Cathy Mueller City Clerk 

12775 Mosheim Wastewater Treatment Plant Expansion Beth Duncan Director 

12932 Allegany Business Center Feasibility Study Matt Diaz Capital Project Manager 

12942 Valley Head Sewer System Marty Smith Town Clerk 

12942 Valley Head Sewer System Kim Erwin Consultant 

12953 Mt Hope South Industrial Park Connie Lupardus Executive Director 

12957 Hardy County Industrial Building Terry Lively Assistant Director 

12983 Reform Water System Improvements Jean Rosene Appalachian Programs Director 

12983 Reform Water System Improvements Winston Richardson 

12997 Athens Water Treatment Plant Improvements Misty Casto Development Director 

12997 Athens Water Treatment Plant Improvements Kystal Kynard Plant Manager 

13001 Brooksville Sewer System Improvements George Crawford District Planner 

13002 NE MS Regional Water Supply Improvements Denise Farrar Administrator 

13002 NE MS Regional Water Supply Improvements Shane Holman 

13026 Hammondsport Industrial Access Road Tom McGarry Economic Dev. Coordinator 

13028 County Line Industrial Park/Smoke Rise Sewer Jack Wright Director of Comm. Development 

13038 Meadow Ridge Business Park Donald Chappel Executive Director 

13053 Prescott Avenue Industrial Access Road Tom McGarry Economic Dev. Coordinator 

13073 Bartow County Industrial Park Lloyd Frasier Assistant Planning Director 

13083 Johnson City Utility Line Relocation Ken Rea Dir., Economic & Community Dev.

13083 Johnson City Utility Line Relocation Jane Myron City Commissioner 

13084 Phelps/Buskirk Sanitary Sewer System Ronny Brooks Area Specialist 

13102 Blairsville/Union County Industrial Park Tom Murphy Executive Director 

13117 Jefferson Water & Sewer Extension Phil Trew Planning Director 

13117 Jefferson Water & Sewer Extension Cathy Howell 

13125 Jackson Water Storage Tank Replacement Benny Hamilton Assistant Director 

13125 Jackson Water Storage Tank Replacement Michael Miller Mayor 

13135 Braselton Wastewater Expansion Chris McGahee Director of Economic Dev. 
145

13135 Braselton Wastewater Expansion Jennifer Scott City Manager 

13136 Jenkins Industrial Site Infrastructure Benny Hamilton Assistant Director 

13136 Jenkins Industrial Site Infrastructure Joe DePriest ED Director 

13138 Morehead Industrial Park Water Storage Tank Rodney Hitch Executive Director 

13138 Morehead Industrial Park Water Storage Tank Billy Winkelman County Judge Executive 

13142 Dexter Rural Water Line Extension Misty Casto Development Director 

13142 Dexter Rural Water Line Extension Martin Broderick 

13144 Huntsville Infrastructure/Research Park Del Schafer Director of Economic Dev. 

13160 Walthall Wastewater Treatment-Sewage Coll. George Crawford District Planner 

13162 Western MD Regional Video Switched Network Guy Winterburg Assistant Director 

13163 Carrs Fork/Littcarr Water Extension Brian Kirby Project Adminisitrator 

13163 Carrs Fork/Littcarr Water Extension Chris Connell Site Supervisor 

13192 Whitley County Water Tim Schwenderman Assistant Director for Econ. Dev. 

13192 Whitley County Water Mike Patrick Executive Judge 

13201 Paintsville/Honey Branch Wastewater Libby Ratcliffe Grants Administrator 

13201 Paintsville/Honey Branch Wastewater Denise Thomas Project Developer 

13203 Hocking County Infrastructure Project Misty Casto Development Director 

13205 Bluefield/Brushfork Sewer Project Terry Honnaker Director 

13205 Bluefield/Brushfork Sewer Project David Cole Executive Director 

13311 Dushore/Cherry Township Water Extension Jill Koski Economic Development Mgr. 

13311 Dushore/Cherry Township Water Extension Mike Hufnagel 

13318 Crestwood Industrial Park Expansion Richard Muessing Grants Manager 

13322 Billy Branch Sewer Line WT Sorrell Director 

13322 Billy Branch Sewer Line Linda Story 

13343 Victory Road Business Park Diane Sheets Executive Director 

13358 Columbia/Adair County Industrial Park Robert Flowers President/CEO 

13364 Mountain Empire Regional Business Incubator Duane Miller Director of Planning 

13369 New Well & Distribution System Steve Adkins General Manager 

13379 Sneedville Utility District Water Line Replacement Ken Rea Director of Economic Dev. 

13381 Mountain City Sewer Line Extension Jerry Horn Superintendent 

13381 Mountain City Sewer Line Extension Ken Rea Dir., Economic & Community Dev.

13384 Big Flats Sewer System Improvements Tom McGarry Economic Dev. Coordinator 

13385 Upper Potomac River Comm. Sewage Plant Guy Winterburg Assistant Director 

13406 Dawsonville Water System Improvements Gary Barr Water & Sewer Superintendent 

13406 Dawsonville Water System Improvements Kim Cornelison City Clerk 

13417 Winder Sewer System Expansion Chris McGahee Director of Economic Dev. 

13417 Winder Sewer System Expansion Herb Feldman 

13418 Madison County Water System Improvements Chris McGahee Director of Economic Dev. 

13424 Tishomingo Water District Study & Improvements Kirby McCray Board of Supervisors 

13424 Tishomingo Water District Study & Improvements Dale Price Board of Supervisors 

13432 Greeneville Hardin Industrial Park Ken Rea Dir., Economic & Community Dev.

13438 Grundy County Industrial Building Renovation Hal Morris Project Administrator 

13438 Grundy County Industrial Building Renovation Ledou Bouldin Mayor 

13444 Garrett Information Enterprise Center Equipment Lowell Bender Dean- Continuing Ed. & Training 

13444 Garrett Information Enterprise Center Equipment Lydia Reiser Director 

13456 Indian Creek Water Duane Miller Director of Planning 

13482 Cumberland Rolling Mill Infrastructure Jay Oliver Community Development Mgr. 
146

13482 Cumberland Rolling Mill Infrastructure Guy Winterburg Assistant Director 

13483 Fort Payne Distribution Center Utilities Jim McGee City Clerk 

13487 Andrews Wastewater Plant-Coll. Improvements Bill Green City Manager 

13487 Andrews Wastewater Plant-Coll. Improvements Tom O'Brien 

13530 Belmont County Fox Commerce Park Don Myers Executive Director 

13533 David Wastewater Improvements Ronnie Rice Chief Financial Officer 

13566 Logan-Hocking Industrial Park Misty Casto Development Director 

13584 Cambria Iron Works Repair & Rehabilitation Fred Querry Ass't Dir., Planning-Comm. Dev. 

13621 Tompkinsville Industrial Park Development Gene Becker Project administrator 

13624 Lick Creek /Mingo County Water, WV Jim Boggs Project Administrator 

13624 Lick Creek /Mingo County Water, WV Sheila Irwin Project Administrator 

13628 Golden Triangle Airport Communications System Phyllis Benson Project Analyst 

13629 Monroe Industrial Park Building Misty Casto Development Director 

13630 McKinney Water Extension Bob Maples Manager 

13630 McKinney Water Extension Jane Combs Chief of Grants and Aid 

13644 Fay-Penn Business Center Improvement,Overrun Tina Wargo Asset & Contract Manager 

13712 Keystone Opportunity Zones Site Plans Tina Wargo Asset and Contract Manager 

13712 Keystone Opportunity Zones Site Plans Donna Bates Economic Development Mgr. 

13717 Macedonia Industrial Park-Phase One Terry Bobrowski Exec Dir 

13759 Gaffney/Clary Wastewater Treatment Plant Kim Fortner Assistant Manager 

13759 Gaffney/Clary Wastewater Treatment Plant Dirk Reis 

13762 Central Garrett Industrial Park Improvements Guy Winterburg Assistant Director 

13762 Central Garrett Industrial Park Improvements Meg Ellis Project Manager 

13797 McCreary County Prison Infrastructure Waylon Wright Comm. Dev. Specialist 

13860 Upper Kanawha Valley Technology Center Robert Wilson Former, President 

13862 Taylorsville Industrial Water WT Sorrell Director 

13862 Taylorsville Industrial Water Sam Erwin 

13866 Rock Springs Industrial Park Improvements Lloyd Frasier Assistant Planning Director 

13977 Pickett County Water Line Extension Steven Bilbrey Mayor 

13977 Pickett County Water Line Extension Bill Robbins 

13987 Stoney Fork/Red Bird/Saylor Hollow Water Tim Schwenderman Assistant Director for Econ. Dev. 

13990 Washington Cnty. Ind. Park Water-Sewer Line Ken Rea Dir., Economic & Community Dev.

13990 Washington Cnty. Ind. Park Water-Sewer Line PC Snap Director 

14002 Ohio University Innovation Center Linda Clark Director 

14022 Troupsburg Wastewater Collection-Treatment Tom McGarry Economic Dev. Coordinator 

14022 Troupsburg Wastewater Collection-Treatment Fred Potter Town Supervisor 

14059 Icard Water Improvement WT Sorrell Director 

14059 Icard Water Improvement Sam Erwin 

14079 Browder Switch Industrial Park Infrastructure Hale Booth Executive Director 

14154 Endless Mountains Industrial Building Renovation Jill Koski Economic Development Mgr. 

14160 Coaldale Business Site Development Tom Pellegrini VP Enterprise Development 

14160 Coaldale Business Site Development Mark Scarbinsky Director 

14187 Monroe County Industrial Building Ronnie Boozer Clerk-Controller 

14187 Monroe County Industrial Building John Byers Director of Technical Assistance 

14191 Prentiss-Alcorn Water System Improvements Brett Brooks Project Engineer 

14191 Prentiss-Alcorn Water System Improvements Walter Bane President 

14197 Elkin Sewer Extension to I-77 WT Sorrell Director 
147

14197 Elkin Sewer Extension to I-77 Pam Stensil Planning Director 

14207 Reltoc Building Renovation Jerry Davis Director and Operations Mgr. 

14207 Reltoc Building Renovation Suanne Sockwell 

14278 Watkins Glen 2nd Street Water/Sewer Upgrade Tom McGarry Economic Dev. Coordinator 

14278 Watkins Glen 2nd Street Water/Sewer Upgrade Mark Specchi Superintendent of Public Works 

14299 Blue Ridge Telecenter Development Phil Trew Planning Director 

14303 NC Mutual Endeavor to Connect Communities Eric Brinke Director of Econ Dev. 

14303 NC Mutual Endeavor to Connect Communities Charlie Pittman Director of Telecommunications 

14383 Kemper County Incubator Expansion Brian Henson Executive Directore 

14611 Breathitt County/KY 30 Water Line, Phase I Gary Pridemore Community Resources Planner 

14611 Breathitt County/KY 30 Water Line, Phase I Shannon Moore Superintendent 

14862 CANA High Speed Access in Bedford County Michele Adams Director, Planning & Comm. Dev.

14862 CANA High Speed Access in Bedford County Carol Snyder Executive Director 

14870 Epworth Broadband Initiative Kristen Gunia Director of Economic Dev. 

14870 Epworth Broadband Initiative Eric Brinke Director of Economic Dev. 

14941 Hancock County Picture Archiving System Ken Rea Director of Economic Dev. 

6302-19-05-C20 Irvine Downtown Project Faye O'Dell former Program Specialist 

6302-19-05-C20 Irvine Downtown Project Brenda Rice Director 

6302-C23 Safe Harbor Transitional Housing Faye O'Dell former Program Specialist 

6302-C23 Safe Harbor Transitional Housing Eddie Patton Executive Director 

 
148

Electronic Appendices 

Appendix H. Electronic Impact-Interview Database 

Appendix I. Project Impact-Interview Project Thumbnails 

Appendix I. Project Area Economic Condition Thumbnails 

Appendix J. Project Area Economic Condition Spreadsheet Details