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OP-ED: RURAL COMMUNITIES NEED PRODUCT, NOT HANDOUTS

I 
Site selection consultants, when asked about the most critical factor determining where a business locates, invariably say, "workforce."

While this is undoubtedly true at some level, I think most local developers would point out that during the initial search, product, not workforce, is more typically the crucial factor. If a community does not have the site or building a company requires, they will never have the opportunity to promote the quality of their workforce. A building or site is the ante that allows communities to get into the game, and without one, workforce, airports, highways, railroads, and universities are little more than words on a marketing flier.

Rural communities across North Carolina are especially aware of the impact of available buildings and sites on their ability to compete for jobs and investment. Metro areas often have private-sector developers competing for the right to put up speculative buildings, or at the very least, willing to partner with the public sector on such projects. Rural communities, on the other hand, are typically left to their own devices.

When I first came to Anson, a rural county 40 miles from Charlotte, I contacted several commercial development companies I had previously worked with on successful projects in the region. I thought I had a pretty strong business argument for them. The Town of Wadesboro was offering extremely low-cost land in its town-owned business park, along with a $1.7 million grant it had recently received to upgrade the infrastructure to the developer's specifications. The response from each of the firms was almost identical; thanks for the opportunity, but we can only do so many projects at any given time, and we have a lot more to gain putting the same building up in Concord or Rock Hill.

That is an understandable position. Ultimately, those developers seek to maximize return, not help a struggling county, but it illustrates the difficulty rural communities face when competing with metro areas for investment.

Further, many well-intentioned state programs designed to level the business recruitment playing field expressly prohibit the use of those funds on speculative buildings. Again, while this is an understandable position, rural economic developers are not looking for a handout. We are simply seeking a way to remain competitive in a booming commercial real estate market that is skewed against us. In some cases, there are legitimate business reasons why a company needs to locate in a metro area; proximity to suppliers or customers, easy access to an international airport or Interstate, or specialized workforce requirements. But many deals happen simply because metro areas have available buildings and their rural counterparts do not.

Fortunately, there is a simple, market-oriented solution to improving rural competitiveness that does not require the state to dive headlong into the commercial development business. Revolving loan funds are a proven tool for assisting communities in the development of speculative product. A ten-year zero-interest loan is a low-cost, low-risk way for the state to kick-start commercial development projects in rural areas where other forms of funding cannot be accessed.

With appropriate rules and qualifications, a loan fund covering up to 90% of the cost of spec building construction would put such a building within reach of most rural counties while ensuring local leaders maintain some "skin in the game" and are raising a speculative building, not a fantasy building. The ten-year maturity period would allow communities with successful projects to turn that money two or more times. In contrast, communities that plan or execute poorly will appropriately receive a more limited return.

Making progress on rural product development is a key legislative priority of the North Carolina Economic Development Association (NCEDA), which is now making its case to the General Assembly to craft bold, creative solutions for addressing this persistent obstacle to job growth and business recruitment in places like Anson County.

U.S. trade and social policies of the past 30 years have had a devastating impact on rural North Carolina while bolstering the economies of more densely populated areas. It is time for Raleigh to reverse that trend and distribute some of the fruits of the state's unprecedented prosperity back into the counties that were once the backbone of our economy. Rural communities aren’t looking for a gift; we just want a fighting chance.

[John B. Marek is executive director of the Anson Economic Development Partnership. He also is a published author and advocate for revitalization and economic sustainability in rural communities.]

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