HD4 - Southside-Southwest Virginia Barriers to Infrastructure and Supply Chain Investment (Chapter 488, 2022)

Executive Summary:

The General Assembly, in House Bill 894 from the 2022 Session, tasked the Virginia Economic Development Partnership (VEDP) to determine whether barriers exist for infrastructure and supply chain investments in Southside and Southwest Virginia. The bill also requested a review of incentives that the Commonwealth and its localities should utilize or develop to retain businesses and promote new infrastructure and supply chain investments.

To accomplish this, VEDP leveraged data from a variety of sources and engaged with over 50 partners, including local governments, economic developers, regional organizations, academic institutions, nonprofits, private sector companies, and state agencies (See Acknowledgments on page 62 for a complete list of partners). Using this information, VEDP developed a report outlining barriers that exist and provides recommendations on how to address those barriers.

Many of the challenges facing Southwest and Southside Virginia today stem from the decline of four key industries — furniture, textiles, tobacco, and mining. The region has seen a loss of production and employment over the last four decades, beginning in the 1980s. Across Southwest and Southside, over $2.2 billion in Gross Domestic Product (GDP) and 60,000 jobs disappeared from just those four industries alone. Due to the high concentration of these industries in the region, the loss of these industries led to the general decline of the regional population and economies of Southwest and Southside Virginia.

The state has authorized and funded several organizations dedicated to filling the void left by the private sector losses. Tobacco Region Revitalization Commission (TRRC), established in 1999 using proceeds from the national tobacco settlement, has funded $1.4 billion in projects throughout the region and attracted over 21,000 jobs. The Virginia Coalfield Economic Development Authority (VCEDA), established in 1988 to diversify seven counties in the coal-producing region of the state, invested over $260 million in projects creating over 23,000 direct jobs. In partnership with regional and local economic developers, both organizations developed workforce, site, and other infrastructure assets over several decades, yielding benefits to the region today. Other state entities, such as the Department of Housing and Community Development (DHCD), Virginia Housing, VEDP, the Center for Rural Virginia, Planning District Commissions, community colleges, universities, and higher education institutions, have contributed additional support to developing critical assets and attracting private sector investment. Even with the economic challenge placed on this region, the people here have demonstrated creativity, resiliency, and innovation to build for the future.

The groundwork laid by economic developers, regional organizations, TRRC, and state agencies so far represents one part of what will be needed for economic transformation in the region. In recent years, Southwest and Southside are starting to see the benefits of these investments, with changes to migration patterns, the lowest unemployment in the state, and recent project wins indicating a new direction for the regions. The success of these investments and recent positive trends demonstrate that Southwest and Southside’s economic challenge is not insurmountable. Even with this momentum, additional long-term focus and investment will be required to sustain and accelerate the positive trends we are seeing and to overcome the remaining barriers to infrastructure and supply chain investment in Southwest and Southside Virginia.

This report frames the barriers through the lens of private companies that could make investments in the regions and the economic developers responsible for laying the groundwork for those investments. It is important to note that while the report focuses on Southwest and Southside Virginia, many of the challenges and solutions discussed apply to rural areas across the state. Where possible, the study highlights challenges that apply to rural Virginia broadly.

The review of barriers to infrastructure and supply chain investment in Southwest and Southside identified five core challenges and determined actionable recommendations for each for policymakers to consider. Those areas are:

• Limited economic development staff

• Lack of available workforce, driven by:

— Limited workforce development program capacity
— Lack of workforce housing
— Lack of childcare and healthcare facilities
— Limited amenities for attracting new talent

• Limited portfolio of prepared sites and buildings

• Remoteness from key infrastructure

• Competitive business incentives

The recommendations in this report address the above challenges and highlight priorities for supporting economic growth in Southwest and Southside Virginia. Many recommendations involve adding new or modifying existing programs to address key challenges. With a few exceptions, this report does not specify which agencies or existing programs would be best suited for a given recommendation and leaves the decision to the discretion of policymakers. Any actions taken to implement recommendations from this report should focus on making programs accessible for recipients and flexible to address the full scope of the specific challenges identified. Programs that are too burdensome or complex may discourage distressed localities with limited resources from using them. Additionally, one size fits all solutions will restrict the potential impact of the investment for localities with diverse needs and will not be nimble enough to address new challenges that will inevitably arise.

Table 1 on page 3 of the report lists the recommendations in this report. Additional details are provided on each recommendation in the body of the report. Each recommendation directly addresses the major barriers to infrastructure and supply chain investments in Southwest and Southside Virginia. It should be noted that a piecemeal approach to implementing these recommendations is likely to yield limited results. A multi-pronged approach that combines efforts to address each of the underlying challenges would help maximize the economic growth generated by these recommendations.