How PA Feeds Sprawl and Creates Low Wage

How PA Feeds Sprawl and Creates Low. Wage Jobs Through Economic Development Subsidies Keystone Research Center ▬▬ June 1, 2006 Re: BUILDING OPPORTUNITY IN PA Conference Keystone Research Center

The Case for Change • PA gives out 100 s of millions of dollars in subsidies to businesses each year • Many projects create jobs that pay poorly • Many projects fuel sprawl rather than smart growth Keystone Research Center 2

Subsidies Create Low-wage Jobs • 312 PA Industrial Development Authority projects received $239 million in low-interest loans from 1998 to 2002. ü 122, two out of every five, produced low-quality jobs (with projected payroll per job less than 80 percent of the industry average in the county with the project). üIn Western, SE, and South-central PA, nearly half of all PIDA loans went to companies projected to create or retain low-quality jobs. Keystone Research Center 3

Subsidies and Sprawl • KRC contracted by Brookings to carry out the first-ever systematic examination of the geographic distribution of PA business subsidies üThe extent to which economic development funds contribute to sprawling land-use patterns and job redistribution. • KRC used the opportunity to develop new communications technology Keystone Research Center 4

What We Studied • Three largest DCED economic development programs from 1998 to 2003 ü Pennsylvania Industrial Development Authority (PIDA) ü Infrastructure Development Program (IDP) ü Opportunity Grant Program (OGP) Keystone Research Center 5

What We Studied • Pennsylvania Industrial Development Authority (PIDA) ü PIDA was created in 1956 and distributes low-interest loans via local non-profit industrial development corporations (IDCs) to eligible businesses. ü There are three categories of PIDA loans: § Job creation and retention loans to individual companies, § Multi-occupancy loans (to finance facilities that will house two or more unrelated PIDA-eligible tenants), and § Industrial Park Loans. § Loans for job creation and retention are capped at $1. 25 million for a single project. § The cap is $1. 75 million if the project meets a special designation such as Brownfield or Keystone Opportunity Zone. Keystone Research Center 6

What We Studied • Infrastructure Development Program (IDP) üIn practice, almost all IDP funds are distributed as grants, which must be used for publicly owned infrastructure improvements. üOur data base contains two IDP loans. üA typical IDP grant might help pay for water and sewer line installation, or road and rail access to a new or expanding industrial site. üOther activities eligible for support include the construction or rehabilitation of drainage systems and energy facilities; the acquisition of land, rightof-ways and easements; demolition of buildings and the clearing and preparation of land. Keystone Research Center 7

What We Studied • Opportunity Grant Program (OGP) ü There are no regulations for the program, which is administered based on DCED guidelines. ü OGP funds may be used for a wide range of purposes including, but not limited to training, site preparation, construction, infrastructure, land acquisition, purchase of machinery and equipment, working capital, environmental assessments, and remediation of hazardous materials. ü Funds may not be used to finance or retire existing debt or for costs unrelated to expansion or location at a site in the Commonwealth. ü Those eligible for OGP grants include companies in agricultural, industrial (e. g. , warehouse and terminal facilities, certain office buildings), manufacturing, research and development, and export service industries. ü Also eligible for OGP grants are municipalities, industrial development authorities/agencies, municipal or redevelopment authorities, and real estate developers developing business locations for more than one company. ü There is no maximum grant award. Keystone Research Center 8

Data & Definitions We Used • 1, 121 Older Communities = 7, 262, 664 people ü 58 Cities = 3, 198, 585 people ü 972 Boroughs = 2, 574, 625 people ü 91 First Class Townships =1, 489, 454 people • 1, 458 Outer Communities = 5, 117, 696 people ü Second Class Townships • 14 Metro Areas = 10, 289, 672 people ü 1, 506 Municipalities in Allentown, Altoona, Erie, Harrisburg, Johnstown, Lancaster, Philadelphia, Pittsburgh, Reading, Scranton, Sharon, State College, Williamsport, York § 763 Older Communities = 6, 548, 678 people § 743 Outer Communities = 3, 740, 994 people Keystone Research Center 9

What We Found • The actual business site address was available for half the projects. The municipality was available for 99% of the projects. • Older communities and outer townships receive the same dollar amount per capita • Inner-ring suburbs get almost nothing • Outer townships get more than twice as much per capita for industrial & business parks • 13 mega projects in “distribution” for $45 million Keystone Research Center 10

Subsidies Fuel Sprawl in Philly, A-B-E • In these 2 metros, outer townships receive more than 50% more subsidy $ per capita • In five-county Philly area, suburban counties get more than 2 ½ times as much in grant $ • In Erie, Harrisburg, Reading, Scranton-WBHazelton, York, and Pittsburgh metro areas, older areas receive no more than 39% more $ per capita than outer townships Keystone Research Center 11

Some Smart Growth Points to A Better Way • Lancaster üAlmost all of Lancaster’s subsidy $s go to the city ü 9 times as much per capita $s go to older areas compared to outer townships • Philadelphia Metro Area üPIDA is much better than OGP – because of common-sense rules Keystone Research Center 12

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Use the KRC Map to Look at Your Area • Easy-to-use, interactive, web-based Geographic Information System (GIS) tool that makes transparent where the money goes Keystone Research Center 15

Keystone Research Center Map • KRC http: //www. keystoneresearch. org • KRC Map http: //www. keystoneresearchmap. org Keystone Research Center 16

Media Coverage - Quotes Saint Paul Pioneer Press (Minnesota) May 4, 2004 A second chance for cities? by Neal Peirce ü New reports suggest that with smarter state policy-making and a dose of ingenuity, much more could be done to defend and redevelop older cities. ü State government agencies handing out subsidies for business expansion are notoriously reluctant to provide public information. ü It's a delicious example of computer-armed reform advocates not only tracking down closely held data, but making it transparent and accessible by new digital technology. Keystone Research Center 17

Media Coverage - Quotes Abe Amoros, Deputy Press Secretary, Governor Ed Rendell ü "This definitely helps us out tremendously…We need to identify what the problems are, and clearly the [Keystone GIS] map points to many troubling policies that seem to have accelerated sprawl. ” Government Technology: Solutions for State and Local Government in the Information Age, June 2004 ü More and more, GIS is becoming the means through which land- and infrastructure-based research is best and most easily disseminated. Keystone Research Center 18

Recommendations • Collection and disclosure of üBusiness site address üLand-use classification üIndustry üJob quality and quantity üWhen projects get multiple bits at the subsidy apple üPrior location of the business üAll of the above for tenants in industrial parks Keystone Research Center 19

Other Recommendations • Wage and benefit standards for jobs created • Limits on subsidy per job • Clawbacks – state gets some money back when company doesn’t deliver • Shift money away from subsidies for individual companies to public goods (education, industry training partnerships, industry centers of excellence) Keystone Research Center 20

Proposed Legislative Reform • House Bill 146 Session of 2005 ü Introduced by Solobay, Barrar, Bebko-Jones, Belfanti, Benninghoff, Blackwell, Caltagirone, Corrigan, Crahalla, Curry, Deweese, Fabrizio, Goodman, Grucela, Hennessey, Kotik, Leach, Maher, Mann, Melio, Mundy, Preston, Readshaw, Reichley, Sainato, Santoni, Sather, Shaner, Sturla, Surra, Tangretti, Thomas, Tigue, Wansacz, Washington, Youngblood and Yudichak, January 31, 2005 • House Bill No. 521 Session of 2005 ü Introduced by Levdansky, Grucela, Veon, Belardi, Bebko. Jones, Belfanti, Blaum, Caltagirone, Daley, Deweese, Fabrizio, Freeman, Gergely, Haluska, Lagrotta, Mccall, Mundy, Ruffing, Sturla, Tangretti, Walko, Washington, George, Goodman, Josephs, Manderino, Mcgeehan, Rooney, Solobay, Surra, Thomas, Wansacz and Williams, February 15, 2005 Keystone Research Center 21