By Stephen Smoot
Twenty years ago, Congress and the administration of President George W. Bush implemented an economic development act to set guidance and priorities for federal funding of qualified projects. This summer, as the United States Senate starts discussion of the reauthorization of the act, US Senator Shelley Moore Capito invited Mike Graney, executive director of the Department of Economic Development, to share the Mountain State’s experience with these programs and obstacles to further success.
Part of the discussion also centered on “opportunity zones,” a program from President Donald Trump to spur investment in economically distressed communities.
“Mr. Graney and the rest of his team will work with all government levels to bring economic opportunity to our state,” Capito explained, the added “they have achieved some recent successes and I hope he will talk about that.”
One of the key issues lies in the fact that many of the economic development programs under the act remain vital, but operate under expired authorization. Capito related that “I must stress that reauthorization legislation will not be successful if it departs from the EDA’s traditional missions.”
Capito called upon Graney to discuss the state’s experience with programs such as the Assistance to Coal Community programs. He responded by saying that 44 of West Virginia’s 55 counties qualify for the program that, among other things, helps decommissioned coal related industrial facilities retool for other purposes.
He used the recent commitment by NuCor to construct a facility in Mason County as an example, also noting its broad based impact. Graney explained that “what’s unique about West Virginians is that we’ll travel a long ways for a good job.” Some applicants to the plant hail from an hour and a half away or more.
The project relied on assistance from the US Economic Development Administration for infrastructure assistance. Graney said that ‘having the US EDA support the sewer there is just critically important to make that happen.”
Capito then turned to Chris Fetzer, executive director of the Northern Arizona Council of Governments, asking about his state’s experience with the coal community development program. Fetzer expressed concerns over the difficulty of dealing with facilities closing “on an accelerated schedule.”
The Senator posed questions about obstacles faced by state and local development entities in taking advantage of EDA projects. Graney related that he would like to see a change in policy to allow 20 year loan and development projects to have the early exit payment pro rated to time spent on site. Currently, even if the business leaves after 19 years, it must pay the full cost back.
He also explained that US EDA places restrictions on using funds for “preliminary work.” This includes infrastructure, archaeological studies, and other “lip of the cup” work that can be easily done if funded. “If we had the flexibility to use EDA funds for that type of work, that would be very helpful,” and would “get projects moving more quickly.”
Capito also raised the question of the impact of US EDA investment priorities that “change from administration to administration.” She cited the Biden Administration removing “critical infrastructure and opportunity zones” while pursuing an agenda more heavily weighted toward diversity, equity, and environmentalism.
“Congress should provide for stability here,” the Senator added.
Patricia Cannon, director of special projects for the Delaware Department of State’s Division of Small Business,” appeared flustered at the question, but answered that “rich people” used such programs “to build hotels.” Capito replied that the same happened in some parts of “my state,” but agreed that “some stability” would be a benefit.”
Fetzer added that the predictability of what struggling communities need does not change and that innovations, such as those the Biden Administration pushes “could become a distraction from what communities really need.”
Capito responded, saying “core functions have to remain the same . . . from administration to administration.”
Discussion then turned to the impact of opportunity zones. According to the Tax Policy Center, the Trump era program is “meant to spur investment in undercapitalized communities” by offering deferrals on tax payments as an incentive for investment.
By August 2020, the US EDA reported that opportunity zones created approximately 500,000 jobs and helped to lift about one million out of poverty. Capito co-sponsored the legislation that created 55 such zones in West Virginia.
Capito finished her time with praise of Tracey Rowan, working on economic development for the State of West Virginia. “What a difference she makes,” the Senator shared, adding that her knowledge has been incredible.
“She’s fantastic,” the Senator finished.