By guest columnist Andy McDonald
In a special called meeting Monday evening, the Berea City Council unanimously adopted a resolution authorizing the city to enter into an economic development agreement with five other central Kentucky local governments.
The economic development interlocal agreement with the cities of Richmond, Georgetown, the Lexington-Fayette County government, Scott County and the Madison County Fiscal Court sets the stage for the Triple Crown Business Park project, in which the parties would jointly invest to purchase over 500 acres for development in Scott County. The council voted to commit Berea to a $500,000 investment in the project.
Officials said that because Berea has a limited amount of land left for industrial development, expanding the city’s revenue base to meet the needs of a growing population will be increasingly challenging to do through industrial growth within city limits. By entering into the regional agreement, say officials, the city can develop new revenue streams by drawing a percentage of occupational license fee, property tax, and insurance premium fee revenues from the proposed Scott County industrial park.
The six entities will divide the annual proceeds from the park according to the size of their investment, with Lexington-Fayette County drawing 33 percent, Madison County drawing 16.7 percent, Richmond 8.3 percent, Berea 8.3 percent, Georgetown 16.7 percent and Scott County 16.7 percent. Scott County and Georgetown draw an additional 10 percent to fund basic operations, such as police protection, officials said.
Council members Jim Davis, Katie Startzman, Jerry Little, Steve Caudill, Cora Jane Wilson and Ronnie Terrill voted in favor of the project. Council members David Rowlette and Teresa Scenters did not attend Monday’s meeting.
Under the provisions of the resolution, the council authorizes Berea Mayor Bruce Fraley to enter the city into an industrial board authority, with each local entity having two representatives. Fraley said the two suggested board members from Madison County are Glenn Jennings and Jim Fultz. Once ratified by all of the local governments, the proposal goes to state authorities for final approval to form the regional interlocal economic development body.
The participating governments will be each be eligible for matching funds from the Kentucky Product Development Initiative. For example, after investing an initial $500,000, Berea will receive an additional $500,000 in state matching funds to invest in the project. When considering all state and federal funds expected, officials say the six local governments will likely have a combined $12 million to invest in the Scott County industrial park.
Lucas Witt of MWM Consultants, the city’s economic development advisor, explained that while the concept of regional economic development might be a relatively new concept to Kentucky, it’s becoming the wave of the future when it comes to attracting new jobs to the state.
Witt referenced the fact that Rockcastle County partnered with Lincoln County and Garrard County to form a similar industrial development project of 1,500 acres, as well as a three-county, northern Kentucky partnership that has done the same.
“Economic development is going more regional. I think Kentucky has to,” Witt said. “Companies do not see city and county lines anynmore, and I think this speaks volumes for this particular regional partnership. You’re going to be able to market the population pool of almost all of central Kentucky, and then, you’ll be getting support from each of these communities in marketing your project.”
Fraley agreed, noting that state officials are increasingly encouraging communities to collaborate with one another to bring jobs to Kentucky instead of competing against each other.
“What we’re hearing from economic development professionals, from legislators, from the Economic Development Cabinet, and the executive branch, is that they are encouraging regionalism to make us more competitive with people outside of Kentucky,” Fraley said, noting the model has worked in Columbus, Ohio, Nashville, Tennessee, and North Carolina. “I believe with all my mind and all my heart that regional economic development is the way economic development will be done in the future. That’s where you’ll see the most competitive and the most successful projects as far as attracting business and industry and creating jobs,” Fraley added.
Michael George of Compass Municipal Advisors said that while revenue estimates are merely a projection at this point, the partners have the potential to draw significant insurance premium tax, occupational license fee, and property tax revenue once the park gets established.
“The initial projection is about 1,400 jobs with an average wage of about $38 (per hour). At full build out, we’re projecting gross revenues of $2.5 million to $3 million a year from the park. What that means for you [Berea] in terms of return is about $200,000 per year after money is distributed to all the parties,” George said. “That’s a pretty significant ROI [return on investment].”
George added that with the establishment of the interlocal industrial authority, the local governments thereafter have a mechanism to pool their resources to open additional industrial parks and create new jobs in central Kentucky, including Madison County.
Audit and Finance Committee Chair Steve Caudill cautioned that the Triple Crown project is a long-term investment, that it might take a while for the industrial park to be fully occupied, the same was true when the Berea Industrial Park was first formed in the 1980s. But even at half capacity, Berea would be drawing a new revenue stream of $100,000 annually, Caudill said.
“If we don’t invest in these things, we’ll never see the money,” Caudill said. “If we don’t start moving in a direction to have regional agreements and cooperation, we’re going to fall behind. I think what you’ve laid out makes all the sense in the world, and I think it’s an opportunity for us to put Berea in a stronger financial position.”
Economic Development Committee Chair Jim Davis agreed, noting:
“Five hundred thousand dollars is a lot of money, but it’s not a lot of money in the overall scheme of things, and we’ll get a return on it fairly quickly,” Davis said. “To get a percentage of what is coming out of Scott County to put into our coffers is better than zero going into our coffers,” he added, noting Berea has run out of land for industrial development.
On Tuesday, the Madison County Fiscal Court unanimously approved a resolution to enter into the agreement, citing its long-term economic benefits for the county. The Richmond City Commission will consider the measure this evening at its regular business session. Lexington-Fayette County, Scott County and the city of Georgetown are also expected to adopt the measure. Attorney Anne-Tyler Morgan of McBrayer, LLC explained the goal is to have the full application submitted to state officials for approval by November.
