A Site Selection Consultant

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A Site Selection Consultants Perspective for
Success
MEDC Summer Conference July 20, 2007 Choctaw,
MS Jeff Forsythe, Senior Consultant
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Overview

• Introduction to MSC
• MSC Site Selection Process
• Current Reality
• Trends
• Certified or shovel-ready sites
• Use of GIS
• Elements of Successful Projects

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McCallum Sweeney Consulting
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About MSC

• Specializes in site selection and incentive
  negotiation services
• Established in July 2000 by Ed McCallum and Mark
  Sweeney
• Brings more than 50 years of combined location
  consulting experience to our clients worldwide
• Brings the comprehensive use of GIS technology to
  bear on our projects

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About MSC

• Provide clients with uncompromised service,
  conducting site selection and incentive
  negotiations with the highest standards of
  integrity

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MSC Clients

• Site Selection

• Economic Development

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MSC Site Selection Process
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MSC Site Selection Process
Planning Phase
Phase I
Phase III
Phase II
Conception

Alignment / Criteria

Negotiations





Community Visits

Regional Analysis
Evaluation

Feasibility






Site Evaluation


Areas of Interest




Investment

Comparative Analyses
Site Due Diligence


Decision

RFP

Selection



Finalist Communities

Candidate
Announcement




Communities
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Phase I

• Alignment
• Project parameters, decision criteria, search
  region
• Regional analysis using GIS
• Attraction and aversion factors
• Attraction
• Manufacturing labor force
• Proximity to interstates
• Etc.
• Aversion
• Presence of union locals
• Competitor locations
• Etc.

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Phase I

• Determine Areas of Interest
• Request for proposal
• Defines project and information needs
• Important to follow directions and meet
  deadlines!
• Evaluate proposals
• Screen against project criteria
• Determine Candidate Locations

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Phase I - What should you be doing?

• Have a great website can prospects find you
  quickly and find out what they need to know about
  your community
• Image building are you top of mind to decision
  makers in your key target industries?
• Relationship marketing do we know you? Do we
  know your community?

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Phase II

• Community visits
• Gather detailed data
• Meet with existing industries
• Meet with community leaders
• Further site evaluation
• Conduct physical inspection / site data
  verification
• Determine site readiness

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Phase II Evaluation of Site Conditions

• Location
• Configuration
• Topography
• Access
• Zoning
• Neighboring land use
• Environmental (Phase I)

• Ownership
• Construction feasibility
• Infrastructure
• Utilities
• Acquisition cost
• Site development cost

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Phase II Evaluation of Operating Conditions

• Labor market
• Availability
• Quality / work ethic
• Wages / benefits
• Training resources
• Education resources
• Higher education
• Vocational education

• Utility services
• Reliability
• Costs
• Taxes
• Income, sales, property
• Leadership
• Community acceptance
• Incentives

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Phase II Evaluation of Living Conditions

• Attractiveness
• Physical conditions
• Movement / congestion
• Housing
• Availability, costs
• Recreation
• Social / Cultural

• Education
• Facilities
• Achievement
• Medical / health care
• Facilities / capabilities
• Costs
• Shopping
• Hotel / meeting space

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Phase II

• Comparative analyses
• Want criteria scoring
• Preliminary incentive evaluations
• Risk identification
• Determine Finalist Locations

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Phase II - What should you be doing?

• Answer the questions
• Meet the deadlines!
• Know your sites and buildings be prepared to
  answer detailed questions
• Provide backup documentation as requested
• Provide support for multiple site visits
• Be prepared to provide a lot of information and
  data

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Phase III

• Finalist Locations
• All finalist locations are acceptable
• Time to distinguish among finalists
• Custom incentive evaluation
• Numerous iterations and What ifs?
• All types of subjective factors
• Responsiveness
• Professionalism
• Etc.

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Phase III

• Negotiations incentives / real estate
• Property
• Infrastructure
• Utilities
• Transportation
• Training
• Taxes

• Comparative evaluations
• Financial
• Risk
• Other issues
• Final site due diligence

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Phase III

• Site selection and communication
• Internal decision process
• Manage message to all candidates
• Development Agreement
• Announcement
• Align company and community objectives
• Press releases, events, etc.

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Phase III - What should you be doing?

• Be responsive
• Have relevant subject-matter experts on hand to
  answer questions
• Be professional
• It can be intense, dont let it get to you
• Stand out from the crowd
• Opposition research
• Go the extra mile
• but dont overstep the boundaries

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Phase III - What should you be doing?

• Incentives
• Know your weaknesses make sure your incentives
  mitigate those weaknesses
• Be prepared for customized incentive evaluations
  and a lot of what if scenarios
• Dont write a check your
• Incentive Due Diligence
• Be prepared to provide backup documentation on
  incentives specifically on process and legal
  authority

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Questions?
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Current Reality
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Two big things to rememberInvestment is made
for a profitInvestment activity has choices
with regard to location
Current Reality
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Current Reality

• Facility siting process fundamentals
• Profit driven
• Investment for purpose of return
• Deadline driven
• Both the site selection and project development
• Competitive
• Multiple location options
• Comprehensive
• Complex decision involving most functional areas
• Risk averse

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Current Reality

• Profit Driven
• Think of the siting process as part of the
  overall capital investment decision
• Models for evaluating capital investment
• Net present value
• Payback Period
• Internal rate of return
• Bottom line Timing is Critical!

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Current Reality

• Deadline Driven
• Increasing speed / shorter time frame is dominant
  theme in recent years
• Market opportunities must be seized quickly
• Once decision is made to move forward, clients
  want minimum time spent on location decision and
  start-up
• Strongly favors prepared communities and
  shovel-ready sites

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Current Reality

• Competitive
• Investment activity has choices with regard to
  location
• True for most private investment activity
• Industrial contiguous region or regions
• Office selected metropolitan areas
• Not just competing with neighboring counties
  competing with locations all over the world

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Competitive Site SelectionScreening Process
Candidate Locations

• Define Search Region
• Center-of-Market Analysis

Regional Screening - Project Criteria RFP
Proposal Screening
Site Visits / Comparative Assessment
Cost Modeling / Incentives
Risk Analysis
Site Decision
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Current Reality

• Comprehensive
• Impacts everything a company does
• Impacted by all parts of the company
• Numerous site variable factors
• Prioritize into Musts and Wants
• Weight Wants
• Immense range of issues to be considered

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Current Reality
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Current Reality

• Risk Averse
• Siting decisions must account for risk
• Identify risks
• Assess probability
• Estimate impact
• Favors locations that are shovel-ready because
  they are less risky

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Current Reality

• Risk Analysis Summary

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Current Reality

• Project Values
• Speed
• Siting decision and project development
• Confidentiality
• Critical for a variety of reasons
• Professionalism
• Integrity, reliability

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Questions?
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Trends Certified Sites
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Trends Certified Sites

• Companies are very deadline driven
• Once they identify a market opportunity, they do
  not want to take much time
• Looking for sites ready for quick development
• Has influenced the process of site selection
• Communities with shovel-ready or certified sites
  have a competitive advantage

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Trends Certified Sites
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Trends Certified Sites

• Growing trend in economic development
• States, regions, communities, and utilities
  instituting shovel-ready or certified site
  programs
• Some use 3rd party verification program
• TVA
• CSX
• Some use guidelines approach, relying on local
  actions
• North Carolina, South Carolina

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Trends Certified Sites

• Objectives
• Identify and develop sites that are project
  ready
• Typically, certified for specific target industry
  uses
• Very rigid adherence to criteria and process
• Examples
• TVA
• CSX
• Build Now NY
• Oregon

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Trends Certified Sites

• Objectives
• Increase inventory of marketable sites
• Can be for specific uses, but not necessary
• Examples
• Duke Energy Mega Site Evaluation
• Duke Energy Target Site Evaluation
• Oklahoma Certified Sites
• Kansas Certified Sites

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Trends Certified Sites

• Objectives
• Make existing inventory of sites more marketable
• Desire to know more about the sites that exist
• Examples
• North Carolina Certified Sites
• South Carolina Certified Sites
• Pennsylvania Select Sites II

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Trends Certified Sites

• Objectives
• Education / Technical Assistance
• Make communities more aware of the process and
  what it takes to be competitive
• Normal by-product of all programs
• Examples
• Pennsylvania Select Sites I

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Trends Certified Sites

• Communities with shovel-ready or certified sites
  have a competitive advantage
• Allows for effective pro-active marketing
• Better re-active marketing
• Know sites strengths and weaknesses
• Better prepared to offer development assistance
  as may be needed
• Present properties that offer company minimum
  development schedule

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Trends Certified Sites

• Typical Requirements
• Minimum number of developable acres required
  determined by target industry
• Developable acreage must be outside the FEMA 100-
  and 500-year floodplain
• Site must be available for sale and clear title
  demonstrated if not owned by E.D. entity, then
  must be controlled with a purchase option

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Trends Certified Sites

• Typical Requirements
• Site must be accessible (no ROWs, easements, or
  other impediments blocking access to, or
  development of, the site) or mitigation solutions
  (including costs and schedule and appropriate
  commitments) must be clearly demonstrated
• Site must be within 10 miles of an interstate or
  4-lane divided, limited access, all season highway

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Trends Certified Sites

• Typical Requirements
• Utility infrastructure must be in place at the
  site or have planned ROW access identified and a
  plan of action clearly demonstrated (including
  cost and schedule)
• Site must be zoned appropriately or capable of
  being rezoned within 90 days. If rezoning
  required, a master plan and a letter from a
  member of the governing body supporting rezoning
  must be submitted.

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Trends Certified Sites

• Typical Requirements
• Environmental Due Diligence - The following
  standards must be met
• Site must have a Phase I ESA completed and if a
  Phase II was recommended, then the Phase II Audit
  must be completed. If Phase II recommended
  mitigation actions, then the mitigation plan must
  be completed or a plan of action clearly
  demonstrated.
• Site must have a geotechnical assessment
  completed.

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Trends Certified Sites

• Typical Requirements
• Environmental Due Diligence - The following
  standards must be met
• Site must have a wetlands delineation completed
  and the site must be free of wetlands, or have a
  mitigation plan achievable within 90 days
• A protected species study must be completed and
  the site must be free of endangered species, or
  have a mitigation plan achievable within 90 days
• A historical / archaeological study must be
  completed and the site must be free of areas of
  significance, or have a mitigation plan
  achievable within 90 days

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Questions?
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Trends GIS
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Trends GIS

• Companies are very deadline driven
• Time allotted for siting decisions has been
  compressed resulting in more use of GIS
• Has influenced the process of site selection
• Communities are being evaluated without anyone
  knowing
• Assists with determining areas of interest
• Prior to any consideration of site or building

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Trends GIS

• Sample Regional analysis using GIS
• Attraction and aversion criteria examples
• Attraction
• Manufacturing labor force of a certain size
• Population of a certain size
• Proximity to interstate
• Etc.
• Aversion
• Presence of union locals (all or specific unions)
• Competitor locations
• Non-attainment areas
• Etc.

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Trends GIS

• Data sources often utilized in screening
• U.S. Census Bureau
• Bureau of Labor Statistics
• U.S. Department of Labor
• National Climatic Data Center
• U.S. Geological Survey
• Rand McNally Atlas
• National Transportation Atlas Database
• Environmental Protection Agency
• National Oceanic Atmospheric Administration
• Etc.

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Trends GIS
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Questions?
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Elements of Successful Projects
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Being Prepared

• Product Development
• Leadership
• Sites
• Infrastructure
• Workforce
• Education
• Training
• Taxes
• QOL
• Community Assets

• Organization
• Vision Strategic Plan
• Org Financial Design
• Staffing / HR
• Sales and Marketing
• Customer Knowledge
• Product Knowledge
• Communication

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Being Prepared ProductLeadership

• Knowledgeable about economic development
  (trained!)
• Long-term vision and commitment
• Passion for your community
• Persuasive communicator
• Internal and external
• Be prepared identify and develop community
  leaders

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Leadership Example

• Dollar GeneralMarion, IN
• Site and schedule driven project
• Very competitive (incentives)
• Mayor took lead
• Site issues (state and federal agencies)
• Legislation

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Being Prepared ProductSites

• Basic need for growing companies
• Dirt Wont Do
• Property does NOT equal site
• Location decision demands speed
• Site selection and facility start-up
• Be prepared maintain a portfolio of ready,
  available sites

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Being Prepared ProductInfrastructure

• Water and Wastewater
• Capacities, line locations
• Energy
• Available, reliable, cost effective
• Transportation
• Road, rail, air, water
• Be prepared stay ahead of needs for
  infrastructure

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Sites and Infrastructure Example

• SeverCorr Columbus, MS
• Rural community
• Demanding site specs
• Community proactively prepared
• Site certification
• 800 million
• 450 jobs

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Being Prepared - Human Resources

• Education
• Recognize ties that bind economic development and
  education together
• Training
• Recruiting, screening, and pre-employment
  training
• Critical component (start-up and on-going)
• Be prepared show improvement in education and
  continue to invest in training resources

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Human Resources Example

• Nissan AssemblyCanton, MS
• Large complex project
• Over 4,000 jobs
• Recruit, screen, and training was critical
• Upgrade employment offices
• On-site center
• High dollar value
• Train for turnover

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Being Prepared ProductTaxes

• Major Site-Variable Factor
• Bottom line distinction among locations
• Balance need for services and tax revenue with
  impact on investment decision
• Minimize as much as possible
• Be prepared have creative tools in place to
  encourage investment

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Tax and Incentives Example

• Nissan WarehouseGreenville, SC
• Small project, third-party building investor
• Limited Nissan investment
• Did not qualify for Fee-in-Lieu
• Creative solution
• Utilized two other programs to create similar
  value

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Being Prepared ProductCommunity Assets

• Quality of community life is a factor in almost
  every project
• Critical for relocation of key personnel
• Becoming a fundamental factor with growing
  emphasis on knowledge-worker opportunities
• Be prepared never stop investing in the quality
  of life of your community
• Look beyond your community to define you quality
  of life assets

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Community and Regionalism Example

• Trex ManufacturingOlive Branch, MS
• Dynamic growth company
• Concern regarding south
• Concern with small town
• Rejected small finalist during windshield tour
• Comfort with Memphis Region

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Being Prepared

• Product Development
• Leadership
• Sites
• Infrastructure
• Workforce
• Education
• Training
• Taxes
• QOL
• Community Assets

• Organization
• Vision Strategic Plan
• Org Financial Design
• Staffing / HR
• Sales and Marketing
• Customer Knowledge
• Product Knowledge
• Communication

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Being Prepared OrganizationVision and
Strategic Plan

• Vision
• Know where you are
• Know where you want to be
• Know how to get there
• Plan
• Grounded in reality
• Well supported and acted upon
• Strong leadership
• Links the community and the economic development
  team

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Being Prepared OrganizationVision and
Strategic Plan

• Be prepared commit to visioning and strategic
  planning

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Being Prepared Organization Organization Design

• Commit to the regional approach
• Aligns with decision making of investors
• Leverages scarce resources
• Commit to staff development
• Adequate staff / professional development
• Align organization with strategy!
• Be prepared design, direct, and invest in your
  organization

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Being Prepared

• Product Development
• Leadership
• Sites
• Infrastructure
• Workforce
• Education
• Training
• Taxes
• QOL
• Community Assets

• Organization
• Vision Strategic Plan
• Org Financial Design
• Staffing / HR
• Sales and Marketing
• Product Knowledge
• Customer Knowledge
• Communication

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Being Prepared Sales and MarketingSales for
Economic Development

• Product Knowledge
• Know your community
• Strengths and weaknesses
• Customer Knowledge
• Know your customer (industry, company)
• Opportunities and threats
• Sales Skills
• Communication skills (listening!)

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Being Prepared Sales and MarketingMarket
Segmentation

• Investment and jobs from outside
• Recruitment
• Additional investment and jobs from inside
• Expansion / Retention
• New investment and jobs from inside
• Entrepreneurial Development
• Be prepared position for all segments

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Recent Example of Being Prepared

• Columbus / Lowndes County / State of Mississippi

• PACCAR Inc
• State-of-the-art engine manufacturing facility
• 300 million capital investment
• 500 full-time jobs
• 400,000 square feet
• 394 acre site located on part of the Crossroads
  megasite

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Summary

• Siting is a process driven by some key
  fundamental issues
• Understanding those fundamentals and the process
  will enable you to better influence the decision
• Be prepared know your communitys strengths and
  weaknesses and understand your target industries
• Be aggressive someone out there is doing it
  better and faster than you are

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Questions?
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MSC Contact Information

• Jeff Forsythe
• Senior Consultant
• McCallum Sweeney Consulting
• 200 North Main Street, Suite 303
• Greenville, SC 29601
• 864-672-1600
• 864-672-1610 (fax)
• jforsythe_at_mccallumsweeney.com
• www.mccallumsweeney.com