Freight Facility Location Selection: A Guide for Public Officials (2001)

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Freight Facility Location Selection: A Guide for Public Officials 17 Chapter 3: The Critical Roles of Groundwork and Collaboration Freightfacilitydevelopersgenerallyprefertoworkwithcommunities that understand the competitive landscape of the freight industry. Thesecommunitiescometo the tablewithanunderstandingof the company’s goals, as well as how the company’s and community’s goalsalign. Theyareable tosuggestproposals thathelpreduce initialinvestmentoroperatingexpenseoratleasttoknowledgeably demonstrate the benefits of specific sites. This provides the most amenable environment for a win-win outcome. Such communities recognizethatalignmentofpublicandprivatesectorgoalsyields benefitsforbothlongintothefuture. Companies begin discussions with government and economic developmentorganizationsatvarioustimesdependingontheirstage inthelocationprocess.Themoresurethecompanyisaboutwhere theywish tobe, themore likely it is that theywilldirectly contact officialsatthelocallevel(county,city,orother)andbeginfeasibility discussions.Ifthesearchisregional(oratanearlystage),thenthe companymaydecideinsteadtospeakwithstateorregionalofficials. Ideally, a community positioning itself for freight uses (i.e., industrial or freight facility development) will have developed a vision, economic development strategy,landuseplan,transportationplan,andzoning regulations that explicitly permit and support these facilities in a variety of ways.  This also means that such plans will have been developed in such a way that areas designated for freight uses are either not in conflict with other community uses and residential neighborhoodsorthatacertainamountofconflicthas been recognized, identified,andmitigationproposed. Thistypeofpreparationmaybereferredtoas“laying the groundwork.” Freight facility developers generally prefer to work with communities that understand the competitive landscape of the freight industry. Ideally, a community positioning itself for freight uses... will have developed a vision, economic development strategy, land use plan, transportation plan, and zoning regulations that explicitly permit and support these facilities in a variety of ways.

Freight Facility Location Selection: A Guide for Public Officials18 Communitiesandregionscanalsohelpsignificantlyintheindustrial or freight facility development process by proactively managing the interaction with both stakeholders at all levels and with the broader public.  These activities can result in “collaboration.” Governmentandappointedofficialscanworkwithlocalintereststo keepeveryoneinformed,involved,andcoordinated.Forexample, they can ameliorate community concerns by ensuring that the communityhasavisionthatisbroadlybased,hasbeendeveloped inacollaborativeway,andthatcallsforlandusedevelopmentthat supports thenecessarytaxbase.Suchavisionandplanswillalso transparentlyacknowledgepotential impactsandsuggestways to avoidormitigatethoseimpacts.Proactiveplanningwillalsoserve toeducatethepubliconthebenefitsthatsuchdevelopmentcanbring tothecommunityatlarge,anddemonstratehowthecommunitycan workwiththenewdevelopmenttoreducetheimpactonresidentsto thegreatestextentpossible. The concepts of proactivity (planning, being proactive) and the building of collaboration – particularlywith the public – deserve extra emphasis here.  All local and regional planners want vital, attractive,andsolventcommunities.Itisalsotruethatthisgoaloften requiresveryhardworkintermsofsolidstrategicthinkingandthe courage to make controversial decisions or propose controversial alternatives.Onekeyfactorinreducingcontroversyiseducationof thepublictotheconceptof“freightasagoodneighbor.”Freight is often seen as a “badguy” contributing to noise, congestion, or unpleasant vistas. While there is no gettingaround the potential effectsoffreightuses, it isalso true thatfreightfacilities thatare well-sitedandwell-plannedcanbeagreatbenefittoacommunity inavarietyofways,fromthedevelopmentofanemploymentbase to tax income potential.  The more the public understands about the tradeoffsof landdevelopment, themoreacommunitycanbe proactiveinstrategy,ratherthanreactivetocontroversy. Proactive planning and targeting of specific freight facility developmenthelpstoprovideacost-benefitframeworkoftaxbase andjobstoamelioratetrafficandotherlandusedevelopmentissues. Therearemanyissuesonwhichresidentsorothersmayopposesuch

Freight Facility Location Selection: A Guide for Public Officials 19 Laying the groundwork Laying the groundwork for industrial and/or freight facility developmentmayconsistofanyorallofthefollowing: ; Priordevelopmentofcommunityvision,goals,and comprehensiveplan. ; Educationandinclusionofcommunitystakeholders. ; Initialthird-partyfeasibilitystudy ontheappropriatenessofthe communityforafreightfacility. ; Amenabletransportationnetwork. ; Clearlydefinedeconomic developmentstrategy. ; Clearandconsistentzoning regulationsandpermitting requirements. ; Publicutilitycapacity. ; Identificationofprivatesector developerswithinterestandcapabilitytoconstructfreight facilitiesandinfrastructure. ; Anamenabletaxenvironment. ; Publicsectorincentives. Preparation for successful freight facility development begins with an understanding on the part of the community and local government of community vision and goals, and the logical steps that need to be taken to move the community in that direction. While clearly not all communities have written visions, even an unwritten vision makes itself clear in the ways that the community plans, or fails to do so, for its own development. a development, not the least of which include NIMBY (not in my backyard)concerns.However,suchoppositionislesslikelytodevelop traction if the community has already established a transparent processanda senseof trust, duringwhich thepublic hasbecome awareofthebenefitsandtradeoffsoffreightfacilitydevelopment. Companies view a community’s or region’s willingness to provide aclearpath through thepublic review,permitting,andregulatory processesasanamenityorincentive.Byprovidingthecompanywith areliableandtransparentpictureofwhatobligationsthecompany needs tomeet,whichpermits it needs toobtain,andaclear time frameforwhenthesehurdlesmaybemet, thecompanycanmore clearlydefinewhenthefacilitywillbeabletoenterthesupplychain andgeneratereturnsoninvestment.

Freight Facility Location Selection: A Guide for Public Officials20 Acomprehensiveplan,whetheratthelocal,regional,orstatelevel, canbeanindicationthatthecommunityhastakenresponsiblecharge ofitsowndirection.Clearly,therearegoodcomprehensiveplansand not-so-goodcomprehensiveplans.Ifwellprepared,acomprehensive planwill define community goals for development, aswell as the specifictransportation,landuse,andopenspacerequirementsand projectstobringabout itsgoals. Agoodcomprehensiveplanwill Case Study Land use regulation is a useful tool to guide freight facility development. Virginia Inland Port, located in Front Royal, VA (approximately 70 miles west of Washington, D.C.), began operations in 1989 and is generally recognized as America’s first successful inland port. The port can also serve as a “lesson learned” opportunity, as current knowledge would suggest that if the port were to be developed today, the layout would be different to allow more strategic development of parcels. Also, land requirements might be expanded to 1,000 acres with greater emphasis on smart growth for supporting freight facilities. Strategic smart growth would entail planning to incorporate zoning and land use for supporting facilities [third-party logistics (3PL), distribution centers], and would buffer residential development from freight activity. Since Virginia Inland Port’s actual development was sporadic, contiguous development didn’t allow for efficient development of the growth and operations existing today. For example, a golf course development across from the facility hinders further industrial development and reflects the importance of planning considerations for future inland port developments. A comprehensive plan... can be an indication that the community has taken responsible charge of its own direction... A good comprehensive plan will also have been developed collaboratively so that a broad range of stakeholders will have had meaningful input to the process. Preparationforsuccessfulfreightfacilitydevelopmentbeginswithan understandingonthepartofthecommunityandlocalgovernment ofcommunityvisionandgoalsandthelogicalstepsthatneedtobe takentomovethecommunity towardthatdevelopment.Avision is not justwordsonpaper,but clear understanding,developed ina collaborativeprocess,ofhowthecommunityseesitselfinthefuture. Thiscanrelatetoalltypesofcharacteristics,includingqualityoflife, economicviability,sustainability,andinfrastructure.Whileclearlynot allcommunitieshavewrittenvisions,evenanunwritten(orno)vision makesitselfclearinthewaysthatthecommunityplans,orfailstodo so,foritsowndevelopment.

Freight Facility Location Selection: A Guide for Public Officials 21 alsohavebeendevelopedcollaborativelysothatabroadrangeof stakeholderswillhavehadmeaningfulinputtotheprocess. Whenacommunityisactivelyseekingorspeakingwithapotential freightfacilityorindustrialdeveloper,thegreatestopportunityfor successwillcomefromextensivecollaborationandcommunicationat that stage. Planners, local electedofficials, economicdevelopment agencies, regulatoryagencies, transportationplanners, andothers needtobebrought intotheprocesssothat theycanexpress their concernsandhavethoseconcernsaddressed.Thesamegoesforthe generalpublic,mostspecificallythoseliving,working,orcommuting inproximitytotheproposedfacility. Inorderforthecomprehensiveplanandvisiontobeimplemented,a communitymusthavesoundlanduseregulationsinplace,including zoningregulations,buildingcodes,transportationfacilityguidelines, andothers.Thoseregulationsimpacthowacompanycanimplement itsplansforaparticularsiteandcanalsogivesomeindicationas to how compliance will impact the project development timeline. Knowledgethatacommunityisalreadyfamiliarwithafacilitytype andhasaprocessinplacecanbeseenasa“locationpositive.”For example,acommunitythatalreadyhousesabulkterminalwillbe familiarwiththeimpactsthatthesemighthaveuponthecommunity and will have a clear process in place for permitting additional facilitiesusingbulkfreight.Othercommunitiesthatdonothavethis experiencemightexhibitconfusionanddelay inrespondingtothe company’spermitapplicationsiftheydonothaveanunderstanding ofacompany’sbusinessneeds.However,evenacommunitywithout priorexperience canensure that it iswellprepared forwhatever typeofdevelopmentitdesires. Firecodes,landuseregulations,trafficregulations,zoning,andhours ofoperation regulations canall significantly impact the feasibility of a freight facility location.  The interpretation of codes and regulations by officials such as fire marshals can have a decisive effect on theability ofa facility to functionasplanned.  Ideally, acommunitypositioningitselfforfreightuseswillhavedeveloped landuse,transportation,andzoningplansthatexplicitlypermitand

Freight Facility Location Selection: A Guide for Public Officials22 supportthesefacilitiesandthat,insomecases,allowforround-the- clockoperation.Asanaside,developmentofregulationsthatare amenablefordesireddevelopmentandthatalsosupportcommunity goals and values can be a particular challenge when freight facilitiesareestablishedattheedgesoftownsandtheneighboring communitieshavedifferingviewsonwhichusesoughttobeprovided forandwhatstandardstoimpose. The availability of public utilities, such as water and sewer, can bea critical element in site selection. Theamount of lead time to developthisinfrastructuremayendupbeingprohibitiveiftheyare notalreadyavailable.Publicutilityavailabilityandcostsareusually investigatedthroughconversationswithlocaleconomicdevelopment agencies and utility providers.  Municipalities need to be aware offreightfacilities’utilityneedsandof thecapacity thatexists to accommodatethoseutilities. Public sector assistance and incentives Public sector assistance in the forms of tax credits, grants, low- cost loans, training programs, utility discounts, and infrastructure development can address specific location shortcomings and is oftenusedtoclosethegapbetweenalocationanditscompetition. Broadly speaking, incentivesdo notdrive locationdecisions in the early stages of facility planning. Incentives do not substantially impact the overall feasibility of a site, nor can they ameliorate seriousshortcomings.Inshort,theycannotmakea“bad”locationinto a“good”one.Therefore,incentivesarenotanearlydecisionfactor, butmaybea significant factoronce the list is reduced to several candidatesites. Companiesandlocationconsultantshaveawiderangeofperspectives regarding the roleanduseofpublic incentives.  Some companies viewtheincentivesprocessasaskingthecommunityforhandoutsand Public sector assistance in the forms of tax credits, grants, low-cost loans, training programs, utility discounts, and infrastructure development can address specific location shortcomings and is often used to close the gap between a location and its competition. many... view incentives as a means for building a critical partnership between company and community...

Freight Facility Location Selection: A Guide for Public Officials 23 arenotwillingtoaskforanyassistancebeyondthatavailableas-of- right(e.g.,benefitsdefinedbylegislationifcompaniesachievepre- sethiringor investment targets). Somemayevenforego incentive offersduetoconcernsoverpublicperceptionorfuture“claw-back” provisionsthatrequirethecompanytoreturnanybenefitsifagreed- uponbenchmarksarenotmet. However, many others view incentives as a means for building a criticalpartnershipbetweencompanyandcommunitytoreducethe one-timeandoperatingcostsoffreightfacilitiestothepointwhere successmaybegained forboth sides.Specific incentiveprograms caninclude: • Taxconcessionsorexemptions. • Loansandloanguarantees. • Employeetaxcredits. • Wagesubsidies. • Landsubsidiesorgrants. • Cashgrants. • Propertytaxabatements. • Utilityratereductions. • Infrastructuregrants. • Accessimprovements. • EnterpriseZones. • ForeignTradeZones(FTZ). • TaxIncrementFinancing(TIF). • Inventorytaxreduction. • Expeditedpermittingandapprovals. • Customizedtrainingprograms. Thepublic sectormayalsobeable tooffer information tofreight facilitydevelopersby, forexample,actingasa clearinghouse for information on back-haul and other freight-leveling opportunities. Some companies would find it helpful to obtain information on localfreightmovementthesamewaytheycanforelectric,utilities, workforce,andsoils.Bycoordinatingthisinformation,thecommunity canensurethatlocalcarriersandfreightusersrunclosertocapacity onamoreregularbasis,providingastrategicadvantage.Thistype

Freight Facility Location Selection: A Guide for Public Officials24 of informedpartnership,which thepublic sector canprovide,may makeadifferenceintheultimatesiteselection. Communitiescanalsoprovidetangibleincentiveswithoutsubsidyby shortening or expediting the permitting time frame.  Communities that understand the company’s process and drivers can smooth thepermittingprocessandprovide clarityofexpectations for the company and the regulatory agencies, thus resulting in a better definedprocessandashortertimetoimplementation.Throughthis approach,communitiescanprovideastrategicadvantagefortheir location. Income, sales, realestate,andproperty taxes canall significantly affectthecostenvironmentforfreightfacilities.Chiefamongthese arepropertytaxes.Realestatetaxescanbehighonurbanfacilities onlandthatmightotherwisebeusedforhigh-densitydevelopment. Overtime,higherrealestatepropertytaxesmaydrivetheseparcels intonon-freightdevelopmentandfreightfacilitieswillrelocatetothe urbanfringe. Whileincentivesareoftenveryusefultools,itshouldbenotedthat localstrategiesofbuildingspeculativeinfrastructure,publicterminals, and warehouses are unlikely to be successful without a thorough understanding of how these directly address operating economics and forecasted market demand. Freight location decisions rarely respond to a “build it and they will come” approachonthepartofthepublicsectorunless thepublicsectorhasbeendiligentindoingits homework.Buthavingneededinfrastructurein placecanbeastrongincentive. Freight location decisions rarely respond to a “build it and they will come” approach on the part of the public sector unless the public sector has been diligent in doing its homework. But having needed infrastructure in place can be a strong incentive.

Freight Facility Location Selection: A Guide for Public Officials 25 Learning: ; Becoming educated on the drivers of freight facility siting decisions can help communities effectively plan for such facilities. Understandingwhatdrivesa company to locate anewfreightfacilityandhowtheprocessprogressesallows forbetterconversationswhenthepublicandprivatesectors cometothetabletogether. ; Obtaining a full understanding of a freight facility’s potential impactscan lead tohigherquality localplanning and development decisions.  Costs and benefits should be understoodandsharedamongtheparties. ; The world of freight movement is a dynamic place.  Fuel costs, regulatory changes, and changing consumer tastes all influence the supply chain.  Elected officials are best preparedtoengageinfreightfacilitydiscussionswhenthey havethevisiontoanticipatechange.Statewideorregional freightplans can incorporate theseelementsanduse them inpolicyformation,andlocalcommunitiescanbenefitfrom beingfamiliarwiththesestatewideorregionalplans. Obtaining a full understanding of a freight facility’s potential impacts can lead to higher quality local planning and development decisions. Costs and benefits should be understood and shared among the parties. Best practices for the public sector So,whatcancommunityleadersandofficialsdointermsoflaying thegroundworkandbuildingacollaborativeprocesstobringgood freightfacilitydevelopmenttotheircommunityinawin-winprocess? The following lists represent some best practices for successfully engaginginthisprocess. Community representatives, whether they be elected officials, economicdevelopmentprofessionals, or in theplanningfields, can andmustleadthedialogueonwhatrolefreightfacilitieswillplayin theeconomiclifeofthecommunity.Publicofficialsshouldtakepositive steps to examine how their community interacts with the freight networkandlaythegroundworkformutuallybeneficialrelationships inthefuturethroughtheprocessesoflearning;examining;and planning,communicating,andeducating.

Freight Facility Location Selection: A Guide for Public Officials26 Examining: ; Thecommunity’slocationonvarioustransportationnetworks andfreightflowswillimpactthekindsofbusinesseswhichwill wanttolocateinthecommunity.Ifthecommunityisnotalong the key flow, it will not be a candidate for activity, while communitiesalongkeyfreightflowswillexperienceincreased pressuresforfreightfacilitydevelopment. ; Other key inputs such as labor force and overall cost environmentwillalso impactthespecificactivitiesdrawnto anarea.Thiswilldifferbycompany,activity,andindustry. Communities need to understand which facility types and functionsmatchtheirowncommunitystrengthsandprovidea competitiveadvantage.Landuseplannersneedtoemploy theseinsightsinthewaystheysituatedevelopmentandlink thatdevelopmenttotheirlocality’snetworksandresourcesas wellastotheircommunity’svisionandgoals. ; Makingtheefforttounderstandwhatthecommunityhasto offerinthesekeyareasallowsformoreefficientandeffective planning.Thisunderstandingcanalsoinfluenceprivatesector siting decisions and lead to improved opportunities for thecommunity.Whetherornotacommunityisevenunder considerationforapossiblefacilityisoftendecidedlong beforemostlocalagencieslearnofit.Thus,acommunity’s ability to better position itself can expand its range of prospects. Economicdevelopment corporations canmakea keycontributioninsharpeningthefocusofpublicplanningat boththeregionalandlocallevels. Planning, Communicating, and Educating: ; Communitiesneed todeterminewhere freightand logistics orientedprospectsfitintotheirbusinessattractionprogram. Whetherasadirect targetor to support strategies for manufacturing, retail, and other activities, communities mustdevelop freightattractionor supportplans.A freight “cluster”maybeapossibilityifcarefullyplanned.Metropolitan ...a community’s ability to better position itself can expand its range of prospects.

Freight Facility Location Selection: A Guide for Public Officials 27 PlanningOrganizations(MPOs)whowanttoinfluenceinstead ofjustreacttothepatternoffreightactivityintheirjurisdictions shouldmakeanattempttointegratesuchcomponentsto theirplans. ; Institutional silos between economic development, land planning, transportation planning, and even between regionalgovernmentsmustbeovercome.Freightmovement andfacilitiesaffectandareaffectedbyallofthese,andour publicsectororganizationsneedtocollaborateinorderfor thebigpicturetobeunderstoodandforallstakeholdersto be“on-board.” ; Freightmovement functionsasa system.  The infrastructure interactswiththeoperation,andprivateinfrastructureinteracts withpublic.Betteroutcomesresultfromcollaboration.Despite the independent decision making of private and public organizations and the difficulty of institutional connections, thepartiesrequire interaction just like thesystemelements. Proactivecommunicationisthefirststeptoarrivingatwin-win proposals. ; Identifying areas appropriate for freight facilities in local plans and using zoning and policy tools can help protect a community’s ability to support freight operations.  Such insightfulandmulti-jurisdictionalplanningcanalsopreserve communityqualityof lifeandavoidpolitical headaches in thefuture. ; Anunderstandingofthecostsandbenefitsoffreightfacilities also lends public agencies the insight to build incentive, financing, and other credit programs that appropriately engagetheprivatesector.Theydosoinawaythatbuildsa long-term,mutuallybeneficialrelationshipbetweencompany andcommunity,balancinggainsandcostsamongtheparties. Electedofficials intentonbringing jobstotheirdistrictscan drivethisprocessandensurethatitmeetstheneedsoftheir constituents. ; Freight and logistics activities sustain community life (e.g., manypopularconsumergoodsarrivebytruck)andenable community growth, yet these benefits are generally not Our public sector organizations need to collaborate in order for the big picture to be understood and for all stakeholders to be “on-board”... Better outcomes result from collaboration...

Freight Facility Location Selection: A Guide for Public Officials28 recognizedbycitizens.Conversely,allcitizenscanrelateto thehazardstheyattributetotrucktraffic.Communicatingthe vital contribution of freight to our economyand educating other stakeholders and the general public is an important part of building collaboration and garnering support. Communicating the specific value of proposed projects is essentialtoattractingandpreservingcommunityorpolitical supportandprotectingtimelinesfordevelopment. Eachcommunity’sspecificsituationwillbedifferent.Nonetheless,the guidingprinciplesorbestpracticesnotedinthischapterrepresenta usefulframeworkforself-examinationandactiontowardbuildinga successfulfreightfacilitystrategy. Freight and logistics activities sustain community life and enable community growth, yet these benefits are generally not recognized by citizens. Conversely, all citizens can relate to the hazards they attribute to truck traffic.