Background Research Material for Freight Facility Location Selection: A Guide for Public Officials (NCFRP Report 13) (2011)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

103 The Critical Roles of Groundwork and Collaboration Freight facility developers generally prefer to work with communities that understand the competitive landscape of the freight industry. These communities come to the table with an understanding of the company’s goals, as well as how the company and community’s goals align. They are able to suggest proposals to help reduce initial investment or operating expense or at least to knowledgeably demonstrate the benefits of specific sites. This provides the most amenable environment for a win-win outcome. Such communities recognize that alignment of public and private sector goals yield benefits for both long into the future. Companies begin discussions with government and economic development organizations at various times depending on their stage in the location process. The more certain the company is about the location, the more likely they will directly contact officials at the local level (county, city, other) and begin feasibility discussions. If the search is regional (or at an early stage), then the company may decide instead to speak with state or regional officials. Ideally, a community positioning itself for freight uses (i.e., industrial or freight facility development) will have developed a vision, economic development strategy, land use plan, transportation plan, and zoning regulations which explicitly permit and support these facilities in a variety of ways. Designated areas for freight use should not conflict with other community uses and residential neighborhoods. If any conflicts exist they should be identified with a proposed mitigation strategy. We refer to this type of preparation as “laying the groundwork”. Proactive collaboration through communities and regions can aid in the industrial or freight facility development process through interaction with stakeholders and the public. We refer to these activities as “collaboration”. Government and appointed officials can work with local interests to keep everyone informed, involved, and coordinated. For example, they can ameliorate community concerns by ensuring that the community has a broad vision, has been developed in a collaborative way, and calls for land use development that supports the necessary tax base. Such a vision and plans will also transparently acknowledge potential impacts and suggest ways to avoid or mitigate those impacts. Proactive planning will educate the public on the benefits the development can bring to the community, and demonstrate how the community can work to reduce the impact on residents to the greatest extent possible. Proactive planning and targeting of specific freight facility development provides stronger conditions to be successful at locating freight facilities that can balance the benefits of jobs and tax base while mitigating traffic and other land use development issues. There are many issues on which residents or others may oppose such a development, not the least of which are NIMBY concerns. However, such opposition is less likely to develop traction if the community has already established a transparent process and a sense of trust, during which the public has become aware of the benefits and trade-offs of freight facility development. Companies view a community’s or region’s willingness to provide a clear path through the permitting and regulatory process as an amenity or incentive. By providing the company with a reliable picture of what obligations the company needs to meet, which permits it needs to obtain, and a clear timeframe for when these hurdles must be met, the company can more clearly define when the facility will be able to enter the supply chain and generate returns on investment.

104 9.1 Laying the Groundwork Laying the groundwork for industrial and/or freight facility development may consist of any or all of the following:  Prior development of community vision, goals and comprehensive plan  Education and inclusion of community stakeholders  Amenable transportation network  Clearly defined economic development strategy  Clear and consistent zoning regulations and permitting requirements  Public utility capacity  An amenable tax environment  Public sector incentives Preparation for successful freight facility development begins with a clear developed vision and set of goals, and the logical steps that the community needs to take to achieve its goals. A vision is not just words on paper, but clear understanding, developed in a collaborative process, of how the community sees itself in the future. This can relate to all types of characteristics, including quality-of-life, economic viability, sustainability, and infrastructure. Relevant to the topic of freight facilities, the vision should include identification of areas for freight and industrial activities along with connections to transportation infrastructure. It should also help identify areas to limit or not allow significant freight activity. A comprehensive plan, whether at the local, regional or state level, can be an indication that the community has taken responsible charge of its own direction. If well prepared, a comprehensive plan will define community goals for development, as well as the specific transportation, land use, and open space requirements and projects to bring about its goals. When a community is actively seeking or speaking with a potential freight facility or industrial developer, the greatest opportunity for success will come from extensive collaboration and communication. Planners, local elected officials, economic development agencies, regulatory agencies, transportation planners and others, need to be brought into the process so that they can express their concerns and those concerns can be addressed. The same goes for the general public, most specifically those living, working or commuting in proximity to the proposed facility. In order for the comprehensive plan and vision to be implemented, a community must have sound land-use regulations in place, including zoning regulations, building codes, transportation facility guidelines, and others. Those regulations impact how a company can implement their plans for a particular site and can also give some indication as to how compliance will impact their project development timeline. Knowledge that a community is already familiar with a facility type and has a process in place can be seen as a “location positive”. For example, a community which already houses a bulk terminal will be familiar with the impacts that these might have upon the community and will have a clear process in place for permitting additional facilities using bulk freight. Other communities which do not have this experience might exhibit confusion and delay in responding to the company’s permit applications if they do not have an understanding of a company’s business needs. Fire codes, land use regulations, traffic regulations, zoning, and hours of operation regulations can all 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 the ability of a facility to function as planned. Ideally, a community positioning itself for freight uses will have developed land use, transportation and

105 zoning plans which explicitly permit and support these facilities and which, in some cases, allow for round- the clock operation. As an aside, development of regulations that are amenable for desired development and which also support community goals and values can be a particular challenge when freight facilities are established at the edges of towns and the neighboring communities have differing views on which uses ought to be provided for and what standards to impose. The availability of public utilities, such as water and sewer, can be a critical element in site selection. The amount of lead time to develop this infrastructure may end up being prohibitive if they are not already available. Public utility availability and costs are usually investigated through conversations with local economic development agencies and utility providers. Municipalities need to be aware of freight facilities’ utility needs and of the capacity that exists to accommodate those utilities. 9.2 Public Sector Assistance and Incentives The public sector assistance in the forms of tax credits, grants, low-cost loans, training programs, utility discounts, and infrastructure development (referenced earlier in this report) can address specific location shortcomings and are often used to close the gap between a location and its competition. Broadly speaking, incentives do not drive location decisions in the early stages of facility planning. Incentives do not substantially impact the overall feasibility of a site, nor can they ameliorate serious shortcomings. In short, they cannot make a “bad” location into a “good” one. Therefore, incentives are not an early decision factor, but may be a significant factor once the list is reduced to 2-3 candidate sites. Companies and location consultants have a wide range of perspectives regarding the role and use of public incentives. Some companies view the incentives process as asking the community for handouts and are not willing to ask for any assistance beyond that available as-of-right (e.g., benefits defined by legislation if companies achieve preset hiring or investment targets). Some may even forego incentive offers due to concerns over public perception or future “claw-back” provisions requiring the company to return any benefits if they don’t hit agreed-upon benchmarks. However, many others view incentives as a means for building a critical partnership between company and community to reduce the one-time and operating costs of freight facilities to the point where success may be gained for both sides. The public sector may also be able to offer information to freight facilities on back-haul and other freight- leveling opportunities. Some companies would find it helpful to obtain information on local freight movement the same way they can for electric, utilities, workforce, and soils. By coordinating this information, the community can ensure that local carriers and freight users run closer to capacity on a more regular basis, providing a strategic advantage. This is the type of informed partnership the public sector can provide may make a difference in ultimate site selection. Communities can also provide tangible incentives without subsidy by shortening or expediting the permitting timeframe. Communities that understand the company’s process and drivers can smooth the permitting process and provide clarity in terms of expectations for the company and the regulatory agencies, resulting in a better defined process and a shorter time to implementation. Income, sales, real estate, and property taxes can all significantly affect the cost environment for freight facilities. Chief among these is property taxes. Real estate taxes can be high on urban facilities on land which might otherwise be used for high-density development. Over time, higher real estate property taxes may drive these parcels into non-freight development and freight facilities will relocate to the urban fringe.

106 While incentives are often very useful tools, it should be noted that local strategies of building speculative infrastructure, public terminals, 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” approach on the part of the public sector. This chapter touches on a number of topics that are covered in the companion Guide to Siting Freight Facilities. That document was developed in parallel to this report and can also be obtained through the Transportation Research Board.