Building Our Future

WCEDC 2012:

Inaugural Report

Enhancing job growth and increasing the local tax base Engaging the community and business leaders

Nurturing existing businesses Actively recruiting new industries and commerce

Established in 2010, the Washington County Economic Development Council www.thewcedc.com is a private-public partnership providing unified economic development for Washington County, Tennessee. It incorporates the missions and objectives of the Economic Development Board, Johnson City Development Authority and Johnson City Public Building Authority into a cohesive approach. Staff members provide support to the governing boards of the EDB, JCDA and PBA so as to foster a consistent, proactive approach to successful economic development in Washington County, Johnson City and Jonesborough. The WCEDC strives to nurture existing businesses and recruit new industries and commerce so that Washington Countians can enjoy an affordable, excellent quality of life in a growing, economically vibrant community.

Our Board: Officers

Hank Carr, Chairman (Corridor Properties) Bobby Jobe, Vice Chairman (Lamar Dunn & Associates) Homer G’Fellers, Treasurer (Johnson City Power Board) Gerald Thomas, Past Chairman (Thomas Construction)

Dr. Jeff Banyas (City of Johnson City); Dr. Wilsie Bishop (ETSU); Warren Broyles (Roadrunner Markets); Tommy Burleson (Burleson Construction); Lamar Dunn (Lamar Dunn & Associates); Dan Eldridge (Washington County); Joe Grandy (Ferguson Enterprises); Candace Jennings (MSHA); Mark Kinser (General Shale); Rick Kirk (Hallmark University Housing); Logan McCabe (Johnson City Development Authority); Dr. Brian Noland, (ETSU); Chuck Perry (Eastman Credit Union); Jim Powell (Powell Companies); Ken Ross (Ken Ross Architects); Lottie Ryans (CenturyLink); Tom Seaton (Chamber of Commerce); Dennis Vonderfecht (MSHA); Jon Smith (Public Building Authority); Rab Summers (Summers-Taylor Inc.); Kelly Wolfe (Town of Jonesborough).

It may not be an exaggeration to say 2011 was the year everything began to change for economic development in Washington County. As the year opened, new Washington County Economic Development Council CEO Robert Reynolds occupied a no-frills desk tucked inside the Innovation Lab on West Market Street and local economic development was fragmented and less than ideally efficient. Yet by the time the year ended, the WCEDC had largely achieved its founders’ goal of “United Economic Development,” and helped the community score a number of highly visible victories in economic development. The year started from a challenging baseline, with the Economic Development Board, Johnson City Development Authority, and Public Building Authority all operating somewhat in their own separate silos. Reynolds, who had come on board in July 2010, listened, observed, and then worked with the WCEDC leadership to formulate a strategy for a successful transition to more efficient economic development. He and the WCEDC board leadership worked to persuade each entity’s leaders to begin consolidating the economic development model so Washington County could grow and prosper even more. By mid-year, that process was well under way, with a smaller, unified staff and a clear set of goals and objectives. The second half of 2011 was as successful as the first half was difficult. There were announcements of company expansions (Mullican Flooring, Nakatetsu and more), significant new retail openings, the consummation of JCDA’s purchase of the Downtown Centre and signing of a lease that will bring Northeast State Community College to downtown, and continued employment growth. As 2012 progresses, the WCEDC will continue to increase its local profile in what appears to be an improving business climate, and its team will continue pursuing important goals, including:

Washington County’s diverse economic base, business-friendly environment, strategic location, high quality of life and outstanding natural beauty position it well for strong growth in the coming decade. A skilled, hard-working economic development team, backed by visionary board leadership, will be crucial for the area to reach its potential. The WCEDC and its private and public-sector board leadership will continually strive for excellence and improvement in carrying out its mission. Thank you for your support! Hank Carr WCEDC Chairman Gerald Thomas Immediate Past Chairman

* Maximizing the impact of Northeast State Community College’s move to the Downtown Centre. * Continuing work with the private sector in bringing further redevelopment to downtown. * Ongoing economic development efforts with existing companies that are considering expansions and others considering a presence here. * Marketing the expanded Washington County Industrial Park and seeking opportunities to develop more land that can attract new employers. * Helping recruit new retail and commercial establishments to the area. * Working with local governments to make the process of building or expanding in Johnson City, Jonesborough or Washington County a smooth and business friendly one. * Marketing remaining available property in Millennium Park, and offering guidance and support as the PBA considers its future role, including the future of the Millennium Centre. * Increasing Washington County’s profile in the region as well as nationally and internationally through increased marketing content online and in the traditional media.

WCEDC Expansions

Clinical Management Concepts – January 2012

The growth at CMC’s institutional division, Pharmacy Network Services, and its compounding division, Pro Compounding, has been so solid, company founder Guy Wilson said, that extra space was needed so those companies could add employees to meet increased sales volume. When the WCEDC and partner agencies helped secure funding for an access road near CMC’s property, the result was a much easier path to expansion. The $3.4 million project includes a 12,000-square-foot building, and Wilson expects it to add 25 jobs over the next couple of years – at a company with an average salary of around $50,000. Electronic version users click for video.

“It’s pretty bottlenecked in here, and the road is key. We’ve been trying to get this worked out for years, and we weren’t making much progress until (WCEDC staffers) came up with folks from the state and the

First Tennessee Development District.”

Guy Wilson, Owner, Clinical Management Concepts

Fiber Innovation Technology – Winter 2012

Specialty synthetic fibers, straight from Johnson City to the world – who knew? FIT has quietly been making its mark with innovative fibers, both via custom and standard designs. The success FIT has achieved led to a chance to expand, and the WCEDC was there to help after learning about the opportunity during a visit to FIT. After learning about some incentives available through the State of Tennessee, company officials made the decision to move forward with a $2 million expansion that already has resulted in nearly 30 new jobs.

Electronic version user? Click for more: Story and video.

“We want to continue to grow in Washington County. When your business is successful and the state recognizes that with help from its end, it eases decisions about whether to invest more capital.”

Michael Holt, President, Fiber Innovation Technology

November 2011 – Mullican Flooring

When one of the nation’s leading hardwood flooring manufacturers decided to consider “backshoring” some jobs from overseas, economic developers from its home in Johnson City, from the region and from the state stood by ready to help make it happen cost-effectively. After company officials conducted an exhaustive due diligence process, Mullican indeed decided to bring those jobs to Johnson City, and the resulting announcement included:

• Relocation from University Parkway to an empty facility on Woodlyn Road

• A $12 million investment by 2015, including a new production line

• Creation of 164 new jobs over the same period, bringing total employment to around 300

The WCEDC continues to work closely with Mullican officials as the company navigates the complex process of moving within Johnson City and relocating production from overseas.

Expansions (continued)

“We believe we’re on the leading edge of a trend by U.S. manufacturers to shift jobs back to American soil. The high quality workforce available in the Johnson City area has made the expansion of our production a reality.”

Neil Poland, President, Mullican Flooring

“Since locating our facility in Washington County, Nakatetsu has enjoyed great success. This success has allowed us to continue to grow and expand our production lines. We look forward to continued growth and appreciate the support of the community and the state in our endeavors.”

Katsumi Okita, President, Nakatetsu Machining Technologies

A successful business model and helpful state incentives were all Nakatetsu needed to take the next step in its long-term growth plans. In September 2011, the auto parts supplier began a $6.3 million expansion at its 4-year-old facility in the Washington County Industrial Park. The expansion will create 35 new jobs at the plant, which produces tapered roller bearings. Bringing on two new production lines will boost employment at Nakatetsu and mark the company’s second expansion here. The Washington County Economic

September 2011 – Naketetsu Machining Technologies

Development Council worked closely with Nakatetsu and Tennessee’s Department of Economic and Community Development to help maximize the impact of this expansion. Electronic version users click for video.

Work progresses at Mullican’s new location

WCEDC Announcements

November 2011 – IPE America

The first fruits of East Tennessee State University’s Valleybrook Campus came early as IPE America (then called BioCorp), a pharmaceutical research and development startup, announced it would locate there. The announcement came after the Washington County Economic Development Council played a crucial role in connecting company representative Eric Latham with leaders from several of ETSU’s health sciences divisions, including the Bill Gatton College of Pharmacy. Latham had contacted the WCEDC with an interest in researching opportunities in Washington County. The EDC’s Mitch Miller and Robert Reynolds connected Latham with the right

The WCEDC collaborated closely with ETSU and the company to help make IPE America’s plan workable. In April, IPE gained clinical approval from the U.S. Food and Drug Administration to begin clinical trials on one of its sustained release drugs to treat hypothyroidism. The new drug uses a platform technology designed to address multiple indications and improve product stability, with the goal of replacing the current “gold standards” for T3 and T4 in the thyroid arena. The company also has formulated test batches of an all-natural arthritis cream at its Valleybrook site, and is in the process of developing an anti-wrinkle cream and other skin care products.

“In our region, it’s a valuable commodity to find research and development space and wet lab space such as the kind available at Valleybrook … and the fact that our region has an institution (ETSU) that includes a pharmacy school and a medical school makes ETSU Valleybrook an ideal setting for us.”

Eric Latham, Business Development, IPE

people at ETSU, which was looking to capitalize on the research and development opportunities at Valleybrook. ETSU’s strong health sciences programs, particularly its medical and pharmacy schools, were strong draws for the new company, which has an experienced research team. IPE America is focused on development of both all-natural, over the counter medications and new pharmaceutical treatments for breast cancer, Parkinson’s disease, Alzheimer’s disease and hypothyroidism.

Existing Business Visits Helping our existing businesses thrive is a primary WCEDC objective. We visit as many businesses as we can, as often as needed, in an informal, low-key format. We like to ask how things are going, and to try and find out whether there’s anything we can do to help in areas that may be giving them difficulty. With close ties to the local governments as well as regional and state economic development players, we have quite a bit at our disposal – whether it involves helping with issues at the local level or finding grants and tax incentives for an expansion or worker training – and best of all every bit of it is free. We also like to be able to knowledgeably brag about our local employers, and a visit is the only way to really be able to do that effectively. In the 12 months ended February 1, 2012, WCEDC staff members visited more than 200 separate businesses in Washington County, Johnson City and Jonesborough, and made multiple visits to some of those. In several cases, this hands-on approach has allowed WCEDC staff to help existing businesses find grants and other incentives that have led to significant expansions and job growth.

Innovate Medical LLC

Commercial Activity Washington County has maintained a positive pace of commercial activity over the past year. The WCEDC is strongly committed to helping commercial businesses, whether retail, professional services, food or others, to experience as smooth a process as possible: from planning to ribbon cutting and beyond.

A small business success Ophthalmologist Dr. Donny Reeves turned to the WCEDC and Tennessee Small Business Development Center for advice when he elected to open his own eye center in Boones Creek rather than relocate to Texas and uproot his family. As a result, five jobs stayed in the area and a new professional services firm, Reeves Eye Institute, came to Washington County. Click for video. The WCEDC works closely with partners like the SBDC, and through networking, to encourage and aid professionals and other entrepreneurs looking to locate in Washington County.

Helping prospects navigate the system Retail sales are the straw that stirs the drink in Washington County, and WCEDC staff members often act as an important liaison between investors and local government as they establish businesses here. The WCEDC provided key support, for instance, as developers of Longhorn Steakhouse (pictured) worked to bring a location to property at the North Roan Street exit of Interstate 26. WCEDC’s good relationships with planning department and other key staff in Johnson City will continue to be an asset as outside companies look to serve Washington County’s growing market.

Recent announcements and openings that have involved help from the WCEDC include:

Washington County continues to serve as the Tri-Cities’ retail hub. Ongoing new development, including the Fresh Market complex at the corner of State of Franklin Road and West Market Street (above), indicates the market’s attractiveness to retailers and restaurants that haven’t yet entered the Tri-Cities.

Downtown Johnson City The WCEDC focuses strongly on revitalizing downtown Johnson City, relying on the experienced leadership of the Johnson City Development Authority Board. Downtown’s dining, retail and arts-related businesses experienced a solid year and welcomed some new neighbors, including Venus and Fur, a clothing boutique, Energy Fitness, a gym, Greenstone, an art gallery/photography studio/printing business, and new restaurants Schmuck’s and The Battery. Click for video report. And recently, established downtown investors Main Street Partners announced plans for a new, three-story apartment building at the corner of Roan Street and State of Franklin Road. The WCEDC and JCDA are developing a comprehensive long-range plan and strategy to revitalize downtown Johnson City.

The WCEDC has played a vital role in the establishment of a Northeast State Community College teaching site at the Johnson City Downtown Centre. WCEDC staff aided the Johnson City Development Authority's leadership in overcoming numerous hurdles to secure a lease agreement between JCDA and the college, which could begin classes as early as August 2012. The JCDA's tax increment financing program (TIF) was used to purchase the building from Washington County and to fund significant building renovations for NeSCC. WCEDC staff continue to aid the JCDA and the college as they prepare for student and faculty arrival later this year. The agreement represents a microcosm of what the WCEDC is all about. It has brought together multiple partners -- Washington County, Northeast State, JCDA, the City of Johnson City and the State of Tennessee -- to accomplish an objective that will greatly benefit multiple constituencies.

In downtown Johnson City, the site will fill a previously empty building and bring hundreds of new people into an area still in need of additional foot traffic. The broader Washington County economy will benefit from the workforce enhancements a local community college presence brings. The local student population will have an additional post-secondary option close to home in an era of high transportation costs. Finally, community colleges' flexibility in meeting local workforce needs should allow for NeSCC long-term to tailor its Johnson City programs to meet the evolving needs of area employers. Electronic version users click for video.

“It’s about the students, and we’ve got to make it more accessible for them. There’s so much talent out there, we just have to make it easy for them to get in, and they’ll do the rest.”

Dr. Janice Gilliam, President, Northeast State Community College

Fountain Square.

Nelson Fine Art.

The Battery Restaurant.

Dr. Janice Gilliam at the Downtown Centre.

WCEDC Staff: Robert Reynolds, CEO

Mitch Miller, Executive Vice President Nicole Evans, Director of Operations

Dan Reese, Project Manager Jeff Keeling, Director of Marketing and Community Relations

Sharpening an important tool: Tax Increment Financing When the WCEDC began its work in earnest (fall 2010), Johnson City's TIF program was involved with three downtown area redevelopment projects, but it also faced important questions. As the only district-based TIF program in Tennessee, it remained a complicated matter for its administrator (the WCEDC/JCDA), and for its participating funders, Washington County and Johnson City. Additionally, the state law governing the program left some of its elements less than clear. In the winter of 2011, staff conducted an exhaustive internal study of TIF. Since then, significant progress has been made in gaining clarity about the TIF program at both the local and state levels. More importantly, the WCEDC and Johnson City Development Authority finalized an additional TIF project in 2011 that should greatly enhance downtown redevelopment – the agreement that is bringing Northeast State Community College to the Downtown Centre. The WCEDC presently is pursuing a final, high-impact project for the remaining available TIF resources so that the TIF program can be transitioned from a district-based approach to a much simpler, more cost-effective "project-based" program.

University Edge Apartments (background, above) is one of the TIF program’s major project-based undertakings. The $20 million construction project, completed in mid-2011, has helped spur development in a once-blighted corridor – including East Tennessee State University’s brand-new baseball stadium adjacent to the apartments (foreground and inset). Several other new projects are set to come on-line in the vicinity of University Edge by mid-2013.

By the numbers

Washington County employers added jobs at a significantly faster rate than neighboring counties, the state and the nation. The following table shows Washington County’s job growth for the latest 12 months available, along with the growth rates for neighboring Sullivan County and similarly sized Blount and Wilson counties. Strong job growth has helped keep Washington County’s unemployment rate, currently 6.9 percent, consistently among the five lowest of Tennessee’s 95 counties.

NUMBER EMPLOYED

UNEMPLOYMENT RATE (not seasonally adjusted)

County Feb. 2011 Feb. 2012 Improvement

Washington 8.2 percent 6.9 percent 1.3 percent

Sullivan 8.3 percent 7.8 percent 0.5 percent

Blount 8.8 percent 7.6 percent 1.2 percent

Wilson 8.3 percent 7.0 percent 1.3 percent

Tennessee 10.1 percent 8.5 percent 1.6 percent

United States 9.5 percent 8.7 percent 0.8 percent

Recent investment growth The WCEDC often plays an important role when employers want to invest or expand in Washington County. Since the fall of 2011, the WCEDC has worked with 10 employers that are in the process of adding more than 1,200 jobs, with accompanying investment of more than $30 million. The WCEDC was working with roughly 20 prospects in the spring of 2012, with the potential for more than 1,000 additional jobs and many millions of dollars in investment.

Jobs figures head in right direction, outdo regional, state and national trends

County Feb. 2011 Feb. 2012 Increase (decrease)

Washington 57,980 59,800 1,820 – 3.1 percent

Sullivan 68,530 68,320 (210 – 0..3 percent)

Blount 58,670 60,640 1,970 –3.4 percent

Wilson 54,950 56,830 1,880 – 3.4 percent

Tennessee 2,764,300 2,824,000 2.2 percent

United States 138,093,000 140,684,000 1.9 percent

Project Investment New Jobs Timeline

Confidential $3 million 50 Complete

Confidential $1 million 900 Three years

Nakatetsu $6.3 million 35 Complete

Reeves Eye Institute 5 Complete

Mullican Flooring $12 million 164 Three years

Longhorn Steakhouse $3.2 million 34 Mid-2012

IPE America (Biocorp) 4 Complete

Clinical Mgmt. Concepts $3.4 million 25 Two years

Fiber Innovation Tech. $1.8 million 30 Mid-2012

TOTALS $30.7 million 1,247

United Economic Development • Johnson City Development Authority • Johnson City Public Building Authority • Economic Development Board

300 East Main Street, Suite 406

Johnson City, TN 37601 (423) 202-3510; toll free (855) 885-3685

www.thewcedc.com

10 minutes from Johnson City, zero minutes from paradise.