PRIMJER 1

Michael Luger, Ph.D.

Office of Economic DevelopmentKenan Institute

The University of North Carolina at Chapel Hill

(919) 962-8870Fax: (919) 962-8202

February 2003

for:Research Triangle Regional Partnership

Charles Hayes, PresidentTed Abernathy, Vice President

The Feasibility of Mini-HubDevelopment in the Research TriangleRegional Partnership Region

The Feasibility of Mini-Hub Development in the Research Triangle Regional Partnership Region i

Acknowledgments

We owe a debt of gratitude to several organizations and individuals whose partner-ship made the project possible and whose help improved its quality. Most important,we thank the Golden LEAF and its executive director, Valeria Lee, for providing thefunding for the study to the Research Triangle Regional Partnership (RTRP). The Foun-dation considered a study of mini-hub development promising not just for citizens ofthe non-core counties of the RTRP region, but in other regions in the state, as well.Accordingly, we approached the project as a pilot that could be replicated elsewherein North Carolina and around the country where there is a relatively prosperous anddensely developed core surrounded by less prosperous and less developed counties.

RTRP was not just a client for this work, but also, an active partner. Indeed, whileCharles Hayes did not invent the idea of mini-hubs, he had the imagination to com-mission a study to see if they made sense in his region. He and Ted Abernathy pro-vided support, data, contacts, and advice to us throughout the project.

Early in the project, Charles and Ted invited a cross-section of business and po-litical leaders to convene and advise us about the likely feasibility of the concept. Thoseindividuals included: Dee Freeman, Ronnie Goswick, David Lawrence, Andy Levine,Neil Mallory, Paul Meyer, Susan Seymour, and Jim Talton

Among the members of the advisory group was Neil Mallory, executive directorof the Kerr-Tar Council of Governments (Region K). He recognized the possible valueof a mini-hub for the five region K counties and invited us to several meetings topresent the concept to his constituency. Those meetings were important testing groundsfor us. We received helpful comments that we then incorporated into the plan. Signifi-cantly, the audiences to whom we presented seemed to agree with our assessmentand wanted to move ahead as a pilot site.

We also need to thank the county economic developers who helped us evaluatetheir industrial sites: Benny Finch, Ronnie Goswick, Jerry Hartgrove, Bob Heuts, AllenKimball, Glen Newsome, Mike deSherbinin, Robin Spinks, Tony Tucker, and LeonTurner.

The Office of Economic Development team that worked on this report includedLeslie Stewart, OED’s associate director; Brande Roberts, OED staff; Jonathan Perry, a

Office of Economic Development, Kenan Institute, UNC-Chapel Hillii

Ph.D. student in the Department of Public Policy, and Jun Koo, a Ph.D. student in theDepartment of City and Regional Planning.

Of course, neither Golden LEAF nor RTRP is responsible for any errors of fact orinterpretation. Neither are the ideas we present intended to constitute the “official”policy of the University of North Carolina at Chapel Hill.

The Feasibility of Mini-Hub Development in the Research Triangle Regional Partnership Region iii

Contents

Acknowledgments ................................................................................................................ i

I. Introduction ....................................................................................................................... 1

II. The Problems to be Addressed by Mini-Hubs ......................................................... 3Economic Disparities ................................................................................................... 4The Failure of RTP to Spin-off Manufacturing ....................................................... 8The Limited Effect of State Policy Efforts .............................................................. 12Too Little Inter-county Cooperation, Too Many Industrial Parks ..................... 13

III. The Mini-Hub Concept .............................................................................................. 17Mini-hubs Defined .................................................................................................... 17What Mini-hubs Are, and Are Not ......................................................................... 18How Mini-hubs Can Pay Off for the Sponsoring Counties ............................... 21

IV. What Needs to be Done to Create Mini-Hubs ....................................................... 23Areas Currently Designated for Mini-hub Sites ................................................... 23Sub-regional Steering Committees ......................................................................... 23Decisions to be Made ................................................................................................ 24Ownership/management options ........................................................................... 24Choice of sites ............................................................................................................. 25Choose appropriate cluster focus ........................................................................... 26Necessary enhancements and incentives .............................................................. 26Financing ..................................................................................................................... 28

V. Some Examples ............................................................................................................... 31Missouri Research Park ............................................................................................. 31The Milwaukee County Research Park .................................................................. 32Stout Technology Park .............................................................................................. 34

References ............................................................................................................................. 37

Appendix A: Office of Economic Development Site Survey Instrument ............... 39

Appendix B: Notes on Potential Sites in Northern and Southern Counties .......... 43

Appendix C: Industry Groupings within Sample Clusters ....................................... 51

Appendix D: Legal Considerations and Examples of Revenue/Cost Sharing ........ 53

Office of Economic Development, Kenan Institute, UNC-Chapel Hilliv

Table 1: Differences in Demographics Among RTRP Counties —Core, Southern, and Northern ......................................................................... 6

Table 2: Cross-commuting in 2000 .................................................................................. 7Table 3: Population Growth — Core, Southern, and Northern Counties ............... 9Table 4a: Largest Employers in Northern Tier (Kerr-Tar) Counties, with

Size and Year Established ................................................................................ 10Table 4b: Largest Employers in Southern Tier Counties, with

Size and Year Established ................................................................................ 11Table 5: Mass Layoffs in RTRP Peripheral Counties, 1996–2001 .............................. 12Table 6: Recent Cluster Studies for the Region........................................................... 19Table 7: Radius data for Northern Sites, 2000 ............................................................. 27Table 8: Radius data for Southern Sites, 2000 ............................................................. 28Table 9: Business Concentrations in Select Cluster Areas in the

Northern and Southern Counties .................................................................. 29

Figure 1: Tier Designations ................................................................................................. 4Figure 2: The Thirteen-county Research Triangle Region ............................................ 5Figure 3: Differences in Educational Attainment within the

Research Triangle Region................................................................................... 6Figure 4: Traffic Counts ....................................................................................................... 9Figure 5: Regional Industrial Parks and Available Acreage ........................................ 14Figure 6: Linkages Among Mini-Hubs and RTP........................................................... 21Figure 7: General Siting of Two Mini-Hubs ................................................................... 24Figure 8: Candidate Sites in the Northern Counties ................................................... 25Figure 9: Candidate Sites in the Southern Counties .................................................... 26

List of Tables and Figures

The Feasibility of Mini-Hub Development in the Research Triangle Regional Partnership Region 1

SECTION ONE

Introduction

Fifty years ago, visionary leaders in North Carolina hatched a plan for a new kind ofindustrial park. Raleigh, Durham, Chapel Hill, and its environs were suffering a con-siderable brain drain of talented, young individuals whose skills and aspirations wereout of sync with the jobs that were available at home. So they took their new collegedegrees with them to San Francisco, Boston, and other such places.

Romeo Guess and Luther Hodges, among others, targeted land in the center ofthe triangle of cities to be home to new kinds of businesses — not the traditionalmanufacturing companies that had been the staple of the region, but research anddevelopment (R&D) operations associated with burgeoning new high-tech compa-nies. The objective was to create jobs that would retain the best and brightest. Thesuccess story of the Research Triangle Park (RTP) is well documented by Link (2002),and Luger and Goldstein (1991).

Research Triangle Park’s founders understood that R&D firms required close prox-imity to research universities and an airport, and RTP had those attributes. But thatraised another concern: what about the parts of North Carolina that also sufferedbrain drain and lagging economic development, but did not have those features? Theanswer the founders gave was that their initiative would benefit those other parts ofthe state nonetheless if the companies locating in RTP also moved their manufactur-ing facilities to the state, to be near their R&D labs.

That did not happen to any large degree. Consequently, the gap between thebest-off and worst-off counties widened. In this region, the core counties (Durham,Orange, and Wake) have median family incomes above the national average and whatGoldstein and Luger (1992) have termed a “brain draw.” But the outlying counties ofthe greater region still suffer relatively low wages, higher unemployment, and theloss of talent. The same is true for other peripheral and rural counties in the state.

In retrospect, the failure of the RTP to generate associated manufacturing activ-ity outside the core counties is not surprising. It was merely a hope, not a plan ofaction. No sites were identified to receive those related plants. No connections wereestablished between possible locations and the RTP. No incentives were provided toinduce specific companies to co-locate R&D and manufacturing in the same state.

Office of Economic Development, Kenan Institute, UNC-Chapel Hill2

The mini-hub idea that is the subject of this report is an attempt to provide theplan of action that has been missing from the RTP model. The concept is to provideenhanced sites appropriate for mid-tech businesses that would benefit from proxim-ity to the RTP and the resources located in the core counties of the region, but requiremore and/or cheaper land than is available in the RTP itself. These mini-hubs wouldbe different from the many traditional industrial parks that are a common element incounties’ economic development repertoire. They would be focused on specific clus-ters of businesses that are consistent with the state’s and region’s strategy for the 21st

century. They would include facilities, services, and amenities that would be particu-larly attractive to those types of businesses. Ideally, they would have a special certifi-cation as an RTP-affiliate, so they can benefit from the cachet of that park. And, possi-bly, they would provide special incentives to targeted businesses to induce them tocome.

The cost of developing these mini-hubs will be greater than for traditional indus-trial parks, because of the enhancements. Even with federal and state support (whichis yet to be determined), the cost would be too high for any single non-core county toincur. Accordingly, the mini-hubs are conceived as multi-county projects, with sharedcosts and benefits. Cost and revenue sharing are not new concepts in the U.S., buthave not been used much in North Carolina. Experts argue that multi-jurisdictionalcooperation — as embodied in cost and revenue sharing — is required if regions are tocompete successfully in the global marketplace of the 21st century.

This report is intended only to outline in broad strokes the mini-hub concept,not to be an operational document. It is meant to provoke sufficient interest amongstakeholders in the RTRP region to justify the next, operational phase.

The report is divided in to four further chapters. Chapter 2 expands upon theproblems faced in this region today, which demand some type of response. Chapter 3presents the mini-hub idea: what mini-hubs are and are not meant to be. Chapter 4specifies the steps that need to be taken to move the idea forward. And Chapter 5provides some examples of parks elsewhere in the U.S. that bear some resemblance towhat we describe here. We relegate some supporting material to the appendices.


SECTION TWO

The Problems to beAddressed by Mini-Hubs

The mini-hub concept was developed to address persistent problems that affect re-gions, like the Research Triangle Partnership, that are characterized by a relativelyhealthy core and a less-vibrant periphery. The core-periphery differences show up inmany measures of economic performance and have several undesirable effects. Theyreflect the market tendency for economic activity to concentrate near the most devel-oped resources (for example, the most complete infrastructure and best-educated la-bor), creating a gap between have and have-not regions that public policy has diffi-culty overcoming. The problem is compounded by a lack of coordinated effort amongthe peripheral counties. “Going it alone,” which is the typical approach to economicdevelopment, invariably results in duplication of effort and destructive competition.

The mini-hub idea is not new. It is based on the same rationale as research parks(which, in our parlance, are the “hubs”) that were developed as growth poles in less-developed and/or more rural regions. In those locations, the parks have provided theurbanization and localization economies that were absent.1 Of course, not all researchparks have been successful, but some have been shown to be an important engine ofregional development (Luger and Goldstein, 1991). One of the most notable examplesis the Research Triangle Park (RTP).

The idea of mini-hubs as an instrument of rural and smaller town economic de-velopment in North Carolina dates back at least to the first two terms of James B.Hunt’s governorship. He proposed the idea of a “Triangle East” park, to be developedamid Zebulon, Rocky Mount, and Wilson, providing a locus for manufacturing facili-ties that may have R&D operations in RTP. That idea was picked up again during theVision 2030 meetings throughout the state, where regional leaders puzzled over waysto provide the impetus for cluster development outside the major urban centers. The

1. Urbanization economies are present in well-populated areas where the density of householdsand businesses enables a large number of support services and amenities to be economicallyviable. Localization economies arise when many similar businesses co-locate to take advantage ofa density of a common pool of workers and other similarly demanded inputs.


Rural Prosperity Task Force also raised the question of whether mini-hubs might be aviable rural development strategy.

Economic DisparitiesThe unevenness of economic development among North Carolina’s counties has longbeen recognized, and has been a focus of state policy for decades.2 In 2001, for ex-ample, the five healthiest counties had an average unemployment rate 8.7 percentagepoints lower than the five worst-off counties (2.7 vs. 11.4 percent),3 and an averagemedian household income $23,262 higher ($49,339 vs., $26,077).4 Those types of differ-ences have persisted through good and bad economic times.5

The worst-off counties in North Carolina generally are rural and toward the pe-riphery of the state. That can be seen in the most recent “tier” map of North Carolina(Figure 1) — which shows five levels of counties by level of distress. Those tiers areused to target tax incentive and other programs toward the counties most in need.Tiers 1 and 2 (the worst-off) tend to be at the state’s rural edges.

FIGURE 1: Tier Designations

2. An early example of this was the 1986 North Carolina Commission on Jobs and EconomicGrowth’s year-long study to identify the major economic challenges facing the state. Chief amongits findings was the growing disparity between rural and urban North Carolina. That study led tothe creation of the North Carolina Rural Economic Development Center in January 1987.3. The worst-off counties in 2001 in terms of unemployment rates were Halifax, Swain, Cleve-land, Robeson, and Yancey. The best-off counties were Watauga, Orange, Currituck, Chatham,and Camden. Source, U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics.4. The worst-off counties in 2001 in median household income were Bertie, Tyrrell, Hertford,Halifax, and Graham. The best-off counties were Durham, Cabarrus, Mecklenberg, Union, andWake.5. In 1997, for example, the difference between the top and bottom five counties in unemploy-ment rates was even greater — 1.88 vs. 11.34 percent.


Each of the seven economic development partnership regions of the state hasmarked variation among its constituent counties, though to different degrees. TheNortheast Partnership, for example, contains just Tier 1, 2, and 3 counties. Other re-gions have at least a few Tier 4 and 5 counties to go along with their lower tier counties.

The Research Triangle Regional Partnership (RTRP), shown in Figure 2, is per-haps the most interesting case because it contains three of the wealthiest counties inthe state (Durham, Orange, and Wake), which house major universities and sophisti-cated high-tech companies. The “core” part of the region is centered on one of theworld’s oldest, largest, and most successful research parks. At the same time, RTRPincludes a Tier 3 (Person) and two Tier 1 counties (Vance and Warren).

Some of the differences in demographics among counties can be seen in Table 1.Figure 3 shows differences in educational attainment.

The tale told by the data is one of two subregions: the haves and the have-nots.Residents of the core counties — Durham, Orange, and Wake — had better access tojobs, with November 2002 unemployment rates at 5.5, 2.9, and 4.8 percent, respec-tively, compared to 7.4, 8.8, 12.3, and 8.8, and 12.3 percent in Harnett, Person, Vance,and Warren, Counties, respectively. Citizens in the higher unemployment countiesthat did work tended to commute longer to their jobs. Over 20 percent of all workersin Harnett, Warren and Person Counties drove more than 45 minutes to work, com-pared to 11 percent or less in each of the core counties. Job quality and pay follow

FIGURE 2: The Thirteen-county Research Triangle Region


FIGURE 3: Differences in Educational Attainment within the Research Triangle Region

TABLE 1: Differences in Demographics Among RTRP Counties — Core, Southern, and Northern

County

Percent Workers

Commuting 45 or More Minutes to

Work

Percent Workers Working at Home

Median Household

Income, 1999

Unemploy- ment Rates,

Nov 2002Total

Population

Percent Population

White

Percent Population

Black or African-

American

Median Age, both

sexes

Durham 7.2% 2.7% $43,337 5.5% 223,314 50.9% 39.5% 32.2Orange 8.0% 4.4% $42,372 2.9% 118,227 78.0% 13.8% 30.4Wake 11.0% 3.8% $54,988 4.8% 627,846 72.4% 19.7% 32.9

Chatham 17.5% 4.5% $42,851 5.3% 49,329 74.9% 17.1% 38.8Harnett 21.5% 1.9% $35,105 7.4% 91,025 71.1% 22.5% 32.5Johnston 23.3% 2.3% $40,872 5.1% 121,965 78.1% 15.7% 34.2Lee 15.6% 1.8% $38,900 7.2% 49,040 70.0% 20.5% 35.9Moore 10.6% 4.1% $41,240 6.2% 74,769 80.2% 15.5% 41.8

Franklin 30.8% 2.1% $38,968 6.1% 47,260 66.0% 30.0% 35.8Granville 18.4% 1.9% $39,965 6.5% 48,498 60.7% 34.9% 36.2Person 25.0% 2.5% $37,159 8.8% 35,623 68.8% 28.2% 38.0Vance 13.6% 1.3% $31,301 12.3% 42,954 48.2% 48.3% 35.0Warren 21.0% 3.2% $28,351 8.8% 19,972 38.9% 54.5% 39.7

Sources: U.S. Census Bureau, 2000 Census of Population; North Carolina Employment Security Commission.

Source: U.S. Census Bureau.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Durham

Orange

Wak

e

Frank

lin

Granvil

le

Perso

nVan

ce

Warr

en

Chatha

m

Harnett

Johns

ton Lee

Moore

No high school diploma

Bachelor's, graduate, orprofessional degree

Core Northern tier Southern tier


TABLE 2: Cross-commuting in 2000

similar patterns. Median household income in the core counties ranged from $42,400to $55,000 compared to around $30,000 in the Tier 1 counties in the northern part ofthe region.

The commuting patterns that arise due to the unevenness of quality job supplycan be seen in Table 2. That table uses recently released 2000 data to show the crosscommuting among the 13 counties in the RTRP region. The shaded cells along thediagonal indicate the percent of workers that stay within the same county of resi-dence to work. One hundred percent minus that amount (shown as the column to-tals) is the proportion of workers commuting out of their county of residence.

We can see that 74.9, 57.6, and 80.5 percent on the workers in Durham, Orange,and Wake Counties, respectively, were able to work within their home counties. InFranklin, Harnett, and Warren Counties (for example), the percentages were muchless: 34.9, 39.2, and 44.9 percent, respectively. Moreover, the gap between the core andnon-core counties in within-county commuting has grown since 1990.

There are at least three consequences of long commutes from outer to inner coun-ties. First, there is an equity issue with lower-paid workers having to spend more timethan higher-paid core county workers every day in their car, incurring out-of-pocketcosts as well as the opportunity cost of their time.6 Second, the commuting creates

6. The opportunity cost of their time is lower, but the cost as a percentage of their income ishigher.

County of Work

County of Residence

Cha

tham

Cou

nty

Dur

ham

Cou

nty

Fran

klin

Cou

nty

Gra

nvill

e C

ount

y

Har

nett

Cou

nty

John

ston

Cou

nty

Lee

Cou

nty

Moo

re C

ount

y

Ora

nge

Cou

nty

Pers

on C

ount

y

Van

ce C

ount

y

Wak

e C

ount

y

War

ren

Cou

nty

Tota

l Cou

nty

Wor

kfor

ce

Wor

king

Out

side

RTRP

Chatham County 44.69% 11.11% 0.09% 0.18% 0.11% 0.29% 5.73% 0.61% 17.06% 0.03% 0.00% 11.12% 0.00% 8.99%11,018 2,739 21 45 26 71 1,413 150 4,206 8 2,743 24,657 2,217

Durham County 0.31% 74.94% 0.19% 1.25% 0.00% 0.36% 0.16% 0.00% 8.24% 0.24% 0.12% 12.39% 0.01% 1.79%349 84,262 211 1,410 409 178 9,262 270 130 13,929 8 112,433 2,015

Franklin County 0.21% 4.27% 34.93% 2.77% 0.13% 1.27% 0.09% 0.00% 0.24% 0.13% 4.37% 46.51% 0.27% 4.80%47 951 7,772 616 28 282 21 54 29 973 10,347 60 22,248 1,068

Granville County 0.06% 22.49% 1.16% 53.46% 0.01% 0.40% 0.29% 0.03% 1.21% 1.08% 5.01% 12.15% 0.08% 2.57%12 4,609 238 10,957 2 82 60 7 249 221 1,026 2,489 16 20,494 526

Harnett County 0.61% 1.35% 0.06% 0.04% 39.20% 3.75% 11.16% 1.25% 0.21% 0.00% 0.04% 21.78% 0.00% 20.55%248 547 24 18 15,916 1,521 4,530 508 84 18 8,841 40,599 8,344

Johnston County 0.21% 2.80% 0.16% 0.18% 2.38% 45.97% 0.32% 0.01% 0.42% 0.01% 0.05% 40.27% 0.02% 7.19%124 1,645 92 107 1,399 26,971 187 8 246 8 30 23,628 9 58,675 4,221

Lee County 6.04% 1.68% 0.07% 0.14% 1.37% 0.21% 71.56% 3.62% 1.03% 0.00% 0.03% 9.15% 0.00% 5.12%1,383 384 17 31 313 47 16,382 828 236 7 2,094 22,893 1,171

Moore County 1.24% 0.18% 0.03% 0.05% 0.16% 0.02% 4.50% 76.10% 0.14% 0.00% 0.01% 0.96% 0.00% 16.60%398 57 10 17 51 8 1,441 24,365 44 4 308 32,018 5,315

Orange County 1.30% 27.06% 0.14% 0.32% 0.01% 0.17% 0.15% 0.00% 57.60% 0.23% 0.02% 6.92% 0.01% 6.06%792 16,470 83 196 9 105 91 35,053 142 12 4,212 8 60,860 3,687

Person County 0.26% 23.83% 0.05% 3.40% 0.00% 0.10% 0.00% 0.00% 4.06% 58.13% 0.44% 3.71% 0.00% 6.02%43 3,939 8 562 17 671 9,609 73 614 16,531 995

Vance County 0.00% 3.03% 2.10% 13.10% 0.06% 0.12% 0.06% 0.00% 0.33% 0.16% 70.13% 6.56% 1.84% 2.51%542 377 2,347 10 22 10 60 29 12,561 1,175 329 17,911 449

Wake County 0.26% 12.80% 0.72% 0.42% 0.27% 1.20% 0.34% 0.04% 1.05% 0.05% 0.14% 80.46% 0.01% 2.25%873 43,351 2,430 1,422 916 4,050 1,167 145 3,552 166 478 272,432 18 338,602 7,602

Warren County 0.10% 2.90% 2.74% 4.13% 0.00% 0.21% 0.00% 0.00% 0.70% 0.06% 24.58% 3.85% 44.87% 15.88%7 207 196 295 15 50 4 1,757 275 3,208 7,149 1,135

% commuting out 55.31% 25.06% 65.07% 46.54% 60.80% 54.03% 28.44% 23.90% 42.40% 41.87% 29.87% 19.54% 55.13%# commuting out 13,639 28,171 14,476 9,537 24,683 31,704 6,511 7,653 25,807 6,922 5,350 66,170 3,941

Data taken from the US Census Bureau website at http://www.census.gov/population/www/cen2000/commuting.html. Cells with no values entered had no workers listed; percentages are rounded. Actual number oshown beneath percentage.


bottlenecks on the major arteries. Though I-85 and US 1 generally are not at capacity,level of service (LOS) is deteriorating. At times now, and increasingly in the future,there will be serious congestion. The Triangle Transit Authority’s proposed regionalrail will have minimal benefits for the outer counties. The traffic patterns referred toabove are shown in Figure 4. The third, related consequence of long commutes isincreasing air pollution. The Research Triangle metro area already exceeds EPA thresh-olds for clean air on many occasions. (For example, www.lungusa.org ranked the Re-search Triangle MSA the 13th worst metro area in the U.S. in terms of ozone in 2001).

Counties in the region also differ in their demographics. Vance and Warren Coun-ties had the highest percent of African-American population in the region and amongthe older populations when retirees are excluded. And they have the lowest educa-tional attainment in the region, with Person, Franklin, and Granville close behind.The southern counties also have older and less well-educated populations.

The Failure of RTP to Spin-off ManufacturingWhen the idea of the Research Triangle Park was first promoted in North Carolina inthe mid-1950s, planners envisioned R&D and headquarters facilities locating in thepark drawing their affiliated manufacturing facilities to nearby, but less developedcounties where labor and land were less expensive (Luger and Goldstein, 1991).

That has not happened to the degree envisioned.7 The core counties in the re-gion flourished, but the peripheral counties languished. Table 3 shows that the aver-age annual growth of each of the three core counties over the 1970–2000 period washigher than all but one of the Kerr-Tar counties, and Orange and Wake Counties sur-passed all of the southern counties in the region. That is the case, despite the fact thatpercentage increases are typically larger when the base number is small, as it was fornon-core counties in 1970. We can see that the three core counties added over a halfmillion residents during that time, two-and-a-half times more than the other ten coun-ties combined.

The peripheral counties have attracted some high-tech manufacturing in suchsectors as instruments, telecommunications equipment, and pharmaceuticals, whichhave developed as part of regional clusters (see OED, 2000; Monitor Group, 2002),centered in the RTP. Examples include Novozymes in Franklin County and Bayer inJohnston County. But the largest employers in the peripheral counties are still mostlytraditional, lower-skilled manufacturers in textiles and apparel, agriculture-relatedproducts, and building materials and mobile homes. The higher-tech activities are notonly less prominent, but have proven to be unstable, showing up disproportionatelyon lists of plant closings in the peripheral counties. Tables 4a and 4b provide lists ofthe largest employers in the ten non-core counties, separated into the north and southgroups. Table 5 indicates the sources of mass layoffs during the 1996–2001 period.

7. A notable exception is the GlaxoSmithKline facility in Zebulon, in the rural part of WakeCounty.


FIGURE 4: Traffic Counts

TABLE 3: Population Growth — Core, Southern, and Northern Counties

County

Total Population,

2000

Total Population,

1970

Average Annual Change

Number of New

Residents

Durham 223,314 132,681 2.30% 90,633Orange 118,227 57,567 3.50% 60,660Wake 627,846 229,006 5.80% 398,840 Chatham 49,329 29,554 2.20% 19,775Harnett 91,025 49,667 2.80% 41,358Johnston 121,965 61,737 3.30% 60,228Lee 49,040 30,476 2.00% 18,564Moore 74,769 39,048 3.00% 35,721 Franklin 47,260 26,820 2.50% 20,440Granville 48,498 32,762 1.60% 15,736Person 35,623 25,914 1.20% 9,709Vance 42,954 32,691 1.00% 10,263Warren 19,972 15,340 1.00% 4,632

Source: U.S. Census Bureau.


2869 Industrial Organic Chemicals, NEC (Primary) 425 1979 2844 Perfumes, Cosmetics & Toilet Preparations (Primary) 1,600 19873672 Printed Circuit Boards (Primary) 315 3444 Sheet Metal Work (Primary) 650 19492521 Wood Office Furniture (Primary) 314 1940 3444 Sheet Metal Work (Primary) 450 19987389 Business Services, NEC (Primary) 165 1993 3262 China, Table & Kitchen Articles (Primary) 450 19843564 Blowers & Fans (Primary) 125 3643 Current-Carrying Wiring Devices (Primary) 3002426 Hardwood Dimension & Flooring Mills (Primary) 125 1965 3965 Fasteners, Buttons, Needles, & Pins (Primary) 300 19363999 Manufacturing Industries, NEC (Primary) 125 2429 Special Product Sawmills, NEC (Primary) 250 19783231 Glass Products Made Of Purchased Glass (Primary) 102 1996 3536 Hoists, Cranes, & Monorails (Primary) 240 19422796 Platemaking & Related Services (Primary) 101 1912 2295 Fabrics Coated Not Rubberized (Primary) 225 19763086 Plastic Foam Products (Primary) 100 1995 2451 Mobile Homes (Primary) 225 19883566 Speed Changers, Drives & Gears (Primary) 91 1877 3841 Surgical & Medical Instruments & Apparatus (Primary) 203 19823089 Plastic Products (Primary) 88 1967 3011 Tires & Inner Tubes (Primary) 200 19692251 Hosiery, Women's Full & Knee Length (Primary) 70 1989 3272 Concrete Products (Primary) 180 19952421 Saw & Planing Mills (Primary) 65 2258 Lace & Warp Knit Fabric Mills (Primary) 175 19752435 Hardwood Veneer & Plywood (Primary) 60 1931 2221 Silk & Man-Made Fiber (Primary) 165 19012439 Structural Wood Members, NEC (Primary) 60 1968 2674 Bags: Uncoated Paper & Multiwall (Primary) 1652015 Poultry Slaughtering, Dressing & Processing (Primary) 60 3444 Sheet Metal Work (Primary) 145 19882449 Wood Containers, NEC (Primary) 52 1970 2448 Wood Pallets & Skids (Primary) 1452675 Die-Cut Paper & Board (Primary) 50 1983 2392 Housefurnishings: Textile (Primary) 125 19652541 Wood, Office & Store Fixtures (Primary) 50 1989 2421 Saw & Planing Mills (Primary) 100 1987

2221 Silk & Man-Made Fiber (Primary) 1,100 1927 2392 Housefurnishings: Textile (Primary) 750 19793714 Motor Vehicle Parts & Accessories (Primary) 550 1964 2251 Hosiery, Women's Full & Knee Length (Primary) 600 19603568 Mechanical Power Transmission Equipment, NEC (Primary) 525 1993 2281 Yarn Spinning Mills (Primary) 600 1895Electricity Production 300 1965 2141 Tobacco Stemming & Redrying (Primary) 550 19042436 Softwood Veneer & Plywood (Primary) 270 1993 2392 Housefurnishings: Textile (Primary) 350 19523354 Aluminum Extruded Products (Primary) 200 1968 3221 Glass Containers (Primary) 300 19603444 Sheet Metal Work (Primary) 200 1997 3564 Air Filters 270 19593823 Industrial Instruments For Meas, Display & Control (Primary) 200 1985 2451 Mobile Homes (Primary) 150 1987Genetically Altered Tobacco 200 2001 2047 Dog & Cat Food (Primary) 145 19462493 Reconstituted Wood Products (Primary) 140 1993 3089 Plastic Products (Primary) 135 19742392 Adult Bedding Products 100 2001 2452 Prefabricated Wood Buildings & Components (Primary) 100 1999

3535 Conveyors & Equipment (Primary) 75 1986 2752 Commercial Printing: Lithographic (Primary) 100 197479 Entertainment Complex 60 2000 3792 Travel Trailers & Campers (Primary) 95 19562421 Hardware and Building Supplies 60 1958 2511 Wood Household Furniture (Primary) 90 19782399 Fabricated Textile Products, NEC (Primary) 45 1979 2819 Industrial Inorganic Chemicals, NEC (Primary) 80 198120 Soft Drinks 40 1961 2491 Wood Preserving (Primary) 75 19992451 Distribution of Home Repair Parts 30 1986 2299 Textile Goods, NEC (Primary) 40 1996Cable Harnesses 25 1972 3272 Concrete Products (Primary) 40 19452421 Kiln Dried Hardwood 25 1989 2411 Logging (Primary) 40Power/Steam Generation 25 1986 2842 Specialties Clng, Polishing & Sanitation Prep. (Primary) 35 19772392 Housefurnishings: Textile (Primary) 750 1979

2426 Hardwood Dimension & Flooring Mills (Primary) 155 19702281 Yarn Spinning Mills (Primary) 145 19782253 Knit Outerwear Mills (Primary) 145 19912281 Yarn Spinning Mills (Primary) 125 19172653 Corrugated & Solid Fiber Boxes (Primary) 101 20002441 Wood Boxes (Primary) 83 19972441 Wood Boxes (Primary) 55 19912449 Wood Containers, NEC (Primary) 47 1952Data processing 34 19897534 Tire Retreading & Repair Shops (Primary) 22 1966Cast stone & architectural concrete 19 19982411 Logging (Primary) 18 19742411 Logging (Primary) 17 19862421 Saw & Planing Mills (Primary) 8 19952411 Logging (Primary) 7 19952875 Fertilizers, Mixing Only (Primary) 5 19203965 Fasteners, Buttons, Needles, & Pins (Primary) 4 19892752 Commercial Printing: Lithographic (Primary) 3 1976

Warren county

Source: N.C. Department of Commerce

Franklin county Granville county

Person county Vance county

TABLE 4a: Largest Employers in Northern Tier (Kerr-Tar) Counties, with Size and Year Established


TABLE 4b: Largest Employers in Southern Tier Counties, with Size and Year Established

2015 Poultry Slaughtering, Dressing & Processing (Primary) 750 1952 3621 Motors & Generators (Primary) 800 19672221 Silk & Man-Made Fiber (Primary) 700 1980 2731 Books: Publishing & Printing (Primary) 300 18932251 Hosiery, Women's Full & Knee Length (Primary) 650 1951 2033 Canned Fruits, Vegetables & Preserves (Primary) 250 19842221 Silk & Man-Made Fiber (Primary) 600 2451 Mobile Homes 250 19732015 Poultry Slaughtering, Dressing & Processing (Primary) 550 1980 Industrial gases/supplies 200 19322015 Poultry Slaughtering, Dressing & Processing (Primary) 400 1980 3713 Truck & Business Bodies (Primary) 160 19662493 Reconstituted Wood Products (Primary) 260 1974 2013 Sausages & Meat Products (Primary) 140 19862281 Yarn Spinning Mills (Primary) 230 1895 3052 Rubber & Plastic Hose & Belting 120 19792451 Mobile Homes (Primary) 225 1987 3199 Leather Goods, NEC (Primary) 120 19853089 Plastic Products (Primary) 220 1964 3769 Guided Missile/Space Equip. 114 19752436 Softwood Veneer & Plywood (Primary) 200 1986 3272 Concrete Products (Primary) 95 19833599 Machinery & Equipment, Industrial & Commercial, NEC (Primary) 150 1973 3444 Sheet Metal Work (Primary) 90 19913251 Brick & Structural Clay Tile (Primary) 110 1913 3443 Fabricated Plate Work (Primary) 75 19762048 Prepared Feeds For Animals & Fowls (Primary) 105 1969 2011 Meat Packing Plants (Primary) 65 19483599 Machinery & Equipment, Industrial & Commercial, NEC (Primary) 100 1981 2911 Petroleum Refining (Primary) 65 19762426 Hardwood Dimension & Flooring Mills (Primary) 100 1991 3444 Sheet Metal Work (Primary) 60 19942512 Wood Household Furniture, Upholstered (Primary) 100 1991 2439 Structural Wood Members, NEC (Primary) 603599 Machinery & Equipment, Industrial & Commercial, NEC (Primary) 100 1990 3612 Power, Distribution & Specialty Transformers (Primary) 55 19748331 Job Training & Vocational Rehabilitation Services (Primary) 95 1980 2711 Newspapers: Publishing & Printing (Primary) 50 19502439 Structural Wood Members, NEC (Primary) 90 1998 2011 Meat Packing Plants (Primary) 50 1946

2834 Pharmaceuticals (Primary) 1,300 1974 2015 Poultry Slaughtering, Dressing & Processing (Primary) 1,040 1989

3663 Satellite Dish Antenna Mfg 800 1988 3629 Electrical Industrial Apparatus, NEC (Primary) 970 1987Warehouse/Distribution 780 1997 2844 Perfumes, Cosmetics & Toilet Preparations (Primary) 930 19713524 Wheeled Loaders 650 1991 3592 Carburetors, Pistons, Rings, & Valves (Primary) 740 19763564 Filters 400 1994 3432 Plumbing Fixture Fittings & Trim, Brass (Primary) 625 19782297 Fabrics, Nonwoven (Primary) 300 1969 3589 Service Industry Machines, NEC (Primary) 500 19713643 Current-Carrying Wiring Devices (Primary) 270 1958 Filters/pumps for pools/spas 480 19713564 Air Filter Mfg 250 1976 Cotton yarn, spun 4752834 Pharmaceuticals (Primary) 200 1992 3714 Motor Vehicle Parts & Accessories (Primary) 460 19783676 Electronic Resistors (Primary) 200 1945 2451 Mobile Homes (Primary) 450 19723462 Iron & Steel Forgings (Primary) 175 1991 2051 Bread, Bakery Prod. Exc Cookies & Crackers (Primary) 450 19903083 Medical and Electrical Tubing 130 1975 Brick clay, common face 435 19882426 Hardwood Dimension & Flooring Mills (Primary) 130 1986 3491 Industrial Valves (Primary) 4002339 Women's & Misses' Outerwear, NEC (Primary) 100 1991 Tacho shells, nacho chips 3853679 Electronic Assembly 100 1944 2511 Wood Household Furniture (Primary) 350 19872834 Pharmaceuticals (Primary) 100 1984 2281 Yarn Spinning Mills (Primary) 325 19962011 Meat Packing Plants (Primary) 94 1941 3552 Textile Machinery (Primary) 300 19832421 Saw & Planing Mills (Primary) 85 1924 2834 Pharmaceuticals (Primary) 300 19882657 Folding Paperboard Boxes (Primary) 80 1979 3251 Brick & Structural Clay Tile (Primary) 300 19882361 Children's & Infants' Dresses & Blouses (Primary) 80 1966 3531 Skid-steer loaders & work tools 300 1996

2273 Carpets & Rugs (Primary) 455 19652511 Wood Household Furniture (Primary) 350 19653423 Hand & Edge Tools (Primary) 300 19822015 Poultry Slaughtering, Dressing & Processing (Primary) 235 19842252 Hosiery, Except Women's (Primary) 200 1992Household furniture, upholstered 1852451 Mobile Homes (Primary) 160 19852511 Wood Household Furniture (Primary) 150 19872221 Silk & Man-Made Fiber (Primary) 150 19502221 Silk & Man-Made Fiber (Primary) 150 19872257 Circular Knit Fabric Mills (Primary) 135 19722451 Mobile Homes (Primary) 130 19873589 Service Industry Machines, NEC (Primary) 120 19792599 Furniture & Fixtures, NEC (Primary) 110 19763634 Electric Household Appliances (Primary) 100 19633291 Abrasive Products (Primary) 100 19493643 Current-Carrying Wiring Devices (Primary) 90 19692048 Prepared Feeds For Animals & Fowls (Primary) 90 02711 Newspapers: Publishing & Printing (Primary) 70 19202752 Commercial Printing: Lithographic (Primary) 70 1947

Moore county

Source: N.C. Department of Commerce

Chatham county Harnett county

Johnston county Lee county


TABLE 5: Mass Layoffs in RTRP Peripheral Counties, 1996–2001

NumberCounty Recorded Examples

Franklin 13 Software, computer networking equipment (2), furniture (2)Granville 5 Telecommunications equipment (2), infusion systems, textiles/apparelPerson 10 Apparel/textiles (5), mobile home mfr., furniture, semiconductorsVance 16 Apparel/textiles (6), mobile home mfr., furniture, tobacco-related (2)Warren 3 Apparel/textiles (2), wood containersChatham 6 Apparel/textiles (2), furniture, poultry processingHarnett 16 Apparel/textiles (4), mobile home mfr., furniture (2)Johnston 15 Apparel/textiles (6), mobile home mfr., furnitureLee 14 Apparel/textiles (5), furniture (2), agriculture, wiring devices/products (3)Moore 10 Apparel/textiles (3), mfd. homes (2), poultry processing

Source: N.C. Employment Security Commission, Mass Layoff Database

The Limited Effect of State Policy EffortsThe inescapable fact is that rural parts of the region are more expensive to developthan urban areas because of their lower population densities and higher costs of infra-structure provision. Rural locations also are unattractive to businesses that seek prox-imity to diversified pools of labor and urban-type amenities. Therefore, there is a “Catch-22” — the very dearth of business development in the rural parts of the region makesit hard to attract businesses to those counties and the disparity between urban andrural widens. Concerted strategic action is necessary to break this cycle.

To compound the problem, the national tobacco settlement will end up hurtingseveral rural counties in the region that are “tobacco dependent.” As tobacco manu-facturers raise prices to earn additional revenues to honor the settlement, demandfalls. At the same time, Congress is cutting back federal price supports. The tobaccogrower is hurt by both developments. Manufacturers may be able to maintain profitsby charging higher prices for less output, but they will employ less labor.

The RTRP region contains several counties that are large tobacco leaf producers.Johnston County has more than ten thousand acres in cultivation, producing over 20million pounds of leaf. That is the second highest level of production in the state.Wake County ranks sixth in the state, Harnett tenth, and Granville fifteenth. RTRP’srural counties also have some large tobacco products manufacturing establishments,namely, in Johnston, Lee, and Vance (where one facility has 580 workers).

Increasingly, North Carolina has tied the amount and type of state economicdevelopment assistance to counties to the level of their distress, as indicated by theirtier designation. The centerpiece of the state’s industrial incentive effort is the WilliamS. Lee Quality Jobs and Expansion Act. First ratified in 1996 as Chapter 105, Subchap-ter I, Article 3A of the N.C. General Statutes, the Act has been amended in subsequentyears. The income tax credits it provides for investment in machinery and equipment,central administrative offices, employment, and worker training all vary according tothe business’s tier.


Luger (2001) provides an analysis of the Act. He concludes that:

In general, most of the Lee Act tax credits go to higher tier (better off)counties. Taking all Lee Act credits together . . . the share of credit dollarsgenerated by businesses in Tiers 4 and 5 was 65.8 percent in 1998, and 79.8percent in 1999, compared to 17.7 percent and 8.8 percent for businesses inTiers 1 and 2. The story is even more pronounced for credits claimed.

The distribution of credit dollars toward Tiers 4 and 5 in large mea-sure reflects the larger population of businesses and workers in those moreurban counties. When we look at the distribution of credit dollars generated percapita and per dollar of personal income in each of the tiers, the distributionskews back toward the higher tier counties for the M&E, jobs, and workertraining credits, because businesses in lower tier counties generally are smallerand less profitable than businesses in higher tier counties, so that they can useless of the credits they generate (from Executive Summary, p. 1).

The Job Development Investment Grant program, ratified at the end of the 2002legislative session (H.B. 1734), also makes provision for activity in lower vs. higher tiercounties. So does the state’s special Utility Account, whose funds may be used onlyfor construction of or improvements to new or existing water, sewer, gas, telecommu-nications, high-speed broadband, or electrical utility distribution lines or equipmentfor existing or new or proposed industrial buildings to be used for eligible industrialoperations. The Department of Commerce also calibrates its funding for the sevenregional partnerships based on the tier designations of constituent counties. We sus-pect these other need-based programs have the same limited effect on regional dis-parities, as does the Lee Act.

That is not to say that the state’s efforts to help the most distressed counties aremisplaced. The programs mentioned above, and others with a rural focus, such as theRural Internet Access Authority and the 21st Century Community program (to name afew) are critical for the viability of rural, less-developed parts of the state. But theproblems those places have in terms of infrastructure availability and quality, K–12education, worker preparedness, and access make economic development a particu-lar challenge.

Too Little Inter-county Cooperation, Too Many Industrial ParksAs a general matter, counties tend to regard industrial recruitment as a competitiveactivity. After all, a plant locating in County X pays property taxes there only. AndCounty X receives the local portion of any sales taxes generated. Certainly the countydevelopers talk to one another, and sometimes share prospects of those they cannotaccommodate. In any case, the counties in the running for a project are determined bywhich of them can meet the client’s needs. Counties also coordinate some activitiesand share information through regional organizations such as the RTRP and COGs.

An indication of the competition for industrial prospects is the proliferation ofcounty owned, sponsored, or sanctioned industrial parks. Figure 5 shows the locationof many of them. It also shows that there are still considerable amounts of availableland in those parks. In addition, many parks have developable land adjacent to them.


FIG

URE

5: R

egio

nal I

ndus

tria

l Par

ks a

nd A

vaila

ble

Acre

age


The problem with this approach is that, arguably, there are too many parks com-peting for a limited number of tenants, and as a result, land prices are kept down bycompetition and persistently low vacancy rates in the parks. To illustrate: based onland sales information in the RTRP database for February 2003, the price of an averageacre of industrial land in Person, Vance, and Warren Counties was between $7,000 and$12,000. The next close-in counties outside the core are Franklin and Granville, withaverages of $16,000 and $29,000 (and Franklin having over 10 times as much acreageavailable). Similarly, the averages per acre in the southern tier rural counties rangefrom $11,000 to $20,000 per acre. Not surprisingly, land in the core counties is moreexpensive: $47,000 to $59,000 per acre in Durham, Orange, and Wake. Of course, landprices conform to a gradient as densities fall. Our point is that the relative oversupplyof land in the non-core counties, relative to industrial demand, is keeping that gradi-ent steeper than it might otherwise be.


SECTION THREE

The Mini-Hub Concept

In this section we explain what we mean by the term “mini-hub” and explain how itcan help address the problems identified in the preceding section.

Mini-hubs DefinedA mini-hub is an enhanced industrial park intended to serve as a “growth pole” out-side of the urban center of a region. The growth pole idea is not new. It has been theguiding principle for many of the research parks established outside major metropoli-tan areas in the past fifty years (see Luger and Goldstein, 1991). A park in less-denseplaces can substitute for the urbanization and localization economies that otherwisewould exist, and help create a critical mass of economic activity that can be self-sustaining.

When Research Triangle Park was established in 1959, the core counties of theRTRP region were not as populous or developed as they are now, and indeed, thepark was responsible for much of the economic growth that has occurred since. Lugerand Goldstein (1991) estimated that one of every four new jobs in the region createdbetween 1959 and 1991 were directly or indirectly attributable to the park. So, one ofthe best examples of a successful growth pole is right here.

Today, the Research Triangle Park can be characterized as a major (or maxi-) hub.With about 40,000 employees in the park, direct links with the area’s research univer-sities, the existence within the park of such facilities as the NIEHS, EPA, MCNC, andthe N.C. Biotech Center, the park is a major center of gravity not just for the regionand state, but also for the U.S. Indeed, the success of the park is a primary factor inNorth Carolina being cited as one of the nation’s top biotech centers (Brookings, 2002),and for the Research Triangle region being a perennial member of the country’s high-tech elite.

The designation of a new type of more rural park as a mini-hub recognizes theexistence of that center of gravity. The proposed enhanced industrial parks would notbe stand-alone developments, but would link in some way with the maxi-hub (RTP)and to each other.


In the remainder of this section, we explain more about what mini-hubs are andare not, and discuss the types of linkages they can have with RTP and each other.

What Mini-hubs Are, and Are NotMini-hubs are meant to be sizable real estate developments suitable for targeted busi-nesses, but they are not intended to be typical industrial park. s. Mini-hubs would bedeveloped on plots of contiguous land, most likely on several hundred acres. But,whereas the “typical” industrial park provides basic hard infrastructure (access roads,water, sewer, electricity, gas) and, in many cases, shell buildings, mini-hubs wouldhave special enhancements as well. And, whereas the “typical” industrial park is happyto accept a wide range of tenants, including warehousing and distribution, and pro-duction of a wide variety of goods, mini-hubs would be developed around target in-dustrial clusters, and would prefer businesses requiring semi-skilled and skilled labor.

The narrowing of industrial focus would enable the enhancements to be tailoredto the targeted businesses. The average skill level of workers in mini-hubs would behigher than those in “typical” industrial parks. The “enhancements” to which we re-fer could include:

meeting/conference facilitiesadvanced information technology (IT) to make sure companies on the parkcan communicate in real time with their buyers and suppliers, and other branchfacilities around the worldspecial facilities appropriate for the park’s focus, including, for example

• a lab with specialized research equipment for use in bio-processing or com-posite materials (or other selected cluster focus)

• incubators or accelerators to house start-up and entrepreneurial businesses• testing facilities to help resident businesses comply with ISO 14000 and

other international specifications needed as an exporterspecialized services appropriate for hub’s focus, including

• training facilities8

• marketing and export promotion assistance• one-stop regulatory review/adherence assistance• technical assistance from organizations such as SBTDC, DOC, and the In-

dustrial Extension Servicespecial location incentives

This region already has conducted cluster analyses to identify existing and emerg-ing industrial sectors that are appropriate recruitment and expansion targets. Table 6summarizes four sets of results — from the Clusters of Innovation project (2002), In-

8. This Office worked with President Lancaster of the N.C. Community College System on aconcept to develop a series of Industrial Cluster Resource Centers that would train workers inskills appropriate for clusters, not specific industries (as do the Focused Industry Training (FIT)and New and Expanding Industry Training (NEIT) programs). See Gorham, Luger, Stewart,Rosenfeld, and Jacobs (2000).


dustrial Cluster Resource Center report (2000), Vision 2030 project (2000), and RTRPCompetitive Marketing Action Plan (1997).

The different studies refer to clusters using somewhat different language, butthere are some similarities: in telecommunications and information technology, in-cluding services and software; in life science-related, including pharmaceuticals andbiotech, labs, and hospitals; and in chemicals and plastics and related products. TheRTRP study also considers warehousing and distribution and sports-related businesses.Further work needs to be done to update these lists and specify which are most ap-propriate for the various subregions of the greater RTRP service area.

Just as mini-hubs are not intended as traditional industrial parks, neither arethey intended to be high-end research parks, like the RTP or Centennial Campus. Itwould be unrealistic to expect the kind of companies that are in RTP and CentennialCampus, and eventually in UNC-Chapel Hill’s Carolina North project, to locate even40 miles to the north or south of the core counties. Location surveys indicate thatthose companies value immediate proximity to the universities and airport, as well asto each other, as well as highly educated labor and the prestigious address of the RTPor research campuses.

Positioned between traditional industrial parks and research parks, the mini-hubscould be viewed as “mid-tech parks,” accommodating businesses that use skilled la-bor to make advanced products, rather than on R&D. Appropriate functions wouldinclude:

Processing, manufacturing, and some back-office activities (sophisticated callcenters, data processing and storage/retrieval) might be appropriate tenants.Spin-offs from RTP and Centennial campus (and elsewhere), seeking less ex-pensive space and access to appropriate labor.

TABLE 6: Recent Cluster Studies for the Region

Clusters of InnovationIndustrial Cluster Resource Centers Vision 2030

RTRP Competitive Marketing Action Plan

Communications equipment

Telecommunications equipment

Information technology and instruments

Information technology and telecommunications business

Communications services and software

Pharmaceutical/ biotechnology

Pharmaceutical/ biotechnology

Pharmaceutical and medical technologies

Health-related businesses, including pharmaceutical/ biotechnology

Medical services, labs and hospitals

Chemicals, textiles, and plastics

Chemicals and plastics Manufacturing, including automotive supply, metalworking, and plastics

Warehousing and distribution

Sports-related businesses


As discussed in section two, the outer counties already have examples of thesetypes of businesses, but they are too few and too scattered to spawn significant addi-tional economic growth.

Central to the mini-hub concept is the existence of meaningful linkages betweenthe mini-hubs and the maxi-hub, and among each other. The connection to ResearchTriangle Park could take several forms. The Research Triangle Foundation, which gov-erns and manages RTP, could govern and manage the mini-hubs, as well. But thatwould require the mini-hubs to have additional characteristics, including a not-for-profit private organizational structure, an explicit connection to the region’s universi-ties, and the types of land use restrictions, such as small footprint, minimum lot size,and design and landscaping standards, that have made RTP such an attractive physi-cal location.9

Alternatively, the mini-hubs could undergo a qualification process to be “certi-fied” by the RTF, as an official affiliate. That would allow those marketing the mini-hubs to use the Research Triangle brand, which has global appeal. It would also distin-guish the mini-hubs from the hundreds of other public and private industrial parks inthe region.

In any case, it is essential for the mini-hub and RTF staffs to work cooperatively,to maximize the likelihood that RTP companies doing R&D would consider the mini-hubs as sites for their back office, production, distribution/warehousing, or spin-offfacilities.

Similarly, it is essential for the mini-hubs within the RTRP region (at this stage,two are conceived) to coordinate efforts. The overall strategy is for the mini-hubs tohave different cluster foci, so that they are not competing with each other, and candevelop differentiable products. They then could realize economies of scale in mar-keting and other management functions. They could cross-refer tenants that better fitthe other mini-hub.

The overall scheme would be marketed to site selection consultants, businesses,and others as an articulated regional system, or what the economic development lit-erature refers to as a “technopolis.”10 The RTP, airport, universities, community col-leges, mini-hubs, other industrial parks, governmental resources, all constitute partsof that system that are coordinated and synergistic. This concept is shown schemati-cally in Figure 6.

The dotted lines show the connections among the mini-hubs. The blue lines sig-nify the connections with RTP. Each mini-hub itself over time would establish connec-tions with resources in its own region, as shown for the mini-hub in the upper lefthand corner. The small green dots might be existing traditional industrial parks thatwould get referrals from the mini-hub staff, of companies not appropriate for the mini-hub.

9. Based on an interview with James Roberson , Gary Shope, and Elizabeth Rooks, of the RTFstaff, on August 12, 2002.10. See, for example, Luger, Gibson and Oh, eds. (1998).


Finally, mini-hubs must be regarded as a regional resource, not as an economicdevelopment project of a single county. Because of the necessary enhancements, thecost of developing mini-hubs will be higher than for a traditional industrial park. Nosingle county — especially those outside the core — is likely to have the resources toproceed alone. Alternatively, several counties could create a consortium that jointlyfinances and governs the mini-hub, and shares in the benefits that are eventually gen-erated.

How Mini-hubs Can Pay Off for the Sponsoring CountiesFor several reasons, the number of business locations and expansions should be higherin a region with a mini-hub and scattered industrial parks than in a region with onlyscattered industrial parks. The mini-hub is likely to be an easier product to marketthan are smaller, less enhanced industrial parks. And there would be more entitiesmarketing the mini-hub. (Some skeptics worry that a narrow focus on cluster-relatedbusinesses will shorten the list of prospects too much.) Moreover, when counties withdifferent tier designations form a consortium, such as what we have proposed, thelowest tier designation of all consortium members applies to businesses locating inthe consortium’s project. For example, now a business locating in Granville Countygets Tier 5 incentives. If Warren or Vance were part of the mini-hub consortium for apark located in Granville County, the business would qualify for Tier 1 incentives.

The larger number of businesses attracted to a region because of the mini-hubwould lead to higher property and local sales tax revenues. In addition, the enhance-ments discussed above would add value to each site, driving property tax receipts upfurther. A mechanism needs to be created to facilitate joint financing and joint rev-enue sharing by participating counties. (We discuss that further in section four.)

Mini-hubs can pay off in one other way: by attracting to the project more federaland foundation money, and earmarked state resources, than otherwise would have

FIGURE 6: Linkages Among Mini-Hubs and RTP

Figure 7: Linkages Among Mini-Hubs and RTP

Central

hub

mini

mini

mini

mini


11. Sampson discusses four rules for competitiveness in the 21st century: Think regionally tocompete globally; Industry clusters drive regional performance; Economic input-advantage fuelscluster competition; and Collaboration achieves economic advantage. See www.commerce.gov/eda.

been forthcoming. The mini-hub concept is particularly consistent with principles es-poused by the Bush administration’s Economic Development Administration. Assis-tant Secretary David Sampson has identified projects that apply regionalism and acluster focus as higher priority for infrastructure funding from his agency.11 A focuson biotech, for example, would tie into a state priority to solidify North Carolina’sadvantage, and could capitalize on the Golden LEAF decision to invest $42 million inbioscience companies developing products or manufacturing in North Carolina. Thenetworking emphasis might be attractive to the Rural Internet Access Authority,through the e-communities initiative. These and other possibilities would need to beexplored in further work.

It is important to stress that mini-hubs would not necessarily compete with exist-ing industrial parks for tenants. Their pool of prospects would be different, just as thecompanies RTP recruits are not typically prospects for traditional industrial parks. Infact, it is more likely that mini-hubs would stimulate business locations in industrialparks. In short, a rising tide floats all ships. Other, lower-tech companies that tradewith the mid-tech tenants targeted for the mini-hubs would seek locations nearby.That is beginning to occur in northeast North Carolina around the NuCor steel plant.It is expected to happen in Greensboro around the Federal Express facility. And it hasoccurred around Research Triangle Park.


SECTION FOUR

What Needs to be Doneto Create Mini-Hubs

A number of steps need to be taken to move from the conceptual/feasibility to imple-mentation stage. Each will be discussed, in turn, in this section. The first action is foreach sub-area designated for a mini-hub to form a regional steering committee. Thatcommittee will decide on a management approach, select the site, and serve as theclient for further study of the appropriate cluster focus, necessary enhancements andincentives, and available resources.

Areas Currently Designated for Mini-hub SitesWe narrowed down the general locations for mini-hubs to those areas shown in Fig-ure 7: one in the Person-Granville-Vance-Warren-Franklin Counties area, and one inthe Chatham-Moore-Lee-Harnett Counties area. The criteria we used to draw the ovalsin the figure were: (1) whatever site is chosen must be within 45 minutes of RDU andRTP, (2) the site should be in as close proximity to distressed populations (lower-in-come and displaced from work) as possible, and (3) the site be accessible by a majorstate or interstate highway. The most likely sites would be along the I-85 or US 1 corri-dors in the north and the US 1, US 15-501, or US 421 corridors in the south.

Sub-regional Steering CommitteesEach designated area should assemble a steering committee to ensure that each mini-hub is developed as a regional resource, and to make decisions regarding strategy andoperations of the mini-hub. The committee should consist of representatives of thecounties considering membership in the consortium. The designated individuals mightinclude city and county managers, economic development directors, county commis-sioners, and local members of the General Assembly. The steering committee shouldinclude representation from the RTRP and Department of Commerce, if only as non-voting members.

The steering committees would be interim decision-making bodies until a morepermanent structure was put in place. They would serve as a client for any further


contracting. And they would be instrumental in garnering political support for theinitiatives.

Decisions to be MadeThe steering committees will have to make decisions regarding ownership and man-agement, specific sites, appropriate cluster focus, necessary enhancements and incen-tives, and financing.

Ownership/management optionsIndustrial and research parks employ a variety of ownership and management mod-els. Ownership and management may or may not be by the same entity. For example,states or local governments that own parks may manage them themselves or contractout management to a private company that specializes in that activity. But parks arenot owned just by states and local governments (including public institutions of higherlearning), but also by private developers, private universities, and not-for-profit orga-nizations (such as the Research Triangle Foundation).

Public ownership has some benefits, including the possible use of eminent do-main to assemble the land. Parks are often built on land that had been in public use for

FIGURE 7: General Siting of Two Mini-Hubs


other purposes, such as a military base or state hospital, so that a significant monetarytransfer is not required.

To the extent that public funds are used to help develop mini-hubs, on the groundsthat the parks have economic development benefits for the region, some public ac-countability is desirable. That can be achieved by creating a governing board whosemembers are appointed by the governor, speaker of the house, and president pro-temof the state senate, for example, and/or who represent local governments in the re-gion. That approach characterizes the governing boards of several of the regional eco-nomic development partnerships (the Eastern region, for example). A more local ver-sion of that characterizes such public authorities as the Triangle Transit Authority.

The participating counties must agree on the constitution of the public govern-ing board, their by-laws and procedures. State law will affect the entity’s authority toissue bonds, condemn land, and other legal actions.

Choice of sitesWe visited a number of potential sites, meeting such criteria as: (1) within 45 minutesof RDU and the research universities in the core counties, (2) near concentrations ofunderemployed and lower-income workers in the peripheral counties, (3) near majorhighways, (4) served by common utilities/infrastructure, (5) large enough with suffi-cient unbuilt space to accommodate a major new project. We provide the protocol weused to collect information on potential sites, as Appendix A.

Figures 8 and 9 show the most likely sites in the northern and southern parts ofthe RTRP area, respectively. We narrowed the list to these possibilities with the help oflocal economic development professionals.

FIGURE 8: Candidate Sites in the Northern Counties


We provide details about these sites in Appendix B. Summary information isprovided in Tables 7 and 8, which show the number of residents, by age, education,and employment, within 5, 10, and 25 miles of each site.

The steering committees will have to recommend a single site for developmentin each sub-region. Obviously, that site will fall in only one of the participating coun-ties. We recommend strongly that the decision rule about how to prioritize siting cri-teria be established up front. All parties should agree about the criteria, then use thecriteria to drive the selection of the site. That will help ensure a rational choice that allcan defend and support, rather than one determined solely by politics.

Choose appropriate cluster focusTable 6 in the previous section summarized recent studies that identified existing andpotential clusters for the RTRP region. The mini-hub steering committees will have toengage consultants to step-down the cluster analysis to each sub-region.

One element of that process is to identify existing concentrations of businessesin the northern and southern parts of the region. Table 9 indicates those concentra-tions for the northern section.

Recruiters could focus on these types of businesses, recognizing that each broadindustry contains many different sub-industries, as shown in Appendix C.

But clusters are more than the central industry. They include other types of in-dustries that are linked through trade — selling inputs (good and services) to thebusinesses or receiving goods and services from them.

Necessary enhancements and incentivesThe steering committee also must identify the appropriate enhancements and incen-tives for its mini-hub. Those can be instrumental in attracting the kinds of businessesthat are targeted. In general, the enhancements to which we refer include special fa-

FIGURE 9: Candidate Sites in the Southern Counties


TABLE 7: Radius data for Northern Sites, 2000

cilities and services appropriate for the mini-hub’s focus. Among the facilities mightbe incubators or accelerators, testing and research labs, advanced information andcommunications technology centers, and meeting and conference space. Those arethe types of facilities commonly found in research parks (see Luger, 2003). The ser-vices to be provided might include special training, marketing and export promotion,expedited regulatory review and approval, and technical and managerial assistance(as provided by such organizations as the small business and technology develop-ment center, the Department of Commerce, and the industrial extension service).

Businesses on the mini-hub site would benefit from the co-location of these fa-cilities and services. Having regulatory agencies in one place enables one-stop shop-ping. Similarly, businesses would have easy access to two different kinds of technicalassistance. The service providers would also benefit from co-location, which wouldprovide opportunities to coordinate and collaborate.

An important financial incentive already is provided businesses that would moveto or expand in a mini-hub. If an industrial park spans or is owned by several countieswith different tier designations, the designation of the lowest of those counties ap-plies to businesses seeking William S. Lee act credits, regardless of the designation ofthe county in which the park is located.

Radius

Total Population 5 Miles 7,866 2,529 5,563 4,200 9,754 6,12110 Miles 59,918 28,962 50,917 50,917 44,786 36,82425 Miles 511,271 398,745 156,909 156,909 175,146 137,114

Population 18–24 5 Miles 357 233 405 329 609 43310 Miles 3,369 2,317 3,922 3,922 3,394 2,91225 Miles 53,834 32,886 12,093 12,093 13,504 10,418

Population 55–64 5 Miles 500 313 413 315 1,073 55210 Miles 4,908 2,853 4,846 4,846 4,208 3,30125 Miles 37,537 31,105 14,635 14,635 16,320 13,729

Median Household 5 Miles $55,214 $32,251 $44,391 $41,211 $33,388 $27,657Income 10 Miles $53,267 $39,559 $31,669 $31,669 $32,417 $25,742

25 Miles $42,780 $40,212 $32,903 $32,903 $33,318 $30,549

High School Education 5 Miles 1,757 614 1,332 1,037 2,023 1,69410 Miles 13,419 7,852 12,271 12,271 10,594 9,32125 Miles 89,449 81,373 40,554 40,554 45,589 34,211

College Education, 25+ 5 Miles 906 177 390 228 1,014 39710 Miles 8,198 1,531 3,836 3,836 3,588 2,08225 Miles 75,687 49,823 10,519 10,519 11,717 9,730

Graduate Degree 5 Miles 452 0 125 53 342 131Education, 25+ 10 Miles 3,854 783 1,176 1,176 1,165 577

25 Miles 46,567 24,799 3,499 3,499 4,149 2,945

Total Employed by 5 Miles 4,760 1,239 2,971 2,192 5,551 2,478Place of Residence, 16+ 10 Miles 33,594 11,879 27,057 27,057 23,986 16,849

25 Miles 260,854 204,963 74,932 74,932 85,154 65,218

Total Employed by 5 Miles 835 344 1,457 1,222 3,466 445Place of Work, 16+ 10 Miles 13,285 5,991 18,566 18,566 14,869 12,228

25 Miles 183,377 157,101 43,649 43,649 49,188 38,109

Northern Subregion

(C) (D) (F) (I)Triangle North Industrial Park

Daniel Site

Capital Blvd Site

US-1 (Soul City) Sites

(A)Butner

Business ParkOxford

Business Park

(B)


TABLE 8: Radius data for Southern Sites, 2000

FinancingThe cost of developing mini-hubs will be considerably more than for standard indus-trial parks. Certainly, roads, water, sewer, gas, telecommunications, and electricity needto be in place. But to make the mini-hub a first-class development attractive to veryselective, footloose, mid-tech companies, all wires and cables will need to be buriedand the site will have to be prepared for high-speed broadband and/or wireless com-munications. In addition, the park will have to be developed at a relatively low den-sity, possibly including minimum lot size and maximum footprint requirements, toensure the appropriate physical appearance. Finally, additional resources will have tobe devoted to landscaping and signage.

The cost of these land use and development add-ons would fall on the countiesundertaking the project, with possible help from the U.S. Economic DevelopmentAdministration. In addition, there will be costs associated with what we referred toabove as enhancements — specialized facilities and programs. The steering commit-tee will have to work with federal and state organizations and agencies to identifyfunds for them.

The high cost of site development would make mini-hubs infeasible for any oneof the non-core counties in our study region. However, because the mini-hub is to be

Radius

Total Population 5 Miles 6,673 7,150 7,528 8,271 12,460 28,80110 Miles 29,733 19,728 26,505 41,930 50,135 64,40525 Miles 424,976 144,131 196,805 304,320 525,773 545,490

Population 18–24 5 Miles 573 503 481 632 2,072 2,24610 Miles 2,090 1,338 1,739 3,027 4,856 5,15925 Miles 40,988 10,523 15,559 29,116 53,727 51,548

Population 55–64 5 Miles 845 683 770 712 1,053 2,49510 Miles 3,187 2,252 2,442 3,854 4,656 5,36525 Miles 39,324 14,974 19,461 23,710 38,586 43,597

Median Household 5 Miles $38,225 $29,072 $32,069 $42,185 $33,090 $34,579Income 10 Miles $35,999 $36,273 $38,091 $36,124 $32,977 $38,851

25 Miles $37,093 $36,424 $36,246 $42,820 $41,268 $39,783

High School Education 5 Miles 2,246 1,773 2,106 2,236 2,305 6,72610 Miles 8,842 4,811 6,892 10,552 12,968 15,63025 Miles 104,105 35,100 47,848 62,307 110,202 120,492

College Education, 25+ 5 Miles 341 293 361 647 1,136 2,73010 Miles 1,842 1,598 2,336 3,872 3,161 5,87025 Miles 43,498 14,527 18,681 39,427 58,682 65,131

Graduate Degree 5 Miles 154 167 152 249 784 885Education, 25+ 10 Miles 583 783 741 1,198 1,528 1,977

25 Miles 16,716 5,433 6,446 18,252 21,708 20,761

Total Employed by 5 Miles 3,676 2,752 3,670 4,601 5,845 15,381Place of Residence, 16+ 10 Miles 16,242 8,199 13,034 22,242 22,114 35,036

25 Miles 236,468 67,330 88,055 134,915 235,127 293,117

Total Employed by 5 Miles 1,602 1,738 630 5,639 5,070 10,702Place of Work, 16+ 10 Miles 8,930 5,396 4,604 20,684 12,486 18,903

25 Miles 172,760 48,649 65,542 77,378 150,995 198,508

Layton Property Site

Talton Property Site

New Hope Farms Site Samarcan Site

CatawbaSite

Lee County Industrial

Park

Southern Subregion

(A) (B) (C) (D) (F) (I)


developed by a consortium of counties, the costs would be shared. The steering com-mittee will need to develop a formula to allocate the costs. Because the selected site isnot likely to be a green field, the formula might take into consideration investmentsalready made on the site by the county in which the site is located.

The allocation of costs would most likely relate to the sharing of benefits. Thosebenefits would include at least property and sales tax (local portion) revenues gener-ated on the site. If the assumption that the mini-hub will induce other economic activ-ity nearby, but not on the site is correct, there would be a basis for sharing other taxrevenues, as well.

A number of institutional mechanisms could be put in place to facilitate the shar-ing of costs. The participating counties could enter into inter-local agreements, wherebythe counties execute a contract regarding the services and costs for a specific parcel.The sharing of revenues also could be arranged through the use of a revenue sharingagreement. The simplest version would cover the benefits generated on-site only. Moresophisticated approaches would include off-site induced benefits.

Multi-county projects are a stated priority of the Economic Development Strate-gic Plan for North Carolina completed by the Governor’s Economic DevelopmentBoard in October 2002. There is currently nothing in the North Carolina General Stat-utes to preclude the inter-local agreements required for revenue sharing, but ErniePearson of the Sanford Holshauser law firm recently submitted an opinion to the NorthCarolina Economic Development Board that state legislation would nonetheless bedesirable for encouraging such agreements.

Appendix D provides further comments about the legal environment for inter-local agreements, and examples.

TABLE 9: Business Concentrations in Select Cluster Areas in the Northernand Southern Counties

Northern tier counties Southern tier counties

Clusters Employment Wages

Number of estab-lishments Employment Wages

Number of estab-lishments

Biotech 35 $673,638 6 2,834 $45,735,549 14

Plastics and chemicals

59 $473,173 5 4,736 $48,813,629 26

Information technology and comm. equipment

596 $5,137,291 57 4,790 $45,714,161 199

Medical-related

146 $933,698 2 89 $1,226,074 2

Source: N.C. Employment Security Commission, ES-202 files. See Appendix B for groupings of industries within clusters.


SECTION FIVE

Some Examples

We know of no developments elsewhere called “mini-hubs” that have all the featuresproposed here. However, there are many examples of what their developers refer toas “research” or “technology” parks, which, because of their location in rural placesand lack of adjacency to major universities, are really mid-tech parks, such as wepropose.

In this section we review a few examples of such mid-tech parks that appearfrom their literature to be interesting illustrations. Of course, success is a normativejudgment, and absent detailed analysis of longitudinal data, we cannot say unequivo-cally that the parks we summarize have, indeed, succeeded.

Our examples are drawn from the membership list of the Association of University-Related Research Parks (AURRP) and from articles in Site Selection magazine.

Missouri Research ParkThe park, opened in 1985, contains approximately 130 acres of land zoned for high-tech and research. When it was started, the surrounding community’s populationwas approximately 40,000. Now it is just over 60,000.

The park is located in southern St. Charles County, Missouri. Two major high-ways connect it to St. Louis. It is 35 minutes from downtown, 30 minutes to the air-port, and 25 minutes from the University of Missouri-St. Louis and Washington Uni-versity. It is adjacent to St. Charles Community College. Companies in the park in-clude:

A.G. EdwardsAppIntell, Inc.Central Rolled Thread Die CompanyConsultant Lubricants, Inc.Diagraph, Inc.Distribution Management Inc.Federal Aviation AdministrationLinco Research, Inc.McLeod USA


National Weather ServiceNatoli Engineering, Inc.NIKE IHM, Inc.Novus International Research CenterWestar CorporationZoltek Corporation

These include mid-tech companies (for example, Central Rolled Thread Die Co.,Diagraph — which makes automated metering, coding, and labeling equipment —and Zoltek Corporation — a producer of carbon fiber), some research, and severalgovernment facilities, including the FAA and National Weather Service.

Consistent with the mini-hub model, the park also includes special amenities,including an award-winning 235-acre golf course, wooded recreational trails, fully-lighted concrete streets, strict protective covenants to ensure first-class, low-densitydevelopment, and all underground utilities (12.5KV electric, broadband fiber, naturalgas, water, sewer). The park is owned and managed by the University of Missourisystem. That enables the park to advertise “affiliations with University of Missourifaculty and research personnel.

The Milwaukee County Research ParkThis park is located on 175 acres in Wauwatosa, Wisconsin, which has a population of47,471. The site is convenient to two major expressways, 10 minutes from downtownMilwaukee and 15 minutes to the airport

The park’s objective — to develop high-tech businesses — is being accomplished“by bringing together the substantial academic, intellectual, business and entrepre-neurial resources of the metropolitan Milwaukee area in a physical environment con-ducive to such activities.”

The park lies within a larger, 1100-acre natural expanse called the MilwaukeeCounty Grounds. The setting features permanent green space buffers, extensivewooded areas, activity trails, sidewalks, ponds, and a natural waterway. The masterplan calls for “a campus like environment that will differentiate the park from otherreal estate developments.”

The Milwaukee County Research Park is not adjacent to a university but is affili-ated with Marquette University, the Medical College of Wisconsin, the MilwaukeeSchool of Engineering, the University of Wisconsin-Milwaukee, and Milwaukee AreaTechnical College, all of which are in the greater metropolitan region. Tenants in thepark’s incubator (Technology Innovation Center) have commercialized innovative tech-nology developed in university laboratories.

Currently over 2,300 people work in the Research Park in high paying positionswith over 70 companies. There is a cluster focus around software. Tenants include:

Advanced Cabling Solutions — Cabling solutions for information technologyapplicationsArgiNOx, Inc. — Researching and development of nitric oxide (NO) inhibit-ing drugs.


Argus Technologies, Inc. — Vertical market software.Attalus Communications, LLC — Design, installation, and support for all-in-one communications systems.Brand Thirty-Three, Inc. — Computer graphics for web sites and commercialapplications.Cogent Corporation — Computer software for the healthcare industry.Collins Communications Technologies — Designs, implements, and supplieshardware for data networks.Desktop Engineering, Inc. — Consulting, service, and support for AppleMacintosh.Developer One, Inc. — Software products for handheld, mobile computing,and PDA devices.Digital Technology Services — Visual based products used in quality controland training applications.Guild Software, Inc. — On-line simulation software and multi-player games.HInnovation, Inc. — Teleradiology and web-based 3D image processing soft-ware and systems.Heartland Software Development, Inc — Custom computer software for busi-ness, including mission critical applications, software integration, infrastruc-ture support, project management, and e-business solutions.IGC-Medical Advances, Inc. — RF coils and gradient systems for the MRI andspectorscopy market.I.Net Solutions, L.L.C. — Intranet, extranet, database design, and high-endweb development.Inphinet Interactive Solutions, Inc. — Internet content design and the devel-opment of web communities.Institute for Viral Pathogenesis, Inc. — Research relating to characterization ofhuman viral pathogens.Leader Controls & Software, LLCMC Services Company — Cross platform integration, database design, andInternet services.Micro Resource, Inc. — Microcomputer software supportMiller Computer Group, IncMolecular Specialties, LLC — Development and marketing of microwaveprobes for electron paramagnetic resonance (EPR) applications.Niceware International, LLC — Development, sales and marketing, and tech-nical support for NiceLabel barcode label production and printing softwarefor mobile and enterprise environments.PhysioGenix, Inc. — Pharmacogenetics and physiological genetics productsand services.PointOne Systems, LLC — Bioinfomatics consulting and softwareProductive Data Corporation — ASP, web hosting, electronic publishing,eCommerce, and data conversion.


ProtoPROBE, Inc. — Biomedical research, research support services, and anti-bodies.Resilient Networks, Inc. — Telecommunications provider of data, voice,Internet, and video services to local and metro area enterprises and institu-tions.Serlio Software Corporation.SPS Productions, LLC — 3d multimedia animation, web content and hosting,and e-commerce.Tailored Solutions, Inc. — Job tracking software for the printing industry.TechWorks, LLC — Managed technology services (MTS) business with opera-tions that monitor and manage, both onsite and remotely, information tech-nology systems for small to medium sized companies.Time Warner Telecom - IDD — High speed Internet service for business andinstitutions.Tobin Solutions, Inc. — Providing a full range of information technology ser-vices for business.Topical Networks, LLC — Internet software and web design with a focus ondigital music distribution.TPI Technologies — Industrial and prototype design using composite materi-als.Uni-Comm Corporation — Engineers and designs PBX, wireless, and othertelecommunications.Wisconsin Internet Solutions Company, LLC Wisconsin Viral Research Group,Inc. — Medical diagnostics laboratory focusing on virologic research.

Stout Technology ParkThis park was opened in 1990 in Menomonie, a northwestern Wisconsin town of 15,000residents in a county with a population of only 40,315. Minneapolis-St. Paul is 60 mileswest and Eau Claire, Wisconsin, is 25 miles east.

The park is close to the University of Wisconsin-Stout, with an enrollment of8,000 students, mostly at the undergraduate level. It contains a satellite campus ofChappawa Valley Community College

Currently, there are 20 tenants in the park, employing 450. The assessed valua-tion of property in the park is approximately $30 million. Companies include:

Andersen Corporation, a window manufacturerAurora Community Health, Inc.Access, Inc. providing licensed outpatient mental healthDunn County Job Center — a one-stop center for information and servicesrelated to employment and workforce development. The facility is a collabo-rative effort that houses the following agencies

• the Workforce Development Board• Dunn County Human Services — W2 program• the Dunn County Economic Development Corporation


• the Dunn County Job Center, including representatives of the Departmentof Vocational Rehabilitation and Job Service.

DBD International, Ltd — a design and marketing firmPhillips Origen™ Center — The Phillips Origen Corporation’s training facilityand incubation center. It includes:

• Phillips Origen™ Clean Room Molding• Phillips Origen™ Magnesium Injection Molding• Phillips Origen™ Medical Device and Manufacturing• Phillips Origen™ Metal Injection Molding

West Wind Graphics


References

Cortwright, Joseph and Heike Mayer (2002). Signs of Life: The Growth of Biotechnology Centers in theU.S. Washington, DC: Brookings Institution, Center on Urban and Metropolitan Policy.

Goldstein, Harvey A. and Michael I. Luger (1992). Carolina Impact: UNC-Chapel Hill and the State’sEconomy. University of North Carolina Bicentennial.

Gorham, Lucy, Michael Luger, Leslie Stewart, Stuart Rosenfeld and James Jacobs (2000). Maintain-ing Competitiveness in the New Millennium: A Plan to Establish Industry Cluster Resource Centers inNorth Carolina. For the North Carolina Community College System.

Link, Albert N. (2002). From Seed to Harvest: The History of the Growth of the Research Triangle Park.Research Triangle Park, NC: Research Triangle Foundation.

Luger, Michael I. (2001). Assessment of the William S. Lee Tax Act. For the North Carolina Depart-ment of Commerce. Available at www.oed.unc.edu.

Luger, Michael I. (2003). “Research Parks and the Economic Development Trajectory: Countries’Ambition and Capacity.” Ms. Chapel Hill, NC: Office of Economic Development

Luger, Michael I., David Gibson and D. S. Oh, editors (1998). Technopolis as Regional DevelopmentPolicy. World Technopolis Association.

Luger, Michael I. and Harvey Goldstein (1991). Technology in the Garden: Research Parks and RegionalEconomic Development. Chapel Hill, NC: University of North Carolina Press.

Monitor Group, in affiliation with Dr. Michael E. Porter (2002). Clusters of Innovation in the ResearchTriangle Region. Council on Competitiveness.

North Carolina Rural Prosperity Task Force (2000). Recommendations Summary. Available at http://ruraltaskforce.state.nc.us.

Office of Economic Development (2000). High-Tech Clusters in North Carolina. For the NorthCarolina Board of Science and Technology, Vision 2030 project. By Edward J. Feser, HenryRenski, and Aaron Cain.

Stewart, Leslie S., Barnett, Camille, Leaman, Sam (1997). Competitive Marketing Action Plan for theResearch Triangle Region. Research Triangle Institute.


APPENDIX A

Office of Economic DevelopmentSite Survey Instrument

[IDENTIFICATION] Industrial Park

General “ranking” meanings: (1) available; (2) adequate; and (3) problematic

Transportation ResourcesInterstate(s):

Miles/minutes to nearest exchange: ____________Highway(s):

Classification from NC DOT (A,B,C,D): ____________Railroad(s):

Short line [nearest loading point/exchange]: ____________Long haul [nearest loading point/exchange]: ____________

Airport(s):Minutes to RDU: ____________Minutes to general aviation nearby: ____________

ICT ResourcesHigh speed Internet access: ____________

DSL provider: ____________Estimation of monthly costs: ____________

Telephone access:Local telephone provider: ____________Fiber or analog classification: ____________Estimation of monthly costs: ____________

Cellular service:Served by:

(1) AT&T _______ (2) Verizon _______ (3) Sprint _______(4) US Cellular _______ (5) _______________ (6) ________________

Estimation of monthly costs:(1) ____________ (2) ____________ (3) ____________(4) ____________ (5) ____________ (6) ____________

Cable Service:Cable (Modem) provider: ____________Estimation of monthly costs: ____________


Community ResourcesCities/Towns [w/ population]:

Distance to town w >5000 population (town center): ____________Minutes to downtown Raleigh: ____________

Hospital(s):Minutes to nearest hospital:Designation of facility: ____________

Available Housing (rental, spec, etc.,):Median housing price (3 bedroom single family house) in the nearest town:____________

Infrastructure ResourcesWater/Sewer access:

Rates at site (cost) in per gallon terms: ____________Availability: ____________Designated water provider:Capacity (average use):

Sanitation (waste disposal):Rate per ton/month: ____________Designated provider: ____________

Electric Utility:Rate per hour: ____________Designated provider: ____________

Natural Gas:Availability: ____________Rates: ____________Designated provider: ____________

Educational Infrastructure ResourcesUniversities: ____________

Miles/minutes to nearest UNC campus: ____________Miles/minutes to nearest other college: ____________

Community College(s): ____________Miles/minutes to nearest facility: ____________Classification of site (satellite, main campus, etc.,): ____________Availability of special “industry targeted” or other programs: ____________

Secondary School(s): ____________What secondary school serves the nearest town (name): ____________Quality of educational facility (Dept of Public Instruction rating): ____________County level percentage of children in public vs. private schools: ____________

Economic ResourcesTier Designation: ____________Nearby manufacturing industry: ____________Nearby service industry: ____________County’s largest employers:

Population:Population density: ____________County property tax rate(s): ____________


Human ResourcesUnemployment Rate (current): ____________Nature of Workforce: ____________

Unemployed:Under-employed: ____________Migrant worker population: ____________Skill characteristics: ____________Other workforce characteristics: ____________

ESC monthly unemployment rates:Selected last four month rates: ____________Unemployment rate from previous year: ____________

General education level (county):Percentage with HS degree: ________ Percentage with 4-year degree: __________

Commentary on workforce and measures:Economic Developer [is unemployment rate a good measure, etc.,]:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

ESC representative [who walks in the door, what do they look like]:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

SITE IDENTIFICATION and BACKGROUND INFO:Size and Configuration:__________________Ownership:______________________Adjacent Land Use: ________________________Site - Specific Tax Incentives:______________________Date of Evaluation: __________________Person Assisting with Evaluation (Affiliation): ________________Position/Title: ____________________Telephone #: _______________Email Address: __________________________Name of Industrial Development: ________________________Facilities ready for move in: _____________________Number of current Tenants: ________________Number of Initial Tenants within the first year: ________________


APPENDIX B

Notes on Potential Sites inNorthern and Southern Counties

NorthWe visited the following sites during the months of July, August, and September 2002.In nearly all cases the respective county’s economic developer accompanied us.

(A) Butner Business Park and Morgan SiteThese two combined sites are located adjacent to Interstate 85. Butner Business Park isshovel-ready with its own graded entrance road. At 325 acres, it has its own water andsewer allocation and is expandable to over 500 acres. The Morgan site adds 160 acresto the total available, and also has its own water and sewer allocation (1,000 gallons a day).

Figure B.1: Butner Business Park, I-85


Figure B.2: Oxford Industrial Park

(B) Oxford Business Park and Montague SiteOxford Industrial Park is Granville County’s certified site, with 125 acres available.This is an established park with several current tenants nearby. The Montague siteadds an additional 160 acres, and also has water and sewer access currently.

(C) Triangle North Industrial ParkThe Triangle North Industrial Park is located adjacent to Interstate 85, at the same exitas the main campus of Vance-Granville Community College. This site is over 100 acresof shovel-ready land, certified by the Commerce Department. There are 90 acres leftto sell in the complex.

Figure B.3: Triangle North Industrial Park


Figure B.4: Henderson Vance Industrial Park

(D) Daniel SiteThe Daniel Site is a 500 to 600 acre site located along the US-1 corridor south of theInterstate 85 split. CSX maintains a spur adjacent to the site, and water and sewer areaccessible. The main drawback to the site is that no service roads have been built toprovide access.

(E) Henderson Vance Industrial ParkHenderson Vance Industrial Park is a 200+ acre facility also located on the US-1 corri-dor. Currently all available parcels are filled.

(F) Capital Boulevard SiteThe Capital Boulevard site is located along the US-1 corridor across the highway fromthe Youngsville Commerce Center. An undeveloped site, the Capital Blvd site is a rect-angular 500-1000 acre site bounded by two two-lane roads. There is no current devel-opment on the site, though a major auto auction site is adjacent to the property.

(G) Youngsville Commerce CenterThe Youngsville Commerce Center is an established business park, with around 105acres currently available. The Youngsville Commerce Center has several establishedtenants who also have plans to expand their operations within the site.

(H) Youngsville Commerce Center SouthYoungsville Commerce Center South is also an established industrial park with twotenants, located adjacent to a rail line. There is not much space to expand here, as thetwo current tenants are occupying much of the available land.


Figure B.5 Warren County “Soul City” Sites

(I) US-1 (Soul City) SitesWarren County offers several sites. OED has combined them into the “Soul City” sitesconglomeration. There is rail access along several of these sites, with CSX running anaverage of one train a day delivering box cars to the nearby chip mill. Along with thenearby community of Soul City, there is a poultry processing plant, an InternationalPaper Mill, an assisted living facility, and a health care provider.

(J) Oine SitesThe Oine site is a newly certified site, the only one in Warren County. The property isover 50 acres, and has an elevated water storage tank adjacent. All utilities are avail-able on the road frontage. The Oine site is located on Exit 229 on Interstate 85, just sixmiles north of the Soul City sites.

SouthWe visited the sites in Lee, Harnett, and Chatham Counties in August and September2002. We contacted the economic developer in each county for information on eachsite, and in most cases a developer accompanied the OED representative to the site.

(A) New Hope Farms SiteOED interviewed Tony Tucker about the sites available in Chatham County. The pre-mier site he showed us and discussed in detail was New Hope Farms. This site islocated at the corner of US-64 and US-421. This site has been in competition (alongwith the current facility in Butner) for the new consolidated Dorthea Dix mental hos-pital facility. As of the latest information available, it appears that Raleigh has decidedto consolidate the mental health facilities in the current location in Butner. This site is


owned by one property owner who is interested in development projects that wouldbenefit the county.

(B) Samarcan SiteThe Moore County sites we have listed on the map of the region are just three of themany listed for the county by the local economic developer. The economic develop-ment office there (represented currently by Robin Spinks of Greenfield DevelopmentCompany) just had a study done of the available industrial sites in the county andcompleted its own system of rankings based on several criteria. That report created asite selection decision matrix for seventeen sites based on several characteristics thecounty is interested in evaluating. Several of those criteria are listed in the site evalu-ation database included in this report. Our report incorporates the individual site datafrom that report, as well as data available from the Commerce Department (and com-ments from Robin in her interview). Their report included the following listedcharacteristics:

(1) Availability (2) 4-lane access (3) Surrounding land use

(4) Environmental issues (5) Sewer access (6) Water access

(7) Taxation (8) Natural gas (9) Telecommunications

(10) Size (11) Rail access (12) Proximity to labor

(13) Proximity to airport (14) Aggregate weighted score

The Samarcan property is a site near industrial use property east of Candor (Mont-gomery County) on both sides of NC-211 at Samarcan Road. The property is almost1,300 acres and owned by an individual willing to discuss development ideas further.Nearby uses include turf farm, grape orchard, rural residential, and heavy industrial.The county property tax is the only current levied tax on the parcels. Water and sewerlines are adjacent on Samarcan Road, available from Montgomery County and thetown of Candor, respectively. Natural gas is not reasonably available (the closest linesare more than ten miles away). The site does have the Aberdeen railroad line runningthrough the property, and is approximately twenty miles from the nearest airport.

(C) Ransdell SiteThe 620-acre Ransdell site is located south of Aberdeen on the west side of US-15/501.The site is located about a mile from US-1 and nearby uses include residential andindustrial. The site is subject to county property taxes only. The town of Aberdeensupplies water via a line adjacent to US-15/501, and sewer is also supplied by Aber-deen, though a line approximately 2,500 feet away. Natural gas is close, with a lineapproximately a half-mile to the north on US-15/501. Alltel provides telecommunica-tions, with a fiber line about a mile away. CSX maintains a rail line along the rear ofthe site, and the nearest airport is about 9 miles away.


(D) Catawba SiteThe Catawba site is about 1,200 acres on the south side of US-15/501 at NC-24/27 eastof Carthage. The property is in the midst of a sale, and the new owner is interested indevelopment. The site is approximately eight miles from US-1, and nearby uses in-clude highway commercial and rural residential. Water and sewer access are 4,000and 6,000 feet away, respectively, both supplied by the town of Carthage. Natural gasis not reasonably available (with the closest line almost twelve miles away). Telecom-munications is provided by Sprint, with a fiber line almost a quarter mile away. Raildoes not go through the site, and the nearest airport is nearly twelve miles away.

(E) Lee County Industrial ParkOED met with Robert Heuts, economic developer of Lee County, to discuss the sev-eral properties available there. The Lee County Industrial Park is the largest site in thecounty, with an area of 450 acres currently expandable to over one thousand acres.There are current plans for the Industrial Park to house the new Central CarolinaCommunity College Telecommunications Center, which is replacing the old facility.The park currently has access to natural gas, and sewer access should open up theadditional acreage. The site also has rail access, with a Norfolk Southern line runningthrough.

(F) Southpark SiteSouthpark (Lee County) is a smaller site than the Lee County Industrial Park. Notenants are now operating, but one business has committed to the site. The site has norail access, but natural gas is available. There is a bypass targeted for a nearby road exitfrom US-421 that is planned for five years out that crosses at a nearby intersection.

(G) Western Harnett Industrial ParkAccording to Jerry Hartgrove in Harnett County, the western part of county has expe-rienced lots of spillover growth from the Fayetteville area, including Fort Bragg. Newelementary and middle schools have been built recently, and a new high school is alsoplanned for the area, and around 2,500 home sites in the area are scheduled to bedeveloped. Located on Highway 87, the Park is about 250 acres in size, zoned indus-trial. The site is about 25 miles away from Interstate 95, 50 miles from RDU, and 25miles from the Fayetteville airport. Harnett County also has had a recent study com-missioned on their economic development efforts, prepared by the Leak Goforth Com-pany, LLC.

(H) Layton Property SiteThe Layton property is more centrally located in the county, along Highway 421 inLillington. The entire property is owned by one family, and is available on an all-or-nothing basis.


Figure B.6: Talton Property Site

(I) Talton Property SiteThe Commerce Department’s SiteSearch service listed several available sites in JohnstonCounty. However, Michael Desherbinin of the Economic Development Office inJohnston County focused our attention on the Talton property. The site is listed as 900acres, with rail access, all utilities (including natural gas), and located right beside theUS-70 Bypass.

(J) Clayton Property SiteThe Clayton property is owned by the Norfolk Southern railroad, and Jim Bowman istheir representative. The property was described as over 400 acres, located along theUS-70 corridor. This site was the second choice mentioned by the economic developeras fitting the suggested acreage.


APPENDIX C

Industry groupings within sample clusters

Kerr-Tar counties (north) Southern counties

SIC Code Industry Classification SIC Code Industry Classification

2824 Plastics/Chems 2821 Plastics/Chems2834 Biotech 2824 Plastics/Chems2844 Plastics/Chems 2834 Biotech2851 Plastics/Chems 2836 Biotech2875 Plastics/Chems 2841 Plastics/Chems3579 Info/Comm 2844 Plastics/Chems3634 Medical 2869 Plastics/Chems3643 Info/Comm 2875 Plastics/Chems3644 Info/Comm 2879 Plastics/Chems3674 Info/Comm 2891 Plastics/Chems3821 Info/Comm 2899 Plastics/Chems3843 Plastics/Chems 3559 Plastics/Chems7371 Info/Comm 3577 Info/Comm7372 Info/Comm 3624 Plastics/Chems7375 Info/Comm 3625 Info/Comm7379 Info/Comm 3643 Info/Comm8711 Info/Comm 3661 Info/Comm8712 Info/Comm 3663 Info/Comm8713 Info/Comm 3669 Info/Comm8731 Biotech 3672 Info/Comm8734 Info/Comm 3676 Info/Comm

3679 Info/Comm3812 Info/Comm3825 Info/Comm3826 Info/Comm3829 Info/Comm3841 Medical3842 Medical7371 Info/Comm7372 Info/Comm7373 Info/Comm7374 Info/Comm7375 Info/Comm7379 Info/Comm8071 Plastics/Chems8092 Plastics/Chems8093 Plastics/Chems8099 Plastics/Chems8711 Info/Comm8712 Info/Comm8713 Info/Comm8731 Biotech8732 Info/Comm

8734 Info/Comm


APPENDIX D

Legal Considerations andExamples of Revenue/Cost Sharing

Our first question was whether North Carolina law specifically created difficulties forinter-local cooperation; more specifically, we wanted to know how counties and mu-nicipalities could share revenues generated from joint activity located in one of sev-eral participating counties. Can local governments in North Carolina engage in eco-nomic development activity that includes such devices as revenue-sharing agreementsto support joint projects? North Carolina law provides many opportunities for suchinter-local activity between and among local polities. There are many current exampleof this type of joint activity in North Carolina and other states.

North Carolina Enabling LanguageThere are two main legal approaches to implementing inter-local agreements betweenmunicipal and/or county entities: (1) direct authorization granted via some sort ofexplicit state constitutional “Joint Exercise of Authority” enabling statute (examplesbeing the State of Minnesota’s Chapter 469, South Carolina’s Title 4 Chapter 1-140,both authorizing joint municipal action); and (2) general assertions of power del-egated to municipalities as implied powers of their corporate nature (an example be-ing our own North Carolina General Statutes). Some of the typical relevant enablinglanguage from the North Carolina General Statutes appears below:

Chapter 153A [Counties] Article 1 §153A-4 (Broad construction) . . .counties ofthis State should have adequate authority to exercise the powers, rights, duties,functions, privileges, and immunities conferred upon them by law. To this end,the provisions of this Chapter and of local acts shall be broadly construed.

§153A-11 [Corporate powers] The inhabitants of each county are a body politicand corporate . . . they are vested with all the property and rights of propertybelonging to the corporation . . . [and] may contract and be contracted with. . . .

The Randleman Dam constitutes a nearby example of inter-local agreements inaction. Six local governments got together (Randolph County and five cities) to con-struct and maintain a dam. Citing several of the relevant statutes (N.C. Gen. Stat. 160A


460, N.C. Gen. Stat. 160A 17, N.C. Gen. Stat. 160A 274, and N.C. Gen. Stat. 162A 14 —which relates specifically to water issues) the six entities drafted a twelve-page agree-ment that contemplated sharing costs for the dam by a pro rata metering out of thewater supply. Based on interviews concerning this and other inter-local attempts atcooperation, the most immediate obstacle to success cited was the presence of localpolitics as a barrier to initial cooperation among the entities involved.

A second example of cost and revenue sharing in North Carolina is in Burke andCaldwell Counties. The towns of Morganton and Lenoir, in cooperation with the coun-ties, proposed the creation of the Foothills Airport Authority, a joint entity, to operatethe Morgan-Lenoir airport. The North Carolina General Assembly ratified a bill tocreate the Authority in its 2001 session (in Session Law 2001-306, Senate Bill 653).

The new Authority is using 300 of the 1,100 acres for the airport, and reserving800 acres for future development. By inter-local agreements, the taxes collected fromusers of the property are to be submitted to the Authority and then divided equallyamong the four participating political subdivisions, each receiving a quarter share.Costs for development also are to split among the participating entities.

Other State/Municipal Experience with CooperationThe Kennebec Valley Council of Governments (a regional economic development or-ganization), through the Kennebec Regional Development Authority, opened a 285-acre park near Oakland, Maine, in March 2002. FirstPark is an example of an inter-local agreement among twenty-four rural counties and municipalities. The largestmember is the town of Waterton, with a population of around 20,000. Oakland, as thegeographic sponsor of the park, levies the property taxes on the tenants. These taxproceeds are then split pro rata among the participating counties and municipalitiesbased on their contribution to the overall real estate valuation for the participatingregion. For example, the city of Waterville, which contributes 16 percent of the partici-pants’ collective value, is given 16 percent of the taxes from the park.

Based on a telephone conversation with the CEO of the park, Paul Levesque, wegleaned several general recommendations. His experience and comments with actualimplementation issues echoed the comments given by those involved in the RandlemanDam venture, and appear below.

(1) Participating entities were particularly concerned about rising costs, for ex-ample, school and educational costs, that would occur with the implemen-tation of the project (which they would subsequently have to fund themselves);

(2) Questions over the equitable reimbursement of the participating entities wasa matter that was important to address and make explicit;

(3) Looking back, one of the more important “do-overs” would have been tomake the initial contracting device for the park more explicit in its details.After the fact, the legal costs incurred in the formation of the entity, theramifications of the TIF (Tax Incremental Financing) zone classification, andownership and maintenance responsibilities of the roads and utilities wereall details better made explicit;


(4) In general, a desire for growth without pain on the part of the participatingentities was troublesome to overcome, even with the understanding thatthis particular economic development vehicle was one of the few availablefor such projects in rural settings.

In a February 11, 2003, address to the Emerging Issues Forum, former MichiganGovernor Engler talked about the use of tax sharing arrangements in the Grand Rap-ids metro area as a way to spur economic development. He credited those arrange-ments for much of the new vitality in that area. At the same forum, Tim Franklin ofVirginia Tech discussed a successful revenue sharing agreement between the city ofDanville and Pittsylvania County, Virginia.

PRIMJER 1

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