The hills and river valleys that make Pennsylvania so attractive to look at also make it more expensive to develop for large industrial sites compared to many of our competitor states. Grading and filling can add $25,000 or more per acre to development costs compared to a flat farm field in Ohio.
Pennsylvania can help boost its manufacturing future by providing additional funding for the existing Business In Our Sites program administered by the Commonwealth Financing Authority.
The program was created by the Rendell administration in 2004 to help fill that gap in two ways. It provides grants for industrial site development to help offset the extraordinary expense of developing larges sites in Pennsylvania, making the state more competitive.
The program also provides low-cost long-term loans that are only repaid once a tenant is secured. This type of financing is particularly important because of the nature of industrial site development. When a company decides to move forward with a factory, it wants to move quickly. Years ago, a company might agree to build on vacant field and wait patiently while a developer graded the site, built roads, extended utilities, and prepared individual sites.
Today, developers need to have ready-to-build sites where companies can begin construction quickly. To be competitive, industrial parks need to be developed on a speculative basis before specific tenants are recruited. Having financing that does not have to be paid off immediately helps make that possible.
The original Business In Our Sites program was capitalized with $300 million. An additional $75 million was funneled to the program in 2016 from other state economic development programs which were not being used. The $375 million has been disbursed in grants or loans. As loans are repaid, the proceeds are available for new loans, but available funding is only a fraction of the original $375 million. No new projects were approved in the current fiscal year because of a lack of funding.
Financial analyses show that increased state revenue from income, sales, and other taxes from companies that locate on the new industrial sites can more than make up for the state investment in the program.
For a list of projects funded by the Business in Our Sites program since its inception, click here.
