Editor's note: This is the first in a series about economic development in Athens
Economic growth is evident throughout the city of Athens.
Take a look around the community. The average person may not know that many of the places they pass by every day are a result of the efforts of the Athens Economic Development Corporation, whose mission is to enhance the quality of life by leading and facilitating economic growth.
This progress didn’t happen overnight. In May 1990, voters elected to permit the collection of a half-cent sales tax to fund the economic growth of Athens, thus AEDC was created in October 1990 as a Type A Corporation after the May election. The types of projects permitted under Type A include the more traditional types of economic development initiatives that facilitate manufacturing and industrial activity.
By law, these sales tax funds can be used to assist companies with infrastructure, relocation, training and other needs through incentives. AEDC was later changed to a Type B Corporation to allow for a broader use of the funds received.
According to Dr. Ray Perryman, promoting growth in a community requires that external funds flow into that area. To be effective, incentives must be directed toward activity that is exported outside the local economy. Sectors that sell into external markets create primary jobs and investments and provide the foundation for sustainable prosperity.
AEDC’s focus is on the creation and retention of primary jobs. A primary job is defined as one at a company of which a majority of the products or services are ultimately exported to regional, statewide, national or international markets infusing new dollars into the local economy, and that meets any one of a specific list of sector numbers of the North American Industry Classification System (NAICS), such as manufacturing, wholesale trade, transportation and warehousing, just to name a few.
Manufacturing makes up the largest primary sector in Henderson County with wages exceeding $25 million in the third-quarter of last year, according to the Texas Workforce Commission Quarterly Census Employment and Wages — a whopping 448-percent increase since AEDC’s inception nearly 30 years ago.
It’s the primary jobs that lay the foundation for the local economy, creating the need for secondary suppliers, retailers and services, in addition to employee buying power, which produces a stable economy.
Just over the last five years, AEDC’s efforts have resulted in 10 project wins generating an economic impact of over $834 million to the local economy over a 10-year period. Those project wins created 533 new jobs, retained 876 jobs and will add more than $34 million to the tax rolls in real and personal property.
Several of these projects were new companies that relocated or expanded their operations to Athens. Others were existing companies AEDC worked with to grow their business, keeping jobs and investments in the Athens community. Below are the highlights from a few of these project wins.
In January 2015, AEDC hired a new executive director who began implementing a business retention and expansion visitation program. It is because of the valuable relationships established through the program that recently kept Athens from losing 430 primary jobs. The impact of losing jobs can be felt in any size city, especially when it’s the loss of hundreds of jobs in a rural community.
That’s what Athens avoided when its economic development corporation went to work fighting to retain an existing company, FutureMatrix Interventional, which was in the process of being acquired by Biomerics, and the hundreds of jobs that came with it.
The key driver for this project was for AEDC to come up with an incentive package that would make the Athens location viable for the company, as the new owners had multiple facilities this location could have consolidated into, of which two locations had just opened new facilities in other states.
The project win was announced last year when Biomerics acquired FutureMatrix Interventional, in Athens’ Industrial Park, allowing the company to expand its business in Athens. The acquisition not only retained more than 400 jobs in Athens but quickly added new jobs and are currently the largest industrial employer in Athens.
The company plans to invest $6.4 million in the Athens facilities and will hire an additional 180 full-time employees over a five-year period.
In 2016, Athens welcomed HVAC Manufacturing to the community after the company relocated its operations from California. Since moving to Athens nearly three years ago, HVAC is now planning its fourth expansion at the facility on West Corsicana Street.
To date, it has invested $2.7 million at the Athens facility and more than doubled its original job estimates. Relocating to Athens from California alleviated the heavy tax burden and higher operating costs, allowing HVAC to invest and grow its business, resulting in more jobs and increased tax revenue for the city of Athens.
Driving into Athens on West Corsicana, one will notice the impressive Clayton Homes building operation that began in October 2016, after purchasing an existing facility. The $8.25 million, first-of-its-kind facility is one of the largest of Clayton’s 40 home building facilities in the United States. Today, Clayton employs 186 people with plans to hire 240 full-time employees over a five-year period.
New construction can be found on the south side of Athens across from UT Health-Athens. The new $12 million state-of-the-art facility, Advanced Rehabilitation & Healthcare of Athens, is scheduled to open this year. The 120-bed facility will consolidate Green Oaks Rehab & Nursing facility, retaining 86 jobs with plans to add 20 new full-time positions.
Incentives play an important role in economic development and create a win-win for the company and the local community. Athens has an array of local and state incentives available to qualified companies.
These incentives include infrastructure assistance, job creation incentives, capital investment incentives, job training grants, several project financing options and tax abatements. Over the last five years, AEDC has paid $1.37 million in incentives, mainly in the areas of capital investment and job creation, with a payback period for the investments of 4.32 years. This equates to an impressive 79-percent ROI on public investment.
The highly competitive environment characterizing modern economic development virtually demands that communities and regions seeking continuing success be competitive with incentives and other location requirements. Incentives, marketing efforts, and other enhancements are widely used, and communities need such tools to level the playing field.