Economic development zones have become a staple in the landscape of American economic growth. Programs like Opportunity Zones and Enterprise Zones are well-known for offering tax incentives to spur investment in various sectors. While these initiatives attract private investment in areas like commercial and residential development, their overall effectiveness remains a topic of ongoing debate. International models, such as China’s Special Economic Zones, offer additional perspectives on zone-based development.
Manufacturers often prioritize jurisdictions with favorable tax environments. However, many also highlight the importance of local coordination, infrastructure, talent, and permitting certainty as crucial factors in their site selection and investment decisions. This has led to the concept of Advanced Industrial Zones (AIZs), which aim to develop industry clusters by aligning physical and procedural elements for next-generation manufacturing.
States across the ideological spectrum are experimenting with geographically-targeted industrial planning. Here are some contemporary examples of place-based programs that aim to revitalize U.S. manufacturing hubs:
Texas Competitive Renewable Energy Zones (CREZ)
Focus: Energy infrastructure | Mechanism: Ratepayer financing
Texas’s Competitive Renewable Energy Zones (CREZ) initiative, established under S.B. 20 in 2005, aims to harness the state’s wind generation potential. The program led to the identification of zones conducive to wind energy, followed by the construction of transmission lines to deliver power to population centers, effectively unlocking renewable capacity and reducing grid congestion.
By 2014, Texas had completed the development of 3,600 miles of transmission lines, representing a significant portion of all U.S. transmission construction during that period. This infrastructure was financed through a $7 billion ratepayer charge, with substantial returns in energy savings for consumers.
Policy mechanism
The CREZ program raised funds by imposing a transmission and distribution charge on utility bills, enabling ten utilities to finance the infrastructure buildout.
Early impact
The initiative facilitated 18.5 GW of new wind interconnection and reduced wind power curtailment from 17% to less than 1%. ERCOT estimates the upgrades save ratepayers $2 billion annually, emphasizing the program’s success. Advocates call for a second iteration to address ongoing grid congestion and capitalize on the state’s solar boom.
Utah Inland Port Authority
Focus: Logistics infrastructure | Mechanism: Tax increment financing
The Utah Inland Port Authority (UIPA) aims to bolster Utah’s industrial economy and supply chains through inland logistics hubs. The 2018 legislation established a jurisdictional area in Salt Lake City, which has since expanded to 15 project areas across the state.
UIPA employs tax increment financing to invest in infrastructure that enhances logistics for manufacturers. In Salt Lake City, for example, UIPA is developing a clean refueling station for alternative fuel vehicles.
Policy mechanisms
The UIPA utilizes tax increment financing, freezing property tax revenues for 25 years and using the growth differential to fund infrastructure. Additionally, the Authority Infrastructure Bank (AIB) provides low-cost loans for revenue-generating projects.
Designating new geographies
New project areas are nominated through municipal or county resolutions and must be approved by the UIPA board. Each area develops a Project Area Plan that includes infrastructure and budget details.
Massachusetts’s Devens Regional Enterprise Zone
Focus: Workforce and industry transition | Mechanism: Permitting reform
Following the closure of Fort Devens Army Base in 1996, Massachusetts established the Devens Regional Enterprise Zone to replace lost jobs. The zone, managed by MassDevelopment, is now a thriving industrial hub.
Policy mechanisms
The Devens Enterprise Commission oversees a Unified Permitting Process ensuring expedited permit processing. The zone also emphasizes eco-industrial development, supported by a range of sustainability programs.
Early impact
The zone has met its goal of replacing the 7,000 jobs lost with the base closure, now housing 95 organizations generating $8 billion in output annually. High-tech firms like Bristol Myers Squibb and Commonwealth Fusion Systems have established large facilities in Devens.
California Green Empowerment Zone
Focus: Workforce and industry transition | Mechanism: Technical assistance and coordination
The Green Empowerment Zone (GEZ) in Contra Costa County aims to transition communities from petroleum refining to low-carbon manufacturing. Established in 2021, the zone is targeting a high-road clean energy manufacturing cluster.
Policy mechanisms
An initial $5 million appropriation supports planning activities and technical assistance for employers. The GEZ does not have its own incentives but leverages existing programs to attract businesses and provide workforce training.
The GEZ’s geographic footprint
The GEZ is tailored to the local oil and gas communities but can expand its jurisdiction with new legislation. A proposal has been introduced to establish another GEZ in the Salton Sea region.
Virginia’s Business Ready Sites Program
Focus: Site prep | Mechanism: Grants
Virginia’s Business Ready Sites Program (BRSP) is designed to prepare sites for industrial investment. The program offers grants for site development, focusing on high-potential geographies.
Policy mechanisms
BRSP issues grants for site prep expenses, with projects eligible for expedited permitting. Grants cover expenses such as engineering studies and physical site improvements.
Early impact
Since 2017, BRSP has awarded $278 million in grants, supporting projects that have created 11,000 jobs and attracted $28 billion in capital investment. Demand for grant dollars remains high, with applications far exceeding available funding.
Original Story at publicenterprise.org