Megasites Equal Megabusiness: Certification Requirements and Processes for Megasites and Supersites
Certified megasites are quickly becoming the new standard for large expansions and relocations. What factors qualify a location as a megasite?
Mark Crawford, Contributing Editor,  (Aug/Sep 08)

Megasites, also called supersites, are large contiguous tracts of land that are choice locations for big industrial operations. These properties are usually owned by or optioned to state or local economic development authorities. Megasite is a loosely used term and has variable meanings for different economic development groups and agencies. For example, some communities might view a 500-acre site that lands a $50 million manufacturing plant and 500 jobs as a megasite. Other cities that want larger-scale manufacturing operations, such as auto plants, view megasites as properties that exceed 1,000 acres in size and can attract at least a $500 million facility and over 1,000 jobs.

 "The problem with this lack of definition is that the communities use a shotgun approach for marketing a particular site for any industry by calling it a megasite," says Ed McCallum, senior principal with McCallum Sweeney Consulting, a site location firm in Greenville, South Carolina, that also specializes in certifying megasites. "This is not the most effective way to use either the megasite or certified site concept. The first step is to identify the target industry the state/community wants to recruit, and then develop the criteria around that."

Key Features
A major mistake developers often make is picking the property first and then trying to determine what industries will be interested in the property. "Instead," says McCallum, "they should understand fully the criteria that are required for the site - infrastructure, transportation, topography, wetlands, environmental, etc. - and use these as the discriminating criteria for selecting a site, for a particular company or industry."

In general, megasites are served by modern utilities and have easy access to high-volume road, rail, and port infrastructure. Other important features include being as close to "shovel-ready" as possible and having a large enough supply of high-quality workers to serve the new facility and the key suppliers who will also likely move in.

Equally important is having "the commitment of the owner and local government to move quickly on a very large project," says Jerry Mallot, executive vice president of the Jacksonville Regional Chamber of Commerce, which recently went through the megasite certification process.

Perhaps the key standard for qualifying as a megasite is being certified - which means an expert third party, usually an experienced site selection firm, has carefully evaluated the site for a number of critical features. These features generally include "clear ownership title, size and configuration of the site, utility availability, transportation availability, favorable environmental assessment, engineering studies, delineation of wetlands, topography data and maps, and quoted price," says William A. Fredrick, president of GrowthTech LLC, a site location firm in Springfield, New Jersey.

"The time frame in which today's large-scale manufacturers have to make location decisions is extremely compressed," says Mallot. "Megasite certification gives companies peace of mind that a site is, in essence, pre-qualified for immediate development. This knowledge reduces of the risk of unanticipated holdups and lawsuits, assures quick acquisition, and can fast-track a project, keeping development costs down."

This advance knowledge lessens the time it takes for due diligence, which makes it easier to stay on schedule and reduces project startup time, risks, and costs. "One example is in Oregon, where a large big box retailer chose a certified site that was miles away from the preferred location for a regional distribution center in Washington state," says Fredrick. "The company chose the Oregon site because of the time and cost savings available through its certified program. Certification programs also speed the sale of sites - since Oregon started its certified site program, 56 sites have been certified, totaling over 3,300 acres. Of these, 19 have been sold and over 2,500 jobs created."

Certified megasites are not necessarily always shovel-ready, because the cost of extending utilities and transportation systems to a megasite for a single large user is very expensive. This kind of site development and related permits are usually undertaken once the site is sold. Smaller sites are more likely to be shovel-ready because their sale is typically faster and utility extensions are economically more feasible.

"There are two key features a client looks for - risk management and velocity," says Jim Colson, president of site selection for Angelou Economics in Austin, Texas. "The certification process is an excellent tool a community can use to assess its own competitiveness. If a site proves not to be competitive, the process helps the community identify what the primary drawbacks are, and then a plan can be developed to fix those problems. Once certified, the site has a very significant marketing advantage."

Depending on the site features and the needs of the company, a varying amount of due diligence is included in the certification process. Ideally, the certification process mitigates as much risk as possible and significantly speeds up the permitting process.

Regardless of how detailed and thorough the certification process appears to be, the company must still conduct its own due diligence. "However, if the site certifier is highly experienced and well-known for its thoroughness, the company's own due diligence will be much easier because the certifier will have much of that information already pulled together," says Colson.


The Certification Process
The process begins with a site visit and meetings with key participants. "The documentation for the site information is gathered in conjunction with the owner, the local economic development organization, and local and state governments to insure that each question is not only completed, but documented," says Mallot. "The net result is a book that provides a complete understanding of the site and a third-party certification that it is ready for development at a reasonable cost and risk."

There is no standard in the industry that defines a certified site. "The process is based on verification of data and industry-specific requirements that are commonly known and understood in the industry, and applying the discipline to make sure that information is gathered, verified and based on a plan - not conjecture, promises, or chance circumstances," says McCallum.

If the region is acceptable, the client requests sites that have all the necessary attributes that will make the site work from a technical perspective. Part of the evaluation process is looking at the status of the site with respect to these attributes and assessing the amount of time needed to complete due diligence regarding environmental, wetlands, permits, infrastructure connects, etc. "If the information is not known and the time period required simply to acquire the information is outside the project schedule requirements, the site is usually eliminated without further investigation," says McCallum.

The process is basically a standard checklist of "site readiness" criteria that is unique to the needs of a particular industry. "For example," says McCallum, "the needs of an auto assembly plant would be much different than the needs of a titanium melting and rolling operation or an aircraft assembly facility. The first requirement is a commitment on the part of the economic development agency that it will put in the time and effort to complete the process - it is not cake walk. The second requirement is making sure all the stakeholders understand - and actually believe - and internalize the concept that site certification is a critical element of their eligibility as a candidate that is only the first step in winning a project."

Cost for the certification process varies according to the size, complexity, and preparedness of a site, but ranges from about $50,000 to $250,000 or more. "Costs can easily exceed $1 million when the client starts adding engineering studies and other extras," says Colson.


Where to Find Megasites

Megasites are located across the United States, from New England to the Pacific Northwest. They are especially abundant in regions with a strong manufacturing history and supporting infrastructure, such as the Southeast. States, cities, and regions in this part of the country are in tough competition for the billions of dollars that big firms want to invest in automotive assembly, engine manufacturing and assembly, metal processing, aircraft assembly, and renewable energy facilities.

Portions of the Cecil Commerce Center in Jacksonville, Florida, were recently certified as megasite by McCallum Sweeney. Owned by the Jacksonville Economic Development Commission (JEDC), the property is attracting the attention of industrial companies who are interested in investing hundreds of millions of dollars in a new facility and adding hundreds of high-paying jobs to the community. "Recognition as a megasite validates Cecil Commerce Center's status in the major league of industrial parks and will further elevate Jacksonville within the site selection community," says Ron Barton, JEDC's executive director.

The Tennessee Valley Authority (TVA) has an extensive megasite program in its multi-state service area, and Entergy has a supersite program in Arkansas, Louisiana, Mississippi, and Texas. "The [TVA] program is designed to make it easier for automotive manufacturers or other large industries to quickly find an optimal location that is ready for development and offers time savings and reduced risks to a new industry," says John Bradley, TVA's senior vice president of economic development. "During three rounds of site reviews in 26 communities from 2004 through 2007, nine sites in our seven-state, 80,000 square-mile service area met the stringent requirements for the program."

As of July 2008, four megasites have been sold - to SeverCorr, PACCAR, Toyota, and, most recently, Volkswagen Group of America, which plans to build a $1 billion automotive production facility at the 1,350-acre Enterprise South Industrial Park in Chattanooga, the first certified megasite in Tennessee. Volkswagen plans to produce a car designed specifically for the North American consumer. Production capacity for the facility is expected to be 150,000 vehicles per year, with startup expected in early 2011.

Volkswagen began the site selection process in January and quickly narrowed the choices down to three sites in Tennessee, Alabama, and Michigan. "Key factors were site readiness, infrastructure, and logistics," says Jill Bratina, director of corporate communications for Volkswagen Group of America. "Site readiness was very important because of our very aggressive timeline. Because production is targeted for 2011, the property basically had to be ready to go."

While the exact definition of a megasite may still be somewhat flexible, the importance megasites play in the site selection process is certain.

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