How Certified Sites Can Expedite the Site Selection Process for Expanding Companies
Companies seeking new locations hope to save time and money by looking at certified sites, which communities offer to lure in new business.
Q3 / Summer 2013
These pre-qualified sites can be a big incentive for companies, especially those looking to move quickly on getting a new facility up and running. Working with a certified site that is “shovel-ready” can shave months off of a development schedule. That time-savings is a valuable commodity.
“Today’s companies operate in a global market, and when they have new orders or a new contract, they want to be able to get to market quickly,” says John Hutchinson, director of public affairs and economic development for Gulf Power Company in Pensacola. “So, being able to quickly have a new business site ready to go is at the top of their minds.”
In April, Gulf Power Company launched its new “Power Up” Site Certification Program. The “Power Up” program is designed to accelerate the development of industrial and large commercial sites for new business development and expansion in Northwest Florida. Gulf Power currently has 14 applicants for its site certification program. It could take up to a year for those sites to work through the application and review process before meeting the requirements and qualifying for that certification designation.
According to news sources, this is the first certified sites program to be offered by Gulf Power, as well as the first program of its kind to be offered in the state of Florida. Gulf Power recognized that in order for local communities to be more effective in their marketing efforts, they needed a product to sell. “When companies come and you show them a cow pasture, you don’t get a second look,” says Hutchinson.
Although site certification initiatives have been around for years, such programs have been on the rise in recent times. Public-private ventures as well as city and state programs have been proliferating from Oklahoma City to Louisiana. North Carolina, for example, launched one of the first statewide certification programs in the country. Since 2001, North Carolina’s Certified Sites Program has certified more than 95 sites spanning almost 25,000 acres.
The program provides another reason for companies to consider locating in North Carolina. For example, last fall Altoona, Pa.-based Sheetz Inc. announced its plan to build a new distribution and food manufacturing facility on a certified site in Burlington, N.C. The company expects to invest $32.8 million in the facility and create 254 jobs by the end of 2018. Sheetz Convenience Restaurants, which operates more than 425 locations across six states, will use the new facility to service its growing base of restaurants in North Carolina and Virginia. The company broke ground on the new facility in June, with an opening scheduled for December 2014.
And in June, the Tennessee Department of Economic and Community Development announced the first six Select Tennessee Certified Sites, under a program that was launched about a year ago with the goal of helping the state’s communities prepare available sites for investment and expansion.
Vetted Sites Provide Incentive
Certification provides a standardized tool by which both development professionals and business prospects can review prospective sites for compatibility with their needs. A certified site is a property that has gone through a rigorous pre-qualification process. Although standards can vary depending on the individual state or individual economic development agency, certified sites have met a lengthy list of readiness criteria and have the documentation to prove it. For example, under Tennessee’s certification program, a site must have at least 20 developable acres with proper zoning in place, all utilities — or a formal plan to extend utilities — must be in place at the site, and it must provide truck-quality road access.
Certifications are typically conducted by site consultants and oftentimes a team of consultants that might include engineering and environmental professionals, representatives from the local utilities, and members of the local economic development organization. “The skill, depth, thoroughness, and market value of certifications varies widely,” says Mark M. Sweeney, a senior principal at McCallum Sweeney Consulting in Greenville, S.C., which has been doing site certification work for the past 15 years.
The certification process works to assemble current and accurate information into a single, useable package that makes it easier for businesses to compare and contrast their options. “The removal of uncertainty and speed are the two main calling cards for this initiative,” says Mike Downing, acting director of the Missouri Department of Economic Development (DED). Since it was introduced five years ago, the Missouri Certification Program has certified 16 sites encompassing more than 2,800 acres with an additional four applicants that are in various stages of the review process. Those certified sites are playing a bigger role in attracting new business, adds Downing.
If a company is looking at building a facility in an open cornfield, it would have to do its own due diligence in terms of land surveys and environmental engineering assessments. It would also have to check for clear property and title, and check that the current capacity of the infrastructure such as power and water are adequate for the company’s needs. All of this has already been done and independently tested on certified sites.
“I won’t say that companies only locate on certified sites, because there is a lot more to site selection than that. But, if they are looking at a specific community and it has a certified site, that will be the first one that they always look at,” says Downing. For example, Columbia, Mo., currently has three certified sites under the Missouri Certified Site Program that span 510 acres. That certified site status has allowed the city to gain the attention of companies looking for specific site requirements. In fact, Columbia’s certified sites are on the short list for two current site selection projects.
Weighing the Pros & Cons
In sum, the main advantages of certified sites for the end user are time-savings and cost savings. “Some companies have been quoted as saying such sites save many weeks in the site selection process and many months — six or more — in the site development process,” says Sweeney. Cost savings will vary widely, but can reach $50,000 or more for mega sites, he adds.
Another big advantage of certification programs, particularly for industrial users, is greater access to information that is both reliable and thorough. Certified sites are attractive to businesses because of the readiness of information, accuracy and depth of information, identification of property risks, and even mitigation of those risks.
“The thorough due diligence process that these sites have undergone removes risk and uncertainty by uncovering and addressing potential obstacles that can delay a project,” says Brandon Talbert of Austin Consulting, which worked on Tennessee’s certification program along with The Foote Consulting Group.
Certainly, one question that remains is what happens if at some point in the future there is a problem with the site. That varies depending on the individual program and entities involved. “In most cases, the certification program is owned by the property owner or economic development agency contracting for the certification,” says Sweeney. However, their liability is largely limited by caveats associated with property information provided to prospective users.
Like much information provided in the real estate business, the data is presumed accurate at the time of collection and certification. “Typically, no warranty is given or implied,” says Sweeney. Companies that decide to purchase or lease a certified property do so only after their own assessment. One potential negative is that some companies may take the certification at face value and not do any of their own evaluations or check to make sure that facts are accurate and current. Nonetheless, there is a clear trend of more sites going through some level of site-readiness assessment, including full certification. To some extent, such certification programs are raising the bar for those communities or states competing for business.
One of the drivers behind the new Gulf Power certification program is that the company recognized that it needed certified sites in order to compete with neighboring states such as South Carolina, Alabama (known as AdvantageSites), Mississippi, and Georgia that all have robust site certification programs. Gulf Power officials also hope that because of its certification program, area communities will begin to give more consideration to preparing for new growth.
“When you ask some communities where their next commerce park is going to be, they haven’t a clue, because they haven’t thought about it,” says Hutchinson. So, an added benefit is helping communities think about growth in an orderly way that ultimately makes them more competitive to attract new business, he concludes.
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