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Committee for Geelong Weekly Addy Opinion Piece - Tennessee model

Following recent events in Geelong there is a compelling argument to review the way our city attracts investment to create new jobs.  Over the past few years a new model of policy making and implementation has replaced the previous model of regional development. Known ascollaborative governance, it brings together both public and private sector representatives to make decisions by consensus, before moving to implementation of their agreed strategy.  The Victorian State Government's new Regional Partnerships model is an example of this.

A good case study of this type of model in operation is Tennessee, which recently attracted a global manufacturing business and is on track to create 600 new jobs.  Earlier this year, the Governor of Tennessee announced that Advanced Munitions International (AMI), a world leader in the manufacture of ammunition, was investing USD$553 million in a new campus for its manufacturing, distribution and R&D operations. This substantial investment will be located in the city of Alcoa in Blount County. While the company looked nationally for a site, the CEO of AMI said that "Tennessee stood out as a place with leaders that understand and support strong business growth."

The model used was based on a partnership consisting of the Federal Government (through the Tennessee Valley Authority and the Oak Ridge National Laboratory), the State of Tennessee, the Industrial Development Board of Blount County, the Chamber of Commerce, the Smoky Mountain Tourism Development Authority and the County Economic Development Board, together with the cities of Alcoa and Marysville.

The AMI incentives package included grants from the Tennessee Valley Authority, Oak Ridge National Laboratory and the State of Tennessee, a lease-back land plan devised by the two cities together with property tax reductions, State-funded road improvements and the issuing of industrial revenue bonds. Three of these incentives are worth reviewing for their relevance to Geelong.

Under the lease-back plan the Industrial Development Board transferred the land for AMI's 236 acre campus to the company for $1, then reacquired the property and leased it and the facility to the company with a nominal $1 purchase option.

Industrial Revenue Bonds are commonly used in the USA as a type of financing put in place by a government or municipality to assist a private company. They are tax-exempt securities supported by the revenue from a specific project with the goal being to improve regional economic and employment conditions. These Bonds are available in Blount County for new and expanding companies and can be used for land, building and equipment purchases. In addition, property tax reductions on the facility and its equipment are available for the first six years the plant is in operation, starting at a 60% abatement in year one, gradually reducing to a 10% abatement in year six.

The attraction of AMI to Tennessee was the result of a collaboration of the dynamic and committed leadership from both public and private sectors, together with an innovative incentives package. As Geelong transforms, it is vital that all sectors work collaboratively to develop a successful strategy to attract investors and create new jobs.

Rebecca Casson is the Committee for Geelong Chief Executive Officer. Follow the Committee for Geelong on Twitter @Comm4Geelong.



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