Virginia’s fundamentals remain strong after unsuccessful arena competition

As Virginia celebrates Economic Development Week, there is no better time to recognize that when it comes to success in economic development, fundamentals matter most.

Incentives, public sector support, personal connections and various intangibles — like, say, letting a CEO pick his favorite Grateful Dead concert to play during a recruitment dinner — can undoubtedly be helpful in getting a deal over the finish line.

But what earns accolades and puts a state in the best position to compete for major investment are a state’s fundamentals: excellent education systems; a high-quality and available workforce; a stable and reasonable tax and regulatory structure; a first-class transportation infrastructure; abundant energy resources; ready-to-build sites; low cost of doing business; and ample natural resources — just to name a few.

This is where Virginia consistently shines and what makes the commonwealth’s recruiting pitch to corporate executives as impressive as ever.

And because our fundamentals are strong, Virginia will continue to shine in the years to come.

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The commonwealth recently came up short in a spirited competition to be the home of a new $2 billion arena project that would have hosted the Washington Wizards and Capitals professional basketball and hockey teams in Alexandria and anchored surrounding redevelopment.

In the end, the teams accepted an investment package from Washington, D.C., the city they have called home for more than 30 years.

In the wake of this high-profile competition, it is fair to wonder whether there could be any lingering effects on the commonwealth’s ‘best for business’ reputation or its ability to attract new investments, businesses and headquarters.

That is a question that has been posed to me dozens of times of late given my past tenure as secretary of commerce and trade, as well as my current involvement in economic development deals in Virginia and around the country.

To me, the answer is an unequivocal ‘no.’

The arena project was a proverbial unicorn in the economic development world.

Indeed, sports franchises are rare, unique economic development prospects with needs that bear little resemblance to the kind of bread-and-butter recruitment and development projects that local, regional and state economic development professionals pursue every day.

While sports teams can be prestigious and impactful economic assets, especially when they anchor broader mixed-use developments in their surrounding areas, they tend to have little need for the commonwealth’s sterling workforce development programs — our excellent college athletics programs notwithstanding.

Nor do sports franchises typically qualify for Virginia’s traditional, highly regarded and performance-driven economic development incentive programs like the Commonwealth’s Development Opportunity Fund (COF), the Virginia Investment Performance (VIP) Grant and the Virginia Economic Development Incentive Grant (VEDIG).

That is why Virginia Gov. Glenn Youngkin, Secretary of Finance Stephen Cummings and other members of the Youngkin administration created a first-of-its-kind financing structure as part of its pitch to Monumental Sports & Entertainment, the company that owns and operates the Wizards and Capitals.

But as is so often the case in economic development, we were not the only players in the game.

Even as Virginia pursued the opportunity, the District of Columbia stayed in the game with a continually improving offer that eventually carried the day.

The strength of incumbency is significant when a corporation is considering the cost and challenges of a major relocation.

Virginia has both benefited from and lost out from the powerful allure of home.

No serious business leader would punish a state because it was unable to convince another business to pull up stakes and relocate.

Because the arena project was such a unique prospect, pursued in such a unique way, and supported by such a unique financing structure, its fate will have very little to no impact on the way companies view the commonwealth, its competitive assets and its economic development efforts.

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As stated earlier, when a business is deciding where to invest, its leaders look at the fundamentals that will determine its long-term success.

Virginia touts its own fundamentals quite well, and independent, third-party validators also have consistently confirmed the commonwealth’s enviable position and solid fundamentals.

For example, CNBC consistently ranks Virginia as a top state for business and job creation — the commonwealth is currently ranked No. 2 in CNBC’s annual Top States for Business rankings — for many reasons, including education, thanks to our outstanding K-12 systems, community colleges and four-year colleges and universities that are the envy of the nation.

Further, Virginia scores highly because our corporate income tax has remained low and stable for more than 50 years, and our utility costs are competitive amongst our regional rivals.

In addition, Virginia’s central East Coast location is a major plus. That position along major highways puts us just one day’s drive from key domestic markets and more than 50% of the U.S. population, while our international connections through the Port of Virginia and Dulles International Airport provide direct access to the global economy.

And thanks to recent and enhanced state and local investments, we have one of the East Coast’s megasites in the Southern Virginia Megasite at Berry Hill as well as dozens of shovel-ready sites that will allow companies to invest, hire and open for business quickly.

Put more simply: Virginia has never been more prepared or better positioned to move at the speed of business.

Having proudly worked alongside three governors — both Democratic and Republican — to recruit new businesses and investment to Virginia and having been on the receiving end of those overtures in the private sector, I can tell you with great confidence that fundamentals are what truly matters.

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It would have been exciting to welcome two professional sports franchises to the commonwealth, which remains the most populous state in the nation without a professional franchise in the top league of the four major sports.

But regardless of the outcome of this particular effort, the fundamentals of the commonwealth’s business case remain unbelievably strong and make us the envy of most other states.

Indeed, Virginia has a tremendous story to tell and a great case to make.

That is why, even if Virginians must cross the Potomac to see live hockey or basketball, economic development professionals at the local, regional and state levels will continue to be successful in bringing new jobs, new investments and new opportunities to the commonwealth.

Todd P. Haymore is managing director of Hunton Andrews Kurth’s public affairs consultancy. He served as secretary of commerce and trade for Gov. Terry McAuliffe, secretary of agriculture and forestry for Govs. McAuliffe and Bob McDonnell, and commissioner of the Department of Agriculture and Consumer Services for Gov. Tim Kaine. He is rector of the Virginia Commonwealth University Board of Visitors, vice chairman of the GO Virginia Region 4 Council and a board member for the Virginia Chamber of Commerce, Virginia FREE and RVA757 Connects.