After a global pandemic that brought the economy to a screeching halt in 2020, Kentucky has rebounded remarkably well. The unemployment rate is hovering just under 4 percent, state revenues are strong, and hardly a week goes by without news of some major new business development in the commonwealth.
“Since the start of 2021, companies have announced more than 400 new location and expansion projects for an incredible $20.4 billion in new private-sector investment, and have created 32,500 full-time jobs,” says Governor Andy Beshear.
The result, according to the governor, is the best two-year period of job growth and economic development in the state’s history. Business advocates say that’s a result of efforts to boost workforce preparedness, infrastructure, regulatory changes, state investments, and collaborations among public and private sector entities.
“This level of investment that we’ve experienced recently is unprecedented,” says Haley McCoy, president and CEO of the Kentucky Association for Economic Development, “But we have a ways to go.”
When it comes to maintaining a thriving economy, a one-size-fits-all approach will not work in a state as varied as Kentucky. Some counties thrive on white collar jobs, some on retail and manufacturing, and others on recreational activities and the arts.
“One of our greatest assets is the diversity in our communities… Elkhorn City down in Pike County couldn’t be more different than Wickliffe down on the Mississippi River,” says Kentucky League of Cities President and CEO J.D. Chaney. “Local officials are very well positioned to know what the best advantages their unique assets and their community have to offer.”
One way to look at the challenge is to consider the entire state as one large business district, says John Bevington, director of business and economic development with LG&E and KU. Then think of each town or county as an individual storefront within that business district.
“Large communities, mid-sized communities, and small communities can be those different storefronts,” says Bevington. “So I think the first step really is trying to determine as my community or as my region, what role do I play in the grand scheme of economic development.”
What follows is an overview of what civic leaders and development officials across the commonwealth are doing to boost local, regional, and state economic prospects in the years ahead.
Given its location along major interstate highways, rail and river transportation, and an international airport, northern Kentucky has become a hub for shipping and logistics businesses. Boone County Judge-Executive Gary Moore says a truck leaving northern Kentucky can reach more than 70 percent of the American population within 24 hours. Given that geographic benefit, Moore says the region has been able to move away from traditional tax breaks to land those kinds of businesses.
“We have not done incentives on distribution for about four years now,” says Moore. “But what we do is offer a community climate where these companies can be successful.”
Since 1987 the Northern Kentucky Tri-County Economic Development Corporation (Tri-ED) has managed business location and expansion efforts in Boone, Campbell, and Kenton Counties. Moore says the agency is funded by a licensing fee on car rentals, which generates about $2.2 million a year. Now, thanks to Tri-ED’s work, Moore says the average salary in the region is up to $67,000.
To further boost cooperative efforts in the three counties and beyond, Moore says Tri-ED has launched a new campaign called Build+Elevate NKY. That initiative will focus on bolstering workforce readiness, focusing future business growth to compliment the current regional ecosystem, providing data to inform community decision-making, and activating the Northern Kentucky Port Authority to facilitate projects on the Ohio and Licking Rivers.
Moore says when northern Kentucky thrives, the whole state benefits because about 70 cents of every tax dollar generated in the region goes into state coffers.
“What makes... our commonwealth special is that, for the most part, we don’t compete with each other… My competition is Nashville, Indianapolis, Charlotte,” he says. “We need to support each other because when we do and we win, the commonwealth wins.”
Bowling Green and Warren County
Bowling Green also benefits from a central location along a major interstate corridor and rail lines. Officials there have also aggressively promoted economic development through the Kentucky Transpark intermodal business and industrial campus located just northeast of town. In the past 20 years, the facility has grown to more than 900 acres.
Even during the pandemic downturn, city and county officials invested more than $58 million in Transpark, including some $19 million for property acquisition, according to Bowling Green City Manager Jeff Meisel. That’s helped Transpark secure major commitments from Tyson Foods, Ball Corp. and electric vehicle battery-maker Envision AESC.
“We’ve been very blessed in that we’ve had several of the number one, new projects announced in Kentucky,” says Ron Bunch, president/CEO of the Bowling Green Area Chamber of Commerce. “This past 12 months, we announced Envision, which is the second largest capital investment in all of Kentucky history.”
In addition to the growth opportunities offered by the business park, local officials also point to other factors that have promoted development around Warren County. The city gives 1 percent of withholding taxes back to companies locating there. (The state provides an additional 3 percent give-back on withholding taxes to those businesses.) The local public schools serve students who speak 85 different languages, which makes the area attractive to international businesses. And Southcentral Kentucky Community and Technical College provides area residents with the training they will need to work in these new facilities.
“As far as the vision for creation of jobs and higher paying jobs, it’s certainly paid off much better than we ever anticipated,” says Warren County Judge-Executive Mike Buchanon.
Owensboro and Daviess County
Kentucky’s fourth largest city also benefits from access to multiple modes of transportation. The Owensboro Riverport ships products all over the world with its access to rail lines, Ohio River barges, 500,000 square feet of on-site warehouse space, and a new dock tall enough to allow the facility to operate even during flood events.
“Anyone that’s looking to utilize multi-modes [of transport] takes huge advantage in the opportunities to have direct access to the water and rail service at same time,” says Riverport President Brian Wright.
Downtown Owensboro has also seen a renaissance in recent years with a popular new riverfront park, a new convention center, and the Bluegrass Music Hall of Fame and Museum. Funding for these projects came from an increase to the local insurance premium tax. Elizabeth Mudd of the Greater Owensboro Economic Development Corporation says the doubling of that tax pushed by former Mayor Ron Payne was controversial at first.
“Back in 2009, we had a lot of people who were scared,” says Mudd. “But I think you have to sometimes take that leap of faith because… it’s just led to our growth.”
That tax increase has raised some $80 million for downtown revitalization, which in turn has generated $1 billion in economic impact. In the years since the increase, the population of Owensboro has also grown 5 percent.
Far Western Kentucky
Water also plays a vital role in developing smaller towns farther down the Ohio River and around Lakes Barkley and Kentucky. So has the unique quality-of-life features that come with living in less populated areas.
“I cannot tout that I have a major international airport and world-class musicians coming through our symphony – I don’t have that in my community,” says Lake Barkley Partnership Executive Director Amanda Davenport. “But what I do have is a small town where you still know all your neighbors, where you know who the teachers are, where you know what your kids are doing.”
The partnership directs development efforts in Crittenden, Caldwell, Livingston, and Lyon Counties, including growing seven different industrial parks there. Davenport says they have been able to expand one of those parks thanks to a $75,000 grant from the state’s Product Development Initiative (PDI), which helps local agencies like the Lake Barkley Partnership enhance the quality and quantity of building sites.
Davenport says that grant, coupled with $500,000 of local investment, has allowed them to improve an industrial park with two large building pads, and plans to construct a spec building that can help attract a new business.
“All of this happened because of PDI,” she says. “Before going through that process, we just had never really thought about what our park could be.”
As well as attracting and retaining businesses, Davenport says her partnership also works to keep the region’s youth at home and ready to provide the workforce needed for future growth.
Paducah benefits from its popular riverfront as well as its national heritage designation as a Creative City from the United Nations Educational, Scientific, and Cultural Organization (UNESCO). Greater Paducah Economic Development President and CEO Bruce Wilcox says a recently enacted insurance tax increase will enable a city-county partnership to fund a new $42 million sports complex in the community.
McCracken County is also home to ice cream manufacturer Dippin’ Dots. The company was founded across the Ohio River in southern Illinois in 1988 but soon relocated to Paducah, where it grew with state and local support, according to Wilcox. Corporate conglomerate J&J Snack Foods recently purchased Dippin’ Dots, and Wilcox says he’s looking forward to new opportunities that acquisition might bring.
“With any organization, any time there’s acquisition [and] growth, there’s spin off-induced, indirect benefits associated with it,” says Wilcox.
For too long, cities and counties, mayors and county judges in southeastern Kentucky went their own directions of development efforts, according to Bruce Carpenter, executive director of the Corbin Economic Development Agency. What they had to learn, he says, was that success would only come from working together. Now the region is served by the Southern Kentucky Economic Development Agency, which unites efforts in Bell, Clay, Knox, Laurel, McCreary, and Whitley Counties.
“We have some great assets in our region but we’ve got to really work together as smaller communities to do away with county lines and be successful,” says Carpenter.
In 2014, local officials landed their first “big fish,” as Carpenter calls it. KOWA is a Japanese company that does electroless nickel-plating of machine components. Now Carpenter says the trick is to build on that success in Corbin to expand development efforts throughout the six-county region.
“It takes time to nurture that as an area and to prove to companies that we’re able to handle the workforce, that we’re able to handle the growth, that we have the quality of life that you see in larger communities,” says Carpenter.
A big selling point for southeastern Kentucky is its natural beauty and friendly small towns. Carpenter says they hope to build on those assets by investing some $250 million on improvements to local amenities that will attract new companies and potential workers to locate there.
“We’ve got to show that we have the training, that we have the quality of life for folks that want to move into the area,” Carpenter. “It’s making them realize that there’s a lot of benefit... in small-community life.”
Metro Louisville and Lexington-Fayette County
The state’s two largest cities already have many amenities that can attract business. Ben Pratt, chief of regional economic growth and senior vice president at Greater Louisville Inc., says the trick is to leverage those assets from schools and shopping and the arts and convention facilities, in ways that can benefit those cities and the state as a whole.
“We’re excited to be one of those communities that have five of the key arts programs, anywhere from a professional ballet to a professional opera, all within a two-and-a-half- or three-hour drive from anywhere in Kentucky,” says Pratt.
GLI serves Jefferson County and 9 neighboring counties in Kentucky as well as five counties in southern Indiana. Pratt says they strive to empower each community with the specific tools they need to realize their own economic visions. A key part of that includes promoting how affordable it is to live here compared to other parts of the country.
“It’s important to make sure that we maintain a lower cost of living,” says Pratt. “That’s also one of our big competitive advantages for attracting the talent that we are trying to make sure not only stay in the commonwealth but also relocate here.”
For its part, Lexington boasts 12 colleges and universities within a 30-mile radius of the city, and offers what Gina Greathouse calls a “globally fluent community” thanks to the horse industry, a range of foreign-owned companies, and 199 languages and dialects spoken in the public schools there.
“Diversity, equity, and inclusion create a sense of belonging,” says Greathouse, who is executive vice president at Commerce Lexington, the chamber of commerce representing nine central Kentucky counties. “Creating a welcoming city is part of what helps us with our recruitment efforts and our retention efforts.”
Through its Access Loan Program, Commerce Lexington has cultivated a diverse group of small businesses and start-ups in the area. Greathouse says that program has distributed $29 million in loans over the past 18 years.
“We recently just did $6.9 million in small business stimulus grants to over 500 companies,” says Greathouse. “Fifty-nine percent of those were women- and minority- and veteran-owned businesses.”
While Lexington has seen remarkable growth in its city center with millions invested in the Rupp Arena complex and the new Town Branch Park, open land for industrial development remains in short supply in Fayette County. To help address that, the city and the University of Kentucky recently agreed to a land swap that will result in a new, 200-acre business site. Greathouse says this Legacy Business Park will be funded in part by $9.5 million from the American Rescue Plan Act. Commerce Lexington has also applied for a $2 million PDI grant from the state.
More Tools in the Economic Development Toolbox
Across the state, civic and business officials say funding remains a persistent challenge to pursuing more development projects, from infrastructure improvements, to workforce training, to quality-of-life assets.
But local municipalities are limited in what taxes they can levy.
“All of our communities are getting so creative within the framework of the existing law to find ways to bring in more tax [revenues] in their community,” says Amanda Davenport of the Lake Barkley Partnership. “But none of us have a really easy way to do that.”
That’s why the Kentucky League of Cities and other groups are advocating changes to the state constitution to give cities and counties more flexibility in how they generate revenues. Such new taxes could be fashioned to place more of the burden on tourists visiting or passing through a community rather than on local residents.
“Our tourists are coming in and they don’t have to pay any taxes, which is great,” says Davenport, “but wouldn’t it be nice if they could share in the costs for our state so that we provide more of these amenities to everybody that comes in?”
In northern Kentucky, Boone County Judge-Executive Gary Moore says there are 13 interstate exists in his county alone where travelers stop to buy gas, food, and other items – purchases that he argues could be generating additional tax dollars.
“I do believe that we would import more dollars into our commonwealth and into our cities and counties if we had local sales tax,” says Moore. “Using that to replace local income tax or occupational tax would take some of the tax burden off of our residents.”
Promoting Kentucky as a place that welcomes all types of people is also crucial to overall development efforts, according to Haley McCoy of the Kentucky Association for Economic Development. She says site selectors considering the state want to know what it’s like to live in the commonwealth, and what diversity exists among the residents and the leadership.
Embracing a community’s diversity is one factor that helped Hardin County land the BlueOval SK battery plant earlier this year. McCoy says the project team there included leaders from the local Korean-American community, and they helped pitch Hardin County to officials from SK Innovation, the South Korean corporation partnering with Ford on the electric vehicle batter plant. McCoy says their presence in those meetings helped seal the deal for Hardin County.
That’s a lesson that other communities can learn from, according to McCoy.
“How do we show and demonstrate that Kentucky is a place that wants everybody to come and you’re welcome when you get here,” says McCoy. “We’re not just looking for corporate investments, but we’re looking for people to come to Kentucky.”