By Don Hampton

On October 31, 2000 Governor Don Sundquist announced that the number of “distressed” counties in Tennessee had fallen from 40 in 1987 to just two in 2000. The announcement did not come as a surprise to the state’s rural population. They already knew that conditions were dramatically improving in their communities.

“The tremendous decline in distressed areas shows that local and state efforts to improve the quality of life in Tennessee are paying off,” Sundquist said. His assertion relates directly to two substantial incentives Tennessee offers businesses that locate in rural counties.

Tax incentives. In addition to the state’s generous corporate excise tax credit, low personal income taxes and sales taxes, Tennessee offers significant franchise tax credits for business. Companies locating in distressed counties are eligible for $3,000 tax credit for each new employee.

Community Development Block Grants (CDBG). These grants are for programs that benefit low or moderate-income people. Companies may use CDBG grants for industrial infrastructure and loans for building and equipment costs. Companies locating in distressed areas are eligible for more CDBG funding at lower interest rates.

These programs have benefited business and provided economic growth in rural areas throughout the state.

Three stars
Another Tennessee program is seeing excellent results. More than 60 counties participate in the “Three-Star” program – an initiative that encourages community development and economic growth. In order for communities to participate in the program, they must meet certain basic requirements, which include:

• Organization development. Communities must maintain broad-based economic development organizations, community adult leadership programs and local bonding authorities.
  
  
• Community development. Participating communities are required to establish community beautification programs, planning commissions, solid waste disposal plans and current emergency management plans.
  
  
• Education/work force development. This requirement includes 501 (c) (3), adult literacy campaigns, labor training and drug free education programs.
  
  
• Economic development. Communities must establish controlled, developed sites for business and industry, marketing strategy and maintain current marketing materials and community data information.

As a result, the Three-Star program has strengthened communities, while making them much more attractive to businesses and families. “The planning process that we implemented as a result of the Three-Star Program became the foundation for many positive programs in this community,” said Ted Moore, executive director, Economic Development Council, Humphreys County.

Participation in the Three Stars Program demonstrates a commitment on the part of these communities to create a higher quality of life for residents. And, it makes these communities much more appealing for business.

Taking to the street
Seymour Tubing Inc. (STI) supplies over 600 different steel tubing components to auto parts manufacturers. The company recently announced plans to build a 170,000 square-foot steel tube plant in rural Dunlap, Tennessee, employing 140 people.

STI chose Tennessee for its new plant because of the state’s “strong support for the automotive industry,” according to company president Koetsu Nakamura. He continued by saying that Dunlap was chosen based on the town’s location relative to several company customers and “the overwhelming positive response we received from the citizenry. Tennessee and Dunlap support our long-term strategic direction.”

State Commissioner of the Department of Economic & Community Development Bill Baxter adds, “As the center of the Southern Automotive Corridor and home to two auto assembly plants and more than 800 automotive suppliers, Tennessee offers Seymour Tubing a prime location for automotive manufacturing and distribution success.”

Bridging the Cumberland Gap
About ten years ago, MasterBrand Cabinets (then known as Aristocraft) located a facility in Cumberland County, Tennessee. This new manufacturing facility enabled Cumberland County to remove its name from the distressed county list.

Today MasterBrand employs 220 residents in a 48,000-person county. And the company has been influential in attracting others to the county.

Crossville Porcelain Stone USA is a local company making ceramic tile. The company has recently opened a second facility in rural Dixon, Tennessee and is in the process of adding a second building to its current operation in Cumberland County. The second building will expand the size of the company’s headquarters operation to nearly one million square feet.

“What attracted MasterBrand is the same thing that attracted Crossville and several other companies to our area,” said Beth Alexander, executive vice president of the Greater Cumberland County Chamber of Commerce. “We have an excellent location with raw materials.”

The area had traditionally been strong in tourism and cut-and-sew, but manufacturing has taken off in Cumberland County since MasterBrand moved in.

“It’s taken us some time to get our programs in place and more time to make them successful,” Alexander said. “What we are able to do is improve the incentives package the state offers. We can negotiate land prices, tax abatements and basically make the state’s package stronger for businesses. In some cases the county and city purchase land jointly to attract businesses.”

‘An overwhelmingly positive impact’
The state created the distressed counties program in 1987 to identify areas that were in need and to help economically develop these counties. “Distressed counties” are those which meet two criteria: They have obtained 75 percent of the state’s median county per capita market or earned income and have had an unemployment rate of at least 12 percent for the last 10 years.

“This program has had an overwhelmingly positive impact in helping Tennessee counties overcome obstacles and reach a level of economic and community development success,” Baxter said.