DATE: Sunday, August 17, 1997               TAG: 9708150009

SECTION: COMMENTARY              PAGE: J4   EDITION: FINAL 

TYPE: Editorial

                                            LENGTH:   76 lines

INFRASTRUCTURE AND JOB GROWTH NECESSARY INVESTMENTS

A new national analysis shows that the most job growth occurs where the most public infrastructure investments have been made.

The analysis, reported in Tuesday's Wall Street Journal, was conducted by Regional Financial Associates, a West Chester, Pa., economic consulting firm. It provides evidence that ambitious local public projects, such as expansion of Hampton Roads' ports and construction of a third bridge-tunnel between the the Peninsula and South Hampton Roads, are wise investments.

Roads, sewers, transportation systems and amenities like parks are the seed that grows prosperity. Cities and states across the nation are furiously planting that seed in a hot competition to attract businesses.

The Journal reported that the value of state and local structures jumped from $2.4 trillion at the end of the 1980s to $3.1 trillion in 1995 and an estimated $3.3 trillion last year.

Virginia is profiting today from Gov. Gerald Baliles' ambitious road-building program begun a decade ago, said Barry E. DuVal, president and CEO of Hampton Roads Partnership and former Newport News Mayor.

In the 1990s, mostly under DuVal's leadership, Newport News built five shell structures, costing $1.5 to $2 million each, expressly to attract businesses from outside the region. A sixth such structure is under construction. So far occupants have been found for all the completed buildings. Without the empty structures, DuVal said, the city couldn't have attracted the businesses.

Virginia Beach has an economic development investment program of about $2 million a year, and nearly all of that money goes for infrastructure improvements to attract businesses or to help existing businesses expand.

Clearly local elected leaders are in a tough spot. Residents, and for that matter the businesses that localities seek to attract, want low taxes. But infrastructure is expensive. So local officials have to weigh the need for infrastructure against the public desire for low taxes and ultimately make tough calls.

The evidence of studies like the one reported in the Journal help make the case for judicious spending. If investments in infrastructure attract businesses and thus build a locality's tax base, lower taxes might follow, but first must come the investments.

Clearly, if infrastructure is neglected, the region loses.

Fortunately, local officials have begun to embrace that philsophy. The Hampton Roads Partnership, a regional organization of elected and private leaders, has hired Rick Horrow, a Florida consultant, to study this region's needs and to assemble by next summer an infrastructure-building package to serve the whole area.

Earlier, in Oklahoma City, Horrow assembled a $230 million infrastructure package that voters approved.

According to the national analysis, the South led the nation in infrastructure investment from 1991 to 1996, when that investment is measured as a percentage of all personal income. The reward has been solid job growth.

Spending the least for infrastructure, again measured as a percentage of personal income, have been the Northeast and the West Coast. Those regions trail the nation in job-growth rate.

``Sometimes,'' the Journal wrote, ``the kickoff to an economic development boom is a sports stadium that may not seem related at first to a corporate decision to relocate. Jacksonville, Fla., city fathers are convinced that the National Football League's selection of Jacksonville for an expansion team put the city on the map for corporate moves.'' This year, the city says, it has landed the most ``mega projects,'' each employing at least 1,000 people, in the nation.

Amenities have become a necessary part of infrastructure if a region is to prosper. Perhaps Virginia Beach's amphitheater or Norfolk's ballpark or Portsmouth's children's museum could be the amenity that tilts a corporations choice of new sites in Hampton Roads' favor. More likely, synergy created by several amenities will increase the region's appeal to potential employers.

But more important than amenities are necessities in the form of roads and utilities. Completion of the Lake Gaston pipeline will be an obvious milestone. Several long-delayed road projects must be put on the front burner.

Hampton Roads' future prosperity depends on the infrastructure investments it makes today. This is not the time for faint hearts. It definitely is the time to build the Third Crossing.

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