Industries Economic Development

Reseeding Virginia’s tobacco region

Commission’s grants help revitalize the economy

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Print this page by Robert Burke

When Paul Farrar walked into a hotel banquet room in Martinsville a few years ago for the 10-year reunion of his high school class, he did what anyone would do. He looked around to see how everybody he knew had turned out. A lot of them had stayed around Henry County, but many moved away, to places like Charlotte, N.C., or Northern Virginia. Farrar could tell the difference. “The ones who left went and got more successful jobs, because they couldn’t find them here,” he says. “It’s a shame that it worked out that way.” 

Back in high school, Farrar was among those who wanted to leave. He graduated from Magna Vista High School in 1997 with a two-year scholarship at Patrick Henry Community College in Martinsville and went on from there to earn bachelor’s and master’s degrees in education from Averett University in Danville.

After graduation, Farrar contemplated trying to land a teaching job in a fast-growing region elsewhere in Virginia. Instead, he started teaching middle school in Martinsville. A big part of his decision to stay home was a program that would erase his college loans. For every year Farrar worked in Southern Virginia, a year’s worth of school debt was erased. He got rid of $8,000 in graduate school loans that way. “Basically, I got my master’s degree for free,” he says.

The program also is a good deal for Virginia’s former tobacco region, which stretches across 41 counties and cities in Southern and Southwest Virginia. The region has been stuck for decades with an anemic economy in which employment growth has been slow or nonexistent. In the 12 years from 1997 to 2009, Virginia averaged 1.2 percent annualized growth in employment, according to data from Chmura Economics & Analytics, a Richmond-based firm. In that same period Southern Virginia averaged 0.7 percent annualized drop in jobs, while Southwest Virginia had zero job growth. The steep drop in tobacco production and the loss of manufacturing and textile jobs — and the deep recession of 2008 — has made things even tougher. “If you don’t go to college, what’s open to you would probably be retail or factory,” Farrar says.

Generally, the region has trouble attracting new companies because of the level of education attained by its work force, a prime concern of business prospects. Statewide about 82 percent of adults have completed high school, while in Southern Virginia the average was 68 percent, and 65 percent in the Southwest, according to census data. And, nearly 30 percent of adults statewide had a bachelor’s degree or higher, compared with just 12.6 percent of adults in Southern Virginia and 11 percent in the Southwest.

But there is help. The financial aid that let Farrar erase his debt comes from the state-appointed Tobacco Indemnification and Community Revitalization Commission, a 31-member panel formed by the General Assembly in 1999. Its money comes from the 25-year, $206 billion settlement made in 1998 between 46 states and several major tobacco companies. The Tobacco Commission’s purpose is twofold: to help wean tobacco growers off of the crop through annual payments, and to help rebuild the region’s sagging economy. The money it has provided is probably the best thing to happen to the region in the past decade, but it might not always look that way. Turning around a depressed region is a slow process that is difficult to measure and that can lead to some uncertainty over exactly what to do.

The commission is a mix of state senators, delegates and cabinet members, plus people from the tobacco industry and almost a dozen local residents. Its current chairman is Republican Del. Terry Kilgore, who represents the far western tip of the state in the General Assembly. Since its creation, the commission has paid $234 million to tobacco growers and quota holders and made 1,221 other grants totaling more than $653 million, mostly for economic development projects. Those are usually proposed by local officials and vetted by commission staff members.

The list of things that the commission has helped create during its existence is impressive. For example, the Southwest Virginia Higher Education Center got an $8 million grant last year for its clean-energy research and development center. In February, the Mid-Atlantic Broadband Cooperative received $4 million toward its plan to extend its fiber-optic network another 464 miles, reaching 121 schools.

Last year the commission put up $2.45 million for a major renovation of the empty “White Mill” building in Danville formerly owned by the Dan River Inc., a textile company that once was the city’s biggest employer. South Carolina-based Gibbs International is renovating the building to create a technology center that will lease space to other companies. City officials predict the White Mill project could create as many as 400 jobs paying an average of $40,000 a year.

Then in January, the commission announced its biggest grant ever, $25 million for the proposed King School of Medicine and Health Sciences Center. King College is a Presbyterian-affiliated school in Bristol, Tenn., but, because of the matching grant, the facility will be built across the state line in Southwest Virginia. The school, which is intended to train doctors for underserved Appalachian communities, plans to enroll its first students in the fall of 2012.

While these economic development projects have made headlines, some have raised questions quietly about whether the commission is putting enough emphasis on education. In 2008 a panel created by the commission and led by former Gov. Gerald Baliles called the education level in the region “the greatest impediment to a modern, information-based, globally competitive economy … Without a highly educated work force, the region will continue to suffer population declines, low wage rates and high unemployment.”

Baliles, a Patrick County native who is now director of the University of Virginia’s Miller Center for Public Affairs, says the things that once made the region’s economy hum don’t matter so much anymore. “Cheap wages and low taxes and physical labor are no longer the keys to economic growth,” he says. “We must change the culture to the point that education becomes a part of every public discussion and decision, because it must be seen for what it is. It’s the key to the economic future. So a sweeping change in the way education is viewed we felt was critical, and the commission has the resources.”

State Sen. Frank Ruff, a Republican from Clarksville who is vice chairman of the commission, doesn’t disagree with the report prepared by Baliles’ panel. But he says, “I’m not sure they fully understood everything we were doing. They did not count as education projects some things that we thought were pretty significant.” The commission, for example, helped fund the creation of a master-machinist training program at the Advanced Knowledge Center in South Hill. “That was counted as economic development rather than education.”

Ruff also urges patience in measuring the full effect of the commission’s efforts. A self-evaluation done last November noted that, of the 976 competitive grants the commission has made, only 51 of the projects have been completed for more than five years. Most of the rest are just a few years old, so it’s too soon to gauge the commission’s impact. But Ruff doesn’t want to leave the impression that the commission’s work will take decades to bear fruit. “We hope it won’t be a whole generation, but we are behind,” Ruff says. “We certainly don’t want to be a liability to the state. We want to carry our own weight. And to do that we have to reach and stretch and educate our young people so they can compete.”

Measuring the effectiveness of the commission’s decisions is a relatively new effort. Neal Noyes, the commission’s executive director, acknowledges that for years its staff didn’t try “in any systematic way” to measure the impact of the organization’s spending. They could count the graduates from local community colleges or the progress made toward filling up new business parks, but that’s not enough. It’s hard to know what to measure. “There’s a lot of things we don’t know,” he says. “We don’t know whether an increase of 3 percent in the number of college graduates correlates in a 3 percent increase in wealth, total wages, this sort of stuff.”

Even in the still-weak job climate in the region, Noyes says, “The argument can be made that things would be worse” without Tobacco Commission spending. “And I’m sure that’s true. But how much worse? And, how do you really want to calculate return on investment? Is it the number of jobs, or intellectual property that is developed? There’s a gazillion things out there.”

That view is shared by many others. Skip Skinner, director of the LENOWISCO Planning Commission (serving Lee, Scott and Wise counties and the City of Norton), says finding new industries to replace Virginia’s declining tobacco and textile industries isn’t easy. “I’ve witnessed firsthand what’s gone on in Martinsville and the southern side of Virginia, and it ain’t pretty. I really feel for my friends in that area. If it weren’t for the Tobacco Commission, it would be a much bleaker outlook. We’re going to pull ourselves out of this, but it’s going to take some time.”

It’s still easy to find examples of projects the commission has done that have made an immediate difference. “Their programs have been huge for us being successful in economic development,” says Jeremy Stratton, director of economic development in Danville, which has recruited a wide variety of companies in recent years. He cites the gleaming Institute of Advanced Learning and Research in Danville, and the fiber-optic loop laid down the U.S. 58 corridor, which runs parallel to the state’s southern boundary. “Both those things are invaluable for the types of companies we’re seeing today,” Stratton says. “They want to have high-speed Internet and access to research.”

Noyes says the commission has been putting more money toward the loan forgiveness program, and it has only lately been catching on. The program started in 2001 with $3.8 million from the commission, and the demand wasn’t that high. “We were not turning people away,” he says. The interest is higher now, he says. The funding increased to $4.25 million in 2009, but that wasn’t enough, as there were more applicants than there were funds to cover.

The commission actually funds two separate loan-forgiveness programs; one for Southern Virginia and another for Southwest Virginia. The latter requires applicants to show they’re either former tobacco growers or quota holders, or a close relative. Both programs require applicants to be seeking degrees from accredited four-year institutions and forgive costs for tuition and fees. Participants can use the program for only one degree. The programs pay different amounts, too — the Southwest program covers up to $2,500 a year, while the Southern Virginia program will cover up to $3,750 a year.

The loan forgiveness program was originally just for teachers, but it’s since been expanded to cover all fields. For the Southwest program, between 2003 and 2009 more than 2,345 students received funds totaling $6.1 million. The Southern Virginia program helped 3,750 people with college costs totaling $14.4 million.

For Paul Farrar, the loan program that helped him pay for his master’s degree has become his job. He left teaching after several years and now works in South Boston as the coordinator for the Southern Virginia loan program. It’s a lot busier these days, he says. Last year the period for enrolling for the fall semester didn’t close until July, but this year it ended in late March, with 1,200 applicants. “That’s all we can do right now,” he says. “This is the fastest it has ever gone.”

Now 30, Farrar is putting down roots. Two years ago he and his wife, Ashley, had a 2,000-square-foot Cape Cod house built on land his parents gave him in Henry County’s Spencer community. The couple has a son, Carson, born in January. Farrar spends many of his days talking to high school students and their parents about why they should think about putting down roots here, too.

“When I went to school, everybody said, ‘I want to get out of here, I want to go somewhere else,’” he says. “When I go talk to high school kids now I hear the same thing, and I say to them, ‘You might say that now, but after four years, you come back and the next big thing might have been built here. Why don’t you take that chance?’” 

CHARTS:

Unemployment Rates
Economic Development Grants
Grant Breakdown
Fiscal Year 2009 Grant Awards


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