Historic investments like the $3.5 billion pharmaceutical manufacturing campus planned by Eli Lilly and Company in the Lehigh Valley don’t just happen. 
They’re the result of years or even decades of work. Of identifying and preparing a site. Of creating relationships. Of crafting a strategy and business-friendly environment. And of building a reputation as a region that gets things done.
“We're here because of the economic environment. This economic environment encourages and enables us to build a state-of-the-art manufacturing facility,” Daniel VonDielingen, Lilly’s Vice President of Global Parenteral Network Expansion, said at last month’s Lehigh Valley Economic Development Corporation Annual Meeting.
Investments like Lilly are the type of economic development LVEDC is prioritizing in its strategic plan – those that bring the greatest impact by creating high-value jobs and tax base anchors that become community assets.
Winning high-value investments requires everyone to do their part, working together with an eye toward the long-term impact, financially and beyond. That’s the formula for successful economic development today.
“When communities work together, it sends a powerful message,” said Don Cunningham, President & CEO of LVEDC. “That’s what makes our region attractive for business growth. It elevates our profile and puts us on the radar of companies like Lilly when they are planning significant investments.”
Site Preparation
The property where Lilly plans to build a 925,000-square-foot, multi-building manufacturing campus is adjacent to Interstate 78 in Upper Macungie Township. It was targeted by township officials years ago for industrial use and zoned accordingly, with life sciences as a pre-approved use.
To improve the value of the property for a major employer, municipal and state officials worked together years ago to plan a new interchange from the interstate. That interchange will improve access, lessening the amount of traffic that otherwise would occur on some roads around the property.
Relationships and Trust
For 31 years, LVEDC has built a coalition of partners who work together with a regional mindset with the mission of attracting and retaining employers who will provide job opportunities for people of all skill and education levels.
Having those relationships in place is essential when recruiting a company like Lilly.
LVEDC was able to convene top leaders to address Lilly’s needs related to infrastructure, utilities, workforce, and speed-to-market.
Getting Noticed
Large-scale investments like Lilly are rare and competed for across the country. More than 300 other regions were in the running for the Lilly project coming to the Lehigh Valley.
Lehigh Valley got on Lilly’s radar because of its reputation. That’s the result of success – being named America’s No. 1 mid-sized market for economic development for two of the past three years – and of a marketing strategy, led by LVEDC, that tells that success story well.
One of the nation’s preeminent site selection companies, Biggins Lacy Shapiro & Co., which was conducting the search for Lilly’s new location, contacted LVEDC to share the opportunity and inquire about potential sites.
Incentives
Incentives are one way that states and communities show they want business growth. They consider them to be an investment in the future and focus on the long-term gains of adding a major employer.
A few previous large projects the Lehigh Valley was a finalist for went to other regions in part because those other regions offered deeper incentives. That includes a previous life sciences company that was considering the same location where Lilly will build in Upper Macungie.
To attract Lilly, Pennsylvania will provide $100 million in incentives - $50 million in grants and $50 million in tax credits.
At the local level, Upper Macungie created and its Board of Supervisors approved participating in a tax district for the Lilly property known as Local Economic Revitalization Tax Assistance (LERTA).
That program is designed to encourage business growth on underutilized land. It defers some of the additional real estate tax revenue generated by improvements to a property, on a graduated scale.
The current property tax continues to be paid, and Lilly is obligated to pay the full amount of taxes on any interim assessment increases during construction. Once the campus is completed, Lilly would pay 10% of the additional increased value in the second year, with payments increasing by 10% every year thereafter until the full new value is paid in year 11 and beyond.
The Parkland Area School District is now considering whether to participate in the LERTA district. Lehigh County will consider it next.
Looking Long-Term
High-value and strategic economic development projects like Lilly carry the potential to be difference makers in their communities.
Lilly estimates that every $1 it invests generates an additional $4 in spending.
Large employers often attract additional investment into a region, including from suppliers who want to be nearby. Adding employers balances the tax base and can avoid over-reliance on residential property taxes.
A diversity of employers strengthen communities by providing opportunities for people to stay and raise families. The average salary at Lilly is about $100,000, and the company’s facility in the Lehigh Valley will create about 850 jobs – 90% of which the company has said will be hired locally.
In addition, the multi-year process to build Lilly’s manufacturing plant will create about 2,000 construction jobs.
Companies such as Lilly, which has a track record of community involvement, also can play a role in positioning the region for continued growth by providing students with real-world exposure to careers and expanding career pathways.
At LVEDC’s Annual Meeting, Gov. Josh Shapiro recognized the region for working together to land Lilly. He said that’s why the Lehigh Valley is a model for economic development.
“This is really just, I think, one example of how the Valley has proven itself time and time again over the years as a major player when it comes to economic development, a major driver of our economy in Pennsylvania,” Shapiro said.