VILLAGE OF HORSEHEADS STRATEGIC ECONOMIC DEVELOPMENT PLAN

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1 Many existing buildings may become obsolete for industrial purposes As with any large industrial site, it is important to ensure that the buildings and infrastructure remain in good condition and are configured to meet the needs of prospective tenants. OPPORTUNITIES Building on the growing Brand Equity of the Innovation Corridor The Village should explore options to create shovel ready sites to further improve HOST s potential to serve as a landing place for growing regional businesses that require larger sites to expand. Advanced Manufacturing Firms HOST is well sited and of sufficient size to serve as a host for a variety of manufacturing enterprises. Its proximity to Hanover Square could make it attractive to firms seeking to provide the experience of high quality of place for its employees. Distribution/logistics The HOST site is already serving as a site for firms in the transportation and logistics industry. THREATS Competition from other regional industrial sites From Elmira to Corning and Watkins Glen and even Ithaca, there are a variety of large-scale industrial sites that could support the same type of industries that would be suited for the HOST site. Loss of Region s advanced manufacturing base The Southern Tier s strength in manufacturing is unique among rural areas in New York. They provide opportunities for employment and make many purchase in the region. If they begin to succumb to averse national and global economic trends, this could have severe consequents for the Village and the entire Southern Tier. FEBRUARY 28, 2018, PAGE 14

2 Industry analysis Horsehead s Competitive Position This assessment must begin with a caveat: Horseheads is located in New York State, which whether merited or not has a reputation as an expensive and difficult place in which to do business. In that context, Horseheads can boast many competitive advantages: Major industrial site served by Interstate highways and rail access with direct access to municipal sewer and water services A regional setting known for its manufacturing strength and skilled workforce (even though the are shares the workforce shortages plaguing the entire United States). A high-quality local school system widely recognized as such. A local property tax burden that is very near the average for the Southern Tier region, despite being a village government, with the additional service associated with that more urban form of government. Therefore, as this analysis identifies potential industry targets for the Village, it is well positioned to attract them. The regional and local economic dynamics are described below. The first level of analysis was to identify important regional clusters that could be sources of new and/or expanded business in Horseheads. This was done using the data from the US Cluster Mapping Project, a web resource created by the Harvard Business School for the US Economic Development Administration. According to the website: The U.S. Cluster Mapping Project is a national economic initiative that provides over 50 million open data records on industry clusters and regional business environments in the United States to promote economic growth and national competitiveness. The project is led by Harvard Business School's Institute for Strategy and Competitiveness in partnership with the U.S. Department of Commerce and U.S. Economic Development Administration. Regional economies are the building blocks of U.S. competitiveness. The nation s ability to produce high-value products and services depends on the creation and strengthening of regional clusters of industries that become hubs of innovation. Clusters, which are regional concentrations of related industries, are a striking feature of all modern economies, making regions uniquely competitive for jobs and private investment. Source: US Cluster Mapping Project ( Based upon the Harvard Business School research, the clusters are grouped into two categories: local clusters that do most of their business within the local economy and traded clusters that do most of their business outside of the local economy. This analysis examined the local and traded clusters for Chemung County and for the region that encompasses Horseheads s labor shed, an eight-county region encompassing the domiciles of people working in Horseheads and the job sites of workers who live in Horseheads. This region includes Broome, Chemung, Schuyler, Steuben, Tioga and Tompkins counties in New York and the Pennsylvania counties of Bradford and Tioga. (See Figure 2.) FEBRUARY 28, 2018, PAGE 15

3 The analysis revealed that the industry trends in Chemung County were largely similar to the eight-county area. Consequently, only the results for Chemung are presented here. The eight-county analysis is found in the appendices to this report. Figure 2. The 8-County Region FEBRUARY 28, 2018, PAGE 16

4 Local Clusters Figure 3 shows the level of private employment in local clusters in Chemung County in Figure 3. Chemung CountyEmployment by Local Cluster, 2015 Employment Local Health Services Local Hospitality Establishments Local Real Estate, Construction, and Development Local Retailing of Clothing and General Merchandise Local Food and Beverage Processing and Distribution Local Commercial Services Local Motor Vehicle Products and Services Local Community and Civic Organizations Local Financial Services Local Logistical Services Local Entertainment and Media Local Personal Services (Non-Medical) Local Utilities Local Education and Training Local Household Goods and Services Local Industrial Products and Services Source: Compiled by Fairweather Consulting from US Clusters Mapping Project (Source: U.S. Cluster Mapping Project ( Institute for Strategy and Competitiveness, Harvard Business School.) FEBRUARY 28, 2018, PAGE 17

5 According to this analysis, the largest local clusters by employment in 2015 were health, hospitality, construction and other clusters that typically support the local economy. Figure 4 shows the change in employment in these local clusters from 2008 to In the figure, growing clusters are depicted in green, declining sectors are shown in red. Note also that each sector is accompanied by a red dash. This shows how employment in that cluster would have changed had that cluster grown in Chemung County at the same pace as the cluster had grown nationally. To illustrate: in Figure 3, Local Hospitality Establishments grew by approximately 250 jobs from 2008 to The red dash above it shows that, had that cluster grown at the national rate, it would have added approximately 375 jobs. Figure Chemung County Local Employment Expected Change vs Actual Change Employment Expected Change -500 Source: Compiled by Fairweather Consulting from US Clusters Mapping Project (Source: U.S. Cluster Mapping Project ( Institute for Strategy and Competitiveness, Harvard Business School.) Cluster The data from figures 2 and 3 indicate that, among clusters that sell primarily within Chemung County, Health Services is the largest (cf. Figure 2), but that this cluster declined by over 300 jobs (cf. Figure 3). If that cluster had grown at the paces of Local Heath Services nationally, it would have added over 700 jobs (beyond the scale of the graph in Figure 3). FEBRUARY 28, 2018, PAGE 18

6 The data in figures 2 and 3 suggest that local clusters with potential for Horsehead would be those with some current employment and a growth rate above the national average for that local cluster. This would include Local Utilities, Local Logistical Services and possibly Local Private Education and Training. The Local Food Processing cluster is also an interesting possibility, but note that its growth rate in Chemung County is below the national average for that cluster. Traded Clusters Figure 5. Chemung County Employment by Traded Cluster, 2015 Education and Knowledge Creation Production Technology and Heavy Machinery Distribution and Electronic Commerce Business Services Metalworking Technology Food Processing and Manufacturing Medical Devices Downstream Metal Products Transportation and Logistics Construction Products and Services Hospitality and Tourism Information Technology and Analytical Instruments Paper and Packaging Insurance Services Vulcanized and Fired Materials Automotive Upstream Metal Manufacturing Financial Services Oil and Gas Production and Transportation Lighting and Electrical Equipment Communications Equipment and Services Marketing, Design, and Publishing Printing Services Upstream Chemical Products Wood Products Plastics Performing Arts Furniture Downstream Chemical Products Nonmetal Mining Recreational and Small Electric Goods Video Production and Distribution Forestry Leather and Related Products Employment Source: Compiled by Fairweather Consulting from US Clusters Mapping Project (Source: U.S. Cluster Mapping Project ( Institute for Strategy and Competitiveness, Harvard Business School.) Figures 5 and 6 show the level of private employment and growth rates for the traded clusters in Chemung County. From an economic development perspective, these are of interest because they are FEBRUARY 28, 2018, PAGE 19

7 Figure Chemung County Traded Employment Expected Change vs Actual Change Employment Production Technology and Heavy Machinery Construction Products and Services Distribution and Electronic Commerce Downstream Metal Products Food Processing and Manufacturing Oil and Gas Production and Transportation Lighting and Electrical Equipment Upstream Metal Manufacturing Printing Services Wood Products Video Production and Distribution Upstream Chemical Products Downstream Chemical Products Plastics Communications Equipment and Services Nonmetal Mining Recreational and Small Electric Goods Forestry Cluster Transportation and Logistics Hospitality and Tourism Agricultural Inputs and Services Education and Knowledge Creation Marketing, Design, and Publishing Medical Devices Furniture Financial Services Performing Arts Vulcanized and Fired Materials Expected Change Paper and Packaging Insurance Services Metalworking Technology Business Services Information Technology and Analytical Instruments Automotive Aerospace Vehicles and Defense Source: Compiled by Fairweather Consulting from US Clusters Mapping Project (Source: U.S. Cluster Mapping Project ( Institute for Strategy and Competitiveness, Harvard Business School.) conducting most of their business outside of the County and thereby bringing new revenue into the County. As Figure 5 illustrates, Chemung County has a number of traded clusters that are outperforming the nation in terms of job growth. These include Production Technology and Heavy Machinery, Construction Products and Services, Distribution & Electronic Commerce, Downstream Metal Products (i.e., metal fabrication), Food Processing & Manufacturing, Oil & Gas Production & Transportation (whose outlook may have changed with New York State government s stance regarding fracking), Lighting and Electrical Equipment, and a number of clusters with modest growth that still exceeded expectations based upon national trend within those clusters. This suggests Horseheads has a variety of opportunities with regard to the industry clusters found within Chemung County. These types of clusters present opportunities for both HOST and the area south of I-86. Note that they are also consistent with the analyses found in the regional economic development plans described earlier. FEBRUARY 28, 2018, PAGE 20

8 Retail Opportunities for Hanover Square & the Area South of I-86: Surplus/Leakage Analysis The following analysis has been conducted to determine how much of the local and regional demand for goods and services that businesses within a five-minute drive of Hanover Square are currently capturing and which potential opportunities exist for future business growth. As shown in Figure 7, the five-minute drive (shown in red) and 30-minute time (shown in green) was used to capture the dynamics of the local retail market for both Hanover Square and the area south of I-86. For each of the categories of retail stores, the analysis shows current sales by existing stores. This is the supply of retail stores in that category for that geographic area. Figure 7. The 5-minute and 30-minute Drive Times from Hanover Square. Second, the analysis provides an estimate of current purchases in that type of store given the income levels and demographics of shoppers in that geographic area. This represents the demand by residents for goods in that retail category for that geographic area. Finally, the analysis uses the difference between supply and demand to identify the extent to which leakage or surplus Source: ESRI Business Analyst. exists in that retail category for that geographic area. Leakage exists if the projected demand for purchases in that category is greater than the sales by existing stores. This means that the local demand is being met by stores outside the geographic area. That is, sales are leaking out of the local market and into other areas. Surplus exists if the projected demand for purchases is less than sales by existing stores. It means that the retail stores in that sector are serving demand from outside the area. Those categories in which leakage exists may represent an opportunity for new business for the local area. Those categories in which surplus exist are bringing sales in from outside the area. ESRI Business Solutions provides data on supply, demand and an assessment of leakage or surplus for a variety of different retail categories. FEBRUARY 28, 2018, PAGE 21

9 Table 3. Area within a 5-minute drive time of Hanover Square: Sectors with Surplus Summary Demographics 2017 Population 9, Households 4, Median Disposable Income $39, Per Capita Income $33,265 Industry Summary Total Retail Trade and Food & Drink Demand (Retail Potential) Supply (Retail Sales) Retail Gap (Leakage/ Surplus) Leakage/ Surplus Factor # of Firms $155,877,401 $144,130,972 $11,746, Total Retail Trade $140,801,455 $120,381,428 $20,420, Total Food & Drink $15,075,946 $23,749,544 ($8,673,598) Industry Group Auto Parts, Accessories & Tire $2,312,647 $6,172,241 ($3,859,594) Furniture Stores $2,619,120 $3,652,825 ($1,033,705) Bldg Material & Supplies Dealers $7,926,069 $18,640,021 ($10,713,952) Beer, Wine & Liquor Stores $2,017,572 $8,307,406 ($6,289,834) Health & Personal Care Stores $12,210,274 $19,350,584 ($7,140,310) Department Stores Excluding Leased Depts. Other Miscellaneous Store Retailers $10,277,394 $19,191,152 ($8,913,758) $2,585,763 $5,819,104 ($3,233,341) Restaurants/Other Eating Places $13,493,552 $23,302,760 ($9,809,208) Source: Compiled by Fairweather Consulting using ESRI Business Analyst Data. Table 3 shows the results of the Surplus/Leakage analysis for the area within a 5-minute drive time of Hanover Square, focusing on those sectors with a surplus (i.e., in which sales by stores in a category within the five-minute drive time are greater than spending by residents within that same five-minute drive time. This shows that there are a number of retail sectors that are already drawing shoppers into that immediate area. These sectors include auto parts, furniture stores, building materials, liquor stores, health and personal care stores, department stores, other miscellaneous retailers. This confirms the conventional wisdom that Hanover Square and the area south of I-86 are regional draws, attracting people from outside the immediate area to shop in the Village area. The question becomes whether or not there are additional opportunities for retail in the Village. One way to assess this is to examine surplus/leakage patterns for a larger geographic area to see if there are categories of retail that are underserved in the larger area for which the Village could position itself. Table FEBRUARY 28, 2018, PAGE 22

10 4 shows the results of the surplus/leakage analysis at the 30-minute drive time, identifying those sectors that show leakage (i.e., unmet demand) at that geographic scale. Table 4. Area within a 30-minute drive time of Hanover Square: Sectors with Leakage Summary Demographics 2017 Population 150, Households 61, Median Disposable $38,079 Income 2017 Per Capita Income $27,842 Industry Summary Total Retail Trade and Food & Drink Demand (Retail Potential) Supply (Retail Sales) Retail Gap (Leakage/ Surplus) Leakage/ Surplus Factor # of Firms $2,021,884,754 $2,146,629,961 ($124,745,207) -3 1,254 Total Retail Trade $1,834,154,069 $1,934,840,612 ($100,686,543) Total Food & Drink $187,730,685 $211,789,349 ($24,058,664) Industry Group Potential # of New Stores Motor Vehicle & Parts $390,700,746 $251,318,917 $139,381, Dealers Automobile Dealers $328,907,156 $194,912,914 $133,994, Other Motor Vehicle $31,892,393 $16,696,814 $15,195, Dealers Furniture Stores $33,088,864 $19,059,938 $14,028, Home Furnishings $30,842,971 $25,602,207 $5,240, Stores* 5.94 Specialty Food Stores $20,569,529 $17,728,586 $2,840, Beer, Wine & Liquor $23,473,894 $21,939,484 $1,534, Stores 1.12 Health & Personal Care $154,854,191 $118,797,447 $36,056, Stores Clothing Stores* $95,714,690 $44,366,919 $51,347, Shoe Stores* $16,069,979 $13,422,208 $2,647, Jewelry, Luggage & $22,557,744 $10,138,343 $12,419, Leather Stores Book, Periodical & $7,964,516 $4,742,754 $3,221, Music Stores* 6.79 Florists* $5,956,014 $3,523,629 $2,432, Office Supplies, $20,244,499 $9,644,735 $10,599, Stationery & Gifts* Used Merchandise Stores $8,072,957 $5,833,532 $2,239, FEBRUARY 28, 2018, PAGE 23

11 Table 4. Area within a 30-minute drive time of Hanover Square: Sectors with Leakage Summary Demographics 2017 Population 150, Households 61, Median Disposable $38,079 Income 2017 Per Capita Income $27,842 Industry Summary Total Retail Trade and Food & Drink Demand (Retail Potential) Supply (Retail Sales) Retail Gap (Leakage/ Surplus) Leakage/ Surplus Factor # of Firms $2,021,884,754 $2,146,629,961 ($124,745,207) -3 1,254 Total Retail Trade $1,834,154,069 $1,934,840,612 ($100,686,543) Total Food & Drink $187,730,685 $211,789,349 ($24,058,664) Potential # of New Stores Other Miscellaneous $37,963,296 $35,814,575 $2,148, Store Retailers 3.36 Electronic Shopping & $43,748,298 $35,557,171 $8,191, Mail-Order* 0.69 Direct Selling $8,599,766 $7,304,269 $1,295, Establishments 1.24 Special Food Services $8,134,206 $1,699,895 $6,434, Drinking Places - $10,589,895 $9,524,457 $1,065, Alcoholic Beverages 3.36 Source: Compiled by Fairweather Consulting using ESRI Business Analyst Data. *Sectors with heavy/growing on-line sales. This analysis indicates there are a variety of sectors in which the Village could compete for retail business. Note, though, that not every sector with leakage is a potential opportunity for the Village. As indicated with asterisks in Table 4, many retail sectors that show a leakage are those that have been experiencing heavy or growing online sales (e.g., books, clothing, shoes, etc.). Thus, even though there is leakage in that sector at the 30-minute drive time, that may not be an opportunity for the Village if that leakage is being met by people ordering goods on line. For example, the far-right-hand column in Table 4 estimates the number of new stores that could be created to absorb the leakage currently occurring at the 30-minute drive time based upon the amount of spending that is leaking and the average sales per store in that sector. In the category of clothing stores, the analysis suggests that, if all the sales that were currently leaking out of the 30-minute drive time were captured, it could mean the creation of new clothing stores in that geographic area. Clearly some of that leakage is being met through on-line shopping. Another portion is also being met by shoppers traveling beyond 30-minutes to purchase their clothing. The good news for the Village in this analysis is that there are retail sectors with some form of unmet demand for which the Village can compete. The caveat is that competing for these sectors will probably FEBRUARY 28, 2018, PAGE 24

12 involve the establishment of niche operations that provide unique goods or services that are not available through on-line shopping (or regional malls) and these new enterprises are most likely to success if they are embedded in a location that provides experiences beyond the simple buying and selling of goods and services. The Village would be best positioned to capture these opportunities by strengthening the experiences it can offer to prospective shoppers. Industry Targets: Creating Complementary Locations Based on the analyses, completed during the planning process, a variety of industry targets can be recommended for the Village of Horseheads. For purposes of clarity and simplicity, the recommended industry targets are grouped according to the three focus areas for the plan: the HOST site, Hanover Square and the area south of I-86. Given the distinct configuration of each of the three areas, it is possible to defining targets for each location in ways that can strengthen the manner in which these three sites complement one another, rather than compete with one another. This is described below. HOST Given its size and excellent access, HOST is the logical location for larger-scale industrial uses. In that regard, the primary target industries for host are the strong traded clusters. This would include: Production Technology and Heavy Machinery Construction Products and Services Distribution & Electronic Commerce Downstream Metal Products (i.e., metal fabrication) Food Processing & Manufacturing Oil & Gas Production & Transportation (a current anchor activity at HOST whose outlook may have changed with New York State government s stance regarding fracking), Lighting and Electrical Equipment In a sense, this list is just the beginning of the industries that can be attracted to HOST. The key to continued success in this endeavor is for the Village to maintain a close working relationship with STEG with regard to industry attraction and expansion efforts. There are some other, nontraditional opportunities for HOST at its southern tip. As indicated above, the southern part of HOST is an easy walk to Hanover Square (See Figure 8.) Thus, it may be possible to conceptually tie HOST to Hanover Square. This would strengthen the mix of amenities available to employees working in businesses in the southern portion of HOST. It also creates the possibility of attracting other types of enterprises to either the southern portion of HOST or the northern edge of Hanover Square, with restaurants and specialty shops lining the access to HOST from the Square. This could include daycare facilities and health and recreational offerings for employees in the region (and particularly those working in HOST facilities). In this way, Hanover Square can help strengthen the attractiveness of the HOST site, while the HOST site can help bring new activities into Hanover Square. FEBRUARY 28, 2018, PAGE 25

13 Figure 8. The Potential for Pedestrian Activity Near the HOST Site. The Walk from Hanover Square to the Southern edge of HOST The Walk from the Corning Radisson to the far end of Market Street. Source: Google Streetview. FEBRUARY 28, 2018, PAGE 26

14 Hanover Square Hanover Square is the lifestyle location for the Village. It is the natural home for uses that have a strong pedestrian component and which promote a broader shopping experience that can incorporate community activities, arts-related events and similar amenities. The analyses conducted for this plan have identified a variety of uses that would be suitable for the Hanover Square area. These include: Small-footprint Specialty Retail (i.e., establishments occupying less than 10,000 square feet that carry a distinct line of products or services and/or offer unique customer experiences as part of their business). This would include establishments that do not directly compete with branded retail outlets likely to locate in a mall or highway-oriented shopping area. Restaurants & cafes (including third places that provide independent professionals, telecommuters and others space to meet with colleagues over coffee, etc.) Health and Wellness Services Small inns and/or beds and breakfasts Co-working spaces (i.e., time-shared office space for professionals, therapists, designers, etc.) Second-floor residential space Community Services/social services Arts-related enterprises (galleries, instructional space, small theater space, etc.) South of I-86 The area south of I-86 can easily complement both Hanover Square and the HOST site in terms of target industries. This would involve the following: Larger-footprint auto-oriented retail including hospitality: This district is already reasonably successful in attracting and supporting retail operations of 10,000 square feet or more that seek highway-oriented locations. This area already hosts a variety of chain store and restaurants and is generally well-suited for this type of development. Branded hotels and motels: as with the retail, this a niche in which the district has already has some success. The ready access to I-86 and its visibility from that corridor make this a good use to continue in the district. Advanced manufacturing and business services: The district south of I-86 has been successful hosting manufacturing enterprises such as Cameron Manufacturing and Eaton. It is also a logical place to attract professional services firms and research-related enterprises (including maker spaces and incubators), particularly those that have outgrown downtown locations. In addition, the district is a logical home for producer services, businesses that provide support services for manufacturers. This can include designers, machine maintenance operations, facilty management enterprises, etc. Cultivating this mix of businesses in the district will be an important buffer should the continuing disruption of retail cause the district to lose its advantage as a location for such businesses. A simple way to think of the opportunity here is to focus on businesses that are too big for Hanover Square or too small for HOST. This district is well configured to serve those niches. As will be discussed in the recommendations section, there are ways to improve its competitiveness in that regard. FEBRUARY 28, 2018, PAGE 27

15 Vision & Recommendations: Build the Village Experience Horseheads s Strategic Position & Vision: the Village Experience One of the most important aspects in continuing the success of the region s Innovation Corridor is to ensure that the Southern Tier can provide interesting and welcoming places for the requisite skilled workforce of engineers, designers, managers and production workers to live and recreate. Lively, walkable communities are an essential ingredient in attracting and retaining such talent. Corning, Elmira and Watkins Glen are all seeking to fill that role. The good news is each presents a different offering that could be complemented by Horseheads. Elmira is the county seat and the major urban center in the area. Corning is a leading-edge company town for the technology era. Watkins Glen is establishing itself as an important tourism center. Horseheads can complement these centers by providing a unique village experience for the Southern Tier. It has the capacity to serve as a small community in which families can live and work, with easy access to the recreational opportunities found throughout the Southern Tier and the Finger Lakes. The ingredient of this village experience include: A vibrant community center that can be reached on foot from surrounding neighborhoods A diverse economic base that includes traditional neighborhood retail, high-quality highway commercial space and an industrial park, all easily accessed from surrounding neighborhoods as well as from an Interstate highway An excellent school system and recreational and cultural facilities that support an active community life. Strengthening Horseheads s ability to fill this niche will involve building upon the Village s many assets. The recommendations below are intended to do just that. They are divided into recommendations that are specific to each of the three target development areas: Hanover Square, the area south of I-86 and the HOST site. These are followed by recommendations that extend village-wide. Goal 1. Strengthen & Expand Hanover Square s Role as the Community Center Key partners: Village Planning Board, Chemung County Planning, Hanover Square Merchants, Village Department of Parks & Recreation Objective 1-1. Extend Hanover Square zoning: Hanover Square has received much attention and made great strides over the past decade. It is increasingly recognized as an area of the Village with a strong set of historical assets and great growth potential. The district can be made even stronger by growing it so that it can include more businesses and mixed-use buildings (i.e., storefronts with apartments on the second floor) and create stronger links to surrounding neighborhoods. Figure 9 contains pictures of the major approaches to Hanover Square. With the exception of South Main Street, these approaches are dominated by parking lots and vacant spaces. It creates the impression that the Square is isolated from the surrounding community. Without a solid street wall of buildings, pedestrians are often uncomfortable walking from a residential area into a commercial center. Figure 10 shows the lack of neighborhood-to-center connectivity in Elmira and the extensive neighborhood FEBRUARY 28, 2018, PAGE 28