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SECTOR ANALYSIS

Sector Analysis Report


Regional Economic Growth Strategy for the Pennyrile Region

Prepared for the: West Kentucky Workforce Investment Board and the Pennyrile Area Development District

July 2010

TABLE OF CONTENTS
INTRODUCTION ThisReportsMethodology INDUSTRYCLUSTERSINTHEREGION ANALYSISOFMAJORSECTORSANDSUBSECTORS Agriculture Construction Manufacturing Retail Transportation&Warehousing Information ProfessionalServices AdministrativeServices HealthCare AccommodationandFoodServices OtherServices COMPETITIVEASSETINVENTORY PhysicalAssets FinancialAssets Business&InnovationAssets WorkforceAssets QualityofLifeAssets POTENTIALTARGETSECTORS APPENDIX:AVAILABLEINCENTIVES APPENDIX:HIGHTECHFUNDINGASSETS 1 2 5 12 14 15 16 17 19 20 21 22 23 24 25

27 35 38 40 43 46 47 60

INTRODUCTION
Thisreport,SectorAnalysis,isthesecondofseveralanalyticalreportsthatwillbedeliveredaspartof theRegionalEconomicGrowthStrategy.Thisreportprovidesamoreindepthanalysisofthe industriesfoundintheregion,theforcesthataredrivingthem,andthespecificnichesectorsthat mayprovetobegrowthtargetsfortheregion. Asapartofthisreport,weincludeachapterCompetitiveAssetInventorythatsummarizesthe assetsfoundintheregiontosupportindustrygrowth,ourobservationsandfeedbackfromour interviewsintheregion.Attheendofthereport,weprovidealistofpotentialtargetopportunities fromtheregion,whichwillbefurtherevaluatedandprioritizedinthesubsequentreportTarget Selection.WewillpresentthesepotentialtargetstotheSteeringCommitteewiththeintentionof conductingafacilitationsessiontorefinewhichshouldbeactualtargetsandwhichshouldbeplaced inaforfutureconsiderationcategory. ThisreportwillbesupplementedbyareportontheWorkforceConditionsintheregion,whichwill includeanassessmentoftheworkforceskillsandcompetenciesbasedonresearchandemployer interviews/surveys,aswellasaninventoryoftheregionseducationalandtrainingprograms.This analysiswillyieldanadditionalsetofassetsfortargetindustrydevelopmentandwillidentifythe skillsandoccupationsneededtosupportfuturejobcreation. Formoreinformationontheprojectandourresearchprocess,visittheprojectwebsite: www.PennyrileFuture.com TheWKWIB,PADD,andconsultingteamthanktheU.S.DepartmentofCommercesEconomic DevelopmentAdministrationandtheU.S.DepartmentofLaborforprovidingfundingforthisproject.

SECTORANALYSIS

Methodology ThefocusofthisreportisonclustersinthePennyrile,KYregion,asthesecountieswillbethefocus ofourstrategicrecommendations.MontgomeryCountyseconomyisselectivelyreferencedas requiredbytheindustrybeingexamined.Otherreports,includingtheEconomicBriefandWorkforce Conditions,lookatthePennyrilePlusMontgomeryregionsincestronglaborcommutepatterns betweenMontgomeryandChristiancountiesrequirethatwedefinethelaborshedtoinclude TennesseeworkersinMontgomerycounty. Thisreport,SectorAnalysis,isthefirststepinathreestepprocesstoidentifyappropriatetarget sectorsforthePennyrile,KYregion.Thisreportfundamentallyseeksto: 1) Examinetheregionsestablishedsectors, 2) Identifyemerginggrowthsectorsthatmayneedtobenurtured, 3) Conductanassetinventoryandanalysis,and 4) Identifylonglistofpotentialtargets. Afterwelookatthefullrangeofsectorsintheregionanddrilldowntoalonglistoftargets,we willcompletetheTargetSelectionreport,ratingeachpotentialtargetagainsttheassetbase, identifyinglocalgapsorchallengesforthetarget,andfinalizingabestlistofregionaltargets. Howdowedefineatarget? Targetsaretypicallydefinedastheindustrieswhichshouldberecruitedornurturedinaregion,such asdistributionortourism.Forthisproject,wewilltakeourtargetingtoamuchdeeperlevel whenpossible,definingsubsectornichetargetsthatareuniquetoregion,orwhichareparticularly suitedtotheregionsassetbase.Furthermore,atargetmaynotbeanindustry,butrather,aspecific project.JustliketheethanolplantinHopkinsvilleisanexampleofaprojectthatwasconceived, defined,andbuiltbylocalpartners,othertargetprojectsshouldbeconsidered.Someofour researchwillexamineaspecificproject,campaign,oractivitybothsmallandlargewhichcan deliverarevenueandjobcreationopportunityfortheregion.Futureresearchanddiscussionswith theSteeringCommitteewillprioritizetheprojectwithintheentiretargetstrategy. Targetswillbefurtherqualifiedasrecruitment,expansion,orstartuptargets(oranycombinationof these),whichwillhelpusdevelopmoreprecisestrategiestailoredtothetargets.Itisimportantto underscorethattargetsarenotonlyforrecruitment.Infact,trendsinstartupgrowthandlocal expansionindicatethatamajorityofnewjobsinthePennyrileregionwillbecreatedfromwithin, notfromattractingnewcompaniestotheregion.Furthermore,ourreportwillexplainhoweach targetshouldbenurturedandsupported.Wewillalsoindicatewhetherwebelievethetargetisa near,medium,orlongtermopportunityfortheregion.
SECTORANALYSIS

Asathirdandfinalstep,wewillcompileournationalresearchonthetargetsintoaseparatereport: TargetProfiles.Thisreportwillcontainresearchonnationalmarkettrends,locationtrendswithin theU.S.,andtheassetsandconditionsthattheindustriesrequire.Wewilllayouttheopportunity forthePennyrileregionforeachtargetasweseeit. ThesethreereportsSectorAnalysis,TargetSelection,andTargetProfileswillcomprisethebulkof ourresearchfortheEconomicDevelopmentStrategy,whichwillincludedetailedrecommendations intheareaofmarketing,communitydevelopment,entrepreneurship,workforcedevelopment,as wellasothers.AparallelresearchandinputprocessisdeliveringaWorkforceDevelopmentStrategy, whichwillcontainmoredetailedrecommendationsonhowtheregionseducationandworkforce systemcanbetterprepareitsworkersforthefutureandtheindustriesthatwillbetargeted. ThisreportutilizesprimarilydatafromtheprivatesectorforecastingfirmEMSI.EMSIprovides detailedindustryemploymentestimatesforeverycountyintheU.S.,withestimatesdowntothe6 digitNAICSlevel.Thisdetailisatremendousimprovementonthedatareleasedbystateandfederal workforceagencies,whichtypicallyreleasedataatthe2digit(majorsector)level.However,some smallcountiesmaynotevenhavemajorsectordatareleased. EMSIofferstwoversionsofitsdata:CoveredandComplete.TheCoveredEmploymentdataset estimatesemploymentatfirmsthatsubmitquarterlyUnemploymentInsurance(UI)filingswiththe state,whichisthedatathatisreleasedbythestateforthemajorsectors.TheComplete Employmentdatasetseekstoestimatealljobsbysector,includingtheselfemployed, unincorporatedbusinesses,andmilitary;noneofwhichareincludedinthestandardUIestimates. SomeindustriesarehighlyinfluencedbytheunincorporatedemploymentincludingtheAgriculture, Construction,andRetailsectors.Weaimtoofferacompletepictureofemploymentintheregion, andutilizetheCompleteEmploymentdatasetfromEMSIforallsubsequentchartsandtables.

SECTORANALYSIS

Thefollowingdiagramshowsourresearchprocessandhowthisreportandfuturereportswithinthe EconomicDevelopmentStrategyconnecttoeachother:

ResearchProcessLeading tothe EconomicDevelopmentStrategy


Examinegrowthsectors Identifyemergingsectors Conductanassetanalysis Identifylonglistofpotentialtargets

Report: SectorAnalysis

Report: TargetSelection
Ratethepotentialofeach potentialtarget Identifylocalgapsor challengesforthetarget Finalizeabestlistof regionaltargets Identifytargetsas recruitment,expansion,or startup Qualifytargetsacross timelineforimplementation

Report: TargetProfiles
Providedetailedmarket researchoneachtarget sectorandthenichesub sectors Definetheopportunity for thePennyrileregion Profilethesupporting assetsintheregionforeach Listcriticalrequirementsto supporttheirgrowth

Report: EconomicDevelopmentStrategy

SECTORANALYSIS

INDUSTRY CLUSTERS IN THE REGION


TobegintheSectorAnalysis,wepresentacompletepictureoftheconditionsofindustryclustersin theregion.Theindustryclusteranalysispresentedbelowexaminestherelativestrengthofthemajor industrieswithgreateremploymentintheregionbycomparingtheirLocationQuotient,growthrates precedingtherecession,andrelativeemploymentbase. WhatisaLocationQuotient? Locationquotientsmeasuretherelativeshareofemploymentinaparticularindustrycomparedto nationalaverages.Forexample,a3.6LQ(locationquotient)forEnergysaysthattheregionenjoys 3.6timesmorejobspercapitathanseenonaverageacrosstheU.S.Typically,whenanindustryhas alocationquotientgreaterthan1.0(theU.S.average),itmeansthattheindustryismoreclusteredor concentratedintheregionandismorecompetitiveatanationallevel,i.e.ithasmoreofitsfair shareintheregionanddrawsinnewmoneyfromoutsidetheregion.Bydefinition,aprimary industry(orprimaryjob)isonethatexportsasignificantshareofitsproductandservicestoa nationalorglobalcustomerbase,whichprovidesalargeupsideopportunitytoexpandmarketshare andcreatenewjobs.CommunitiesacrosstheU.S.competeaggressivelytorecruitorretainthese primaryjobs. Whyareprimaryjobsimportant?Simplyput,withoutprimaryjobs,theeconomywillremain limitedbythesizeofthelocalpopulationthatismostofthejobswillbeinretail,healthcare,and othertraditionallypopulationservingindustries.Primaryjobsbringnewmoneyintotheregionand createalargemultipliereffectontheeconomyinsteadofjustrepeatedlyrecirculatinglocalmoney. Partsoflocallyservingindustriescanbeprimary,suchasretailersthatservetouristsorhospitalsthat providetertiarycaretooutoftownpatients.Consequently,localdollarstendtoleavearegionwhen residentsleavetoshopinneighboringregionsorgethealthcareathospitalsinmajorcities.These industriescanactasanegativedrainontheeconomy(sometimesreferredtoasretailleakage). LargeClusterReview OurinitialreviewofclustersinthePennyrileregionfoundlarge(andforsomehighgrowth)clusters inAgriculture&Food,Healthcare,Energy,Transportation&Logistics,IndustrialMachinery,and Retail. Allofthesesectorshavehighconcentrationsintheregionandwereexpandingbeforetherecession beganin2008.ForexampleinTransportation&Logistics,thePennyrileregionhasseensignificant employmentgrowthofitswarehousinganddistributionindustryinrecentyears.From20032008,

SECTORANALYSIS

employmentgrew450%toreachnearly800warehousingjobsintheregion,ledbytheWalMart DistributionCenterinHopkinsville.
Pennyrile , KY - Large Clusters
1.5 Auto 3.1 LQ -23% Size of bubble indicates relative employment base. Materials Healthcare Retail 1.2 Industrial Machinery Transportation & Logistics Energy 3.6 LQ 101%

1.4

Ag & Food 2.7 LQ -12%

1.3

Location Quotient, 2008

1.1 U.S. avg Building & Construction

1.0

0.9

Non-Profits Culture & Entertainment Engineering, Design, & Content Finance

0.8

Back Office

0.7

0.6

Professional Services

0.5 -20% -10% 0% 10% 20% 30% 40% Pre-Recession Growth History (2003-2008)
Source: Avalanche Consulting, EMSI Complete Employment

IndustrialMachinery,primarilyasuppliercluster,exhibitsahighlocationquotientandhighpre recessiongrowth.TherecentdecisionbyHemlockSemiconductortoinvestover$1billionin MontgomeryCounty,Tennesseeinafacilitytomanufacturepolycrystallinesiliconforsolarpanels shouldgiveafurtherboosttothissuppliersector. Additionally,theAgriculture&Food,Automotive,andMaterialssectorsallhavehighrelative concentrationsinthePennyrileRegion,despitejoblossesintheseindustriesinthefiveyears precedingtherecession.Areturntogrowthatthenationallevelwouldlikelymeangrowthinthe localsectors.OtherregionallystrongsectorssuchasHealthcareandEnergy(whichincludescoal mining)areprojectedtocontinuerapidgrowtharoundtheglobe,offeringopportunityforthe Pennyrileregiontocarveaplaceintheseexpandingmarkets.

SECTORANALYSIS

EmergingSectors Alongsideexistinglargeindustryclustersintheregion,Pennyrilehostsanumberofpromising emergingsectors.Althoughcurrentlyexistinginlowrelativeconcentrationsintheregion,these underdevelopedindustriesareoftensomeofthefastestgrowingonanationalscale.Examplesof theseindustryclustersincludeBackOffice,Engineering,andProfessionalServices.Theseindustries providecrucialsupporttoawidevarietyofhighgrowthfieldsincludinghealthcare,insurance, biotechnology,andenergy.


Pennyrile , KY Small Clusters
Apparel 2.7 LQ -64% Metalworking Size of bubble indicates relative employment base. Logging 4.4 LQ +23%

1.4

Aerospace

1.2 U.S. avg


Location Quotient, 2008

Consumer Goods Mftg

1.0

0.8

0.6

Electronics Telecom Services Research

0.4

Furniture Private Education Software / Info. Tech.

0.2 Boatbuilding 0.0 -100% -50% 0% Biomedical Supplies & Labs 50% 100% 150% 200%

Pre-Recession Growth History (2003-2008)


Source: Avalanche Consulting, EMSI Complete Employment

Severalclustershavesuchasmallbaseofemploymentandlowlocationquotientsintheregionthat theyarehardtopinpoint:BiomedicalSupplies&Labs,Software/InformationTechnology,and Research.However,theygrewmorethan50%inthefiveyearsleadinguptotherecessionaclear signoftheiremergenceintotheregion.Giventheirsmallsize,addingjustafewcompaniesandjobs peryeartothesesectorshasadramaticeffectonthepercentagegrowth. Logging(whichincludesmineralminingandquarries)andAerospacehavehighlocationquotients butstillemploylownumbersofworkers. Thetableonthefollowingpageshowstheactualvaluesfortheclusterbubblecharts.

SECTORANALYSIS

Pennyrile,KYClusterComposition
2009 Cluster Aerospace Agribusiness&Food Apparel&Textiles Automotive BackOffice BiomedicalSupplies&Labs Building&Construction ConsumerGoodsMftg Culture&Entertainment Education Electronics Energy Engineering,Design,&Content Finance Furniture Government Healthcare IndustrialMachinery Logging&Metal/MineralMining Materials Metalworking NonProfits ProfessionalServices Research Retail Shipbuilding Software/Info.Tech. TelecomServices Transportation&Logistics Total Jobs 375 8,920 1,008 1,823 3,905 65 6,903 540 7,552 858 616 3,447 1,718 4,761 93 50,411 10,822 2,198 783 1,446 1,151 1,889 1,899 663 14,153 10 576 280 3,704 132,347 LocationQuotient 1.45 2.67 2.71 3.07 0.77 0.11 1.02 1.09 0.86 0.39 0.41 3.46 0.65 0.55 0.32 3.77 1.05 1.22 4.35 1.41 1.17 1.07 0.52 0.45 1.12 0.14 0.38 0.49 1.08 1.39 Prerecession,'03'08 Growth 62.2% 12.4% 64.2% 23.0% 22.8% 31.1% 14.5% 1.0% 7.3% 25.6% 37.9% 100.7% 13.6% 20.0% 50.0% 16.8% 4.8% 25.1% 23.2% 4.0% 4.0% 3.3% 29.8% 155.9% 1.8% n/a 56.0% 3.9% 36.8% 9.8% NewJobs 295 1,237 2,004 752 815 14 1,037 6 501 160 161 1,608 219 827 113 7,107 498 550 153 72 51 60 464 382 254

n/a

20 197 11 1,060 12,128

Source:AvalancheConsulting,EMSIComplete

GrowthForecasts AccordingtoforecastsfromEMSI,manyoftheregionswellestablishedandemergingindustry clustershavehighforecastedgrowthinrelationtonationaltrends.(Seetheintroductionofthis reportforanexplanationofthisdatasource).Forexample,theBiomedicalSupplies&Labscluster, whilerelativelysmallintheregion,isforecastedtogrow41%between2009and2019,comparedto 19%growthnationally(thoughthiswillonlytranslateto28newjobs).Largerclusterssuchas Energyareprojectedtogrow33%overthenextdecadecomparedtoa3.5%lossofjobsnationally.

SECTORANALYSIS

Pennyrile,KYClusterComposition
10yearForecast,'09'19 Cluster Aerospace Agribusiness&Food Apparel&Textiles Automotive BackOffice BiomedicalSupplies&Labs Building&Construction ConsumerGoodsMftg Culture&Entertainment Education Electronics Energy Engineering,Design,&Content Finance Furniture Government Healthcare IndustrialMachinery Logging&Metal/MineralMining Materials Metalworking NonProfits ProfessionalServices Research Retail Shipbuilding Software/Info.Tech. TelecomServices Transportation&Logistics Total Source:AvalancheConsulting,EMSIComplete Growth 47.7% 9.2% 62.9% 28.3% 31.8% 43.1% 20.4% 7.0% 10.7% 28.4% 3.9% 33.3% 35.4% 26.1% 25.8% 1.5% 16.2% 5.2% 4.1% 10.2% 5.2% 12.3% 22.2% 106.0% 5.2% 0.0% 77.1% 12.9% 12.0% 7.8% NewJobs 179 824 634 515 1,240 28 1,409 38 805 244 24 1,149 609 1,241 24 764 1,748 114 32 147 60 232 421 703 729 0 444 36 444 10,352 USForecast,'09'19 Growth 0.2% 0.0% 34.7% 13.6% 24.7% 19.2% 15.9% 8.3% 11.5% 22.4% 0.2% 3.5% 11.2% 26.2% 5.3% 7.1% 24.1% 3.4% 9.9% 12.5% 10.2% 12.0% 13.3% 47.2% 6.8% 12.7% 37.0% 5.2% 10.2% 13.2%

Acomparisonofthoseclusterswithregionalhighgrowthprojectionstonationalforecastssolidifies existingunderstandingofindustryclusterstrengthsintheregionandrevealsafewadditionalareas ofpotentialgrowth.EMSIforecaststhatgrowthinthePennyrile,KYregionisexpectedtooutpace thenationintheseindustryclusters:BackOffice;BiomedicalSupplies&Labs;Culture& Entertainment(Tourism);Education;Energy;Engineering,Design&Content;Healthcare;Materials; Metalworking;ProfessionalServices;Research;Retail;Software/InformationTechnology;and Transportation&Logistics.Oftheseclusters,emergingregionalindustriessuchasResearchand Software/InformationTechnologyshowsomeofthehighestpotential,withforecastedgrowthin Researchabove100%overthenextdecadeandSoftware/InformationTechnologyat77%.Whilenot

SECTORANALYSIS

asrelativelyconcentratedintheregionastraditionalindustryclusterssuchasEnergyand Agriculture&Food,theseprojectionsrevealtheenormouspotentialandsignificanceofthese emergingindustries,particularlythroughtheirtiestothenationaleconomy. TheSelfEmploymentEconomy Approximately30%ofalljobsintheregionaleconomyareproprietorjobs,includingtheself employed,independentcontractors,andunincorporatedbusiness.Theseunincorporatedbusinesses arenotrequiredtofilequarterlyemploymentreportstostateorfederalagencies,andthereforeare notincludedintheWageandSalaryemploymentdatathatarecommonlyquotedinthemediaand researchpapers. Thesetypesofjobsareincreasinglyimportanttotheeconomy,asworkersofallagesand educationalbackgroundsarestartingtheirownbusinessesinresponsetoasoftjobmarket.As shownintheEconomicBrief,over2,000selfemployedpositionswerecreatedinthePennyrile MontgomeryCountyareain2008alone.Theselfemploymentportionoftheeconomygrewthree timesfasterthanthecorporateeconomyfrom20032008. Whilestateandfederalagenciesonlyreleaseanestimateofselfemploymentbycounty,weutilize theEMSIdatasettopullouttheselfemployedeconomybyindustry.
Pennyrile , KY Proprietors / Self-Employed Clusters
2.0 Ag & Food 2.7 LQ -6% Size of bubble indicates relative employment base. Energy 1.7 LQ +58%

1.8

1.6 Non-Profits 1.4 Building & Construction Retail

Location Quotient, 2008

1.2 U.S. avg 1.0 Transportation & Logistics Healthcare Back Office

0.8 Finance Professional Services Private Education Culture & Entertainment Research 0.4 LQ +53%

0.6

0.4

0.2

0.0 -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% Pre-Recession Growth History (2003-2008)
Source: Avalanche Consulting, EMSI Complete Employment

SECTORANALYSIS

10

Pennyrile,KYSelfEmploymentClusters
2009 Cluster Aerospace Agribusiness&Food Apparel&Textiles Automotive BackOffice BiomedicalSupplies&Labs Building&Construction ConsumerGoodsMftg Culture&Entertainment Education Electronics Energy Engineering,Design,&Conten Finance Furniture Government Healthcare IndustrialMachinery Logging&Metal/MineralMini Materials Metalworking NonProfits ProfessionalServices Research Retail Shipbuilding Software/Info.Tech. TelecomServices Transportation&Logistics Total Jobs 4 5,631 40 12 1,537 17 3,012 90 893 351 61 396 251 2,643 12 17 1,341 165 214 39 28 1,506 794 254 4,461 0 104 54 875 132,347 LocationQuotient 0.99 3.82 0.83 0.80 0.99 0.55 1.34 0.70 0.55 0.36 0.59 1.71 0.38 0.50 0.43 0.73 0.74 0.87 2.86 1.09 0.91 1.33 0.58 0.41 1.20 0.00 0.29 0.58 1.05 1.00 Prerecession,'03'08 Growth 0.0% 5.7% 5.1% 36.4% 25.7% 54.5% 31.2% 36.1% 19.6% 2.6% 35.6% 58.1% 18.5% 33.0% 45.5% 50.0% 16.9% 20.8% 52.5% 85.7% 78.3% 2.0% 18.3% 53.3% 7.7% n/a 6.0% 6.9% 9.3% 12.5% NewJobs 0 331 2 4 337 6 866 26 145 9 16 133 43 691 10 16 195 31 74 18 18 29 126 88 320 10yearForecast,'09'19 Growth 25.0% 15.3% 20.0% 8.3% 38.5% 52.9% 18.1% 31.1% 34.0% 1.4% 27.9% 42.2% 38.2% 39.9% 16.7% 23.5% 21.6% 23.6% 1.9% 25.6% 42.9% 9.5% 5.3% 41.7% 6.5% 0.0% 43.3% 25.9% 5.9% 12.2% NewJobs 1 860 8 1 591 9 544 28 304 5 17 167 96 1,055 2 4 289 39 4 10 12 143 42 106 289 0 45 14 52 3,033

n/a

0 6 4 79 2,853

Source:AvalancheConsultingcalculationsfromEMSICompleteandEMSICoveredEmployment

Asshowninthechartsabove,nearly25,000peopleareconsideredselfemployedintheregion.The selfemployedareconcentratedinAgriculture&Food,Retail,andConstruction.Theselfemployed economyisexpectedtogrow12%overthenext10years.

SECTORANALYSIS

11

ANALYSIS OF MAJOR SECTORS AND SUBSECTORS


Inthefollowingpages,weprovidemoreinformationonthemajorsectorsintheregion.Major sectorsaredefinedbytheU.S.BureauofLaborStatisticsandaretypicallyreportedonbytheBLS withquarterlyemploymentandpayrollestimates.Asmentionedintheintroductiontothisreport, weutilizeanotherdatasetfromEMSI,whichprovidesahigherlevelofdetailonthesubsectorstothe majorsectors. Theseonepageprofilesonmajorsectorsshowhowthesectorisperforming,andwhichsubsectors areforecastedtohavethemostgrowthoverthenext10years. Theconsultingteambelievesthattheseonepageprofilesonmajorsectorsandtheirsubsectorscan bereproducedasInformationSheetsfordistributionbythePADD,WestKentuckyWIB,local chambersofcommerce,andcolleges.Thesesheetswillservestudentsandlocalbusinessestobetter understandwherejobgrowthandrevenuegrowthcanbefoundintheregionaleconomy. Foreachsector,weprovidethefollowingcomponents: KeySectorDynamicsThistableratesthesector's: o LocalRelativeConcentration o LocalJobGrowth,Historical o LocalJobGrowth,Forecast o U.S.JobGrowth,Forecast ShiftShareAnalysisThischartpresentsadifferentperspectiveonjobcreationtrendsfor eachmajorsector.Shiftshareanalysisbreaksagrowthrateintothreecomponents: o NationalShareHowmuchlocalgrowthisduetoanimprovementintheU.S. economy o IndustryShiftHowmuchlocalgrowthisduetothesectorsoverallgrowthatthe nationallevel o RegionalShareHowmuchgrowthisactuallybeingcreatedatthelocallevel Byexaminingthesethreecomponents,wecanseeiftheRegionalShareispositive indicatingthatthesectorisgrowingmorecompetitive(advancing)againsttheU.S.economy. SectorBreakdownTableAllsubsectorsareprovidedthatcomprisethemajorsector. Subsectorsareprovidedatthe4digitNAICSlevel.Dataincludes: o TotalJobs,2004/2009/2019 o AnnualGrowthRates,20042009,20092019(Note:annualizedgrowthistherateat whichthesubsectorgrowsperyearonaverage) o NetNewJobsovereachtimeperiod,20042009and20092019

SECTORANALYSIS

12

ThechartsandtablesutilizedataandforecastsfromEMSI.Refertothisreportsintroductionfor moreinformationonthisdatasource. Weprovideasynopsisofdataforthemajorsectorsherebeforediscussingselectsectorindividually:


MajorSectors
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019 TotalJobs NAICS Description 11 21 22 23 42 Agriculture,Forestry,Fishing,Hunting Mining,Quarrying,andOilandGas Utilities Construction WholesaleTrade 2004 7,628 1,857 259 5,098 14,974 2,196 11,584 2,835 787 2,575 2,115 3,370 240 4,466 681 10,294 1,074 5,836 5,469 41,861 125,200 2009 7,076 3,527 285 5,800 10,029 2,227 11,154 3,845 802 2,629 2,560 4,345 161 3,952 805 10,828 1,027 6,288 5,901 49,200 132,440 2019 5,909 4,827 230 6,872 8,897 2,214 11,594 4,323 807 2,939 3,431 6,467 163 5,486 1,017 12,181 1,259 6,761 6,645 49,592 141,614 AnnualJobGrowth '04'09 1.5% 13.7% 1.9% 2.6% 7.7% 0.3% 0.8% 6.3% 0.4% 0.4% 3.9% 5.2% 7.7% 2.4% 3.4% 1.0% 0.9% 1.5% 1.5% 3.3% 1.1% '09'19 1.8% 3.2% 2.1% 1.7% 0.1% 0.4% 1.2% 0.1% 1.1% 3.0% 4.1% 0.1% 3.3% 2.4% 1.2% 2.1% 0.7% 1.2% 0.1% 0.7% NetNewJobs '04'09 1,670 26 702 31 (430) 1,010 15 54 445 975 (79) (514) 124 534 (47) 452 432 7,339 7,240 '09'19 1,300 (55) 1,072 (13) 440 478 5 310 871 2,122 2 1,534 212 1,353 232 473 744 392 9,174 (552) (1,167) LQ* 2009 3.5 5.4 0.8 1.0 1.3 0.6 1.1 1.0 0.4 0.5 0.5 0.6 0.1 0.7 0.3 1.0 0.5 0.9 1.1 3.5 US% '09'19 0.3% 0.8% 0.7% 1.0% 0.9% 0.3% 0.4% 0.7% 0.4% 1.4% 2.5% 2.3% 0.2% 2.0% 1.9% 2.1% 1.6% 0.7% 1.1% 0.6% 1.1%

3133 Manufacturing 4445 RetailTrade 4849 TransportationandWarehousing 51 52 53 54 55 56 61 62 71 72 81 90 TOT Information FinanceandInsurance RealEstateandRentalandLeasing Professional,Scientific,andTechSvcs ManagementofCompanies Administrative,WasteMgmtServices EducationalServices HealthCareandSocialAssistance Arts,Entertainment,andRecreation AccommodationandFoodServices OtherServices Government Total

1.2% (4,945) (1,132)

Source:EMSICompleteEmpl oyment,2Q2010 *Note:Ca l cula tedwi thoutMil i ta ryempl oyment

SECTORANALYSIS

13

Agriculture TheagriculturesectorinthePennyrileregion hasexperiencedjoblossinrecentyears,though joblossesslowedleadinguptothestartofthe recessionin2008. Cropandanimalproductionemploysthevast majorityofworkersinthissector,buthas experiencejobgrowthratesathighnegative levels.Supportactivitiesemploysmallnumbers ofworkersbuthaveperformedbetterthanthe overallsectorcreatingjobsinrecentyears andforecastedtocontinueitspositivegrowth overthenext10years. Mineralmining(includinglimestonequarries)is partoftheminingsector,whichisdominated bycoalmining,butisshownhereaspartof agriculture.Mineralmininghasalsobeenlosing jobsintheregionandisexpectedtocontinueto losejobsatthelocalandnationallevel.
SectorBreakdown:Agriculture&MineralMining
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Very High Local Job Growth, Historical: Negative Local Job Growth, Forecast: Negative US Job Growth, Forecast: Slightly Negative Local Competitiveness Trend: Advancing

TotalJobs NAICS Description 11 1141 1152 1153 1142 1151 1133 11A0 1131 1132 11+ 2123 Agriculture,Forestry,FishingandHunting Fishing SupportActivitiesforAnimalProduction SupportActivitiesforForestry HuntingandTrapping SupportActivitiesforCropProduction Logging Cropandanimalproduction TimberTractOperations ForestNurseriesandGatheringofForestProducts Agriculture&MineralMining NonmetallicMineralMiningandQuarrying 2004 7,628 72 54 15 20 415 205 6,846 0 0 8,104 476 2009 7,076 68 79 16 29 401 195 6,287 0 0 7,657 581 2019 5,909 141 110 21 30 384 163 5,059 0 0 6,569 660

AnnualizedGrowth '04'09 1.5% 1.1% 7.9% 1.3% 7.7% 0.7% 1.0% 1.7% n/a n/a 1.1% 4.1% '09'19 1.8% 7.6% 3.4% 2.8% 0.3% 0.4% 1.8% 2.1% n/a n/a 1.5% 1.3%

NetNewJobs '04'09 (552) (4) 25 1 9 (14) (10) (559) 0 0 (447) 105 '09'19 (1,167) 73 31 5 1 (17) (32) (1,228) 0 0 (1,088) 79

Source:EMSICompl eteEmpl oyment,2Q2010

SECTORANALYSIS

14

Construction TheconstructionindustryinthePennyrile regionexperiencedmoderatetohighgrowth leadinguptotherecession.Thesubsectors thatgrewthefastestincluded:utility construction,specialtytradecontractors, structuralconstruction,civilengineering construction,buildingfinishingcontractors,and residentialconstruction.Thishighgrowth reflectedanimprovingcompetitivesituation againstnationaltrends,astheregionalshare oflocaljobcreationcounterbalanceda decliningindustryshiftthatbeganin2007. Overthenext10years,forecastspointto positivejobcreation,thoughatslowerrates thanseenbeforetherecession.Thetopthree fastestgrowingsubsectorsinfutureyearswill becommercialconstruction,roadconstruction, andfoundation/structuralconstruction.
SectorBreakdown:Construction
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Average Local Job Growth, Historical: Moderate Local Job Growth, Forecast: Moderate US Job Growth, Forecast: Low-Moderate Local Competitiveness Trend: Advancing

TotalJobs NAICS Description 23 2362 2373 2381 2383 2389 2382 2379 2361 2372 2371 Construction NonresidentialBuildingConstruction Highway,Street,andBridgeConstruction Foundation,Structure,andBuildingExteriorContracto BuildingFinishingContractors OtherSpecialtyTradeContractors BuildingEquipmentContractors OtherHeavyandCivilEngineeringConstruction ResidentialBuildingConstruction LandSubdivision UtilitySystemConstruction 2004 5,098 672 373 564 1,009 716 826 95 649 52 143 2009 5,800 538 298 730 1,171 1,000 867 118 794 64 220 2019 6,872 749 381 906 1,427 1,209 989 132 815 65 200

AnnualizedGrowth '04'09 2.6% 4.4% 4.4% 5.3% 3.0% 6.9% 1.0% 4.4% 4.1% 4.2% 9.0% '09'19 1.7% 3.4% 2.5% 2.2% 2.0% 1.9% 1.3% 1.1% 0.3% 0.2% 0.9%

NetNewJobs '04'09 702 (134) (75) 166 162 284 41 23 145 12 77 '09'19 1,072 211 83 176 256 209 122 14 21 1 (20)

Source:EMSICompl eteEmpl oyment,2Q2010

SECTORANALYSIS

15

Manufacturing ThemanufacturingsectorinthePennyrile,KY regionhassufferedlargejoblossesinrecent yearsnearly5,000over20042009,about onethirdoftheregionsmanufacturingjob base.Joblossesareexpectedtomoderate substantiallyaftertherecession,althoughthe downwardtrendinmanufacturingjobsisa likelyscenario. Somemanufacturingsectorshaveperformed well:foodmanufacturing,chemicals,and textiles(thoughquitesmall).Manufacturingfor beverages,tobacco,primarymetalandmineral products,isexpectedtoreboundintopositive territoryoverthespanofthenext10yearsin thePennyrileregion.
SectorBreakdown:Manufacturing
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Above Average Local Job Growth, Historical: Very Negative Local Job Growth, Forecast: Negative US Job Growth, Forecast: Negative Local Competitiveness Trend: Lagging

TotalJobs NAICS Description 3133 Manufacturing 312 331 325 327 311 314 335 332 321 326 333 322 323 339 313 336 316 315 337 BeverageandTobaccoProductMftg PrimaryMetalMftg ChemicalMftg NonmetallicMineralProductMftg FoodMftg TextileProductMills ElectricalEquipment,Appliance,andComponentMftg FabricatedMetalProductMftg WoodProductMftg PlasticsandRubberProductsMftg MachineryMftg PaperMftg PrintingandRelatedSupportActivities MiscellaneousMftg TextileMills TransportationEquipmentMftg LeatherandAlliedProductMftg ApparelMftg FurnitureandRelatedProductMftg 2004 14,974 370 359 273 261 1,128 10 51 948 820 1,239 1,217 339 89 331 134 4,089 49 2,981 188 2009 10,029 185 215 411 257 1,315 10 10 864 774 751 1,175 328 91 263 148 2,359 22 785 75 2019 8,897 336 303 564 337 1,377 10 10 863 762 737 1,110 303 84 212 108 1,435 10 331 27

AnnualizedGrowth '04'09 7.7% 12.9% 9.7% 8.5% 0.3% 3.1% 0.0% 27.8% 1.8% 1.1% 9.5% 0.7% 0.7% 0.4% 4.5% 2.0% 10.4% 14.8% 23.4% 16.8% '09'19 1.2% 6.1% 3.5% 3.2% 2.7% 0.5% 0.0% 0.0% 0.0% 0.2% 0.2% 0.6% 0.8% 0.8% 2.1% 3.1% 4.8% 7.6% 8.3% 9.7%

NetNewJobs '04'09 (4,945) (185) (144) 138 (4) 187 0 (41) (84) (46) (488) (42) (11) 2 (68) 14 (1,730) (27) (2,196) (113) '09'19 (1,132) 151 88 153 80 62 0 0 (1) (12) (14) (65) (25) (7) (51) (40) (924) (12) (454) (48)

Source:EMSICompl eteEmpl oyment,2Q2010


16

SECTORANALYSIS

Retail Theretailemploymentbasehasbeenshedding jobsataslowpaceinrecentyearsworsening intotherecession.The10yearforecastforthe regioncallsforaslightimprovementbackinto positivegrowthterritory,comparabletothe annualrateexpectedfortheU.S. Thehighestjobgrowthisexpectedinthe followingsectors:ElectronicShoppingand MailOrderHouses;SportingGoods,Hobby,and MusicalInstrumentStores;HomeFurnishings Stores;UsedMerchandiseStores;andOffice Supplies,Stationery,andGiftStores. Severalretailsubsectorsareexpectedto bouncefromanegativetrendtopositivefuture growth:automotive,furniture,clothing, florists,buildingmaterials,andshoes.
SectorBreakdown:Retail
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Above Average Local Job Growth, Historical: Slightly Negative Local Job Growth, Forecast: Slightly Positive US Job Growth, Forecast: Slightly Positive Local Competitiveness Trend: Lagging

TotalJobs NAICS Description 4445 RetailTrade 4541 4511 4422 4533 4532 4412 4539 4521 4529 4421 4481 4461 4531 4441 ElectronicShoppingandMailOrderHouses SportingGoods,Hobby,andMusicalInstrumentStore HomeFurnishingsStores UsedMerchandiseStores OfficeSupplies,Stationery,andGiftStores OtherMotorVehicleDealers OtherMiscellaneousStoreRetailers DepartmentStores OtherGeneralMerchandiseStores FurnitureStores ClothingStores HealthandPersonalCareStores Florists BuildingMaterialandSuppliesDealers 2004 11,584 52 195 113 197 260 116 481 366 1,827 214 394 743 132 746 2009 11,154 91 239 127 216 307 111 487 384 2,019 191 371 769 125 671 2019 11,594 143 349 164 276 380 133 581 450 2,360 220 415 860 137 729

AnnualizedGrowth '04'09 0.8% 11.8% 4.2% 2.4% 1.9% 3.4% 0.9% 0.2% 1.0% 2.0% 2.2% 1.2% 0.7% 1.1% 2.1% '09'19 0.4% 4.6% 3.9% 2.6% 2.5% 2.2% 1.8% 1.8% 1.6% 1.6% 1.4% 1.1% 1.1% 0.9% 0.8%

NetNewJobs '04'09 (430) 39 44 14 19 47 (5) 6 18 192 (23) (23) 26 (7) (75) '09'19 440 52 110 37 60 73 22 94 66 341 29 44 91 12 58

SECTORANALYSIS

17

SectorBreakdown:Retail
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019 TotalJobs NAICS Description 4482 4452 4471 4512 4453 4413 4431 4483 4542 4411 4451 4543 4442 ShoeStores SpecialtyFoodStores GasolineStations Book,Periodical,andMusicStores Beer,Wine,andLiquorStores AutomotiveParts,Accessories,andTireStores ElectronicsandApplianceStores Jewelry,Luggage,andLeatherGoodsStores VendingMachineOperators AutomobileDealers GroceryStores DirectSellingEstablishments LawnandGardenEquipmentandSuppliesStores 2004 75 198 1,405 70 109 436 189 87 58 748 1,349 795 226 2009 59 114 1,205 54 116 439 149 52 43 619 1,265 801 131 2019 64 114 1,198 53 111 414 140 45 37 506 1,008 635 72 AnnualizedGrowth '04'09 4.7% 10.5% 3.0% 5.1% 1.3% 0.1% 4.6% 9.8% 5.8% 3.7% 1.3% 0.2% 10.3% '09'19 0.8% 0.0% 0.1% 0.2% 0.4% 0.6% 0.6% 1.4% 1.5% 2.0% 2.2% 2.3% 5.8% NetNewJobs '04'09 (16) (84) (200) (16) 7 3 (40) (35) (15) (129) (84) 6 (95) '09'19 5 0 (7) (1) (5) (25) (9) (7) (6) (113) (257) (166) (59)

Source:EMSICompl eteEmpl oyment,2Q2010

SECTORANALYSIS

18

Transportation&Warehousing TheTransportationandWarehousingsector experiencedstrongjobgrowthintheregionin recentyears,butforecastspointtoamoderate growthof1.2%peryear.Bycomparison,the U.S.sectorisexpectedtogrowlessthan1% annuallyoverthenext10years. Thewarehousingsubsectorisexpectedto createthemostjobsgoingforwardforthe regionabout300over10years.Truckingis projectedtoexperiencenonetjobcreation.
SectorBreakdown:Transportation&Warehousing
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Average Local Job Growth, Historical: Very High Local Job Growth, Forecast: Moderate US Job Growth, Forecast: Slightly Positive Local Competitiveness Trend: Advancing

TotalJobs NAICS Description 4849 TransportationandWarehousing 485 492 493 482 484 488 483 486 TransitandGroundPassengerTransportation CouriersandMessengers WarehousingandStorage RailTransportation TruckTransportation SupportActivitiesforTransportation WaterTransportation PipelineTransportation 2004 2,835 147 188 121 286 1,413 183 55 29 2009 3,845 205 332 781 274 1,504 299 16 25 2019 4,323 340 472 1,075 305 1,507 242 10 15

AnnualizedGrowth '04'09 6.3% 6.9% 12.0% 45.2% 0.9% 1.3% 10.3% 21.9% 2.9% '09'19 1.2% 5.2% 3.6% 3.2% 1.1% 0.0% 2.1% 4.6% 5.0%

NetNewJobs '04'09 1,010 58 144 660 (12) 91 116 (39) (4) '09'19 478 135 140 294 31 3 (57) (6) (10)

Source:EMSICompl eteEmpl oyment,2Q2010

SECTORANALYSIS

19

Information Thissectorincludesdiverseinformation productsandservices,comprisedof datacenters,softwarepublishers, telecomunicationsandtelevisionJobgrowthin theregionhasbeenslightlypositiveand expectedtoremainsooverthenext10years. Mostofthetraditionaltelecommunications sectorshavebeenlosingjobs.However,local newspaperpublishershavebuckednegative nationaltrendsandcreatedjobsoverthe2004 2009period(whichisexpectedtoturnnegative goingforward).Dataprocessing/hostingand videoindustriesareprojectedtocreatejobsin futureyears. Overall,thelocalsectorisexpectedto outperformthenationalsector.
SectorBreakdown:Information(incl.Telecommunications)
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Very Low Local Job Growth, Historical: Slightly Positive Local Job Growth, Forecast: Slightly Positive US Job Growth, Forecast: Slightly Positive Local Competitiveness Trend: Flat

TotalJobs NAICS Description 51 5182 5179 5121 5172 5112 5122 5174 5191 5152 5111 5151 5171 Information DataProcessing,Hosting,andRelatedServices OtherTelecommunications MotionPictureandVideoIndustries WirelessTelecommunicationsCarriers(exceptSatelli SoftwarePublishers SoundRecordingIndustries SatelliteTelecommunications OtherInformationServices CableandOtherSubscriptionProgramming Newspaper,Periodical,Book,andDirectoryPublisher RadioandTelevisionBroadcasting WiredTelecommunicationsCarriers 2004 787 79 11 58 39 0 14 0 10 41 210 120 211 2009 802 62 25 61 78 10 10 10 10 34 262 100 167 2019 807 129 31 75 81 10 10 10 10 31 236 81 124

AnnualizedGrowth '04'09 0.4% 4.7% 17.8% 1.0% 14.9% na 6.5% na 0.0% 3.7% 4.5% 3.6% 4.6% '09'19 0.1% 7.6% 2.2% 2.1% 0.4% 0.0% 0.0% 0.0% 0.0% 0.9% 1.0% 2.1% 2.9%

NetNewJobs '04'09 15 (17) 14 3 39 10 (4) 10 0 (7) 52 (20) (44) '09'19 5 67 6 14 3 0 0 0 0 (3) (26) (19) (43)

Source:EMSICompl eteEmpl oyment,2Q2010


SECTORANALYSIS


20

ProfessionalServices Professionalserviceshavealowrelative concentrationinthePennyrileregion,yet growthrateshavebeenhighinrecentyearsand areforecastedtoremainhighoverthenext10 years.Thishighgrowthreflectsan improvementincompetitivenessasshownby theshiftsharechart,wheretheregional shareofjobsismorepositivethanthe industryshiftseenatthenationallevel.This sectorisworkinghardtobridgethegapin availabilityofservicesinthelocaleconomy. Managementandtechnicalconsultingservices haveexperiencedthehighestrateofgrowthin theregionandwillcontinuetobethefastest growingsectoroverthenext10years. ScientificR&Dwillgrowquickly,aswellas softwaredevelopment. AdvertisingandPublicRelationsisexpectedto bouncefromnegativetopositivegrowth,asis SpecializedDesignServices.Intotal,about 2,000jobsareexpectedtobecreatedin ProfessionalServicesoverthenext10years.
SectorBreakdown:ProfessionalServices
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Low Local Job Growth, Historical: Very High Local Job Growth, Forecast: Very High US Job Growth, Forecast: High Local Competitiveness Trend: Advancing

TotalJobs NAICS Description 54 5416 5417 5415 5413 5418 5419 5414 5412 5411 Professional,Scientific,andTechnicalServices Management,Scientific,andTechnicalConsultingSer ScientificResearchandDevelopmentServices ComputerSystemsDesignandRelatedServices Architectural,Engineering,andRelatedServices Advertising,PublicRelations,andRelatedServices OtherProfessional,Scientific,andTechnicalServices SpecializedDesignServices Accounting,TaxPreparation,Bookkeeping,andPayro LegalServices 2004 3,370 208 28 203 1,189 155 500 94 580 412 2009 4,345 703 36 520 1,284 84 729 40 575 374 2019 6,467 1,413 61 843 1,932 115 969 52 672 409

AnnualizedGrowth '04'09 5.2% 27.6% 5.2% 20.7% 1.5% 11.5% 7.8% 15.7% 0.2% 1.9% '09'19 4.1% 7.2% 5.4% 4.9% 4.2% 3.2% 2.9% 2.7% 1.6% 0.9%

NetNewJobs '04'09 975 495 8 317 95 (71) 229 (54) (5) (38) '09'19 2,122 710 25 323 648 31 240 12 97 35

Source:EMSICompl eteEmpl oyment,2Q2010


21

SECTORANALYSIS

AdministrativeServices TheAdministrativeServicessectoriscomprised ofthebackofficeandadministrativejobsthat keepbuildingsoperational.Temporary employmentservicesarealsoincludedinthis sector. Thissectorexperiencednegativejobgrowth from20042009,however,itisforecasttogrow 3.3%peryearoverthenext10years,faster thanthe2%forecastfortheU.S. Employmentserviceswillcreatenearly1,000 newjobsoverthenext10years.Inaddition, officeadministrationservicesandservicesto buildingswillcreateanother600jobsduring thistime. Administrativeservicesshowsthelargest reboundofanymajorsector,improvingfrom 2.4%annualgrowthduringthe2004to2009, timeperiod,toshowinganincreaseto3.3% annualgrowthfrom2009to2019.
SectorBreakdown:AdministrativeServices
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Low Local Job Growth, Historical: Negative Local Job Growth, Forecast: Very High US Job Growth, Forecast: High Local Competitiveness Trend: Advancing

TotalJobs NAICS Description 56 5622 5613 5612 5611 5617 5621 5614 5619 5629 5615 5616 AdministrativeandSupportandWasteManagementan WasteTreatmentandDisposal EmploymentServices FacilitiesSupportServices OfficeAdministrativeServices ServicestoBuildingsandDwellings WasteCollection BusinessSupportServices OtherSupportServices RemediationandOtherWasteManagementServices TravelArrangementandReservationServices InvestigationandSecurityServices 2004 4,466 57 1,173 89 206 1,495 23 280 164 33 26 920 2009 3,952 63 1,072 119 229 1,630 16 200 89 29 20 485 2019 5,486 124 1,985 191 338 2,117 20 243 101 30 15 322

AnnualizedGrowth '04'09 2.4% 2.0% 1.8% 6.0% 2.1% 1.7% 7.0% 6.5% 11.5% 2.6% 5.1% 12.0% '09'19 3.3% 7.0% 6.4% 4.8% 4.0% 2.6% 2.3% 2.0% 1.3% 0.3% 2.8% 4.0%

NetNewJobs '04'09 (514) 6 (101) 30 23 135 (7) (80) (75) (4) (6) (435) '09'19 1,534 61 913 72 109 487 4 43 12 1 (5) (163)

Source:EMSICompl eteEmpl oyment,2Q2010

SECTORANALYSIS

22

HealthCare Thehealthcaresectorhasgrownatasteady, moderatepaceinrecentyearswithaslightjob lossprojectedin2009.Growthisforecastedto speedupoverthenext10yearstoanaverage of1.2%peryear. Despitethesepositivetrends,theregions healthcaresectorhasbeenlaggingbehind nationaltrends.Whenbeingexaminedinthe shiftshareanalysis,theregionalshareofjob growthhasbeennegativeanindicationthat localjobgrowthinthissectorhasbeendriven byastrongnationaleconomyandgrowing shareoftheeconomydevotedtohealthcare. Withinthesector,MedicalandDiagnostic Laboratoriesareexpectedtogrowfasterthan anotherothersubsector.
SectorBreakdown:HealthCareServices
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Average Local Job Growth, Historical: Moderate Local Job Growth, Forecast: Moderate US Job Growth, Forecast: High Local Competitiveness Trend: Lagging

TotalJobs NAICS Description 62 6215 6241 6242 6213 6222 6214 6233 6216 6212 6219 6244 6231 6221 6211 6239 6243 6232 HealthCareandSocialAssistance MedicalandDiagnosticLaboratories IndividualandFamilyServices CommunityFoodandHousing,andEmergencyandOth OfficesofOtherHealthPractitioners PsychiatricandSubstanceAbuseHospitals OutpatientCareCenters CommunityCareFacilitiesfortheElderly HomeHealthCareServices OfficesofDentists OtherAmbulatoryHealthCareServices ChildDayCareServices NursingCareFacilities GeneralMedicalandSurgicalHospitals OfficesofPhysicians OtherResidentialCareFacilities VocationalRehabilitationServices ResidentialMentalRetardation,MentalHealthandSu 2004 10,294 13 187 15 341 137 486 129 359 301 129 1,130 1,967 3,137 1,533 103 181 143 2009 10,828 36 341 17 465 196 596 178 375 322 125 1,182 2,013 3,192 1,338 54 168 230 2019 12,181 65 542 25 678 283 831 230 465 374 140 1,322 2,189 3,311 1,333 49 149 194

AnnualizedGrowth '04'09 1.0% 22.6% 12.8% 2.5% 6.4% 7.4% 4.2% 6.7% 0.9% 1.4% 0.6% 0.9% 0.5% 0.3% 2.7% 12.1% 1.5% 10.0% '09'19 1.2% 6.1% 4.7% 3.9% 3.8% 3.7% 3.4% 2.6% 2.2% 1.5% 1.1% 1.1% 0.8% 0.4% 0.0% 1.0% 1.2% 1.7%

NetNewJobs '04'09 534 23 154 2 124 59 110 49 16 21 (4) 52 46 55 (195) (49) (13) 87 '09'19 1,353 29 201 8 213 87 235 52 90 52 15 140 176 119 (5) (5) (19) (36)

Source:EMSICompl eteEmpl oyment,2Q2010


23

SECTORANALYSIS

AccommodationandFoodServices TheAccommodationandFoodServicessector (includinghotels,restaurants,andbars) experiencedpositivegrowthduring2007 followedbyseveralyearsofmoderateto negativegrowthsince.Despitethistrend,the sectorisforecastedtoreturntoincreased growthin2011andremainpositive. Thesectorisunderrepresentedintheregion, withjust0.7jobspercapita(LQ)per1jobper capitaseenattheU.S.level.Whenlookingat locationquotients(LQs)forindividual subsectors,weseethathotelshavejusta0.33 LQ(i.e.Wehavejust30%ofthehotelsthata populationoursizecantypicallysupport)and barshavejusta0.09LQ.Fullservice restaurantshavejusta0.63LQ,whilefastfood restaurantsareoverrepresentedintheregion. Growthhasbeenpositiveinrecentyears,ledby fastfoodrestaurants.Hotelemploymentis expectedtocontinuetodeclinesimilartoU.S. trends.
SectorBreakdown:AccommodationandFoodServices
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019 TotalJobs NAICS Description 72 7212 7224 7223 7222 7213 7221 7211 AccommodationandFoodServices RV(RecreationalVehicle)Parks DrinkingPlaces(AlcoholicBeverages) SpecialFoodServices LimitedServiceEatingPlaces RoomingandBoardingHouses FullServiceRestaurants TravelerAccommodation 2004 5,836 25 23 212 2,912 16 2,141 506 2009 6,288 43 27 263 3,319 13 2,174 450

Key Sector Dynamics Local Relative Concentration: Below Average Local Job Growth, Historical: Moderate Local Job Growth, Forecast: Low US Job Growth, Forecast: Low Local Competitiveness Trend: Flat

AnnualizedGrowth 2019 6,761 55 33 304 3,798 14 2,137 420 '04'09 1.5% 11.5% 3.3% 4.4% 2.7% 4.1% 0.3% 2.3% '09'19 0.7% 2.5% 2.0% 1.5% 1.4% 0.7% 0.2% 0.7%

NetNewJobs '04'09 452 18 4 51 407 (3) 33 (56) '09'19

LQ 2009

473 0.70 12 0.80 6 0.09 41 0.41 479 1.05 1 0.39 (37) 0.63 (30) 0.33

Source:EMSICompleteEmpl oyment,2Q2010


SECTORANALYSIS

24

OtherServices Thissectorcapturesavarietyofmiscellaneous servicestobothhouseholdsandbusinesses: automotiverepair,equipmentrepair,churches, funeralservices,anddrycleaners.Thesector hasexperiencedmoderategrowthinrecent yearsandisexpectedtomaintainthispositive trendinthefuture.Theforecastedgrowthrate of1.1%isonparwiththenationalforecasted rate. Nonprofitsandrepaircompaniesareexpected toexhibitthefastestgrowthoverthenext10 years,followedbyfuneralservicesand automotiverepair.Employmentatchurchesis predictedtogrowatamoderatepace,while employmentatdrycleanersisexpectedtofall.
SectorBreakdown:OtherServices
Pennyrile,KYRegion SortedbyForecasted%Growth,20092019

Key Sector Dynamics Local Relative Concentration: Average Local Job Growth, Historical: Moderate Local Job Growth, Forecast: Moderate US Job Growth, Forecast: Moderate Local Competitiveness Trend: Advancing

TotalJobs NAICS Description 81 8133 8113 8139 8112 8122 8111 8114 8134 8131 8121 8132 8129 8123 OtherServices(exceptPublicAdministration) SocialAdvocacyOrganizations CommercialandIndustrialMachineryRepair Business,Professional,Labor,PoliticalOrganizations Electronic,PrecisionEquipmentRepair DeathCareServices AutomotiveRepairandMaintenance PersonalandHouseholdGoodsRepair CivicandSocialOrganizations ReligiousOrganizations PersonalCareServices GrantmakingandGivingServices OtherPersonalServices DrycleaningandLaundryServices 2004 5,469 30 315 177 84 169 968 256 185 1,494 355 10 196 181 2009 5,901 96 599 157 111 161 943 312 185 1,508 410 10 233 123 2019 6,645 131 771 200 140 196 1,138 374 207 1,645 429 10 204 71

AnnualizedGrowth '04'09 1.5% 26.2% 13.7% 2.4% 5.7% 1.0% 0.5% 4.0% 0.0% 0.2% 2.9% 0.0% 3.5% 7.4% '09'19 1.2% 3.2% 2.6% 2.5% 2.3% 2.0% 1.9% 1.8% 1.1% 0.9% 0.5% 0.0% 1.3% 5.3%

NetNewJobs '04'09 432 66 284 (20) 27 (8) (25) 56 0 14 55 0 37 (58) '09'19 744 35 172 43 29 35 195 62 22 137 19 0 (29) (52)

Source:EMSICompl eteEmpl oyment,2Q2010

SECTORANALYSIS

25

COMPETITIVE ASSET INVENTORY


Toarriveattheselectionoftheregionstargetsectorsforeconomicdevelopment,weevaluateand highlighttheassetsintheregionthatwillsupporttheirdevelopment.Regionalassetsareassessed inthefollowingcategories: PhysicalAssets AirTransportation HighwayTransportation RailTransportation PortAccess IndustrialParks Power Water FinancialAssets StateandLocalFinancialIncentives LocalGrantsandLoanPrograms AvailableVentureCapital LocalBankingSector Business&InnovationAssets TaxBurden Incubators ResearchandDevelopment/Universities WorkforceAssets EducationalAttainment EducationalandTrainingInfrastructure K12Education QualityofLifeAssets CostofLiving PublicSafety Healthcare Recreation/Entertainment

SECTORANALYSIS

26

PhysicalAssets Physicalassetsincludeair,rail,highway,andothertransportationandcargoaccessalongwithutility andrealestateinfrastructurethatarenecessaryforsuccessfuleconomicgrowth.Duetoits abundantnaturalandenergyresourcesandcentrallocation,thePennyrileregionhasmuchstrength inthisarea. AirTransportation ThePennyrileRegionhasasignificantassetinthe AirService:DirectFlightAvailability nearbyNashvilleInternationalAirport(BNA). (Top15Destinations) FifteenairlinesprovideserviceintoNashville: June2010 NashvilleDailyFlights AmericanAirlines,Continental,Delta,Northwest, DuringWeek Southwest,United,andUSAirways.Nashville Destination In/Out provides471weeklydirectflightstotheirtop15 Chicago 62 destinationsalone,with89domesticand40 Baltimore 42 Houston 41 internationaldestinations. Orlando 36 Denver 34 LocatedaboutanhouroutsidethePennyrile Atlanta 31 region,BNAprovidesmorecompetitivecargoand Atlanta 31 passengerflightaccessthansmallerregional Tampa 29 Detroit 27 airportssuchasEvansvilleandPaducah.A Washington,DC 25 comparativeanalysisofadvanceticketstoChicago LasVegas 24 foundthataflightfromNashvillecost FortLauderdale 23 approximately$140,whichiscomparabletotheSt. LosAngeles 22 Philadelphia 22 Louisprices.Thispriceissignificantlylowwhen Raleigh/Durham 22 comparedtoasimilarflightfromEvansvillethat TotalFlights 471 wasfoundtocost$320andaflightfromPaducah #ofDomesticDestinations 89 thatwas$255.Notonlywereflightfaresfoundto #ofInternationalDestinations 40 bemoreexpensiveintheseareasbutalsodirect Source:NashvilleInternationalAirport flightstothewestcoastandmostlargermetros wereunavailablefromthesesmallerairportsaswell. ThepresenceofSouthwestAirlinesregionalhubinNashvilleisamajoreconomicdevelopmentasset forthePennyrileregion.

SECTORANALYSIS

27

HighwayTransportation ThePennyrileregionisconvenientlylocatedinatriangularareaformedbythreeinterstatehighways: I64,I65,andI24.Thesecorridorsofferconnectionstomajorinterstatesrunningtoallcornersof thecountry.Additionally,theproposedI69extensionwilldirectlyconnecttheregiontoIndianapolis throughEvansvilletothenorth,andcreateacorridorthroughMemphistoTexasandMexicointhe south.Theseinterstatescombinedwithintraregionalhighwaysprovideeasyaccesstogreater regionalmarketsandlongdistancedestinations. Over15millionpeopleliveinmetropolitanareaswithin200milesofthePennyrileregion,including themajormetropolitanareasinSt.Louis,Indianapolis,Nashville,Lexington,Memphis,Cincinnati, andKnoxville. SurroundingCities

West:

Distance Population 30mi. 978,895 184mi. 3,173,275

Paducah St.Louis
North:

Evansville Indianapolis
South:

5mi. 720,646 185mi. 2,866,515

Nashville
East:

49mi. 2,712,352

BowlingGreen 46mi. 204,247 Lexington 175mi. 1,255,739 PennyrileRegion 417,903


SECTORANALYSIS

28

RailTransportation SeveralClassIRailroads,definedasthe KentuckysRailNetwork largestrailroadswiththehighest revenueinthecounty,arelocatedin Kentucky.CSXTransportationoperates themajorityofClassIrailroadsin Kentucky,includingtheNorthSouthline runningdirectlythroughthePennyrile region.TheChicagotoNashvilleand DetroittoAtlantamainlinesrunthrough Kentucky.Inaddition,CSXhasa partnershipwiththePaducah&LouisvilleRailroad,whichoperatesaShortLinerailwayrunningEast Westthroughtheregion,connectingPaducahandLouisville.CSXoperatesmajorterminalsin Nashville,Louisville,andEvansville,hasextensivenetworksthroughouttheMidwestandEastCoast, andofferscompetitiveratesforcargoshipment.AnotherintermodalrailwayistheNorfolkSouthern Railroad,whichconnectsLouisvilleandGeorgetownthroughitsCincinnatitoAtlantaandNew Orleansmainlines.CanadianNationalrunsthroughKentuckywithitsChicagotoNewOrleans mainline.ItconnectsCanada,Mexico,andtheUnitedStates,andprovidesaccesstotheportsonthe Atlantic,Pacific,andtheGulfofMexico. ThePaducahandLouisvilleRailway ThePaducahandLouisvilleRailway(PAL),althoughonly265miles,runsthroughLouisville, Madisonville,Paducah,andPrinceton.ItconnectswithClassIrailroadsinthevariouscities: CPRailSystem,CSX,andNorfolkSoutherninLouisville;CSXinMadisonville;andBurlington NorthernSantaFeandCanadianNationalinPaducah.Themaponthefollowingpageshows theextentofitsreachandthejunctionswhereitconnectstootherrailsystems.ThePAL operatesneartheOhioandTennesseeRivers,whichprovidesaccesstotheLouisville JeffersonRiverportandthePaducahMcCrackenCountyRiverport.Itscargoconsistsof 73.5%coal,12.5%chemical,6%minerals,and8%other.

SECTORANALYSIS

29

PaducahLouisvilleRailway


http://www.palrr.com/generalinfo/Printer_P&L_map.pdf

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PortAccess ThePennyrileregionbenefitsfrom immediateproximitytonumerous riverportsontheOhioRiver,providing shippingaccesstodestinations throughoutthecountryincludingSt. Louis,Minneapolis,Chicago,Pittsburgh, Memphis,andNewOrleans.Themajor KentuckyriverterminalsofPaducah, Owensboro,andLouisvilleconducta significantamountoftradewithLatin America,andalthoughportfacilitieslikelyrequireupgradingtomeetexpandeddemandinthe future,thesecloseoutletsoffersignificantLatinAmericanandworldtradeassetstothePennyrile region.Thetransportedcargoislargelymadeupofpetroleumproducts(32%),coal(24%),crude materials,suchaslumber,gravel,andmetals,andgrainproducts.Onthenationallevel,inland waterwaystransport20%ofAmericascoaland60%ofgrainexports. In2005,themajorcommodityshippedfromKentuckytoTexaswaslimestone,andfromTexasto Kentuckywaspetroleumcoke.TexasutilizestheGulfIntracoastalWaterway,whichconnectsports alongtheGulfofMexicototheinlandports:Memphis,St.Louis,Chicago,St.Paul,Cincinnati,and Pittsburgh.ThemaincommodityshippedtoKentuckyfromMississippiispetroleum,andfrom KentuckytoMississippiareaggregates.MississippihasthreeportsalongtheGulfofMexico.By usingtheTennesseeTombigbeeWaterway,whichconnectstheTennesseeRivertotheBlack WarriorTombigbeeriversystem,cargocanbeshippeddirectlyfromtheGulfofMexicototheOhio RiverBasin.In2008,thestateswiththehighestimportsfromKentucky,bybarge,wereLouisiana (aggregates),Tennessee(coal),Ohio(coal),andAlabama(coal,andWestVirginia(aggregates)).The stateswiththehighestexportstoKentuckywereLouisiana(petroleum),WestVirginia(coal),Ohio (coal),Indiana(aggregates),andIllinois(coal).ThesetransportsrelyonthewaterwaysoftheOhio River,TennesseeRiver,CumberlandRiver,andtheGreenRiver.ConnectingtotheLowerMississippi River,cargocanbeimportedandexportedfromforeigncountries. ACloserLookatPaducahsPortEconomy ThePaducahMcCrackenCountyRiverportislocatedinPaducah,betweenmiles1.3and2.1 ontheTennesseeRiver,aswellasanintersectionoftheOhioRiver.Italsoservesasa connectionpointtohighwaysUS60,US62,andI24;andiseasilyaccessibleto65%ofthe U.S.populationwithinonedaywithgroundtransportationFurthermore,theRiverport transferscargothroughthePALRailway,whichconnectstomoreextensive,ClassIrailroads. Previously,therehasbeenalackofavailablepropertyforpotentialtenantsattheport.

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However,anewopportunityforexpansionwaspresentedwhenPaducahMcCrackenCounty obtainedRiverportWesta242acreport. Thisriverporthandlestransportationlogisticsandstorageonavarietyofcargoatits48acres foroperationsandstorage.U.S.inlandwaterwaysmainlytransportbulkycargo,suchascoal andpetroleumproducts,whichin2005madeupmorethanhalfofthecargovolume,food, andchemicalproducts.In2003,coalmadeup38%andcrudematerialsmadeup34%ofthe cargoalongtheTennesseeRiver.Othercommoditiesincludefoodproductsandchemicals. Althoughcoalmakesupalargepercentageofthecargo,thePALrailway,whichisthefreight connectiontothePaducahMcCrackenRiverportforKentucky,onlyliststhefollowing riverports:GrandRiversTerminal,JeffersonRiverport,andCalvertCityTerminalasrailto wateroptionsforcoalcargo. SeveralheadquartersandcompanyfacilitiesarelocatedinPaducah.IngramBarge,whichis headquarteredinPaducah,servicesMississippi,Ohio,Tennessee,andtheCumberlandRiver areas.CrounseCorporationisanotherbargecompanyheadquarteredinPaducah.Itstop commodityiscoal,whichmakesup90%ofitscargo.JamesMarineandMarquette Transportationareadditionalbargecompaniesintheareaaswell.Intotal,23barge companieshaveeitheroperatingorcorporateheadquartersstationedinPaducah.In additiontothis,AEP,thesecondlargestcarriertransportcompany,planstobasetheir operatingheadquartersinPaducahby2012. IndustrialParks Theregionhasnumerousindustrialparksshovelreadyfordevelopment.TheKentuckyCabinetfor EconomicDevelopmentprovidesanindustrialsitesearchabledatabase,whichyields209sitesacross thestate,23ofwhicharelocatedinthePennyrileregion.Sixteenoftheseregionalsiteshaveover 100acresofland;thelargestbeingtheInterstate24IndustrialparkinHopkinsvillewithover2,000 acres.Additionally,thestateprovidesanincentivefordevelopmentofindustrialsitesthroughthe RegionalBusinessParkProgram,whichallowscountiestoformregionalagreementstodevelop competitivetractsofland.Althoughtheregionhasplentifulsitesforcorporateexpansions,thestate andlocalwebsitescouldbebetterdesignedtohighlighttheseassets.

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AvailableRegionalIndustrialSites,2010
Largest SiteName Interstate24IndustrialPark(047012) GuthrieKY&TNStatelineSite(219013) PennyrileWestPark(143003) GuthrieSite219012 Interstate24BusinessPark(221003) HopkinsvilleCommerceIndustrialPark#2(047026) OakGroveSite(047018) CommerceIndustrialPark(047005) LyonCountyRiverport(143002) SouthPark(047010) GrandRiversSite(139005) PrincetonIndustrialPark(033001) GreaterMadisonvilleIndustrialPark(107002) EddyvilleIndustrialPark(143001) IndustrialParkNorth(055005) MuhlenbergCountyIndustrialPark(177001) IslandFordIndustrialPark(107005) HopkinsvilleAgPark(047013) CrittendenIndustrialParkSite081001 WestHopkinsIndustrialPark(107001) MarionCrittendenCountyIndustrialCenter(055001) HopkinsvilleIndustrialPark(047001) Source:KentuckyCabinetforEconomicDevelopment City Hopkinsville Guthrie Eddyville Guthrie Cadiz Hopkinsville OakGrove Hopkinsville Eddyville Hopkinsville GrandRivers Princeton Madisonville Eddyville Marion Greenville Madisonville Hopkinsville Crittenden DawsonSprings Marion Hopkinsville Acres 2,098 1,062 805 800 592 507 400 316 274 175 157 146 138 114 106 105 65 49 40 38 29 28 15 Tract 2,098 849 805 800 472 383 400 86 274 175 103 103 49 65 70 105 65 49 40 38 29 14 15 Rail? Possible No No Possible No Possible No No No No No Possible No Possible Possible No No Possible No Possible Possible No No HwyDist AirDist (mi.) Adj 1.5 0.5 8 0.7 4.2 Adj 4.2 0.5 2.6 2 Adj 2 3.2 0.5 21.4 3.8 0.5 3.2 0.6 1.5 18.6 1.6 (mi.) 55 65 35 65 93 71 55 71 51 41 60 118 56 51 35 67 32 51 72 21 69 63 75

HopkinsCountyNorthIndustrialRecreationalPark(107009) Hanson

Power ThePennyrileregionisservedbyseveralelectric providers(seetabletotheright),withTennessee ValleyAuthority(TVA)servingastheprimary wholesalerofelectricity.Blessedwithabundant waterresourcesthatpowerahydroelectric generationfacilityandacoalplantnear Hopkinsville,theTVAprovideselectricityatsome ofthelowestratesinthenation;onlytobe surpassedregionallybyratesinSt.Louis.A2008 study,commissionedbythegovernorof Kentucky,foundtheelectricratestobethe8th lowestinthenation.Thesamestudyfoundthe industrialelectricpowerratestobethe3rd lowestamongstateseastoftheMississippi.

PowerProvider KentuckyUtilities Company PennyrileRuralElectric Cooperative PrincetonElectricPlant Board HopkinsvilleElectric System Kenergy GreenRiverElectric JacksonPurchaseEnergy TennesseeValley Authority(Wholesale)

CountiesServed Caldwell,Christian, Crittenden,Hopkins, Lyon,Muhlenberg Caldwell,Christian, Muhlenberg,Todd, Trigg Caldwell Christian Crittenden,Hopkins, Lyon Hopkins Livingston Caldwell,Christian, Lyon,Muhlenberg, Todd,Trigg

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EnergyPriceComparisons
March2010
NaturalGas State Kentucky Tennessee Illinois Indiana Ohio Missouri Michigan US $6.19 $6.00 $6.01 $5.84 $7.65 $5.90 $8.01 $6.36 $8.58 $9.88 $9.29 $8.61 $10.20 $10.14 $11.14 $10.92 $8.19 $9.61 $10.36 $8.53 $10.38 $7.24 $11.55 $10.86 Electricity Industrial $4.85 $7.23 $7.39 $5.60 $5.79 $4.66 $6.80 $6.53 $7.68 $10.08 $7.99 $7.97 $9.80 $6.23 $9.60 $9.83

CityGate Residential Residential Commercial

Note:Naturalgaspricesareinthousandsccft;Electricitypricesincents/kwh;prices areaveragesacrossallcustomersineachcategory. Source:EnergyInformationAgency

PowerisdeliveredtothePennyrileRegionbyacombinationofinvestorownedutilities,municipal electricsystemsandruralelectriccooperatives,includingKentuckyUtilitiesCompany,Kenergy,and PennyrileRuralElectricCooperative.AllutilitiesinthePennyrileRegionprovideelectricityat relativelylowratesandhighreliability. Althoughnotaslowaselectricrates,naturalgasratesinthestatearecompetitivefortheregionand lessexpensivethanthenationalaverage.Ingeneral,theregioncanboastofreliablepowersupply andratesforindustrialandresidentialusers.Additionally,thestateprovidesincentivesforthe utilizationofKentuckycoal,fuelsconsumedinmanufacturingprocesses,andtheutilizationof alternativeenergysources. Water Kentuckyhassignificantwaterresourcesprovidedbyextensiveriversystemsandabundantrainfall. Waterandwastewatercapacityarecriticalcomponentsformanypotentialindustrytargets,andthe Pennyrileregionappearstohaveplentifulcapacitytosupplynecessaryinfrastructure.Theregion alreadyhasastepupintheformationofthePennyrileWaterManagementCouncilandtheregional ManagementPlanwithmillionsofdollarscommittedtonumerouswaterandwastewaterprojects throughouttheregionalcounties.Alongwithapowerinfrastructureandwithcurrentcapacityand managementstructuresinplace,thePennyrileregionhasacompetitiveadvantageinthisarea.

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FinancialAssets Thissectionreviewstheregionsfinancialassetsforsupportingcurrentandfuturebusinesses,which includestateandlocalincentiveavailability,theavailabilityoffundingthroughventurecapital,and thelocalbankingsector. StateandLocalFinancialIncentives TheStateofKentuckyandlocalauthoritiesoffera KeyStateandLocalIncentivePrograms KentuckyBusinessInvestmentProgram widevarietyoffinancialincentivestocompanies KentuckyEnvironmetalStewardshipAct relocating,expanding,orinvestinginKentucky. KentuckyInvestmentFundAct Incentivesincludecorporatetaxcreditsand KentuckyEnterpriseInitiativeAct abatementsforinvestmentsinactivitiesand KentuckyTourismDevelopmentAct ResearchFaclitiesStateIncomeTaxCredit facilitiesrelatedtospecificindustriessuchas KentuckyIndustrialRevitalizationAct manufacturing,tourism,agribusiness,and IncentivesforEnergyIndependenceAct researchanddevelopment.Creditsare RegionalBusinessParkProgram additionallyavailableforreinvestmentin PADDRevolvingLoanFundProgram deterioratingfacilitiesandland,aswellasforthe trainingofworkers.Anotherincentiveincludessales,whichusestaxexemptionsforapproved purchases(suchasnewmanufacturingequipment).TaxIncrementalFinancingoptionsarealso availablefordevelopmentprojectsaswellasIndustrialRevenueBonds. AlthoughtherearenumerousincentivesavailableinthePennyrileregion,stateandlocalauthorities havenotdevelopedaneffectivemethodologyfordisseminatinginformationregardingthese incentivesandpromotingtheiruse.TheKentuckyCabinetforEconomicDevelopmentswebsite presentsavailableincentivesinadisorganizedmanner;thereissignificantoverlapbetweenmany incentives,creatingconfusionastotheirspecificpurpose,qualificationsforuse,andbenefits. Additionally,thestateappearstolackahighlevelclosingfund,similartothoseavailableinother statesthroughouttheMidwest.ThisshortcominghindersKentuckyfromaggressivelypursuing premiertargets. Acompletelistofstateandlocalincentivesandgrantandloanprogramscanbefoundinthereports Appendix.

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LocalGrantsandLoanPrograms Thestateandlocalauthoritiesofferavarietyofloanandgrantprogramsthatencourageeconomic development,infrastructuredevelopment,smallbusinessgrowth,jobtraining,aswellasfocusingon assistancewithinvestmentinqualifyingprogramsandindustries..TheKentuckyDirectLoan Programofferslowrateloanstocompaniesandindividualsinvestinginapprovedfixedassets,and thePADDRevolvingLoanFundProgramofferssimilarloansatafixed4%ratetoassistwith investmentsalreadyreceivingprivatefunding.DevelopmentgrantsareavailablethroughtheDelta RegionalAuthorityandEconomicDevelopmentAdministrationbutadministeredlocallyinthe Pennyrileregion.AdditionalgrantsareavailablethroughtheLocalGovernmentEconomic DevelopmentFundtoassistinawidevarietyofdevelopmentprogramsbutareonlyavailablein eligiblecoalproducingcounties. AvailableVentureCapital Althoughventurecapitalinvestmenthasbeenlowerin VentureCapitalFunding IntoKentuckyCompanies(inmillions) Kentuckythepasttwoyears,nationalinvestmentrates havedroppedaswell.Additionally,VCinvestmenthasnot Investment($millions) Year followedaconsistentpatterninKentucky,withinvestment 1999 $28 reachingahighof$50millionin2000andalowof$1 2000 $50 millionin2003.TheFortWashingtonstudycommissioned 2001 $12 2002 $6 in2006foundthatbetween2001and2005,Kentucky 2003 $1 ranked32ndinthenationforventurecapitalinvestment, 2004 $24 cominginlowerthanallotherregionalstatesexceptSouth 2005 $16 Carolina.Duringthisperiod51%ofinvestmentwentto 2006 $7 Biotechnologydeals,withthenextlargestshareat29for 2007 $18 2008 $7 consumerproducts. 2009 $4 Source:PriceWaterhouseCooper/ Nonetheless,thestatehasadditionalresourcestoassist NVCAMoneyTreeSurvey companieswithraisingfundingforproductdevelopment. Programsdesignedtosupporthightechbusinessgrowthinclude:
HighTechInvestment/ConstructionPools.TheDepartmentofCommercializationandInnovation(DCI),in theCabinetforEconomicDevelopment,administerstwopoolsoffunds: TheHighTechConstructionPoolisusedforprojectswithspecialemphasisonthecreationof hightechjobsandknowledgebasedcompanies.Thecommissionerrecommendsfundingof companiestoKEDFAforapproval;and TheHighTechInvestmentPoolisusedtobuildandpromotetechnologydrivenindustriesand researchintensiveindustrieswiththegoalofcreatingclustersofinnovationdrivenindustriesin

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Kentucky.Thecommissionerrecommendsfundstobeusedtosupportloansandgrants,or secureanequityorrelatedpositiontoKEDFAforapproval. CommonwealthSeedCapital.TheCommonwealthSeedCapitalLLC(CSC)investsstatefundstoprovide earlystageseedfundingtofacilitatethecommercializationofinnovativeideasandtechnologies developedinKentucky. KentuckyNewEnergyVenturesFund.TheKentuckyNewEnergyVenturesFund(KNEV)providesseed stagecapitaltosupportthedevelopmentandcommercializationofalternativefuelandrenewableenergy products,processes,andservicesinKentucky.TheKNEVfundmakesgrantsof$30,000andinvestments rangingfrom$250,000toover$750,000.QualifiedcompaniesmustbeKentuckybasedandfundsareto beusedforbusinessdevelopmentactivities. InnovationandCommercializationCenterProgram.TheKentuckyInnovationandCommercialization CenterProgramisastatewidenetworkofregionalInnovationandCommercializationCenters(ICCs)and localInnovationCenters(ICs)thattogetherprovideacohesiveresourceofferingbusinessbuildingservices andassistanceinobtainingfunding.ThecabinetmanagesthestatesnetworkofsixregionalICCsand sevenlocalICs.Seewww.startupkentucky.comtolocatetheofficesservingeachregion. KentuckyCommercializationFundProgram.TheFoundationalsoadministerstheKentucky CommercializationFundprogram,whichprovidesseedfundstoKentuckyuniversitysfacultymembersfor commercializingproducts,processes,orservicesdevelopedthroughresearchanddevelopmentwork undertakenataKentuckyuniversity,withawardsnotexceeding$75,000eachyear(uptoamaximumof $150,000overtwoyears).

AcompletelistoffundingprogramscanbefoundintheAppendix. LocalBankingSector PennyrileBankingSector ThePennyrileregioniswellservedbynumerous SortedbySizeofDeposits communityandregionalbanks.Intotal,14banksare HeritageBank FirstSouthernNational presentthroughoutthePennyrile,KYregion.Thetop3 PlantersBank,Inc. banksbydepositsare:HeritageBank,FirstSouthern FirstKentuckyBank,Inc. National,andPlantersBank.Allofthesebanksplayan HancockBank&TrustCompany importantroleintheeconomy,includingproviding UnitedSouthernBank criticalloanstostartupcompaniesthatcurrentlycannot FarmersBankandTrustCompany FirstUnitedBankandTrustCompany findventureorangelinvestment.Havingcommunity CommonwealthCommunityBank,Inc. focusedbanksthatunderstandandknowlocalbusiness FirstNationalBankofMuhlenbergCounty,Kentucky leadershipandentrepreneurshelpstoremedyconcerns ElktonBank&TrustCompany ofalackofstartupcapital. BankofCadizandTrustCompany FredoniaValleyBank
ThePeoplesBank

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Business&InnovationAssets BusinessassetsarecharacteristicsofthePennyrileregionthatrelatetothetaxburdenonindustry andtheavailabilityofstartupanduniversitybasedservices. TaxBurden Kentuckyenjoysarelativelycompetitiveoverallstatetaxclimate.Inanexaminationoffiveareasof taxationthatimpactbusiness:corporatetaxes,individualincometaxes,salestax,unemployment insurance,andpropertytaxes.KentuckycameinaboveOhio,Illinois,andTennesseebutslightly belowMissouri,Michigan,andIndiana.Similarlythecombinedstateandlocaltaxburdenplacesthe Pennyrileregionrightinthemiddleofregionalcompetitors,slightlyaboveSt.LouisandNashville, butbelowtheUSaverageandsignificantlybelowOhio.
StateandLocalTaxBurden
CombinedStateandLocalTaxBurden,19992008 StateandLocalTaxBurden State KY TN IL IN OH MO MI US 1999 2000 2001 2002 2003 2004 2005 2006 2007 9.8% 9.8% 9.6% 9.7% 7.9% 7.8% 7.8% 7.9% 9.0% 8.9% 8.8% 9.1% 8.9% 8.9% 8.8% 8.8% 9.4% 9.2% 9.2% 9.2% 9.4% 9.4% 9.3% 9.3% 9.6% 9.5% 9.5% 9.5% 9.9% 8.2% 9.2% 9.1% 9.2% 9.6% 9.7% 9.7% 8.2% 9.3% 9.1% 9.4% 9.6% 9.8% 9.8% 8.3% 9.3% 9.2% 9.5% 9.7% 9.8% 9.7% 8.5% 9.5% 9.4% 9.5% 9.6% 9.9% 9.6% 8.4% 9.4% 9.5% 9.4% 9.5% 9.9% 2008 9.4% 8.3% 9.3% 9.4% 9.2% 9.4% 9.7%

9.8% 9.9% 9.9% 10.1% 10.2% 10.3% 10.3% 10.5% 10.5% 10.4%

Source:TaxFoundation

StateBusinessTaxClimateIndex,2008

HigherScoresIndicateaMoreFavorableTaxSystem
State KY TN IL IN OH MO MI US BusinessTaxIndex 5.2 5.1 5.0 5.7 4.0 5.4 5.4 5.0

Source:TaxFoundation *Note:TheIndexcomparesthestatesinfiveareasoftaxationthatimpact businesscorporatetaxes,Individualincometaxes,salestaxes, unemploymentinsurancetaxes,andtaxesonproperty,includingresidential andcommercialproperty.

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Incubators Entrepreneursareservedbytwosmallbusinesscentersintheregion:theSmallBusiness DevelopmentCenter(SBDC)andtheMinorityEconomicDevelopmentInitiativeofWesternKentucky, Inc.(MEDI).TheSBDCserveslocalbusinessesseekingassistancewiththeirbusinessplansorfinding funding.TheSBDCislocatedintheHopkinsvilleChamberofCommerce.TheSBDChassubscriptions toseveraldatasourcesthatcanassistinfinancialanalysis,includingindustrydatafromFirst Research.Trainingsessionsareprovidedandbusinessesaredirectedtolocalbankswhentheyhave completedtheirproperplans.TheSBDCisoperatedbyMurrayStateUniversity,whichhasother SBDCsinOwensboroandMurray. MEDIisanassistancecenterthatfocusesonsmallandminoritybusinesses.Accordingtotheir website,thecenterprovides:BusinessPlanDevelopment,FinancialPlanPackaging(BusinessLoans), TechnicalAssistance,Mentoring,ResourcesandReferral,FeasibilityAssessments,Training, Education,ProcurementandCertificationAssistance,andmore.SmallandMinorityowned businessesarelistedintheMoversandShakersMinorityDirectoryandhaveopportunitiesto networktogetheratsocialfunctionsandbusinessseminars. TheRegionalBusinessandInnovationCenterisinneighboringMurray,whichprovidesassistanceto entrepreneursandtechnologydevelopersintheregion.Thisincubatorworkstoformapartnership betweenstategovernment,localbusiness,andMurrayStateUniversity.Thisprogramalsoservesas thestateInnovation&CommercializationCenter(ICC),administeredthroughtheKentuckyScience andTechnologyCorporation.TheregionalsobenefitsfromthenearbyPaducahInnovationand SmallBusinessCenter,whichservesasaonestopresourceforsmallbusinessdevelopmentneeds. Thisincludesassistancewithlocatingcapitalinvestors. ResearchandDevelopmentatUniversities MurrayStatesBreathittVeterinaryClinic(BVC)inHopkinsvilleprovidesdiagnosticlaboratoryservice toabroadeffortpromotingtheefficientproductionofsafeanimalproductsinKentuckyandserves asavitalresearchandtrainingcenter.About30peopleareemployedatBreathitt.TheUniversityof KentuckysCollegeofAgricultureoperatesCooperativeExtensionServiceofficesineverycountyin thestate.Thesecentershaveseveralstaffonsitethatprovideavarietyofeconomicandcommunity assistance,includingyouthdevelopment,agriculturaltechnicalassistance,andfamilyservices. Beyondtechnicalassistance,MurrayStateUniversityprovidestheregionwithgraduatelevel programsinawidevarietyofareas,includingagriculture,environmentalscience,biology,business, andchemistry.TheirOfficeofSponsoredProgramshelpsdevelopresearchprograms,assistsin technologytransfer,andworkswiththeOfficeofDevelopmenttocreateprojectsthathavea regionalimpactandcanpositivelyaffectWesternKentucky.
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WorkforceAssets Thissectionhighlightssomeoftheregionalconditionsoftheworkforceandtheeducational/training institutions.Severalsubsequentreportswillexaminetheseandotherworkforceissuesinmuch greaterdetail. EducationalAttainment EducationalAttainment,2008 Theeducationalattainmentoftheregions PercentwithaDegreeorHigher adultpopulationisbelowtheU.S.average. County HighSchool Bachelor's Graduate Ofthecountiesforwhichdataisavailable ChristianCounty 82.2 14.2 4.5 fromtheU.S.Census,onlyMontgomery HopkinsCounty 76.8 13.4 5.8 Countyhasahighschooldegree MuhlenbergCounty 73.6 7.7 3.5 MontgomeryCounty 90.8 22.8 7.1 attainmentratehigherthantheU.S.All UnitedStates 84.5 27.4 10.1 countieshavebelowaverageattainment Source:AmericanCommunitySurvey ratesforhighereducation. EducationalandTrainingInfrastructure ThePennyrileregioncontainsanarrayofeducationalofferingswithinalimitednumberof institutions.Containedintheregionaretwocommunitycolleges,HopkinsvilleandMadisonville, bothwithdiversecurriculumandprogrammingthathaveasubstantialcapacitytoservetheadult andnontraditionalstudentintheregion.Thecommunitycollegesinteractwithlocalindustryto helpwithstudentoutreachandprogramdevelopment,overallprovidingsupportsforskill developmentintheprioritycompetencyareas.Additionallythereseemstobesignificant involvementbetweenthetwocommunitycollegesandeachoftheirrespectivecommunities. Togetabetterpictureofhowtheeducationalsystemworkswithintheareabeyondtheboundaryof thePennyrileregion,oureducationalinfrastructurereviewobservedregionalinstitutionsin Tennesseejustacrossthestateline,andinKentuckyjustbeyondthedevelopmentdistrict.Included inthisexpandedareaaretwocareerandtechnicalcommunitycolleges(DaymarInstituteandMiller Motte,bothinTN)andtwo4yearinstitutions(AustinPeayStateUniversityinTNandMurrayState UniversityinKY).ThroughthisscanitwasrevealedthattheTennesseeinstitutionshaveincreased capabilitieswithintheirpoliciestoworkwiththenontraditionalandadultstudentaswellasa myriadofprogrammingthatprovideatalentpipelineintothetargetedindustries.Moreover, MurrayStateUniversity,theonlyinstate4yearinstitutionexamined,hasalargeswathof programmingandcurriculum,includingareasfocusedonentrepreneurship,butdoesnothave significantpoliciesinplacethataretargetedtowardthenontraditionalstudent.
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WhileweseemoderatecapacitywithinMurrayStateUniversityonentrepreneurialcurriculum,the remainingeducationalinstitutionsdonotexhibitsimilarprogramming.Thereisanentrepreneurship focusprevalentthroughtheeasternandsouthernregionsoftheKentucky.WhilethePennyrile regionmaylacktheseeducationalaspects,therearemodelswithinthestatefortheregionto emulate. K12Education Foreachstudentenrolledinapublicschool,Kentucky PublicEducationExpenditures PerStudent,2008 spendsapproximately$9,900peryear.Thisamount exceedsTennesseeby$2,000,Indianaby$1,000,and State ExpendituresPerStudent Kentucky $9,883 Missouriby$400.However,Kentuckysexpendituresare Tennessee $7,820 aboutonparwithIllinois,Ohio,andMichigan,aswellas Illinois $10,353 slightlybelowtheU.S.averageof$10,300. Indiana $8,867 Ohio $10,340 Onaverage,Kentuckystudentsdonotperformwellon Missouri $9,532 Michigan $10,075 theAmericanCollegeTest(ACT),performingunderall U.S. $10,297 regionalpeersaswellastheU.S.average.In2009,the Source:U.S.DepartmentofEducation averagecompositescoreforKentuckystudentswas19.4 comparedtoa21.1averagenationally.Thisnumberis lowered,however,bythehighnumberofstudentstakingthetestinKentucky,100%.Ingeneral,as theproportionofstudentstakingacollegeentranceexamrise,averagetestscoresdecline.Asa result,Kentuckysrelativelylowscorecanbemisleading,especiallyconsideringthatthisaverageis comparabletoMichigan;theonlyotherregionalstatetohave100%ofstudentstesting.
ACTScores
AverageStatewideACTScores,2009 State Kentucky Tennessee Illinois Indiana Ohio Missouri Michigan U.S. Composite 19.4 20.6 20.8 22.2 21.7 21.6 19.6 21.1 English Math Reading Science Student%* 18.8 19.0 20.7 19.8 20.5 20.7 21.6 22.4 21.1 21.4 21.5 20.9 18.6 19.6 20.6 21.0 19.8 21.0 20.8 22.6 22.2 22.1 19.6 21.4 19.7 20.4 20.7 21.6 21.7 21.5 20.1 20.9 100% 92% 97% 24% 64% 67% 100% 45%

*PercentofstudentstakingtheACTtest Source:ACT

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WhenexaminingACTtestscoresbycountywithintheregion,somevariationsinperformance appear.HopkinsCountyhasthehighestcompositetestscores,followedbyTodd,Muhlenberg, Crittenden,Caldwell,andLyonallofwhichhavescores20orhigher.Someofthisvariationcanbe attributedtohowmanygraduatestaketheACTtest.Trigghasthehighestpercentageoftesttakers (74%),whichwillpulldowntheaverage.LyonCountyhasoneofthehighestpercentagesoftest takers,aswellasoneofthehighestcompositescores.Thecountyalsohadagraduationrateof 100%in2008.


ACTTestScoresbyCounty,2008
Students %Taking SchoolDistrict Caldwell Christian Crittenden Hopkins Livingston Lyon Muhlenberg Todd Trigg English Math Reading Science Composite 19.5 18.9 19.4 21.1 17.6 20.2 20.3 20.1 18.4 19.9 19.2 20.0 19.7 17.8 18.9 20.1 20.6 18.5 20.9 20.3 21.6 22.0 19.2 20.9 21.2 21.1 19.9 20.9 20.0 20.9 20.8 18.6 20.2 20.5 20.5 19.1 20.4 19.7 20.6 21.0 18.4 20.2 20.6 20.7 19.1 Tested 82 283 54 309 53 54 176 93 99 Test 61% 57% 61% 67% 56% 71% 50% 66% 74% Graduates 135 496 88 459 94 76 354 140 134 Graduation Rate 88% 82% 83% 87% 90% 100% 88% 92% 86%

Source:KentuckyOfficeofEducationAccountability

RighttoWork Kentuckyisnotarighttoworkstate,whichisa strongflagagainstanyfuturemanufacturing projectthatwouldconsiderrelocatingtothe Pennyrileregion.Mostmanufacturingjobshave beencreatedinrighttoworkstatesinthe southernU.S.(Texas,Georgia,theCarolinas). Righttoworkstatutespreventtheformationof forcedunions,inwhichallemployeesmustbea memberinordertobeemployedatthatfacility. UnionsgottheirstartinthePennyrileregionduetothecoalindustry,thoughcoalhassincebeende unionized.Unionsarenowpresentintheregioninbothmanufacturinganddistributionindustries, includingUnitedAutoWorkers,UnitedSteelWorkers,andUnitedGarmentWorkers.

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QualityofLifeAssets Thissectionexaminesthecostofliving,publicsafety,andtheavailabilityofhealthcareand entertainmentintheregion. CostofLiving CostofLivingIndex KentuckyandthePennyrileregiongenerallyenjoyavery lowcostoflivingincomparisontoU.S.averagesandmost COLI City Hopkinsville,KY 77 majorcities,butaregenerallyonparwithotherregional Clarksville,TN 78 cities.Hopkinsville,Clarksville,andLouisvilleallhave Nashville,TN 89 aboutthesamecostofliving:around78comparedtoa Louisville,KY 78 nationalbaselevelof100.WhileEvansville,Paducahand Evansville,IN 71 Memphisareslightlylessexpensive,Nashville,andSt. Paducah,KY 75 Memphis,TN 72 Louisareslightlymore;howeverthecostisstillrelatively St.Louis,MO 80 lowwhencomparedtonationallevels. US 100 Source:Sperling's TrafficisoflittleconcerninthePennyrileregion.The averagecommutetimeinHopkinsvillerunslessthan20 AverageCommuteTime minutes,whichislowwhencomparedtoaUSaverageof AvgCommuteTime City 27minutes.Amongregionalcities,thoselocatedin Hopkinsville,KY 18.7 Kentuckyhavesomeoftheshortestcommutetimes. Clarksville,TN 26.4 Nashville,TN 25.4 Louisville,KY 22.5 Homepricesintheregiontypicallymirrortheoverallcost Evansville,IN 20.1 oflivingindex.At$95,590,themedianhomepricein Paducah,KY 17.4 HopkinsvilleissignificantlylessthantheU.S.averageprice Memphis,TN 24.6 of$202,300.MedianhomepricesthroughoutKentucky St.Louis,MO 26.4 US 27.4 andotherregionalcitiesareabouthalfthenational Source:Sperling's average,withtheexceptionofNashville. MedianHomePrices Thecostoflivingconditions,combinedwiththenatural MedianHomePrices City beautyofKentuckyandtherecreationalopportunities, Hopkinsville,KY $95,590 continuetomakethePennyrileregionahighlyattractive Clarksville,TN $114,370 areaforpotentialemployers. Nashville,TN $158,310 Louisville,KY $108,470 Evansville,IN $80,160
Paducah,KY Memphis,TN St.Louis,MO US Source:Sperling's $80,980 $88,280 $99,940 $202,300

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PublicSafety Violentcrime,asdefinedbytheFBI,includes PropertyCrime murder&nonnegligentmanslaughter,forcible IncidentsofPropertyCrimeper1,000Residents,2008 rape,robbery,andaggravatedassault.In2008,the Incidentsper1,000 City latestyearforwhichthereiscompletedata,there Hopkinsville,KY 52 were5.9incidentsofviolentcrimeinHopkinsville Clarksville,TN 39 per1,000residents,7.9innearbyClarksville,and Nashville,TN 54 only0.6inPaducah.Althoughthesefiguresare Louisville,KY 12 Evansville,IN 4 comparabletotheU.S.averageof4.5per1,000 Paducah,KY 9 residents,thecrimerateinPennyrileisstill Memphis,TN 19 significantlylessthaninthelargermetroareasof St.Louis,MO 21 MemphisandSt.Louis.Comprisingthemajorityof US 32.1 allviolentcrimesthattakeplaceintheregion, Source:FBI aggravatedassaultrepresentsthevastmajorityof ViolentCrime theinfractions. IncidentsofViolentCrimeper1,000Residents,2008 Incidentsper1,000 City Incontrasttoviolentcrime,Hopkinsvilleand Hopkinsville,KY 6 Clarksvillehaveamuchgreaterincidenceof Clarksville,TN 8 propertycrimeper1,000residentsthanother Nashville,TN 14 regionalcitiesexceptNashvilleandtheU.S.on Louisville,KY 7 average.With52.1incidentsper1,000residents, Evansville,IN 47 Paducah,KY 1 HopkinsvilleisonlybelowNashvilleby1.6incidents; Memphis,TN 80 however,thisrateiswellabovetheU.S.averageof St.Louis,MO 85 32.1incidentsper1,000.Thebulkofproperty US 5 crimeinHopkinsvilleconsistsoflarcenytheft. Source:FBI Thisdatahasthepotentialtobemisleadingthroughitscompilationfromlocalreporting methodologiesandduetotheresearchersabilitytomistakenlydistortthedifferencesbetween citiesandcounties.

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Healthcare PhysiciansPerCapita Onapercapitabasis,thePennyrileregionhasa relativelylownumberofphysicianswhencompared Physicianspercapita Location toregionalcities.Thenumberofphysiciansper Hopkinsville,KY 147 Clarksville,TN 147 capitainHopkinsvilleis147;however,thisisonly Nashville,TN 504 slightlybelowtheUSaverageof170.Other Louisville,KY 398 surroundingcitiessuchasSt.Louis,Nashville,and Evansville,IN 304 Evansvillehaveamuchhigherconcentrationof Paducah,KY 309 medicalfacilitiesandserveasregionalhubsfor Memphis,TN 332 St.Louis,MO 553 medicalcare,particularlytertiarycare. US 170 Source:Sperling's Theregionisservedprimarilyby7localhospitals JennieStuartMedicalCenterandTroverClinic Foundationbeingthelargest.Inaddition,several PennyrileHospitalSector establishednursinghomesaredistributedthroughout SortedbyRevenueSize JennieStuartMedicalCenter,Inc. Hopkinsville theregionthatprovidequalitycaretotheelderly TroverClinicFoundationInc Madisonville population. MuhlenbergCommunityHospitalInc Greenville CaldwellCountyHospital,Inc. Princeton CrittendenCountyHospital,Inc. Marion WesternStateHospital Hopkinsville TriggCountyHospital,Inc. Cadiz Recreation/Entertainment Theregionhasahighlevelofrecreationavailabletoitscitizens.TheLandBetweentheLakes offerstremendouswateractivitiesaswellasthousandsofmilesofwaterfront.Numerouscities producefestivalsandsomeareeveninvestinginbikepathstoboostrecreationalcycling. Discussionswithlocalresidents,particularlyyoungprofessionals,pointtogapsinentertainment.Itis apparentthattheregionhasashortageofrestaurantsdueinparttopastalcoholsalesrestrictions. Previousindustryanalysisshowsthattheregioncurrentlyhas3060%ofthehotels,restaurants,and barsthatitcanpotentiallysupport.NearbyNashville,Owensboro,andEvansvilleoffershoppingand entertainmentthatfillthegapsthatthelocalofferingsneglect.

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POTENTIAL TARGET SECTORS


Basedontheabovedataforclustersintheregion,andourscanoftheregionsassets,wehave identifiedthefollowingclustersaspotentialgrowthopportunitiesfortheregion: EstablishedIndustryClustersintheRegion Agribusiness&Food Manufacturing:Automotive,IndustrialMachinery Energy/CleanEnergy HealthCare Logging&Metal/MineralMining Retail&Tourism Transportation&Logistics Clustersthatareunderdevelopedoremergingpresentadifferentkindofopportunityfortheregion: Underdeveloped/EmergingClustersintheRegion BackOffice BiomedicalSupplies&Labs Research Software/InformationTechnology Wewillexamineeachoftheseclustersinmoredetailinasubsequentreport:TargetSelection.This reportwilllookattheglobalforcesaffectingeachcluster,theassetsandstrengthsforthecluster foundintheregion,andthenichesectorswithineachthatmayprovidejobcreationopportunities forthePennyrileregion. Ultimately,notalloftheseclusterswillbeselectedastargetsandadditionaltargetswilllikelybe uncoveredinfutureresearchanddiscussions.

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APPENDIX: AVAILABLE INCENTIVES


StateandLocalFinancialIncentives KentuckyBusinessInvestment(KBI)Program

Eligibility:Anybusinessentityengagedinoneormoreofthefollowingactivities: Manufacturing;Agribusiness;Regionalandnationalheadquarters(regardlessofthe underlyingbusinessactivity);Nonretailserviceortechnologyactivitiesmustbe:designedto serveamultistate,nationalorinternationalmarket;providedtoacustomerbasethat includesmorethan50%nonresidents;andmayInclude,butarenotlimitedto,callcenters, centralizedadministrativeorprocessingcenters,telephoneorinternetsalesorderor processingcenters,distributionorfulfillmentcenters,dataprocessingcenters,researchand developmentfacilitiesandothersimilaractivities. EnhancedIncentiveCounties:Kentuckycountiesaredesignatedenhancedincentive eligiblebymeetingatleastoneofthethreefollowingcriteria:(1)countieswithanaverage annualunemploymentrateexceedingthestateaverageannualunemploymentrateinthe fiveprecedingcalendaryears;(2)countieswithanunemploymentrategreaterthan200 percentofthestatewideunemploymentratefortheprecedingyear;and(3)counties meetingathreeparttest(threeyearunemployment,educationattainmentandroad quality).Onceacompanyentersintoataxincentiveagreement,thecompanymaintainsits enhancedbenefitsforthetermoftheagreementregardlessofanychangeinthecounty's status.Anyprojectlocatedinanenhancedincentivecountythathasbeendecertifiedshall haveuntilJuly1ofthethirdyearfollowingthedecertificationtoobtainfinalapproval. Requirementstoqualifyfortheincentives: o Employmentminimumrequirement Createaminimumof10new,fulltimejobsforKentuckyresidents. Maintainanannualaverageofatleast10new,fulltimejobsforKentucky residents. o Investmentminimumrequirement Incureligiblecostsofatleast$100,000. o Wageminimumrequirement Forenhancedincentivecounties,atleast90%ofthenew,fulltime,Kentucky residentemployeesmustreceivebasehourlywagesofatleast$9.06(125% ofthefederalminimumwage). Forothercounties,atleast90%ofthenew,fulltimeKentuckyresident employeesmustreceivebasehourlywagesofatleast$10.88(150%ofthe federalminimumwage). o Employeebenefitminimumrequirement Thetermemployeebenefitsisdefinedasnonmandatedpaymentsbyan approvedcompanyforitsfulltimeemployeesforhealthinsurance,life insurance,dentalinsurance,visioninsurance,definedbenefits,401(k),or

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similarplans.Nonguaranteedpayments,suchasbonuses,commissionsand incentivepay,arenotconsideredemployeebenefits. Anycompanyparticipatinginthisprogramisrequiredtoprovideitsnew, fulltimeKentuckyresidentemployeeswithemployeebenefitsequalto15% oftherequiredminimumhourlywage. Ifemployeebenefitsarelessthan15%oftherequiredminimumhourly wage,acompanymayutilizeacombinationofwagesandemployeebenefits equivalentto115%oftherequiredminimumhourlywage.Atleastone companypaidbenefitisrequired. Forenhancedincentivecounties,atleast90%ofthenew,fulltime, Kentuckyresidentemployeesmustreceivetotalhourly compensation(basehourlywagesplusemployeebenefits)ofatleast $10.42 Forothercounties,atleast90%ofthenew,fulltimeKentucky residentemployeesmustreceivetotalhourlycompensation(base hourlywagesplusemployeebenefits)ofatleast$12.51.
o

Eligiblecostswillonlyincludecostsincurredafterthedateofpreliminaryapproval. Foraprojecttobeconsideredanownedproject,theapprovedcompany oranaffiliateeitherownstheprojectinfeesimpleorpossessestheproject pursuanttoacapitallease.Eligiblecostsforownedprojectsinclude100%of theland,building,sitedevelopmentandstartupcosts. Foraprojecttobeconsideredaleasedproject,theapprovedcompany occupiesthesiteoftheprojectpursuanttoanoperatingleaseagreement withanunrelatedentitythatreflectsanarmslengthtransaction.Eligible costsforleasedprojectsinclude100%ofthestartupcostsand50%ofthe estimatedannualrentpaymentsforeachyearofthetaxincentive agreement.

Benefit:Taxincentivesareavailableforupto15yearsinenhancedincentivecountiesorup to10yearsinothercountiesvia:
o o

TaxCreditsupto100%ofcorporateincomeorlimitedliabilityentitytaxliability arisingfromtheproject. WageAssessmentincentivesuptofivepercentofgrosswagesofeachemployeein enhancedincentivecountiesoruptofourpercent(includinguptoonepercent requiredlocalparticipation)ofgrosswagesofeachemployeeinothercounties.If thelocalcommunitydoesnothavealocaloccupationalfee,thenanalternativeform ofparticipationshouldbeprovided. Theemployeesrecoupthewageassessmentthroughastateincometaxcreditequal totheamountofthewageassessmentwithheld.Thetaxincentivesremaininplace untiltheauthorizedrecoveryamount(approvedcost)isrealizedorforthetermof thetaxincentiveagreement,whicheveroccursfirst.Unusedcreditsthathavebeen authorizedfortheprojectmaybecarriedforwardforthetermofthetaxincentive
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agreement,however,unusedcreditsexpireatthematurityoftheagreement. KentuckyReinvestmentAct(KRA)

Eligibility:AnyKentuckycompanyengagedinmanufacturingandrelatedfunctionsata locationoperatingwithintheCommonwealthonapermanentbasisforareasonableperiod oftimeprecedingtherequestforassistance.

QualifyingExpenditures: o Incureligibleequipmentandrelatedcostsofatleast$2,500,000.

Eligibleequipmentandrelatedcostsmustberelatedtoaqualifying ReinvestmentProjectwhichincludestheacquisition,constructionand installationofnewequipmentandtheconstruction,rehabilitationand installationofimprovementstofacilitiesnecessarytohousethenew equipment. Eligibleequipmentandrelatedcostsdoesnotincludecostsrelatedtothe replacementorrepairofexistingmachineryorequipmentresultingfrom normalwearandusage. o Agreetomaintainafulltimeemploymentbaseofatleast85%ofemploymentatthe facilityasofthedateofpreliminaryapproval. o HasnotbeenawardedincentivesundertheKentuckyIndustrialRevitalizationAct (KIRA)withinthepreviousfiveyears. o Applicantmustcertifythattheprojectwouldnotbeeconomicallyfeasiblewithout theincentives. o Approvedcostsincludetheeligibleequipmentandrelatedcostsandeligibleskills upgradetrainingcoststhatareapprovedbyKEDFAforrecovery,areincurredafter thedateofpreliminaryapprovalthroughthedateoffinalapprovalandmaybeup to: 50%oftheeligibleequipmentandrelatedcost. 100%oftheeligibleskillsupgradetrainingcosts Benefit:Ataxincentiveisavailableforupto10yearsfromthedateoffinalapprovalvia:
o

TaxCreditsupto100%ofcorporateincomeorlimitedliabilityentitytaxliability generatedbyorarisingfromtheproject.

KentuckyEnvironmentalStewardshipAct(KESA)

Eligibility:Anybusinessentitythatmanufacturesanenvironmentalstewardshipproduct whichisauniqueproductthathasasubstantialpositiveimpactontheenvironment. QualifyingExpenditures:Aprojectmusthaveatleast$5,000,000ineligiblecoststo participateintheprogram.Approvedcompaniescanpotentiallyrecoverupto25%ofthe projectsfixedassetcostand100%ofemployeeskillstrainingthroughtheKESAtax incentives.

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Benefit:AKESAapprovedcompanyiseligibletoreceivea100%creditagainsttheKentucky taxliabilitygeneratedbytheproject.Thetaxliabilityassociatedwiththeprojectis determinedbysubtractingthebaseyeartaxliabilityfromeachyearstaxliabilityafterthe projectisactivated.Thetaxincentiveisavailableforrecoveryoveratenyearperiodoruntil theauthorizedincentiveisrealized.Inaddition,thecompanyislimitedtoamaximumof 25%oftheauthorizedincentiveinanysingletaxyear.Anyunusedincentivesremaining aftertheincentiveagreementhasexpiredarenotaccessible.

KentuckyInvestmentFundActKIFA

Eligibility:Personalandcorporateinvestorsinapprovedinvestmentfunds.Eachqualified investmentmustbeinabusinessthatisactivelyandprincipallyengagedinaqualified activitywithinKentucky,orwillbeactivelyandprincipallyengagedinaqualifiedactivity withinKentuckyafterthereceiptofaqualifiedinvestment.


o

Qualifiedactivitymeansanyindustrial,manufacturing,mining,miningreclamation foreconomicdevelopment,commercial,healthcare,agriculturalenterprise,or agribusinessactivity.

QualifyingExpenditures: o Minimumfundsize:$500,000

$500,000incommittedcashcontributionstothefundmustbemadepriorto anyallocationofcredits. Acertifiedinvestmentfundmusthavenolessthanfour(4)unaffiliated investors. Noinvestormayhaveacapitalinterestinmorethan40%oftheinvestment fundstotalcapitalization QualifiedinvestmentseligibleforthistaxcreditareinvestmentsinKentuckybasedsmall businessesthatmeetthefollowingcriteriaatthetimeaninvestmentismade: o 50%ofthecompanysassets,operationsandemployeesarelocatedinKentucky; o Thecompanysnetworthislessthan$5million(or$10million,ifitisaknowledge basedbusiness)oritsnetincomeineachofthepriortwoyearsislessthan$3 million;and o Thecompanyhasnomorethan100employees. o Totalqualifiedinvestmentsmadebyaninvestmentfundinanysinglebusinessshall notexceed30%ofthecommittedcashcontributionstotheinvestmentfund.

Benefit:40%taxcredit,althoughthetotalamountoftaxcreditsavailabletoanysingle investmentfundshallnotexceed,inaggregate,$8,000,000forallinvestorsandalltaxable years.

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KentuckyEnterpriseInitiativeAct(KEIA)

Eligibility:Anybusinessentityprimarilyengagedinmanufacturingorserviceortechnology activities,orinoperatingordevelopingatourismattractioninKentucky. QualifyingExpenditures:Aneligiblecompanymustmakeaminimuminvestmentof$500,000 inaneconomicdevelopmentproject.Eligibleinvestmentcostsincludeexpendituresfor buildingandconstructionmaterials,researchanddevelopmentequipment,andacquisition ofrealpropertythatisowned,usedoroccupiedbytheapprovedcompany.EffectiveJune 26,2009,electronicprocessingequipment,whichisdefinedastheuseoftechnology havingelectronic,digital,magnetic,wireless,optical,electromagnetic,orsimilarcapabilities, nowinexistenceorlaterdevelopedtoperformaserviceortechnologyactivity,isalsoan eligiblecost. Benefit:TheKEIAprovidesasalesandusetaxrefundoneligibleinvestmentcosts.The maximumsalesandusetaxrefundincentiveavailableforcommitmentbyKEDFAineach fiscalyearforallprojectsislimitedto$20,000,000forbuildingandconstructionmaterials and$5,000,000forequipmentusedforresearchanddevelopmentorelectronicprocessing.

ResearchFacilitiesStateIncomeTaxCredit

Astateincometaxcreditisprovidedforinvestmentinfacilitiesusedtopursueresearch.The incometaxcreditisequalto5%ofthequalifiedcostfor"constructionofresearchfacilities" for"qualifiedresearch"asdefinedinInternalRevenueCodeSection41.Thecreditis availabletonewandexistingbusinessesthatconstruct,remodel,expand,orequipresearch facilities,butdoesnotincludereplacementproperty.Anyunusedcreditmaybecarried forwardfor10years.

KentuckyTourismDevelopmentActKTDA Eligibility:Anindividualorcompanyinvestinginatourismdevelopmentproject. QualifyingExpenditures:Investmentmustbetowardsexpansionofatourismattraction, whichcaninclude: o o o o o o o culturalorhistoricalsites; recreationorentertainmentfacilities; areasofscenicbeautyordistinctivenaturalphenomena; EntertainmentDestinationCenters; KentuckyCraftsandProductsCenters; ThemeRestaurantDestinations;and, Lodging,when: builtinconjunctionwithatourismattractionandthetourismattractioncost morethanthelodgingfacility;or
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builtonstateorfederalparksandrecreationallands;or involvesrestorationorrehabilitationofahistoricstructure;or involvestherestorationorrenovationofalodgingfacilityhavingnolessthat 500roomswithprojectcostsexceeding$10,000,000;or Involvestheconstruction,restoration,orrenovationofafullservicelodging facilitywhichisorwillbeapartofamajorconventionorsportsfacilitywith projectcostexceeding$6,000,000;or Involvestheconstruction,restoration,orrenovationofafacilitywhichisor willbelocated: IntheCommonwealthwithina50mileradiusofapropertylocated ontheNationalRegisterofHistoricPlaceswithacurrentfunctionof recreationandculture;and Located within any of the 100 least populated counties in terms of populationdensity. Benefit:Theincentivefordevelopersofapprovedneworexpandingtourismprojectsisthe abilitytorecoverupto25%oftheprojectsdevelopmentcostsoveratenyearterm. Projectsincluding,butnotlimitedtolodgingfacilities,thatareconstructedonstatepark, federalparkandnationalforestlandsareeligibletorecoveruptofiftypercent(50%)of developmentcostsoveratwentyyearterm.Anexpandingattractionreceivestheincentive onincreasedsalestaxduetotheexpansion.

KentuckyIndustrialRevitalizationAct(KIRA) Eligibility:Companiesorindividualsinvestinginrevitalizationofexistingapprovedfacilities thathaveclosedorareindangerofclosing. QualifyingExpenditures:


o

Investmentsintherehabilitationofmanufacturingoragribusinessoperationsthat areinimminentdangerofpermanentlyclosingorthathaveclosedtemporarilymay qualifyfortaxincentives,where25jobsarecreatedormaintained. Investmentsintherehabilitationofcoalminingandprocessingfacilitiesthathave closed,beentemporarilysuspended,orseverelyreducedthatemploy,orintendto employ,aminimumof500personsandhavearawproductionofatleastthree milliontonsfromtheeconomicrevitalizationprojectfacilitymayqualifyfortax incentives.

Benefit:CompaniesapprovedundertheKentuckyIndustrialRevitalizationAct(KIRA)may receivestateincometaxcredits,KentuckyCorporationLicenseFeecredits,andjob assessmentfeesforuptoten(10)yearslimitedtoseventyfivepercent(75%)ofthecostsof therehabilitationorconstructionofbuildingsandtherefurbishingorpurchasingof machineryandequipment.

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IncentivesforEnergyIndependenceActIEIA

Eligibility:Anycompanythatconstructs,retrofits,orupgradesafacilityto:
o o

Increasetheproductionandsaleofalternativetransportationfuels Increasetheproductionandsaleofsyntheticnaturalgas,chemicals,chemicalfeed stocks,orliquidfuels,fromcoal,biomassresources,orwastecoalthrougha gasificationprocess Generateelectricityforsalethroughalternativemethodssuchassolarpower,wind power,biomassresources,landfillmethanegas,hydropower,orotherrenewable resources.

QualifyingExpenditures:Requirementstoqualifyfortheincentives:
o

Alternativefuelfacilityorgasificationfacilitythatiscarboncapturereadyanduses coalastheprimaryfeedstock:theminimumcapitalinvestmentis$100,000,000 Alternativefuelfacilityorgasificationfacilitythatiscarboncapturereadyanduses biomassresourcesastheprimaryfeedstock:theminimumcapitalinvestmentis $25,000,000 Renewableenergyfacilitythatmeetstheminimumelectricaloutputrequirementof atleastonemegawattofpowerfor:wind,hydro,biomass,landfillmethane;or generationof50kilowattsforsolar.Theminimumcapitalinvestmentis$1,000,000.

Benefit:Taxincentivesavailableforupto25years,uptoamaximumof50%ofthecapital investment,via:
o

SalesandUseTaxrefundsupto100%oftaxpaidontangiblepersonalproperty madetoconstruct,retrofitorupgradeafacility. SeveranceTaxincentivesupto80%oftaxespaidonthepurchaseorseveranceof coal. TaxCreditsupto100%oftaxpaidoncorporateincomeorLimitedLiabilityEntityTax arisingfromtheproject. WageAssessmentincentivesupto4%ofgrosswagesofeachemployee.

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RegionalBusinessParkProgram TheRegionalBusinessParkProgramisfundedundertheLGEDFprogramanddesignedto developlargeblocksofavailable,accessible,andmarketablelandasregionalbusinessparks. Theparticipatingcountiesshareinthetaxrevenues,andallotherproceedsgeneratedfrom theproject,throughinterlocalagreementsbetweentheparticipatingcountiesandthe formationofregionalauthorities.Theselegallyestablishedauthoritiesown,maintain,and markettheavailableacreagewithguidancefromtheCabinetforEconomicDevelopment. BluegrassStateSkillsCorporationSkillsTrainingInvestmentCredit(STIC)

Eligibility:Companyengagedwithinthestateinoneofthequalifiedactivitiesforover3 consecutiveyears:manufacturingincludingtheprocessing,assembly,productionor warehousingofanyproperty;processingofagriculturalandforestryproducts; telecommunications;healthcare;productresearchandengineering;toolanddieand machinetechnology;mining;tourismandoperationoffacilitiestobeusedinthe entertainment,recreationandconventionindustry;transportationinsupportof manufacturing.ParticipantsintheprogrammustbeKentuckyresidentswhoarefulltime employeesoftheapplyingcompanyandtheymustmakeaminimumof$10.88perhourplus 15%benefits. QualifyingExpenditures:ThecompanymustinvestinSkillsUpgradeTrainingforemployees. Benefit:TheBSSCprovidestaxcreditsfor50%ofcustomizedtrainingprograms.Thistraining canbeprovidedinhouse,byaconsultant,orbyaneducationalinstitution.BSSCwillprovide creditsupto$25perhour($50p/htotaltraining)forallinhousetraining.

SalesTaxIncentiveforthepurchaseofcommunicationssystemsorcomputersystems

Eligibility:Companiesinthefollowingbusinesses:softwarepublishers;dataprocessing, hosting,andrelatedservices;internetpublishing,broadcasting,andwebsearchportal businesses;orcustomcomputerprogrammingservices. QualifyingExpenditures:


o o

Expenditureofatleast$100,000,000ormore InstallationofthequalifyingsystematasinglelocationwithintheCommonwealth within18monthsofpurchase Systemmustbeusedatthelocationforthefullperiodofdepreciationunderthe InternalRevenueCode

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Systemmustbeusedforthebusinesspurposeslistedundercompaniesthat qualify

Benefit:Salesandusetaxespaidonqualifyingpurchases

RecyclingEquipmentCredit o Incometaxcreditsareallowedforupto50%oftheinstalledcostsofequipmentused exclusivelytorecycleorcompostpostconsumerwaste(excludingsecondaryanddemolition wastes)andformachineryusedexclusivelytomanufactureproductscomposedsubstantially ofpostconsumerwastematerials. CorporateIncomeTaxCreditforUseofKentuckyCoal

Acorporationincometaxcreditisallowedforupto4.5%ofthevalueofKentuckycoal (excludingtransportationcosts)usedforindustrialheatingorprocessing.Thecreditis allowedfor10yearsfollowingeithertheinstallationorconversiontocoalburningunits.The creditinanyyearcannotexceedthecorporation'sincometaxliabilityminusothercredits. Unusedcreditscannotbecarriedforward.

BiodieselFuelTaxCredit o Astateincometaxcreditisallowedforproducersorblendersofbiodieselfuelorblended biodieselfuelwithablendofatleast2%.Biodieselorblendedbiodieselproducers receivea$1creditpergallonproducedorblended.Unusedcreditscannotbecarried forward.

KentuckyCleanCoalIncentive o TheKentuckyCleanCoalIncentiveActprovidesforanincome,orpublicservice corporationpropertytaxcreditfornewcleancoalfacilitiesconstructedatacostexceeding $150millionandusedforpurposesofgeneratingelectricity.Beforethecreditisgiven,the EnvironmentalandPublicProtectionCabinetmustcertifythatafacilityisreducingemissions ofpollutantsreleasedduringelectricgenerationthroughtheuseofcleancoalequipment andtechnologies.Theamountofcreditwillbe$2.00pertonofcoalminedinKentuckyand usedinthefacilityandnotalreadyreceivingtaxcredit.Anyunusedportionsofthiscredit shallnotbecarriedforward. VoluntaryEnvironmentalRemediationPropertyIncomeTaxCredit o Anincometaxcreditofupto$150,000pertaxpayershallbegrantedforexpendituresto remediatecontaminationonqualifyingvoluntaryenvironmentalremediationproperty.The amountoftheallowablecreditforanytaxyearislimitedto25%ofthemaximumcredit approved.Thecreditmaybecarriedforwardforupto10years.

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MachineryandEquipmentTaxExemptions

PropertyTaxes:Exemptionofmanufacturingmachineryfromalllocalpropertytaxes.The staterateisonly15centsper$100ofassessedvalue. SalesandUseTaxes:Machineryfornewandexpandedindustry(manufacturing,extraction ofminerals,ores,coal,clay,stone,andnaturalgas).Replacementmachineryfor manufacturingisexemptwhenitincreasesconsumptionofrecycledmaterialsnotlessthan 10%,performsadifferentfunction,manufacturesadifferentproduct,orhasagreater productivecapacity.Repairparts,replacementparts,andsparepartsaretaxable. Additionalsalesandusetaxexemptionsforrelatedbusinessexpensesincluding: o Rawmaterialswhichenterintoandbecomeapartofthemanufacturedproduct. o Suppliesuseddirectlyinmanufacturingwhichhaveausefullifeoflessthanoneyear (lubricatingandcompoundingoils,grease,machinewaste,abrasives,chemicals, solvents,fluxes,anodes,filteringmaterials,firebrick,catalysts,dyes,refrigerants, explosives,etc.),excludingrepair,replacement,orsparepartsofanykind. o Industrialtoolsthathaveausefullifeoflessthanoneyear,limitedtohandtools (suchasjigs,dies,drills,cutters,rolls,reamers,chucks,saws,sprayguns,etc.)and toolsattachedtoamachine(suchasmolds,grindingballs,grindingwheels,dies,bits, cuttingblades,etc.),excludingrepair,replacement,orsparepartsofanykind. o Materialsandsuppliesthatarenotreusableafteronemanufacturingcycle,excluding repair,replacement,orsparepartsofanykind. o Energyandenergyproducingfuelsusedinmanufacturing,industrialprocessing, mining,orrefiningtotheextentthattheyexceed3%ofthecostofproduction. o PollutioncontrolequipmentandfacilitiesapprovedbytheKentuckyDepartmentof Revenue.

GrantsandLoanPrograms DirectLoanProgram(KEDFA) Eligibility:Companiesorindividualsinvestinginapprovedfixedassets(land,building,and equipment). QualifyingProjects:Projectsfinancedmustbeagribusiness,tourism,industrialventures,or serviceindustry.Projectsmustcreatenewjobsorhaveasignificantimpactontheeconomic growthofacommunity. Benefit:KEDFAoffersalowratemortgageloanprogramtoworkinconjunctionwithprivate financing.

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PADDRevolvingLoanFundProgram Eligibility:Companiesorindividualsinvestinginapprovedfixedassets(land,building,and equipment). QualifyingProjects:Projectsfinancedmayincludemanufacturing,service,ortourismrelated businesses.PADDisnotaprimarylenderandwillrequireotherlendersparticipationina projecttoequalorexceedthePADDloanamount.Themaximumloanamountcannot exceed$250,000.Projectownersmustinjectaminimumof10%towardtheprojectcost. Benefit:PADDoffersa4%fixedrateloanprogramtoworkinconjunctionwithprivate financing.Loantermswillmatchthelifeoftheassetfinanced,butnotexceedtwentyyears.

DeltaRegionalAuthority(DRA) TheDeltaRegionalAuthority(DRA)isafederalagencyservingtheeightstateMissisippi DeltaRegion.AllnineofthePennyrilecountiesarepartoftheDelta.TheDRA,alongwith theLocalDevelopmentDistricts,arechargedwithmakingimprovementstothe infrastructure,transportation,andoveralleconomyoftheregion. DRAfundsareavailabletoassistinprojectsthatwillcreatejobsandsupporteconomic developmentactivitiesintheDeltaRegion.AllPennyrilecountiesareeligibletoparticipate.

EconomicDevelopmentAdministration(EDA) ThePADDstaffassistsCityandCountygovernmentswithdevelopingandadministering projectsthatarefundedthroughtheEconomicDevelopmentAdministration.EDAtargetsits investmentsassistanceonattractingprivatecapitalinvestmentandcreatinghigherskill, higherwagejobsinthosecommunitiesandregionsthataresufferingfromeconomic distress.EDAinvestmentsarefocusedonlocallydevelopedinitiativesthatachievethe highestreturnonthetaxpayers'investmentanddirectlycontributetoeconomicgrowth. LocalGovernmentEconomicDevelopmentFund

Theprogramisfundedthroughanallocationofcoalseverancetaxreceipts.Grantsare providedtoeligiblecoalproducingcountiestoassistindiversifyinglocaleconomiesbeyonda dependenceoncoal.Fundsmaybeusedtosupportnonrecurringinvestmentsinpublic healthandsafety,economicdevelopment,publicinfrastructure,informationtechnology developmentandaccess,andpublicwaterandwastewaterdevelopment.

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SmallBusinessLoanProgram Eligibility:Asmallbusiness(50orfeweremployees)engagedinmanufacturing,agribusiness, orserviceandtechnology. QualifyingConditions:Atleastonenewfulltimejobmustbecreatedbythebusinesswithin oneyearoftheloanclosingdate. Benefit:KEDFAcanfundupto100%oftheprojectcosts,ortheloancanbeusedin conjunctionwithotherlenders,withaminimumloanamountof$15,000andamaximum loanamountof$100,000.Loantermswillrangefrom310years,dependingupontheuseful lifeoftheassetfinanced.Interestrateswillbefixedforthetermoftheloan,andwillbetied totheWallStreetJournalPrimeRateatthetimeoftheclosing,plusaspreadbasedonthe riskoftheloan,asdeterminedbyKEDFA.

CommunityDevelopmentBlockGrantsLoansCDBG TheCommunityDevelopmentBlockGrantProgram,administeredthroughtheGovernors OfficeforLocaldevelopment,isafederallyfundedprogramwherecommunitieswork throughcityandcountygovernmentstoreceivefundingforeconomic developmentopportunitieswhichspecificallyaddressthecreationorretentionofjobsfor personsoflowandmoderateincome. LinkedDepositProgram UndertheKentuckyLinkedDepositInvestmentLoanProgram,theStateInvestment CommissioninvestsfundsfromthestatesAbandonedPropertyCashAccountatasetrate witheligiblelenders.Inturn,thefinancialinstitutionagreestolendtheproceedsofthe fundstoeligiblesmallbusinessborrowersatanattractiverate.Themaximumloanrate chargedbythelenderwillbethecurrentWallStreetJournalprimerate,butnotlessthan 5%.Themaximumloanamountis$100,000perbusinessandthemaximumloantermis7 years.Prepaymentandearlypayoffoftheloanisavailablewithoutpenalty.Loanproceeds maybeusedforworkingcapital,interestcosts,capitalexpenses,ordebtrefinancing.Eligible borrowersmustmeetthefollowingcriteria: o Mustbeestablishedasaforprofitentity o MustbeheadquarteredandmaintainofficesandoperatefacilitiesinKentucky o Mustemployfewerthan50fulltimeemployees,themajorityofwhommustbefrom Kentucky o Musthavegrossearningsof$1millionorlessperyear o Businessprincipalscantbeofficersordirectorsofeligiblelendinginstitutions

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BluegrassStateSkillsCorporationGrantinAid(GIA)&CompetitiveGrantinAid(Consortia)

Eligibility:Firmsengagedinthefollowingactivitiesmayapply:manufacturing,non manufacturing(majorityofincomeforservicesprovidedmustbegeneratedoutsideof Kentucky),headquarteroperations(majorityofservicesprovidedmustbeforfacilities locatedoutsideofKentucky),publicornonprofithospitals,andtrainingconsortia.The BSSC'sGrantinAidprogramforConsortiapromotescollaborativetraininginitiativesfor companiesthathavecommontrainingneeds.Theeligibleconsortiashallincludethreeor moreBSSCeligiblecompaniesthatmaintainanindustrydrivenboardorcommittee,a missionstatement,bylaws,bankaccount,andafederalidentificationnumber.Participants intheseprogramsmustbeKentuckyresidentswhoarefulltimeemployeesoftheapplying companyandtheymustmakeaminimumof$10.88perhourplus15%benefits. QualifyingExpenditures:ThefollowingtrainingtypesareallowedunderBSSCguidelines:Pre EmploymentSkillsTraining,EntryLevelSkillsTraining,&SkillsUpgradeTraining.The followingareexamplesofeligibletrainingactivitiesandmethods:classroom&OJTtraining, innovativetrainingtechniques,individualassessment,trainthetrainertravel,tuition,and certification.Standalonesafety,mandatedtraining,traineewages,retroactivetraining,and pro/conuniontrainingarenoteligible. Benefit:TheBSSCprovidesupto50%reimbursementforeligibletrainingactivities.This trainingcanbeprovidedbyaninhousetrainer,aconsultant,oraneducationalinstitution. BSSCwillreimburse$25perhour($50p/htotaltraining)forallinhousetraining.

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APPENDIX: HIGH TECH FUNDING ASSETS


HighTechInvestment/ConstructionPools TheDepartmentofCommercializationandInnovation(DCI),intheCabinetforEconomic Development,administerstwopoolsoffunds: o TheHighTechConstructionPoolisusedforprojectswithspecialemphasisonthe creationofhightechjobsandknowledgebasedcompanies.Thecommissioner recommendsfundingofcompaniestoKEDFAforapproval;and o TheHighTechInvestmentPoolisusedtobuildandpromotetechnologydriven industriesandresearchintensiveindustrieswiththegoalofcreatingclustersof innovationdrivenindustriesinKentucky.Thecommissionerrecommendsfundsto beusedtosupportloansandgrants,orsecureanequityorrelatedpositiontoKEDFA forapproval. CommonwealthSeedCapital TheCommonwealthSeedCapitalLLC(CSC)investsstatefundstoprovideearlystageseed fundingtofacilitatethecommercializationofinnovativeideasandtechnologiesdevelopedin Kentucky. SBIRSTTRMatchingFundsProgram

TheCabinetwillmatch,onacompetitivebasis,Phase1andPhase2federalSmallBusiness InnovationResearch(SBIR)andSmallBusinessTechnologyTransfer(STTR)awardsreceived byKentuckyhightechsmallbusinessesandthosewillingtobecomeKentuckybased businesses.ThisincludesmatchingPhase1federalawardsupto$100,000tosupportthe explorationofthetechnicalmeritorfeasibilityofanideaortechnology,andupto$500,000 offederalPhase2awards,whichsupportfullscaleresearchanddevelopment.

KentuckyNewEnergyVenturesFund

TheKentuckyNewEnergyVenturesFund(KNEV)providesseedstagecapitaltosupportthe developmentandcommercializationofalternativefuelandrenewableenergyproducts, processes,andservicesinKentucky.TheKNEVfundmakesgrantsof$30,000and investmentsrangingfrom$250,000toover$750,000.Qualifiedcompaniesmustbe Kentuckybasedandfundsaretobeusedforbusinessdevelopmentactivities.Formore informationandfundingguidelines,pleasevisitwww.StartupKentucky.com.

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InnovationandCommercializationCenterProgram TheKentuckyInnovationandCommercializationCenterProgramisastatewidenetworkof regionalInnovationandCommercializationCenters(ICCs)andlocalInnovationCenters(ICs) thattogetherprovideacohesiveresourceofferingbusinessbuildingservicesandassistance inobtainingfunding.TheCabinetmanagesthestatesnetworkofsixregionalICCsandseven localICs.Seewww.startupkentucky.comtolocatetheofficesservingeachregion. KentuckyEnterpriseFund

TheKentuckyEnterpriseFundprovidesseedstagecapitaltoKentuckybasedcompaniesthat arecommercializingatechnologybasedproductorprocess.Therearetwotypesofawards designedtostimulateprivateinvestmentinKentuckybasedtechnologycompanieswithhigh growthpotential.www.startupkentucky.com o KentuckyEnterpriseFundawardsinvolvegrantsof$30,000andinvestmentsupto $750,000insmallandmediumsizedKentuckybasedcompaniesforbusiness developmentactivities. o RuralInnovationFundawardsinvolvegrantsof$30,000andinvestmentsupto $100,000insmall,rural(outsideofFayetteandJeffersonCounties),Kentuckybased companiesworkinginpartnershipwithaKentuckypostsecondaryinstitutionor unaffiliatedthirdparty.

KentuckyScienceandEngineeringFoundationAwards SmallcompanieshavingtheirprincipalplaceofbusinesslocatedinKentuckyareeligibleto applyfortheFoundationsR&DExcellenceprogramawardsunderthe"emerging technologies"category,withawardsrangingfrom$20,000to$50,000peryear(upto $100,000fortwoyears).Emergingtechnologiesarethesubjectofresearchand developmentactivities,whichareconductedtohelpthecompanyfurtherdefineanddevelop anewproductorprocesstechnology.Formoreinformationandfundingguidelines,please visitksef.kstc.com. KentuckyCommercializationFundProgram TheFoundationalsoadministerstheKentuckyCommercializationFundprogram,which providesseedfundstoKentuckyuniversitysfacultymembersforcommercializingproducts, processes,orservicesdevelopedthroughresearchanddevelopmentworkundertakenata Kentuckyuniversity,withawardsnotexceeding$75,000eachyear(uptoamaximumof $150,000overtwoyears).Formoreinformationandfundingguidelines,pleasevisit ksef.kstc.com.

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