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Economic Development Highway Corridors Study, West Virginia

Map of West Virginia. The map shows the 10-county study area located in southwest West Virginia on the borders of Kentucky and Virginia. Project Type : Access/circulation changes to support changing land use in either a rural or urban area

Project Objectives : Quality of life retention or improvement. Facilitate changing character of employers

Outcomes Metric : Business investment likely, Tax base effects. Higher wage employment. Diversification of employers

Economic Environment: Predominantly rural except for Kanawha and Wayne Counties

Economic History: Declining population growth, above-average jobless rate despite stagnant labor force growth as displaced workers leave the region or drop out of the labor force.

Distinguishing Features : Anchored by the state capitol, Charleston, the balance of the study corridor is slowly transitioning away from its traditional reliance on coal mining.

I. Existing Conditions

The West Virginia Highway Economic Development study area consists of three highway corridors, located in, or to be constructed in, southwestern West Virginia. Because the three highways are located close to each other, and in two instances, would intersect with each other, a single 10-county study area was identified, comprised of Boone, Kanawha, Lincoln, Logan, McDowell, Mercer, Mingo, Raleigh, Wayne, and Wyoming Counties in West Virginia. Two of these counties-Kanawha and Wayne-are located in metropolitan statistical areas, with the capitol of West Virginia, Charleston, located in Kanawha County. Exhibit 1 shows the location of the study area. The remaining eight counties are predominately rural in character and have historically been centers of West Virginia's coal mining industry. The study area is generally triangular in shape, and is bordered on the north by Interstate 64, which passes through Charleston and Huntington; on the east by the West Virginia Turnpike/Interstate 77, which goes from Charleston south to Beckley and Princeton; and on the south and west, by borders with Kentucky and Virginia. The study area is bisected by U.S. Route 119, also known as Appalachian Highway corridor G, which goes from Charleston southwest to Williamson, West Virginia, and then west to Pikeville, Kentucky.

Exhibit 1 illustrates the year-to-year changes in study area population from 1982 to 2000, compared with West Virginia, its neighboring states (Virginia, Maryland, Ohio, Kentucky, and Pennsylvania). Population in the study area and state declined for much of the last 20 years and was lower than the adjacent states. Since 1980, the study area has lost residents at a rate of nearly 1 percent per year, while the U.S. population has been moving in the opposite direction, increasing by more than 1 percent per year. The study area, as well as the state, has been suffering from declining population levels due in large part to a lack of employment opportunities.

Exhibit 1: Population Trends

Line graph, Exhibit 1: Population Trends. Source data in following table.  

  1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Study Area(Left Axis) 663.8 660.6 650.3 639.6 630.1 616.9 600.1 586.6 578.1 577.4 577.3 577.9 574.8 572.6 569.5 565.5 561.0 555.9 550.5
Study Area(Right Axis) -0.2 -0.49 -1.56 -1.64 -1.49 -2.09 -2.71 -2.26 -1.44 -0.13 -0.01 0.1 -0.53 -0.39 -0.54 -0.7 -0.79 -0.92 -0.96
WestVirginia -0.23 -0.23 -0.89 -1.08 -1.28 -1.32 -1.47 -1.29 -0.72 0.29 0.43 0.61 0.16 0.18 -0.05 -0.2 -0.19 -0.21 -0.19
Adjacent States 0.11 0.24 0.3 0.2 0.47 0.69 0.73 0.54 0.45 1.16 0.96 0.87 0.7 0.63 0.55 0.51 0.52 0.57 0.45

Source: US Census Bureau

Exhibit 2 depicts the unemployment rate over the last 20 years, comparing the study area, West Virginia, and the adjacent states. West Virginia and the study area (the top two lines) exhibit a similar trend to the adjacent states, but, historically, have exhibited higher unemployment rates and stronger jumps in the unemployment rate.

Exhibit 2: Unemployment Rate Trends

Line graph, Exhibit 2: Unemployment Rate Trends. Source data in following table.

 
  1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Study Area(Left Axis) 13.5 19.6 16.6 13.5 12.6 12.4 11.2 9.0 8.3 10.2 11.2 11.1 9.0 7.7 7.4 6.7 6.8 7.0 5.7
WestVirginia 14.0 18.0 15.0 13.1 11.8 10.8 10.0 8.6 8.4 10.6 11.4 10.9 8.9 7.9 7.5 6.9 6.6 6.6 5.5
Adjacent States 10.8 10.3 8.1 8.0 7.4 6.5 5.7 5.2 5.3 6.4 7.0 6.0 5.3 4.8 4.9 4.5 3.9 3.8  

Source: Bureau of Labor Statistics and West Virginia Bureau of Employment Programs

An examination of Exhibit 3 provides a deeper understanding of the economic structure of the study area, displaying the top five sectors, by 2-digit SIC code, in terms of employment share and gross output. Coal mining remains an important part of the study area's economy, contributing nearly 10 percent of gross output in 2002. Given that Charleston, the state capitol, is located within the study area, the size of the employment share of state and local government employment is not surprising. Health services are also important to the region as it has a high percentage of older residents.

Exhibit 3: Top Five Employment Sectors

Ten-County Study Area, 2002

Employment

Gross Output

Sector

Number

%

Number

%

Local and State Government

45,691

17.06

$2,810,702,849

7.10

Health Services

25,802

9.64

$2,002,841,546

5.06

Eating and Drinking Places

13,251

4.95

$483,759,074

1.22

Business Services

12,150

4.54

$973,462,326

2.46

Coal Mining

11,199

4.18

$3,912,925,078

9.89

Source: Global Insight

II. Highway Project

Three highway corridors in West Virginia were considered by the study. One, Route 119 (Corridor G), is already built, while the other two, TOLSIA and King Coal Highways and the Coalfields Expressway, are proposed. The characteristics of the three-highway corridors are described below to provide a context for the identification of the major economic development issues. The corridors are shown in Exhibit 4.

Exhibit 4: Study Area Highway Projects

Exhibit 3: Map of the West Virginia study area highway projects.

The map shows the three proposed highways and their relative location to existing highways in the study area. TOLSIA/King Coal Highway will follow the route of the current US 53, with an interchange with Route 119 (Corridor G) near Williamson. The Coalfields Expressway will reach northeast from Welch to Beckley.

Source: AECOM Consult Inc.

Appalachian Highway Corridor G -U.S. Route 119, also designated as Appalachian Development Highway Corridor G, extends from Huddy, Kentucky, east-northeast to Charleston, West Virginia, for a distance of about 81 miles, traversing Boone, Kanawha, Lincoln, Logan, and Mingo Counties in West Virginia. The entire length of Corridor G was upgraded to a limited access highway, with the project completed in 1997 at a cost of $881 million. Corridor G is a four-lane divided, partial-access control highway, with at-grade intersections along it. There are clear signs that economic development is moving southwest from Charleston along Corridor G toward Williamson. There will be an intersection between Corridor G and the proposed TOLSIA/King Coal Highways about nine miles east northeast of Williamson.

Time saved by traveling the new highway is significant; approximately 93 percent of this highway is posted at 65 mph. The section within the urbanized area of Charleston is posted 45-55 mph due to the enormous amount of development in the area around Southridge Mall. Traffic has increased steadily along this facility since its inception. A portion of the highway, at this location, has been expanded to six lanes to compensate for the additional traffic. This decreases travel time during the off peak; however, peak hour traffic is still a concern in this area. It takes approximately 1 hour and 30 minutes to travel US 119 from the I-64 interchange in Charleston to the Kentucky State Line during off-peak hours.

Historical traffic counts were collected for 1979, 1989, and 2001 at selected locations along the route. Annual Average Daily Traffic (AADT) increased 26 percent in 1979-89 and 55 percent in 1989-2001. This increase in accessibility will benefit the development of tourist attractions in the study area. Much of the traffic traveling to the Hatfield-McCoy Recreational Trail System utilizes Appalachian Corridor G.

TOLSIA and King Coal Highways -The Tug-Ohio-Levisa-Sandy-Improvement Association (TOLSIA) Highway will be the northern half of a proposed project to replace existing West Virginia Route 52 between Huntington and Bluefield, with the southern half of the project, from Williamson south, designated as the King Coal Highway. The study area for the TOLSIA/King Coal Highway consists of McDowell, Mercer, Mingo, and Wayne Counties in West Virginia. The new TOLSIA/King Coal Highway would be part of the proposed I-73/I-74 corridor that would extend from southeastern Michigan to Myrtle Beach, South Carolina.

TOLSIA, extending between Huntington and Williamson for 58 miles, will be a four-lane, divided, partial-access highway, costing approximately $866.6 million. Existing Route 52 is a two-lane, undivided highway that runs along Big Sandy River, the border between Kentucky and West Virginia, at the bottom of the river valley. According to the West Virginia Department of Transportation (WVDOT), the current AADT along Route 52 is 5,000-6,000 vehicles per day, with an average of 15 percent trucks on the northern half and 30 percent on the southern half. The existing road is hazardous, as evidenced by its high accidentrate. Since steep grades prevent trains from transporting coal directly from mines, trucksare the only alternative. These trucks present a hazard to motorists, as they cause delays on the current roadways and entice motorists to attempt to pass the trucks on the two-lane road.

The proposed King Coal Highway would also be a four-lane, divided, partial-access highway. It would extend from Williamson, West Virginia, south-southeast about 90 miles to Bluefield, West Virginia, at a cost of about $1.5 billion. King Coal Highway would serve through traffic and offer connector service to small communities located on existing Route 52 such as Williamson, Gilbert, Laeger, Welch, Keystone, Northfork, Bramwell, and Bluefield. At its southern terminus, the King Coal Highway will pass between Bluefield on the east, and Princeton on the west, cross over ADHS Corridor Q and then connect with I-77 at interchange 1 just north of the Virginia state line. The new alignment will follow the ridgelines, eliminating most of the negative factors associated with the existing alignment. The alignment will include a connector road to facilitate traffic to both Williamson and the Mingo County airport.

Coalfields Expressway - The Coalfields Expressway would go from Grundy, Virginia, about 60 miles east-northeast to Beckley, West Virginia, where it would connect to the West Virginia Turnpike and I-64, and will parallel the WV 16 and WV 83 corridors. The Coalfields Expressway covers McDowell, Raleigh, and Wyoming Counties in West Virginia, and Buchanan County in Virginia. The proposed highway would be a four-lane, partial-access control, divided highway, costing $780 million, excluding right-of-way (ROW) acquisition. The southwestern part of the Coalfields Expressway, located in McDowell County, West Virginia, would pass through very hilly terrain, consisting of numerous stream and river valleys with steep slopes and high, narrow ridgelines. The capital costs per mile would be high due to the rugged terrain so the Coalfields Expressway will also not be built to full interstate standards.

WV 16 and WV 83 possess travel restrictions caused by excessive curves and grades, which in turn affects travel time. These routes are primarily two-lane facilities with a high percentage of "No Passing Zones" that restrict the passing of slower moving vehicles. The high presence of truck traffic along with the absence of sufficient passing zones further compounds the travel time problem.

The Coalfields Expressway will bypass some of the small towns, and will eliminate or improve some of the inadequate curve and excessive grade situations. There will be an interchange between the Coalfields Expressway and the King Coal Highway near Welch, West Virginia. At its eastern terminus, the Coalfields Expressway will split into two segments near Sofia. The northerly segment will connect to the West Virginia Turnpike at interchange 42 using existing State Route 16, while the southern segment will connect to the West Virginia Turnpike just south of Beckley, where I-64 branches off and heads east toward White Sulphur Springs. Finally, in January 2002, the Virginia Department of Transportation announced plans to begin constructing a 51-mile segment of the Coalfields Expressway that would end at the West Virginia state line near Paynesville.

III. Objectives of the Project

The two primary economic development issues for the Economic Development Highway Corridors Study in West Virginia are:

IV. Coordination of Project with other Economic Development Strategies, Plans and Opportunities

The West Virginia Development Office (WVDO) is the state's main agency devoted to promoting economic and community development. Based in Charleston, the WVDO employs about 110 people and works under the authority of the 19-member West Virginia Council for Community and Economic Development. The WVDO supports existing businesses for retention and expansion purposes, as well as works with business start-ups and attracting new industries to the state. The Development Office also pursues opportunities for international trade.

WVDO's Business and Industrial Development Division (BID) is charged with helping to retain or expand operations in the state as well as recruit new business opportunities through economic assistance programs. BID programs use tax incentives, loans, and worker training to achieve the goals of business recruiting and retention and workforce development. The group uses target industry marketing to focus its marketing and recruiting efforts.

WVDO's Community Development Division is designed to be a catalyst for, and provider of, the planned development of West Virginia's communities. A wide range of state and federal programs are administered to help develop human resources and install public utilities, access roads, buildings, streets, sidewalks, and other public improvements.

Other programs and agencies charged with promoting economic development include:

The Neighborhood Investment Program (NIP) provides state-level tax credits to local non-profit organizations to give to businesses in return for their support.

Main Street West Virginia is part of the National Main Street Program, which works with communities to revitalize their traditional or historic commercial areas (i.e., downtown or central business districts). In West Virginia, 13 communities have met the requirement for Main Street designation, 3 of those-Beckley, Charleston East End, and St. Albans-are located in the 10-county study area.

Certified Development Community Program is intended to spur communities across the Mountain State to better prepare and equip them to respond to the needs of existing and prospective business and industry. A community's preparation will be facilitated by successfully completing the CDC requirements and becoming "certified."

The Office of Coalfield Community Development (OCCD) works in conjunction with local economic development agencies and helps communities affected by surface mining activity develop land use master plans for economic health and viability long after the mines cease operations.

Expressway Authorities are regional development authorities that have been established along all three of the proposed highways. The enabling legislation establishing the authorities gives them the following functions and powers:

Lincoln Economic Development Authority operates a regional micro-loan program to businesses in Boone, Lincoln, Logan, and Mingo Counties.

V. Methodology

A number of analysis methods were utilized to determine the future conditions in the study are and estimate the economic benefits of the three completed highways. These methods included:

Future Conditions in the Study Area (Baseline)

The existence of the three highways, with their accompanying direct benefits (i.e., better accessibility, higher traffic volumes), and accompanied by appropriate economic development policies, creates an opportunity for future economic growth rates and levels of employment and population to be higher than the baseline. The study team prepared a 25-year forecast for the study area and the state assuming that the two proposal projects are not built. The rate of economic growth in the study area will be slightly below the statewide growth rates over the 10- and 25-year periods. However, this difference is somewhat misleading, as the study area includes the two counties located in MSAs: Kanawha and Wayne. If these two counties are not considered, then the economic growth rates in the eight rural counties will continue to be well below the statewide economic growth rates. The eight rural counties stand to benefit the most from the economic development benefits that could be created by the new highways. Forecast growth rates for the major economic variables are presented below.

Direct Effects of Highway Completion

This section presents the direct changes in activity levels that would be produced by the completed highways. The term "activity levels," as used in this context, includes changes in traffic volumes, the change in the number of persons living within a specified one-way driving distance of the study area, and forecasts of commodities carried by trucks that would come into, leave from, or pass through the study area. Both the opportunity to increase tourism and develop new industrial parks will depend to a large extent on the increase in the activity levels. Exhibit 5 shows the change in travel times along routes within the study area.

Exhibit 5: Changes in Travel Time Due to Construction of Highways

 

Unimproved Conditions

Improved Conditions

Time Saved

TOLSIA Highway (Huntington to Williamson)

79 min.

55 min.

24 min.

King Coal Highway (Williamson to Bluefield)

149 min.

83 min.

66 min.

Coalfields Expressway (KY Line to Beckley)

115 min.

58 min.

57 min.

Corridor G (US 119) (Charleston to Williamson)

N/A

80 min

N/A

Source: Wilbur Smith

Reduced travel times along the three highways will result in improved accessibility of the study area from population centers throughout much of eastern United States. This increased accessibility will benefit the travel and tourism industry of the study area. Currently, 25.8 million people reside within an eight-hour drive of the study area. After improvements, 44.9 million people will be within that same driving distance, according to Wilbur Smith calculations. The expanded market area includes Washington, D.C., Nashville, Cleveland, and Raleigh.

The annual level of tourism spending in the study area would go up by about 51 percent over the next 24 years if the two proposed highways were not built. In contrast, by 2025, annual tourism spending in the study area would be 96 percent higher (i.e., an approximate doubling) if the two proposed highways were built. This increase is based only on the higher traffic volumes, and the accompanying rise in the number of visitors that would occur; the subsequent implementation of economic development policies would generate higher increases in tourism spending.

Exhibit 6 presents the increases in study area economic activity that would be produced by 100 new employees in different three-digit SIC economic sectors. The figures shown in the table are the total increases in economic activity that would be produced by the expansion of each industry, including local purchases of goods and services and hiring of new workers, and thus include the direct, indirect, and induced effects. For example, 100 new employees in wood products would result in 172 new employees in other industries. Several factors influence the multiplier. Employment multipliers are high when production serves a market outside the local area. For example the coal industry and industrial chemical multipliers are high because the coal and chemicals produced in the local area is ultimately sold outside the local area. In effect, consumers outside the local area are hiring employees in the local area to produce for them. Another factor that would influence the multiplier would be whether the production required component material produced in the local area. Industrial chemicals, for example, are typically made from raw materials (e.g., minerals, petroleum products) that are purchased in the area. Still another factor is the relationship of capital and labor in the production.

Exhibit 6: Impacts of New Development in Selected Economic Sectors

Sector with Employment Increase of 100: Employment Total Increases In Labor Income EmploymentMultiplier
Output Value Added
Wood Products - SIC 243 171.6 $19,314,611 $6,817,740 $4,756,619 1.72
Industrial Chemicals - SIC 281 393.7 $85,701,589 $32,197,791 $17,386,594 3.94
Industrial Machinery - SIC 359 144.3 $12,911,557 $6,283,470 $4,894,718 1.44
Electrical Equipment - SIC 369 142.7 $16,030,565 $6,249,476 $3,857,858 1.43
Trucking and Warehousing - SIC 42 171.1 $15,882,971 $7,199,010 $5,004,439 1.71
Wholesale Trade - SIC 50 and 51 145.7 $13,025,546 $8,895,972 $5,234,186 1.46
Hotels - SIC 701 112.9 $5,279,681 $3,389,324 $2,068,290 1.13
Computer and Data Processing - SIC 737 133.5 $9,597,164 $6,550,307 $5,292,221 1.34
Other Business Services -SIC 73 136.8 $9,769,837 $4,320,230 $2,753,472 1.37
Coal Mining - SIC 12 279.6 $46,473,043 $22,776,614 $14,464,588 2.80
Apparel -SIC 23 138.5 $12,320,118 $3,497,512 $2,466,323 1.39
Non-Residential Construction - SIC 154 159.6 $15,236,373 $6,317,813 $4,910,199 1.60
Residential Construction - SIC 152 179.4 $18,773,649 $6,058,405 $4,367,477 1.79
Highway Construction - SIC 161 151.2 $14,675,580 $6,098,948 $4,630,616 1.51
Forest Products - SIC 083 112.2 $3,305,683 $877,892 $421,338 1.12
Bakery Products - SIC 205 166.1 $21,775,686 $9,125,816 $5,488,884 1.66
Commercial Printing - SIC 275 142.1 $13,977,023 $5,611,324 $4,173,744 1.42
Automotive Stampings - SIC 371 193.5 $27,280,315 $9,810,523 $7,917,229 1.94
Mining Machinery - SIC 353 162.0 $19,686,554 $7,822,530 $6,231,780 1.62
Credit Agencies - SIC 61 126.7 $6,035,810 $3,205,364 $2,936,154 1.27
Amusement and Recreation Services - SIC 719 104.1 $2,782,569 $1,877,316 $1,143,867 1.04

Source: Global Insight calculations using RIMS II multipliers

Plans are underway to construct industrial parks at the intersection of Corridor G and the TOLSIA/King Coal Highway. The Indian Ridge Industrial Park, currently under construction in McDowell County, is located near the intersection of the Coalfields Expressway and the King Coal Highway. More such sites should be developed as the highways are completed. The reason for constructing the new industrial parks will be to increase the supply of developable acreage in the study area with the required infrastructure needed to support the market-driven economic development. One caution is that the supply of available industrial areas in total acres of land having the full suite of required utility services not outstrip the demand for such space. As stated above, for every 100 new manufacturing jobs attracted into the study area, there would be significant increases in economic activity, with the proportionate increases in employment, income, output, and value added varying according to the type of industry that moves into the study area.

VI. Economic Development Results and Recommendations

As noted in Section III (Objectives of the Project) the highway improvement itself increases employment and general business activity but there are additional things that could build on the highway improvement to further leverage this positive development. The end of Section V. Methodology, gives an idea of the types of industries that might expand and the indirect effects (multiplier) of such expansion. The study developed a list of recommendations to provide guidance in leveraging additional increases in employment and business activity beyond those directly related to the highway improvement. These are outlined below. They are divided between recommendations to increase tourism, development policies for new industrial parks, and other policies that would enhance the study area's economy.

Recommended Economic Development Policies for Tourism

Updated: 12/04/2012
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