2006 Annual Report Executive Summary
Kentucky Highlands Empowerment Zone
During the period ended December 31, 2006, the Kentucky Highlands Empowerment Zone continued its implementation of the Strategic Plan as all the Benchmarks were completed or nearly finished. The most important event that occurred in the KHEZ during 2006 was the decision by the Jackson County EZ Community, Inc. to reprogram the funds for the Jackson County Reservoir that had been included in the original Strategic Plan in 1994. Public hearings were conducted to offer changes to the Strategic Plan and propose a reallocation of resources. In Jackson County, the public forums were held on December 7, 2006 in the morning and December 12, 2006 in the evening. The purpose was to accepted proposals on how to reallocate the $3,868,644 remaining from the Jackson County Reservoir project. The hearings were well-attended, with more than 125 people signing the registration form and many others present. During the meetings, 51 projects were proposed.
The Jackson County EZ Community, Inc. has taken the projects and assigned each to one of their standing committees for review. This process involves the committee meeting with each project sponsor to gather further information on the proposal. Following the research phase, the committees will present their findings and recommendations to the full board of directors of the Jackson County EZ Community, Inc. This board will then make a final decision on the reallocation of funds. This process will be completed by March 31, 2007. The final recommendations will be reviewed by Kentucky Highlands Investment Corporation, as Lead Entity, the Commonwealth of Kentucky and the U.S. Department of Agriculture - Rural Development for project eligibility and public participation. Following this review, the projects become part of the Strategic Plan and implementation will begin.
Another major effort during 2006 with the KHEZ was continuing to assist Mid-South Electronics, Inc. with their rebuilding efforts. On January 15, 2005, Mid-South Electronics, Inc. experienced a devastating fire at Plant 1 in Annville. The larger of the two adjoining Mid-South Electronics, Inc. facilities, the 168,000 square foot plant housed the company’s molding operations, electronics assembly work and administrative offices. The building was completed destroyed. All inventory and production equipment was lost. The company was forced to layoff 655 associates.
On a positive side, Mid-South Electronics, Inc. was insured for the loss, most of the plant’s tooling survived the fire and the company quickly reestablish operations in Jackson County. To assist with this effort, the KHEZ approved more than $5.2 million in financing for the company and arranged a further $3 million in loans. All employees that were working at Mid-South Electronics, Inc. at the time of the fire were called back at work. However, by the end of 2006, Mid-South Electronics, Inc. largest customer, Frigidaire, moved of all their production offshore to China and Mexico forcing Mid-South Electronics, Inc. to regroup again. The company is current on its loans and feels it will still be an important employer in the area, but at smaller level of around 250 employees. The majority of the Empowerment Zone grant award has been earmarked for job creation efforts, and in this area, the KHEZ continues to be judged a success.
According to the 2000 U.S. Census, the population of the three KHEZ counties stood at 43,052, an increase of 4,494 residents or 11.7% during the 1990's. This compares to a growth rate of 9.7% for Kentucky during the same period and a decline in population in the Appalachian counties of the Commonwealth, of which the KHEZ is part.
On the county level, most Benchmarks are now complete. In Clinton County and Wayne County, all Benchmark projects have been implemented. In Jackson County, as reported earlier, the Jackson County Reservoir was the only project left to be completed. After spending more than $1.2 million in environmental and engineering studies on the proposed 113-acre lake, the project stalled in the federal and state review process. The reallocation process is now underway.
Through the period ended December 31, 2006, the KHEZ has invested $35,986,921, or 90.0%, of the SSBG award. Excluding the funds remaining for the reservoir in Jackson County ($3,868,644), more than 99.6% of the KHEZ funds have already been expended in the communities. This is far more than the $40 million original award, validating the sustainability of the KHEZ Strategic Plan approach. The resulting impact is tangible and apparent.
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