Glossary of Terms

Capital Investment

The value of investments on buildings and other real property improvements, and all equipment additions (machinery, data, transferred, pollution control) made by the company.

Cluster

TNECD has 10 target industry clusters:

  • Aerospace & defense
  • Automotive
  • Business services (headquarters, data centers, back office)
  • Chemicals, plastics and rubber
  • Energy technology
  • Entertainment and media
  • Food and agribusiness
  • Healthcare and medical devices
  • Transportation, distribution and logistics
  • Other manufacturing

County Tier

Under state law, TNECD is required to annually classify each Tennessee county into one of four tiers.

The tier system is based primarily on an index of county economic status developed annually by the Appalachian Regional Commission (ARC). The index is based on three equally weighted indicators: per capita market income, poverty rate and three-year average unemployment rate. Tier four counties rank as most economically distressed.

A county’s tier may impact company or community eligibility for state tax or economic development incentives. “County tier” may also be referred to as “county tax tier.”

Direct Economic Impacts

New jobs, incomes and output that will be generated over a 10-year forecast period by company expansion, new startup or re-location activities. (See “economic impact”).

Distressed County

Counties which rank among the nation’s 10 percent most economically distressed counties, according to an annual index created by the Appalachian Regional Commission (ARC). The ARC uses an index-based methodology to measure the economic status of all counties in the nation. The index is based on three equally weighted indicators: per capita market income, poverty rate and three-year average unemployment rate.

Economic Impact

Economic impact is measured in terms of the total number of new jobs, new salaries, and new economic output that are forecasted to be created in the State of Tennessee over a ten-year forecast period as a result of company expansion, new startup or re-location activities.

Direct impacts reflect new jobs, salaries and economic output generated directly by the projects evaluated. 

Indirect impacts reflect new jobs, salaries and economic output generated in supplier networks and other firms indirectly impacted by the projects evaluated. Indirect job creation may occur in new or existing area firms, such as parts suppliers, maintenance companies and other service firms that supply goods and services for the project.

Induced Impacts reflect new jobs, salaries and economic output induced as a result of the project and other businesses indirectly supported. New economic activity induces additional growth in other industries of the economy, such as retail stores, gas stations, banks, restaurants, and service companies that may supply goods and services to new workers and their families.

Economic Output

Economic output is the projected value of goods and services produced in the state as a result of business development project activity over a 10-year forecast period. Economic output can be thought of as the revenue generated by the direct business and spin-off businesses. (See “economic impact”).

Employment

The definition of employment varies by data source.

  1. The data source for the “Tennessee Labor Force” and “County Labor Force Estimates” dashboards is the Local Area Unemployment Statistics (LAUS) program of the U.S. Bureau of Labor Statistics. Employment represents the total number of persons who work as paid employees, work in their own business or profession or on their own farm, or work at least 15 hours of the week as unpaid workers in a family-owned business. Each employed person is counted only once, even if he or she holds more than one job.
  2. The data source for the “Tennessee Employment and Job Growth” dashboard is the Current Employment Statistics (CES) program of the U.S. Bureau of Labor Statistics. Employment represents the total number of persons on establishment payrolls employed full or part time. Persons on the payroll of more than one establishment are counted in each establishment. Temporary and intermittent employees are included, as are any workers who are on paid sick leave, on paid holiday, or who work during only part of the specified pay period. Data exclude proprietors, self-employed, unpaid family or volunteer workers, farm workers, and domestic workers.
  3. The data source for the ”Small Businesses with Employees in Tennessee” dashboard is the Quarterly Census of Employment and Wages (QCEW) program. Employment represents the number of workers covered by Unemployment Insurance (UI) programs. Employment covered by UI programs represents about 97% of all wage and salary civilian employment in the country. It includes full and part-time jobs, temporary and permanent. Persons on the payroll of more than one establishment are counted in each establishment. Data exclude self-employed workers, most agricultural workers on small farms, members of the Armed Forces, elected officials in most states, most employees of railroads, some domestic workers, most student workers at schools, and employees of certain small nonprofit organizations.
  4. For the “Foreign-Owned Establishments” and “Foreign-Based Projects” dashboards, TNECD defines employment as the total number of employed persons at a business location. Employment estimates may be reported by the company or other stakeholders, or obtained from third-party databases such as Hoover’s, Dun & Bradstreet.

FastTrack grant program

The state's signature grant program that provides funding for job training, infrastructure development, and a discretionary fund for a variety of other expenses.

FastTrack Job Training

  • The FastTrack Job Training Assistance program is a reimbursement grant program that reimburses companies for on-the-job training on a per-position basis.  Because companies are not reimbursed under this grant program until a position has been created and filled for a period of 3, 6, or 24 months, no clawbacks are required under this grant program.

FastTrack Infrastructure Development

  • The FastTrack Infrastructure Development grant program reimburses local governments for public infrastructure projects tied to one or more new company locations or existing company expansions.  Because the infrastructure funded by this grant program is owned by the local government, no clawbacks are required for this grant program.

FastTrack Economic Development

  • The FastTrack Economic Development grant program reimburses local governments for work performed by a company that is not covered by the FastTrack Job Training Assistance or Infrastructure Development grant programs.  Companies benefitting from a FastTrack Economic Development program grant are required to enter into an Accountability Agreement with the department that requires the company to report annual net new job creation numbers.  If a company does not create at least 80% of the jobs it committed in exchange for the grant, the company will be required to repay a proportional percentage of the grant funds to the department.

Related links:

More information about FastTrack grants is available here: http://www.tnecd.com/advantages/incentives-grants/

A database of projects dating back to 2011 with FastTrack grant contracts in place is available here: http://www.tn.gov/transparenttn/topic/fasttrack-project-database

Federal Programs Funding

TNECD administers grants from three federal funding partners:

  • Appalachian Regional Commission (ARC) grants are available to the 52 counties in middle and east Tennessee for economic and community development projects.
  • Delta Regional Authority (DRA) grants are available to the 21 counties of West Tennessee for projects targeting workforce competitiveness, strengthened infrastructure and increased community capacity.
  • Through the Community Development Block Grant (CDBG) small cities program, funds are available to assist communities across the state* with infrastructure, housing rehabilitation, health and safety, and other projects aimed at improving community livability. Tennessee has also received CDBG funds for disaster recovery due to flood and tornado disasters impacting Tennessee.

* TNECD administers the "Small Cities" CDBG program. All communities in Tennessee are eligible except those in entitlement communities which receive CDBG funds directly from the U.S. Department of Housing and Urban Development (HUD). Entitlement areas include Bristol, Chattanooga, Clarksville, Cleveland, Davidson County and Nashville, Franklin, Hendersonville, Jackson, Johnson City, Kingsport, Knox County and Knoxville, Morristown, Murfreesboro, Oak Ridge, Shelby County and Memphis.

Film project

Film projects include feature films, TV series, music videos, commercials, and other entertainment productions. The Tennessee Entertainment Commission (TEC) supports film projects in a variety of ways.

Foreign-Based Company

A Tennessee business that is headquartered in a country outside of the United States.

Foreign Direct Investment

An investment made by a foreign-based company in a Tennessee operation.

Indirect Economic Impacts

New jobs, incomes and output that will be generated indirectly over a 10-year forecast period as a result of company expansion, new startup or re-location activities. (See “economic impact”).

Induced Economic Impacts

New jobs, incomes and output that will be induced over a 10-year forecast period as a result of direct and indirect growth. (See “economic impact”).

Job Fulfillment

The job fulfillment rate equals the percentage of net new job commitments that have been created, or job creation as a percent of new job commitments. Companies receiving FastTrack grant assistance have up to five years to create new jobs. This five-year time period may include facility design, construction or other time-intensive activities that may require the hiring process to begin later within that five-year time period. As such, the job fulfillment rate is higher for projects locating in earlier years.

Incentives

TNECD administers some non-tax incentives through the FastTrack grant program. The FastTrack program provides grant assistance to companies and/or local government entities to assist in their business development efforts.

Tax incentives are administered by the Tennessee Department of Revenue.

More information about tax and non-tax incentives available to business is available here: http://www.tnecd.com/advantages/incentives-grants/

Labor Force

The civilian labor force includes all persons ages 16 and older who are either employed or unemployed. The civilian labor force excludes persons who are inmates of institutions and who are not on active duty in the Armed Forces. (See “employment” and “unemployment”).

Data source is the Local Area Unemployment Statistics (LAUS) program of the U.S. Bureau of Labor Statistics.

Labor Force Participation Rate

The percentage of the civilian noninstitutional population that is in the labor force (that is, either working or actively seeking work).

Data source is the Local Area Unemployment Statistics (LAUS) program of the U.S. Bureau of Labor Statistics.

New Job Commitments

The number of net new jobs a company commits to create.

Nonemployers

Businesses that have annual receipts of $1,000 or more and are subject to federal income taxes. Most nonemployers are self-employed individuals operating unincorporated businesses (known as sole proprietorships), which may or may not be the owner’s principle source of income.

Data source is the U.S. Census Bureau.

Payback Period

The payback period is the projected number of years that it will take the State of Tennessee to recover the cost of incentives from the additional revenues that it will receive as a result of the project. (See “Return on Investment”).

Project

A "project" is a company commitment to expand, start operations or re-locate to Tennessee. All projects referred to in the context of business development are projects that TNECD has assisted. Many projects receive FastTrack grant assistance from TNECD, but others receive assistance from the department in other ways.

Project Type

TNECD captures four different types of business development project activity:

  • Expansion: a project which involves a Tennessee business expanding its operations and/or workforce at an existing Tennessee facility.
  • Expansion New Location: a project which involves a Tennessee business expanding its operations and/or workforce at a new location within the state.
  • Recruitment: a project which involves recruitment of a business to Tennessee that was not originally located in Tennessee.
  • New Startup: a project which involves a new startup company that was not previously located in Tennessee or any other location.

Project Year

Calendar year in which a project occurs. Year in which a company commitment is made to locate growth activity in Tennessee.

Rate of Return

The rate of return on investment is the average annual rate of return to the State of Tennessee. TNECD’s model treats state incentives as the investment and net new tax benefits to the state as the return on investment. Net benefits are additional tax revenues generated, less costs of additional services for new residents and businesses. (See “Return on Investment”).

Return on Investment (ROI)

Return on investment measures the projected gain or loss generated from an investment relative to the amount invested or the investment's cost.

In a return on investment analysis, the Center for Economic Research in Tennessee (CERT)  forecasts the fiscal net benefits that projects will generate (return to the state) relative to state incentives for the project (state’s investment). Fiscal net benefits take into consideration tax revenues, tax credits, additional costs of providing state services, and many other facets of a business operation).

CERT utilizes a model developed by economic consulting firm Impact DataSource. The model was developed in partnership with the Tennessee Department of Revenue. The model provides an estimated payback period (or number of years that it will take the state to receive a full return on its investment) and rate of return (percent of investment that will be returned to the state each year).

Rural and Urban

TNECD defines urban counties as counties where at least 50 percent of the county population lives in an urbanized area.

According to the U.S. Census Bureau, urbanized areas comprise larger places and the densely settled areas around them. Urbanized areas have an urban nucleus of 50,000 or more people. In general, they must have a core with a population density of 1,000 persons per square mile and may contain adjoining territory with at least 500 persons per square mile.

There are 17 urban counties in Tennessee according to this definition: Anderson, Blount, Bradley, Carter, Davidson, Hamblen, Hamilton, Knox, Loudon, Madison, Montgomery, Rutherford, Shelby, Sullivan, Sumner, Washington, Williamson

http://tn.gov/ruraltaskforce/section/about

Southeastern States

The Southeast is a 12-state region, as identified by the U.S. Bureau of Economic Analysis (BEA). The 12 states are: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.

TNECD Region

TNECD considers nine regions in Tennessee. Counties in each region:

  • Northeast Tennessee: Benton, Carroll, Crockett, Dyer, Gibson, Henry, Lake, Obion, Weakley
  • Greater Memphis Tennessee: Fayette, Lauderdale, Shelby, Tipton
  • Southwest Tennessee: Chester, Decatur, Hardeman, Hardin, Haywood,  Henderson,  Madison, McNairy
  • Northern Middle Tennessee: Cheatham, Davidson, Dickson, Houston, Humphreys, Montgomery, Robertson, Rutherford, Stewart, Sumner, Trousdale, Williamson, Wilson
  • Southern Middle Tennessee: Bedford, Coffee, Franklin, Giles, Hickman, Lawrence, Lewis, Lincoln, Maury, Marshall, Moore, Perry, Wayne
  • Southeast Tennessee: Bledsoe, Bradley, Grundy, Hamilton, Marion, McMinn, Meigs, Polk, Rhea, Sequatchie
  • Upper Cumberland Tennessee: Cannon, Clay, Cumberland, Dekalb, Fentress, Jackson, Macon, Overton, Pickett, Putnam, Smith, Van Buren, Warren, White
  • East Tennessee: Anderson, Blount, Campbell, Claiborne, Cocke, Grainger, Hamblen, Jefferson, Knox, Loudon, Monroe, Morgan, Roane, Scott, Sevier, Union
  • Northeast Tennessee: Carter, Greene, Hancock, Hawkins, Johnson, Sullivan, Unicoi, Washington

Total New Jobs

Total new jobs created through TNECD projects includes direct, indirect and induced job creation projected to occur over a 10-year forecast period. (See “economic impact”).

Total New Salaries

Total new salaries created through TNECD projects includes direct, indirect and induced new salaries projected to occur over a 10-year forecast period. (See “economic impact”).

Unemployment

Includes people who are jobless, actively seeking work, and available to take a job.

Data source is the Local Area Unemployment Statistics (LAUS) program of the U.S. Bureau of Labor Statistics.

Unemployment Rate

The number of unemployed persons as a percentage of the labor force.

Data source is the Local Area Unemployment Statistics (LAUS) program of the U.S. Bureau of Labor Statistics.