Jennifer Sparger

English

Research Papers in Economics

SOLD!
James River Islands
Auctioned
O
n Feb. 22, close to 300 people
packed a Richmond auc-
tion house to bid on some very
unusual property: 39 islands scat-
tered across a short stretch of the
James River. 
Located in Goochland
County, several miles up the river
from Richmond, these islands
range in size from 5 acres to one-
hundredth of an acre. Potential
buyers were informed that the
acreage depends on the water
level and that some of the islands
are below water part of the year. 
Bidders were not thwarted by
this news — or by the fact that
ownership of five of the islands
was contested at the time of the
auction. According to Tim
Dudley, vice president of real
estate for Motley’s Real Estate
and Auction Group, all 39 islands were bid on, and the
islands with contested ownership sold for approximately
$6,000 per island. 
Why would people be willing to buy up the islands,
despite the iffy conditions? For most buyers, it was a love
of the great outdoors, to have their own place to camp,
fish, hunt, and enjoy watching wildlife. 
“Many islands are now being claimed because of the
land value and because land that might have been unim-
portant years ago has taken on a different perspective.
They’re great as a recreational opportunity,” says George
Sydnor, the Richmond businessman who sold the islands at
the February auction. 
According to a recent survey from the U.S. Fish &
Wildlife Service, wildlife-related recreation is a $108 
billion industry nationwide, 12 percent of which is leasing
or buying property for such recreation.
Furthermore, an increase in outdoor recreational 
hobbies — combined with higher disposable incomes 
and lower interest rates — has played a role in creating 
a niche market for recreational land. 
All of the islands sold on the day of the auction, but some
buyers decided not to go through with the deal. 
For example, one man who took his surveyor out to the river,
could not find “his” island and backed out. — JENNIFER SPARGER
MOVING ON
GM Plant Closure
Frees Up Prime Parcel
A
t its peak, General Motors
Corp.’s van assembly plant
in southeast Baltimore employed
7,000 workers. At the beginning
of 2005 that number was down 
to 1,100, and it dropped to zero
on May 13 when the automaker
closed the plant for good.
But the blow of losing yet
more Fifth District manufactur-
ing jobs is somewhat blunted in
this case. Economic developers
view the closure as a rare oppor-
tunity to create a new industrial
park in one of the state’s prime
pieces of real estate.
News of the planned closure
last fall sparked a virtual cottage
industry of proposals for what to
do with the site. (The announce-
ment came well before June’s
report that GM planned to shed
25,000 workers from its payrolls over the next few years.)
No wonder. It sits on 182 acres nearby the Port of
Baltimore.
“There’s a lot of demand for how we redevelop this
land,” says Aris Melissaratos, Maryland’s economic devel-
opment secretary. “The strategy for developing this land is
key to the future growth of the port.”
A GM spokeswoman says the company continues 
to explore options. It can take more than a year to de-
commission plants like the one in Baltimore, which most
recently made GMC Safari and Chevy Astro minivans.
The plant closure came as little surprise to state 
officials. The good news, Melissaratos says, is that 70 per-
cent of the GM workers were retirement-eligible.
Melissaratos has backed Gov. Robert Ehrlich’s request
that GM donate the property to the state and further
asked that the company open a research and development
facility on the site.
The secretary thinks up to 5,000 jobs can be created 
on the site which would be called the Baltimore Global
Trade and Technology Center and include GM’s R&D 
unit, mid-rise office buildings, and port-oriented manufac-
turing and distribution operations. Melissaratos thinks
groundbreaking for the new buildings should happen
simultaneously with demolition of the van plant. 
A love of the outdoors and a desire to have their own
place to enjoy it drew about 300 people to the
February 2005 auction of 39 islands located on the
Goochland County stretch of the James River.
8 Region Focus • Summer 2005
SHORTTAKES
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RF Summer 2005 FINAL.ps - 7/12/2005 13:52 PMDespite the optimism, taking full advantage of the
abandoned site is a steep challenge. GM workers were 
paid an average of $27 an hour, and even in a market with
low unemployment, matching those wages may be a
stretch. Still, Melissaratos is undeterred. He sees the re-
development of the site as part of a larger “transformation
of Maryland’s old manufacturing economy to a new knowl-
edge economy.”  — DOUG CAMPBELL
COVERING THE UNINSURED
Maryland Governor Vetoes 
“Anti-Business” Health Benefit Mandate
C
oncerned about the growing number of working
Americans lacking health insurance or dependent on
Medicaid, Maryland lawmakers in April mandated that large
employers spend a minimum amount of money on health
benefits. A month later, the law was vetoed by Gov. Robert
Ehrlich, Jr. as being anti-business. Ehrlich also vetoed a bill
that would have increased the state’s minimum wage by a
dollar.
The Fair Share Health Care Fund Act would have
required companies with more than 10,000 employees to
devote at least 8 percent of their payroll to health insurance,
excluding wages paid in excess of the state median income.
Alternatively, large firms would have to pay the difference
between their health insurance costs and 8 percent of total
wages into the state Medicaid fund.
Four companies in Maryland have that many workers:
Giant Foods, Johns Hopkins University, Northrop
Grumman, and Wal-Mart. Only Wal-Mart would have had to
increase its spending on benefits, which is why the law was
widely regarded as targeting the mega-retailer.
The law was aimed at low-skilled workers whose employ-
ers often don’t provide comprehensive benefits packages
and whose relatively low wages make it difficult for them to
purchase insurance on their own. “Somebody still has to
empty the trash, park the cars in the garage, and landscape
yards,” says Tom Hucker, executive director of Progressive
Maryland, which lobbied for the vetoed legislation.
Still, Maryland’s mandate for employer health benefits
wouldn’t have addressed why some salaries aren’t keeping up
with health costs. Also, it wouldn’t have helped many thou-
sands of other workers who aren’t employed by large
companies. According to a December 2003 report by the
Kaiser Commission on Medicaid and the Uninsured, 49 per-
cent of uninsured workers nationwide are either
self-employed or at firms with less than 25 people. 
A proposal to cover a broader range of companies failed
to pass the state’s General Assembly last year. “Lawmakers
are very sensitive to small-business owners who are trying to
create jobs,” explains Hucker. 
Economist Aaron Yelowitz at the University of Kentucky
says it’s hard to know how much Maryland’s health benefit
mandates would have affected businesses, but he thinks that
they could have had unintended adverse effects. “If you
make Wal-Mart pay more for health insurance, they might
simply lower other forms of compensation,” notes Yelowitz.
Or companies could reduce the hours of part-timers to 
make them ineligible for benefits. In Hawaii, the only state
that mandates health coverage of employees, the percentage 
of people working 20 hours a week or less is higher than 
the national average due to businesses trying to skirt the 
mandate.   — CHARLES GERENA
BACK BY POPULAR DEMAND
Fifth District Utilities Seeking Permits
for New Nuclear Capacity
I
t’s been almost 30 years since an American power 
company ordered a new nuclear power plant. Now, three
groups of reactor makers and utilities, including major
players from the Fifth District, are seeking to break that
drought.
In the past, power companies had to apply for separate
licenses to build and run a plant, each of which required
extensive regulatory and public scrutiny. That’s why
Congress took several steps to streamline the licensing
process in 1992, one of which was to create a single 
construction and operation license (COL). 
Despite this change, power companies didn’t rush out 
to apply for a COL. Instead, they chose to upgrade their
existing nuclear plants.
The reluctance to build nuclear plants has softened in the
last few years. Fossil-fuel prices have risen, electricity demand
has increased, and power companies have faced 
pressure to reduce their emissions. These factors have put
nuclear power back on the table along with other alternatives.
“We have to look at our customer needs and the most
economical way to meet them,” says Rita Sipe, spokes-
woman at Charlotte-based Duke Energy. Duke belongs to
NuStart Energy Development, one of the three consortiums
that applied for a COL in response to the U.S. Department
of Energy’s November 2003 solicitation. To provide an
incentive for companies to test the licensing process, the
agency offered to cover up to half the cost of the process,
estimated at $400 million. 
Filing a joint application helps spread out the financial 
burden and risks among the eight consortium members that
are power companies, including Duke, Baltimore-based
Constellation Energy, Raleigh-based Progress Energy, and 
EDF International North America in Washington, D.C.
Each company contributes $1 million to the consortium and
will have an equal share in any new plant that is built using
the COL. 
Marilyn Kray, president of NuStart, says the group is 
evaluating potential plant sites and working with consortium
members General Electric and Westinghouse to have their
reactor designs certified by the National Regulatory
Commission. If all goes well, NuStart’s COL application
could be ready for submission within the next three years and
construction could begin on a plant by 2010. — CHARLES GERENA
Summer 2005 • Region Focus 9
RF Summer 2005 FINAL.ps - 7/12/2005 13:52 PM

Sold! : James River islands auctioned

http://www.richmondfed.org/publications/research/region_focus/2005/summer/pdf/short_takes.pdf

Sold! : James River islands auctioned

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