How are the tax dollars being spent?
Monday, April 15, 2013
When it comes to economic development, the measure of success isn’t necessarily what some might think.
The Jefferson City Area Chamber of Commerce recently presented its annual report to the City Council and, later this week, will be giving the same presentation to the Cole County Commission. Both the city and county contract with the chamber for economic development services, though the city provided $50,000 more than the county in 2012.
Randy Allen, chamber president and CEO, said the partnership for the economic development program has been extremely successful, but it’s hard to explain that to those who measure success in a different way.
“The problem is most people deem success as ‘Did you attract a new industry?’” Allen said.
He said the program really began just before the recession hit, which meant many businesses no longer were looking to expand or move into new areas. Another aspect, he said, is that it took some time to get the program up and running at the level it is now.
“Before, we weren’t even dressed out. Now we’re dressed out, on the field, up to bat and we’re hitting singles, just haven’t hit the home run yet,” Allen said. “But it’s just extremely difficult to explain this to people.”
According to the chamber’s report, more than $521,000 was spent on economic development in 2012. Of that amount, $406,628 was spent on chamber personnel expenses.
Allen said that’s because economic development is very personnel focused. Allen said the activities are focused on making contact and marketing.
“Economic development is all about doing those activities,” Allen said. “It’s less about building something or creating something. It really is that facilitation process.”
The chamber has 11 employees, including Allen, and spends $771,583 on personnel in a budget of $978,525.
While some of the 11 employees are more economic-development focused, Allen said, there are no employees devoted only to economic development. The chamber has a system of documenting hours by activity and classifying that activity as economic development, chamber, half and half or administrative, Allen said.
Administrative costs are calculated by employee and the percent of time they spend on economic development or chamber activities. For example, Allen said, if one employee spends 80 percent of his or her time on economic development activities, then 80 percent of that employee’s administrative costs would come from the economic development fund.
In total, the chamber spent $36,406 on economic development expenses in 2012. The largest expense was $8,194 for travel, followed by $5,515 spent on the website. Other economic development expenses include professional development, small-business assistance, technology, and research and analysis.
The chamber also reported that in addition to the $450,000 provided by the city, county and support from 21st Century Land Investments, operated by the chamber, another $71,917 was spent on economic development from the chamber’s own funds. Allen said there was no specific project or expense that led to the additional funds being needed. He said the chamber develops a strategic plan at the beginning of the year and decides what needs to be worked on. He said any overage from the dedicated funding just comes out of the chamber’s funds.
“That has not been unusual the last six years,” Allen said. “We always spend more than our dedicated income.”
The chamber also spent $2,913 on community development expenses. Those included funds for Old Town, public relations and marketing, a community development committee and travel.
In the annual report, the chamber reported 36 business attraction projects being worked on in 2012. Allen said an attraction project is trying to bring a new business to a community.
The chamber also reported some business expansion projects announced in 2012, resulting in a $26.2 million investment in the community. Allen said the chamber’s existing business manager, Shaun Sappenfield, works closely with businesses, and when one looks to expand, he helps to identify available incentives for businesses.
“It’s facilitation and developing incentives,” Allen said. “We are like the consultant.”
Allen said the chamber helped to create enhanced enterprise zones, which are specified geographic areas designated by local governments and certified by the Missouri Department of Economic Development. Zone designation is based on certain demographic criteria and the potential to create sustainable jobs in a targeted industry.
Alpla Inc. was one business that announced an expansion in 2012 that is expected to create 25 new jobs. The company was approved for state tax credits under the enhanced enterprise zone program.
Representatives of Alpla did not return messages seeking comment on incentives and assistance they received with their expansion.
Unilever also announced an expansion in 2012 that is expected to create 61 new jobs. Jeff Graubard, media relations manager with Unilever, said the company received industrial revenue bonds for their expansion, as well as a five-year personal property tax abatement. Graubard did not respond to a question about the role of the local chamber of commerce in the company’s expansion.
“We helped them put together their package and work with the city and county to make sure that they had the best available thing,” Allen said.
In this month’s Chamber Today publication, Allen wrote that in the period of 2007 to 2012 “the city and county leveraged a return of $1.33 for its $1 investment in the operating budget for (economic development).”
Allen said what that means is that for every $1 spent on economic development by the city and county during that six-year period, the chamber has spent $1.33 on economic development.
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