Switching Gears: GYEDC Requesting Change to Per Capita Funding from Public Agencies

2013-07-06 23:38:05

A rising tide lifts all boats.

Vic Smith, board member of the Greater Yuma Economic Development Corporation, used this phrase to illustrate his belief that any investment that creates new jobs –– whether in Yuma, Somerton, San Luis or Wellton –– economically benefits the entire region.

“This is an investment for all of our future, whether it’s county or city or San Luis or Somerton,” Smith told the Yuma County Board of Supervisors when requesting an increase in funding.

“It’s ever so painstakingly slow, but we’re coming out of a recession and I think we have some opportunities coming our way.”

It might be time to switch gears when it comes to funding the nonprofit corporation, according to the GYEDC board.

In a time of high unemployment, GYEDC has a challenging mission: expand economic activity by attracting commerce and industry to the region and assisting existing industries to develop to their full potential.

Dennis Booth, a board member, noted that GYEDC has been filling that mission, despite a shrinking budget and staff.

“They’re out there marketing the community the way no one else can,” he said.

In fiscal year 2012/13, GYEDC helped to bring in $9.5 million in capital investments and create 428 jobs with an average base salary of $12 an hour, according to Julie Engel, GYEDC president and CEO.

The jobs were created with assistance from the corporation. “We helped them expand though grant applications and workforce development,” Engel explained.

InsulTech, a company that makes high-tech thermal and acoustic insulation, now has 40 new employees, with nine added recently, and another 40 needed this year.

Convey Health Solutions, a call center that opened in September, needs 150 new employees on top of the 154 already there. Northwest Industries, a glass fabrication company, added 11 new positions in May.

Yuma Truck Driving School added five permanent employees and trained 133 exiting military members who continue to live in Yuma, making about $45,000 a year.

Since Engel took the helm in 2008, GYEDC has helped create more than 2,000 jobs: 245 in Somerton, 911 in Yuma, 776 in San Luis and 15 in Wellton.

And although “grossly understaffed,” the corporation continues to work new leads, Engel said.

Forty-four percent of leads are in the manufacturing industry, 12 percent in distribution, and other major leads are in the industries of food processing, logistics and call centers.

The staff’s big focus is currently on California.

“California is begging us to go over there and recruit some companies because of their tax policies and other policies,” Booth noted.

GYEDC recently launched a marketing campaign showcasing seven available properties. The marketing piece was mailed to more than 1,000 California companies in the industries of aerospace, manufacturing with an emphasis on guns, and logistics.

Engel worries that the staff will miss “hits” from the latest campaign because the phone and office are sometimes left unattended due to the small staff.

“We don’t want them to get a voice mail,” she noted.

For many years, GYEDC had five full-time staff members and a part-time employee. Today the corporation has four full-time staff members.

The recession hit the municipalities particularly hard and the corporation’s budget for 2008/09 dropped from $662,140 to $633,390. In 2009/10, it dropped again to $618,390, and then in 2010/11 it dropped to $563,890.

“It is important to point out that GYEDC has continued to produce results. However, if we were funded adequately we believe our marketing efforts could produce greater results,” Engel said.

For that reason, GYEDC requested per capita funding from each public entity this year. The City of Yuma is the only public agency that has agreed to this model.

“Today the public sector arbitrarily determines what level to fund GYEDC and the amount is subject to change every year. This creates a great deal of uncertainty and volatility for the corporation,” Engel said.

She noted that it is common practice across the nation for public sectors to pay a rate based upon their population estimates when funding economic development corporations.

The average per capita spending for economic development in Arizona is $5.60 per person, according to Engel. For the United States, the average per capita funding is $6.10. The model adopted by the GYEDC board assesses a rate of $2.50 per person.

When compiling an operational budget that will have adequate funds for marketing and staffing, GYEDC estimated per capita funding would cover all its expenses. Without the per capita funding, the corporation has a deficit of $124,000.

GYEDC will have to raise at least $60,000 from the private sector in the first quarter of the new fiscal year to “effectively” market the region, Engel said.

So far, Yuma County has committed $118,450, the City of Yuma has committed $233,00, and San Luis has pledged $13,000. The corporation has not received numbers from Somerton or Wellton at this time; however, Somerton has promised an increase, she said.

Wellton has been impacted by sales tax reductions and state shared revenue reductions, so “this year will be difficult for them,” Engel added.

Not everyone is a fan of the proposed per capita model.

Robert Pickels, county administrator and GYEDC ex-oficio board member, objected to GYEDC’s request. He noted that two years ago, the county decided to fund the corporation at the equivalent of what it would cost the county to pay for an economic development employee.

“The approach they’re now asking us to take is very different,” Pickels said.

Ferguson, county supervisors chairman and GYEDC board member, said his problem is that the county is contributing $50,000 to the Port Authority, “and the city of Yuma is not giving them a dime and that’s economic development. It’s OK for them to require us to go per capita for GYEDC, but they don’t want to fund the Port Authority.”

But he added, “On the same token, I don’t have any problem taking them to $120,000.”

In the end, the county decided to increase its contribution from $110,391 to $118,450, but still short of the $150,000 the corporation had requested.

Supervisor Russ Clark said that he didn’t see the county’s contribution as an expense.

“It’s an investment that will have a pretty immediate return,” Clark told Engel. “We’re in a community that’s hurting for jobs. Your one organization has proven in your tenure particularly an aggressiveness and an ability to reach out and to get the things done that need to be done. You’re surrounded by some very competent big business leaders that believe very strongly in what you’re doing.”