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Subject: Economic Development Present:
Mayor Ernie McAlister, Mayor Pro Tem Jack Smith, Council Members
Michael Joyce, Jennifer Robinson, Julie Robison and Nels Roseland Absent: Council Member
Marla Dorrel Others Present:
Economic Development Commission members Nellie Shipley (Chair),
Hari Nath, Richard Morris, Wally Dawson, and Gregg Sandreuter; Cary
Chamber President Howard Johnson and Board Chairman Brian Reid Mayor McAlister called
the meeting to order at Ms. Shipley reviewed the
Economic Development Commission’s (EDC) recommendation for
implementation of the Sanford Holshouser economic development report. (A
copy of the PowerPoint Presentation is attached to and incorporated in
these minutes as Exhibit A.) Mrs. Robinson asked about
the funding for an Economic Development Director (EDD). She said that
council may want to look at extending the funding and making a commitment
for a certain number of years. Mr. Joyce stated that
EDC’s role in this process should initially be to act as a board of
directors. Mrs. Robison asked about
the program development strategy and whether the commission discussed
expected targets for measurable objectives. She said it is reasonable to
have expectations so that anyone applying for the position knows the
expected outcome at the end of each year. Mr. Sandreuter responded that
one idea the commission discussed was how quickly the EDD position could
pay for itself and become self-sustaining. Mr. Nath added that it is not
easy to measure. He said that the commission thought that the EDD would
create the objectives for the governing board to review. Mr.
Dawson stated that an important consideration was to not have that person
boxed in and to not limit the position. He said the EDD will need space to
develop on their own, receive input from council, and review the Sanford-Holshouser
report, and then within a short time frame recommend specific action items
to the board. Mr. Morris stated that the commission wanted the EDD to
create a measurable action plan. Ms. Robison asked if the
commission discussed a time frame for satisfactory outcomes. Mr. Dawson
responded that the commission thought that over time the person would be
able to demonstrate the actual economic impact of the expenditure for that
position. He said that the EDC’s expectation is that it be multiplied
rather quickly, and within a three year time frame the EDD should be able
to quantifiably demonstrate what the funds have returned. Mr. Dawson said
that the funds will be used to create the tax base and the EDC discussed
accountability to the tax payers for any additional expenditures. He said
that it needs to be compounded multiple in terms of the return. Mrs. Robison asked if the
Sanford Holshouser report provided compelling objectives and ideas to
pursue that would render the best return. Ms. Shipley responded that there
was some discussion about the options to be undertaken. She said that when
the EDC was tasked with the organizational structure they deferred the
entire issue. She said that the commission decided that in the first 90
days the EDD will need to state the measurable objectives because that
person is going to have that knowledge and expertise. Mayor McAlister said that
the Sanford Holshouser action plan has concrete objectives and provides
the blueprint for the focus of the EDD. How those objectives are
accomplished is an interactive process. Mr. Roseland asked what
is budgeted in the Town’s current operations to help the Chamber. Mr. Roseland said there
are two policy questions to be answered:
(1) who should manage the economic development effort; and (2) who
will pay the bills. He said that the Sanford Holshouser report recommends
that the business community manage the economic development effort through
a new 501c3 which would be a funding mechanism for the new positions. He
said that the business community would take a leadership role in managing
and paying for the function. He said that the EDC recommendation has the
business community taking the lead management role with some council
oversight, but the Town would still pay the bills. Mr. Roseland asked when
the financial sharing and match would take place. Ms. Shipley responded
that the EDD would be the person to inform the Town of a reasonable stage
to make the transfer. She said there are two things that happen when
funding responsibility is shifted to the entity doing economic
development: (1) accountability is lost, and (2) their attention is
shifted—if they are fundraising they are not doing economic development.
She said there would be opportunities for fundraising to partner with the
private enterprise, which is one of the things that could be done by a
501c3. She said that the fundraising should initiate from a specific goal
to be accomplished. Mayor McAlister said that
a significant part of the Sanford Holshouser report was the recommendation
that eventually the economic development effort would be drawn from the
business community. He said that the Town will take on a greater portion
of the funding obligation in the early part of the program, but a
commitment needs to be made for a period of time so that the program can
be successful. Mayor McAlister asked if
the Chamber has an annual audit and whether their costs can be segregated
so that council would know exactly how much is being spent for economic
development. Mr. Johnson responded that the Chamber does have an audit
program and they can accommodate that request with their accounting
system. Mayor McAlister said that
the Town would fund the program, but that the EDD would be paid by the
Chamber of Commerce, not the Town. Mrs. Robison asked is the
governing board would convene prior to the hiring of the EDD to hone in on
greater specifics. Ms. Shipley responded that it would make sense for the
board to meet and provide a general framework for the director. She said
that the board will determine whether the EDD has met the objectives which
have been set. Mrs. Robison is said that
the job description should be shaped around the highest priorities so that
the benefits to the local economy can be seen. She would feel more
comfortable with flushing out the focus ahead of the hire and the
expertise that the person would be expected to bring to the job. Mayor Pro Tem Smith said
that the foundation in the recruiting effort is the position description
which should be put together by the governing board. Mayor McAlister said that
he and Mr. Roseland discussed the privilege license fee increase as a
possible funding source. He said it makes sense because the funds come
from the business community and could go back into the business community.
He received information from staff which showed that the privilege license
fee increased the Town’s revenue $630,000 over fiscal year 2006, and
that would cover the first year costs of the program by two to one. He
said it is a logical revenue stream to consider for funding the economic
development positions. Mrs. Robison asked if the
estimated revenue stream from the privilege license fee increase is
already factored into the current budget. Mr. Fogleman responded
there is enough operating margin available to take it from the general
fund. Mayor McAlister talked
about the continuing role of EDC. He said it is natural for the EDC to
continue as an entity to receive information on a regular basis and
leaving primary oversight with the EDC is good. He said that regardless of
the number of members, the governing board will be a public body similar
to the Planning and Development Committee and Operations Committee. He
said that because of confidentiality issues it is better to have fewer
people involved; however, it is important to structure the program so that
everyone on council can have input regardless of the number of board
members. Mrs. Robison asked about
the structure of the governing board. She suggested that a majority of the
board be made up of EDC members. She said it is an actionable way to have
the citizen commission take a more permanent role in application of their
expertise and knowledge of the market. Mr. Dawson stated that in the
original draft report EDC members were part of the governing board. The
commission put a lot of emphasis on council accountability, and including
the EDC on the governing board would be duplicative because the commission
is already part of the recommendation and review process.
Mr. Dawson said that the EDC wanted to ensure that the commission
was outside of the governing board. Ms. Shipley added that the EDC decided
it would make sense for the commission to be heavily involved during the
first year, but continuing in their recommendation they will be receiving
and providing feedback along with the governing board. Mr. Roseland said that
keeping the group focused to five members has an advantage.
Intermittently, the broader group can weigh in as needed. He supports the
smaller composition for the governing board. Mr. Dawson said there are
two different things: the hiring process board panel and then there is the
governing board. Mayor McAlister asked why
they wouldn’t be one in the same. Ms. Shipley said responded that the
EDC wanted a leaner group to be involved in the selection process due to
the confidentiality. She said appointing two EDC members to a subcommittee
to work with the governing board in hiring makes sense, but going forward
the reporting can be done on a much more structured basis than the hiring.
Mayor McAlister said that
it makes sense to adopt a governing board structure similar to the EDC
recommendation (mayor, two other council members, chamber president,
chamber chair and Town manager). It
should be included by reference that the governing board works closely
with the EDC for citizen input. He said someone has to be holding the
purse strings and someone has to be in a management capacity, which is the
governing board. Mayor McAlister said that
he thinks the mayor and the economic development commission council
liaison are the only two that need to be on the board, two members from
the chamber—the executive director and the chair (or at the executive
director’s choice, the economic development vice president). ACTION:
Mayor McAlister moved that the mayor and the economic development
commission liaison from the council side, the chamber president and his
designee from the chamber side, and the Town manager become the managing
board of this effort. Mr. Joyce provided the second. Mrs. Robison asked who
will staff the governing board. Mayor McAlister said that would be left up
to the Town clerk staff to determine the support because it would be a
public body. ACTION:
Mayor McAlister called for a vote on the motion, and council
granted unanimous approval. At ACTION:
Mrs. Robinson moved to excuse Mr. Joyce from the meeting. Mrs.
Robison provided the second and council granted unanimous approval. Mayor McAlister stated
that the EDC recommendation is for $300,000 and asked how the funding
would work for the EDD and business retention expert. Mr. Fogleman said
that the EDC discussed that none of the money would move forward until the
first 90 day report came back itemizing exactly how it will be spent and
sticking to the priority list. He said that the money could be
appropriated for that initiative and staff would work out the cash flow
specifics later. Mr. Roseland proposed an
alternative of setting up a separate economic development fund, putting
aside $750,000 once, and then drawing down over 2-1/2 to 5 years. He said
that the Chamber should come up with the other $750,000 to fund the second
position. He said it would be with the direction that the business
matching partnership would kick in as soon as possible so that it does not
eat into the operating budget. Mayor McAlister said that
the proposal shows a long term commitment to the program and it should be
structured so that it does not create a cash flow crunch for the chamber.
He said it would also create a sense of urgency that there is a corporate
match at some point in the future as suggested by the Sanford Holshouser
report. Mrs. Robinson said she
likes the fact that the funds are being appropriated during the budget
process, she is not in favor of mid-year appropriations. She said it shows
commitment to the program for more than just one year. However, she is
leery about the private fundraising. Mrs. Robinson asked Mr. Johnson about
the likelihood of the chamber raising the funds. Mr. Johnson said that
they can reestablish and reinforce fundraising and that 2-1/2 years should
not be a problem. Mrs. Robison said this
will be a completely new business model which will create new value in
order to be of interest. She said If the early part of the work is to
develop a plan with a sound business model it would have certain
strategies. Ms. Shipley said that the
committee felt that to the extent fund sharing did occur it should be done
later so that there is no diversion from doing economic development or
loss of accountability. She said that seed money creates accountability if
there is only one funding source. She said that additional funding should
be new money and that the Town should not be looking at the Chamber’s
pot of money for its source. She
said that the EDC’s recommendation is that the Town implements the
program with new funds, not existing funds. Mr. Roseland asked for
clarity on when the business support will begin. Mr. Dawson said that the
whole objective in terms of revenue source and payback is tax base, not
the Chamber and the benefactor of the seed money is the Town. If the
recommended model works then the investment of $300,000 in years to come
will yield two to three times that amount with the Town keeping 100
percent. Mr. Dawson said that the EDC did not consider a future
fund-sharing of private versus Town funding for ongoing operations. Mr. Roseland stated that
the EDC recommendation did not include 501c3 funding. Mr. Dawson replied
that the funding for the non-profit was for acquisition of property and
other things in which the Chamber or the Town may not want to venture
into, not for operating funds. Mayor McAlister stated
that the Sanford-Holshouser report showed that the function of the 501c3
would be to carry the economic development function, it would be funded in
part by contributions from the business community, and it would include
operating funds. ACTION:
Mr. Roseland moved that an appropriation of $750,000 be provided
from
general fund fund balance
in
a special economic development fund that does not revert at the end of the
next fiscal year with the intent of providing a long term commitment to
the economic development plan. Mrs.
Robinson provided the second. Mayor McAlister asked if
Mr. Roseland would entertain an amendment to the motion to include a
$300,000 ceiling on what can be expended. ACTION:
Mr. Roseland amended his motion with that ceiling. Mrs. Robinson
amended her second. Mrs. Robison asked for an
amendment to the motion to include a relationship with the revenue stream
from the privilege license fees. Mayor McAlister asked
staff if attaching those funds was a possibility. Mr. Fogleman responded
that council could direct that some portion of the revenue stream be
directed towards that particular fund. He said that part of the mechanics
would be forecasting the exact number for the upcoming revenue stream. He
suggested addressing it in terms that the $750,000 of the estimated
differential is around $630,000 from FY05 to FY06. He said that the
general fund fund balance can make up the difference. Mr. Roseland said that if
the expectations in revenue growth is exceed they may consider putting it
aside in the economic development fund since it is revenues received from
the business community. If the Town exceeds budget targets those excess
receipts should be captured long term and funneled toward the economic
development effort. ACTION:
Mr. Roseland amended his motion to include tying the funding to the
privilege license. Mrs.
Robinson amended her second. Mayor McAlister said that
it actually identifies where $630,000 of the $750,000 is coming from. He
said it brings the delta down to a significantly lower amount. ACTION:
Mayor McAlister called for the vote, and council granted unanimous
approval. Mayor McAlister stated
that council has accepted the structure, established the governing board,
funded the program, and put the funding in place with a cap to carry for a
number of years. Ms. Shipley said that the
recommendation that discusses fundraising talks about a non-profit entity
being more effective at raising private foundation funds and does not
address the issue of operational or special purposes; however, that is
something that may be visited in the future.
She said it would be more appropriate for the EDD to come back to
the council with a determination of whether the funding would work. Ms. Shipley said that it
would be optimal if council could decide on the development of the basic
program of work and whether the council intends to vet the proposals with
the list of exceptions, so that they know who needs to meet when. Mayor
McAlister suggested using the Sanford-Holshouser February presentation on
the economic development action plan, which would be done once the
structure is established:
Mayor
McAlister said that the plan provides guidance as to what the EDD is
expected to do. He said that council can adopt that as the broad outline
and then add specificity to it. ACTION:
Mayor McAlister moved that council adopt the above bullet points as
a broad blueprint. Mr.
Roseland provided the second and council granted unanimous approval. Town
Attorney Chris Simpson asked that the decisions be embodied in an
agreement between the parties. Mr. Roseland said that the general
understanding is that the Town manager and attorney will work on the
financial logistical details to handle the cash flow and reporting.
Mayor McAlister added that it would be done by the management
committee established earlier. Mayor
McAlister thanked the members of the EDC for their hard work and adjourned
the meeting at |