City Budgets for Economic Development, but MEDC Left Out of Draft
by Kati O'Hare
Aug 16, 2012 | 1248 views | 0 0 comments | 4 4 recommendations | email to a friend | print

MONTROSE – The City of Montrose plans to allocate $240,000 to economic development and community program support in its 2013 budget, however, Montrose's economic development corporation won't be guaranteed any of that money.

In a lengthy budget discussion on Aug. 13, city councilors decided to go with their city manager's recommendation and not fund Montrose Economic Development Corporation, a public-private partnership organization, in its 2013 draft budget.

MEDC was requesting $50,000 from the city so it could continue to be the point-of-contact and facilitator for business development and growth in Montrose County, according to its request form.

"That money would have helped offset the cost of putting prospect packets together, and the time we spend working with these companies," MEDC Executive Director Sandy Head said in an interview with The Watch.

Although budget cuts always hurt, councilors' decision won't shut down the organization, and there are still opportunities to get some financial support from the city, she said.

City councilors directed staff to budget 1.5 percent of its total 2013 General Fund for economic development, of which only $40,000 is to be used specifically for community program support, Finance Director Shani Wittenberg said.

MEDC can approach the city for a specific funding request, such as business recruitment incentives, out of the remaining $200,000 for economic development.

It is the first year since the organization formed in the late 1990s that the city is providing no direct funding to MEDC.

According to Head, the city has provided about $80,000 annually to MEDC since the city's own efforts as an economic development entity ceased and MEDC took over the reins. And in 2006 and 2008, increased revenues allowed the city to set aside an additional $20,000 for the organization, for business recruitment and retention incentives.

But in 2011, decreasing revenue resulted in councilors and staff re-evaluating its contribution, and that year it designated only $24,000 from its budget for MEDC operations. That $24,000 was again budgeted for MEDC in 2012.

On Monday, the city also decided to lower its membership status and will pay only $250 instead of $600 annually starting in 2013, Councilor Carol McDermott said.

"We decided to fund the MEDC on a membership dues basis only in 2013 because we have had to analyze every expense at the city in hopes of putting our taxpayer dollars to work more efficiently," City Manager Bill Bell said. "We don't feel that we have received $24,000 in direct benefit on an annual basis from their organization over the past several years. We are able to make more of a difference for our existing businesses by working directly with them."

Not every councilor agreed with the decision, however. When asked by Bell, McDermott and Councilor Judy Ann Files said they disagreed with not funding the organization.

"I was very disappointed (with the decision) because I feel that MEDC provides a vital service for our community," McDermott said in an interview with The Watch. "I was in favor of supporting them to the extent of $24,000, which would allow them to continue to exist . . . In my opinion, we cut MEDC off. This is only a draft decision, discussion can and probably will continue."

Bell said his recommendation stems from the fact that the city recently faced $782,000 in staff reductions and/or job reassignments to make certain that it could present a balanced 2013 budget to the public.

"It seems as though the MEDC organization could be spending more money on direct economic development initiatives to benefit local businesses if their overhead was readjusted to reflect the current economic environment here in Montrose," Bell said.

It has come up before between councilors and MEDC, and was brought up again Monday, that more than $22,000 is being spent annually for the corporation's office in Montrose. Head said they've worked with their property manager and got a significant reduction in their rent, but MEDC is in that lease agreement until 2014.

Bell said he'd like to see the city continue its relations with MEDC to promote business recruitment and expansion.

"We understand the need for an economic development corporation in the Montrose community," he said. "We are simply choosing to fund individual development projects as they come along, rather than paying into the overhead costs of an outside organization."

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