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What to do with the economic development association?

A recent series of meetings between the Archuleta County Board of County Commissioners, the Pagosa Springs Town Council and the board of the Archuleta Economic Development Association (AEDA) has raised questions about the future of economic development in the area.

With some government officials and board members attempting to discern which direction the AEDA should take, others have questioned if the town and county should even continue to sustain the AEDA as it is currently formulated, or whether it should be replaced with some other form of economic development organization.

A primary concern is the amount of funding, if any, the AEDA should get as the county and town navigate through a difficult budgeting process over the next month or so. That issue, coupled with questions regarding the AEDA’s effectiveness (especially in light of last month’s resignation of AEDA Executive Director Bart Mitchell), has led to a series of meetings between local government officials.

Those meetings culminated with an AEDA planning session Tuesday morning at the Ross Aragon Community Center. Attended by the BoCC, town council and members of the AEDA board, the four-hour meeting was facilitated by Region 9 Economic Development District Assistant Director Laura Lewis-Marchino.

At the meeting, the boards were asked to provide priorities they believe the AEDA should focus on during the next several years. While the responses were mixed, several common themes arose that Lewis-Marchino listed as a starting point for the boards to consider. Those themes included:

• Attraction of “Lone Eagles and High Flyers” to the area (two subsets of entrepreneurs that has been the focus of AEDA efforts the past few years);

• Development of local infrastructure (especially telecom capabilities for high-tech industry);

• “Economic gardening” (i.e. encouraging local small business start-ups) and business retention;

• A strategic plan, stable financial resources and sustainability for the AEDA.

Listing the priorities, however, did little to answer questions many board members had regarding how the AEDA had functioned over the past several years, or how useful the AEDA is in its present form. Furthermore, the AEDA’s apparent inability to sustain itself raised concerns from several audience members.

“Unity of message will result in sustainability,” responded Pagosa Springs Town Manager David Mitchem.

Few seemed convinced by Mitchem’s reply. In fact, a couple of local business owners (also AEDA board members) said that, while they had intended to write checks to assist in AEDA funding, they had held onto their money due to the board’s lack of leadership and focus.

AEDA board member Bob Scott said, “I have a blank check sitting on my desk that I still haven’t signed over to the AEDA,” adding, “I’m wondering if I should just give it over to Seeds of Learning or the Humane Society where I know it will do some good.”

Asked if the lack of leadership in the AEDA had been a reason for withholding that donation, Scott replied, “That’s some of it, sure.”

AEDA board member Tim Horning reflected Scott’s concerns, stating that he too held a check that he was not prepared to sign over to the AEDA. “I want to make sure my money is well spent,” he said.

“These guys haven’t written these checks because they’re not inspired by what they see,” said Michael Whiting, executive director of the Southwest Land Alliance.

Several others expressed that the AEDA’s lack of leadership and apparent lack of focus had diminished enthusiasm for the organization’s ability to affect local economic development — leading to funding inadequacies that, in recent weeks, has led to calls for the town and county to meet those financial gaps.

According to AEDA board Vice-President Marion Francis, during the first 10 years of the AEDA, the organization had been primarily funded by La Plata Electric Association and membership dues. “It was not primarily funded by the town and county.”

Francis reported that, while the AEDA has a current operating budget of $70,000 for this year, it has revenues amounting to just around $25,000.

In recent years, Francis continued, “There’s been a balance (in expenses and revenues) due to fund-raising by the AEDA,” but the recent economic downturn had cut deeply into those fund-raising revenues.

The fact that fund-raising for the AEDA had cut deeply into the AEDA’s revenues has been part of the discussions about the organization’s future between the town and the county, as the funding shortfall has seemingly been placed in the lap of local governments. Yet, while county and town officials seemed to agree that there is a need for the AEDA (or some local economic organization), neither town nor county officials articulated exactly what that need might be. Likewise, neither town nor county officials could mention exactly what accomplishments could be attributed to the AEDA during the past few years.

Although the meeting started with members of the various boards apparently seeking a solution for sustaining the AEDA, by the end of the meeting some in attendance asked if an alternative was not warranted. Earlier in the meeting, BoCC commissioner Bob Moomaw briefly mentioned that the AEDA might be replaced with another option for economic development.

One option for economic development that has been discussed (primarily by the BoCC) is a Community Development Corporation (CDC). A CDC would differ from the AEDA in a number of ways. With a CDC, the focus on economic development is broader, as it is designed to create or provide the infrastructure, services and amenities that are not usually the concern of private business, corporations or local governments. For instance, by drawing on revenue provided by grants and investors, a CDC would (among other things), fund commercial development, affordable workforce housing, job training, etc., while providing a return on investment. In the meantime, the AEDA has, over the past several years, only provided business mentoring and commissioned studies on “Lone Eagles and High Flyers” as they pertain to the local economy.

Another difference is that, while the AEDA relies on funding from local governments, membership dues and donations from year to year, a CDC would be self-sustaining (from grants and investments), actually producing a profit within the first few years of operation, with returns going to investors (as dividends) or reinvested back into the community.

Finally, the structure of the organizations illustrates differences in funding mechanisms between the AEDA and a CDC. Due to differences of tax-exempt status (the AEDA has 501(c)(6) while a CDC would, by definition, have 501(c)(3) status), a CDC can apply for grants and all donations are tax-deductible. Conversely, the AEDA cannot apply for grants and, while membership dues can be written off as a business expense, donations are not tax deductible.

Although BoCC discussions regarding the implementation of a CDC remains preliminary, BoCC commissioner John Ranson said (during a previous meeting), “It is something we’re looking at.”

However, it was town council member Mark Weiler who spoke loudest at the end of Tuesday’s meeting as to the need for something different to charge local economic development.

“You have a void today, you have a credibility problem today,” he said. “Please don’t do as you always have done ... please try something different. The model of the AEDA did not produce the results it was designed for ... it is not the model for the future. It was a flawed strategy, it didn’t get the results it wanted.”

While a subcommittee was formed at the conclusion of the meeting — at first charged with providing results by March 1, but then having those expectations moved up to mid-December — the future of the AEDA remains far from certain. Although town council has a work session scheduled for noon today, with “Discussion on Economic Development” listed as the single agenda item, how it remains to handle the AEDA and its lack of funding and leadership can only be guessed.

Albert Einstein once said that insanity is defined as doing the same thing over and over again, expecting different results. The next few months should be interesting as the town and county determine what course local economic development will take and if that course is doing something over yet again or deciding on a different direction.

jim@pagosasun.com