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Questions asked about CDC/government ties

More than two years after the Archuleta Economic Development Association (AEDA) restructured to become the Pagosa Springs Community Development Corporation, questions have been raised by several community members — including past board members and the current PSCDC executive director — regarding the direction and future viability of the organization.

At issue is the extent of government involvement in the CDC. With over $100,000 in town and county funding accounting for nearly 70 percent of the CDC’s 2012 budget, both government entities also have representatives serving on the CDC Board of Directors.

County Commissioner Clifford Lucero represents the BoCC on the board, while Pagosa Springs Mayor Ross Aragon not only represents the town on the board, but serves as the board’s president, essentially leading board proceedings and determining (to a large degree) the direction of those meetings.

Concerns have been raised recently, in the shadow of an announcement of a Wal-Mart store locating in Pagosa Springs. However, many of the concerns that have been raised recently were brought up in an article published last summer (July 21, 2011) in The SUN.

That article addressed the fact that the PSCDC has not been operating as CDCs are normally defined — a condition that continues to this day.

Primary to the point of last summer’s article was the fact that, while CDCs are normally funded by local government (through initial seed money and later, through community investment), a CDC operates with autonomy, with government taking a hands-off approach. Indeed, the goals of a CDC may, at times, be at odds with the more politicized desires of a local government. It is the implied structural independence of a CDC that allows it to pursue projects free from government interference and political goals.

Extensive research conducted on the definitions, purpose and organization resulted in finding little — if any — direct government involvement in CDC operations.

That has not been the case in Archuleta County since the PSCDC was formed.

Many of the points raised in last summer’s SUN article have been brought up by former PSCDC board members in recent weeks.

Earlier this month, local business owner and former PSCDC board member Bob Scott revealed his reasons for resigning his seat last year, citing numerous problems he identified with a PSCDC board he said hampered the organization from achieving any real progress.

Among the problems Scott cited were a lack of defined strategy for economic development, a lack of transparency and candor (especially in regard to Wal-Mart discussions and a previously proposed land-lease deal for a performing arts pavilion), an unwillingness by the board to assess, discuss or objectively identify weaknesses with Town and County involvement in economic development efforts, an unwillingness by the board to manage or hold accountable a PSCDC executive director (Steve Vassallo, previous PSCDC executive director) who had exceeded his authority on numerous occasions, and an unwillingness by the board to be self-critical in its efforts or to hold personnel accountable.

In a statement sent to The SUN, Scott claimed that the PSCDC board had been guilty of, “a general atmosphere of protecting sacred cows, protecting the status quo, and a lack of vigorous, honest debate about economics.”

Scott added that, while he was serving on the board (Scott resigned from the board in 2010), he asked Pagosa Springs Town Manager David Mitchem — an alternate PSCDC board member — about discussions with Wal-Mart, but had been “rebuffed.”

In fact, Mitchem is not only an alternate board member (adding yet another local government official to the board’s composition), but is frequently called upon by Aragon during monthly PSCDC meetings, asked to provide input, advice and opinions.

It was that Wal-Mart conversation that Scott mentioned — that didn’t take place — that some say goes to the core of the PSCDC’s problems: Behind-the-scenes government involvement with CDC leading to a confused purpose of the organization, leading to the question of what a CDC should be but the PSCDC is not.

While none of the current PSCDC critics state that local government, as the primary funding mechanism for the organization, should not have some input regarding the PSCDC’s general direction, the overall consensus among critics has been that government involvement with the group has not resulted in positive results.

“In my opinion,” Scott wrote, “the PSCDC should be apolitical. The PSCDC should unequivocally be led by the private sector lest all efforts are colored by political machinations — and the private sector should have superior ability to implement any strategy developed, as long as government is part of the process and truly wants change.”

It was a sentiment echoed by PSCDC executive director Rich Lindblad. Using the analogy of the federal government’s bailout of the U.S. auto industry in 2009, Lindblad said, “I don’t see Barack Obama sitting on the board of GM.”

Furthermore, with town and county officials not just serving on the PSCDC board but presiding over meetings, the organization’s ability to raise private funds could be hampered, as potential donors view the PSCDC as an extension of those governments. Having already paid taxes to the town and county, those potential donors could reasonably view a fund-raising appeal by the PSCDC as government’s attempt to “double dip” from the wallets of local residents and business owners.

When asked if that government involvement could be a source of not just apparent stasis by the PSCDC, but a barrier to fund-raising, Lindblad answered, “You’re preaching to the choir.”

Evaluating the current board, one that Scott said had government influence, “Even more than the AEDA,” he added, “I wouldn’t have a problem except that, without a strategy and a process, everything is ad hoc. As it is, everything is subject to political whims.”

Former board PSCDC board member Michael Whiting was more pointed in his assessment. “The inability of the CDC to provide strategy and planning documents, a budget, etc., is the result of having government on that board,” Whiting said.

“Questions about accountability are seen as a threat,” Whiting continued. “There is neither a clear strategy, a plan for paying the bills or any accountability for taxpayer money.”

“It has been converted, without board action, to a new purpose ... damage control for our existing small businesses,” Whiting concluded.

Lucero didn’t agree with his fellow county commissioner, however.

“Right at this time, I think it’s important to have strong government representation,” Lucero said, adding, “I do see a direction that needs to be taken with less government intervention.”

Lucero continued, “We need to have a county representative on the board. Not necessarily someone from the BoCC, but a business person from the county, someone from this community.”

While conceding that he agrees the PSCDC should have less government involvement on the board, Aragon nonetheless stated, “The town needs a representative on the board ... it could be anybody, it doesn’t necessarily have to be me.

“If the town didn’t have money involved, I would walk away immediately,” Aragon said, saying that his involvement with the PSCDC is the source of stress and extra work.

Not answering concerns stated by Whiting or Lindblad, Aragon dismissed Scott’s comments.

“He’s like a disgruntled employee. He didn’t even resign, he just walked away. Walked away without letting us know what his problem was with the CDC,” Aragon said. “His criticism was not helpful.”

Both Aragon and Lucero claim that financial concerns keep them on the PSCDC board. While that stewardship of public money could be considered admirable, the question of the PSCDC ability to operate autonomously and effectively remains.

“We have to ask, with all those resources, the money, talent and experience, why has the CDC done so little? That’s a leadership problem,” Whiting said. “Replacing me with Clifford isn’t going to fix it, and Rich isn’t going to fix it. It’s a more fundamental problem. This is a conflicted organization.”

Whiting’s point is supported by the fact that, as normally defined, CDCs are formed by residents, small business owners, congregations and other local stakeholders to revitalize a low- or moderate-income community, typically with the goal of establishing affordable housing and creating jobs for community residents. Jobs are often created through small or micro business lending or commercial development projects. As such, CDCs prefer to partner with those organizations rather than administer projects through direct participation as board members.

Ultimately, the goal of housing and commercial development is to anchor capital locally, with dividends to investors resulting from a stronger, more stable and secure local economy, as a local workforce is provided with not just a sustainable environment for living (and spending money), but also jobs through encouraging business startups.

Putting aside the fact that the PSCDC has done nothing to address the issue of affordable housing and little to indicate a willingness to invest in commercial property or small businesses, it is the issue of government involvement in the PSCDC that has become an additional concern for past board members and the current executive director.

“While I agree that supporting existing businesses and attracting new business is part of the goal, a major goal,” Whiting said, “it has become apparent that all the effort is going into supporting Wal-Mart. Rich (Lindblad) has said that supporting local businesses survive Wal-Mart is taking up all his time. Even though we’re told that Wal-Mart isn’t seeking subsidies, isn’t all this money and effort going towards helping businesses survive a big box a subsidy? I don’t think that they, as a company, have a policy of supporting their competition.

“The CDC not taking an official stand on Wal-Mart is a problem,” Whiting continued, “especially when the board’s leadership, the mayor, has stated that their primary mission is the support of Wal-Mart and that’s confusing. It’s confusing to the taxpayers and it’s confusing to the small business owners.

“If the only stand the board is taking is to spend tax dollars and Rich’s time on helping our local businesses survive Wal-Mart, that’s a subsidy. And that’s a huge problem,” Whiting concluded. “It’s the direct opposite of what we (the BoCC) were told and what the taxpayers were told. Rich has said that he’s spending all his time working with small businesses to survive Wal-Mart. But the core of the PSCDC was not survival, but vitality and growth.”

The participation of Aragon and Lucero on the PSCDC board is part of a larger issue regarding the propriety of local officials serving on and leading the boards of local committees and commissions. Town council member Kathie Lattin presides over the town’s planning commission board while town council member Bob Hart is president of the Town Tourism Committee. Both the planning commission and the TTC bring recommendations to council, many times with accompanying requests for money or staff resources. Neither Lattin nor Hart have recused themselves from votes on resolutions or ordinances that originated from their respective extracurricular boards.

And like the PSCDC, participation by government officials on those boards throws into question the ability of those organizations to operate independently, much less provide information or ideas that could change a previously settled council position on an issue.

Although Aragon and Lucero have taken the stance of good stewardship of public money to justify their seats on the PSCDC board, the question has been asked if money invested by the county and town has been wisely spent considering that government participation on that board interferes with its ability to raise money or operate autonomously.

While the PSCDC continues to struggle finding investors, seemingly as yet unable to function in a way that defines CDCs throughout the U.S., as long as county and town governments continues to sit on the board and direct how the PSCDC conducts its affairs, those questions will most likely continue to be raised.

jim@pagosasun.com

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