City will pay $92,000 this year and next for 60% of Economic Development Corporation’s services
By Reggie Ellis @Reggie_SGN
VISALIA – Tulare County’s largest city, economic hub and home to most of its workforce will continue to contribute to the organization charged with bringing new companies to fuel economic expansion.
At its Nov. 20 meeting, the Visalia City Council voted to remain a member of the Economic Development Corporation serving Tulare County, also known as the Sequoia Valley EDC, but at a reduced rate for fewer services. Visalia City Manager Mike Olmos, who is retiring next year, said the city should track the EDC’s progress and services over the course of the next two years to make sure the level of services matches the city’s significant contribution.
“This is a watershed moment of the EDC,” said City Manager Mike Olmos. “They will have to restructure themselves.”
The EDC’s budget for the current fiscal year is $407,901. Visalia was slated to pay 40% of the total, or $165,593. Only wanting to pay for “essential services,” those which directly generate new leads and prospects and provides service to those prospects, Visalia asked for a new budget from the organization. EDC countered with $227,704. Visalia’s portion of the public sector contribution remained at 40% but was lowered to $92,440, a savings of $73,153. City contributions for the 2018-19 budget would remain the same.
Vice Mayor Bob Link asked how the contributions were calculated for cities. TCEDC Executive Director Paul Saldana said that it is based on population, sales tax revenue and property tax valuation.
Visalia and Woodlake, the county’s smallest city, are the only cities that still owe money for the remainder of the fiscal year. In September, Visalia decided to pay half up front to give more time for Visalia and TCEDC staff to negotiate a reduced cost for reduced services or possibly leaving the organization all together. Porterville, Dinuba and Lindsay have all paid a portion of their contributions with the remainder being applied as a credit. Tulare, Exeter and Farmersville have already dropped out of the TCEDC for financial reasons.
Public contributions make up about 47% of the EDC’s budget while private contributions only amount to 13%. The rest of the budget is made up of special events and $138,000 from its reserves.
“If we stay we will need a stronger commitment from the private sector with more money and more involvement,” said Link.
Olmos argued that Visalia’s contribution will increase if other cities can’t pay and the Visalia’s own EDC, the Visalia Economic Development Corporation, offered to provide the same level of service as TCEDC for just $69,000 per year, a 50% reduction and a savings of $96,593 per year.
“I don’t think the $69,000 is a real number,” said Councilmember Phil Cox. “We are going to have to pay for those services.”
Cox questioned Jones on how much additional time he would be spending on providing an alternative service to those offered by TCEDC and what that would cost the city. Jones said there would be some additional time absorbed into his hours and that he would need to discuss further with the council what that might cost as his focus would shift from primarily business retention and expansion to new business traction. Jones did say that Visalia is an extremely marketable location for industrial companies due to its central location in the state, its availability of 1,000 acres zoned for industrial uses and that it is a well-run, well-planned city.
“Even under an alternative plan, we will still have a considerable amount of interest [from industrial companies],” Jones said.
Jones said the City could invest in Geographic Information System (GIS) technology similar to what the EDC offers on its web site, www.sequoiavalley.com. The EDC’s site search for companies looking to build or relocate to an existing facility is not only a database of suitable sites but overlays that map with information about demographics, rent or sale prices, proximity to other facilities, amenities and infrastructure. Jones said subscribing to GIS Webtech would cost the City $6,900 per year with a start-up cost of about $20,000. Jones said that web site could be integrated with the city’s existing GIS systems for sewer and water lines, traffic data, zoning maps, and those offered by partnering agencies, such as workforce data, to create a tool that could do more than the current one offered by the EDC.
TC-EDC is among the top 1% of EDC’s nationwide and earned the designation of an accredited economic development corporation because it has provided results, which recently included the location of Green Power motors in Porterville and Faraday Futures in Hanford. He also announced that the EDC just helped close a deal for Revolution Plastics to open a plant that will bring 120 new jobs to Dinuba.
Mayor Warren Gubler, Visalia’s representative on the TCEDC Board, reminded the Council of some of the other projects that the organization played a role in attracting to Tulare County, such as a Nordstrom fulfillment center. He also implied that TCEDC would be making another announcement about another project in the Visalia area in the next few weeks.
Councilmember Greg Collins motioned to approve the revised budget and remain in the TCEDC. Steve Nelson was the only no vote in the 4-1 approval. Nelson cited a report compiled by staff that showed Visalia had spent $671,186 over the last four years. During that time, the TC-EDC assisted with 95 prospects of which 10 resulted in visits to Visalia for site tours of qualified sites and just two ultimately located in Visalia creating a total of 20 jobs.
“We are putting a bandaid on a wound that needs surgery to stop the bleeding,” Nelson said. “Two prospects for $90,000 is not a very good investment. Stop the bleeding and move on to a better program.”