Wednesday, September 25, 2013

Show Me The Money


 It has been said that our EDC needs to build up reserves  to offer cash as a way of attracting industry to town. That companies will point blank ask how much cash our EDC is willing to offer. If we don't have enough, we are out of serious consideration. 

Is that even a good way to conduct business? Do we really want a business that is just looking for a hand out?

A reason some do not want to go 4B is that all the money could be siphoned off for a quality of life project(s) and we would have no money to attract manufacturing or industrial business(es).  Sounds to me like some companies are asking our board to give them everything we have, which would in turn affect future projects. 

But wouldn't the same thinking that keeps our 4A board from draining all the money, be the same rational thinking that would keep a 4B board from doing the same thing?

We are trusting 5 people (the number of members required for a 4A EDC board) but won't trust a 7 member 4B Board (the number of members required for a 4B EDC board)? 

That line of thinking just doesn't add up to me. 

I believe having 7 people being good stewards over money is better than 5. Fourteen eyes looking over money, better than 10.  I guess I'm crazy.

Anyway back to building up reserves...

I'll play along with that thinking.  We need to have money in the bank to give a company a blank check apparently.  But answer me this, what towns are you generally competing against when you try to attract industry? I have looked at some nearby towns with 4A EDCs to see how we stack up.

Fiscal year 2012 budgets:
Sulphur Springs - Cash Reserves: $2.5 Million; Annual Sales Tax Revenue: $1.5 Million
Greenville - Cash Reserves: $1.5 Million; Annual Sales Tax Revenue: $500,000
Mt. Pleasant - Cash Reserves: $2.4 Million; Annual Sales Tax Revenue: $1.1 Million
Paris - Cash Reserves: $1.5 Million; Annual Sales Tax Revenue: $1.2 Million
Wylie - Cash Reserves: $1.3 Million; Annual Sales Tax Revenue: $1.6 Million
Rockwall - Cash Reserves: $18 Million; Annual Sales Tax Revenue: $4 Million
McKinney - Cash Reserves: $12 Million; Annual Sales Tax Revenue: $8.8Million

Commerce - Cash Reserves: $1.6 Million; Annual Sales Tax Revenue: $400,000

According to statements and posts, our EDC has been showing businesses the money and they have been choosing to go elsewhere.

Greenville, with similar reserves and revenues, announced in August that it was able to attract 2 businesses that will create over 300 jobs. (Fritz Industries and International Grains and Cereal LLC).

What no one can answer is how much money is needed.  Some say we must have more and yet we  see our neighbor to the west was able to attract 300 jobs with less.  

2 comments:

  1. Quay, as always, the Commerce EDC appreciates your support and encouragement. I just have a couple of statements regarding issues in your blog, and again I do not speak for the board, only for myself. First, the EDC has a nice war chest and ample funds, in my opinion, to attract a couple of small businesses and a couple of mid-size companies. We are currently working closely with two such companies that may create some exciting opportunities for the city. However we have to continue to chase the " big fish" to replace Covidien. The city is very aggressive with the funds it allocates to the EDC to attract industry and create jobs for its citizens, therefore I believe the funds will be in place to allow the EDC to effectively compete. The second issue is your statement " That companies will point blank ask how how much cash our EDC is willing to offer. If we dont have enough, we are out of serious consideration. Is that even a good way to conduct business? Do we really want a business that is just looking for a handout? " The EDC has not offered cash to any of the companies we are dealing with currently. WE have offered EDC land, land at discounted prices, improvements to the property, potential abatements, land financing, etc. Every company has different needs. However the incentives we offer are a very, very, small percentage of the companies capital investment and investment in jobs for our city. These are " for profit" companies working in a very competetive free enterprize system. Their managers have the responsibility to conduct due diligence and determine what location and incentive package gives them the best chance for success and they want to feel the city is equally concerned about their success and has a little " skin in the game" I don't call that a " hand out " I call it Good Business. Dale Stotts President CEDC Board

    ReplyDelete
  2. I think that if we look at the basic issue that this whole issue: switching form a 4A to 4B, it is the quality of Life Issue. The City of Commerce is losing Good, Quality Citizens, like water through a sieve, all the time. Our children don't want to stay here, new potential Citizens who could potentially move here are most often deterred, because of our Poor Quality of life Facilities. Our older youth suffer due to this, we need to take care and provide healthy recreational facilities and places to gather. We all suffer due to it. Why would we expect to attract more Citizens to live and work in this Community, if we can't take care of our Own today, better than we do. investing in improving our Quality of life facilities in Commerce would be such a Boost to the Community's moral and overall Health. I wish all of the infighting between the different Camps would cease and we could all agree to Invest in Ourselves, the Current Citizens first, heal our Community, make it he best it can be, then try to attract others to join us. If that can't happen, the downward spiral will continue and our Community will continue to be the Black Hole many are working hard to escape from.

    ReplyDelete