Local ED Program: Should a municipality have its own ED director?

(from Maine Townsman, June 1998)
by Michael L. Starn, Editor

Economic development is a "motherhood and apple pie" issue that people broadly support but at the same time they find it hard to agree on how to approach it.

What Maine municipality doesn't want high quality jobs, with benefits, available to its residents? What candidate for public office doesn't put economic development at the top of his/her political agenda?

Municipal officials are in a quandary regarding economic development. They know that their citizens want it, or at least the jobs part of it, but they aren't sure about how to make it happen.

In trying to address this popular public issue, many communities have joined with other communities in regional approaches to economic development (see related articles in this issue). And, for varied reasons, a few communities have hired their own economic development director, or have added economic development responsibilities to other municipal positions.

HIRING AN ECONOMIC DEVELOPMENT DIRECTOR

Each community will have to determine on its own if an economic development director makes sense for it or not. The TOWNSMAN interviewed local officials from two Maine communities that, in recent years, have gone the route of hiring their own economic development director, with different experiences and different outcomes. It's a tale of two Maine towns - one on the eastern shore and the other in the western mountains - creating their own economic development programs.

Finding A Niche

The Town of Bucksport, located in Hancock County along U.S. Route 1 and at the mouth of Penobscot Bay, was a regional economic center at one time. A single, industry, Champion Paper Co., has for a long time been the cornerstone of economic development activity in the town.

While town officials still view the paper company as an integral part of the town's economic future, they feel that the town should have a more diversified economic and tax base. Town officials want to rediscover and recapture their economic past; they want to capitalize on the town's strategic location and maximize the benefit of its current economic base.

Four or five years ago, the Bucksport Town Council initiated an economic development plan. Council members, according to Town Manager Roger Raymond, were aware that Bucksport residents, like those of most communities, wanted two things: good jobs and a good quality of life.

The local elected officials recognized that the town's recently completed comprehensive plan could deal with the quality of life issues, but that in order to address the "good jobs" issue, an economic development plan was needed.

With the help of Eastern Maine Development Corporation, an Economic Development Study Committee, comprised of local business people and town officials, created a 50-plus page Bucksport Economic Development Plan that lays out goals and objectives for the town's economic future.

Once the plan was written, the town council decided that an employee - an economic development director - was needed to carry out its goals and objectives. Municipal officials, business people and other citizens of Bucksport did not want all of the hard work, thought and compromise that had gone into the plan to be wasted, or for the plan to sit on some town office shelf gathering dust.

Jeff Kolback was Bucksport's first economic development director, hired in 1995 shortly after the economic development plan was adopted by the Bucksport Town Council.

Kolback, who is now economic development director in Gardiner, spent most of his one and a half years in Bucksport doing the necessary legwork that has given a solid foundation to the town's economic development program, according to the Bucksport's current ED Michael Ruel.

"Jeff laid the groundwork for my position," says Ruel. Kolback was instrumental in establishing a number of economic development committees and subcommittees that are now the infrastructure for all economic development activity in the town.

An umbrella Economic Development Committee, made up of one school board member, three town councilors and eight business people, advises the town council on economic development issues.

A number of subcommittees and other special committees take on specific economic development projects and work with the municipal economic development department in implementing some of the goals and objectives of the ED Plan.

One of those special committees is the Bucksport Area Hospitality Society which is charged with the responsibility of welcoming new people to town. "Welcome to Bucksport" mailings include literature and coupons from local businesses and a variety of other informational pieces, including the town's annual report.

A Business District Subcommittee is made up of downtown merchants and works on projects specific to the downtown. This subcommittee has worked on CDBG proposals - the town received a $396,000 grant last year for downtown revitalization.

A couple of years ago, Bucksport received a Quality Main Street grant and used it to develop a statistical model for the downtown. From the demographic study, the Business District Subcommittee and town officials discovered that Bucksport's downtown had some holes in it (figuratively speaking) that could be filled. Using the information from the study, the town aggressively recruited certain types of businesses that were missing from the downtown. Results of their efforts were a new bookstore, gifts and card shop, and bakery, all helping to fill a downtown development niche.

When asked if other Maine towns need an economic development director, Buckport's Ruel says, "It's definitely worth looking at."

But, he also acknowledges that all communities do not have the same ability, or resources, to make it happen. For that reason, he urges municipal officials to look carefully at regional economic development efforts. "If we work together, capitalize on each other's strengths, we can all be successful," says Ruel.

Reflecting on the success of Buckport in its economic development program, Ruel offers the following advice to municipal officials contemplating an economic development program.

•Allow criticism and listen to what is most important to people in your community.

•Let the people in your community be involved in the process; they will be the ones that can sell the program.

•Support existing businesses. They will then become supportive of you and receptive to your business recruitment efforts.

•Promote business diversity. Diversity provides more reason for people to do business locally. It also increases the volume of business activity.

Responding To A Need

Town officials in Bridgton, on the western tip of Cumberland County and with a population just over 4,200, were responding to a economic development need brought to light, oddly enough, by an economic tragedy in Massachusetts.

In November 1995, a major fire that drew national attention consumed a large knitting mill in Lawrence, Massachusetts, putting hundreds of people out of work. The company that owned the Malden Mill in Lawrence also owned the Bridgton Knitting Mill, which employs over 300 people in the region.

One bright note, to the otherwise tragic event, was that the owner of the Malden Mill, with his own money, paid the wages and benefits for his displaced employees after the fire and planning decisions while a new mill was being constructed.

Former Bridgton Town Manager Jim McMahon says the Massachusetts fire got local business and government leaders thinking about a more proactive effort to retain and attract business to Bridgton.

Shortly after the Massachusetts mill fire, the president of the local chamber of commerce presented to the Bridgton selectmen a list of ideas for the selectmen's consideration. One of those ideas was that the town should make a greater effort to retain and attract businesses. The Massachusetts mill fire had prompted Bridgton business leaders to ask the question, "What would happen if the fire had been here."

The outcome of this discussion was a decision by the board of selectmen to present to the town meeting the idea of hiring an economic development director for the town. A combination of funding, some from local sources via town meeting, a contribution by the chamber of commerce and a grant from the state Department of Economic & Community Development (DECD), got the effort off the ground.

The town hired Todd Crabtree to a one-year contract. The first half of the contract, that is his first six months on the job, was to be spent developing an economic plan for the town of Bridgton. The second six months were to be spent implementing the plan.

Well, the first six month went just as planned. Crabtree produced "a very good economic development plan", according to McMahon. The plan was accepted by the board of selectmen and a local economic development committee, composed of town officials and local business people.

The second six months of the economic development director's contract did not proceed as smoothly. There were problems getting consensus within the town on how to implement the plan, particularly within the economic development committee. A regional economic development effort, spearheaded by Pam Corrigan, then-town manager of Naples, got some of the Bridgton town officials and business people questioning the idea of a single-town economic development program. And, finally, the decisions of Tim Crabtree and Pam Corrigan to accept employment elsewhere, out of the region, put the whole project in limbo.

"An economic development program is definitely needed by the town," says outgoing Bridgton Selectman Bob McHatton. "But, it may need to be in a multiple town setting."

McHatton says, "Even the individual we hired (Crabtree), who did the study (economic development plan) recommended this approach".

Although McHatton says it will be up to the new board of selectmen to decide what direction Bridgton takes with its economic development program, he believes the town can't afford to go it alone. Plus, he says, "If surrounding towns are doing well economically, we will too."

One of the problems that McHatton sees with local economic development programs is that people's expectations are unrealistic. "I don't think a community really knows what it wants. Or, if it does, it's a pie-in-the-sky program that can't be achieved anyway."

"Economic development is a tough issue to deal with," says McHatton. He points out that everybody wants good paying jobs, environmentally-friendly businesses, and no liability (for the town) if things don't work out for the business. "It's all of the good, and none of the bad (that comes with economic development)," says McHatton.

HARVESTING HOMETOWN JOBS

A recent publication of the National Center for Small Communities, headquartered in Washington, DC, focuses on the importance of targeting local economic development programs on existing and start-up businesses and on how smaller communities are finding their niche in the new global economy.

What follows are some highlights

and excerpts from the publication, "Harvesting Hometown Jobs", that may help to guide Maine municipal officials in structuring their local economic development programs.

Economic Development Facts and Trends

Only 1 percent of net new jobs in the United States occur as a result of business relocations. About 55 percent of all new jobs arise from expansions of existing businesses. The remaining 44 percent of new jobs are created by startup companies - firms that begin with zero to a handful of employees and, if things go well, grow into successful enterprises.

Although economists and business analysts sometimes differ in their interpretations of these numbers, there is strong agreement that job creation among new, small firms is integral to the nation's economy.

"Harvesting Hometown Jobs" identified six national and global trends that are, or should be, shaping local economic development programs.

1)Despite the strong economy, many larger companies are restructuring and downsizing operations putting people out of work, but creating new opportunities for contracting out or spinning off operations to startup and existing small firms.

2)Communications technologies - fiber optics, microwaves, satellites, etc. - are greatly minimizing the "distance penalty" that has burdened rural economies for centuries.

3)Women are entering the labor force in unprecedented numbers, oftentimes through self-employment.

4)Farm families are increasingly reliant on off-farm income, including income from entrepreneurial ventures.

5)Long time natural resource dependent communities are pushing development to the next level, diversifying agricultural production and adding value to agricultural products through local processing.

6)American workers are reevaluating what is meant by "economic" security. They realize that it is unwise to rely on an employer (company) for security. As the search for security becomes personal, independent and home-based enterprises appear more legitimate and sustainable.

Why Small Businesses Are Important

According to the U.S. Small Business Administration (SBA), 99.7% of all companies in this country are small. This may be somewhat misleading because SBA defines small as under 500 employees. However, more revealing statistics show that about 90% of all businesses have less than 20 employees; 79% have less than 10 employees; and 61% have less than five.

Small businesses will contribute about 60% percent of the new jobs between 1994-2005, according to recent projections issued by the Bureau of Labor Statistics; large firms will contribute 15%; and all others will contribute the remaining 25%.

Most locally-owned firms are committed to their area, and unlikely to relocate. Despite demanding workloads, local entrepreneurs are often highly engaged in civic affairs. New entrepreneurial ventures are likely to rely on existing businesses for supplies and services, thus creating an increased market for local firms.

Researcher Mark Popovick, who studied rural entrepreneurship in Maine and three other states in the 1980's, discovered that "These businesses almost always start out small. But when their total impact is weighed, their role in sparking income and employment opportunities becomes clear."

Growing Small Businesses

Entrepreneurial ventures sprout and grow when and where the conditions are most favorable - in environments, or systems, that deliberately encourage and nurture entrepreneurship.

Half of all new small firms fail within five years. Some factors influencing entrepreneurship fall outside the purview of local action. However, "Harvesting Hometown Jobs" lists nine actions that community leaders can take to spawn and support new, small firms.

1)Scout for entrepreneurial opportunities arising from spin-offs from existing businesses or joint ventures among local firms.

2)Assess the needs of current and potential entrepreneurs.

3)Act as a nurturer and convener, helping incubating firms to form networks and learn from each other.

4)Act as a broker of business assistance resources, so that entrepreneurs become knowledgeable about the programs and services available to them.

5)Lift excessive local zoning restrictions to accommodate and aid the growth of home-based businesses, without sacrificing quality of life for community residents.

6)Develop a plan to attract "lone eagles", successful professionals who are leaving congested regions and setting up business operations in smaller, slower paced communities.

7)Encourage local lenders to offer small business financing, to aid the community and strengthen the bank's Community Reinvestment Act (CRA) rating.

8)Partner with or create a revolving loan fund to provide small loans at near-market rates to qualified businesses.

9)Incorporate youth entrepreneurship training into the local high school or community college curriculum to inspire an entrepreneurial spirit in the community's young citizens.

Focusing on Existing Businesses

According to recent, rural development studies, most of the changes in small town employment result from the decisions made by existing businesses.

Preserving and building the local economy is achieved by keeping local firms healthy and happy and encouraging their growth in the future. Building the local economy is to recognize and support existing firms that are likely to create new local jobs, including those which are small in size and modest in reputation.

Community economic development efforts are likely to be most successful when they balance retention and expansion strategies with efforts to create or attract new firms.


To receive Helpful Resources for Small Communities, a free flyer describing all publications available from the National Center for Small Communities (including Harvesting Hometown Jobs) please make a request by e-mail (kjackson@sso.org), phone (202-624-3551) or fax (202-624-3554). The NCSC's address is 444 N. Capitol Street, NW, Suite 294, Washington, DC 20001.