E-D-C, M-D-D, 1-2-3
By Lynette Sowell
My front porch
Brace yourselves, this is going to be a long one. Since I can’t sit down and have a cup of coffee with you, I’m going to put it out here on my column.
EDC, MDD, up to us
It’s up to us voters, not to the city council, to decide what WE want to do with sales tax dollars for economic development. ALL of us have that chance on November 7. EDC stands for economic development corporation; MDD stands for municipal development district. Both are approved by voters. This is important. I can’t make you care about what happens, but I want you to know you have a part in this decision. Many people I know, don’t know what the EDC is supposed to do for our city.
If you were one of the few who went to the forum held at the VFW on Saturday, there were two messages given by the candidates, either “EDC, good; MDD, bad,” or “EDC, ok; MDD, better.” So what in the world does that mean? What makes the EDC bad or good, or an MDD bad or good?
The first time I attended an EDC board meeting was about six years ago. I really had no idea what they were supposed to do. But I learned. I went to meetings, watched what was happening, read the records, and also had good discussions with then-EDC executive director, Polo Enriquez.
An EDC like Copperas Cove has currently is a type “A” EDC. One of its main purposes is to bring in “primary” jobs. Type A EDCs are NOT allowed to recruit restaurants or stores. (Sorry, if you were hoping the EDC would bring in Chili’s or a steakhouse.) Primary jobs give workers a living wage. These can be light industrial jobs in distribution centers, manufacturing plants, assembly places, etc.
Our EDC was created by Copperas Cove voters in 1990. It is funded by city sales tax money, 3/8-cent of every dollar we spend in our city. This is different than property tax. Who decides how that 3/8-cent is spent? Ultimately the city council, but the EDC itself is overseen by a board of five volunteer members who apply and are appointed by the city council. The main company headhunter for the EDC is its executive director, who is paid a six-figure salary for bringing those companies to Copperas Cove (sorry, not Chili’s). Polo called himself a “hired gun” who would go out and sell the city to companies. He also remarked, more than once, that it would be good to have council members go with him as he went to recruit companies in places like California. Who pays for all that?
Well, for the 2016-2017 fiscal year, the EDC projected $1.37467 million in sales tax revenue, money to be spent to bring in jobs. So, you’re voting on the fate of millions of dollars.
Trying to bring higher-paying jobs to Copperas Cove isn’t new, but the job creation by the EDC and earlier groups hasn’t been always successful nor has it been sustained, if there was some success.
Goin’ back in time
Let’s take a brief trip back into Copperas Cove’s history, so we can go “back to the future.”
Back in April 1987, the “Copperas Cove Industrial Park South” was opened. The 38-acre park, located on F.M. 116 South, was an effort by the city, the chamber of commerce, and something called the Cove Industrial Foundation, with P.O. Dewald as vice-president. According to an April 5, 1987 article in the Leader-Press, the city spent $175,000 to bring streets and utilities to the property, and a company named Farr Industries had purchased six acres to begin construction on a 44,000-square-foot factory for manufacturing heavy industrial filters. It was the city’s “field of dreams” – if you build it, they will come.
At the grand opening, then city councilman and chamber of commerce president Jim Schmitz said, “This park represents a true team effort between the city, chamber and foundation to benefit Copperas [Cove], but it is only the beginning. I am confident that within the next three years we will see this park full, enabling the city to expand its tax base. Our economic development efforts are just beginning.”
In another article from November 1986, when discussing the park’s development, Stan Ledbetter, the “economic development coordinator for Copperas Cove,” said the park’s potential targets include defense contractors, small businesses, and manufacturing firms.
This all sounds extremely, extremely familiar to me, as I leap forward 30 years into the future, with the Copperas Cove Economic Development Corporation’s business and technology park, The Narrows, located behind the Five Hills Shopping Center and just off the bypass. It’s a 72-acre park and has been ready for development since early 2015. It’s in a fabulous location. For almost three years, this site has been ready for building, just the like the site in 1987. Wherever that 1987 business park is, I have no clue, but last time I drove down F.M. 116 South, I didn’t see any remnants of a park.
Things have been rocky for the EDC over the years. After the business park came the EDC’s No Touch fiasco of the early 1990s, which probably goes down as one of the most infamous financial debacles in Copperas Cove history. A Minnesota-based company bilked the EDC out of a total of $1.3 million in loans for which the EDC co-signed and was left holding the proverbial bag when the company declared bankruptcy before even opening a facility in our city. Ouch.
Lest you think I’m “hating on” our EDC, I’m not; this is all part of our city’s history and the more I look at archives, the more I see the same things being said now that were said by community leaders more than 30 years ago. The dates and the names change, but the language remains the same with little apparent results. So should we get rid of the EDC, because it hasn’t been successful so far in bringing in the jobs they are supposed to bring in? I don’t know. That’s up to the voters—and not the city council.
An EDC board has to answer to the city council for its activities and ultimately the voters. It has been almost three years since The Narrows has “opened” and the EDC has not made any more trips to recruit companies to come to our city. Yes, we have had some site visits by prospective companies. But it is foolish to think we can just sit back and “hope” someone stumbles onto Copperas Cove because we have a good website or Facebook page.
Fans of an EDC say it is a good thing that the EDC is state-regulated. It has bylaws and checks for a reason. Our EDC board has to abide by regulations and bylaws and it is up to the council to call them into question if they do not.
One example of this is in Hutto, where the city of Hutto’s powers-that-be are in an uproar over their EDC and possible “criminal activity” and the police have launched an investigation into the expenses of Hutto’s EDC – also a type A EDC like Cove’s. According to an October 20 Austin American-Statesman article, the Hutto city council booted all the members from the EDC board back in July and announced on Thursday night there was a criminal investigation beginning against the board’s former members, for spending almost $15,000 on trips to conferences in Alaska, New Jersey and New Orleans that included a suite at MetLife Stadium. One councilman alleged there were “many food purchases from a business owned by a former board member of the corporation” and other expenses included expensive dinners, golf games and Formula One races.
How’s that for a strictly-regulated entity that is just like ours? What happened?
MDD: Doing More?
An MDD is another way to create economic development in a city. Its proponents say we can “do more” if voters approve an MDD In November. The MDD can still do what an EDC does as mentioned above, bringing in those higher-paying jobs we are looking for. The EDC maintains a list of prospects, potential companies seeking to move or expand to Copperas Cove. The MDD, if approved, could still work on those prospects.
But, as far as “doing more” is concerned – an MDD can fund convention centers and “quality of life” improvements. It can also help existing business property owners “fix up” their businesses, something which our EDC presently can’t do. The city of LaVernia has a façade matching grant program where it will match funds for a business property owner to make improvements to the outside of their building and property. Another example is the city of Rockdale, with a proposed splash park. The city of Aransas Pass built an aquatic park.
Our EDC can offer incentives to companies coming to our city, but our EDC can’t give small local businesses financial or other incentives if their project does not include job creation. One complaint I hear from residents is why “someone” doesn’t fix up downtown or some of the rundown-looking businesses in our city. The EDC can’t fund that. But, this would be an option an MDD could offer.
Another difference with an MDD is it can collect sales tax beyond the city limits, into the city’s “extraterritorial jurisdiction” or ETJ, which an EDC can’t. So if there’s a business within a certain distance of the city limits, they’ll collect sales tax, which is one of the reasons that voters who live within the ETJ area get to vote on this too.
A concern of MDD opponents is that an MDD does not have the state-mandated reporting requirements nor accountability requirements like an EDC. The 2015 edition of the Texas Municipal League’s Economic Development Handbook does state what an MDD “may do” regarding projects and actions like buying, selling, and leasing property, accepting grants or loans, and adopting rules for its operation.
One risk that worries MDD opponents is that the millions of dollars our EDC holds will turn into a “slush fund” run by the city, as said by one of our council candidates. Scary stuff? How could our city’s administration use up an MDD’s revenue, except but a city council allow it or not give direction to the MDD board on what project to take on?
My point is –
Ultimately, whether we continue with an EDC or create an MDD, we voters are the ones responsible for holding an EDC or MDD accountable for how the money is spent. We need board members to be proactive, not merely reactive, or worse, passive-aggressive regarding decisions or projects. We need board members who will study projects and prospects and ask questions. We need people on council and on the EDC board who will make wise decisions.
Going by our history, state regulations and mandates governing our EDC will NOT ensure that companies will come to our city, will NOT ensure that money is well spent, and furthermore will NOT ensure that expenditures will not be rubber-stamped by a council. Having people on the council or the board who are either for or against our city administration will NOT guarantee transparency, will NOT ensure companies will come here, nor will it ensure wise decisions are made. We can’t blame the EDC’s format for not bringing companies here.
Whatever voters decide, it is ultimately the people we vote into office who are responsible for overseeing those sales tax funds for a measure of success, and letting the EDC (or MDD) executive director do their job and sell Copperas Cove and what we have to offer. Maybe, we’ll get things into gear, whichever way the election goes. Pro-EDC, pro-MDD, both “sides” in the end do want the same thing: more for Copperas Cove, better jobs, better opportunities, better quality of life.