“Eighty percent of job growth comes from existing companies,” said Erik Collins, Montgomery County’s manager of economic development. “It’s more expensive to recruit businesses than to keep and grow what you have.”
The Dayton Daily News spent six months examining who is doing what on economic development, what it is costing, and how well the various entities are working together. The results are a mixed bag. It is not always clear who is calling the shots, and there is little to stop jurisdictions from bidding against each other for jobs that can boost their tax bases for years, if not decades.
The Daily News examined public records, including government budget documents and the tax forms filed by nonprofit economic development organizations, and conducted interviews with local government officials, Chamber of Commerce leaders, company executives and other experts. The examination found:
• Economic development groups in four local counties — Montgomery, Greene, Miami, and northern Warren — spend nearly $23 million annually.
• Two organizations — the private-public Dayton Development Coalition and the private Dayton Area Chamber of Commerce — account for about a third of that spending. Both say their efforts to keep jobs or bring in additional ones are showing results, despite the loss of high-profile employers like General Motors and NCR.
• The top executives of the Dayton Area Chamber of Commerce and the Dayton Development Coalition are well compensated. Both, for example, earn considerably more than Ohio Gov. Ted Strickland, whose salary is $142,356. Jim Leftwich, president and chief executive officer of the coalition, earned total compensation of $257,000 in 2009, while Phil Parker, the Dayton chamber’s president and CEO, received total compensation of $269,455 in 2008, the most recent year available. However, while Parker and Leftwich easily top the list of salaries for economic development officials in the Miami Valley, their pay is in line with people in similar positions around the state. The chief executives of chambers of commerce in Akron, Cincinnati, Cleveland and Columbus each earn more than Parker or Leftwich.
• The Dayton area relies heavily on private, nonprofit organizations for economic development. These organizations operate largely out of the public eye. Some of the region’s chambers of commerce, funded by private businesses, refused to provide financial information to the Daily News, or didn’t respond to multiple requests. Those included the Kettering-Moraine-Oakwood Chamber, South Metro Chamber, Northmont Chamber, Lebanon Area Chamber, and Piqua Chamber. In those cases, the newspaper relied on 2008 data that the not-for-profit organizations were required to report to the Internal Revenue Service.
• Some 26 local political jurisdictions, in addition to the chambers of commerce and organizations such as the Dayton Development Coalition, are actively involved in economic development in the region. Yet when NCR announced in June 2009 that it was leaving Dayton after 125 years and moving 1,300 jobs to the Atlanta area, the move surprised some local officials, raising questions about who is responsible for maintaining ties to critical employers.
“I don’t know whether we were really considering that NCR would leave,” said Robert Premus, a Wright State University economics professor.
• The Dayton-Montgomery County Port Authority, created 10 years ago and touted as the type of development arm that brought the Rock and Roll Hall of Fame to Cleveland, is so little used now that it has one employee, Executive Director Ron Parker, who works just eight hours a week. Economic development specialists said port authorities, with broad financing authority, can be invaluable in helping fund projects to support corporate expansions and relocations. The local port authority supported WorkflowOne’s consolidation in a downtown Dayton building, Parker said, but the recession dried up the agency’s revenue and forced him to cut expenses.
• Despite claims of better cooperation, economic development inevitably pits one community against another. Kurz-Kasch Inc. left Moraine for Miamisburg; Evenflo Inc. chose Miamisburg over Vandalia; Huffy Corp. left Miamisburg for Centerville. Motoman Inc. just announced it will relocate its operations from West Carrollton and Troy to a consolidated site at the new Austin Boulevard-Interstate 75 intersection in Miamisburg. Although each of these moves kept a valued employer in the region, that’s small solace to a community that just lost a chunk of its job base.
A company’s move out of Dayton and into a nearby community, said Shelley Dickstein, Dayton’s assistant city manager for strategic development, “is not a win for us.”
Fragmented system
Local development officials say they’ve worked hard to repair a fragmented system.
“Economic development is generally a team sport,” said Montgomery County Development Director Joe Tuss.
But that team hasn’t always been unified. In 2007, a $90,000 report funded by the city of Dayton, Montgomery County and the Dayton Development Coalition found the local approach to economic development was full of “redundancy and miscommunication across multiple agencies.”
The finding was not disputed. “At that point in time, that observation was a legitimate observation,” said Ron Budzik, a former Mead Corp. executive who is now executive director of the Dayton Business Committee, a group of 18 corporate officials that works behind the scenes on community issues. “Compared to where we were in 2007, we’ve really made some progress.”
Wakeup call
The report served as a wakeup call, say local economic development officials.
Dayton responded by investing $125,000 to establish the Dayton Business Resource Center, intended as a space for agencies involved in economic development to collaborate.
Collins, who oversees the BusinessFirst! database that Montgomery County created in 2000, said 31 local governments use the software, which details information about companies and their need for services. In 2009 alone, economic development staff using BusinessFirst! visited 607 businesses.
Local governments and the Dayton Development Coalition also have worked together on a new initiative called the Advantage Sharing Program, intended as a conduit for state or federal funding, or private foundation money, to help encourage companies to create new jobs.
And, in a bid to capitalize on the mission at Wright-Patterson Air Force Base and the potential for job growth in the aerospace sector, Dayton, the county and the development coalition established a trade office in Haifa, Israel. Uri Attir, the newly hired business development director in Haifa, came away impressed after spending 10 days in the Miami Valley.
“There is tremendous involvement in local government, city and county, to make this come true,” he said. “There is a true connection between academic research and business needs.”
Big players
Although each jurisdiction has its hand in economic development, the biggest players are the Dayton Area Chamber of Commerce and the Dayton Development Coalition. Both are nonprofits, but with different functions and marketing strategies.
Dayton Area Chamber of Commerce
The chamber offers economic assessments to its approximately 2,800 members, including business and expansion services, said Phil Parker, the president and CEO. Some 330 of those assessments were done in 2009, Parker said.
The chamber’s budget of $3.9 million is funded by its private members. The chamber and its separate, nonprofit foundation collectively receive about $1 million in public money annually, including funding from state agencies. The city of Dayton’s aviation department also contracts with the chamber for air travel marketing services and for operating Dayton International Airport’s business traveler center.
Parker and fellow employees Chris Kershner and Stephanie Precht are state-registered lobbyists.
The chamber has a staff of 27 full-time positions. While his organization works with companies and public entities throughout the region, Parker said he defers to the development coalition on matters involving Wright-Patterson, related defense development and any out-of-state companies wanting to come here.
“We provide services at our members’ request, with our members’ approval,” he said.
Dayton Development Coalition
Several economic development officials said if there is a “go-to” organization in the area, it’s the development coalition.
“You have to have an organization that represents the region, and the Dayton Development Coalition is that entity,” Tuss said. “I think, overall, they have done a very good job at that.”
The coalition has about 300 dues-paying members, including 270 companies and 30 local governments. About $1.3 million of its $3.6 million budget comes from public sources. However, the coalition is not a public entity by any stretch. It will provide to its government members, upon request, audits showing how its public funds are spent, but it does not make available to the public the results of those audits.
The organization did provide information on salaries and budgets to the Dayton Daily News.
Local officials credit the coalition with helping secure the government’s 2005 Base Realignment and Closure decision to relocate additional research programs to Wright-Patterson, which could result in a gain of 1,100 jobs by September 2011.
It also manages a state-funded entrepreneurial development program to help nurture startup businesses, and it actively courts companies that might be interested in relocating here. When a business inquires about a location, the coalition sends e-mail “site-seeker” alerts to regional partners to see whether they can meet the company’s needs, Leftwich said.
“It’s a process that gives everybody in the region a chance to make their best offer,” he said.
The coalition, Montgomery County and Miami Valley Research Park said they collaborated this year to attract the law firm Wilmer Cutler Pickering Hale and Dorr. The firm plans to open a back-office service operation in the office park this September, bringing in 187 jobs at an average salary of $49,000.
Although some have scoffed at the notion of a flying car, the coalition also has been in talks with a company considering Dayton as a possible site to produce the two-seat Transitional Roadable Aircraft, which would sell for $194,000, take off and land at airports and also drive on roads.
Joe Zeis, vice president and chief strategist for the coalition, said last week, “We’ve had positive talks.”
Hit or miss
Economic development often is a hit-or-miss proposition, experts say, and companies usually have their own ideas about where they will do business.
“In the end, the companies are the customers,” Tuss said.
West Carrollton officials said they tried hard to keep robotics company Motoman Inc., offering a building near its current West Carrollton operation, plus financial incentives of nearly $5.5 million over five years including tax abatements.
It wasn’t enough.
“They concluded that they wanted a brand-new building, and we could not offer that,” said Bill Covell, West Carrollton’s director of economic development.
The company’s future location at the new Austin Boulevard interchange of Interstate 75 will consolidate its southwest Ohio operations, bringing in about 200 employees from West Carrollton and 65 from Troy.
Losing Motoman will cost West Carrollton its fourth-largest employer and about $225,000 a year in payroll tax revenues, Covell said.
West Carrollton has reached a tax revenue-sharing agreement with Miamisburg, where Motoman’s new location will be, under which West Carrollton will receive a total of about $350,000 in gradually declining payments during the next five years, Covell said.
“Miamisburg was good through the whole thing,” Covell said. “They (Miamisburg officials) were not trying to steal them or anything like that.”
Asked if the fact that Motoman is staying in the region takes the sting out of losing the company, Covell said, “No.”
“It makes it sting a little bit less that people that work in West Carrollton (for Motoman) will still have their jobs,” he said.
Staff Writers Ben Sutherly, Thomas Gnau and Joanne Huist Smith contributed to this report.
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