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JEDC mulls independence

Tight city budget may make continued funding impractical

Posted: Tuesday, March 28, 2000

Juneau could be at a crossroads for economic development.

A proposal before the Juneau Assembly calls for an immediate 50 percent cut in funding for the Juneau Economic Development Council, with a full phase-out of city support a year or two thereafter.

Acting Director Kirk Flanders had initially opposed the idea of being weaned off of city money.

But Flanders says the budget process has been so unfair that he looks forward to making JEDC independent of the assembly. The end result could be that the assembly and JEDC end up as adversaries with competing approaches to economic development, he warned.

Dwight Perkins, an assembly member who serves as JEDC liaison, proposed the 50 percent cut in grant funding last month.

Northrip to remain in CroatiaLongtime JEDC director resigns post

By BILL McALLISTER

THE JUNEAU EMPIRE

Charlie Northrip, widely credited with bringing the Juneau Economic Development Council back from a period of disfavor, has announced his resignation as executive director.

Northrip, in Croatia since November, had been on a one-year leave working with the U.S. Agency for International Development.

He notified JEDC board and staff members last week that he plans to stay an additional year working on television and radio infrastructure in the fledgling democracy. He originally was to notify the JEDC of his intentions by May 1.

Acting Director Kirk Flanders said he wasn't surprised.

``He's not the kind of guy who goes backwards in life,'' Flanders said.

Northrip has been an effective spokesman against cutting the JEDC budget in the past, according to city Finance Director Craig Duncan. In Northrip's absence, a 50 percent cut has been proposed.

``Charlie is hoping that his announcement won't make things worse for JEDC,'' said board Chairman Tim Sunday.

``I have to say that the prospect of returning to have to fend off yet another attempt by CBJ staff to target the JEDC in the budget process made the decision easier,'' Northrip said in an e-mail to the Empire Friday.

Northrip, a member of the Alaska Broadcasters Association Hall of Fame, is assisting independent TV and radio stations with getting connected to a fiber optic backbone system. He's also working on capitalizing the stations and getting personnel trained.

``The TV network I'm helping establish here is off to a good start and recent governmental changes are providing encouraging signs that more progress can be made,'' he said. ``We've also been asked by the new government to help assess how they can change the state-controlled radio-TV system into a true public system. Both those activities and others mean there'll be plenty to do for some time to come.''

Perkins said the non-profit organization was never supposed to be on city money permanently. With the city facing a revenue crunch, JEDC has become a ``luxury,'' he contends.

Flanders questions whether Perkins is expressing a majority view on the assembly.

Two other assembly members were non-committal about funding levels for JEDC. But they were wary of deep cuts in the next fiscal year.

``I always think it's a bit silly to cut your economic development engine when you're looking for new revenue,'' said Frankie Pillifant, a new member of the assembly.

``I would say you try to nurture economic development when things get tight,'' said Deputy Mayor John MacKinnon.

The transformation of JEDC - from the economic development arm of the city into a regional business-assistance organization attracting grants and providing services throughout Southeast - has been a rocky one, at times.

JEDC was formed by an assembly resolution in the late 1980s during an economic downturn. The private non-profit corporation, with its membership appointed by the assembly and an annual city grant of $200,000, was originally charged with attracting outside industry and was oriented toward big projects.

``As the years passed, with little concrete results, the assembly grew dissatisfied and began reducing CBJ support,'' said longtime Executive Director Charlie Northrip in an e-mail from Croatia, where he is working with a U.S. aid agency. Northrip just announced he would not return to his JEDC post.

``By the time I was hired (in 1993), CBJ support had dropped to $80,000,'' Northrip said. ``The board, by that time, decided to move in the direction of smaller scale, grass-roots economic development. That was my mandate.''

Jackie Stewart, who was appointed to the JEDC board in 1990, said she argued for a change of direction after the organization publicly supported controversial developments, such as a home port for the U.S. Navy, which never came to pass.

``I felt they were embracing activities that weren't necessarily for the benefit of the quality of life in Juneau,'' Stewart said.

Kim Elton, then a member of the assembly, insisted on matching grants as a way for JEDC to prove the worth of its programs. ``Elton even said he'd support a plan for two CBJ dollars for every non-CBJ dollar,'' Northrip said. ``I wish I'd taken him up on it.''

JEDC reports that its $125,000 city grant leveraged about $900,000 in 1999, for a 7-1 match.

Through a variety of financing and assistance programs, Northrip and Flanders say JEDC definitely has made a difference to the Southeast economy: 437 jobs created, 202 saved, 104 businesses started and $5.39 million in capital raised.

For example, JEDC's revolving loan fund has provided ``gap financing'' for entrepreneurs who couldn't get enough money through bank loans to make projects fly.

Steve Bowhay, co-owner of Glacier Gardens Rainforest Adventures, said he couldn't have succeeded in launching the business without that financing and also JEDC's help in drafting a business plan. The company now employs 40 people full-time in the summer and has contracts with major cruise lines that are expected to bring in 60,000 visitors from the ships this year, Bowhay said.

That assistance was offered elsewhere in Southeast, too. JEDC put a staff member across the street from the closed pulp mill in Ketchikan to assist laid-off timber industry workers who wanted to start businesses.

Along with one-on-one business counseling, JEDC has conducted classes in various aspects of business management, and has had special programs concerning disabled workers, employees with substance abuse problems and prisoners.

Through Alaska InvestNet, which holds an annual conference next week in Anchorage, JEDC is providing the only matching service in Alaska for entrepreneurs and potential ``angel'' investors who want to finance homegrown business startups.

JEDC also produces The Capital Profile, a biannual overview of economic trends and demographics.

``I read their newsletter line by line, and I save it for future reference,'' said Juneau Chamber of Commerce President Kathy Kolkhorst.

JEDC would go after private foundation funding if the city's grant is eliminated, Flanders said.

The question is whether there is a public policy reason for having the link between the group and the municipality. Flanders says that governments in Anchorage, Sitka, Ketchikan and Kenai fund their economic development agencies, all at a higher amount than in Juneau.

``I think the CBJ needs its own economic development agency, that can respond to municipal priorities,'' Northrip said. He noted that when federal funds were awarded to Juneau to compensate for a decline in the timber industry, ``the assembly used the JEDC as a screening agency for proposed uses of the money and made one of the criteria assistance (to) other communities in Southeast.

``The Southeast Alaska Revolving Loan Fund, Bartlett House and other regional help came out of that project,'' Northrip said. ``The JEDC and the assembly both agreed the CBJ should not be a lender.''

The revolving loan fund, which was started with $100,000 of CBJ funds, attracted additional investment from governments in Sitka, Wrangell, Thorne Bay and Haines. Northrip calls it ``a very good tool to show how Juneau is helping all of Southeast.''

Even so, city Finance Director Craig Duncan is suggesting something amiss in JEDC's management of the loan fund.

Although he denies any responsibility for the proposed cut in the JEDC grant, Duncan's statement that the JEDC might have overstepped its authority with a loan that went bad has rankled Flanders and the organization's board. Duncan says Flanders is making him the scapegoat for budget cuts proposed by elected officials.

Both the city and JEDC played a role in financing a project by In His Hands, a Juneau corporation, to manufacture affordable, modular housing.

The project failed over a year ago, leaving a clearcut on city-owned land above Fred Meyer and a default on a JEDC loan. Flanders, who acknowledges that JEDC could have been more hard-nosed about financing criteria, said the organization projects a loss to the fund of up to $50,000 after the upcoming sale of the IHH factory building on Thane Road that it foreclosed on.

It appears that JEDC went ahead with financing even though the developer didn't come up with its required share of capital, Duncan said.

The city is auditing the revolving loan fund next month. Confident that no procedural violations will be uncovered, Flanders said that will be ``a slam dunk'' by JEDC.

But the budget process itself has been alienating, Flanders said. Duncan has suggested JEDC need not bother even submitting a request for funding for the next fiscal year, as the number already has been chosen, Flanders said. ``If you don't believe in the process, you won't trust the outcome.''

As a result, he says he's now thinking of a transition plan to becoming a completely privately funded agency.

``I'm becoming more resigned to it, and frankly, with the way we've been treated through this process, I'm looking forward to it.''

But the assembly needs to keep the grant level near $125,000 for the fiscal year beginning July 1, otherwise JEDC can't honor its commitments to agencies that have provided matching dollars for ongoing programs, Flanders said.



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