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Development council considers its future

Posted: Tuesday, July 25, 2000

The board of the Juneau Economic Development Council recently survived a near-death experience, fiscally speaking.

Now the challenge is to figure out what to do with the rest of its corporate life.

The job-creation arm of the municipality is looking for a new executive director and a retooled mission. The outcome appears uncertain, despite a lot of discussion about the possible privatization of the council in the spring, when the Juneau Assembly was considering an immediate and deep cut in its grant.

``There's no strong energy going one direction or the other,'' said Acting JEDC Director Kirk Flanders.

A board retreat is being held Aug. 7 to review 11 applications for executive director and to talk more about funding sources and focus.

It's unclear now whether the new executive director will help the board chart its future, or whether he or she will be hired to execute a plan already in place.

Flanders is not applying to replace longtime Executive Director Charlie Northrip, who recently announced he would not return from a leave of absence in Croatia.

``I've reflected on it, and decided we need some new energy, some new blood,'' Flanders said.

Board Chairman Tim Sunday said he was surprised no one on staff applied for the position. Names of candidates aren't being released now, although finalists may be made public following the Aug. 7 retreat.

Sunday said he's looking for ``another Charlie.'' Northrip, a key figure in Alaska public broadcasting before taking the helm of JEDC, has been credited with keeping municipal funding alive during his six-year tenure with the organization. He also implemented the council's strategy of building the local economy one job at a time, instead of looking for one or two major employers that could be lured to Juneau.

During Northrip's time, JEDC also expanded its reach to several other Southeast communities, notably with a revolving loan fund for business startups.

Whether those strategies remain in place is a key question.

``I would like to see more focus on Juneau,'' Sunday said. ``I feel that things are pretty flat around here, economy-wise.''

Part of the dynamic is political.

Flanders and JEDC board members were surprised this spring when their liaison to the assembly, Dwight Perkins, proposed a 50 percent cut in the council's $125,000 annual grant, with a possible zeroing out a year later.

Perkins said JEDC was not supposed to be on the municipal umbilical cord indefinitely and that, with a financial crunch for the city, the economic development mission had become a luxury. But other assembly members said retrenching in that area was the wrong move during tight times, when the city could use more tax revenue from new or expanded businesses. Flanders argued the cut was even bigger than it appeared, because JEDC uses city funds to leverage seven times as much from outside sources.

In the end, the assembly settled on a $100,000 grant this year, with continued annual cuts of $25,000 projected until JEDC is zeroed out in four years.

The reprieve has created some ambivalence within JEDC about whether to identify private funding sources and make a transition plan to get off of municipal funding.

``In many ways, the board's feeling like, `OK, we dodged a bullet; we're OK for this year,''' Flanders said. ``I think this is the time to talk about it (privatization).''

One quandary: As all the current JEDC board members were appointed by the assembly, the group could have a problem attracting grants from certain nonprofit foundations, based upon the eligibility criteria in some cases.

Another option would be for the city to hire JEDC as a contractor, paying for specific tasks, Flanders said. ``I think it matters who the next mayor is, frankly.'' Mayor Dennis Egan's term is up this fall.

For now, JEDC is doing a little bit more fee-for-service consulting work to make up for the reduction in the city grant, Flanders said.

There has been talk of approaching local financial institutions for some assistance, he said. The rationale would be that JEDC prepares business plans and provides gap financing for some entrepreneurs who then go on to get bank loans, on which the banks make a profit.

While the big picture remains fuzzy, JEDC is continuing to concentrate on the details of its ongoing programs.

Flanders said that he would like to make more short-term ``micro loans,'' in the range of $10,000 to $35,000, to help business people who have been living off credit cards to make their new ventures work. That would set such entrepreneurs up to seek larger, conventional loans a few years later, he said.

``We still have more money to put on the street,'' Flanders said. ``We've got more money than we've got good deals.''

Juneau's low unemployment has limited the pool of entrepreneurs, he said. ``Why take a risk if you can go get a paycheck?'' But part of the interest in making smaller loans that turn around faster is the loss JEDC faces from its support of In His Hands, a modular housing venture that went under, leaving the council with an empty IHH building on Thane Road. Flanders is floating the idea of having the city take over the building, reimbursing JEDC for holding costs of about $140,000.

It would be a much cheaper way of providing storage for the high school than through the new construction that has been proposed, he said.

Meanwhile, JEDC is doing another round of business grants tied to employment of people with disabilities.

Last year, Gastineau Human Services, Commercial Signs & Printing and Rainbow Foods received of grants of $8,000 to $15,000 for capital equipment and office renovation, in exchange for a commitment to hire a worker with a disability for at least five years.

This year, the program has $55,000 available, and is looking for applicants from Juneau, Sitka and Ketchikan, said Jim Weiland, a business counselor with JEDC. Companies that provide benefits will have a better chance of getting a grant, Weiland said. In consultation with the state Division of Vocational Rehabilitation, JEDC expects to award four or five grants of $12,000 to $15,000 each. Applications must be postmarked by Sept. 1.



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