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Wednesday, Jan. 24, 2007 | Ask the San Diego Regional Economic Development Corp.’s what its best recent accomplishment was and its representatives will tell you about the campaign they ran to attract the headquarters of the agency created by California’s $3 billion stem cell initiative.
They’ll describe with any number of superlatives how wonderful of an operation it was and how it was an example of the “power of collaboration” among San Diego’s wealthiest citizens and corporations.
It would seem to have been a great success.
Unfortunately, however, it wasn’t.
The committee that made the decision on where to site the headquarters for the potentially powerful institution chose the Bay Area.
“It was unsuccessful, but many people thought of it as a win,” CEO Julie Meier Wright told us.
Ironically, in their own operations, businesspeople rarely see such results as “wins.”
The Economic Development Corp., or EDC, received just more than $1 million last year from the city of San Diego. While gripes about the taxpayer funding of the agency — and the bloated salary of its CEO — have come up in the past, the city’s troubling financial position and the lack of valuable production from EDC makes this the time for real change.
The effort to attract new jobs and enterprises to the region may indeed be worthy of an investment from taxpayers, but only if it is administered in the most efficient way possible.
It is not clear that this is the case now. Not only is the city facing a financial crisis, but EDC has not had much success — nor placed much emphasis on — luring new businesses to San Diego.
At the same time, the city is paying other employees to itself lure businesses to the city. The mayor’s Business Expansion, Attraction and Retention team was created, it seems, to fill the void EDC left when it decided long ago that it would focus on influencing local policy debates instead of bringing new jobs to the region.
Businesses can and should influence local government decisions. But they don’t need more than $1 million in taxpayer funds every year to help with their efforts.
Finally, when the San Diego Regional Chamber of Commerce hired its new CEO just a few weeks ago, it sent a number of different signals that it was going to be engaging in the kinds of efforts that has defined the work of EDC for the past several years.
Chamber CEO Ruben Barrales told us something important recently: “In a place like California or San Diego specifically you need to have constant attention on growing the economy and attracting businesses.” The chamber’s board members described Barrales’ mandate to “create jobs” locally and lobby Sacramento and Washington D.C. — the two efforts that are supposed to be at the core of EDC’s mission.
In short, the private sector prides itself on its ability to recognize economies of scale and enforce efficiency on operations. Yet the city, the chamber and EDC’s efforts are clearly overlapping. The chamber and EDC, for example, both have set up task forces to look into issues regarding the Chargers’ search for a new stadium. It’s certainly not a coincidence that neither has produced anything.
This overlap would not be worrisome if EDC had strong list of accomplishments to which it could point.
Unfortunately, EDC’s list is aging and many of the achievements it highlights are questionable.
EDC claims it was instrumental in protecting local military bases from the federal government’s base closure process. That is, it says, its most important accomplishment in the last several years. Many people in the city, even EDC’s harshest critics, do give the agency credit for the effort. But the bulk of those activities took place in 2004. And they were undermined when EDC, after begging the military to recognize the value of Marine Corps Air Station Miramar, bizarrely and meekly endorsed a plan to try to force the Marines to dramatically alter their activities at the base to make room for a commercial airport.
The last supposedly successful project to which EDC representatives point as evidence of the organization’s continuing benefit to the region is an ad campaign launched last year dubbed “San Diego Works.” Designed to combat the negative headlines that the city’s financial crisis had provoked around the nation, the EDC campaign took cheery slogans to the country’s largest newspapers and magazines along with pictures of happy business people. Though nothing, in effect, had changed about the city’s financial condition — in fact, the mayor says he sees things are worse now — the agency saw spin and damage control as its job.
The list of accomplishments for an agency like EDC should be more simple and obvious.
But it’s not.
The mayor and City Council should move to eliminate the $1 million EDC receives each year.
There have been murmurings of such an effort in the past, when the salary of EDC’s Meier Wright became the subject of local news reports.
Many bemoaned the spike in her compensation package that had earned her more than $515,000 in 2001 — an exorbitant amount, critics thought, for an official of an organization that received so many tax dollars.
Since then, the taxpayer contribution to the agency has been cut and EDC has tried to demonstrate that her salary no longer comes from public funds.
Like the agency’s public relations initiatives, that argument is not very substantive. An agency’s board makes salary determinations based on its entire budget. It’s hard to imagine that without the city’s investment, the board would still decide to pay its executive so high a proportion of its budget. Meier Wright recently refused to disclose her compensation, saying it is no longer public information and nowhere near the previously reported levels. But a quick search of the latest available public records show that she earned nearly than $455,000 in salary and retirement contributions in the 2005 fiscal year.
If this were a private organization funded with private contributions, this information would not be a subject of public concern. But if an organization needs substantial public dollars to continue its work, as EDC argues it does, it must also face the scrutiny that all city departments are under right now.
The mayor has been investigating all city departments to ensure that there is no overlap in responsibilities and that the job can’t be done more efficiently. EDC’s positioning and list of accomplishments over the last two years wouldn’t look very good under such scrutiny.
The city will need to solve an $87 million budget deficit this year. As the City Council and mayor search for savings, they’ll find an easy target for cuts in EDC.
With the mayor investing other city funds in the effort to attract businesses to San Diego, it seems time to remove the generous public subsidy and let the market shape EDC as it may. Cutting it off from public funds would force local businesses to decide whether they want to keep paying hefty dues into both EDC and the chamber, whose efforts overlap, or produce a more efficient way to not only advocate for the interests of businesses locally but attract new ones to town as well.
The chamber should consider re-branding itself into a new broad-based advocacy group that had the economic development of the region as one of its missions.
But only after cutting the taxpayer contributions, and provoking a near-total reorganization of the business community’s efforts, should the city consider reinvesting in them. Right now it is putting scarce taxpayer dollars into EDC for economic development and getting little more in return than another lobbyist at its door.