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Spend your lunch hour with us on Thursday, June 21st!
Learn from a pro how to get the most from your website!
At the R3bi on Thursday, June 21st
From 12:00 to 1:00
Bring your lunch
The mission of the Red River Region Business Incubator is to improve the economic viability of new and emerging businesses by fostering entrepreneurial growth and enterprise development. The R3bi recruits, trains and nurtures entrepreneurial talent to encourage the growth of sustainable businesses.
Paris Economic Development Corp. has had six months to work with its business plan – and work they have.
“If we have a business plan and we’ve implemented it, the role of staff is to stay focused on these activities. The role of the board is to hold us accountable,” PEDC Director Steve Gilbert said during a recent update of the plan. “There are some things we need to refocus on and engage the board and community.”
PEDC started its three-year implementation of the plan in January after approving the final version in December. It covers what PEDC hopes to accomplish in economic development.
The multi-part vision includes a need to establish relationships with industry and corporate decision makers to cultivate opportunities; to work with existing manufacturers and industry experts to understand new business models, economics and the requirements companies have to compete; to address education, training, infrastructure, responsiveness of services and other fundamental needs that ensure local competitiveness; to create a “culture of innovation;” and become a model of rural innovation.
The plan calls for not only keeping and expanding businesses already operating in Paris, but also attracting new industry. Instead of using a scattergun effect to go after any and every project that comes along, the plan calls for a focused effort on 20 to 30 target companies that would be a good fit for Lamar County’s assets and strengths.
The business plan also includes support for starting new businesses right here. The business incubator is one method already in place. Future efforts could include regional partnerships via grant funding and finding ways to provide start-ups with access to capital.
Gilbert’s update also included a day-to-day focus in several areas:
The proposed “report card” includes areas for civic leadership; retaining and recruiting new industry; development “transactions,” such as permits and project approvals; land and buildings; small business and entrepreneurs; and work force talent.
“We need to set a baseline and goals and measure our progress,” Gilbert said.
The business plan is an important component as the City Council begins looking at forming a strategic plan for Paris, board President Pike Burkhart said.
“What are we going to do in five years and 10 years and 15 and 20?” he said. “Right now we have some real nice prospects in the mill that will add to growth.”
A strategic plan can be costly to develop because of the complicated studies required. If the city needs to fund its plan, Burkhart said, it might want to consider selling bonds – the municipal equivalent of taking out a loan. Mayor A.J. Hashmi said the city’s looking at it, but the council plans to educate itself about bonds and related issues first.
“The city’s in good financial condition. The PEDC’s in good financial condition. Interest rates are historically low for bonded indebtedness,” Burkhart said. “The window is in the next few years, perhaps less than a year.”
The most immediate next steps with the Paris City Council include discussions with the city manager, quarterly council updates on PEDC activities, discussions about the targeted companies, retail opportunities and the city’s plans to call for a vote on 4A or 4B sales tax funding for the EDC.
Gilbert also said the corporation needs a marketing and public information team to make sure people are aware of what the Paris Economic Development Corp. is doing. Those efforts could include radio spots, social media efforts, video segments for the website and a “Speakers Bureau” that would address civic clubs and other groups.
“I’ve already talked to local business leaders, and I think we have some people ready to sponsor some of the radio spots,” Gilbert said.
It’s a good business plan, but needs a financial plan that looks three to four years out to compliment it, board member Bruce Carr said.
“We live year to year with this budget,” he said. “We don’t really have a vision where we’re going to be financially.”
Voters may get a chance to change how the Paris Economic Development Corp. is funded this year. If they do, it will mean changes for the organization.
“If the A/B thing comes to fruition, I’m not saying it’s right or wrong, but that would reduce the amount of money we have available for incentives,” PEDC board member Bruce Carr said during a recent budget meeting.
The City Council may call an election about a 4A/4B division of sales taxes that fund economic development some time this year.
“Then our community engages in information and discussion, and the voters will decide,” PEDC Director Steve Gilbert said. “That’s not something for me to be involved in. I can provide information on what we’ve done.”
The corporation gets its funding from a portion of the state sales tax collected in the city. That funding was approved by voters of Paris about 15 years ago. It’s known as 4A, which limits the funding to manufacturing and industry while 4B also allows for retail and infrastructure.
Because there are limitations on what 4A money can be spent for, Mayor A.J. Hashmi has asked the Paris City Council to consider placing a referendum on a ballot on whether to split the funding equally between 4A and 4B.
The current sales tax is at the maximum 8.25 percent, of which 6.25 percent goes to the state, 1.50 percent to the city, and 0.50 percent to the county. Of the city’s portion, 0.25 percent goes to the PEDC. The sales tax wouldn’t increase.
In Texas, any city may have a 4B structure, and the state’s largest cities must be 4B rather than 4A. Most of the state’s smaller communities are 4A.
However the vote goes, Hashmi said his “feelings will not be hurt.”
“If 4A is very successful, there’s no need to bring 4B up,” he told the board. “If 4A isn’t working, try something new.”
By JEFF PARISH
Paris Economic Development Corp. has a budget for the 2012-2013 fiscal year, although it didn’t come without a great deal of discussion.
“I don’t know how we can keep doing budgets like this,” said board member Kenny Dority, the lone dissenting vote at a recent budget meeting. “We’re spending every dollar we get in. If we continue this, we won’t have the money to incentivize anything.”
The budget’s actually come down, PEDC Director Steve Gilbert said. Not to mention the fact that the corporation budgets less in revenue than it generally takes in.
Paris EDC schedules about $1 million in sales tax income each year, but actually brings in around $1.2 million. That extra $200,000 goes into reserves. Interest on investments is expected to bring in another $15,000, plus $483,700 from cash reserves for incentives.
“That’s the best way to budget. We’re being responsible,” Assistant Director Shannon Barrentine said. “Instead of hoping we get $1.2 million and budgeting that, we budget for a million flat and we get $1.2 million.”
Between investments and cash, PEDC has about $5.14 million on hand. But that doesn’t mean the money is sitting idle. In fact, most of it’s already accounted for.
“We’re not hoarding cash or sitting on a lot of cash,” Gilbert said. “We’re trying to meet our obligations and manage them effectively.”
Over the next 10 years or so, PEDC has agreed to pay about $4.7 million to help local industry – $5 million if PEDC goes through a process to remove Paris Packaging bonds from its books. Instead, about $2.37 million would be placed in an escrow account and a third party would pay it out.
That basically means the corporation can meet its current obligations, but any future incentives would come from present income, board member Bruce Carr said.
Dority wasn’t alone in believing the EDC could do better.
“What would be better would be to budget $1 million and have expenses of $300,000,” Mayor AJ Hashmi said.
“That’s not doable,” Barrentine said.
Board President Pike Burkhart noted that the corporation’s activities are designed to bring in new business, which raises the revenue for all the local tax-based entities.
Health insurance benefits for staff went up about 15 percent. Costs for things like staff training and travel expenses are down, however. Promotional advertising dropped from $40,000 to $25,000.
“We’ve decided to really dial that back,” Gilbert said of the advertising budget.
“Are you going to replace that with some face to face?” Burkhart asked.
“That’s pretty much our whole approach,” Gilbert replied.
All told, next year’s operating budget – which includes salaries, equipment and similar expenses – is $444,070, a 4.2 percent drop from the current year’s budgeted $463,150. That’s 30 percent of the overall $1.5 million budget, which is down slightly from the current year’s $1.52 million budget. Hashmi noted that with budgeted income of $1 million, the EDC’s overhead is closer to 45 percent and should be lowered – to maybe 35 percent or so.
Barrentine asked what sort of overhead the city runs. Hashmi said he didn’t know and didn’t want to provide inaccurate numbers.
“Irrespective of what it is, it’s high,” the mayor said. “It is high because it is inefficient. There are five people doing what one person could be doing, and there are things that require five people that one person is doing.”
One particular item from the operating budget that raised a lot of discussion was the PEDC’s annual $60,000 payment to rent the depot from the Lamar County Chamber of Commerce. A state grant helped fund the restoration of the building, which required the chamber to lease it back from the city. When the PEDC and chamber separated, Paris Economic Development Corp. got the building.
Many of the requirements in the original building, such as the lease, have since expired, Barrentine noted. That $60,000 includes all utilities, the building and maintenance.
“Why should we do that when we can save $60,000?” Wehrman said. “Sixty thousand dollars is $60,000 of the taxpayers’ money.”
Even getting out of the deal wouldn’t necessarily save the entire $60,000, Dority said. There would be utilities and maintenance to pay for.
Hashmi said it might be possible for the city to lease the building to the EDC for $1 a year, or even for nothing at all, since the corporation is a city entity. City employees could easily maintain the building, he said.
The PEDC-Chamber of Commerce agreement has a 120-day notice requirement to terminate. Hashmi said he would look at the city’s agreement with the chamber to see what kind of similar provisions it might have.
Paris Economic Development Corp. exists to bring in new industry and help existing industry keep going and expand locally. It does that through incentives to the companies.
Historically, PEDC has budgeted its incentives into two accounts – new industry and existing industry. This year’s budget is more detailed. New industry expenses for industrial projects, innovation and other items totals $574,757. Existing industry – which includes Campbell Soup, Highway 24, HWH and others – totals $479,962.
The new industry group includes $85,762 for a contractor called New Industry Attractions, which helps draw retail business to Paris. A separate item — Retail Attractions — is unchanged from this year’s $32,715. The mayor questioned the value of the expense, saying it doesn’t seem to have drawn anything major, like a Target.
Paris’ sales tax, known as a 4A structure, prevents the EDC from providing incentives to retail operations the way it does to manufacturing and industry. But part of attracting industry is quality of life, Burkhart said, and that includes the local retail shopping available. Retail Attractions has helped with Rue 21 and construction at the Paris Towne Center, as well as some pending. It takes time, he said.
“We’ve got several projects that are coming into focus,” Gilbert said. “We really have made progress.”
Some also questioned the PEDC’s continued funding of the Red River Regional Business Incubator. The corporation plans to provide $95,500 of R3Bi’s $171,840 income. Dority said the EDC originally provided a small part of that, and it has grown over the years. Most incubators are subsidized, Gilbert said.
Board member Douglas Wehrman said a Princeton University study showed that every $1 spent on a business incubator returned $7 after five years. R3Bi is only in its second year.
“At what point is enough enough?” Dority asked. “Is it worth $30,000? Is it worth $60,000? Is it worth $1 million?”
R3Bi Director Fred Green noted that his fundraising activities have been hampered some because of new duties the PEDC board has placed on him. And some of those who have committed funding have yet to pay.
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By JEFF PARISH
Paris had a few requests for tax abatements on projects at local businesses, but first the city has to adopt a policy to establish one.
“We’re required to renew these policies every couple of years. We’re behind current, I guess you could say,” PEDC Director Steve Gilbert said at a board meeting Tuesday. “We want to try to streamline the process and make it less complicated, but we want to make sure we’ve got everybody covered.”
The City Council plans to take up the policy on June 25. The Paris Economic Development Corp. board of directors was scheduled to consider a new, revised version Tuesday. Instead, they opted to renew the old policy and take a longer look at revising it later.
“The big change there – the simplification – in the new policy we’re proposing to just negotiate on each project how much we’ll abate rather than trying to make it fit the chart,” Gilbert said.
The draft policy was created after a review of other cities’ recent policies, which showed a trend toward much simpler documents with more case-by-case negotiation rather than a set of criteria.
“That’s what we did in Fairview and Rowlett. Everything was a potential horsetrade,” said new City Manager John Godwin, who was attending his first PEDC meeting. “We weren’t trying to horsetrade for three entities. That’s the difference here.”
Board member Bruce Carr said that approach could lead to a sense of unfairness because “you treated Billy Bob differently than you did XYZ Company over there.”
“In our original policy, we had a chart,” Gilbert said, holding up the policy and showing a copy of the chart, which shows a range of capital investments, payroll and jobs created by a project. “This is criteria to make sure a project qualifies and at what level we might be willing to abate.”
When the old policy was created, it exempted existing industry from the chart’s requirements. Most requests were large enough that they fell into a different category of individual negotiation, anyway.
A lot of research, time and effort went into drafting the policy four years ago, said Dr. Pamela Anglin, Paris Junior College president. The PEDC, Commissioners Court, City Council and PJC all had a hand in creating it. The charts gave the policy a structure that made approval across all related governing bodies easier.
“We had the guidelines. We knew it fit,” Anglin said. “If it’s negotiable, the city and PEDC always take the lead. But if it’s all up for negotiation, there’s no guarantee the college and county will approve it.”
The chart also created problems, Gilbert noted. For example, if a project had a capital investment of $2 million and added around 50 jobs, that put it into two different categories, one that offered a 30-percent abatement over three years, while the other could earn 90 percent.
“Would we split the difference and give them 60 percent?” he asked.
“You give them the most advantageous,” Anglin responded.
Given the time requirements and the doubts over the open nature of the new draft policy, the board decided to reapprove the old policy.
The board also approved forming a working group to review the policy and draft a new one within the next 90 days. The committee would include the Lamar County judge, PJC president, Lamar County Appraisal District chief appraiser, city manager and PEDC director or their designees. Carr said it would be a good idea for Godwin to be involved in the process to bring ideas from other communities.
Godwin said he would sit in rather than designating someone else.
“It’s a bit inconvenient to do it this way because it requires us to do it a couple of times,” Carr said. “But it ensures we’re going to do it the right way.”