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Economic Development Agency On The Ropes

September 14,2o17-

City Of Tulare Pulls Out Of Tulare County EDC / Visalia Waivers

The Tulare City Council could voted unanimously it would pull out of the Tulare County EDC at their September 5 meeting. Mayor Carlton Jones was not in attendance.

Still, Jones says he agrees with the decision offering that we could “not see an adequate return on investment” and that the city could better use the monies in-house or working with the Chamber of Commerce.

Screen Shot 2017-09-11 at 7.19.44 PMTo put a exclamation point on the matter – the city also asked the EDC to return most of their annual payment from the city, meant to cover July 1 to June 30 each fiscal year, now that they have  given notice to the EDC in recent days that they are out.

A city staff report says in past four years Tulare paid $261,220 to the TCEDC but in that time only one company made the decision to locate in Tulare although the EDC referred 46 prospects. The report adds that 11 of those referrals were from the state GO-Biz office who will continue the city referrals with or without the TCEDC. The staff report concludes “ this contribution is no longer cost effective or efficient and the funds could be reallocated to an agency that will provide service exclusively to the City of Tulare. In addition the City recently reorganized the entire Community & Economic Development Department  in an effort to better serve the Development Community.”

Pictured: New companies locating in Tulare County are often distribution centers

The news for the EDC is only little better from the council chambers at the City of Visalia where they recently decided to fund only 90-days worth of their allocated annual funding awaiting a response from EDC on their request to further lower Visalia’s contribution. City sources say in the end, they too may decide to pull out.

Hanging over this decision for all the cities is a huge budget crisis made worse by the looming retirement funding all face. Porterville alone is looking at a 3-year PERS payment increase totaling $2.7 million.

Visalia’s annual PERS payments will gradually increase from $11.90 million (General Fund portion: $8.63 million) in FY 16/17 to $20.13 million (General Fund portion: $14.51 million) in FY 22/23. The PERS payment increase for FY 17/18 alone is $1.23 million above the FY 16/17 amount.

Because of their strapped budgets Exeter and Farmersville say they cannot afford to pay their TCEDC payment this year.

The shortfall for the TCEDC is to be backfilled from $100,000 in reserves they socked away, to maintain the budget at $313,000 from public sector members with another $45,00 added from private sector members.

At a special EDC board meeting in August the City of Visalia’s contribution this fiscal year was to be reduced from $165,593 to $112,829 while Tulare was to pay $21,00 less – now $44,497. Meanwhile Porterville was being asked pay $15,000 less.

Now all this up in the air or worse.

20 Jobs

The Visalia staff report from August 21 on the issue adds that “TCEDC has informed staff that the contribution of $112,829 (the decreased amount) to the TCEDC for FY 2017/18, is non-negotiable and by not accepting the proposal, the City will no longer receive services from the TCEDC.”

TCEDC has assisted Visalia with 96 prospects during the past 4 years, the length of time since the Council decided to fill the formerly vacant city Economic Development Manager position. Of those 96 prospects, 10 of them resulted in visits to Visalia for site tours to look at a variety of qualified sites and 2 of those 96 prospects ultimately located in Visalia. Those two businesses have an estimated 20 employees in total for the two companies.

Typically,  many new companies looking at Tulare County are distribution centers, highly automated and employing just a handful of workers unless they are of the mega-variety like a Nordstrom or Amazon.

The County of Tulare added $10,000 a year as a limited member of the EDC, after pulling out the organization a few years ago over a policy dispute. The County started their own economic development department.

With Tulare out, Visalia and even Porterville wavering, the EDC appears to be facing a new budget crisis of their own.

The agency headed by Paul Saldana, was first launched in 1983 and aims to bring new industry and jobs to the county.

 

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