Lee’s Summit considering cuts in funding for economic development

rpulley@lsjournal.comApril 17, 2013 

Councilmember Bob Johnson pitched tough questions at the Lee’s Summit Economic Development Council April 12, questioning its effectiveness during a budget meeting where the group made its request for funding.

Johnson said the city is adding lower-paying retail jobs but not those that pay a liveable wage for Lee’s Summit.

“How are we making an effort to recruit quality jobs?” Johnson said.

The Budget Committee was hearing requests from the LSEDC, the Lee’s Summit Chamber of Commerce and Downtown Lee’s Summit Main Street Inc. for services they provide the city to promote economic growth and tourism. The city is suggesting cuts in their appropriations for next year.

Johnson criticized the lack of travel outside the region and the percentage of the LSEDC budget spent on salary and benefits. He said it was about 68 percent.

LSEDC Treasurer Christine Bushyhead responded that the three full-time employees of the EDC together had 75 years of experience and their wages were commensurate with peers in the field.

“From our perspective, if you look at other (economic development councils) and other communities, then come back and tell us we are out of line and we don’t compete enough with the dollars we have today,” she said.

LSEDC President Jim Devine responded to the travel question.

He said traveling to promote Lee’s Summit in other areas would elicit the response: “Where is that?”

A better tactic, he said, is to compete hard for the companies that come looking at this region through the efforts of the Kansas City Area Development Council.

“To go outside this area, to spend airfare, is a waste of money,” Devine said.

Chairman of the LSEDC Executive Board Rick Viar and Bushyhead, both volunteers, told the committee that the council has increased its involvement in the Kansas City organization to make Lee’s Summit more visible.

Bushyhead said that in March the group had a retreat for strategic planning and it would continue its efforts for local expansion and business creation, and improving the community.

She gave an example of the Gateway Business Alliance Group, executives and CEOs who have organized to help the city solve transportation problems, notably the Jefferson Street Bridge, volunteers hours from the “best and brightest” in the Lee’s Summit community, she said.

The LSEDC’s request is for $250,000 from the city, to be added to about $345,000 from private contributors to complete its nearly $600,000 budget for the coming year.

Viar said that in 1986 the LSEDC contributions from private donors was an average of $1,216 and had increased to $2,437 in 2012, an indication of the support that Lee’s Summit businesses have for the work the LSEDC has been undertaking.

“That’s evidence of the strong public/private partnership we’re enjoying,” Viar said.

At the April 12 Budget Committee meeting members also heard requests for funding from the Lee’s Summit Chamber of Commerce and Downtown Lee’s Summit Main Street.

The chamber is responsible for the city-wide branding project. Downtown Lee’s Summit Main Street, as part of its activities, organizes public events and recently finished cooperating with the city to adopt design standards for the downtown area.

Downtown Lee’s Summit Main Street’s request was $60,000 and the Chamber was asking about $180,000 for branding.

The committee also heard a preliminary report from City Manager Steve Arbo on his proposed budget of about $58.2 million in spending for the general fund.

The city is cutting spending next year by $600,000 to avoid depending on non-recurring revenue for ongoing expenses.

To finance the service agreements the city uses money from its Bed and Industry Tax and supplements it with an allocation from the general fund. Last year the supplement was $62,000.

Arbo said he was suggesting a cut of $10,000 to the general fund’s supplement to the Bed and industry tax, shared proportionally by the three groups.

His recommendation for 2013-14 allocations:

• $58,000 to Downtown Lee’s Summit Main Street

• $243,000 to Lee’s Summit Economic Development Council

• $49,700 to the Chamber of Commerce

Johnson proposed delaying the committee recommendation on the service agreements until it had reviewed the rest of the city budget. Other committee members agreed until the presentation by James McKenna, brand manager, on the branding program managed by the Chamber.

He told the committee the Chamber needed the money to continue advertising campaigns and working with community groups to maintain momentum.

“You don’t pause and then pick it up,” McKenna said. “If you stop at one point, you’ll have to restart somewhere else.”

He said its cheaper to maintain an ongoing effort.

McKenna said that by renegotiating contracts for radio, television and newspapers, and by in-kind contributions from the chamber, the city’s initial investment of $97,529 for advertising was leveraged into a value of $292,289.

During the next year the Chamber will be working with 30 to 40 businesses for cooperative media buys, which will push the effort further at less cost for all, he said

Arbo said that city staff also thought it was important to continue the branding process but he preferred to split its request between this year and next. The Chamber was seeking $131,000 from the general fund next year, in addition to the Chamber’s share of the Business and Industry Tax.

Arbo recommended amending this year’s budget to increase raise the appropriation for branding by about $50,000 to $131,000 so the Chamber would have money to commit to future contracts before the 2013-14 starts on July 1. That amendment will go to the full city council.

A $50,700 request for branding that would be funded by the Business and Industry tax would be discussed as part of the three service agreements in the 2013-14 budget.

The committee voted 2-1, Johnson voting no, to recommend the revised budget for branding in 2012-14 to the City Council. Rob Binney was absent from the voting.

Councilman Dave Mosby said he thought the three organizations were a “direct generator of revenue” more than users. “Their funding should be full, without a reduction.”

Budget discussions will continue through June when the full council will vote on the spending plan.

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