Holland proposes bump to Lee’s Summit spending for economic development

rpulley@lsjournal.comFebruary 14, 2014 

  • 200,000

    dollar increase proposed for promoting economic development, despite looming deficit

Several Lee’s Summit council members are pushing to spend more on economic development, regardless of a projected $1.8 million general fund deficit in 2014-15.

At a Budget Committee meeting Feb. 10, Councilman Derek Holland continued to press for adding $200,000 to the amount of money the city already spends specifically for economic development.

About $330,000 is collected annually from a “bed-tax” which has been used to support public service agreements with the Lee’s Summit Economic Development Council, Downtown Lee’s Summit Main Street Inc. and the Lee’s Summit Chamber of Commerce, with supplements from the city’s general fund.

City leaders want to increase growth in commercial properties to broaden the tax base and ease pressure on its operating budget and the burden on homeowners.

The committee is meeting monthly with City Manager Steve Arbo to give him suggestions for the 2014-15 budget of about $58 million. Arbo has identified $600,000 in cuts, generally, with more work to be done to reach $1.8 million in cuts for a balanced budget, based on spending and revenue trends.

Committee members Bob Johnson, chairman, Rob Binney and David Mosby also were at the meeting, while Allan Gray was absent.

Johnson broached the idea of cutting allocations to those organizations because of the deficit. He noted the tax in the “Business and Industry Fund” (the formal name for the tax on hotels and motels) is for economic development, but not earmarked to those organizations.

Representatives of each group were at the meeting, but the LSEDC responded to the heat. It receives the largest share of city subsidy at around $250,000.

Johnson and Holland said the city’s efforts at business recruitment are failing, provoking a defense from LSEDC President Jim Devine, Brad Cox, executive board chairman, and Christine Busyhead, secretary and board member.

Johnson reiterated his complaint that the ratio between residential and commercial property assessments sits at about 17 to 83 percent.

“The point is, in the last 10 years, it’s flat,” Johnson said.

Devine said that housing was the driver of that. While commercial sector did grow, the city also allowed construction of 700 to 800 houses annually during those fast-growth years.

The meeting featured some tense moments.

Johnson remarked that he knows Devine doesn’t like industrial development. Devine challenged that, to which Johnson replied Devine told him as much in a private meeting. Devine demanded Johnson name the date of the meeting.

They dropped the spat when Cox came forward to take over speaking for the organization.

Then there was a moment when Devine spoke to Cox in undertones, advising him, and Mosby, visibly irked, interrupted Cox and asked Devine to repeat himself. Devine didn’t and took a seat. Soon after, Mosby interrupted Cox and asked if Devine had something he needed to say. Devine did not come back to the mircophone.

Aside from the drama, the discussion touched on how few new companies have come to Lee’s Summit in recent years, to the role of the LSEDC in retaining businesses.

Holland said the economy is on the verge of a rebound and Lee’s Summit has to position itself to take advantage of that resurgence.

“I personally believe, and the majority of the council believes, that we need to be more aggressive,” Holland said.

He said the economic development efforts in the past weren’t as coordinated as they could be.

Bushyhead told the committee members that the LSEDC, Chamber and Main Street groups already recognized the need for closer cooperation and in the last year were making strides in that area.

“We need you as a partner,” Bushyhead said. “We don’t need the tension, we don’t need the feeling we’re not accomplishing things.”

She said the city can’t buy the amount of volunteer talent that the business leaders, engineers, teachers and other experts have pooled in the three organizations.

Binney said, “I’ve seen nothing but growth in partnerships.”

He suggested that because the city just passed an ordinance with lower requirements for a fund balance, it could consider more spending on economic development this year.

The LSEDC representatives asked committee members to remember accomplishments in the community, which were influenced by the LSEDC, such as business retention, the Unity and Barber annexations and a plan for an improved interchange at U.S. 50 and Missouri 291. The city and Missouri Department of Transportation have a plan for rebuilding the intersection, if voters improve a $10 million bond issue in April for the city’s share of the cost.

Cox said retention work done by the LSEDC is not as “sexy” as new recruitment, but is a vital piece of economic development. He said the economic climate has changed from that of 20 years ago when Lee’s Summit chased manufacturing jobs.

“It’s changed underneath us and we need to adapt,” Cox said. “If we’re not ready, we’re not going to get the deal.”

He said the LSEDC is working on taking advantage of the growing healthcare economy, capitalizing on the hospitals, clinics and its population of educated workers.

“We have an astounding array of health care providers in this city, an amazing amount of jobs,” Cox said.

Arbo asked for clarification of the committee’s position. Johnson said he heard three members who wanted to pencil in more money for economic development.

Mosby said he’d agree to an additional $200,000, but not with cuts to basic services for fire, police or snow removal.

Binney said that because the city just passed an ordinance with lower requirements for a general fund balance, it could temporarily keep a lower reserve to consider spending for economic development.

Holland said he wanted to add $200,000 out of general revenue, in addition to money raised by the bed tax. That idea had support of three of the four present members, save Johnson.

“I’m doubling down,” Holland said. “But if it’s the status quo, if we get the same results, I’m not going to do that.”

“We hear you, we understand what you’re looking for,” Bushyhead said. “Let us continue what we’re doing.”

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