Breaking the bank

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The Hamilton County Alliance will run out of money this year, unless the county steps in to help

Jeff Burt is the president of the Hamilton County Alliance

Since the housing market crash of 2008, an annual $120,000 deficit in the Hamilton County Alliance’s budget has been supported by a “rainy day” fund.

By the end of the year those funds are projected to run out –potentially meaning insolvency for the countywide economic development organization. HCA President Jeff Burt and Chairman Ron Brumbarger are asking the county, and the cities and towns therein, to prevent that.

But not all of the municipalities are certain that a greater contribution to the Alliance would be a worthwhile investment.

Brumbarger

Formed in 1992 as a public-private partnership, the HCA is the “only body in Hamilton County tasked by charter to promote economic vitality,” according to Brumbarger. The public portion of the organization’s $550,000 annual budget comes from a $50 Economic Development Support Fee (EDSF) dedicated to the HCA for every plat approved in the county, and from additional grants to the HCA from each of the eight communities in the county: Carmel, Fishers, Noblesville, Westfield, Sheridan, Arcadia, Atlanta and Cicero.

Although the HCA’s Web site bills itself as funded by 39 percent public, 61 percent private dollars, Burt said that private dollars now make up only 25 percent of the annual budget. Between 1994 to 2008, the EDSF averaged $150,000 in revenue for the HCA. Since 2008, Burt said that number has dropped to $38,000 to $40,000 annually in response to the housing market slump. The HCA is asking for an additional $105,000 this year – half from the county and half from the founding communities of Fishers, Carmel, Sheridan, Noblesville and Westfield – to make up the deficit.

“We’ve pared back the budget as hard as possible,” Brumbarger said. “We’ve done all the things you’d expect a good steward of public money to do. We’ve really cut back as much as we legally and professionally and ethically can.”

Nonetheless, the Alliance has exhausted its rainy day fund, and the additional $105,000 it is now asking

from the county would shore it up for the remainder of this year. Both Burt and Brumbarger admit, however, that it would only be a stop-gap measure.

 

Changes coming

Brumarger laid out a three-pronged plan to steady the Alliance’s financial footing: the creation of industry associations which would bring in membership fees, increased private-sector participation and a re-evaluation of municipal funding which, Brumbarger said, has remained mostly unchanged in the past five to seven years.

“The most critical piece is that we don’t have significant engagement from the private sector,” said Brumbarger. “We need more of them to realize that to market our community and make it a better place to live is an all-hands-on-deck proposition.”

As to why existing businesses should support the Alliance – which aims to bring new players into the market – Burt pointed out that since 2003, the organization has helped local businesses receive 305 grants worth a total of $9.2 million. Much of that money was dedicated to help existing businesses expand or train employees.

In its 20 years of existence, HCA has assisted 292 businesses, had 12,546 job commitments, awarded 385 grants for $15,862,755, generated $10,158,719 in estimated property tax support, and provided Hamilton County with $996,968,196 in total capital investment.

 

Varying opinions

Officials in Fishers, however, have expressed doubts about the actual benefits the town receives from the Alliance.

“To me, the numbers they were giving us were skewed,” said Town Council President Scott Faultless. “In terms of return on investment, I think ours is substantially lower than even the numbers they’re giving us.”

Councilor Stuart Easley said the HCA was giving disproportionate benefit and attention to certain communities, namelyCarmel, considering the county-wide funding it receives.

“They’re saying, ‘What’s good forCarmelis good forHamiltonCounty,’” Easley said.

Other concerns included the organization’s lack of a significant Web and social media presence (a newly updated Web site was launched within the last month), and what Fishers officials perceived as a failure to keep up with the times.

Council Vice President Mike Colby was perhaps the bluntest, saying, “My impression of this group is that they’re always getting started.”

However, town officials ultimately seemed to decide they weren’t quite ready to let the organization fall by the wayside, especially amidst fears that the Indy Partnership, the organization tasked with economic development for the nine “donut counties” aroundIndianapolis, may cease to exist or see a reduced role as part of a merger with another development organization.

“The Indy Partnership and the Indiana Economic Development Corporation (IEDC) have been the biggest source of (business) leads over the past few years,” Faultless said. “If the Indy Partnership is going away, that’s the biggest threat to me. And that’s your biggest selling point. We need someone who is selling the region – specificallyHamiltonCounty.”

Johnson

Noblesville Mayor John Ditslear and Economic Development Director Judi Johnson also are concerned about the future of the Indy Partnership – saying that counties will need to step up their own attraction marketing.

“If we don’t have the Alliance who do we have that recommends the out-of-state and global inquiries?” Johnson said. “We come together and work together on a regional basis. The Alliance is a conduit for each community to reach the state level.”

Carmel, like Noblesville, sees great value in the services provided by the HCA, but the Alliance has perhaps done more for the city than is has for any other Hamilton County municipality. According to the numbers provided by the HCA, the organization has given Carmel a greater than six-to-one return on its investment. The Alliance takes some credit for helping to bring more than 5,000 job commitments and more than $420 million in capital investments to the city by assisting in bringing companies like Midwest ISO and ADESA to Carmel.

Ditslear

Mayor Jim Brainard added that the existence of the Alliance allows the city to continue operating without a department dedicated to economic development, and he said Carmel likely would be in favor of increasing its contributions to the Alliance, if necessary.

“The Hamilton County Alliance provides a valuable service to Carmel and Hamilton County, and we save money by having one office serve the entire county,” he said. “I have reviewed the Alliance’s financial position with Jeff Burt and will be recommending that we carefully monitor it as we prepare the city’s budget for 2013. We may have to slightly increase our annual contribution, but increased housing permit fees that go directly to the Alliance may also correct the imbalance as the economy improves.”

While Fishers and Carmel may have differing opinions on the real benefit provided by the Alliance, Westfield Mayor Andy Cook said his staff has yet to form a solid opinion on the HCA’s impact on his city.

That’s because Westfield, he said, has very rarely been in a position to benefit from the efforts of the Alliance. While neighboring municipalities have shovel-ready sites primed for economic development, Westfield is playing catch-up and trying to get to that point with new developments such as Grand Park, currently under construction.

“We don’t have a corporate campus as Carmel has and Noblesville has,” Cook said. “We haven’t really been in a position to benefit (from the Alliance).”

Cook said the city also has been hurt by 20 years of uncertainty that he said surrounded the state’s planned overhaul of U.S. 31. With Grand Park under way and plans for U.S. 31 now finalized, however, Westfield will be in a position to make a strong push for economic development opportunities in the near future. What the Alliance’s role will be in these efforts, though, is still to be determined, Cook said.

“We’re really looking at what needs to be done … Obviously, the Alliance needs funding,” he said. “Our whole concentration over here politically is economic development, so whatever assistance we can have in bringing commercial tax base to the city, that’s what we need to have happen.”

 

Hamilton County Alliance Performance 1992-2011
Capital Businesses Value of Estimated Estimated Job Return on
City Investment Assisted Grant Awards Property Tax COIT Commitments Investment
Carmel $423,508,051 109 $7,878,667 $4,426,490 $1,279,048 5,734 $6.19:$1
Fishers $139,536,685 76 $2,826,459 $2,182,455 $605,990 3,963 $5.08:$1
Noblesville $109,294,462 66 $3,601,072 $1,295,040 $412,860 1,781 $4.01:$1
Sheridan $45,455,000 8 $359,000 $595,310 $28,275 92 $12.61:$1
Westfield $36,674,000 33 $1,197,557 $564,024 $131,826 922 $4.87:$1
Ham. County $996,968,196 292 $15,862,755 $10,158,719 $2,487,379 12,546 $8.73:$1
Unincorpoated $242,500,000 $1,095,400 $29,380 54

 

By the Numbers: Hamilton County Alliance (1992-2011)

Total Businesses Assisted: 292

Total Grant Awards: 385

Total Grant Award Dollars: $15,862,755

Total Capital Investment: $996,968,196

Total Job Commitments: 12,546

Total Est. Property Tax Support: $10,158,719

Total Est. COIT Generated: $2,487,379

Financial Overview

1992-2011 funding was 43 percent public, 57 percent private

Prior to 2007 – 39 percent public, 61 percent private

Prior to 2007, the average annual revenue was $503,000; since 2007, it has been $362,000.

The HCA has used its rainy day account to supplement its budget the past four years. The rainy day account will reach zero this year.

The HCA needs to generate an additional $105,000 in 2012 to meet its budget.

HCA Response

The Hamilton County Alliance reduced its average annual operating expenses by $71,000 since 2008.

Eliminated print media expenses.

Reduced marketing expenses.

Eliminated new/replacement computer equipment purchases since 2007.

Reduced/eliminated travel.

No salary increases since January 2008.

Cut salaries $10,000 since January 2010.

Eliminated 50 percent of HCA 401k contribution since 2008 ($29,000).

Increased each employee’s insurance deductible by $5,000 per year since 2009 (additional $1,000 this year).

Funding issues going forward

Total current public sector support is $190,000 (unchanged since 1993)

Annual private sector funding is down 16 percent ($110,000 raised in 2011)

Economic Development Service Fee (plat fee) is down on average $141,000 per year since 2007

EDSF is not expected to make a significant recovery until 2014

History

The Hamilton County Alliance was created in 1992 and was the only economic development organization in the county. Since that time, Hamilton County has increased by 185,000 people, and the municipal population has increased 167,000. Municipal employers have increased from 38,000 employees in 1992 to more than 110,000 today.

During the course of the five community meetings in October 2010, some key assets were highlighted for marketing support from HCA. They include: Grand Park, Westfield; Palladium/City Center, Carmel; Medical Technology Corridor, Fishers; Corporate Campus, Noblesville; Sheridan Industrial Park, Sheridan; and Arcadia Business Park, Arcadia.

 

By Jordan Fischer, Robert Herrington and Kevin Kane
editorial@youarecurrent.com 

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