A fraying front? Counties reassess funds for business-recruiting arm

Dorchester County Council's Larry Hargett (from left), Vice Chairman George Bailey, Administrator Jason L. Ward, Chairman Bill Hearn, clerk Sally K. Herbert, and council members Carroll S. Duncan, Willie Davis and David Chinnis discuss issues during a recent meeting.

When the Navy pulled out of Charleston in the mid-1990s, the prospect of losing 22,000 direct jobs served as a wake-up call for the Lowcountry.

Berkeley, Charleston and Dorchester leaders banded together in 1995 to form the Charleston Regional Development Alliance. Its mission: to work as one to recruit new jobs and industries to the region.

By most measures, it has been successful, helping to produce 27,500 new jobs and $7.5 billion in capital investment from 251 new or expanding companies since 1995, according to the alliance.

But the once-united front shows signs of fraying. Disenchantment with the agency among the three counties, which provide nearly a third of its $3.1 million annual spending plan, seems to be growing.

Dorchester County, for instance, slashed its traditional funding for the agency this year to $50,000, in part because it received less state money and needed to make cuts, but also because its council questioned what they were getting for their money. The county last year gave $173,000. The alliance had requested a $25,000 increase.

"People started questioning what was our return on investment with the alliance and what was the alliance doing," said Bill Hearn, who is a member of the CRDA's executive committee as chairman of Dorchester County Council.

The discontent sprang forth more than a year ago.

"Dorchester County officials met with the alliance in the spring of 2013 expressing their concerns on where we fit in and where they fit with us on economic development," Hearn said. "I was trying to keep my finger in the dike, trying to keep it together. It took on a life of its own."

Also disillusioned are Charleston and Berkeley counties.

Charleston County put its usual $500,000 in its budget this year for the alliance, but it might come with strings.

"It doesn't mean we are going to give it all to them," Council Chairman Teddie Pryor said. "We don't like the direction some things are going now. We want to have more control over how the money is used. A lot of the stuff (on economic development) we are doing ourselves."

Berkeley County may put a hold on its funding altogether. "I'm going to recommend the line item remain in the budget and encumber it because there are issues out there and they need to be resolved," said Berkeley County Council Finance Chairman Tim Callanan.

Berkeley is scheduled to vote on its new budget Monday, including $258,000 for CRDA. Last year, Berkeley committed $299,250 to the alliance.

North Charleston Mayor Keith Summey, whose city gives $25,000 a year to the public-private agency, declined to go into details of the problems governments are having with the alliance, but he acknowledged troubles exist.

"There are some issues going on right now, and I have been asked to try to help work through those issues," he said.

At issue are representation and a feeling of being bypassed in initial conversations over incentives for prospective or expanding industries. That has created "hard feelings," one official said.

"The RDA cannot give any incentives," Pryor said. "Only the county or state can do that. They should not negotiate a package and then bring it to us. That's not the way it's supposed to be done. We need to be on the front end. "

David Ginn, president and CEO of the alliance, said his agency strives to be inclusive with everyone in the loop on economic development, but he added the CRDA has no incentives to offer.

"We don't own any buildings, and we don't have the ability to give grants or reduce taxes," Ginn said from the agency's 8,000-square-foot North Charleston office overlooking scenic views of the Ashley River.

Spokeswoman Claire Gibbons said the issue over incentives might be based on prospects contacting the alliance first because of the confidentiality involved.

"(Prospective industries or businesses) just want one point of contact so they don't have to go to different counties or cities individually," she said.

Because of the way the process works, she said, a county is communicating directly with the prospect at all stages after the alliance is contacted. "We are just playing a facilitator role," Gibbons said.

About representation, Ginn said each county's top official has a seat on the alliance's 11-member executive committee and each county's economic development leader meets with the group every week with around-the-clock access to industrial prospects.

The seeds of discontent over representation could have been planted years ago, said Hearn, the Dorchester County Council chairman.

Until 2009, elected officials were not allowed to serve on the agency's 60-member board, but they could send a representative, Gibbons said. That's the same year the agency restructured itself to seek more private investment to boost its bottom line. Among those contributors is Evening Post Industries, parent company of The Post and Courier, which donates $25,000 to the alliance.

It was not until two years ago that elected officials could serve on the agency's executive committee. Now, the counties want more say, based on the amount of money they inject into the agency.

"One of the things is that, essentially, when it comes to me, if the taxpayers are going to fund this organization to the extent we do, we want to make sure the taxpayers have adequate representation on the board itself," Callanan of Berkeley County said. "It switched over a few years back where larger corporations came in and they strike a check and are getting a higher degree of representation than the taxpayers."

Asked if the group is still viable, he said, "They should play an important role in economic development, but are they playing that role now? I don't think so. ... I don't think it's optimizing its role."

The alliance works largely behind the scenes, mainly because the employers it courts request confidentiality until they are ready to publicize their expansion plans.

"We don't need people to know about us," said Lonnie Carter, the alliance's board chairman and president and CEO of state-owned utility Santee Cooper, which gives the group $100,000 a year. "The effort is to promote the region, not the RDA."

But the secrecy and low profile also have worked against the group to some degree.

Council members change over the years, and some of them don't know much about the alliance or what it does. The disconnect can work against an agency trying to work in private while seeking public money. Hearn said some council members don't know Ginn.

Carter is unsure why Dorchester County has questioned its return on investment.

"I don't know what makes people think they aren't getting enough," he said.

From 2004 to 2013, Dorchester County contributed more than $1.5 million to the alliance, according to Gibbons.

During that time, the group said it helped land 1,080 direct jobs and more than $769 million in capital investment in Dorchester. The return on investment per dollar was 420 percent, she said.

Hearn said the agency has done a good job, one reason the county was hesitant to cut funding because "we were concerned about putting ourselves in a bad marketing position by poking our finger in the eye of the alliance."

In Berkeley, which committed $2.6 million to the agency since 2004, the CRDA said it helped bring in 2,990 direct jobs and more than $1.9 billion in capital investment from 2004 to 2013. The return on investment per dollar was 506 percent, according to the alliance.

Berkeley County Supervisor Dan Davis said the amount of jobs the CRDA has helped bring to the county "has not been an issue with us."

Callanan, the finance chairman, believes the CRDA "can do more. I don't see the RDA as involved as I would like to see them."

In Charleston County, which committed nearly $3.9 million to the CRDA since 2004, the alliance said it helped bring in 8,418 direct jobs over the previous 10 years and nearly $1.8 billion in capital investment, not including Boeing Co., which brought in thousands more jobs after 2009. The return on investment per dollar was 810 percent.

Pryor, chairman of Charleston County Council, said he was satisfied with the CRDA's role in job creation until a couple of years ago, but he said the CRDA should not take credit for industry expansions or firms the county worked with directly.

"Did we bring it in or did they bring it in?" he said. "They are supposed to be recruiting. They shouldn't be handling expansions."

The alliance points to its successes over the past five years, saying it has played a role in attracting 41 companies, 7,600 jobs and $2.3 billion in capital investment, especially aerospace and pharmaceutical firms, to the Lowcountry.

Carter said the alliance has been "wildly successful" and will continue to be if everyone works together.

"I think everybody's boat is floating higher now because of the RDA," Carter said. "I think the alliance has always got to earn its funding."

Carter called economic development "a team sport."

"If it is not, it is not effective," he said.

Ginn echoed his remarks.

"My hope is that we will work through any questions and be stronger together on the other side," he said.

Reach Warren L. Wise at 937-5524.