Let’s Do the Math (Again) with the Economic Development Fund

The DeKalb Chamber of Commerce wants a new annual allocation from the city.

The DeKalb Chamber of Commerce is requesting $45,000 from the city to create an event coordinator position to take over the events that Re:New DeKalb has run for years…Re:New DeKalb will undergo a fundamental shift later this year, said Frank Roberts, the president of the organization’s executive board. He said the organization will broaden its focus to include economic development in the entire city, public safety, and creating a marketing brand for DeKalb.

First of all, that’s some serious mission creep they’ve got there. Secondly, the Chamber already gets $50,0000 per year from DeKalb’s Economic Development Fund for marketing and tourism.

Speaking of the Econ Fund:

The money would come from the city’s economic development fund, which is funded by the city’s hotel/motel tax. Biernacki said the city expects to see a boost in this fund with the new Hampton Inn and Suites being built at the corner of South Annie Glidden Road and Taylor Street.

No, I’m thinking the money probably wouldn’t come from that fund. Reason(s): the Econ Fund always a) gets a transfusion from the General Fund, and/or b) runs in the red.

Can the Hampton take make up for the shortfall and fund the new venture too?

The Econ Fund was created to capture hotel/motel revenues and earmark them for economic development, but we’ve never collected enough to fully fund these activities, and the problem has worsened since its creation.

Much of its history is online in annual budgets and here at City Barbs.

Starting in FY2009 with a $214,000 budget (PDF p. 113), Econ was to cover the city’s lobbyist expenses, ReNew DeKalb’s activities, DeKalb County Economic Development Corporation (DCEDC) services, and the Chamber’s marketing and tourism efforts.

Hotel-motel tax revenues fell short about $50,000 that year — despite a hike in the rate, mind you — and the General Fund had to make it up.

The next year, the city shifted ReNew DeKalb’s $50,000 allocation out of Econ (PDF pp. 112-113) and into the downtown TIF fund. Yet, here (PDF p. 106) you can see that the General Fund still has had to continually subsidize Econ, because hotel/motel revenues are still slipping.

When DeKalb decided to contract with Hopkins Services for retail marketing a couple years ago, the logical place to budget the $75,000+ expense would have been the Econ Fund, but they didn’t because they couldn’t, and the expenditure has come from the General Fund (Administrative Services) budget instead.

For FY2013 (PDF pp. 99-100) we expect to spend $128,000 from Econ, plus make up for a $33,000 deficit there, plus we’ll see at least $120,000 expended for the same types of developmental/marketing activities that Econ should pay for, but which have been buried in other fund budgets because it can’t.

And that’s just the stuff we know about.

Now they want to sprinkle another $45,000 into this mix? How about we tally up all the costs for these services first, consider the ROIs and the overlaps and then make a decision?

Aldermen Jacobson and Baker were right to try to put the brakes on, and I hope the new council members will agree.