Early Returns

Early Returns

ECONOMIC DEVELOPMENT by Mark Gordon | Managing Editor

The Sarasota Economic Development Corp.'s annual budget increased 24% and surpassed the $1 million mark from 2004 to 2005 as the group officially began operating independent of the Greater Sarasota Chamber of Commerce.

The largest expenditure increases were in categories called developing "value added industry clusters" and "existing business and industry programs." Spending in those categories rose 162% and 130%, respectively. Those branches represented 41%, or $436,013 of the overall budget of $1,074,661.

The EDC is a non-profit public/private partnership supported by private funds and local government funding and business occupational license fees. In the 2005 budget:

• $715,051, or 66.5%, came from taxes and government funding.

• $359,610, or 33.4%, came from the private sector.

EDC President Kathy Baylis says about 60% of the group's overall budget goes to pay the salaries of the nine employees and other administrative costs; that number includes parts of the spending in all categories.

The EDC's annual report was published in March. It's the first annual report since the organization broke off from being a committee within the Chamber of Commerce in October 2004 to form a separate group. It now partners with all of the chambers in Sarasota County, as well as with groups outside the county, such as the Manatee County Economic Development Council and the Tampa Bay Partnership for Regional Economic Development.

Overall, the EDC comes in at the lower end of annul budgets when compared to other counties along the Gulf Coast. For example, in Lee County, the Horizon Foundation, which combines county and private economic development under one group, had an operating budget of about $2,701,423 in 2004. The Tampa Bay partnership had net revenue of $2,907,894 in 2005, its annual report shows; it had assets of $3,196,952.

The activities of the EDC reflects a shift in the focus of economic development organizations nationwide, says Baylis. Ten or 15 years ago, counties and governments would put together economic development organizations primarily to attract and recruit companies from other areas, Baylis says.

But that model has changed. Now, Baylis says, EDCs, and Sarasota's in particular, are "resource brokers. We help people connect the dots."

That's where the value-added clusters and existing business and industry programs come into play, Baylis says. Clusters are a group of businesses serving similar functions and markets. Real estate and development, for example, is a cluster, and it would include mortgage companies, builders and Realtors.

With the "value-added cluster expenditures," Baylis says the group is seeking to assist current and recruit new companies in industries not as well covered as real estate or tourism, yet ones that have a "foothold" in the area. The EDC defines those clusters as life sciences, such as hospital and research centers; creative services, such as graphics designers, filmmakers and architects; specialty manufacturing and high technology.

The EDC spent $218,225 on the value-added clusters segment in 2005, its highest expense, up from $83,342 in 2004. According to a breakdown of the numbers Baylis provided to the Review, 48%, or $105,000, was used to pay two new staffers to expand the program.

About 90% of the money for that expense category came from the business fees and government funding, the report shows, with the remainder coming from private funds.

Cluster initiatives in life and environmental services included organizing a symposium on natural capitalism, an economic theory based on a 1999 book that takes a pro-environmental approach to business and the markets. In the creative services cluster, the EDC produced an electronic press kit to recruit the film and TV industry to the county.

Other programs the EDC worked on in 2005 were working with Startup Florida and the city of Sarasota to provide free wireless Internet connections in downtown Sarasota and developing a Web site for area manufacturers.

On the existing business front, Baylis says, the EDC looks out for "red flags" in business currently operating in the county. For example, if she hears about a business with a lease coming up in a few months, she might put that company in touch with commercial Realtors to facilitate a new deal.

The EDC spent $217,758 on this program in 2005, up from $94,625 in 2004. Just as in the value added-clusters, more than half, $114,000 in this case, went for two new employees to work on programs within the category.

Has the change in the EDC to an independent public-private organization proven effective? Kerry Kirschner, executive director of the Argus Foundation, a Sarasota-based, non-government funded business group, says the EDC needs to go past "brainstorming."

"The problem I see is, where is the end goal?" asks Kirschner, a former Sarasota mayor. "What are their overall goals?"

Baylis says the EDC takes a long-range approach toward achieving goals. A majority of the work she and her staff do will not show immediate results, she says; it likely won't even show significant results in a year. It might take 10 years for significant results.

"A lot of the initiatives are just planting seeds," Baylis says. "Sometimes they will sprout and grow. Sometimes they won't."

SARASOTA EDC

The first chart details spending in five of the largest expenditures in the EDC's annual budget. The second chart breaks down how much money came from business license fees, government entities and the private sector in these categories in 2005.

Categories 2004 2005 Difference

Developing value-added

industry clusters $83,342 $218,255 $134,913

Existing business & industry $94,625 $217,758 $123,133

Target market for companies

in value-added industry clusters $82,764 $136,696 $53,932

Communications, PR program $54,199 $92,398 $38,199

Administration $156,232 $135,304 ($20,928)

EDC Private % from

Categories Trust Fund sector Total Public

Developing value-added

industry clusters $194,521 $23,734 $218,255 89%

Existing business & industry $150,871 $66,887 $217,758 69%

Target market companies

in value-added industry clusters $80,237 $56,459 $136,696 59%

Communications, PR program $20,476 $71.922 $92,398 $22%

Administration $83,880 $51,424 $135,304 62%

Totals $715,051 $359,610 $1,074,661 67%

The EDC Trust Fund is made up of occupational license fees and a $1 dollar per capita investment from Sarasota County, the town of Longboat Key and the cities of Sarasota, North Port and Venice.

Source: The Sarasota Economic Development Annual Report.