Once thought to be strictly within the purview of national governments in the industrialized world, the concept of government-assisted economic development has, in modern times, become increasingly downsized to include not only mid-size to large cities across America, but even smaller communities like Seminole. In a competitive business environment, the creation of economic development entities throughout the country was inevitable.
Consider that sports arenas, once largely held by private investment groups, are now often partially or wholly owned by local governments, and the construction of a new stadium is, on average, 65-percent subsidized by taxpayers. Just since 1997, 19 new NFL stadiums have been built, all but two under such arrangements that include approximately $7 billion in taxpayer funding on the federal, state, and local levels.
To a small town, a new manufacturing facility is as crucial to the community as a sports complex in a large metropolitan area with an NFL franchise. The jobs created by a new fried chicken franchise or a shoe store are not inconsequential in a community with a population of 6,000-plus.
While some may lament the co-mingling of public and private funds, the benefits of this melding of municipal governments and business is clear and is, for the most part, quantifiable. Local taxpayers generally understand that, provided that all dealmaking is kept transparent and the benefits to the community are tangible.
The reality in the modern world is that those who manage a community’s purse strings and property have the leverage to provide the incentives to attract new businesses to an area, or to retain existing ones. Thus the competition between small communities can be much more intense than what meets the eye.
Incentives may include investment capital, low interest loans, tax incentives, donated land, utility rate discounts, and many others. Such incentives are based on a criteria which consists primarily of the number of new jobs created or retained, annual payroll, and the amount of capital investment.
The City of Seminole entered that arena in 2002 with a ballot initiative that created the Seminole Economic Development Corporation (SEDC), using a local half-cent sales tax to fund its operations. The Texas legislature’s Development Corporation Act of 1979 allowed municipalities broad latitude in determining how economic development would be defined.
With such latitude, under past Executive Directors, the SEDC has assisted in the acquisition of affordable housing and even secured a federal grant to conduct a feasibility study for the extension of a railway into Seminole.
In addition to the aforementioned incentives, the SEDC budget includes a facade program that provides up to $5,000 for improvements to downtown storefronts. Two $5,000 grants in 2017 helped to deliver $69,815 in capital investments in the downtown area, according to departing SEDC Executive Director Chris Jones.
“In a weak job market, the focus is on job creation and workforce development,” Jones explained to the Sentinel. “When your unemployment is down to 2-percent, you have to change the matrix a bit, more toward capital investment.”
Other relatively small “quality of life” budget items are intended to make the city more attractive to potential investors. Under this program, the SEDC made an investment in the City Park Splashpad to supplement a private grant, and a colorful new lighting system will enhance the downtown area, beginning in January. While the benefits remain more intangible, it is a type of “Dress for Success” approach to making a town more attractive for investment.
Among the SEDC’s most obvious successes is the Beall’s Department store on Avenue A, which provides an anchor for commerce in the downtown area. Beall’s retention in Seminole, and the subsequent expansion of Beall’s Shoes into the adjacent space, was the culmination of a complex array of incentives that included, among other things, roof repairs and donated property, including part of the parking area behind the store.
Likewise, Wingate by Wyndham brought an independently owned but nationally recognized brand to town with its presence in west Seminole. A deal was hammered out with its Midland owners that included a $750,000 grant, paid out over a five-year period, on the owners’ initial $4 million capital investment. The Wingate turns in periodic reports related to room occupancy.
According to Jones, however, the group’s biggest success is the JNL Steel Components business on the Hobbs Highway. Created with an initial capital investment of $1.2 million, the SEDC’s contribution was a five-year $100,000 loan at 3.25-percent interest. JNL’s agreement was based on 46 jobs created, which it surpassed in a short time.
In the last six years, a period of time during which the most accurate records could be had, the SEDC provided loan guarantees of $1,258,600 toward $10,558,000 in capital investments between 13 currently operating businesses in Seminole. According to Jones, 12 are in compliance with their original agreements, and efforts are under way to bring one into full compliance. Negotiations with the 13 businesses included guarantees of the creation of at least 134 new jobs.
Those businesses include, in addition to JNL and the Wingate, the recently negotiated Blossom Estates Vineyard, BYOP Pizza, Elite Sports Center, Tex-Star Windows, and the Workplace Testing Center, all of whom received short term low interest loans. Receiving a package that includes a combination of low interest loans and grants are Dickey’s Barbecue and the Kingdom Kids Academy.
Grants were issued to Mochachino’s Coffee Shop and Let’s Celebrate Bakery for facade improvements as part of the SEDC’s Downtown Revitalization program. Additional grants were provided to the new owners of properties at 216 and 218 South Main Street. The Seminole Dunes Apartments were built with an initial capital investment of $3.2 million, with a $60,000 pass-through loan from the SEDC, reimbursable through a federal grant for subsidized housing.
The Bush’s Chicken franchise arrangement involved the donation of city-owned land. Since land is a finite resource, contingencies are made that allow the city to place a lien on a parcel of land, and any improvements, if the recipient is not in compliance or defaults on its contract with the SEDC.
Currently in a holding pattern, awaiting the finalization of all details of their individual business plans are the Sunland Retirement Center, which will open with a $2 million capital investment and plans the creation of approximately 20 jobs, Border States, a lawn company specializing in commercial lots, which plans 15 jobs and a $250,000 capital investment, and a new installation planned by the Angelina Tank Company, which is on hold pending talks between its investors. Jones hopes that the Angelina Tanks project will represent an establishment of Gaines County’s first manufacturing facility in 20 years.
“Since most of this $1.2 million is in the form of loans, that’s money that we recoup, with interest” Jones told the Sentinel. “Only a small portion of that is the form of grants. And for a loan to become a grant, the company has to meet certain performance criteria. Since I got here, we’ve addressed the compliance issues and got everybody up-to-date on their contracts.”
Taking the position of Executive Director of the SEDC during the summer of 2016, Jones was a Seminole native who was recruited from his Defense Department post in Utah. Near the end of his first year at the SEDC, the 34-year-old Director released the centerpiece of his approach to the office, a five-year Strategic Plan from which most of his efforts would spring. His plan focused primarily on Gaines County’s Agriculture, Energy, Manufacturing, and Medical industries.
The multiple facets of each would ultimately broaden the scope of his office’s functions considerably more than his predecessors. From the outset, Jones took a more hands-on approach to Seminole business. Regular visits to area businesses to acquire feedback became a staple of his office, with assistance from Workforce Coordinator Kristi Duncan.
Jones also redirected most of his office’s marketing efforts from magazine advertising to the digital realm, resulting in more than 130 new business contacts and requests for business packets since its institution last summer. The effort was supplemented by travel to two recent business conferences related to fabrication and business aviation.
“These are all people looking to expand or relocate their companies,” Jones explained. “We’re generating about four leads per week, and we mail packets to them.”
Jones also established a Real Estate advisory committee to help facilitate the connection between new businesses and available property, and with the SEDC Board and the City council, introduced five separate loan programs aimed at the capitalization of new and existing businesses.
Under Jones’ advisement, the SEDC and the Seminole City Council got the Freeport Tax Exemption passed to help facilitate businesses who manufacture goods from components that are shipped in from elsewhere, then reshipped out of Seminole.
Along with performing the usual business recruitment and retention functions of his office, Jones also addressed a second component of the job creation aspect of that office, the training and availability of a competent local workforce.
In that vein, Jones has focused on the schools, establishing a relationship between his office and students and faculty participating in the SkillsUSA program. He has spoken to SHS students and distributed information concerning workforce retention.
Forming a formal partnership with Odessa College and the Seminole Independent School District, Jones laid the groundwork for a welding program at Seminole High School that will ultimately lead to full certification in a dual-credit arrangement with OC. Similar plans are in the works for a nurse training program.
“For now, we were going for the low-hanging fruit,” Jones told the Sentinel. “With what the school has in place now, these were the programs that would be easiest to get off the ground in a shorter period of time.”
The welding program at SHS will receive assistance from Lincoln Electric of Euclid, Ohio, which will donate at least six welding machines and exhaust equipment to replace the existing antiquated shop equipment. Representatives of the company recently toured the SHS facility and its 2700 sq. ft. space devoted to the Industrial Arts.
The relationship with Odessa College also facilitated a series of advisory sessions that provided office space for the Odessa-based Small Business Development Council (SBDC) to consult with local business people. A series of SEDC-sponsored “Eggs and Issues” breakfasts allowed local business leaders and office holders to address District 83 Representative Dustin Burrows and other elected officials. A Small Business Appreciation banquet last March was another part of the overall business outreach package.
For his efforts, Jones was recognized by the Texas Economic Development Council with a special Merit Achievement Award at the annual TEDC conference.
Jones left his SEDC post at the end of December to take a similar position for the City of Andrews, but not before explaining his perceptions of some of the pitfalls of the office’s duties as they are currently configured.
“This office can only function as a normal EDC with greater autonomy,” Jones told the Sentinel. “The city has a responsibility of upholding the law and doing all these mandatory type things like code enforcement. But in order for us to sit in that sweet spot and advocate on behalf of businesses, and make the processes so seamless for businesses that they don’t even notice, we can’t be tied down to what people perceive to be difficult. That autonomy has to be there, from a budget perspective, and from a daily operations perspective.”
At its first meeting of 2018, the Seminole City Council, addressing a recent proposal by Mayor Wayne Mixon, will discuss whether to defund the SEDC office and place it on a ballot for public vote in May.
By Sam Holbrooks, Seminole Sentinel