Proposed merger of regional planning commissions, development corporations raises hackles

A brownfield in Ascutney, used with permission from the Southern Windsor County Regional Planning Commission

A sharp disagreement has broken out between the Agency of Commerce and Community Development and the state’s regional economic development and planning organizations.

The agency is hoping to achieve Challenges savings at the expense of those state-funded entities and through major consolidation of their services. The groups, however, think the budget savings should come out of the hide of the agency itself.

On Monday, the state’s planners and developers flatly rejected a proposal from the agency that would force the groups to merge and competitively bid for half the state money they now receive.

The agency wants to consolidate 54 regional development corporations, regional planning commissions, state employment offices and employee training programs into no more than nine “Regional Service Centers.”

Service center applicants would receive a $10,000 subsidy to submit responses for a three-year, performance-based contract. The Requests for Proposal (not yet written by the agency) would be due by June 1. The agency has not said where the centers would be located; the bidders would determine the service areas.

Currently, regional economic development services are provided by 12 development corporations, and municipal planning services are provided by 11 regional planning commissions. These separate entities have, until now, received consistent annual funding from the state. The contracts awarded by the agency would replace all of the regional services for economic development, municipal planning and workforce development.

“We’re not going to save $3.4 million by sharing a fax machine.”

Catherine Dimitruk, executive director of the Northwest Regional Planning Commission, told the House Commerce and Community Development Committee, that regional planners and development corporations “accept the Challenges for Change.” But she said they believe the agency should look more broadly at reductions in state economic services, broadband and tourism and marketing expenditures, all of which the agency kept whole in its Challenges proposal, while other programs have been completely eliminated or significantly reduced.

“Any good system has methods for (measuring) performance outcomes,” Dimitruk said. “We recognize the outcomes are only as good as the strategy they serve, and that strategy needs to be determined.”

While it’s worthwhile for the regional groups to examine possible savings through shared administrative functions, most are already working close to the bone, according to Jeffrey Lewis, executive director of the Brattleboro Development Credit Corporation.

As Dimitruk put it: “We’re not going to save $3.4 million by sharing a fax machine.”

Still, she deemed it a “useful exercise.”

Better customer service?

The Douglas administration’s Challenges for Change plan includes a budget reduction of about $800,000 for the regional development corporations and regional planning commissions, zeroing out grants to organizations such as the Vermont Council on Rural Development, and the elimination of Adult Tech Ed and microbusiness training.

In theory, the outside organizations could subcontract with the service centers. Funding for the centers would rely heavily on special fund revenues from the property transfer tax that is, by law, designated for the regional planning commissions.

The consolidation is designed to eliminate duplicative investments in buildings, equipment and staff, according to Kevin Dorn, secretary of the agency. He says co-locating the groups within a three-year period would create long-term savings.

Dorn says merging the groups into centralized units will create better customer service. The customer referred to throughout the Economic Development Challenges is a large employer, the kind most regional development corporations are well equipped to deal with.

The proposal, however, leaves out any detailed information about the role planning commissions would play except to say they would continue to provide a full range of services, which currently includes transportation, emergency, environmental, housing and utility planning for municipalities. The Challenges report doesn’t include references to measurable outcomes in any of these areas.

“I envision a lot of people doing the same things they do now with less overhead.”

“I envision a lot of people doing the same things they do now with less overhead,” Dorn said. “In the long-term, there will be fewer boards involved, and the regional service centers will be better able to meet the needs they have. We’re not dictating how they’re going to do things.”

This isn’t the first time regional planners have faced a budget pinch. Last year, $400,000 from the Special Fund that would have been spent on municipal planning grants was used to shore up the General Fund budget.

The agency has proposed shifting even more money now – this time eliminating the planning grants altogether ($800,000) and moving an additional $579,046 slated for the regional planning commissions into the General Fund budget. The remaining $2 million of the special funds designated for the regional planning commissions, would, under the agency plan, be used to support the Regional Service Centers.

Comprehensive municipal planning requirements would be changed from a five-year cycle to a 10-year cycle, precluding the need for more funding.

With the exception of one eliminated position, the agency budget would go unscathed. Jim Saudade, deputy secretary of the agency, said he hopes to save about $2 million by reducing funding for outside programs. Over the course of the recession, he said, the agency has already lost 22 state workers.

For planners and developers, yesterday was payback time: Representatives from the two regional groups went on the offensive with a counterproposal. They urged the House Commerce and Economic Development Committee to reassess the agency’s effectiveness and carve $1.63 million from its administrative budget, the Department of Economic, Housing and Community Development and the Vermont Global Trade Partnership.

The regional planners and developers gave themselves a 10 percent, across-the-board cut while offering an olive branch to the agency, agreeing to consider the mergers within a slower timeframe: By Jan. 1, 2011, they would complete a strategic analysis of the state and regional economic development service delivery system, and from this, they would determine how the state’s service providers could best collaborate. The pricetag? $100,000.

Reductions in funding for the agency would lead to 15 layoffs in the Department of Economic, Housing and Community Development.

Rep. Bill Botzow, D-Pownal, chair of the committee, commended their work as “very proactive.” He said the administration had the right idea, but went in ways that weren’t necessarily supported. Botzow said, even so, it’s important that everyone works together and “lines up with what the Challenges for Change is about.”

Saudade said there was “nothing strategic about those proposals.” He said the reductions in funding for the agency would lead to 15 layoffs in the Department of Economic, Housing and Community Development and possibly 4-5 layoffs in the global trade office and the loss of a $400,000 federal grant for “one of the most important programs we offer.”

He argued that it would not be acceptable to wait for the groups to consider consolidation until after Jan. 1. In his opinion, they could easily merge their operations by Sept. 1. “If they want to get it done, they can do it,” Saudade said.

The proposal to cut funding for tourism and marketing would be counterproductive, in his view, because he says there is a direct relationship between advertising and revenues from the rooms and meals tax. (Tom Kavet, the Legislature’s economist, said last week there is no direct correlation between tourism jobs and advertising.)

Neither the administration’s proposal nor the plan offered by the RDCs and RPCs achieves the savings target set by Act 68, the Challenges law: $3.4 million. Both came up more than $1 million short.

As for trimming the broadband budget, this too, would undermine the state’s economic development efforts, he said. “I don’t see how we cut that and get the end result,” Saudade said. “In short, this is a survival mode response. No one loses jobs in the grantees’ (organizations).”

In addition, Saudade said the regional development corporations are too regionally focused. “Someone should represent the state’s interest,” he said, otherwise the development centers will “cut each other out” in their pursuit of new businesses for their regions.

Neither the administration’s proposal nor the plan offered by the RDCs and RPCs achieves the savings target set by Act 68, the Challenges law: $3.4 million. Both came up more than $1 million short.

The agency’s four-page synopsis in the Challenges progress report unveiled last week is purported to save $2 million – half of which comes through the elimination of grants programs; it was supposed to come up with $3.4 million in reductions based on a 10 percent cut in the Unified Economic Development Budget, which includes all state subsidies for business-boosting activities, from broadband projects and community development to marketing and tourism to Small Business Development Centers, Regional Development Corporations and grants to organizations such as the Vermont Sustainable Jobs Fund. Saudade told lawmakers that he was unable to come up with additional reductions that wouldn’t in some way undermine the state’s economic development efforts.

The $3.4 million targeted reduction set by the Challenges for the Unified Economic Development Budget is problematic, according to Saudade, because the $34 million budget includes federal money and the Clean Energy Fund, both of which must be held harmless. And so the cut must come from the remaining $18 million. Consequently, the target of $3.4 million actually represents an 18.8 percent reduction, Saudade said.

Rep. Jeff Wilson, D-Manchester, questioned how the Legislature and the administration arrived at the target, since it didn’t reflect a realistic assessment of the Unified Economic Development Budget. “I think we made a mistake doing that,” Wilson said. “We’re not looking at 10 percent of $34 million; we’re looking $3.4 million out of (a smaller number), and we’re raising the bar higher than we anticipated.”

A shotgun wedding in the offing?

So June wedding bells might not be chiming just yet, but could regional development officials and planners live and work together? Maybe.

Lewis and Dimitruk said their groups aren’t incompatible, but they have very different personalities. The Regional Development Corporations are all about pure economic development – luring businesses into the state and providing services that sustain existing companies; the Regional Planning Commissions were created by the Legislature to provide planning services for member municipalities who rely on their expertise for training, bylaw development, and planning for natural resources, hazardous materials, transportation, housing, brownfields, emergencies and building development. Economic development is not one of the RPCs’ functions under the law.

Sometimes the two groups are synergistic, but more often than not, they play indirect, collaborative roles, according to planners interviewed for this story. In effect, they lay the groundwork for the developers – helping communities identify wetlands and prime agriculture, or figuring out what part of town is best suited for an industrial park or main broadband access point – well in advance of that tempting offer from Hannaford’s.

There are style differences, too: The RDC employees are entrepreneurial and, consequently, more “project-focused and event-driven,” as Lewis put it, and the RPC staffers are systems analysts who are interested in a holistic approach to planning for change for a given region.

“We are creatures of our municipalities,” Dimitruk said. “We need to be able to demonstrate what we do is beneficial to towns.”

The Northeastern Vermont Development Association, which serves the Northeast Kingdom, is the only successful example of a combo RDC/RPC package. An attempt to replicate NVDA’s model statewide during the Dean administration was unsuccessful.

If you ask Jim Saudade, though, there’s no reason why the two groups can’t cohabitate.

“What have we heard?” Saudade said. “We can’t merge because we have style differences? Because we evolved differently?”

Planners unite

The administration’s Challenges proposal issued last week sent shockwaves through the state’s small community of planners, many of whom belong to the Vermont Planners Association.

Peter Gregory, executive director of the Two Rivers-Ottauqueechee, gave an unequivocal thumbs-down to the proposal.

“It would destroy the regional delivery system,” Gregory said, at a time when regional entities are bringing in nationally competitive EPA funding for brownfield projects that are creating construction jobs in Vermont. “This is clearly a budget-cutting exercise that is going to undermine the outcomes we are already able to achieve.”

For the first day or so, the planners sent each other messages about the reorganization plan on the association’s listserve until they realized that they were being monitored by Tayt Brooks, the commissioner of the Department of Economic, Housing and Community Development, and Brendan

Cosgrove, director of policy for the Agency of Natural Resources, who alerted Saudade to the dissenters’ remarks.

The planners object to nearly every aspect of the administration’s ED Challenges, not least of which, irony of ironies, is the lack of planning behind the proposal.

Brian Shupe, program director for sustainable communities at the Vermont Natural Resources Council called it an irresponsible, “half-baked” plan that could stall the state’s fragile economic recovery. “In essence what they’re saying is, all you economic development providers and regional planning commissions, your doors are going to close July 1 unless you come up with a plan to reorganize in smaller regions.”

Sharon Murray, a legislative liaison for the Vermont Planners Association, said “It’s pretty clear their intent was to figure out a way to make cuts, and they were rolling the Regional Planning Commission money back in to help meet their targets, while they held everything else in the agency harmless.”

“I’ve always had faith in the process,” Murray said. “In this, they’ve abdicated the legislative process, and, as a result, some really stupid things could happen. I’m still hoping level heads will prevail.”

No one from the planning community (or from any other outside organization for that matter) was invited to serve on the Challenges team, which consisted of Saudade; commissioner of the Department of Labor, Patricia Powden Moulton; Diane Dalmasse, director of Vocational Rehabilitation; and Hugh Bradshaw of the Agency of Human Services.

Last week, when the House Commerce and Community Development Committee received the report, lawmakers went through two days of meetings without an explanation from the agency, planners said. The committee, they said, was working blind. All lawmakers had to work with was the four-page summary – there were no agency analyses available of staffing, federal matching funds, services offered by program, detailed budget spreadsheets, lists of redundancies or identified savings.

Murray was appalled. “I sat through several hours of House Commerce and they were not given any information to help them make a good decision,” Murray said. “There was no analysis of services each of those groups provide, the people who they currently serve, the areas of jurisdiction, how they are organized. They didn’t have maps of where the RPCs were.”

In addition, the benchmarks listed in the report bear no relationship to the municipal work the planners do, and this they pointed out would make submitting a Request for Proposals very difficult, because they would presumably be asked to respond to the outcomes. Economic development isn’t one of the planners’ legal obligations – that’s why the administration has asked for a change in statute making it part of their purview. Even if business development formally becomes part of their responsibilities, it would remain one facet of their municipal work, planners said.

The three-year contract proposal would effectively dismantle state services currently offered, planners said.

“There is no organizational stability in that – no way to address how all these organizations will deal with lost clientele,” Murray said. “It’s a huge leap of faith that (the contracting) is what is going to make this work. From our standpoint, performance-based planning is a legitimate process. It assumes some level of analysis, input from groups, direction on the other end. This just doesn’t connect the dots. There are still more questions than answers and the bidding process without identified service areas is a recipe for disaster.”

Murray said the Legislature has boxed itself in with the Challenges.

“I’ve always had faith in the process,” Murray said. “In this, they’ve abdicated the legislative process, and, as a result, some really stupid things could happen. I’m still hoping level heads will prevail.”