By Joseph Hamrick
The Commerce Journal
A potential change by the Commerce Economic Development Corporation (CEDC) from a Type 4A to a Type 4B corporation was the topic of a lively discussion on July 23 inside the Commerce City Hall.
Carlton Schwab, president/CEO of Texas Economic Development Council, shared his thoughts on the differences between Type A and Type B corporations.
Type A corporations can only use funds toward primary job development such as manufacturing or industrial businesses. A Type B corporation is allowed to spend incentive money toward non-primary jobs such as retail and restaurant businesses.
According to Schwab, Type B corporations were created so EDCs could use funds for quality of life development.
“The creation of 4B was really created to fund community development kinds of expenditures and activities,” he said.
Although the CEDC is a Type A corporation, it can fund Type B projects with voter approval.
“There have been a lot of Type B projects funded by Type A corporations,” Schwab said.
Type B corporations are allowed to do development that is considered a quality-of-life improvement, such as parks, sports and entertainment facilities, and tourism and affordable housing options.
“Type B corporations can do everything under Type A,” he said. “And then they can do the quality-of-life improvements that are in a Type B corporation.”
Schwab said he is in favor of Type A corporations because he does not consider retail and Type B improvements economic development.
“You have to understand that if you [change from A to B], you’re going to face pressure to spend money on things that are everything but economic development,” he said, citing cities that have moved from Type A to Type B for street maintenance and retail. “Retail is a result of economic development, not a cause of it.”
Schwab used an illustration to demonstrate that Type B corporations would be forced to play favorites when awarding money to retail businesses.
“If you’re going to give Bonnie’s Mexican Food restaurant a $5,000 grant, what about Marc’s All-You-Can-Eat Barbecue Joint; does he get an equal $5,000 grant too?” he said. “I’m trying to give you some crude examples of the futility of giving money to the retail and service sector.”
Mike Odom, president of the Friends of the Commerce Public Library Board, said a big reason why only seven percent of A&M-Commerce faculty live in Commerce is because the city does not make additions that would improve the quality-of-life.
“One of the reasons is the quality of life in this town is not up to par,” he said. “We can’t compete with not just retail but with road repair, with cultural life in communities like Rockwall and even Fate nowadays.”
Odom listed a few things the CEDC would be able to fund if it were a Type B corporation, including renovating the city pool that broke down and adding more entertainment options for Commerce.
“These things I think would attract people who are already employed here [A&M-Commerce] to put down roots here instead of living in Fate, Rockwall, and even as far as Dallas,” he said.
Because many Type B corporations use much of their funds for non-primary jobs such as retail and service, and quality-of-life improvements, Schwab said there are not many Type B corporations that are players in traditional economic development.
“I would say there’s 10 in the entire state,” he said, adding that most Type B corporations focus on revitalizing their downtown areas, parks, and making street improvements. “Palestine ... they’re Type B now and they’re just doing downtown stuff.”
According to Odom, with the money the university brings in to the city, the CEDC should focus on improving quality of life so the money made at the university stays in the city.
“We’ve already got jobs, but that money’s leaving town,” he said. “$23 million a year leave town just for meals eating out.”
Schwab said the city would need to balance the money brought in from the quality of life improvements with the loss of Covidien and Zurn.
“Will that mitigate the loss of a Covidien or Zurn or anything else?” he said. “That’s the question you’ve got to ask yourself.”
Bonnie Hunter, executive director of the CEDC, said the corporation is trying hard to fill the void from Zurn and Covidien.
“Since I’ve been here, we have started trying to market ourselves,” she said, speaking about recently joining a regional EDC group. “In the month of May alone, we had four site visits to Commerce. They have not made any decisions yet.”
Hunter said the CEDC should stay as a Type A and keep advertising to industrial corporations.
“There is that company out there,” she said. “There’s going to be several companies. It’s just a matter of keep trucking at it and we’re going to get them.”
The CEDC recently purchased the old Chogie building off of Highway 11. Dale Stotts, president of the CEDC, said they have already had two companies visit, and he thinks the extra building is another tool in the chest for the CEDC.
“It’s tools we have and it’s tools we’re utilizing; and I think we’re going to see some good results,” he said. “It’s a feather in Bonnie’s hat and she’s worked very hard.”
According to Quay Throgmorton, the CEDC needs to broaden its horizon in bringing companies to Commerce.
“We’ve tried this for 20 years and I think it’s time that we have an option to spend money on B projects,” he said.
Derek Price, a resident of Commerce, said although everyone wants to see Commerce thrive, something needs to change in order for it to happen.
“The direction we’ve been on with 4A only — if you look at the city as a whole — we’ve got an empty downtown, we’ve got major employers leaving, we’ve got professors driving far out of their way to avoid living in this area,” he said. “We need to change the direction. If changing direction is not going 4B, what are some other options we can look at?”
Throgmorton said companies competing for Type B incentives would have to play by the same rules as companies competing for Type A incentives.
“Before you give money to a restaurant opening, is it going to have a positive impact on this town?” he said. “They have to be just as forthcoming and create improvement and better quality of life before you open up your check book to anybody.”
Jenna Hill, a board member of the CEDC, had a question about downtown businesses for Throgmorton.
“Quay, did you not have a dress shop downtown or your wife have a dress shop downtown? How did that go for her?” she said.
“It went out of business,” Throgmorton said.
Throgmorton said he doesn’t see why the CEDC board is opposed to becoming a Type B corporation.
“I just don’t understand why as a board you would not want the option of spending money on 4B projects. And that’s all it is, an option,” he said. “Let’s have an option to do something different.”