Economic Development options include privatization

Mar. 20—The City Council met early Tuesday to hear an update on the Huntsville's Economic Development journey, with the final question being which direction would be most profitable.

It was a presentation that the Council was ready to hear, but ended with Mayor Russell Humphrey asking City Manager Aron Kulhavy to show the Council forward motion and effort on Economic Development.

"I think you have done a wonderful job bringing us the what the vehicles are, but we (council) want to move forward," Mayor Humphrey said. "We want to give the direction. We want to do what is going to be the best to give us the best opportunity to try to achieve that. I think we are in position now in our community — in timing and everything — now is the time. We have a window, I believe.

"What I want to make sure is that this council wants Economic Development like we have never had it before," Humphrey said. "We are not asking for the result, we are asking for the effort.

"We will do whatever we need to do to get there," Mayor Humphrey said.

Kulhavy started the workshop talking about why Economic Development matters. He said it increase community engagement, improved and diversified tax base, better quality of life, created a viable future for generations to come, created more employment opportunities and created community wealth.

"This is a workshop we have been workin on for quite awhile. We are going to have a little conversation about Economic Development," Kulhavy said.

"We want to have a conversation to get some direction on future activity in the City of Huntsville."

In the slideshow presented, Kulhavy noted that businesses that are relocating or expanding locally are: time challenged; have more than one other city under consideration; wanting a positive local government environment for their business; are sensitive but not sympathetic to local politics; and at the end of the day, will make the best business decision.

Therefore, community impressions matter.

"We need to make sure we have the water, sewer, streets and roads, public safety and everything else we have in the city to provide to (prospective businesses)," Kulhavy said, noting that infrastructure is the most pressured topic most investors are looking at.

The organizational chart for the City has four divisions under the Economic Development Department — Administration, Cultural Services, Main Street and Tourism. The slideshow, however, indicated that there are currently only two full-time employees in the ED Department.

Mayor Russell Humphrey questioned the setup of the current ED Department.

"What I am saying is, you are taking Economic Development and you are watering it down," Mayor Humphrey said. "And if you look at the graph that compares us to three or four other cities close to us, you will see that we are one of the lowest (funded) if not the lowest one."

Humphrey explained that the comparatively small funds are then spent on other areas.

Kulhavy said that staff has increased participation with area partnerships in their current efforts. There are 10 listed with two subdivisions listed, with a total budget around $30K. Saying that the website first published in 2014 has been a big drive for many investors with dedicated sections of site selectors.

He also mentioned the marketing efforts that have been added with Economic Development Director Tammy Gann attending more trade shows, increased advertising nationally, LinkedIn, conferences and regional meetings.

"One of the things seasoned site selectors and developers know is they are sensitive to local politics, but they are not necessarily sympathetic to them," Kulhavy said. "If they are not getting the attention they want or the service they need, they go right down the road and give that to someone else."

Kulhavy shared the different types of ED Organizations to the council, saying there are basically two structures — ED Corporations and Public-Private Partnerships.

"We currently fund Economic Development through the General Fund, with the operating budget set at $288,668 and also have a Capital Improvement Project funding in the amount $200K," Kulhavy said. "We have drawn down from that a lot over the years for incentives."

In FY 2023, Kulhavy noted that the city has the largest operating budget in its history just under $290K.

Kulhavy also noted that if a Type A or Type B City Funded ED was voted and approved by the residents, the money allocated to those would have to be recouped in some other way in the General Fund. Kulhavy also presented a graph indicating that Huntsville with city funding is significantly lower that area cities.

"Kudos to you guys. What I would like to see is for us to try and figure out how to get some non-retail, manufacturing industry to come in," Councilmember Jon Strong said. "I think the big challenge here is to get higher paying jobs for our citizens that are already here."

Strong added that he understood Kulhavy's view that retail is more beneficial to the city, citizens with higher paying jobs are spending more locally buying houses and so on.

Retailers will follow that dollar, Strong said.

Councilmember Casey Cox, who works with Sam Houston State University, said he also hears how graduates of the college find it challenging to stay in Huntsville after graduation because the higher paying jobs are not here.

"A lot of alumni are saying they miss their time at Sam Houston and would love to move back to Huntsville but.... and so filling in those dots would be a beneficial action for us," Cox said.

Contact Brenda Poe at editor@itemonline.com