Associate Development Organizations 2013-2014 Biennial Report per RCW 43.330.082 December 2014 Report to the Legislature Brian Bonlender, Director Acknowledgements Washington State Department of Commerce Mary Trimarco, Assistant Director, Business Services Division Karen McArthur, Project Manager/Editor Robb Zerr, Marketing Services Manager/Writer Washington State Department of Commerce Business Services Division 1011 Plum St. SE P.O. Box 42525 Olympia, WA 98504-2525 www.commerce.wa.gov For people with disabilities, this report is available on request in other formats. To submit a request, please call 360-725-4000 (TTY 360-586-0772). Associate Development Organizations Table of Contents Introduction ..................................................................................................................................... 1 Report Scope and Methodology .................................................................................................... 3 Key Outcomes ................................................................................................................................ 5 State Audit Findings and Recommendations............................................................................... 7 Appendix A: ADO Reports by County ........................................................................................... 9 Adams County Development Council ..................................................................................... 10 Southeast Washington Economic Development Association .............................................. 13 Port of Chelan County .............................................................................................................. 19 Clallam County Economic Development Council .................................................................. 21 Columbia River Economic Development Council – Clark County ........................................ 24 Cowlitz Economic Development Council................................................................................ 28 Port of Douglas County ............................................................................................................ 31 Grant County Economic Development Council ..................................................................... 35 Greater Grays Harbor, Inc. ....................................................................................................... 39 Island County Economic Development Council .................................................................... 42 Economic Development Council of Jefferson County .......................................................... 51 Economic Development Council of Seattle & King County .................................................. 53 Kitsap Economic Development Alliance................................................................................. 57 Kittitas County Chamber of Commerce .................................................................................. 60 Associate Development Organizations Klickitat County Public Economic Development Authority .................................................. 63 Lewis County Economic Development Council ..................................................................... 65 Lincoln County Economic Development Council .................................................................. 69 Economic Development County of Mason County ................................................................ 72 Economic Alliance, Okanogan County ................................................................................... 76 Pacific County Economic Development Council ................................................................... 80 Pend Oreille County Economic Development Council .......................................................... 83 The Economic Development Board for Tacoma-Pierce County ........................................... 88 San Juan County Economic Development Council ............................................................... 93 Economic Development Association of Skagit County....................................................... 102 Skamania County Economic Development Council ............................................................ 109 Economic Alliance Snohomish County ................................................................................ 113 Greater Spokane Incorporated .............................................................................................. 118 Tri County Economic Development District – Stevens & Ferry Counties .......................... 123 Thurston County Economic Development Council ............................................................. 126 Wahkiakum Chamber of Commerce ..................................................................................... 130 Port of Walla Walla ................................................................................................................. 133 Port of Bellingham – Whatcom County ................................................................................ 144 Yakima County Development Association ........................................................................... 148 Associate Development Organizations Introduction Overview Associate Development Organizations (ADOs) are the Washington State Department of Commerce's (Commerce) partners in local economic development activities. ADOs are local organizations designated by each county to coordinate business retention and expansion, and support new business development and recruitment activities within their service area(s). ADOs also support research, planning, and implementation of regional and local economic development strategies. RCW 43.330.080 directs Commerce to contract with county-designated ADOs. It also directs organizations that are designated as ADOs to build strong relationships with public and private partners within their community. ADOs leverage their state funding to obtain financial support from their partners. With this combined effort, ADOs create jobs, business growth, and capital investment in their communities. Most importantly, because each ADO is a local entity, its activities are grounded in the needs of its local economy. The statute states that the services delivered by ADOs include: • Participating in the development of a county-wide economic development plan. • Performing as the local economic development point of contact for both public and private partners. • Providing information on state and local permitting processes, tax issues, export assistance, and other essential information for operating, expanding, or locating a business in Washington. • Marketing their county and the state as an excellent place to expand or relocate a business. • Collaborating with local partners to meet workforce development needs. • Providing business retention and expansion services. • Partnering with other organizations such as Small Business Development Centers and Service Corps of Retired Executives (SCORE) to improve business support services. • Collecting data for use in local and statewide program evaluation. • Participating in region-wide economic development planning and research. • Sharing best practices with other associate development organizations at least two times each year. In 2012, the Legislature made several changes to the annual contractual and reporting requirements of the ADOs, and the responsibilities of Commerce. One of these changes was for the ADOs to meet and share best practices with each other at least twice annually. Commerce coordinates these meetings. Additionally, the ADOs must provide a “summary of best practices shared and implementation” in their annual reports to Commerce (Appendix A). Associate Development Organizations 1 ADO/Commerce Relationship As part of the Team Washington strategy first laid out in 1985, ADOs were created to provide economic development services in every county in the state. Originally, the Local Economic Development Assistance Program provided administrative grants to the 33 ADOs that served the state’s 39 counties. The Growth Management Act of 1990 formally recognized the ADO network as the delivery system for local economic development resources and assigned the program to the Department of Trade and Economic Development (now Commerce). ADOs negotiate their contracts with Commerce on a biennial basis. As part of the contracting process, ADOs and Commerce staff jointly set target goals in a variety of performance measures for each county. Currently, Commerce maintains contracted partnerships with 34 ADOs which oversee all 39 counties. Commerce’s Business Services Division maintains the ADO contracts and provides support to the ADO network, so the relationship between the ADOs and Commerce is two-fold. One side is a contractual relationship focused on the details of the grant and ensuring that performance is measured and targets are met. The other side of the relationship is a coordinated effort to provide economic development services throughout the state. For example, Commerce serves as liaison between client businesses and other government agencies to help streamline site selection and permitting processes, and access certain loans and incentives. Commerce is able to elevate projects to the Governor’s Office on behalf of the ADOs as well as coordinate recruitment and expansion projects so that businesses receive a timely response to their requests for proposals. ADOs serve as the principal contact for Commerce regarding economic activity in their respective areas. ADOs help Commerce gather data about community profiles, industrial sites, plans for business development and retention, reports on business activities, and proposals for other economic activities in their service areas. Associate Development Organizations 2 Report Scope and Methodology Commerce is required to report ADO performance results to the Legislature by December 31 of each even-numbered year. The report must include the performance results of the contracts with ADOs as required by RCW 43.330.082. Background information on local economic development around the state and recent ADO program improvements may also be presented. For this report, Commerce used ADO self-reported performance measurement data from the contract management database, information collected directly from the ADOs, and economic, demographic and budget information published by federal and state agencies. ADO Performance Data ADOs report quarterly to Commerce the types and quantities of economic development activities funded by their grant and local match for each county. ADOs also report the number of businesses, jobs, and private investments leveraged with the ADO grant funds. Performance data has been available since 2008, though the metrics have changed with each contracting cycle. In 2011, Commerce transitioned to a cloud-based contract performance monitoring system (Salesforce) to track data on business recruitment, retention, expansion, and startups. This system was designed to provide greater context and detail about the outcomes reported by the ADOs and enable Commerce staff to review the data more effectively. Further, this tool was designed to allow ADOs to input quarterly updates on the businesses they are working with. This is particularly helpful because many economic development projects are lengthy and/or multi-phased. The measurements were revamped in 2013 to coincide with the new grant contracts. These metrics were jointly developed by a committee of ADO representatives in collaboration with Commerce staff. The new reporting system was intended to capture a wider set of variables that more accurately reflected the diverse activities of the ADO network. Annual goals are self-selected by each ADO for the new grant period. While this new reporting system expanded the breadth of reporting, it did not contribute to increasing the accuracy of the reporting or show a tangible relationship between local economic development efforts and recruitments, retentions, expansions, jobs, or capital investment. Also, the Salesforce system design could not support the revamped metrics without costly adjustments, so Commerce has been working with a new consultant to come up with a solution. Associate Development Organizations 3 Data Limitations ADO performance measurement data have several limitations. • Data are self-reported by each ADO. The reporting system does not employ performance measures that are verifiable by a third party. Therefore, Commerce staff is not able to fully audit the performance reports. • Several ADOs report difficulty determining the value of certain measures, such as the amount of private investment leveraged and employment wages for many projects. Gathering this information depends greatly on the strength of the relationship between the ADO and the individual business, so results are often inconsistent. Associate Development Organizations 4 Key Outcomes In State Fiscal Year (SFY) 2014, ADOs reported that they: • Helped 127 companies throughout the state relocate, expand, and grow through retention or startup. • Recruited 12 companies to locate new facilities within the state. • Supported 46 expansions of businesses. • Worked on the recruitment/expansion of five businesses. • Retained 11 businesses. • Worked with 53 startups Combined, these efforts led to 2,094.5 jobs being created and/or retained and $485 million in private investment. In comparison, ADOs created and retained 2,675 jobs and supported $455 million in private investment in fiscal year 2013. Business Recruitment ADOs recruited 12 companies statewide in SFY 2014, generating 1,717.5 new jobs. This included 520 new jobs in King County, 134 in Skagit, and 600 in Spokane. These three counties accounted for 55 percent of all jobs created in the state according to ADO reports. Counties not listed did not report job numbers. County New Jobs Created Jobs Retained Columbia 10 Cowlitz 50 Grant 91 King 520 Kitsap 49 Kittitas 11 5 Lincoln 13 Okanogan 6 Pend Oreille 40 1 Pierce 34 282 San Juan 11 7 Skagit 134 11 Skamania 32.5 Snohomish 15 Associate Development Organizations 5 County New Jobs Created Jobs Retained Spokane 600 Stevens/Ferry 6 13 Thurston 0 35 Wahkiakum 13 3 Walla Walla 28 20 Whatcom 4 Yakima 50 Totals 1717.5 377 Source: ADO Quarterly Reports Business Retention and Expansion ADOs completed 11 retention projects and supported 46 expansions for the reporting period. The 11 retention projects retained 377 jobs. Business Startups ADOs provided business startup services to 53 new businesses during 2013-14, compared to 75 in 2012-13. ADO services have been impacted by budget reductions from partners at all levels: federal, public, and private. It is possible that this, along with a change in the way data is reported, contributed to the decline in the number of jobs and positive business outcomes created by the ADO network as compared to previous years. Best Practices In 2012, the Legislature made several changes to the annual contractual and reporting requirements of the ADOs, and the responsibilities of Commerce. One of these changes was for the ADOs to meet and share best practices with each other at least twice annually. Commerce coordinates these meetings. Additionally, the ADOs must provide a “summary of best practices shared and implementation” in their annual reports to Commerce (Appendix A). Associate Development Organizations 6