Development Group Is Victim of Nonsupport
Citing an inability to attract support from the business community it was formed to serve, the long-suffering Economic Development Corp. of Orange County has decided to close its doors.
The announcement of the March 31 closure was made less than a month after the group--in an attempt to heighten its profile--staged a two-day showcase of Orange County goods and services.
“We just don’t have the funds to operate in a manner that’s conducive to professional economic development,” said EDC executive director Frank L. Smith. “There is a feeling within the business community that (the work of the EDC) isn’t a high priority.”
The EDC originally was formed 10 years ago, but continuous budgetary difficulties have kept it operating only in fits and starts. Its latest reincarnation began just 13 months ago.
In a letter to EDC members dated March 24, Smith said the group’s board of directors considered a variety of options to keep the EDC in business in a more limited form. But those alternatives were scrapped in favor of simply going out of business. Smith said the goals of the EDC played no role in the agency’s failure to raise enough money.
“I think our goals are in keeping with the general goals of economic development, statewide and nationwide: The bottom line is to create jobs, and you do that by attracting quality business to your community.”
Smith said the EDC raised only $125,000 this year toward its budget goal of $250,000. That goal, Smith said, was less than half the operating budgets for EDCs in San Bernardino, San Diego and Los Angeles counties.
San Diego County, generally regarded to be one of the more effective EDCs in the state, has a budget this year of $900,000, its executive director, Dan Pegg, said.
“You have to have the kind of budget we’re operating on to have any impact,” Pegg said.
Dues-Paying Members
But Pegg also said he was not sure “there was broad enough private support” to sustain Orange County’s EDC. San Diego’s EDC has 250 dues-paying member businesses, contrasted with only 45 in Orange County’s. “From everything we could see, Smith and his board were doing all the right things; they just didn’t have the time or money to do enough of them,” Pegg said.
Directors of Orange County’s EDC--many of them from the county’s largest businesses--blamed a variety of factors for the private, nonprofit agency’s demise. In particular, they cited an inability on the EDC’s part to sell itself to the business community in the face of the county’s rosy economic condition.
Thomas H. Nielsen, president of the Irvine Co. and chairman of the EDC’s board, said that such organizations “work better in depressed environments.” Given the county’s “robust economic picture,” Nielsen said, an EDC for Orange County was not “a crucial issue at the moment.”
And John Miltner, a vice chancellor at UC Irvine and one of the EDC’S vice chairmen, said that beyond the the county’s healthy business climate, the geographic composition of the county--with 27 cities and no recognized downtown--contributed to the EDC’s failure.
“I think with the exception of the United Way, the Performing Arts Center and the university, no entity has been able to transcend the 27-cities syndrome” and successfully unite business and political interests throughout the county, he said.
Significance Downplayed
Smith, however, downplayed the significance of Orange County’s multi-city makeup. “While not having a downtown made our efforts somewhat more challenging, it nevertheless is the nature of the county and one of its major attractions. We had an effective working relationship with many of the cities (but) their financial support was not as strong,” he said.
As Smith and his board see it, the EDC failed because it could not convince potential business supporters that its function differed from those of other county organizations such as the Chamber of Commerce and the Industrial League and could not demonstrate the need for encouraging further business development at a time when the county’s economy remains strong.
Smith said he would prefer to remain in Orange County but, if a new job is not forthcoming, won’t “stay in Orange County and add to its 3.6% unemployment” rate.
Miltner said, however, that beyond a lack of business support, he believes the EDC failed because “in its current genesis, (it) was unable to get the various cities and, to any substantive effect, the county, to be really involved in it.”
Pegg said that between 50% and 55% of the San Diego EDC’s $900,000 budget comes from governmental agencies. In Orange County, however, the Board of Supervisors provided only $70,000 in seed money for the first year of the EDC’s operation in 1977 and an additional $108,000 in 1978 before requiring the group to raise funds on its own.
One fund-raising problem cited by Edmond B. Buster, retired president of Cherry Textron in Santa Ana and a vice chairman of the EDC’s board, was “absentee-owned” businesses.
“If you look at industry here, a lot of it is absentee-owned and, in those cases, it is quite difficult for local managers to commit to a large amount of dues,” Buster said.
Efforts Earn Praise
Overall, board members complimented Smith on his efforts to make the ill-fated EDC work.
Miltner said that “with Tom Nielsen as chairman and a dynamic person like Frank Smith (as executive director), if they couldn’t accomplish it, the time simply isn’t right.”
Miltner said he believes that the county does need an EDC.
“We, as a county, have got to project a climate for business interests outside of our area, and we’re going to have to do that collectively. A municipality on its own wouldn’t have the resources available collectively to the county. We’re going to have to have the same thing that woke California up when those microprocessing people (Microelectronics & Computer Technology Corp.) went to Austin, Tex. I have a feeling we’re going to lose a couple big ones here and realize we’re going to have to work together.”
