Oxnard Pins Economic Hopes on Privatization : Government: The city tentatively agrees to hire a private contractor responsible for recruiting new businesses and ensuring that existing companies stay.

Continuing its effort to down-size city government and cut costs, the Oxnard City Council moved forward Tuesday with a plan to put the city’s economic development in the hands of a private contractor.

Council members tentatively agreed to privatize the Economic Development Department, which is responsible for recruiting new businesses to Oxnard and ensuring that existing businesses do not leave.

The idea is that businesses, through sales and property taxes, generate revenue for the city that can be spent on a range of public services.

Under a plan endorsed by the council Tuesday, the city would help create a private, nonprofit corporation that would provide economic development services to Oxnard.

“I’m very supportive of the concept that we should spin this activity away from the city,” Councilman Michael Plisky said. “It belongs in the hands of the private sector.”

Although council members stopped short of fully supporting the privatization, saying many details still need to be hammered out, they agreed that economic development remains the city’s best hope for curing longstanding budget problems.

“We just can’t apply a Band-Aid remedy to the issues we are addressing,” Councilman Andres Herrera said. “I think we need to look at a more prolonged, continued support of economic development on behalf of the council.”

Support for the move, first proposed in August as part of a sweeping reorganization of city departments, has grown as the city looks for ways to scale back government in the face of budget shortfalls projected over the next five years.

After slicing $13 million from the city’s spending plans over the past three years, Oxnard officials have learned they will have to wrestle with a $2.6-million budget deficit next year.

In an effort to cut costs, the City Council agreed last summer to make city operations more efficient by reducing the number of city departments from 16 to 11. When the Economic Development Department is dissolved, the city will stand at 10 departments.

Councilman Tom Holden said he favors the nonprofit corporation for economic development because it would be more cost-efficient. “For the same funding dollar, we are receiving a much larger work force of people equipped to do this job,” he said.

As now proposed, the city would pay the private corporation $775,000 for economic development services in 1994. Steve Kinney, the city’s economic development director, would leave public service to help manage the newly formed corporation.

Other directors of the new corporation would include attorney Steven Zimmer, and George Lauterbach, chairman of the existing advisory commission.

Other board members would be drawn from the Oxnard City Council, local business and banking interests, and other public and private agencies.

Although the corporation would receive annual funding from the city, council members stressed the importance of the corporation’s directors to seek new funding sources.

“I don’t want this to be another program that is a blood-sucking vampire that doesn’t do anything but take our money,” Herrera said.