For more than 10 years, the Midcoast Economic Development District has served as one of Maine’s seven economic development districts – a regional partner to the federal government in efforts to stimulate the economy and create job growth.
Due to what critics have described as a lackluster performance and a questionable impact on economic activity, counties have begun to hold back funding for the Midcoast Economic Development District, or MCEDD, leaving the organization on the verge of losing its federally designated economic development district status.
Despite raising approximately $59,000 from Cumberland, Knox, Lincoln, Sagadahoc, and Waldo counties for the 2015-2016 fiscal year, MCEDD does not have the matching funds necessary to access the U.S. Economic Development Administration’s $70,000 Comprehensive Economic Development Strategy planning grant.
The grant is distributed to economic development districts through the U.S. Economic Development Administration to support the creation of an annual report to identify areas of economic opportunity. The report guides the distribution of Economic Development Administration funds to the region.
The preparation of the report is one of the central missions of economic development districts.
MCEDD’s inability to access the Comprehensive Economic Development Strategy planning grant will end its ability to serve as an economic development district as of July 1.
The MCEDD Board of Directors voted Feb. 27 to transfer MCEDD’s economic development district designation to the Midcoast Council of Governments, a nonprofit regional economic development and planning organization based in Sagadahoc County.
MCEDD Executive Director Jeffrey Kobrock said the transfer in designation to the Midcoast Council of Governments will allow the Midcoast region to continue to access Economic Development Administration funds and benefit from an economic development district.
The Midcoast Council of Governments is intertwined with MCEDD. The two organizations share staff and have a financial relationship, Kobrock said. Kobrock also serves as the executive director to the Midcoast Council of Governments.
Despite no longer being able to function as an economic development district starting July 1, MCEDD still expects to receive approximately $59,000 in county funds, Kobrock said.
The federal strategy for economic development
The Economic Development Administration, or EDA, housed in the U.S. Department of Commerce, is the only federal agency devoted solely to economic development, according to its website. Partnership with regional organizations is the heart of the Economic Development Administration’s strategy to spur sustainable job growth and develop regional economies.
Economic development districts are the vehicle through which the federal government supports regional economic development projects. The districts typically cover a large geographic area and are run by a board of directors composed of elected officials, municipal staff, or community members from the area served.
A comprehensive economic development strategy is a major focus of any EDA-designated economic development district. The comprehensive economic development strategy is one of the Economic Development Administration’s bread and butter programs. Through planning grants, designated organizations develop a comprehensive economic development strategy plan for their region – a roadmap for regional economic growth.
The strategy guides federal funding for the region by earmarking areas for economic development. Each year the EDA awards a planning grant to support the comprehensive economic development strategy. The EDA expects economic development districts to find a 50 percent local or regional match for these funds to increase their impact and create real and sustainable economic growth.
Each district develops its own financial model to support its operating budget and leverage federal funds. Some districts are supported by local municipalities through the payment of dues, some are supported by counties, and some receive support through a hybrid of both.
At the start of the new fiscal year, MCEDD will not have the matching funds necessary to access the $70,000 Comprehensive Economic Development Strategy planning grant, and will no longer be able to serve its purpose as an economic development district.
MCEDD
The Midcoast Economic Development District is a registered nonprofit that received federal designation as an economic development district in 2005.
The organization has gone through several transitions in its organizational structure, funding model, and coverage area. MCEDD initially followed a hybrid funding model that combined county and municipal funds and served Lincoln and Sagadahoc counties and Brunswick.
MCEDD expanded its territory in 2011 to encompass Knox, Lincoln, and Sagadahoc counties, Harpswell and Brunswick in Cumberland County, and four towns in Waldo County. It now has a 30-member board of directors representing the region.
MCEDD also transitioned its funding model from its former hybrid version of receiving funding from both counties and municipalities to its current model of receiving money strictly from counties, Kobrock said.
MCEDD engages in several small-scale programs, such as participation in the Revolving Loan Fund, a state program that provides loans to small businesses, and it offers a cooperative purchasing program for municipal activities such as roadwork, brush clearing, road salt, and office supplies.
According to MCEDD’s Lincoln County budget request submitted for the 2015-2016 fiscal year, MCEDD’s primary purpose is to serve as a conduit for Economic Development Administration funds.
However, in MCEDD’s approximately 10 years as an economic development district, only two projects in its region have received Economic Development Administration funds as a result of the Comprehensive Economic Development Strategy.
The Economic Development Administration provided funding to the development and expansion of Wing Farm Business Park in Bath and West Bath in 2006 and the Maine Street Station in Brunswick in 2009.
Kobrock pointed to those two projects as successes for MCEDD. However, they occurred at roughly the same time MCEDD received a blistering report from the Economic Development Administration that said, “The organization was struggling to survive.”
The EDA’s 2009 performance evaluation and recommendation report for MCEDD also recorded a hostile attitude between the counties represented on MCEDD’s board – at that time, Lincoln and Sagadahoc counties.
According to the report, Lincoln County representatives felt Sagadahoc County was favored for economic development projects.
The report also said Lincoln County was not paying its share in dues to MCEDD or providing enough matching funds for the Comprehensive Economic Development Strategy.
Since the 2009 report, MCEDD expanded its territory and revamped its funding model. However, there have been no additional Economic Development Administration funds distributed for projects identified in MCEDD’s Comprehensive Economic Development Strategy.
With few results for the nearly decade of local and regional funds devoted to MCEDD, Lincoln and Knox counties held back support in the recent budget season and only provided the organization with a portion of its budget requests. The funding MCEDD expects to receive from the counties in its region will not be enough to sustain itself as an Economic Development District, Kobrock said.
Property taxes at work
MCEDD has failed to persuade the Lincoln County Budget Advisory Committee to recommend its full budget request for the past two years. In the most recent budget season, Knox County followed Lincoln County’s lead and reduced the amount of funds allocated to MCEDD.
The Lincoln County Budget Advisory Committee, composed of selectmen and a legislator from Lincoln County, has zeroed out MCEDD’s budget request for the past two years, recommending an end to county funding for the organization.
Budget advisory committee members said MCEDD’s services appeared to be a duplication of economic development services available elsewhere, according to The Lincoln County News archives. According to Lincoln County Administrator John O’Connell, the budget committee didn’t see the benefit MCEDD provided for Lincoln County.
For the 2014-2015 fiscal year, the Lincoln County Board of Commissioners went against the budget committee’s recommendation and provided MCEDD $5,000. MCEDD returned to Lincoln County with a request for approximately $27,000 for the 2015-2016 fiscal year.
The budget advisory committee again recommended $0. Lincoln County commissioners again went against the committee’s recommendation and provided MCEDD with $8,000 to organize broadband workshops. The two workshops were discussed as a first step in the process to connect Lincoln County municipalities to broadband infrastructure along Route 1.
For the 2015-2016 fiscal year, Knox County reversed its previous practice of providing full funding to MCEDD. MCEDD requested $28,491 from Knox County, according to its submitted budget request.
Knox County Commissioners only approved $10,000. According to the minutes of the Oct. 23, 2014 joint meeting of the Knox County Budget Committee and Knox County Board of Commissioners, the budget committee expressed a great deal of confusion and concern about MCEDD projects.
Budget committee members said MCEDD seemed to focus on projects municipalities had developed on their own, rather than jump-starting new projects or initiatives.
According to the minutes, Knox County Administrator Andrew Hart said funding for MCEDD “is a controversial topic every year.”
Despite reduced amounts from Lincoln and Knox counties, MCEDD is scheduled to receive $16,379 from Cumberland County, $20,750 from Sagadahoc County, and $4,055 from Waldo County.
The total amount MCEDD is expecting from the counties in its region is $59,184. The funding is not enough to match the $70,000 Comprehensive Economic Development Strategy planning grant from the Economic Development Administration, Kobrock said.
Unable to sustain itself as an economic development district in the 2015-2016 fiscal year, Kobrock said, MCEDD’s board of directors voted to transfer its designation as an economic development district to the Midcoast Council of Governments on Feb. 27.
MCEDD’s uncertain future
There was no discussion of the resolution to transfer economic development district status from MCEDD to the Midcoast Council of Governments, according to Lincoln County Commissioner Bill Blodgett, also a member of MCEDD’s board of directors.
According to Blodgett, the issue was not even on the agenda for the meeting.
MCEDD’s board of directors voted to approve transferring the economic development district designation in a 17 to 2 vote, Kobrock said, indicating the strong support it had from the board.
Blodgett was an opposing vote, due to the lack of discussion around the resolution. Blodgett said the resolution felt like a power grab.
According to the resolution, the board recognizes that MCEDD “does not have the capacity or funding to sustain, manage, staff and fund the Midcoast EDD.”
It goes on to say the Midcoast Council of Governments “is currently the only organization with the capacity, funding and commitment to sustain, manage, staff and fund the Midcoast EDD.”
The Midcoast Council of Governments has a complicated and intertwined relationship with MCEDD. The two organizations have a close financial relationship with a similar mission and shared staff, Kobrock said.
Kobrock was originally hired to serve as executive director of the Midcoast Council of Governments, Kobrock said, and took on the additional responsibility of MCEDD in 2010.
A regional economic development and planning organization that serves Sagadahoc County, Brunswick, and Harpswell, the Midcoast Council of Governments supports itself with dues from municipalities.
Kobrock said the Midcoast Council of Governments was in a sound financial position. Transferring the designation of economic development district status to the Midcoast Council of Governments was a “strong solution,” Kobrock said.
“This way the Midcoast region can continue to benefit from an economic development district,” Kobrock said.
The resolution must be approved by the Economic Development Administration before it goes into effect.
Despite its looming inability to provide the matching funds needed for Economic Development Administration grants, MCEDD has issued a call for project proposals for the Comprehensive Economic Development Strategy.
Successful project proposals will be included in the Comprehensive Economic Development Strategy report, which is a prerequisite to receive Economic Development Administration project funds.
According to Kobrock, the Midcoast Council of Governments will administer the Comprehensive Economic Development Strategy program if the EDA approves the transition.
“If we’re successful in transferring the designation all the activity of an economic development district will go on uninterrupted,” Kobrock said.
John Atwood, senior public affairs specialist for the EDA, said the EDA has not received any official information from MCEDD regarding the change in economic development district status.
Despite not being able to access the EDA’s $70,000 Comprehensive Economic Development Strategy planning grant, MCEDD will continue to collect the approximately $59,000 raised from the counties to use for general operations, Kobrock said.
Due to the different fiscal years used by counties, Kobrock said he did not know when county funds would be disbursed to MCEDD. He said he expected most of the funds would be exhausted by July 1 when MCEDD would lost its economic development district status.
“It really isn’t going to be an issue,” Kobrock said.
Kobrock said he does not expect county funds to be transferred to the Midcoast Council of Governments to match the Comprehensive Economic Development Strategy planning grant. “That would be up to the funders,” he said.
According to Lincoln County Administrator John O’Connell, the $8,000 earmarked from Lincoln County has not been distributed yet. O’Connell said disbursement of the funds is contingent on MCEDD completing the scope of work discussed with commissioners.
Asked if MCEDD would continue to function after July 1, when it stands to lose its economic development district designation, Kobrock said he didn’t know. “You’ll have to ask me again in July,” Kobrock said.
