EDC shakeup leaves agency’s 2009 agenda in doubt

Gov. Donald L. Carcieri’s planned shakeup at the R.I. Economic Development Corporation is putting a question mark on the agency’s 2009 Economic Growth Plan, which was released just last month.
A Carcieri administration spokeswoman said “it’s too soon to tell” whether the broad strategy document that is intended to guide the EDC for the next year will remain in effect.
Following some of the recommendations of an advisory panel, Carcieri and legislative leaders last week announced they will replace the EDC’s board members and launch a national search for a new executive director in an effort to revitalize the state’s economic-development efforts.
A report by the panel, which was formed by Carcieri in December, faulted state officials and the quasi-public EDC for not having a clear economic-development strategy and for not collaborating on business issues. Panel members also said that in the business community, the EDC is not perceived as helpful to small and emerging companies.
Questions posed to EDC officials last week about the pending changes and their effects on the agency’s existing growth plan were referred to the governor’s office.
Carcieri spokeswoman Amy Kempe said that it would be up to the reconstituted EDC board to decide whether it wanted to proceed with the growth plan or change it.
The 2009 plan, subtitled “Rhode Island, Working Again,” emphasized the need for the EDC to assist small businesses; to build partnerships with the business community, other state agencies and the federal government; to focus on work force development and to become more responsive.
It was a departure from the year-ago plan, which focused on fostering an innovation economy with the intent of creating higher-wage jobs for Rhode Islanders.
The 10-point action plan for 2009 does have some points common to the recommendations contained in last week’s advisory panel report.
Both emphasize the need to create public-private partnerships in attracting and retaining companies, as well as the importance of assisting small businesses and establishing an expedited permitting process.
Indeed, Kempe said where the report and the growth plan coincide, those segments of the plan would likely remain. “A good idea is a good idea,” she said. Kempe could not give a timetable for change to the makeup of the board – existing members have been asked to stay on for now – or when the hiring of a permanent executive director would take place. Both require special legislation, although the General Assembly leadership has said they will cooperate.
Keith Stokes, longtime EDC board member and executive director of the Newport County Chamber of Commerce, said he wasn’t bothered by the advisory panel’s report or by Carcieri’s decision to replace the board.
“I think they are absolutely correct in their assessment,” Stokes said last week.
Stokes, who has been on the EDC board since its creation in 1995, said the agency’s difficulties stem from its “undercapitalization,” noting that the state’s annual appropriation to the EDC has declined from about $9.5 million in the 1990s to $5 million now.
In addition, he said, the high turnover rate of EDC executive directors hasn’t helped. In the most recent change, EDC director Saul Kaplan’s tenure ended abruptly in December when he left to lead the nonprofit Business Innovation Factory. J. Michael Saul, the EDC’s deputy director in charge of lending services, is now serving as the agency’s interim director.
To guard against turnover, the governor said he will seek legislation that would allow the state to offer a three-year contract to the new EDC chief.
Other steps Carcieri and legislative leaders are taking to reorganize the EDC include:
&#8226 Abolishing the R.I. Economic Policy Council, which started out as a nonprofit corporation supported by the private sector and the state, but was brought under the control of the EDC by Carcieri in March 2008.
&#8226 Create an Office of Economic Research and Policy Analysis within the EDC. Carcieri said he is proposing legislation for the office that will “compile, prepare and distribute key economic data and relevant trends.” The EDC has already launched a search for an economist.
Carcieri said an early priority of the new EDC board would be forming a “public/private partnership” that would issue grants from both companies and the state to assist in “business attraction, recruitment activities and brand development.” &#8226

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