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Did we get our money's worth from state jobs aid?

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About the cover


D e s e r t   E x p o s u r e    June 2008

The $250,000 Question

As the clock runs out this month on a quarter-million dollars of state economic aid to Grant County, we look back and ask: Did we get our money's worth?

By David A. Fryxell

The spring of 2003 was not the worst of times for Grant County — that would have been the early 1980s, when unemployment hit 40 percent. But it may have been the cruelest time: Stream, the call-center company recruited to help replace jobs lost in the mining industry, abruptly announced it was closing. The company's 600 jobs, lured to Silver City by $1.7 million in state training funds and a five-year, $625,000 town commitment to pay its rent, bled away to Canada, India and the Philippines after only three years. Meanwhile, the community continued to reel from the shrinking of Phelps Dodge, the long-time mining mainstay of the local economy.

pie chart

"There's no doubt, in many areas times are tough, perhaps no tougher than it has been here in Grant County," Gov. Bill Richardson conceded, adding optimistically, "Time after time this strong community has bounced back."

To help Grant County bounce back, the state Economic Development Department sent $250,000 to this hard-pressed corner of New Mexico. Five years later, just before the clock ran out on that funding at the end of this month, community leaders agreed on a last-minute accounting sleight-of-hand to put the remaining roughly $40,000 toward hiring an economic-development coordinator.

In the grand scheme of things, a quarter-million dollars is not a lot of money. But the funding did represent an unprecedented investment by the powers-that-be in Santa Fe in an often-overlooked part of the state. It sparked an extended community conversation about the economic future of Grant County, and spawned a bewildering alphabet soup of acryonymed groups (see box) vying for slices of the economic-development pie. It gave Grant County residents a sliver of hope.

What that $250,000 state investment in job creation did not do, however, was create many jobs. Arguably, one small-business development effort partly funded by that money "created or retained" 18 jobs; at least some of those enterprises, however, were already receiving help from the Small Business Development Center (SBDC), which predated the state funding. Insiders will tell you, though, that ultimately the only jobs created by the state's quarter-million-dollar investment in Grant County's economic development were two jobs for economic developers. Neither job exists any more, and one of the two who got hired has since left the state.

Moreover, a significant fraction — possibly more than half, though an exact accounting remains elusive — didn't even wind up in Grant County. Some $16,500 was paid to Pathfinders, a consulting firm in Dallas. About $20,000 went to retain the services of Alice Worrell, an economic-development expert based in Colorado. Another almost $108,000 went to a Santa Fe firm, Southwest Planning and Marketing, which in turn paid an unknown sum to a local independent contractor for 10 months. A second Santa Fe firm, Community By Design, got $9,000. And a little over $43,000 — plus additional state and foundation funds — went to the Sirolli Institute, a New Age-y "Enterprise Facilitator" nonprofit based in Edmonton, Alberta; some of that money was then returned to Grant County as salary for the local facilitator.

The saga of the $250,000 meant to jump-start Grant County's economic future could most charitably be described as a "learning experience." With nothing but good intentions, dozens of volunteers spent countless hours in meetings trying to hash out a vision for the future. Local officials put their trust in outside experts who were supposed to know best, only to wind up with what one community leader characterizes as "a rip-off."

Today, five years later, it's deja vu for Grant County: Teleperformance, the call-center firm recruited to partly replace Stream, is announcing layoffs and may close its doors here completely — at the cost of nearly 200 jobs — in the wake of a consolidation by key client Sprint. Sud_denly, the story of how five years and a quarter-million dollars were spent in Grant County has become more than just a head-shaking history lesson. For community activists and officials, as well as those in other locales pondering investments in their own future, it's a hard-knocks lesson in what not to do.

Judy Ward remembers the spring of 2003 as the time when "everybody descended on Silver City. Governor Richardson, Rick Homans of the Economic Development Department, the Department of Labor — they were all going to help us."

A Silver City native whose family roots in the area date to 1888, Ward was then assistant director of the SBDC and an economic developer for the Silver City-Grant County Economic Development Corp. (SIGRED). Founded in 1978 as a stockholder corporation called the Southwest New Mexico Economic Development Corp., SIGRED reorganized in 2000 as a nonprofit and assumed the point position in recruiting employers — including Stream — to the area. Ward, who is now in her fourth term on the Silver City town council, retired from SIGRED last year.

The organization itself — running short of funds despite the state's largesse in 2003 — went dormant soon after, in October 2007. "It's heartbreaking," says Ward. "All those years of building, of keeping Silver City out in the public eye. . . ."

In announcing that SIGRED would close its doors, board chairman Jeremiah Garcia cited the proliferation of agencies seeking economic-development funding: "We feel that with so many hands in the cookie jar, it would be best to give it time and see what happens."

Sean Ormand, president of First New Mexico Bank and a SIGRED member, echoed that concern at the final meeting. The area's many economic-development groups are "well-intentioned, but if you have 10 and they are not well-funded, you have 10 potential failures," he said. "It's frustrating to work with too little."

Ironically, the proliferation of Grant County economic-development organizations can be traced in part to that 2003 crisis and the strings attached to the state funding. SIGRED was then still the go-to agency for economic development in the area. When companies interested in locating in Grant County inquired in Santa Fe, the Potential Recruitment Opportunity (PRO) forms went to SIGRED. When Stream's announcement sent shockwaves all the way to the Roundhouse, it was SIGRED that gathered state and community leaders together in April 2003.

Lloyd Alexander remembers that meeting well. A retired banker, he would later become active in two of the organizations spawned by the state funding: as an at-large member of the Community Economic Development Advisory Board (CEDAB) and as treasurer for the Successful Entrepreneurship and Economic Development (SEED) group, the local entity responsible for enacting the Sirolli vision. Back in 2003, however, Alexander had no idea how many meetings he'd soon be signing on for.

"There was this community outcry — we've got to do something!" he recalls. "There was this big meeting, and Rick Homans was there. I happened to be standing by him as he finished talking with Judy Ward and Linda Kay Jones [executive director of SIGRED]. So I asked him, 'Are they the ones who are going to get this money?'"

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