Sunset for SEDCO?

As both development and funding dry up, some call for the Scarborough group to pay its own way.

SCARBOROUGH — The Scarborough Economic Development Corp. has worked to lure businesses to town for 27 years. But with a down economy and few recent bravura successes, some on the Town Council are wondering aloud if it should see 28, offering a preview of what could be a spirited debate this budget season.

“I really felt like there was some trouble brewing a couple of years ago,” said Councilor Karen D’Andrea on Monday.

D’Andrea served as council liaison to SEDCO in 2009 and 2010, and was initially “completely on board.” But then as projects dried up in the recession, and as the corporation began to deplete its primary funding source – proceeds from the sale of lots in the industrial park – D’Andrea says she “saw the handwriting on the wall.”

SEDCO’s two-person operation ran a budget of $233,979 last year, of which $58,362 was offset with money from the industrial lot reserve. But with all lots sold, after the $60,000 remaining in the fund is used, that goose goes dry.

“I said SEDCO needed to find some way to raise its own revenue,” recalled D’Andrea, an executive from the nonprofit world in her own right. “Well, we had a couple of conversations about it and that was it. The next year I said it again, and again there was a discussion about it and nothing happened. Now, here we are, it’s year three and what’s going to happen to SEDCO?”

Harvey Rosenfeld, 66, has led SEDCO for all but the first two years of its existence. He came to Maine in his 20s with a background in home restoration and dreams of a career in boatbuilding. But before long he applied “on a whim” to a home weatherization job in the state Division of Community Services during the administration of Gov. James Longley. That department, like two others Rosenfeld worked for during his seven years in state government, no longer exists.

But the experience led to social services work and two years as Saco’s city administrator – a post Rosenfeld admits was too political for his laid back, practical style – and then to the SEDCO job. He came along just as Scarborough was beginning to earn its reputation as the fastest-growing community in Maine.

“The tax rate in Scarborough is what it is because Harvey has done a very fine job over a lot of years,” praised SEDCO board Chairman Stuart Axelrod, general manager of Pine Tree Waste. “We have outstanding fire and police services and good schools because of the business SEDCO brought it. It didn’t happen by itself. That growth was supported and assisted and guided, and I think SEDCO and Harvey played a huge part in that.”

But, as with many things, it can be a case of what-have-you-done-for-me-lately?

“My concern is that we were not seeing a return on the money from SEDCO,” said D’Andrea, suggesting that the Town Council has the power as its incorporators to disband SEDCO despite its independent, quasi-municipal status.

“There needs to be some kind of change. I think it needs to be a big change,” she said. “I don’t think we need two staffers any more. I think we can pare it down, maybe find some space for it in town hall.”

Although he admits to be closing in on retirement, with maybe less fire in the belly to take on the “big fight that every development project seems to result in these days,” Rosenfeld said with or without him, ending SEDCO’s special status is the wrong move.

“The reason SEDCO was set up as a separate entity, as opposed to being a part of the town as its done in most nearby communities, is that, as such, we can offer a far greater amount of discretion than can the town, where everything is a public document,” he explained.

In addition to keeping a company’s secrets until it’s is ready to make a formal application to the town Planning Board, Rosenfeld said his group’s status helps it to act as an intermediary between the developer and the town. Where town officials are more or less obligated to uphold ordinances and zoning rules, SEDCO can lobby for changes on the developer’s behalf, when they can benefit the town.

Still, D’Andrea said, SEDCO’s budget should be in play until Rosenfeld, or his board, can “give me the data,” on how its work has helped the town, when no obvious development appears to be happening.

“I would rather see that money [from SEDCO’s budget] sunk into the schools,” said D’Andrea. “The schools are a much more valuable long-range economic development tool than SEDCO is, I believe.”

The council’s liaison to SEDCO, Judith Roy, said one other councilor has spoken openly of disbanding SEDCO. Roy, however, is more circumspect.

“The economy is turning and SEDCO is important to that, although maybe there is a better way to do it,” she said. “But if you don’t have the mix to support the commercial tax base, you’re not going to have good schools that way, either.”

The magic number, Roy said, is to draw one quarter of all property tax revenue from commercial properties. In Scarborough, business accounts for slightly less than 20 percent of Scarborough’s tax revenue.

“That’s important,” Rosenfeld said, “because I believe [without SEDCO] our geography, where we are in relation to other communities, is such that we would have seen exactly the residential growth we have had, but without the business growth to support it and help provide essential services.”

The problem with moving the needle in the near future, said Axelrod, echoing Rosenfeld, is that Scarborough has more land than empty buildings, meaning development in town tends to require a larger investment, and that usually comes from exactly the kind of companies now sitting on the sidelines, according to conventional wisdom.

According to Rosenfeld, it’s the contacts he’s making, and the conversations he’s having during these downtimes, that will pay dividends, and may be even more important than what happens when the economy is booming. Right now, he said, he’s talking with three different companies about building on Haigis Parkway.

“There’s a lot of pieces in play that SEDCO has done over the years, that are just waiting for the economy to let them happen, and then a lot of these discussions would go away,” Axelrod said.

Still, Rosenfeld said he does plan to turn in a budget to the finance committee on April 9 that is 8 percent lower than the current fiscal year. He also intends to submit a report to Hall by week’s end detailing some alternate revenue streams, things like selling advertising on the SEDCO website or charging a fee for consulting services, which have always been offered free to big corporations and home occupation start-ups alike.

And, as Hall points out, the town has five TIF districts with SEDCO written into them as a beneficiary.

“The problem is, those have not performed very well and we have other obligations we have to meet first, like refunding taxes paid to the developer of those properties,” Hall said. “The day will come when revenue from those TIFs can be directed into economic development, we’re just not there yet.

“So, it is fair to say that this year, because there are limited funds, there will be more taxpayer support required for SEDCO. And it’s fair for taxpayers to ask if we‘re getting results for what we are putting into this, but, of course, that’s same of all departments.”

But, in the, end, SEDCO’s biggest problem may be all about marketing. D’Andrea said SEDCO is marketing to the wrong kinds of businesses – that it no longer needs to go after retail or biotech operations at all – and that “green industry” is where it should be directing its efforts. She and others also suggest that the Greater Portland Economic Development Corp., now getting off the ground and due to hire an executive director by May, could pick up some slack, at least with luring larger companies to the region.

But others say SEDCO really needs to market to Scarborough, in order to survive.

“In the recent surveys the town has done, the percentage of people who knew what SEDCO was is very low,” said Roy. “A lot of people don’t know what SEDCO is and what it means to the mix.”

“The average person really does not really understand what SEDCO does,” agreed Axelrod.

“That’s true,” said Hall. “And for that reason some people may view economic development as a non-essential activity, but I don’t see that as the case.”

Still, D’Andrea predicts a spirited debate as the annual budgeting process unfolds, especially given that Hall predicts a $2 million revenue deficit going into FY 2013.

“I’m not saying, ‘Goodbye, Harvey,’” she said. “It’s just that often, when things get stagnet, its time for a shakeup. I’m not here to say let’s shut SEDCO down because they’re doing a terrible job. I’m saying things need to be done very differently because the world has changed.”