Job Creation in the Greater San Marcos region[/caption]Update: March 18, 3:45 p.m. The story has been updated to reflect Buda's discontinued funding for the organization.
San Marcos officials have voiced support for diversification of the city’s economic development efforts, but the effect that decision will have on the effort to improve wage levels and job opportunities in the region remains unclear.
At a City Council meeting Feb. 17 the Greater San Marcos Partnership, which is responsible for economic development in the Greater San Marcos region, including Hays and Caldwell counties, saw council propose reducing the city’s contribution to the partnership by two-thirds, from $360,000 annually to $120,000.
“If there is a cut in funding, there would be a subsequent cut in service, but we still have to discuss what that cut would be and what that cut would mean,” GSMP President Adriana Cruz said at the Feb. 17 meeting.
An amended GSMP contract reflecting the city’s reduced financial commitment will not be made official until both parties agree to the terms, though council members discussed the issue at a meeting March 17.
Under the terms of the new contract between the city and the partnership, the city’s in-house team would be largely responsible for small-business economic development within San Marcos. If the city and partnership approve the new contract, the city will continue its contribution of $30,000 per month to the partnership through September. On Oct. 1, the city would reduce its contribution to $10,000 per month.
The city has provided $360,000 annually to the partnership since 2010, making it by far the entity’s largest single funding source. Hays County provides the second-highest level of funding at $150,000 annually.
GSMP Executive Board Chairman Will Conley said the city’s contribution is higher than others because the service it receives from the organization is different. While other contributing cities have their own economic development departments or corporations that specifically handle local economic development efforts, the partnership handles San Marcos’ local efforts as well as the broader promotion of the region.
“Once that matter is recognized, then a matter of funding and what services come along with that funding will be a discussion of great detail, because we do a tremendous amount more for the city of San Marcos than what we do in our support role for Kyle, Buda, Lockhart, Luling, Dripping Springs and other areas,” Conley said.
The city’s $360,000 contribution accounts for nearly one-third of the partnership’s annual budget, but Cruz said 95 percent of the work the organization does is focused on San Marcos.
“We cannot do this work without your support,” Cruz told City Council at the Feb. 17 meeting. “Without your support financially, without your support physically—we can’t do our job without the good work done by City Council and by city staff.”
Since launching in 2010 the GSMP has been involved in some aspect of 593 jobs created through businesses relocating to or expanding in the city of San Marcos, according to a partnership report.
If council approves the reduction, the $240,000 formerly spent on the partnership will go to the creation of three new city staff positions. The city would also gradually increase the amount it spends on economic development during the next five years. If council approves the final language of the amended contract with the partnership, the city could hire an economic development director by mid-summer, Miller said. In 2016, the position’s first full year, the director would make $151,800 in salary, insurance and other benefits. In 2017 a program manager would be hired at a cost of $72,600 annually. In 2019 the team would be rounded out by hiring an economic development specialist at a cost of $49,500.
Transparency
The GSMP is a 501(c)(6) organization, a classification common for chambers of commerce and similar entities. The 501(c)(6) designation means the partnership is not for profit, and no net earnings of the group can be distributed to its members.
Because the partnership is not a public entity, such as a city department, it is not bound by the same disclosure laws. Additionally the partnership accepts private money, adding another wrinkle to the issue of transparency. The organization is subject to open records laws, but it is not legally required to adhere to the Texas Open Meetings Act, although Conley said he is open to voluntarily complying with the TOMA’s regulations.
In one example of what Councilman John Thomaides perceived as a lack of transparency between the partnership and city, three council members requested a detailed breakdown of the partnership’s budget in April 2014. After the request was made there were many delays, he said.
According to emails obtained by Community Impact Newspaper through a Texas Freedom of Information Act request, City Finance Director Steve Parker followed up on council’s request to Cruz for a “detailed breakdown” of the partnership’s budget on May 9.
After multiple emails between Cruz and Parker, a detailed report of income and expenses was sent to the city June 13.
The partnership’s expenses during the first half of the 2013–14 fiscal year included 10 three-day passes to the Formula 1 race at Circuit of the Americas in 2013 at a total cost of $20,300 as well as $2,860 spent on limousines in early November, according to the partnership’s budget.
After some City Council members raised questions about expenses from the first half of 2014, the partnership’s board of directors voted to begin spending public money exclusively on operational expenses, such as salaries and rent.
Growing outside investment
Since the GSMP began in 2010, its annual budget has grown from $360,000 to $1.19 million. Much of that growth has been driven by contributions from the private sector.
Among the partnership’s largest private investors are Austin-based public relations firm Buie & Co., Austin-based real estate investment firm McDonald Development Group and Central Texas Medical Center, which each provide at least $25,000 annually. Kyle provides $5,000 annually. The city of Buda recently voted to cease funding to the organization.
In a resolution announcing its intentions to stop providing funding to the partnership, the Buda EDC board cited concerns about the organization's focus on San Marcos—using Cruz's stat that while only a third of the partnership's budget comes from San Marcos, the organization focuses 95 percent of its work on the city—as well as competition with the partnership in recruiting businesses to Buda and declining resources being provided to city's other than San Marcos over the past 18 months.
Of the 1,358 jobs announced in the Greater San Marcos region since 2011, 765, or 56 percent, have been outside the city of San Marcos.
“Had you told me or other council members at that time in 2009 that this is what we would be funding, that we would be the largest contributor and other cities would benefit for a paltry investment … the other cities need to kick in,” Thomaides said.
