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Area economic development corp.'s membership plan: A common approach

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Last summer, Cumberland Area Economic Development Corp. announced a financial package for Mike Nolan, second from left, owner of Earth Spring Farm, a new 42-acre agricultural operation in Monroe Township, Cumberland County. The farm’s full-time staff includes, from left, Megan Hellerman, Matthew Lowe and farm manager Julie Henninger.
Last summer, Cumberland Area Economic Development Corp. announced a financial package for Mike Nolan, second from left, owner of Earth Spring Farm, a new 42-acre agricultural operation in Monroe Township, Cumberland County. The farm’s full-time staff includes, from left, Megan Hellerman, Matthew Lowe and farm manager Julie Henninger. - (Photo / Amy Spangler)

Cumberland Area Economic Development Corp.'s plan to sell memberships, announced last week, has a familiar feel.

The plan offers businesses perks and services that can include networking, seminars and legislative updates. A fee scale corresponding with the service level ranges from $100 to more than $4,500 annually.

The model is similar to the way Cumberland County's four chambers of commerce are set up. Michelle Crowley, president and CEO of the Greater Carlisle Area Chamber of Commerce, acknowledged there was some concern in her organization.

"The game plan is to make sure there is no overlap," she said. "We work very well with them."

Crowley serves on the CAEDC board and Jonathan Bowser, president and CEO of CAEDC, serves on the chamber board.

Bowser said the CAEDC membership plan — known as the Cumberland Valley Alliance — was discussed in detail with the chambers to avoid conflicts. The agency will partner with the chambers where possible to reduce costs and share resources, he added.

"Most economic development corporations throughout the commonwealth have a fundraising program and are largely funded by the private sector," Bowser said. "We now need to diversify our funding streams to continue to do the work we have been doing."

Cumberland County Commissioner Jim Hertzler recently noted the county cut its contribution to CAEDC from $90,000 to $40,000 this year, with the expectation the agency would soon be "self supporting."

"They're attempting to do what any business would do when their funding is cut," said George Book, president and CEO of the West Shore Chamber of Commerce. "They were cut in one area and they're looking for funding in another area."

Jeff Palm, executive director of the Mechanicsburg Chamber of Commerce, declined comment, citing a need for more information. Scott Brown, executive director of the Shippensburg Chamber of Commerce, did not return a phone call seeking comment.

One hundred percent of the investment generated from the membership plan will fund existing financing programs, Bowser said, in addition to funding business attraction efforts through direct marketing.

The CVA includes three levels of membership: Friends ($100-$1,499), Members ($1,500-$4,499) and Founders ($4,500 and up). With each level come additional services that range from greens fees at the CAEDC golf tournament to being an annual tourism conference sponsor.

For every $1 invested, CAEDC has returned $127 in additional investment, Bowser said, which has equated to more than $10 million in additional annual tax revenue.

Crowley noted that Franklin County has a similar arrangement, with its economic development agency and chamber both raising money from the same business community.

A decade of growth

The membership plan is another step forward in a CAEDC's brief, but eventful, history. When the county commissioners took office 10 years ago, the three members' main goal was to take charge of economic development and tourism.

Their hands were barely down from being sworn in before they announced plans to dismantle the county economic development office and rebuild it from scratch.

The three — Gary Eichelberger and since-departed commissioners Bruce Barclay and Rick Rovegno — campaigned, in part, on a pledge to run the county like a business. That meant a local economic development team that could provide business expertise, support and, perhaps most importantly, loans.

A decade of transition later, CAEDC has settled into its role as the lead agency for county economic efforts, which include tourism. The Cumberland Valley Visitors Bureau, formed in 2005, has been under the CAEDC umbrella since September.

Rovegno said creating CAEDC was necessary to break out of Dauphin County's shadow. Cumberland has been growing at a much faster rate than Dauphin for several decades, he noted, to the point where the counties have comparable populations today. (The 2012 U.S. Census counted 269,665 people in Dauphin, 238,614 in Cumberland).

"That mindset couldn't go on," Rovegno said of the notion Dauphin is superior. "We didn't want to dominate anyone, but we wanted an even seat at the table."

"Creating a more business-friendly environment, as well as marketing the benefits of the county as a location (both for business location and leisure visitors) were two underserved needs we could address at very minimal investment with excellent long-term benefits," Eichelberger said in an email.

Bowser came aboard in 2012 and worked with Shireen Farr, who was named chief operating officer in 2013, and the CAEDC board of directors on a reorganization of the agency. Farr previously served as director of the tourism bureau.

The results have been good for Cumberland County, officials say. They point to statistics showing $109 million in total CAEDC investment since 2005, which has yielded total private and matching investment of $445 million and created or retained more than 4,000 jobs.

Cumberland County had an unemployment rate of 5.3 percent, or the fifth lowest in the state, as of December 2013, the most recent numbers available.

"The best way we can judge our success is by asking, 'Are we being a catalyst for business growth and job creation?'" Bowser said.

Business expansion

Last summer, for example, CAEDC announced a financial package for Earth Spring Farm's new 42-acre agricultural site in Monroe Township. Owner Mike Nolan had operated an 8.8-acre farm in Dickinson Township and, because of significant increases in production and customer base, decided to expand.

Earth Spring sells subscriptions for 20 weeks of produce delivered to neighborhood drop points from June through October.

CAEDC partnered with AgChoice Farm Credit on a $445,000 investment, which was used to acquire and make improvements to the property. The money came via the Small Business First loan fund, which gave Nolan 1.5 percent financing.

"We just had our biggest year yet," Nolan said. "We went from three full-time employees in 2012 to five, and then next year, we'll have, like, seven."

Earth Spring had to earn its financial package, he added. That meant showing CAEDC and its partners three years of data and selling them on its expansion plans.

"We could not have done it without (CAEDC), that's for sure," Nolan said, "at least not in 2013."

The biggest thing CAEDC does for the county is to help manage explosive growth with some foresight and consistency, officials say. According to Moody's Analytics, in 2013, Cumberland County experienced a 3.5 percent increase in gross domestic output, a 1.3 percent increase in job growth rate and a 7 percent increase in median home price growth rate.

Hertzler, who replaced Rovegno as the minority Democrat on the board in 2012, said he wants CAEDC to make reusing existing vacant sites for redevelopment a priority. Working with regional partners is also important, he added.

"Cumberland County is not an island unto itself," Hertzler said. "It is important to me that our county economic development agency work in concert with the efforts of the capital region and the entire region."

Harrisburg Regional Chamber, CREDC remain involved

Before Cumberland County established its own economic development office, the Capital Region Economic Development Corp. was the dominant agency in the county.

While CAEDC has made a name for itself over the past decade, David Black, president and CEO of the Harrisburg Regional Chamber and CREDC, said little has changed for his organization.

CREDC's biggest role is running the Ben Franklin TechCelerator in Carlisle, formerly known as the Murata Business Center. The business incubator gives startup companies rented space, programs, training and additional support.

"Running that incubator is an expensive item for CREDC, but with the support from the regional business community, we've managed to do that and have success," Black said.

Several technology companies, such as WebpageFX and Z-Band Inc., have graduated from the incubator and moved into their own facilities in the area.

In addition, CREDC is active making loans and distributing enterprise zone tax credits in Cumberland County. The agency had a role in helping Pizza Grille expand into Carlisle, for example, Black said.

"We've done significant business lending over the past few years," he added. "We will continue to be a presence. We continue to work with our partners in lending, and the fact they've had some repeat clients speaks to the influence we've had there."

One reason CREDC remains a player in Cumberland County is its state Area Loan Organization designation by the state Department of Community and Economic Development. A certified lender designation grants agencies access to Small Business First, which offers low-interest financing to businesses.

CREDC was the sole ALO provider in Cumberland County for many years. CAEDC sought the designation for several years before the state granted the agency co-ALO status with CREDC in 2010.

CREDC administers the Keystone Innovation Zone and Enterprise Zone tax credits for the region. KIZ tax credits are used to offset certain state tax liabilities, and Black said the credits "significantly contribute to the ability of young emerging growth companies to transition throughout the stages of growth."

The state defines an enterprise zone as "an area that has been designated by the Department of Community and Economic Development (DCED) as financially distressed and disadvantaged." Grants are distributed as part of the program.

Black said CREDC has "a good working relationship" with CAEDC, whose CEO, Jonathan Bowser, sits on the CREDC board of directors.

Black offered the following highlights of CREDC activity in Cumberland County:

• In 2003, CREDC processed seven business loans, totaling nearly $1.7 million and creating/retaining 128 jobs.

• In 2013, CREDC processed two business loans, totaling nearly $1.9 million. Both were done late in the year for projects to create/retain 28 jobs in manufacturing. Black lists the recipients as "confidential."

• In 2013, CREDC awarded $406,875 in KIZ funds to five companies in Cumberland.

• CREDC helped Holy Spirit Health System package its Redevelopment Assistance Capital Program grant application last year and advised Carlisle Construction on its bid for state assistance.

• From Jan. 1, 2001, through 2013, CREDC issued 29 percent of its $72.8 million in loans in Cumberland County.

• CREDC has made three loans in Cumberland totaling more than $1 million since the start of 2001, two of them since the start of 2011. A $2 million loan was made in April 2011 to an unnamed printing company in Middlesex Township. Last year, a $1.76 million loan went to a "confidential" manufacturing company.

Tourism bureau grows into force

When the Cumberland Valley Visitors Bureau was formally established in 2005, it started slowly.

One of its first big projects was simply publishing a visitor’s guide. It did not hire a full-time tourism director until 2007.

The bureau gained additional muscle in 2010, when the county commissioners approved a 0.5 percent hotel tax increase. Funds were designated for a $50,000 tourism infrastructure loan program and a $50,000 grant program.

CVVB has continued to grow through the years, adding full-time positions in 2010 and 2011. Commissioner Gary Eichelberger said CVVB is “almost entirely” funded by the 3 percent hotel tax.

The economic development/tourism staff numbers 12, with much overlap in duties.

“Our board and our commissioners see the importance of tourism and economic development,” said Jonathan Bowser, CEO of the Cumberland Area Economic Development Corp. “One advantage that we have ... is we’re able to take our economic development and tourism efforts and blend them together where it makes sense.”

CVVB has seen increases in visitation, which has reached approximately 1.4 million overnight business and leisure travelers visiting the region, Bowser said. In 2012, travel generated $750 million in direct visitor spending and supported approximately 6,000 travel and tourism jobs.

Some CVVB highlights from its brief history:

2005: Established a 13-member tourism committee and opened a Carlisle visitor’s center.

2008: Launched a new website and conducted destination-marketing research through Randall Travel Marketing Inc.

2009: Completed a yearlong branding study with North Star Destinations, which incorporated the marketing data.

2010: Held the first Cumberland Valley Tourism Conference, which has become annual.

2011: Opened a full-service Cumberland Valley Visitors Center in downtown Carlisle. Signed an agreement with the Central Pennsylvania Conservancy to be the exclusive booking agent for groups and meetings.

2012: Relocated to the Carlisle municipal building. The Plainfield Service Plaza on the Pennsylvania Turnpike reopened as the Cumberland Valley Service Plaza. Opened a visitor information desk inside the U.S. Army Heritage and Education Center. Launched a new website with two revenue generators: a booking engine and advertising opportunities.

John Hilton

John Hilton

John Hilton covers Cumberland County, manufacturing, distribution, transportation and logistics. Have a tip or question for him? Email him at johnh@cpbj.com. Follow him on Twitter, @JHilton32. Circle John Hilton on .

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