Economic Development Corporation: Where Has the Money Gone?

After sinking $750,000 into a public-private partnership aimed at bringing economic investment to Elk Grove, the city is poised to reduce its support for the program—but questions remain about exactly how the money was spent.

Founded in 2007, the Elk Grove Economic Corporation was supposed to create 1500 jobs over a five-year period. The total number actually created so far, according to a city report? About 70.

Of course, the project suffered from unfortunate timing. “Over the four-and-a-half years since we started down the road with the EDC, the economic climate in the state and nation has been one of the most challenging we’ve ever seen,” City Manager Laura Gill said in her report on the project at Wednesday’s city council meeting.

An article in Wednesday’s Sacramento Bee outlined some of the stumbling blocks along the way. While the original agreement creating the corporation called for the city to provide one-third of its funding, private dollars didn’t roll in as anticipated, leaving the city footing 60 percent of the bill.

More troubling for councilmembers—and taxpayers—is the fact that the EDC never provided the city with a single one of the regular reports on its spending and progress called for in the agreement. While a member of the council has served on the corporation’s board each year, some councilmembers appeared not to have learned of the lapse until recently.

“Why wasn’t the council made aware of this?” Vice-Mayor James Cooper asked Gill after her presentation, which recommended reducing the city’s annual contribution to the corporation from $150,000 to $60,000 and hiring an in-house Economic Development Director. “Had I known I would have looked at cutting the money a long time ago. We have a fiduciary responsibility to make sure the public’s money is spent well.”

The reporting requirements are the same as those for any community group that receives a grant from the city.

Notably absent from Wednesday’s meeting was Steve Czarnecki, the executive director who’s presided over the EDC since its founding.

Czarnecki told Elk Grove Patch in an interview in early March that an outside firm was auditing the corporation’s finances, but Gill said the city has yet to receive the results of that audit.

He also said that some of the efforts the corporation undertook, like sending out newsletters and email blasts touting the benefits of doing business in Elk Grove, take time to pay off.

“Over time it builds top-of-mind awareness but doesn’t necessarily trigger immediate action,” he said.

Councilmembers tentatively approved including the $60,000 for the EDC in next year’s budget, but will revisit the issue at their May 25 meeting. Mayor Steven Detrick, who currently sits on the EDC board, said the corporation had recently elected a new board chair and would release more details about its future plans in the coming weeks.

Gill says the unaudited financial numbers she’s received from the EDC don’t appear to show any red flags. But until a third party analyzes them, some councilmembers pointed out, it’s difficult to tell.

We’re Transparent Enough, Thank You

Councilmember Gary Davis was fuming after his proposal for a citywide committee on citizen engagement failed to win support from his colleagues Wednesday.

The volunteer committee would have analyzed how well the city is encouraging residents to get involved in their government, from holding Neighborhood Watch meetings to responding to information requests. City staff estimated the cost to the city to be zero.

“The whole idea of this is to turn the lights on at city hall,” said Davis. “They’re still dim. We’re a city that has a checkered past and if we’re going to move forward folks are going to have to be allowed to be involved in the process.”

But his fellow councilmembers, none of whom would second the measure so it could be put to a vote, said the city’s already doing plenty to boost citizen involvement.

“I think there’s other ways to take the temperature of how we’re doing on public engagement than creating another committee,” said Councilmember Patrick Hume. “We’ve done outreach efforts in the past and they’ve yielded results. I saw it as a lot of effort for questionable return.”