HEDC will continue without the support of the borough


May 21, 2020

Haines Economic Development Corporation board members are trying to figure out what the organization will look like without financial support from the Haines Borough.

On May 12, assembly members voted to eliminate the borough’s roughly $95,000 annual contribution to HEDC which, at present, constitutes the organization’s entire operating budget.

At a meeting on May 14, HEDC board members expressed disappointment but also a desire to make adjustments to allow the organization to continue.

Board president and former Chamber of Commerce board member Heather Shade said part of the reason the Chamber of Commerce originally pushed for the creation of HEDC was because economic development is a slow, continuous process that benefits from consistent work. She said prior to HEDC, economic development in Haines had only been dealt with intermittently every couple of years.

Continuation of the organization will require operational adjustments, Shade said. HEDC will have to pare down and refine its focus. This could involve operating without an office or paid staff as well as working to secure other funding sources and leveraging relationships with partner organizations.

Right now, HEDC has funding until its memorandum of support with the borough expires Aug. 31.

When assembly members voted to cut funding for the organization, they suggested HEDC use the remaining months of borough support to secure outside funding sources.

HEDC board members agreed that staff time would be well spent working to secure grants in the coming months.

Bringing money into Haines through grants will also serve to demonstrate the value HEDC brings to the community, board member Sean Gaffney said.

Applying for grants presents some challenges.

HEDC executive director Margaret Friedenauer said grant writing will take time away from her current work, which includes assisting business owners dealing with the economic impacts of COVID-19.

In a separate interview with the CVN, Friedenauer said it could be challenging to find a grant to supplant the operational costs previously supported by the borough. Grants are usually structured to support a specific project and the administrative costs associated with that project. Few cover general operating costs.

However, there are a number of grants available for economic development organizations assisting with local economic recovery efforts, Friedenauer said.

The complete elimination of borough funding will make HEDC an outlier among economic development organizations.

“It’s unusual for an economic development corporation not to have a little fiscal support from local government, but not unheard of,” Friedenauer said.

The structure for funding economic development varies from community to community.

While HEDC has traditionally received all its funding from the borough, other economic development organizations use business sponsorships or host fundraising events to help cover costs, Friedenauer said.

Bigger economic development organizations, like those in Juneau and Anchorage, tend to have more outside funding sources. At the opposite extreme, organizations like HEDC and the Skagway Development Corporation receive almost all their funding from their respective municipalities.

Friedenauer participates in weekly meetings with economic development organizations across the state, coordinated through the Center for Economic Development at the University of Alaska Anchorage. HEDC is one of the youngest organizations on the call and it serves one of the smallest communities, she said.

Although many of the similarly sized communities in Southeast Alaska fund economic development, not all structure it through an economic development organization like HEDC.

Instead of a separate nonprofit, Wrangell has an assembly-appointed advisory committee, the Economic Development Committee, and an Economic Development Department housed within the borough, a structure similar to the Haines Tourism Advisory Board and the Haines Tourism Department.

Funding for HEDC comes from a voter-approved 1% sales tax that was originally directed toward tourism and was expanded in 2004 to include economic development. Prior to the creation of HEDC in 2017, funding for economic development manifested as the intermittent employment of borough economic development directors and projects like the harbor’s boat ramp and fuel dock improvements.

Because the funds from the 1% sales tax have a restricted use, money cut from HEDC could be redirected to support the tourism department, but it can’t be used to pay for something like school bond debt.

At the HEDC meeting, board members discussed the possibility of asking the assembly to fund the organization at a lower level. At the May 12 assembly meeting, Shade had requested $35,000 in funding, which the assembly rejected.

Gaffney raised the possibility of asking for $20,000.

Other board members said it would be a waste of time as the assembly had already made up its mind about HEDC.

“I don’t think going back and asking for a different amount is valuable,” Shade said.

Some saw the appeal of operating the organization autonomously.

There’s something kind of freeing about operating without an obligation to the borough, board member Sue Chasen said.

As board members work to navigate the anticipated funding cut, the goal is to ensure HEDC continues to operate so it can be ready to support future economic development efforts.

“We could work on developing the skills and knowledge of our board as an organization to be ready to implement big projects in the future,” Shade said. “When there are more ambitious, forward thinking ideas for building this community, when they come up, we want to be ready to implement those.”

In the coming weeks, the HEDC board will meet to discuss the future structure of the organization. The next public HEDC board meeting is June 11.


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