Commissioner Musgrave Voice Concerns About Proposed Merger Of Economic Develoment Coalition

To:  Members of the Economic Development Coalition Executive Committee and Board

From:  Cheryl Musgrave, Vanderburgh County Commissioner

Date:  February 11, 2021

Re:  Merger of Southwest Indiana Chamber of Commerce, Economic Development Coalition of Southwest Indiana, and Growth Alliance for Greater Evansville 

I am concerned about the merger of three organizations referenced above: the creation of a new entity, the Evansville Regional Economic Partnership, (“EREP”), and the use of Vanderburgh County tax dollars in support of the new organization.

First, I appreciate and have voted support of tax dollars funding GAGE and the Coalition for many years. Indeed, I was a founding member of the two organizations.  I have personally been a member of the Chamber and have attended many well-organized and purposeful events.  These organizations have contributed much to our community.

The entities at the center of the merger/consolidation effort are distinctly organized.  The SW Indiana Chamber of Commerce, the “Chamber”, currently represents two counties, Vanderburgh and Posey.  

The Growth Alliance for Greater Evansville, (“GAGE”), was set up to be the local economic development organization, (“LEDO”), for the city of Evansville and the unincorporated Vanderburgh County.  Its board members are exclusively from Vanderburgh County. Warrick, Posey, and Gibson counties have LEDOs that are not asked to merge/consolidate in this effort for reasons that are unknown to me.  There will be greater representation for these three counties than for unincorporated Vanderburgh county because of the remaining LEDOs.

The Economic Development Coalition of Southwest Indiana, (“Coalition”) was formed to represent the interests of all four counties, Vanderburgh, Warrick, Gibson, and Posey in attracting and retaining business.  It has representation and contributions of varying levels from all four counties.

While I am not opposed to a merger of some or all of the functions of these entities, I have several concerns about the details of the proposed structure.  These are outlined below along with proposed solutions.

1. Tax Support and Reduction of Elected and Appointed Members 

I have been confident in my votes to commit tax dollars in support of both the Coalition and GAGE.  There have been measurable results, such as in grant seeking, and intangible results, such as goodwill.  The board structure of the proposed new organization lacks existing key elements, and I am not confident that public tax dollars should be spent in support.

Currently, the Vanderburgh County Commissioners appoint two members to the Coalition, one Commissioner to serve on the Executive Committee and one citizen to serve on the board, and the Vanderburgh County Council appoints two members of the board, one of whom is a member of council.  GAGE is designed to have a single Commission appointee, a Commissioner.  This is a total of five current county level appointments, including three elected officials and two citizens.  The proposed EREP reduces the county appointees to a single Commissioner, decreasing the input of Vanderburgh County government and citizenry.  

Vanderburgh County contributes $150,000 annually to the Coalition and another $150,000 to GAGE, for an annual total of $300,000 devoted to economic development.  As stated above, three elected officials oversee the use of taxpayer funds.  This creates a level of confidence that public tax dollars are being used for the benefit of Vanderburgh County taxpayers which is not replicated in the proposed merger.  The reduction of county elected officials slated for the EREP decreases elected official oversight and accountability of taxpayer dollars.

This concern can be addressed partly by adding a minimum of two elected Vanderburgh county Commissioners and one citizen appointee on the proposed EREP board/executive committee.

2. Tax Support and 501C3 Board Membership

The creation of a 501C3 entity for the sole purpose of receiving governmental payments is stated as necessary by the legal advisors to meet IRS requirements, which do not permit donation of tax dollars to the proposed EREP, a 501C6 entity.  The 501C3 board membership is currently proposed to simultaneously be the Executive Committee of the EREP.  This structure, for the sole purpose of frustrating IRS regulatory intent (i.e., not having public tax dollars support a 501C6 entity), is at best questionable.  Currently Vanderburgh county, and presumably the other counties, has an annual contract with both the Coalition and GAGE.  It has not been made clear why the contractual arrangement has been scuttled in favor of the pass-through donation proposal from the 501C3 to the 501C6.

I propose that the 501C3 Board members be comprised of all the County Commissioners (three per county) and the mayors of contributing entities, plus one if necessary.  This allows elected officials who are contributing tax dollars to annually vote on the tax funds allocated.  This assumes equal dollar contributions by each political entity.

This, together with the additional elected officials in part A above, would serve to alleviate taxpayer concerns regarding oversight and accountability on the non-elected board use of tax dollars.

3. Reduction in Board Membership

The proposed EREP is comprised of 55 + board members, with a 21-member Executive Committee.  This represents a reduction of approximately 109 board members from the current count.  This is a drastic and unnecessary change which leaves talent on the sidelines; does not create a diverse pipeline of talent; and reduces the variety of viewpoints represented.  The ability to engage those of diverse perspective, including small and large business, and an inclusive cross-section of our community is greatly reduced with the loss of over 100 board seats.  Board membership should be expanded.

4. Reduction of 12 Meetings to 6 Annually

The Coalition monthly meetings are purposeful and have served to inform key stakeholders about the economic climate of the region.  The meetings create the sole opportunity I have had to become acquainted with Commissioners from surrounding counties.  In addition, the meetings serve as a continuing conversational arena with community and business leaders, many of whom might not meet except for this forum.  The EREP would be well served to continue the monthly meetings as it has been one of the most important products of the Coalition and GAGE.

5. Initiatives

Through monthly interaction with Coalition staff, I have developed confidence in their skills and dedication.  This confidence has led to working together on key initiatives.  Members of the Coalition may not be aware of the lack of staff of the Vanderburgh County Commission and the brake this puts on pursuing detailed initiatives.  A key aspect of Vanderburgh County involvement in the Coalition has been access to the staff that has served to supplement and guide key initiatives and grants.

The proposed consolidation of Coalition staff under the leadership of a single CEO and the removal of multiple Commissioner representation would lead to a discontinuation of this informative and cooperative environment to the harm of the economic activity of Vanderburgh County.  

6. Budget

I have an outstanding concern about the total lack of any budgetary information, including income, expenses, and structure.  

In conclusion, I cannot support the proposed merger at this time.