The El Dorado-Union County Chamber of Commerce will serve as the economic development arm of the city of El Dorado in 2024, per an annual contract for services that was approved earlier this month.
On Dec. 14, the El Dorado City Council agreed to a recommendation by the El Dorado Works Board -- who administers the El Dorado Works initiative, a one-cent city sales tax that is earmarked for economic development, municipal infrastructure and economic development projects -- for a $51,000 contract for the chamber to provide economic development services for the city next year.
The amount represents a $6,000 increase over the amount the city had allocated for the annual chamber contract since 2017.
The chamber initially requested a total of $56,000, an additional $11,000, during a presentation to the EWB on Dec. 12.
A portion of the request, $5,000, was for a host sponsorship to promote El Dorado as a "Strategic Lithium Player" for the 2024 Arkansas Lithium Innovation Summit, which will be held Feb. 15 and 16 in Little Rock.
However, after some discussion, the EWB recommended that the chamber remove the $5,000 from its proposal and approach the El Dorado Advertising and Promotion Commission with a funding request for the amount, Greg Downum, chairman of the EWB, told city council members on Dec. 14.
In its Dec. 14 edition, the News-Times erroneously reported that the $5,000 was a part of the $51,000 that was ultimately approved for the 2024 chamber contract.
Downum also explained that the chamber's request for an increase in its contract was driven primarily by a rise in the cost of the doing business that is related to economic development.
He noted that the chamber sought to increase salaries for its staff, who have not had a pay raise since 2020.
Council Member Frank Hash inquired about the chamber's total, annual operating budget, including subsidies from the city and Union County, who appropriates $30,000 to the chamber each year.
Bill Luther, president and CEO of the chamber, said the budget, which is also made up of membership dues/investment and event revenue, for 2022 was $321,000, with income coming to $375,000.
He added that approximately $359,000 was budgeted for 2023.
Hash then referred to a 2016 state Constitutional amendment regarding the use of public funds to enter into contracts for services with chambers of commerce and other related economic development agencies.
The amendment also clearly defined economic development services that are covered by the Constitution, including:
Planning, marketing, and strategic advice and counsel regarding job recruitment, job development, job retention and job expansion.
Supervision and operation of industrial parks or other such properties.
Negotiation of contracts for the sale or lease of industrial parks or other such properties.
Has noted that he was mayor when voters approved the amendment.
"There was nothing in that amendment that focused any kind of money that the city or county would give that involved insurance, increases in insurance or salaries. I don't know why we're doing that," Hash said, adding that the chamber is a private, non-governmental organization, hence the Arkansas constitutional amendment allowing municipalities to enter into contracts for services with chambers of commerce.
Luther pointed out that the city's contract with the chamber was approved under a similar format when Hash served as mayor.
Hash served two mayoral terms from 2011 - 2018.
"When I was mayor, we didn't give the chamber any money until they made this amendment," said Hash, later adding, "I didn't say we didn't give money. I'm saying what we gave money for."
In 2015, Hash called for a suspension of the chamber's contract with the city -- which at the time was funded at a level of $30,000 -- until legal challenges that led to the constitutional amendment were resolved.
The 2015 contract expired at the end of 2015 and was not restored in 2017 at a level of $45,000.
On Dec. 14, Downum clarified that the city enters into a contract for the chamber to provide economic development services and the increase in the amount of the 2024 contract reflects an increase in costs for the chamber to provide such services to the city.
Hash insisted that the state constitutional amendment does not allow for public dollars to cover increased expenses as a part of the chamber's contract for services.
Downum noted that the chamber's proposal emphasizes that funds appropriated by the city are not to be used for building maintenance, utilities or business insurance.
Hash pointed to the earlier mention of a salary increase for chamber staff members.
"Correct. It costs them more to operate the chamber and so, it then seemed reasonable to us that it then costs them more to offer economic development services to the city, which would justify the increase," Downum explained.
City Attorney Robert Rushing later expounded on the matter, telling Hash, "We're still engaging the chamber for economic development services ... They're just trying to justify why they're asking for more funding for economic development services because it's costing them more. We're not budgeting funds to pay their employees."
The chamber has four full-time positions, including the president and CEO, economic development project manager; vice president of membership and events; and communications and finance coordinator.
The scope of services provided by the chamber as a part of the city contract includes:
Provide planning, marketing and strategic service and counsel to the city regarding job recruitment, development, retention and expansion.
Maintain an office for economic and industrial development providing for job recruitment, development, expansion and retention.
Provide a full-time, professionally qualified project manager and such staff who will consult with the city on a frequent and regular basis as required to carry on the previously described functions
Work closely with the mayor to carry out the duties of the contract.
As a single point of contract for the Arkansas Economic Development Commission, chamber officials reported that they are supporting the AEDC on six economic development projects and they received an inquiry about a seventh project hours before the city council met on Dec. 14.
The chamber said it is also supporting 25 economic development projects outside of the AEDC, including 10 new local projects that fall into the categories of commercial and retail (three); restaurants (five); forest products (one); and one new manufacturing/industrial/alternate energy/recycling and data management projects.