VCDC Capital Campaign requests city participation By David Lias
Plain Talk Steve Howe, representing Vermillion Now! and the Vermilion Area Chamber of Commerce and Development Company (VCDC) was joined by members of the VCDC board of directors at the April 6 Vermillion City Council meeting. Howe and the VCDC board members asked for the aldermen's help in helping Vermillion Now! capital campaign reach its fundraising goal of $1.5 million. "We think this campaign, like the new city hall, is going to provide a fresh start for Vermillion," said Howe, the VCDC's executive director. Howe said that approximately a year ago, the VCDC board decided that a capital campaign was needed. "They looked at other communities, and they determined that this was a tool that most communities use to be successful in their economic recruitment efforts," he said. The board agreed to make the capital campaign part of the VCDC's strategic plan approximately a year ago. "The first thing we started out doing was conducting an analysis of the community," Howe told the aldermen. "We wanted to determine where we were, where we have been in the past, and where we wanted to go in the future. What we found through this assessment of the community was that in comparison to a number of other communities, such as Watertown, Madison, Brookings and Yankton, we found that we had much lower wages. "We also discovered that we had significantly higher poverty rates — somewhere in the neighborhood 20 percent (higher)," he said. "We also found that from a population growth standpoint, there's been slower overall growth in the past 15 years, and historically, there's been very little population growth in the community in the past century." The low wages, high poverty and slow growth are likely linked to the types of employment opportunities offered in Vermillion, Howe said. "We discovered that Vermillion was very heavily weighted in service and retail alone. We have our education community, and a lot of the businesses that we have are here to provide services to that community," Howe said. The businesses that are Vermillion's major employers also offer the lowest wage ranges when one looks at national averages, he said. "We have this unbalanced industry mix, and where we are lacking are areas like manufacturing, construction, wholesale trade, transportation and warehousing, so we need to figure out a way to balance this industry mix." The analysis, Howe said, also identified several strong points in the Vermillion community. "If you go up and down Cherry Street, you can see the tremendous amount of capital investment that the business community is putting back in Vermillion. People have a lot of faith in this community, and they are excited about its future and they are making this capital investment back into the community." The University of South Dakota has also taken steps to be stronger in the future with its capital investment in new buildings and its decision to move to Division I, he said. "We also have a lot of dedicated community leaders who are interested in seeing this city move forward." Even though the retail service area of Vermillion is causing the city's wages to be lower than comparable cities in the state, "the retail service industry is very strong and the education economy is very strong in the community,"" Howe said. "We have found that the university has a very stabilizing effect on our economy. We think this is an outstanding foundation in which to build on in the future." The VCDC board decided in the fall of 2008 to go forward with its capital campaign. "We hope that the campaign will allow us to build on this foundation to address and focus on this unbalanced industry mix, so we can focus on recruiting businesses and manufacturing and industries in other areas where we are lacking," he said. Robert Johnson, a member of a firm that is helping the VCDC conduct the capital campaign, said that originally, the goal of Vermillion Now! was to raise at least $2.3 million in the community. After conducting interviews with individuals throughout the city, it was discovered that a more reasonable goal would be $1.2 million to $1.5 million over a six to eight month time frame. A committee made up of approximately 20 people settled on several main goals for the capital campaign, including new business recruitment and expansion, marketing, workforce development and entrepreneurial development. "One of the things that we found in talking to the people," Johnson said, "is that we did not find a lot of support for retail and service sector jobs. The majority of people said we want good, high-paying jobs that pay $15 to $18 per hour, and provide people enough income to have a good house and be contributing members of the community." The committee decided to allocate $600,000 for business recruitment and expansion, $400,000 for marketing, $300,000 for workforce development and $200,000 for entrepreneurial development. People who were interviewed in the community also decided, Johnson said, that the committee should concentrate on five major areas: transportation, manufacturing, computer science, health care and finance and insurance. A benchmark is to attempt to create a total of nearly 500 new jobs in those five areas. "These 492 primary jobs would generate an additional 278 secondary jobs," Johnson said. "It is estimated that this number of jobs would create an annual payroll of $22 million in the community, and of that you would have about $12.5 million in consumer expenditures that would be spent in the area." The capital campaign's return on investment will be strong, he said, and the people who will benefit the most will be the citizens of the Vermillion community. The 492 new jobs, according to co-chairman Jerad Higman, would generate approximately $156,000 in additional sales tax dollars, $361,000 in additional electricity sales, $111,000 in water and public services and other miscellaneous funds for a total annual city revenue of $738,832. The capital campaign will be conducted over a five year period. After all of the money is raised and is put to use, the additional revenues generated in the city would begin in the sixth year, and go on for perpetuity in the city, Higman said. The campaign has reached out to the public sector, the private sector and the business community, and has raised $600,000. "That's something we're pretty proud of today," Higman said. "We want to get the entire community involved. The way I look at it is it's an investment in Vermillion, so everybody has a piece of the pie." Higman asked that the city council match private contributions from the business community at the rate of 50 cents per each private sector dollar pledged, up to a maximum of $450,000. "We expect to raise the amount needed from private sector by Aug. 1, 2009," he said, "and payments can be made over a five year period." The city would have to provide $90,000 annually for the next five years to provide the matching funds. City manager John Prescott said one of the best sources of funding from Vermillion likely will be the city's bed, board and booze (BBB) sales tax. "That's where the current allocation to the VCDC comes from, and it fits well." Another source may be expenditures from the city's general fund, if needed. "We definitely recommend that you look at the BBB tax first, followed by funds from the second penny (sales) tax and then the general fund," Prescott said. Mayor Dan Christopherson told the VCDC representatives that the city is in the middle of its budget year, and their request is not included in this year's financial plans. "It will take a little bit of fancy footwork to work on it for this session, but I think we'll try and do our part to make this happen," the mayor said.