Some Cowlitz County cities and port districts will face a steep spike in their Cowlitz Economic Development Council membership fees next year when the council establishes a funding model for its public sector partners.
The new model is intended to create a fair structure for fees, as wells as make up for a 20-year lapse in increases, said CEDC President Ted Sprague. But the move has some public officials scrutinizing their budgets to see how to fit in the CEDC membership.
“I don’t think it’s an unfair amount we are asked to pay. … But any increase is difficult when you are faced with a 1% property tax limit,” said Kalama City Administrator Adam Smee.
The CEDC works with public and private partners to attract and retain businesses in the county and grow the local workforce. The organization also advocates at the state and federal levels to “streamline regulatory burden and ease the permit process” for businesses, according to the CEDC website.
Membership fees help the not-for-profit CEDC pay its staff members, cover marketing costs and fund travel, Sprague said.
CEDC membership fees for private sector organizations are based on the number of employees the business has, Sprague said. But the CEDC didn’t have a similar structure for public sector groups.
“There was no rhyme or reason to why a certain city was paying a certain amount, or why a certain port was paying a certain amount,” Sprague said.
Public membership fees also had been stagnant for nearly two decades, Sprague said, while private membership fees increase by 1% to 2% annually.
The new fee model, which takes effect January 2020, provides structure for the public member fees and sets an annual “cost of living index” increase estimated to be about 3% per year. Sprague said a special CEDC committee helped create the new system.
“That way, if in five years somebody from a city asks, ‘Why do we pay this much?’, I can point out the system ... instead of saying, ‘That’s just the way we do it,’ ” Sprague said.
Previously, some of the fees were negotiated individually between the CEDC and the public entities. For most of the categories, the new fee was set at whatever the highest paying entity in that group was already charged.
For example, the model sets fees for deep water ports at $20,000 — the same amount the Port of Kalama was already paying.
However, that new rate is a $5,000 increase over the Port of Longview’s previous fees.
Port of Longview Commissioner Jeff Wilson, who represents the port on the CEDC board, said the boost was a “significant increase ... and the three elected (commissioners) will have to talk about it.”
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“CEDC provides development opportunities, and … I think there is value in the membership,” Wilson said. “However, the port has to be fiscally responsible, and we have to understand what we are willing to pay.”
The port commission is just starting its budget discussions now, Wilson said, and has not taken action on how much it will allocate toward membership fees for any group, including the CEDC.
The CEDC’s new fee model also sets the costs for cities by population size, including a new rate for cities with fewer than 5,000 residents. Rates for other population sizes are based on the highest paying city of that size.
In total, three cities will pay more next year: Castle Rock, Kalama and Woodland. Kalama has the “easily the largest” increase, Sprague said. The city, which was previously paying $500, is facing a 400% increase to its membership fees to $2,500.
“That is a pretty substantial increase. I would say that $500 was kind of a nominal number in the past,” said Smee, the city administrator.
But Smee said he will advocate to stay part of the CEDC because “I see them as providing value to the community and the region.”
He pointed to a $50,000 grant the city received a few years ago to fund its downtown revitalization study. That grant needed a “community economic vitalization board” sponsor, a role that the CEDC filled for Kalama.
“The CEDC has value for us, both in the tangible stuff of … grants, as well as the larger regional presence they play in terms of recruiting business and development in the area,” Smee said.
The decision on whether the pay the membership fee is ultimately up the the city council, which plans the annual budget for the city. The council will hold its first budget hearing next week.
“We are dealing with limited resources, especially for general funds,” Smee said. “Ted may end up front and center in front of the council explaining why the increase and the fees and what the direct benefits are.”
Sprague said the CEDC announced the fee increases early this fall specifically for that reason.
“We wanted to give everyone lots of notice. … One of the things I offered when I sent the notice out … was that I could come talk to the council or commission,” Sprague said. “The only invitation I’ve had so far is the City of Woodland. I will be making a presentation down there in November.”
Sprague added that the fees are intended to “create a sense of fairness” for CEDC members.
“We needed to be more sophisticated. It’s only fair to everybody,” he said.