Paige calls for audit of city contributions to EDC

August 23, 2010

Colorado Springs Councilman Sean Paige called Monday for an audit of money the city and Colorado Springs Utilities have provided to the Colorado Springs Regional Economic Development Corp.

“Not too long from now, we’ll be weighing new funding requests from EDC,” Paige said Monday in an e-mail to the mayor and council members. “I can’t in good conscience support those requests until we have a better understanding of how these funds are being used.”

Paige, who headed a group that successfully opposed a proposal last year to extend a property tax levy and spend the $3.2 million it generates on economic development, asked his colleagues to support the proposed audit at Monday’s informal meeting.

“While I have no reason to suspect that this money is being misused, or being put to questionable purposes, I think any recipient of this much public money should be open to periodic review, given our obligation to ensure that these funds are spent in an appropriate, cost-effective manner,” Paige said in his e-mail.

Council members asked for interim City Auditor Denny Nester to research how much the audit would cost and how much time it would take.

“You keep coming here asking for more studies and reports,” council member Jan Martin said to Paige. “They only get a small portion of their budget from the city and I believe they already have an external auditor. Do we want to use funds that the city doesn’t have right now on studies or do we want to send them to create jobs?”

Mike Kazmierski, EDC’s president and CEO, said the group’s financial statements are audited annually, documents he has provided to Paige and Nester. He said such audits typically cost between $6,000 and $8,000 and take about a week to complete. EDC last year received $192,000 from Utilities and $70,000 from the city, which together accounted for about 19 percent of the nonprofit’s $1.4 million budget, he said.

“In our discussions, (Paige) believes economic development support may not be something the city should be doing under his limited-government philosophy. From that perspective, funding economic development is a valid question,” Kazmierski said.

EDC last year attracted 13 employers that are expected to create 2,046 jobs by 2014 and generate an annual economic impact of $81.7 million. A 2007 study by local economist Dave Bamberger concluded that the city receives $11 in tax revenue for each dollar it gives EDC.

The group has received funding from Utilities for more than 10 years to support its marketing program to attract new employers to the Springs and another program to keep key local employers in the area and help them expand, Kazmierski said. Many private utilities have their own economic development operations; Springs Utilities has no separate such unit and instead funds EDC’s efforts, he said.

“A lot of our marketing is aimed at companies that would be large users of utilities,” Kazmierski said. We wouldn’t be able to travel and meet with those companies without that support. The companies we attract provide a good stable revenue source to utilities.”

EDC sought funding from the city five years ago to take over the local employers program, which involves visits to those employers to discuss their concerns and costs about $250,000 a year to operate, Kazmierski said. Many other Colorado cities and counties, include Aurora and Jefferson County, fund nonprofit economic development agencies, he said.

“The city had agreed to help us because they were downsizing their own economic development program,” Kazmierski said. “We started the program because we found that many of our companies were being visited by other cities to get them to move there. We are trying to help them succeed. We didn’t want to lose quality companies in our town because we weren’t doing a good job of taking care of those companies.”


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