EDP Presentation: Danville City Commission Workshop 4-23-13

Danville City
Commission
WORKSHOP

WHO ARE WE?
The textbook definition of your EDP . . .
Ec • o • no • mic De • vel • op • ment Part • ner •ship
(ěk'ə-nŏm'ĭk dĭ-věl'əp-mənt pärt'nər-shĭp') n.
1. An innovative, collaborative, public-private alliance
unifying and coordinating the interrelated and
interdependent community and economic
development missions, resources, and initiatives of
its Partners. MOA Sec. 2, p. 1; Sec. 3(A), p. 2.

Danville-Boyle County
Economic Development
Partnership
Business
Development
Boyle County
Industrial
Foundation
BCIF
Board of Directors
EDP-BCIF
President/CEO
Business
Services
Danville-Boyle
County Chamber of
Commerce
Chamber
Board of Directors
Executive Director/
EDP Vice President
Downtown
Development
Heart of Danville
HOD
Board of Directors
Executive Director/
EDP Vice President
Main Street
Perryville
MSP
Board of Directors
Executive Director/
EDP Vice President
Tourism
Development
Danville-Boyle
County Convention
& Visitors Bureau
CVB
Board of Directors
Executive Director/
EDP Vice President
EDP
Board of Directors
EDP
President/CEO
ECONOMIC DEVELOPMENT PARTNERSHIP
Structural Overlay with Partner Organizations
Private, nonprofit corporations—
receive no public funding.
Private, nonprofit corporations or public agencies—
receive public funding by appropriation or tax.
Boyle County Fiscal Court
Danville City Commission
Junction City Council
Perryville City Council

WHO ARE WE?
The textbook definition of your EDP . . .
Ec • o • no • mic De • vel • op • ment Part • ner •ship
(ěk'ə-nŏm'ĭk dĭ-věl'əp-mənt pärt'nər-shĭp') n.
2. A nonprofit, corporate entity governed by an active board
of fifteen (15) Directors representing both the private
and public sectors and designed to ensure that the
Partners work in concert to provide an exemplary array of
economic development services in a coordinated and
cost-effective manner.

WHO ARE WE?
 The 2013 EDP Board of Directors . . . (see board listing)
 John C. Albright Chairman
 Richard Trollinger Vice Chairman
 Lisa A. Bottom Secretary/Treasurer
 Jamey Leahey Chamber of Commerce
 Jerry Boyd Convention & Visitors Bureau
 Bill Pollom Heart of Danville
 Alan R. Turbyfill Industrial Foundation
 Robby Mayes Main Street Perryville
 Sherry Davis, Director at Large Hobart Corporation
 Terri Gilbert, Director at Large Agriculture
 Judge/Executive Harold W. McKinney Boyle County Fiscal Court
 Mayor Bernie R. Hunstad City of Danville
 Rita G. Douglas, Alternate City of Junction City
 Mayor Anne Sleet City of Perryville
 Jody A. Lassiter President/CEO

HOW DID THIS HAPPEN?
 The Danville-Boyle County Economic Development Partnership,
Inc., was formed in 2006 on the foundation of the former Boyle County
Community Development Council, Inc.
 There was no formal coordination or working agreement among
those organizations that would become the EDP Partners.
 The Boyle County Industrial Foundation (BCIF) was served by a part-
time executive in a more competitive business development
environment.
 Mayor John W. D. Bowling and Judge-Executive Tony Wilder pledged
$100,000.00 each to support the EDP and attract a full-time
economic development professional.
 Then-BCIF board member John Albright participated in the EDP’s
creation.

WHAT DO WE DO?
 The “Big 4”: The EDP’s primary missions are
shared across all Partners . . .
Business Development
Business Services
Downtown Development
Tourism Development
MOA Sec. 2, p. 1

HOW DOES THIS WORK?
 A few of the basics . . .
 The 9 EDP Partners are either:
 Economic Development Organizations (EDOs),
i.e. Chamber of Commerce, or
 Local Governments, i.e. Boyle County Fiscal
Court.
MOA Sec. 1, p. 1.

HOW DOES THIS WORK?
 The EDP functions through a Memorandum of
Agreement among all the Partners that
specifies the mutual responsibilities and
relationships among them, their staff, the EDP
Board of Directors, and its central staff. The
MOA is a 3-year contract reviewed annually.

HOW DOES THIS WORK?
 EDO Partners retain their own boards of
directors and maintain separate budgets, but
we share staff and services as the EDP continues
to centralize administration and realign staff
support roles to maximize our efficiency and
effectiveness.
 Diagram of Board & Executive Relationships
MOA Sec. 4(B), p. 3; Sec. 4(D), pp. 3-4; Sec. 5(B), p. 5; Sec. 6(B)(2), pp. 8-9. See Diagram.

EDP Board
EDP
President/CEO
EDO Partner
Board
Executive
Director
Chair serves as EDP
Board, Executive Committee
member.
Board authority, CEO accountability
for EDP mission, personnel.
Board authority, Executive Director
accountability for Partner mission, personnel.
EDP CEO serves
as ex officio
Partner Board
member.
EDO Partner Executive Director
serves as EDP Vice President for
Partner mission, member of EDP
Executive Team led by EDP CEO
for EDP operations and initiatives.
ECONOMIC DEVELOPMENT PARTNERSHIP
EDP-Partner Board & Executive Relationships

HOW DOES THIS WORK?
 EDP FY 2012-13 Budget: $458,368.00
 The EDP receives both public and private
funding to support its operations:
 Public: (same level since 2009)
 City of Danville: $120,000 ($130,000 requested, FY 13-14)
 Boyle County: $110,000 ($120,000 requested, FY 13-14))
 Private:
 Chairman’s Circle: $95,000 (increased to $105,000)
 Industrial Foundation: $78,000 (shared CEO)

HOW DOES THIS WORK?
 70% of EDP’s public funds, 45% of total budget
supports the EDO Partners:
 Heart of Danville: $110,000 (staff/operations)
 Main Street Perryville: $30,000 (staff/operations)
 Chamber of Commerce: $20,000 (business development
support/fiscal administration services fee)
 CVB: $1,048 (shared staff benefit cost)
 Shared Services: ≤ $32,000 (communications, website)
 Chamber/HOD/MSP: $16,000 (private funds – membership
dues reimbursements/investment credits)
MOA Sec. 5(C), p. 5; Sec. 5(E), p. 6; Sec. 6(A), pp. 7-8.

HOW DOES THIS WORK?
 Private sources:
 Industrial Foundation’s $78,000 contribution directly
subsidizes the compensation of the EDP President/CEO,
who also functions as Industrial Foundation’s President.
MOA Sec. 5(E)(1), p. 6; Sec. 6(A)(1), p. 7.
 $95,000 in budgeted Community Partner investments
supports:
 ALL of the EDP’s business marketing & recruitment activities;
 Business data research & website development/maintenance;
 $16,000 in membership dues reimbursement & investment
credits to Chamber, HOD, and MSP. MOA Sec. 5(C), p. 5.

Commissioner’s Question
 “Give in priority the top five things the city commission can
do to assist you in the mission of bringing business and
new jobs to Danville.”
 Funding: Continue the City’s funding support of the EDP at the requested
level of $130,000 in FY ‘13-’14, the first increase requested since 2009.
 Fully Engaged: Active participation in all voting and/or ex officio
positions on EDP and Partner boards (BCIF, CVB, HOD) to be fully
informed about our plans, activities, and initiatives.
 Attitude: Present a cooperative, can-do, customer-friendly attitude to
existing businesses and new projects by the Commission and City staff.
 Focus on the Positive: Accentuate the positive aspects of local economic
development now and in the future, rather than negatives of yesterday.
 Ask First: If you have any concern about the EDP or its Partners, address it
first to the EDP or Partner for a response before publicly communicating
through the media.

Heart of Danville
 What is the financial relationship between EDP and HOD?
 The EDP annually appropriates $110,000.00 from its general
fund (derived from local government appropriations) to HOD
to subsidize its operations. MOA Sec. 5(E)(2), p. 6; Sec. 6(A)(2), p. 7.
 Is HOD subject to the Kentucky Open Meetings or Open
Records Acts?
 Open Meetings: NO. HOD is not within the definition of a
“public agency” to which this Act applies under KRS 61.805(2).
 Open Records: YES. HOD falls within the definition of a “public
agency” under KRS 61.870(1)(h) due to deriving more than 25% of
its funds expended annually from public sources.

Chamber of Commerce
 What is the structure of the Chamber of Commerce?
 The Chamber of Commerce is a private, nonprofit
corporation that is tax-exempt under IRC §501(c)(6). It is a
membership organization that is supported predominantly by
the dues paid by its members.
 Is the Chamber subject to the Kentucky Open Meetings or
Open Records Acts?
 NO. As a private, non-profit corporation, the Chamber is not
within the definition of a “public agency” to which these Acts
apply under KRS 61.805(2) or KRS 61.870(1).

Chamber of Commerce
 What is the annual fee paid by EDP to the Chamber of
Commerce?
 The fee is a fee-for-service in the amount of $20,000.00 per year that is paid
in quarterly installments by the EDP to the Chamber (COC). This service
and fee was initiated July 1, 2010, by amendment to the EDP MOA.
 Services:
 EDP Executive Vice President: The Chamber Executive Director
acts as the Executive VP in support of the President/CEO.
 Business Development: The Chamber’s Executive Director supports
and assists the EDP President/CEO with new business
recruitment, existing industry retention /expansion, and other
initiatives and management as needed.
 Finance and Administration: The Chamber provides centralized
financial accounting and office management to the EDP/Partners.
MOA Sec. 5(E)(4), p. 6; Sec. 6(A)(4), pp. 7-8. See EDP-Chamber Description of Services.

Convention & Visitors Bureau
 What is the CVB?
 The CVB is a joint City-County tourist and convention commission
created by local ordinances by authority of KRS 91A.350 - .394.
 Appointments to the CVB commission are made by the City
Commission and County Fiscal Court according to state statutory
mandates.
 The CVB is a taxing district which is solely funded by the County’s
3% transient room tax.
 The CVB receives NO additional appropriations from City or County
via the EDP.
 However, the EDP provides a small percentage cost-share for the
CVB Visitors Center Coordinator, because this position provides
staff support to the EDP Partners and will function as the central
receptionist upon EDP’s relocation to Constitution Square.

 What role will CVB play when the EDP Partners relocate to
Constitution Square?
 Managing Partner: Similar to other EDP shared services, CVB will
be the Partner coordinating the EDP’s fulfillment of services to the
Fiscal Court under the County-EDP lease agreement. This will be
added to the EDP MOA by amendment effective July 1, 2013.
 Services: The services to be provided for CS by the EDP under the
County’s lease agreement are largely within the tourism expertise of
the CVB, such as park interpretation, tour/event coordination,
marketing/promotion, and educational programming. County-EDP Lease
Agreement, Sec. 5, pp. 3-4.

 Why is CVB’s share of rent at Constitution Square being
abated by the EDP?
 Abatement: The amount of CVB’s abated rent will be $350.00 per
month or $4,200.00 per year.
 Reasons: The abated rent will be retained by CVB to:
 Fund compensation for part-time, seasonal weekend staffing of the
Visitors Center at Constitution Square. This cost, over $3,000.00, had
been eliminated by CVB in FY ‘13-’14 as a budget reduction.
 Defray other added staff expenses as the EDP’s managing Partner at
Constitution Square in fulfillment of services to the County.
 The abatement allows CVB to retain $4,200.00 of its own limited
transient room tax revenues to apply to these needs.

 Is EDP and/or CVB going to “manage” Constitution
Square?
 NO. EDP’s services are limited to those specified to Section 5 of the
lease agreement with the Fiscal Court.
 Landlord: The County remains responsible for management and
maintenance of the common areas, log buildings, and
exterior/infrastructure of the historic buildings to be occupied by
the EDP Partners.
 Tenant: EDP is responsible only for its business-related expenses,
such as telecommunications, equipment, cleaning services,
furnishings, and renter’s liability insurance.
 Result: This is LESS than the EDP’s responsibilities and financial
obligations at the McClure-Barbee House location.
County-EDP Lease Agreement, Sec. 4, p. 2-3.

Industrial Foundation
 The Boyle County Industrial Foundation (BCIF), Inc., is the lead Partner
within the EDP for the primary mission of business development:
 Manages and improves existing real estate assets for sale or lease for
industrial and/or commercial development;
 Monitors, assesses, and responds to opportunities for acquisition of
additional land and/or buildings to maintain a competitive stock of real
estate assets for industrial and/or commercial prospects;
 Markets for sale or lease any available land or buildings owned by third
parties for potential industrial and commercial development;
 Provides “concierge” services both to new business prospects and existing
industries through an extensive network of public and private resources;
and
 Facilitates and supports the activities of the Danville-Boyle County
Industrial Council, an association of local industry managers.
MOA Sec. 3 (B), p. 2.

 What is the corporate structure of BCIF?
 Founded in 1961, BCIF is a private, non-profit corporation.
 Article V, Articles of Incorporation (December 11, 1961):
“The corporation is not organized for a profit and no
part of the net earnings shall enure to the benefit of
any private shareholder, individual, officer or director
and no dividends shall be paid on the capital stock.”
 Internal Revenue Service (July 12, 1977): By letter, BCIF was
designated as tax-exempt under Internal Revenue Code
§501(c)(6). IRS Form 990s have been annually filed by BCIF since
this date.

 What about the Kentucky Secretary of State’s website that
refers to BCIF as “P - Profit”?
 BCIF was organized as a corporation under KRS Chapter 271 (or its
predecessor act) long before Kentucky adopted a non-profit, non-
stock corporation act (KRS 273); therefore, the SOS technically
refers to BCIF as a “profit” corporation because it retains shares.
 Similar situation: Danville Country Club, Inc., which was formed
much earlier than BCIF in 1924, is also referred to as a “P – Profit”
corporation by the Kentucky SOS.
 Key consideration: Substance trumps form.

 Who serves on BCIF’s Board of Directors? (see board listing)
 John C. Albright, Chairman (Caldwell Stone Company)
 Greg W. Caudill, Vice Chairman (Farmers National Bank)
 Walter L. Goggin, Secretary (Robinson, Hughes & Christopher, CPAs)
 Alan R. Turbyfill, Treasurer (Kentucky Trust Company)
 Jody A. Lassiter, President/CEO (EDP)
 Dr. Carmen Coleman (Danville Independent Schools)
 James “Jim” L. Jacobus (Inter-County Energy)
 Carl Metz (Ephraim McDowell Health)
 Dr. John A. Roush (Centre College)
 Bob Rowland (Retired Educator/Small Businessman)
 Harold W. McKinney, Boyle County Judge-Executive (voting, ex officio)
 Paige D. Stevens, Danville Mayor Pro Tem (voting, ex officio)

 City Representation:
 The Mayor of Danville has been a voting, ex officio member of the BCIF
Board of Directors since the tenure of former Mayor John W. D. Bowling.
 As of January 1, 2015, the Judge-Executive and Danville City Manager will be
non-voting, ex officio members after bylaws amendments in 2013.
 Access: As a member of the BCIF Board of Directors, the Mayor (or the City’s
official representative) has direct and full access to BCIF’s corporate
documents, financial information, and business development project files.
 Attendance: Since January 1, 2011, the BCIF Board of Directors had 15
meetings (including 1 special meeting in April 2011). The City of Danville was
represented at only 7.
 2011: 7 meetings; the City was represented at 2 (March and May).
 2012: 6 meetings; the City was represented at 5 (did not attend January).
 2013: 2 meetings; the City was represented at 0.

 Why was BCIF structured as a private entity?
 Long-term stability:
 No political influence and interference.
 No dependence upon public funding.
 Confidentiality with business/industrial prospects.
 Is BCIF subject to the Kentucky Open Meetings or Open
Records Acts?
 NO. As a private, non-profit corporation, BCIF is not within the
definition of a “public agency” to which these Acts apply under
KRS 61.805(2) or KRS 61.870(1).

 Why does BCIF retain shares and shareholders?
 BCIF’s Board of Directors investigated conversion to a
nonprofit, nonstock corporation as early as 2008.
 Problem: 905 shares outstanding in 2008, growing inability to
secure a quorum for Annual Meeting via presence or proxy due to
death, no contact information, extinct corporations, or loss of stock
certificate. For example:
 The Louisville Store (out of operation, no corporate existence)
 Chevron USA (local owner purchased shares, no corporate record)
 Roy Johnson Estate (no heirs or contact with heirs)
 Annual meetings of shareholders historically functioned by BCIF
Chairman or President/CEO holding proxies of majority of
shareholders to conduct business. No more than 2-3 shareholders
attended in person.

 BCIF’s legal counsel and accountant advised the board that conversion
may produce tax liabilities that would reduce BCIF’s financial
resources.
 BCIF’s legal counsel advised the creation of a Trust to which shares
could be gifted or waived to assure a majority for shareholder action.
The Trustees are BCIF’s officers.
 Shares in Trust: 678.5
 Inactive shares with no shareholder representative: 67.0
 Active shares with shareholders: 159.5
 Substance over form: BCIF functions essentially the same as any KRS
273 non-profit, non-stock corporation where the Board of Directors
directly governs its affairs according to its bylaws.
 Yes, BCIF may still issue shares of stock by retaining this status.

 Does BCIF receive public funding via the EDP?
 BCIF receives NO public funding directly or via the EDP budget.
All private revenues have been generated from real estate
sales/leases and financial investments for 50 years.
 BCIF has paid City, County, and State real and personal
property taxes since 1961 to support community’s growth rather
than using its non-profit exemption.
 BCIF subsidizes industrial recruitment and retention activities
from its income and reserves.
 BCIF shares a President/CEO with EDP, which is subsidized by
$78,000 in funding support to EDP. MOA Sec. 5 (E)(1), p. 6; Sec. 6(A)(1), p. 7
 Rather than receiving benefit of EDP’s public funding, BCIF
provides direct benefit to EDP and, by extension, the taxpayer.

 How did BCIF contract with Farmers National Bank Wealth
Management to manage its equity investments?
 This is the apparent target of Mayor Hunstad’s statement in his second
letter/op-ed: “A significant contract was awarded to a board members
[sic] business entity when it did not appear to be the most
competitive bid.”
 BCIF Treasurer Alan Turbyfill issued a detailed Request for Proposal
(RFP) to local financial investment advisors, excluding Kentucky Trust
Company.
 Due to ethical considerations, board members affiliated with a responding
firm were shielded from the review and deliberation process. In
particular, Vice Chairman Greg Caudill consistently recused himself from
any board or executive committee participation in this process.

 Eight (8) local firms responded to the RFP, and were reviewed
on these criteria:
 Adequacy of firm’s response to RFP questions;
 Nature of firm’s account management; and
 Amount of firm’s fee for services.
 Per the criteria, Treasurer Turbyfill and President/CEO Jody Lassiter
recommended two (2) firms with local ties for the board’s
consideration and selection:
 Community Trust Investment Services; and
 FNB Private Wealth Management.
 Presentations were then made by representatives of both firms to
the BCIF Board of Directors with the opportunity for questions.

 BCIF’s board equally split as to the best service given
different variables offered by each firm.
 Ultimately, FNB was selected after two votes because:
 The firm’s services would be provided locally in Danville vs. Lexington;
 Its investment philosophy was more conservative; and
 Its service fee was considerably less.
 At no time did any Board member question the process or
propriety of the Board’s action.
 Per the Board’s direction, FNB’s management is monitored
and reviewed on a periodic basis to assess investment
performance.

 Has Boyle County’s per capita personal income declined?
 NO. In fact, Boyle County’s per capita personal income (PCPI) increased
from $25,288 in 2001 to $30,686 in 2011, per the U.S. Bureau of Economic
Analysis. Annual growth was 2.0% in Boyle versus 3% in Kentucky and
2.9% for the U.S. See Boyle County BEARFACTS, 2011.
 Has BCIF refused to benchmark economic performance?
 NO. The BCIF Board heard but declined criticism of “per capita net
earnings” data presented to the Board because (1) per capita personal
income, not per capita net earnings, is a traditional benchmark for BCIF’s
economic development performance; and (2) a University of Louisville
report (published April 2012) which utilized data later corrected by the U.S.
Bureau of Economic Analysis. The report was reviewed in detail, and a full
briefing on the report and its incorrect data was supplied to the entire
Board.

 Benchmarking: The EDP Board of Directors took up the
issue of benchmarking performance of ALL EDP Partners,
including BCIF, in 2012. A “Performance Dashboard” was
created through the leadership of then-board member Ben
Nelson with key economic indicators approved by all Partner
boards. For example, BCIF’s indicators will include
unemployment rate, number employed, per capita personal
income, payroll tax revenues, and BCIF’s quarterly
employment census. This EDP Performance Dashboard will
be a dedicated page of the new EDP website to be launched
later this Spring.

 What has BCIF done for us lately?
 Total: (projects/reports from January 1, 2008, until today)
Jobs: 1,033 | Capital Investment: $201,144,741.00
 Expansions:
Jobs: 523 | Capital Investment: $79,972,741.00
 New:
 Completed:
 In process:
 Withdrawn:
See spreadsheet for detailed project/report listing, 2008 – 2013 YTD.

ADDENDA
 BCIF Question: Why is Mr. Hunstad in his private capacity as a
citizen pursuing appeal of BCIF’s rejection of his Open Records
request to the Kentucky Attorney General?
 April 2: Date of Mr. Hunstad’s ORR letter to BCIF, sent via certified
mail. BCIF President/CEO Lassiter was on family vacation during
the week of April 1 – 5.
 April 8:
 Morning: Lassiter received and responded via e-mail due to time
considerations to both of Mr. Hunstad’s known e-mail addresses that BCIF is
not within the definition of a “public agency” to which the Open Records
Act applies under KRS 61.870(1).
 Evening: Discussion/approval of the City Commission’s workshop with
EDP was on the Commission’s meeting agenda, which had been issued by
Friday, April 5.

ADDENDA
 April 14: A receipt was returned to BCIF that its e-mail response was
displayed at Mr. Hunstad’s personal e-mail address.
 April 15: Lassiter received an e-mail from Mr. Hunstad’s personal address
that he would be on vacation during the week of April 15 – 19.
 Quote: “I will get some general questions to you in time but won't likely provide
a comprehensive list of questions. . . . I appreciate your interest in getting any
questions I have answered. As you are aware, I had some questions on the MOA
for the Constitution Square, public funding of the BCIF, and to a lessor extent its
status as a non-profit. I will also have some questions on industrial recruiting and
negotiation of incentives.”
 ORR: There was no reference in Mr. Hunstad’s e-mail to his ORR to BCIF or his
intent to appeal BCIF’s denial of his request.
 April 22: BCIF received notice from the Attorney General’s Office that
BCIF’s denial of Mr. Hunstad’s ORR had been appealed to that agency.
BCIF has referred the appeal to its legal counsel, W. Banks Hudson.

EDP Presentation: Danville City Commission Workshop 4-23-13

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EDP Presentation: Danville City Commission Workshop 4-23-13