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14 Nov 2015

A Precarious Partnership: Some Cities Are Ending Support of the Valley-Wide Business-Development Organization

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Joe Wallace, the CVEP chief innovation officer and managing director, addresses the audience during the 2015 Coachella Valley Economic Summit. Joe Wallace, the CVEP chief innovation officer and managing director, addresses the audience during the 2015 Coachella Valley Economic Summit. Kevin Fitzgerald

At the recent 2015 Coachella Valley Economic Summit, hosted by the Coachella Valley Economic Partnership (CVEP), roughly 700 representatives of the valley’s elite businesses and employers listened to rosy reports about the current national, state and local economy.

According to presenter Michael McDonald, of Market Watch LLC, job growth in the valley in 2015 was at its highest level since 2005. Employment in the leisure, hospitality and health care sectors is at 15-year highs, while hiring in the professional/business services sector is higher than it has been since 2008. Median home prices have rebounded to match prices in early 2008, when they began the free-fall precipitated by the widespread economic downturn.

It was a good day for CVEP, founded in 1994 “to promote a diversified, year-round economy by facilitating programs that stimulate job creation in key industries through business attraction, retention and expansion, and unite business and education leaders to create well-trained and educated future workforce.” CVEP published its first Economic Blueprint, described as “an ambitious, forward-thinking, market-based strategy to advance the region through the downturn (of 2009-11) and position it for long-term growth and prosperity,” back in 2009.

“The Coachella Valley is kind of an oasis that’s friendly to business (in a way) that you don’t get in other parts of our state,” CVEP’s director of marketing, Steven Biller, told the Independent in a recent interview. “CVEP can do things as a group and as a region that the cities can’t do individually, because they don’t have the budgets or our negotiating leverage.

“The cities expect us to bring them business and create jobs. That’s how we’re judged. And we’re trying to get the valley workforce built up to be able to take those jobs.”

CVEP has adopted a three-pronged approach to achieve these goals: Workforce Excellence, an effort to improve the local workforce through advanced educational and career opportunity; the Small Business Development Center (SBDC), which assists startup and established businesses with financial planning, capital, marketing, sales, human resources, technology and more; and the iHub, which launches businesses and hopefully creates local high-paying jobs.

CVEP officials claim these efforts are paying off. At the SBDC, since 2010, more than 355 jobs have been created, with 223 jobs retained and more than $25 million in loans and equity generated. At the iHub, more than 30 companies have received assistance, resulting in 100-plus new full-time jobs. Through the Workforce Excellence program, 136 business organizations have engaged with the valley high schools to impact career and college aspirations of 3,331 students—while providing 2,152 scholarships.

“We have a low college-attendance rate here in Coachella Valley, and CVEP is fighting that,” Biller said. “We give out between 300 and 325 college scholarships a year to kids going to community college and university. They all have to be seniors, and they have to demonstrate financial need. Right now, most people who apply and qualify are getting the scholarships, because we tend to have more scholarships available than we have kids applying for them. That’s a big story: There’s so much money being left on the table, it’s crazy.”

The average value of the available scholarships is $2,500 per semester to a student attending community college, and $5,000 per semester to a public university student.

While the local economy is doing well, however, not all is well in CVEP’s world. Back in 2009, five-year funding agreements were reached between CVEP and Coachella Valley’s nine independent municipalities. Several of the cities have since reduced their funding commitment to CVEP—or eliminated it completely. Coachella, La Quinta, Indian Wells and Desert Hot Springs discontinued the funding, while Cathedral City ceased specific support of the iHub program, but continues its $25,000 annual contribution to CVEP overall.

Representatives of Indian Wells, Coachella and Cathedral City expressed a recurring theme: City budget shortfalls forced the funding curtailments.

Indian Wells City Manager Wade McKinney told the Independent: “The city’s economic position has been significantly affected by the recession and by the loss of redevelopment, and so our support to many Coachella Valley organizations was eliminated. We created a community grant program with a fixed funding level of about $250,000, which increases consistent with city annual revenue increases.”

Would CVEP would be eligible to receive any of that available funding? “I believe they are eligible; you just have to be a non-profit, but I don’t believe they’ve applied to us for any grants,” McKinney said. “It’s certainly very competitive, and we receive lots of applications.”

CVEP’s Biller had a different take: “Indian Wells can find the money, but they just don’t want to,” he said. “Now they should, because what about all the people working in their resorts? Do they want good hospitality and hotel and restaurant work staff?”

Coachella City Councilmember V. Manuel Perez explained: “What caused us to make the unfortunate decision to opt out of CVEP for 2016 was the need for budget cuts. We had to cut our fire and police budgets, so we felt compelled to make cuts in other areas as well. Unfortunately, CVEP was one of those.”

Biller perceived a somewhat different cause for the Coachella City Council decision: “In the cases of La Quinta and Coachella, which just dropped their funding support, they’re more interested in retail business development, and we are not a retail organization except, through the SBDC. So those two cities are going to take the $10,000 each that they were giving to CVEP annually and make their own strategic choice to create a new entity they call the East Valley Coalition, and do their own retail outreach. The East Valley Coalition happens to be based in CVEP’s Indio office. So, although it sounds antagonistic, it’s not. These cities need to put their dollars where they think they’re going to get the most impact.”

Biller said he hoped cities would see the light and begin funding CVEP again at some point.

“Hopefully, in the future, people will understand that they should be part of a regional strategy, because a rising tide lifts all boats,” Biller said. “We’re not going to stop providing scholarships to the kids in Coachella and La Quinta. We’re not going to stop serving businesses that come to us. We’re not going to stop anything. That would be crazy, because it goes against everything that CVEP is about.”

Coachella’s Perez agreed with Biller. “This new East Valley Coalition’s main focus will be economic development in the eastern Coachella Valley, which is one of the priorities of the new Coachella City Council,” Perez said. “But we want outcomes that we can measure for success. It is my hope and the hope of the city that, after this year, we go back to CVEP. This is not a long-term decision.”

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