Jul 16 2012

Where to spend money to make money?

Published by at 7:27 am under Idaho

Sayer
Idaho Commerce Director Jeff Sayer, left, listens to a Rotarian express himself following a luncheon presentation at the Red Lion in Pocatello. (photo/Mark Mendiola)

 

mendiola
Mark Mendiola
On Eastern Idaho

A column from Pocatello writer Mark Mendiola.

Idaho Department of Commerce officials who attended the Idaho Economic Advisory Council’s first meeting in Pocatello in about five years updated council members on economic development initiatives throughout the state and gave input on how the council might best allocate more than $6 million in Community Development Block Grants.

The flexible CDBG program is administered by the U.S. Department of Housing and Urban Development (HUD) to provide communities with resources needed to address a wide range of respective needs. The Idaho Economic Advisory Council makes recommendations to Gov. Butch Otter on block grant funding applications and reviews Industrial Revenue Bond dispersals.

At their July 11-12 meetings, council members unanimously endorsed providing $399,000 to Bonneville County for a Melaleuca lift station to develop 6,600 acres of prime commercial land and $400,000 to Burley, leaving about $4.7 million for future allocations. They opted for the time being not to fund Kimberly’s request for downtown improvement funding.

Noting the state is only two weeks into its new fiscal year, Idaho Commerce Director Jeff Sayer cautioned the council members not to prematurely approve large sums of allocations in the event prospective new projects in Idaho need start-up financing. Council members agreed to lower typical grant allocations from a maximum allowable $500,000 to an average $350,000, depending on circumstances.

Sayer said the council, in a sense, manages an investment portfolio and shoulders a fiduciary responsibility. Significant projects in their own right are coming to Idaho, he said. “It’s important for the council to step cautiously into the perspective of only funding things in front of you. … We’re in a transition period. … We can’t afford to give $500,000 to everyone. Please help us make this money stretch. There are a lot of cool things coming.”

Enhancing downtown developments throughout the state is one of the most viable means of moving Idaho forward, he said.

Gynii Gilliam, Commerce’s chief economic development officer, noted that Burley boasts larger sewer capacity than Twin Falls or Jerome to accommodate potentially large employers. She mentioned there’s a possibility a large business may announce in mid-August that it is locating in Burley. “It would add value to the entire ag industry,” she told the council, adding it could be included in a grant application if it materializes.

Gossner Foods Inc. runs the Magic Valley swiss cheese plant in Heyburn, and Gem State Processing operates a large dehydrated potato flake plant in Burley. Two to three dairies feed Gossner’s California operation. Its Logan, Utah, cheese plant is at full capacity.

There are an estimated 65,000 head of dairy cattle in the greater Burley area, said Kelly Anderson, an advisory council member who is regional president for Zions Bank in Burley. Idaho dairy farms produce an estimated 34 million pounds of milk a day.

Anderson was elected the council’s new vice chairman at the Pocatello meeting. Corey Smith, Idaho Falls founder of PharmEase, a long-term care pharmacy, was elected its new chairman, succeeding Janice McMillian, a Moscow agriculture professional whose term expires.

Anderson noted the dairy industry continues to struggle after doing really well until 10 years ago when it was “dropped to its knees.” Chobani’s location of a yogurt plant that will employ about 400 on 190 acres near Twin Falls, plus the opening of cheese plants, have helped restore viability to the industry, he said. “If the industry fails, it will hurt the economy dramatically.”

Gilliam said nine new business enterprises employing 10 to 100 are ready to launch at various Idaho sites, and nine other companies are engaged in negotiations for property worth between $2 million and $100 million. The businesses entail manufacturing, agriculture, mining and finance. Annual wages for Idaho mining jobs average $66,000.

About 60,000 Idahoans remain unemployed with a higher percentage of those in the 25-30 age range without jobs, Gilliam said, stressing she hopes Commerce’s economic development efforts will find them work.

Despite Hoku’s recent layoff of 100 workers at its solar polysilicon plant in Pocatello, its stock value dropping to 10 cents a share and its Nasdaq delisting, its owners and managers are optimistic they can resolve their issues, Gilliam said.

Sayer said tourism in Idaho is up 7 percent over last year and the state’s exports have surged. Emerging sectors include aerospace, “rec tech,” ammunition, arms and outdoor clothing. The government sector is a driving economic force in the state with the Idaho National Laboratory, universities and hospitals major employers, he said, emphasizing the state enjoys some of the lowest energy and labor costs in the nation.

When Otter became governor, Idaho’s annual budget totaled $3.2 billion, but it is now at $2.2 billion, a 32 percent decrease, Sayer pointed out.

John Regetz, Gilliam’s successor as Bannock Development Corporation executive director, praised ATCO for recently opening a modular housing operation inside the Gateway West Industrial Center in Pocatello. Its units are destined for Canada, North Dakota and Wyoming. There were 900 applications for its 190 jobs. Ninety percent of its materials will be bought locally.

Union Pacific’s 150th anniversary punctuates the fact Pocatello remains the “Gate City” where freight converges via rail, airlines and intersecting interstate highways. Pocatello also has the potential of being designated an inland port.

Regetz cited the $200 million Portneuf Medical Center, Allstate’s new call center, a $650,000 I-Gem grant to the Idaho Accelerator Center, Herberger’s new store in the Pine Ridge Mall, the Pocatello Heinz food processing plant’s designation as the corporation’s top factory and Verizon’s plan to bring 4G service by the end of the year as advances in the area.

Dan Cravens, Idaho Department of Labor regional economist, told the advisory council that Bannock County’s 7.3 percent unemployment rate is slowly tracking downward and is below the state rate of 7.8 percent and the national 8.2 percent rate. Manufacturing related to agriculture has been a major stabilizing factor in the region. The county’s job postings are up in 2012.

The labor department anticipates health care, transportation, educational, scientific, technical and financial services, utilities, real estate and hospitality professions will be growth sectors through 2018, Cravens said. “However, we are not out of the woods, and it’s going to be a slow climb.”

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