Nixon proposes new economic focus that might compete with DREAM program for funding
Monday, January 5, 2009
JEFFERSON CITY, Mo. -- In his first job plan, incoming Gov. Jay Nixon may be siphoning some money from one of the favored economic development initiatives of outgoing Gov. Matt Blunt.
The Democratic governor-elect, who succeeds the departing Republican governor Jan. 12, has proposed what he calls the Show Me Jobs initiative.
The first plank of the idea would create a low-cost loan program for small businesses financed by an existing 4 percent fee levied by the Missouri Development Finance Board on its tax credit recipients.
"To create the jobs of the future, small businesses must have access to affordable capital," Nixon's news release said while outlining his plan shortly before Christmas.
Left unspoken in Nixon's announcement was the fact that those fees already support an economic development program. They go to the Downtown Revitalization Economic Assistance for Missouri program begun by Blunt in June 2006.
When announcing the DREAM program, Blunt's news release said its goal was to increase property values, re-establish a cultural heritage, attract private investment "and, most importantly, to create good jobs for Missourians in downtowns all across our state."
Quite often, the employers located in downtowns are small businesses.
Thirty cities -- ranging from Strafford (population 2,136) to St. Joseph (population 73,912) and including Poplar Bluff, Sikeston and Cape Girardeau -- have been designated as DREAM cities since the program began.
The designation makes them eligible for help from the Missouri Development Finance Board to draft a downtown revitalization plan. The cities also get easier access to financial aid and services from the Department of Economic Development and the Missouri Housing Development Commission.
In the case of Cape Girardeau, for example, the state finance board contracted with a St. Louis firm to work on the city's downtown redevelopment plan. Cape Girardeau was in the first round of DREAM cities announced in 2006 and is nearing completion of its downtown plan, said John Mehner, a state finance board member who also is president and chief executive officer of the Cape Girardeau Area Chamber of Commerce.
In the meantime, Cape Girardeau already has received some state financial incentives, Mehner said.
The DREAM program's initial 10 cities have received about $44 million in public aid for downtown housing, construction, renovation and infrastructure projects, which has helped spur $205 million in private investment, according to figures from the Department of Economic Development.
But without the seed money from the state finance board, those dollar figures may not have been so large. The state board's financial help in creating a downtown redevelopment plan is the key to making the DREAM program work, Mehner said.
In the 2008 fiscal year, the finance board's fee generated more than $2.4 million.
A Nixon spokesman said the incoming governor is not trying to replace the DREAM program with his own economic development initiative nor diminish his predecessor's program.
"We believe the resources are available for both to continue," said Nixon spokesman Oren Shur.
Nixon has not set a total price tag for his small-business loan proposal. But Shur said the loans may be in the range of $10,000 to $25,000 per business.
Regardless, the two development programs would be drawing money from the same source.
If the finance board can afford to fund both the DREAM initiative and Nixon's small-business loan program, "then you've got a great deal from all sides," Mehner said, because the loans could help businesses while simultaneously returning a greater investment yield on the board's money.
But there is no guarantee Nixon's administration will continue the DREAM program long-term. Shur said it will be subject to the same performance review Nixon plans to use across state government to determine if it is efficient and effective and, if so, how much money it should get.