Madison blogosphere neighbor John Nelson expresses his hope that the promotion of Julie Gross from Chamber of Commerce director to Lake Area Improvement Corporation director means better things for Madison.

I want to be generous and look for signs that Gross’s appointment signals positive change. The press-release language surrounding her appointment at least suggests a repudiation of the Dwaine Chapel regime. The first time I met him, previous LAIC director Chapel told me he was brought here to “fix” Madison. He didn’t. He grew up in Spearfish. He lived in Brookings. But he never carried the lessons of those two successful communities to his work in Madison. Contrary to the delightful hyperbole of a 2007 newsletter, Chapel never “immersed” himself in Madison. He never even moved here, maintaining his residence in Brookings, where he finally landed a better job after six years stuck in the Madison depot.

Chapel’s depot office mate Gross is talking up and being talked up for her longtime commitment to and residence in Lake County. I can’t help getting the feeling that their bad experience with bringing in outsider Chapel solidified our local leader’s commitment to rejecting outside perspectives and hiring locally this time. I hope that Gross’s proven commitment to the community will bring a more committed quest for economic development that builds on Lake County’s strengths.

But is hiring Julie Gross really a change, or is it simply an affirmation of the status quo? (Remember, status quo is Latin for stuck in the mud.) Gross may have more perspective on boosting local retail. But her record doesn’t show a great deal of success in promoting retail from the Chamber perspective. The Chamber’s signature event, Crazy Days, has steadily declined over the past several years, and Gross has not found the magic formula to reverse that decline or the magic event to replace it.

Gross also shows little more appreciation for public input and participation than Chapel did. When I proposed hosting a “Speaker’s Corner” event during Crazy Days, Gross nixed the idea, expressing alarm that in such an uncontrolled setting, people might get up and say anything. And we sure as heck don’t want people saying anything in Madison.

Madison needs new ideas. I respect the idea of local wisdom being able to recognize local problems and come up with new ideas. But Julie Gross is a creature of the local establishment. And the local establishment has a poor record of receptivity to new ideas.

Hope for the best. Expect the worst.

Three weeks after applications closed, we still haven’t heard from the Lake Area Improvement Corporation whom it will pick to direct economic development efforts in and around Madison.

As we eagerly await the golden child to reverse previous LAIC exec Dwaine Chapel’s failures, Madison residents may wish to note the City of Sioux Falls’s advertisement for an economic development coordinator. Where Madison lets its economic development honcho operate in a quasi-public corporation that keeps its records secret and can’t be held directly accountable by taxpayers, the City of Sioux Falls makes its economic development coordinator a city employee.

Sioux Falls also pays that person half of what Madison’s economic development chief gets. Dwaine Chapel pulled down six figures for not doing much. The Sioux Falls economic development coordinator gets up to $2,135 bi-weekly, or just over $51K annually.

Jeepers: the LAIC should have been getting tons of applications.

The Sioux Falls economic development coordinator is also expected to make “downtown development… a key focus.”

So if Madison were to adopt the Sioux Falls approach, the city would get more accountable economic development efforts for half the price. And we’d do something about downtown.

Incumbent Madison city commissioner Nick Abraham gets the last of five candidate profiles in the Madison Daily Leader. He says just enough of the right things to make me feel comfortable with my Madison neighbors re-electing him tomorrow.

Commissioner Abraham offers cautious praise of the Chamber and the Lake Area Improvement Corporation. I’m uneasy with his statement that “A lot of what they accomplish goes unnoticed.” Why not use this interview to tell us some of those unnoticed things instead of expecting us to just imagine that the LAIC is doing wonderful things?

Abraham salvages his economic development commentary by sending perhaps the clearest signal a Madison politician that the LAIC expects too much from taxpayers:

However, Abraham said the partnerships among Madison, the Chamber and LAIC don’t mean that support needs to be universal.

“The city can’t be playing a major part with all of their projects,” Abraham said. “They need to realize that we don’t need to fund everything that they do.

“For example, they came and asked us to support about a third of Forward Madison II — and that’s a lot” [Chuck Clement, "Abraham Seeks Second Term with City," Madison Daily Leader, 2012.04.02].

That’s a lot—please, please tell me that we can interpret that comment as a signal that Abraham will not vote to give the LAIC more free taxpayer subsidies with no accountability… and that he will push his fellow commission members to follow suit.

Abraham mentions a couple of other policies, which is a couple more than some other candidates mentioned in their profiles. Abraham mentions the challenge of making urgent upgrades to the city’s water system as we struggle with maxed-out bonding capacity. He also mentions the need to strengthen the city’s revolving loan fund to support a downtown improvement project.

Off policy, Abraham makes an apt mention of his ability and willingness to talk to citizens while he’s at his day job:

Up to this point in his adult life, he’s worked as a mechanic at F&M Co-op in Madison, and it’s a job that gives local residents the opportunity to talk to Abraham about his other responsibilities as a city commissioner.

“People will ask questions more often than make complaints,” Abraham said. “It’s a very easy atmosphere for someone to ask for information.

“Many people find that asking informally, face-to-face is a lot easier than coming to a (city) meeting” [Clement, 2012.04.02].

With regret, I’ve had to ding Abraham in the past for being a little too open with some bigoted language about Muslims that isn’t acceptable from a public official trying to put Madison’s best face forward (language for which the commissioner subsequently apologized). But his comments above highlight an important sensitivity to the nature of his political job: as commissioner, he works for the voters, and when they ask him questions, he has an obligation to respond. He may be elbow-deep in grease and grit, fixing their flats or wrestling with fan belts, but he also recognizes that citizens may strike up useful conversations with him at the F&M shop that they won’t have the chance or the courage to start in more formal settings.

Nick Abraham is the only blue-collar worker currently serving on the Madison City Commission. He’s the only blue-collar worker among the five candidates on the ballot tomorrow. Abraham’s working-class background has likely contributed to his willingness to call out the crony capitalism that other commissioners so blithely cheer.

KJAM lets us know that the Lake Area Improvement Corporation has posted the opening for its executive director position.

The last LAIC exec, Dwaine Chapel, once told me that his job was, basically, to fix Madison. Having utterly failed, Chapel leaves that job description pretty much unchanged for the next exec. Interviewees, study for this essay question: Did Chapel fail because he lacked the skills or because the elites running Madison don’t really want full-throttle economic development that might disrupt the established order?

The LAIC lists the following qualifications:

• A four-year degree in a relevant field of study to include Public or Business Administration, Economics, etc.
• A minimum 3 years management and economic development experience
• Clear understanding of marketing, business development, real estate and commercial development, sales and leases, strategic planning, and negotiation
• Excellent verbal, written and presentation skills
• Strong analytical and problem solving skills
• Familiarity with budgeting, financial and tax reporting
• A high degree of organization with the ability to deal with a variety of tasks and constituencies
• Experience in supervising staff
• Experience with personal computers and Microsoft Office products
• Valid South Dakota driver’s license
• Volunteer governing board experience a plus

You know, aside from the second criterion, my résumé just might pass muster!

The posting does not list the salary, but for reference, job hunters, the last guy got six figures. Dicker hard, applicants!

If you’re interested in taking the next big swing at fixing Madison, you have until March 31 to e-mail you application letter and résumé to Kari Blom: Kari@MadisonWorks.com. You can also send hard copies to Lake Area Improvement Corporation, Selection Committee, P.O. Box 32, Madison, SD 57042.

And applicants, if you have any questions about how the LAIC operates, just click here for the Madville Times LAIC dossier. Nowhere else will you find as complete an account of the economic and political challenges you will face in trying to fix Madison.

I had the pleasure of attending the Spearfish Economic Development Corporation‘s annual meeting last night at the Spearfish Convention Center. They fed me free meatballs. Mmmm….

They also handed me and the couple hundred other people there a copy of their proposed budget:

Spearfish Economic Development Corporation proposed 2012 budget (click image to enlarge)

Compare that with the budget the Lake Area Improvement Corporation, Madison’s equivalent of the Spearfish EDC, submitted to the Madison City Commission last July 11:

(click image to enlarge)

The Spearfish EDC plans to spend $126,000 this year. $80,000 will come from the taxpayers. $46,336 will go toward administration—i.e., paying Bryan Walker to hustle for the city and to keep his stapler loaded.

Madison’s LAIC last year burned up $740,000. The $265,000 the LAIC took from the taxpayers in 2011—$140,000 from the regular Madison budget, another $100,000 as Madison’s last of five payments into the failed Forward Madison program, and $25,000 from Lake County—is more than double the Spearfish EDC’s entire budget. Madison’s LAIC spent more on salaries and other employee benefits in 2010—$156,848—than the Spearfish EDC spent on administration, recruitment/marketing, training, and business retention and expansion last year.

Overall, it appears that Madison spends nearly six times more on its economic development corporation than does Spearfish, and at least three times as much on salaries.

I invite reader assessments of whether Madison’s LAIC is producing six times as much economic development as the Spearfish EDC.

Lake County finished 2011 with a jump in unemployment. According to the South Dakota Department of Labor, December 2011 unemployment in the county jumped from 4.0% to 4.4%. Following a relatively normal seasonal pattern at the local and state level, both the number of jobs and the number of people in the local workforce shrank.

Five years ago, the Lake Area Improvement Corporation promised it would use $2.3 million in handouts from taxpayers and donors to maintain a status-quo job creation rate of 400 new jobs over the coming five years. In 2006, the average number of jobs in Lake County was 6525. In 2011, the average number of jobs in Lake County was 6277.

In other words, Lake County had 248 fewer jobs when Forward Madison finished than it did when the program started.

Oh, but that darn recession must have thrown a monkey wrench in the Madison works, right? That’s the excuse LAIC cheerleaders Jeff Nelson and Dick Ericsson offer. We’ve had this conversation before, but let’s update my September calculations with the full workforce and employment figures for 2011:

Recall that the recession never actually happened in South Dakota. But whatever impacts from the national recession may have trickled into South Dakota, the statewide job tally still increased by 1.46% over the last five years. Lake County’s behemoth neighbor Minnehaha County was able to grow its job count 3.45%. Even our dusty neighbor Miner County managed, like the state, to increase both its number of jobs and the number of people on hand to fill them.

During a period of growth for the entire state, Lake County saw its workforce decline 2% and the number of jobs available drop 3.8%.

This isn’t spin; this is cold hard numbers. Forward Madison sent Madison backward.

Dwaine Chapel confirms: Brookings has better jobs than Madison

Oh, and SDSU and Brookings were doing so well…

Dwaine Chapel has resigned from the executive directorship of the Lake Area Improvement Corporation. Chapel is leaving one of the few six-figure salaries in Madison to work where he lives, in Brookings, directing the SDSU Growth Partnership and the SDSU Innovation Campus. He replaces Teresa McKnight, who resigned last October to head the University of Montana Research Park in Bozeman. Chapel’s contract is one year; the Growth Partnership board is conducting a national search for a permanent director.

Update 18:25 MST: According to the SDSU Growth Partnership’s 2010 990 filing, the organization paid former exec Teresa McKnight $143,022. The LAIC cleverly hid Chapel’s salary on its 2010 and 2009 filings, but the LAIC’s 2008 990 listed Chapel’s pay and other compensation as just about $113,000.

As the LAIC board prepares to meet next week to finalize a transition plan, let us pause to recognize the achievements the Lake Area Improvement Corporation has made under Chapel’s leadership:

…and you can see and Feel the Surge(!!!) of the “Forward Madison 2″ launch…

My neighbor Ashley Kenneth Allen attended the Lake Area Improvement Corporation’s dog and pony show promoting its “Forward Madison 2″ economic development initiative, which is counting on taxpayers to pick nearly a third of the tab for attempting to bribe businesses into moving to or expanding in Madison. When Allen saw the list of businesses who get handouts from the LAIC, he got to wondering if maybe a majority of the Madison City Commission has a conflict of interest in voting to transfer hundreds of thousands of dollars to the LAIC:

Once again, the Lake Area Improvement Corporation (LAIC) is asking our Madison City Commission and Lake County Commission for additional funding, this time for the new “Forward Madison 2” program. The original program lasted 5 years and was led by the LAIC. Executive Director, Dwaine Chapel, has presented a “pamphlet” to the City Commission along with a request for a 5 year, $625,000 tax payer funding commitment from the City of Madison for this “recharged and refocused” program. At this time, there have been no specific plans, detailed financial records, or business plans provided to the public. I have been told that local officials have seen detailed records. LAIC officials state they will focus on Job Creation/Retention, Housing, and Retail Development. It may be a suitable use of taxpayer dollars, but I expect that the City and County officials will fully evaluate and obtain the detailed plans before voting on such funding.

However, this letter is not about the successes or failures of the original “Forward Madison” program or how the LAIC managed that program. I am writing today to discuss issues of “conflict of interest” and “crony capitalism”. The LAIC is a private development corporation, even though it receives tax payer funding through the City of Madison and Lake County. Because the LAIC is a private corporation, they do not disclose what specific money and or resources are being given to other local businesses for economic development.

A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other. The presence of a conflict of interest is independent from the execution of impropriety. Therefore, a conflict of interest can be discovered and voluntarily defused before any corruption occurs.

Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth. Self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it can corrupt public-serving economic and political ideals, even on a local level.

A research and analysis document entitled “ROI Benchmark Analysis: Forward Madison” was prepared by the NCDS Inc. for the LAIC and outlines the efforts made in the original Forward Madison program. Page 9 of this document lists the companies that were “assisted” over the five year program. We do not know from the report if this is a financial, “in-kind”, or other type of assistance. Three of the 57 businesses listed include East River, Rewards Runner (owned by Bulldog Media), and Prostrollo’s. Again, the report does not indicate what type of assistance was given.

Last fall, I asked the City Commissioners and Mayor to abstain from voting on any funding for the LAIC if they are currently or previously employed by a company that works with or has been assisted by the LAIC. For the record, Scott Delzer is employed by Bulldog Media, Karen Lembcke is employed by Prostrollo Auto-Mall, and Gene Hexom was employed by East River for 36 years. The commissioners did not feel there were any conflicts of interest and all of them voted on funding requests from the LAIC. According to the LAIC’s report, the commissioners I have listed have had work relationships with companies that were “assisted” by the LAIC Forward Madison program between 2007 and 2011.

As stated above, there does not have to be any impropriety for there to be a conflict of interest. I am not accusing anyone of impropriety or wrong doing. However, I believe these public officials should refrain from voting on any budgetary and policy items if there is even a slight potential of a conflict. When this does not happen, it can lead to improprieties and appearances of crony capitalism. It would be ethically correct to recuse themselves and abstain from voting on issues regarding the LAIC. At this time, I am not advocating voting “yes” or “no” on these requests. I want a fair and unbiased vote on this request.

I am unable to find a code of ethics on file for our City Commission. If there isn’t one, it needs to be created. We need to include language that prohibits public officials from voting on budget and policy issues that can benefit them individually or the businesses that they represent.

I believe these specific commissioners should abstain from voting on the matter of giving $625,000 tax payer dollars to the LAIC over the next five years. I would expect Lake County Commissioners to act in the same manor (if any of them have a potential conflict of interest).

The merit of the funding request for the “Forward Madison 2” program is a different argument for a different day.

Sincerely,

Ashley Kenneth Allen

Mr. Allen also recorded last week’s LAIC meeting in three parts. Put on your hip-waders and enjoy:

Part 1:

Part 2, wherein Madison advertising jumps the shark. “It’s Time to Feel the Surge!… Recharge! Move Forward! Jolt into the Future and Envision a Bigger, Stronger, Modern Madison! It’s Time to Execute, and You’re Taking Charge! Right Now, You Have the Power to Shock Forward Madison 2!” Yes, well, maybe shock therapy is Madison’s solution:

And at 40 seconds into Part 2, when you follow that marketing flash and dash with, “I suppose by now you know that the co-chairs of this group are Moe, Larry, and Curly,” well, I really don’t need to blog any commentary. Thanks, Curly.

Part 3, wherein any shreds of energy manufactured by that video opening have dissipated entirely. The speaker gamely asserts that anyone who says Forward Madison failed will hear a different story from the managers of the companies who got handouts from the LAIC. Why yes, I’m sure we would….