BEDC-GBIC STRUCTURE: A SQUARE PEG IN A ROUND HOLE?

By Juan Montoya
As city leaders come to the realization that the funds dedicated through the Greater Brownsville Incentives corporation through its subcontractor Brownsville Economic development Council to foster economic development in Brownsville are not yielding the results they envisioned.

In 1992, the citizens of Brownsville voted to establish a 4A Economic Development Sales Tax to fund the Greater Brownsville Incentives Corporation (GBIC), which was formed to oversee the disbursement of a ¼ cent sales tax collected in Brownsville. Its sister Brownsville Community Improvement Corporation shared with another  ¼ cent sales tax for quality of life improvements. Each corporation gets about $5 million annually. 

The GBIC board, appointed by the Brownsville City Commission approves funding for job creation incentives and various grant programs related to infrastructure and education. 

The Brownsville Economic Development Council (BEDC) was established in 1992 as well and is a quasi-governmental entity. The BEDC Board of Directors is made up of 33 members who volunteer their time and expertise to assist in the economic development efforts of the community. 

But it is really the nine-member Executive Committee of the BEDC that ultimately decides which projects to fund. It has become a clubby set, with some members openly doing business with potential clients and business prospects.  BEDC's three-year contract to recruit and vet manufactures and industry with the GBIC is scheduled to terminate this September.

The BEDC is paid by GBIC to the tune of $1.6 million for its operations and outreach efforts.

Representation on the larger board is made up of organizations including the Greater Brownsville Incentives Corporation, Brownsville Independent School District, University of Texas at Rio Grande Valley, Port of Brownsville, Cameron County, City of Brownsville, Brownsville Chamber of Commerce, Brownsville Public Utilities Board, and the BEDC general membership.

You'd think that after 25 years, the BEDC would have economic development down pat, but apparently t'aint so. In fact, the board is so huge as to be unwieldy and difficult to oversee. In fact, a report prepared by representatives from the UTRGV School of Business, the Brownsville Public Utilities Board and the Texas Southmost College Workforce Office has found that the relationship between the GBIC and the BEDC has been distorted for a number of reasons. The report states that both the GBIC and the BEDC have assumed roles that were never envisioned when they were formed.

Study members found that a lack of basic documents to gauge the BED's performance presented a major problem.

Former CEO Jason Hilts who resigned suddenly last month told them that there were no annual reports for the entity after 2015, although the bylaws require that one be generated each year. 

"To that end, we have no valid way of quantitatively evaluating BEDC’s performance during the course of its ongoing contract with GBIC," the report reads. Hilts, despite having a scant background in economic development, had been the BEDC's CEO since 2002.

The report noted that Another problem with the BEDC was the lack of follow-through with projects and noted that if information had been gathered and analyzed over a number of years it would have allowed for some form of trend analysis.

"Similarly, BEDC recently took on the responsibility of helping Keppel AmFELS apply for state 

funds from the Texas Enterprise Zone so as to diversify into the ship building business, but the application process has stalled and has yet to be completed," they wrote.

Other problems with the BEDC structure was that: 

1. The BEDC had not reviewed its bylaws for the last three or four years. As a result, they may be out of touch with all of the responsibilities the organization was created to assume, and have instead adopted new priorities not laid out in the bylaws.

2. The last time the BEDC had an annual meeting was in 2014 despite the fact that the BEDC bylaws stipulate that every September the organization will hold its Annual Meeting and, no later than 30 days after the Annual Meeting, the election of officers and the election of three directors to the Executive Committee will take place. The members of the Executive Board interviewed explained that they had held annual meetings in the past primarily for the purpose of “honoring someone” or “presenting a new board member.” Furthermore, the election of officers of the corporation and members of the Executive Committee have taken place on an annual basis but not as prescribed by the bylaws. Additionally...board training has been sporadic, with some board members feeling somewhat disenfranchised.

3. The current governance of the GBIC-BEDC relationship, as well as the internal governance of BEDC should probably be revisited. With regard to the GBIC-BEDC relationship, we can find no other economic development corporation in the Rio Grande Valley with a similar arrangement. The most prevalent model involves the EDCs being presided over directly by a board of community members who are appointed by their city’s elected officials.

4. As the reader may be aware, Brownsville’s model contains two layers of governance: the GBIC 

board, which is appointed by elected officials, and contracts with BEDC to perform economic development services. BEDC, in turn, has its own autonomous board.... As a consequence, GBIC was created to perform the relatively narrow role of dispersing City funds for economic development purposes. It has been argued to the committee that the present arrangement “insulates economic development from politics.” We have come to fear that the current arrangement insulates BEDC from the community.

5. With regard to BEDC’s own governance structure, its board is obviously too large to be functional, the report said. In order to address this dysfunction, the Executive Committee essentially serves as the board, and performs many, if not most of the board’s key functions. The justification for such a large board is that it allows BEDC to secure the participation of a wide spectrum of the business community and include representation from an array of key organizations. Based upon discussions with current and past board members, the present configuration may be resulting in more feelings of alienation than affiliation.

6. The study also stated that it was imperative that the City and community develop a comprehensive economic development plan, and save for changes resulting from a formal annual or bi-annual review, the City should stay focused on that strategic plan for economic development. (There is)... evidence of potentially worthy projects being abandoned owing to changes in, or losses of BEDC personnel (e.g., business retention initiatives, data acquisition and analysis, Latin American recruitment, and annual reporting efforts).

7. We feel it would probably be wise for the GBIC board to, in conjunction with the work outlined above, begin a national search for a GBIC executive director. Obviously, such a person would need to have extensive experience in community economic development. His/her first responsibility would be to oversee the completion of the work described above, work with the GBIC board in developing a resulting strategic plan, and implement said plan. Finally, at the conclusion of the process described above, GBIC would likely need to engage in a fundamental discussion of its structure and its relationship BEDC.