Healthy chamber is critical to Escondido’s economic future

For longer than anyone can remember, there have been chambers of commerce in place to protect and promote business enterprise within their areas of influence.

In fact, chambers predate the republic's founding with the chartering of the first such organization in New York City in 1768 by 20 merchants.

In the years since, such business organizations have spread out into communities of all sizes and locales, flourishing in varying degrees, depending on the general economy, the community’s locale and the extent to which there are physical and political resources in place to accommodate commercial and industrial growth.

In recent decades, however, chambers have had to cope with the changing community dynamics and business models of their members and look for new and better ways to serve them. They’ve also had to ratchet up their advocacy efforts to counter mounting opposition from status quo groups whose view of an ideal community is best depicted by frayed and yellowed snapshots from years past showing Piggly Wiggly grocery stores, service stations, auto dealers, florists and muffler shops next to each other along downtown main streets. They’ve not wanted much to do with modern land zoning approaches that better accommodate such uses, lest zoning products such as auto parks, malls, business parks and the like attract more businesses and residents.

It’s been a tough road for chambers in the recent economic downtown. Some, however, are doing fairly well. Case in point: the San Diego North Chamber of Commerce which represents employers with sizeable workforces along the Interstate 15 corridor as well as entrepreneurial enterprises poised for growth.

In Escondido, however, there aren’t the defense, high-tech and cutting-edge companies in abundance. The city’s four largest employers are public agencies – the two school districts, the city itself and its hospitals. There are plans to develop sites for life science and other cutting-edge uses, but meanwhile, the city’s current business contingent contains the more traditional small and medium-size companies.

Escondido’s chamber has struggled the past few years, trying to balance declining membership revenues, brought about by the economic downturn, against the continuing costs to keep the doors open. Two years ago, in an effort to spread its mission wingspan, the chamber obtained a city stipend to operate a convention and visitors center, aimed at attracting people and groups to its local offerings.

The bureau’s partnership with the city’s Economic Development Division is now working to organize the first leg of the Amgen Tour of California Bike Race on Mother’s Day. Four years ago, the city hosted the final day of the race with tens of thousands of hungry and thirsty bicycle race fans lining its route along downtown and neighborhood streets and beyond.

Despite its role in helping organize the Amgen event and champion other economic development wins in recent years, the chamber still needs additional assets; chief of which is access to its equity in a relatively new building and property.

The city had owned the north Broadway parcel as well as the dilapidated headquarters building, leasing it to the chamber for $1 a year before selling it in 2004 to its tenant for a bargain $4,500. Shortly thereafter, the chamber raised monies and secured debt financing to raze the structure and erect a new headquarters building at a cost of about $750,000. Today, informed sources estimate the value of the improved property ranges between $850,000 and $900,000.

To help cure its financial ills, the chamber can either try to sell its property, fully recognizing the location and use would have limited appeal a to a typical commercial property buyer, or try to find a sale-leaseback arrangement in order to convert its equity to cash and remain on the site as a tenant.

The most likely landlord prospect is the city. Next month the city council will consider whether the city should buy the chamber building and property for $550,000 and lease it back at $3,100 a month for 20 years, yielding a $717,000 return on principal, plus interest. At the end of the leaseback, the property would revert to the chamber.

Critics are calling the proposal a “sweetheart deal,” claiming the city has no business buying a property to prop up a non-government enterprise and that the $550,000 can better be used to restore the recreation and other services that fell prey to budget cutbacks in recent years. While it’s a good rule of thumb that government bodies resist using tax monies to rescue non-government entities, there’s an unintended consequence in not doing so that needs to be taken into account in this case.

For one thing, a relatively healthy chamber reinforces a city’s economic development efforts by signaling a more robust economic vitality to prospective employers looking to locate in the community. A business citizenry actively engaged in organized economic development attracts the very generators whose sales and property tax revenues and local spending can replenish city coffers to levels necessary to restore services cut back during the downward tax revenue spiral of recent years.

Critics and skeptics need to keep in mind the proposed sale-leaseback is not a handout or gift of public funds. Plain and simple, it’s a real estate transaction that helps to make sure Escondido’s “Open for Business” sign stays lit.

Daniels, principal consultant of Dick Daniels Public Relations, has been a public relations practitioner for 35 years and was an Escondido city councilman from 2006 to 2010.

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