In Joint Meeting, Council Considers Future of Gilroy’s Economic Development Corporation

In what Mayor Al Pinheiro called “an open and frank discussion,” Gilroy officials and members of a business development group met Monday night to consider ideas for generating jobs and lowering Gilroy’s 16 percent unemployment rate.

It was the first meeting between the council and the Economic Development Corporation (EDC) Board since the proposal of increased collaboration during the council’s goal-setting session in January.

The council and EDC board discussed the continuing challenges for Gilroy after the recession, the formation of a long-term economic plan and the future of funding for the agency.

Some of those issues were outlined in a handout provided by EDC president, Tammy Brownlow, including that Gilroy faces unemployment beyond the average for the county and that nearly a quarter of its industrial properties are vacant.

On the other side of the coin, Gilroy has a large potential workforce and many available opportunities for businesses.

“We’ve tried to be different things over the years, but I think it’s important in this economy to look at what our assets are,” Brownlow said.

The corporation has helped numerous developments come to fruition over the years, and many at the meeting directly credited their efforts with bringing big-box stores to Tenth Street. Several of those stores are now top contributors to the city’s sales tax income.

Yet the corporation itself, born of the Gilroy Chamber of Commerce 17 years ago, is facing a financial crisis: The city's current two-year budget included reducing funding from $120,000 to $96,000 as part of a widespread response to the recession, and private contributions this year are lower than expected, according to City Administrator Tom Haglund and material from the EDC.

“The small amount of reserves that the EDC set aside a few years ago is being burned on a monthly basis,” said Brownlow.

 With an uncertain recovery looming, the question of increasing funding for the corporation was met with mixed response.

“That’s taxpayer’s money, and when we’ve been so careful with it and so tight with it over the past few years, now we’re just going to let it go?” said Councilman Peter Arellano.

Arellano suggested that the city consider maintaining its level of funding and pinpoint ways that their policies are impeding new businesses.

“You have to justify expenditures, whether it’s $50 or $5,000,” said Rob Oneto, a contributing business owner and member of the corporation’s board. "But in the end, as a company, we saw the value of doing so."

Developing a long-term economic plan for the city, one looking beyond the advent of high-speed rail, was a collaborative project supported at the meeting.

“To me, economic development is about the long haul,” said Councilman Peter Woodward. “Although nationwide we are seeing a very slow recovery, I continue to believe that we’re going to see a very strong economic recovery in Silicon Valley over the coming years.”

The corporation board agreed to help in the development of a proposed long-term economic plan.

“I think we need to have more of this in the future,” said Brownlow. “There needs to be a more formalized process for us to report what we’re doing to the council.”

Correction: The original timeline for the city's reduced funding to the EDC was incorrect. According to the City Administrator, funding was reduced for the current two-year budget that began in July 2009.