Alderman Nancy Allen,

For clarification I have rearranged your exact words into 10 points or questions. Two items, number five and seven, have two sub-points.

Here are the questions and comments from your July 26th email.

1. How much are the dues for your Board members?

2. Can anyone be on the Board if they pay the dues?

3. Does it seem a conflict to anyone for a Council member or newspapers to be on the FEDC Board?

4. From listening and questioning at our first requested meeting last month, it seemed to me that the FEDC is primarily, with a few exceptions, made up of rich men who appear to be deciding what is best for Fayetteville in a vacuum.

5. I noted that in one of your power point slides that you had five things that "We Have All Agreed Upon".

A. How was that determined? Why wasn't the Council consulted?

B. We do not all agree with all those things, particularly the location of the high school. Your Board wants the high school built out in the western part of town. Indeed, the Council voted 6-1 for it to remain in the center of the city, but this is ultimately the decision of the Fayetteville School Board.

6. Why hasn't all the Council been involved, updated, asked for their input, etc. since the FEDC's inception, not just since our request for a meeting last month?

7. It has always been my impression that the Council was the elected body to represent the City, the body to make decisions for the citizens.

A. We meet publicly. It is troublesome to me that the FEDC does not meet publicly with media in attendance. That might make it appear that they are making decisions for the City behind closed doors.

B. I understand big catches, like "the one that got away" must be kept quiet during negotiations, but what about other business?

8. I asked, at our last meeting, what industry, other than Biobase, and how many employees have been brought into Fayetteville since 2004 and you did not have those figures. Would you please get them for me?

9. How has the function of the Chamber of Commerce changed, if at all, since the FEDC was formed?

10. How does Ray Boudreaux's job connect with the FEDC, if at all?

I welcome the opportunity to answer your questions. You have done a good job of asking not only your own questions but also questions from your constituents. I hope this proves to be a good first step in a series of positive dialogs that result in a better understanding of why and how the City Council, the University of Arkansas, and the Chamber of Commerce formed a partnership and created FEDC.

Below are your questions or comments in black ink. My answers or comments follow in blue ink.

1. How much are the dues for your Board members?

FEDC has 80 members. (A complete list is on our website at http://www.fayetteville.com/about_us/current_membership

There are two levels of investment for people or businesses to join FEDC. Those that join at $5,000 per year or above ("Board Members", not to be confused with the EXECUTIVE BOARD) elect six people from that level to represent them on the Executive Board. Those that join at less than the $5,000 level ("Members") elect two people to represent them on the Executive Board. There are 8 elected executive board members serving two year terms.

In addition there are three by-position voting members on the Executive Board, i.e. the Mayor of Fayetteville, the Chairman of the Fayetteville Chamber of Commerce, and the UA Chancellor. (The Chancellor has appointed Phil Stafford, President of the University of AR Technology Development Foundation to represent him at our board meetings)

In addition to the 11 voting members (8 elected by the paying members plus the three by-position executive board members) FEDC has three by-positions, non-voting ex-officio members. Ex-officio members are:

Ray Boudreaux, City Economic Developer and Drake Field Manager
Bill Ramsey, President of the Fayetteville Chamber of Commerce
Kathy Deck, Director of Center for Business Excellence and Research

This information is on our website at http://www.fayetteville.com/about_us/fedc_executive_board_of_directors

Anyone can be a FEDC member if they pay their dues. To be on the executive board you must be elected by your FEDC peers or hold a by-position post. We have members from as far away as Eureka Springs.

3. Does it seem a conflict to anyone for a Council member or newspapers to be on the FEDC Board?

The Mayor is a by-position voting member. Robert Rhoads, representing the Hall Estill Law Firm has been elected to a voting position on the board by his peers at the Board level. NWA Times is a member but are not on our Executive Board nor have they nominated anyone for election. FEDC does not see a conflict but are willing to talk to anyone that does see a conflict. Our organization is setup in accordance with the rules and regulations of a 501 C (6) organization and in compliance with the states FOIA. The City, Chamber, and UA are all signatories of our by-laws.

4. From listening and questioning at our first requested meeting last month, it seemed to me that the FEDC is primarily, with a few exceptions, made up of rich men who appear to be deciding what is best for Fayetteville in a vacuum.

It's virtually impossible to make a decision in a vacuum in Fayetteville thanks to the excellent job the NWA Times does in reporting everyone's position on a myriad of issues. Public access TV also provides volumes of information. It's my opinion that the businessmen you refer to are among the very best informed in the community. To be a successful business person they must fully understand the business environment they are in and have the pulse of the citizens that make up their customer base be that local or global. Our Executive Board fully understands that in Fayetteville there is a very wide variety of view points on economic development (E.D.). From what I've seen, public opinions range from going backwards to the good old days, to no growth, some growth, and a lot of growth. Another point to be made later is that FEDC members and all of the Executive Board understand that E.D. issues in Fayetteville, and indeed in all communities, rest on the decisions City Council makes. FEDC has no authority to make decisions. City Council has the ultimate authority and responsibility to foster or throttle E.D. activity that funds local government and our public school system.

5. I noted that in one of your power point slides that you had five things that "We Have All Agreed Upon".

A. How was that determined? Why wasn't the Council consulted?

I believe you are referring to one or both of these slides below. The whole purpose of these slides was to consult with the city. I selected these very basic points as a place to start discussion. They are not set in stone. It was my impression that all agreed. Which point(s) below do you not agree with?

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(Briefing Slide)
Points to Agree On

• Property tax revenues for our schools are running $3-4M short (3-4 mil) without consideration for a new high school.
• Sales tax revenues are down, they need to be closely monitored, and if sometime in the future City Council considers raising their mil rate that must be closely coordinated with the school board.
• The best way to fix this is to increase tax revenues. (Note: Recall the clarification and discussion on this at our meeting following Alderman Thiel's question on raising taxes. What we mean here is "GROWING" the tax base with new business and industry, not raising sales or property tax.)

(Briefing Slide)
Points to Agree on to Grow the Tax Base

• Leverage our greatest strength -- UA
• Cluster of Businesses centered on green technology.
  - Sustainability Center of the Universe
• Recruit more P&G type companies
• Garden in our back yard
• Recruit manufacturers (targeting those that bring research) that are compatible with Fayetteville
• A diverse economic base is most sustainable

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Question 5, Part B.

B. We do not all agree with all those things, particularly the location of the high school. Your Board wants the high school built out in the western part of town. Indeed, the Council voted 6-1 for it to remain in the center of the city, but this is ultimately the decision of the Fayetteville School Board.

Please see the attached FEDC letter dated June 1, 2007, to the Fayetteville School Board, copied to City Council. FEDC does not say "FEDC wants the high school built out in the western part of town." FEDC's main point is, given the current funding shortfall even before the cost of a new high school is factored in, fiscal reality indicates that the current high value location with too few acres available to build a 21st Century School should be sold and that money used to help offset the cost of a new high school-where ever that is. With the highest school millage rate in NWA, FEDC believes it is prudent to keep millage rate as low as feasible otherwise we will not be competitive.

6. Why hasn't all the Council been involved, updated, asked for their input, etc. since the FEDC's inception, not just since our request for a meeting last month?

As seen in question three, the City was one of the founding fathers of FEDC. Following the advice of the Ticknor Report the Mayor is a voting member. He brings the perspective of the City Council to every meeting although he can not speak for the Council. Robert Rhoads also brings City Council and a business perspective to our meetings and of course he doesn't speak for the other council members. The City Council has been very involved with every step in the BioBased project and briefed on other projects including some information on Project Star. As indicated by Alderman Gray at our last meeting my door is always open to City Council members.

7. It has always been my impression that the Council was the elected body to represent the City, the body to make decisions for the citizens.

You are 100% correct. Every economic developer understands that neither he nor his board has any authority to make decisions for the governing body. All of my executive board members know and understand this. All FEDC can do is bring E.D. projects to City Council for approval when the time is right for our customer. We need to work very closely with council so that we don't bring something forward that is not enthusiastically approved. That was the purpose of "What Can We Agree on?" Here's the bottom line. There few, if any, successful ED programs that are not strongly supported by the governing body and the vast majority of the citizens. City Council needs to give FEDC specific guidelines on how you want us to grow our tax base. As an example what type of business and industry should FEDC pursue on behalf of the city? Would you and the rest of City Council consider incentives for say a targeted green business that would build a LEEDS certified facility?

A. We meet publicly. It is troublesome to me that the FEDC does not meet publicly with media in attendance. That might make it appear that they are making decisions for the City behind closed doors.

FEDC simply can not make a decision for the city. At some point every project becomes public and City Council makes the final decisions. However, we need your help in guiding us on what to recruit because the ultimate black eye for a community is to recruit and court a company for a year or more only to have it crash and burn in the council chambers.

B. I understand big catches, like "the one that got away" must be kept quiet during negotiations, but what about other business?

Small businesses, trying to buy property as an example, are just as eager as large corporations to keep their business matters under wraps until their timing is right to go public. All big and small businesses must at sometime go public for zoning, building permits, water and sewer hookups, paying impact fees, getting approval for incentives if applicable, etc. There are exceptions. As an example, Biopure, a Bio-pharmaceutical company out of Cambridge, MA made no secret of their desire to build a $150,000,000 manufacturing plant somewhere in the continental US. See www.biopure.com Biopure sent out over 5,000 RFP letters to all 48 states. Every Chamber of Commerce and every E.D. organization in America had a shot at that very open, high dollar project. But, going public right out of the chute was the customer's decision.

8. I asked, at our last meeting, what industry, other than Biobase, and how many employees have been brought into Fayetteville since 2004 and you did not have those figures. Would you please get them for me?

These numbers are very hard to accurately track. Some E.D. organizations shoot at everything that flies and claim everything that falls and never count lost jobs. In reality, FEDC can never claim they are the sole organization that landed a set of new jobs because it's always a team effort and ultimately the credit goes to the City Council that sets the business environment and approves the projects that create the jobs. Zoning, incentives, and final project approval rests on the shoulders of City Council. BioBased now has 70 employees. The AMP employees 30 people during their season. The Henningsen Cold Storage Company would have invested approximately $30,000,000 and created 35 jobs however that project was denied by City Council. Although it is difficult to quantify, FEDC touches approximately 80% of the new restaurants, hotels, and retail stores through initial inquires for demographic data, available land, available commercial and retail space, warehouses, and motels/hotels. Every large hotel must have an independent marketing analysis to get loan approvals. Those consulting firms always call, most likely meet with us, or go to our website.

Two things that limit our success has been lack of industrial property and wet lab space.

9. How has the function of the Chamber of Commerce changed, if at all, since the FEDC was formed?

Their function has not changed, except they are not the lead agency for ED. They are a vital part of the team on every project-as are the city and UA.

10. How does Ray Boudreaux's job connect with the FEDC, if at all?

Ray is a very valuable member of our team. He is a non-voting, ex-officio, Executive Board Member. Ray played a key role in the formation of FEDC including setting up meetings and conference call with Ticknor & Associates in 2004. His experience is invaluable when it comes to coordinating and navigating projects through the city process.

I look forward to answering your other questions and I would welcome recommendations from you or any of the other council members. FEDC, City Council, the citizens, and the rest of the FEDC team need to find those things we all agree on so we can work together to increase our tax base without raising tax rates whenever possible. Currently City Council is falling short in creating a community that has sufficient property tax generation to adequately fund our Public School system -- even before we consider building a much needed new high school. This shortfall is EVERYONE'S problem and we all need to work together to fix it.

During my research in answering your questions it is apparent that we do not have a true Public/Private/Academic Partnership. The "Public" (City Council) has never been fully on board because City Council wasn't directly involved in the creation of our organization.

We need to immediately fix this. No economic development organization can expect to be successful unless they have the governing body's complete support. The council always has the ultimate authority to nurture or throttle a project. City Council's actions and attitudes always set the tone for the community's business environment.

FEDC recommends that City Council pass an economic development resolution endorsing the Public/Private/Academic/Partnership, recognize FEDC as the single point of contact in representing the city to recruit and grow the type of economic development City Council specifies and endorses in the resolution. This resolution should lead to an economic plan for Fayetteville's future -- a plan that the public/private/academic partnership can work as a team.

My door is always open and I would welcome an opportunity to meet with you or any other Alderman. Thanks again for your questions.

Steve Rust
President and CEO
Fayetteville Economic Development Council