Development alliance to shift strategy before hiring CEO

Tara Bozick
Contact Reportertbozick@dailypress.com
Hampton Roads Economic Development Alliance pressured to change the way it operates

After pressure from government and business leaders to change the way it brings jobs and investment to the region, the Hampton Roads Economic Development Alliance plans to undergo a strategic "reset."

The re-examination of the alliance's role for the region comes after past HREDA Chairman Bob Boyd announced the resignation of President and CEO Darryl Gosnell in January. The alliance acts as a regional marketing arm to attract companies from across the U.S. and internationally.

A change in leadership was needed for the "reset" that both government and business members agreed upon after a Dec. 1 meeting between the executive committee and representatives from each member community, Virginia Beach Economic Development Director Warren Harris told Virginia Beach City Council members during an informal session on Feb. 3. The Daily Press did not attend the Virginia Beach session, but watched the online video. Gosnell couldn't be reached for comment.

"It's not only Virginia Beach," Harris said. "It's a regional concern among all localities and private sector investors. They haven't seen a return on their investment, either."

York County, which contributed $62,287 to HREDA in the current fiscal year, would like the group to reconsider its program focus and marketing strategies. York Economic Development Director Jim Noel said the organization provides exposure for the county in places and business sectors it wouldn't otherwise receive.

"Unfortunately, HREDA has not brought any prospects that ultimately located in York County," Noel said. "While there are multiple reasons for this, clearly there is a disconnect between the prospects they are securing and the product available in York County."

Boyd acknowledged HREDA hadn't re-evaluated its mission in about 16 years. The group hopes to finish a strategic planning session in March. After the board has determined its priorities, Boyd said the search for a new chief executive will begin.

"Our world has changed, our community has changed and your organization is about to do the same," Boyd told 230 attendees of the alliance's meeting of investors at the Newport News City Center Marriott on Feb. 5.

Reason for change

Virginia Beach pushed the group to change its tactics by withholding half of its roughly annual $420,000 in funding this year because the city hadn't seen an economic development project come from the alliance in at least five years, Harris said. Still, the Alliance listed German firm Prufrex as a win for Virginia Beach in its annual report.

Because cities and counties fund the Alliance at 95 cents per capita, Virginia Beach — with the region's largest populace — provides 27 percent of the group's municipal funding. Businesses provide $1 million of the Alliance's $2.6 million annual budget.

In particular, Harris said Virginia Beach wanted more leads on office users and technology companies rather than warehouse distribution or large land users. Regionally, economic developers and investors want to foster a more entrepreneurial landscape to grow companies locally.

Harris advised Virginia Beach City Council that the HREDA would still have a necessary economic development role. Typically, project consultants want to contact one regional entity rather than every department to find out about available land or buildings or other assets. The alliance also does not give incentive money and it's up to the individual cities or counties to close the deals. On Feb. 3, Virginia Beach approved releasing the other $212,612 in funding for the rest of the year, Harris said.

Norfolk reduced its funding to HREDA by about half, from $230,000 to $117,000, this fiscal year, Norfolk spokesman Lori Crouch said. She said the city would re-evaluate full support if they saw more return on their investment.

Most Peninsula city and economic development leaders weren't as strong as in their wording, but supported making the HREDA more effective.

Newport News has benefited from the alliance's help in getting Continental Automotive Systems' operations, and has provided international help to Liebherr Mining Equipment, Newport News Economic Development Director Florence Kingston said. The group also continues bringing domestic and international prospects to the city, which contributed $161,685 in funding to the group this fiscal year.

She noted Newport News and other communities have always had the chance to offer input to the HREDA.

Newport News City Councilwoman Pat Woodbury, who also serves as a city liaison on the alliance board, understands every city wanting more for itself, but noted that new business was good for the entire region.

"We have to be happy about what happens wherever it is regionally, but certainly we don't want anybody left out," Woodbury said. "We want economic development in all the cities and towns that are a part of HREDA."

Regional benefit

Hampton City Manager Mary Bunting noted that the group helped bring Liberty-Source PBC to Fort Monroe, where it plans to employ more than 500 workers in the coming years. Bunting noted that the HREDA still has a strong board, which well be led by Hamptonian and 2015 Chairman Rick Bagley, a senior vice president at Wells Fargo Advisors.

"The alliance also helps us to expand our own economic development marketing efforts," Bunting said. "Even the best of programs should constantly strive for enhancement and ensure focus is reflective of market strengths and opportunities."

James City County, which contributed $65,000 this year to HREDA, has noticed that most of its projects are coming directly to the economic development department rather than through the state or regional groups, said James City Economic Development Director Russell Seymour. While Seymour still views the alliance's marketing as important, the county also goes after its own projects while focusing on helping existing businesses expand.

For private investors and developers like CEO of W.M. Jordan Co. John Lawson, who is spearheading the Tech Center project in Newport News, the alliance's focus on bringing in business has been complementary to local efforts.

"I'd like to see them more effective," Lawson added.

During the strategic planning process, members will discuss whether the alliance should take part in other efforts like entrepreneurship, workforce development and providing data analytics, Boyd said. Funding will also need to be part of that conversation if the Alliance's priorities become more robust, said Boyd, who is also regional president of BB&T.

"The alliance is what brings us all together under the same team," Bagley said. "I understand everyone wants a physical deal in their locality but sometimes economic development is a long-term game that doesn't happen overnight."

In 2014, the Alliance had 100 public and private investors, including the Daily Press Media Group, said Tom Elder, Alliance executive vice president. Over the past five years, the alliance reports it helped bring 26 new companies to the region.

Bozick can be reached by phone at 757-247-4741. Sign up for a free weekday business news email at TidewaterBiz.com.

Hampton Roads Economic Development Alliance accomplishments, 2013, 2014

In-person meetings482,436

Corporate appointments342,305

Appointments with site selection consultants140,131

New projects opened55,62

Marketing missions48,44

Prospect visits to Hampton Roads34,37

(Source: HREDA annual reports)

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