Montgomery County’s economic development privatization on track

Montgomery County’s plan to turn most of its economic development portfolio over to a nonprofit corporation is on track, and the organization is set to officially start work this spring as planned.

Patrick Lacefield, Montgomery County’s director of public information, said the county has appointed 10 of the 11 members to the new Montgomery County Economic Development Corp. board and that the nonprofit has been incorporated. The initial timeline for the transition, which was released in May, called for the nonprofit to be incorporated and a board to be appointed by January 2016.

The next major step for the fledgling corporation is to hire a CEO, and a search to find the organization’s first leader is underway. The hand-off of development responsibilities to the organization will most likely come in June, Lacefield said.

Earlier this year, Montgomery County Executive Isiah Leggett rolled out a plan to privatize many of the functions performed by the Department of Economic Development. The Montgomery County Council approved the shift to a nonprofit corporation in June.

The primary reason for replacing the department with an independent organization is that business leaders and elected officials believe a private-public partnership, operating mainly independently of county government, will be more responsive to the needs of businesses.

“By restructuring economic development functions, Montgomery County seeks to strengthen private-sector involvement in economic development, to be more nimble and adaptive to market changes and community needs, and to improve operational efficiency and effectiveness. Business operates at a much faster pace than most government services and, in order to be effective, the new organization needs to be responsive to businesses in their timeframe,” the county explains in a document posted online addressing frequently asked questions about the change.

Shifting economic development responsibilities from a county department to a nonprofit corporation has the backing of business groups in the county, such as the Montgomery County Chamber of Commerce. Gigi Godwin, the chamber’s president and CEO, testified in favor of the legislation authorizing the transition this past summer.

“We share the same value of a vibrant, sustainable, growing and balanced economy. We need to attract and retain business in order for Montgomery County to remain relevant and competitive in the global marketplace,” Godwin told the council, according to a news release from the chamber.

The Montgomery County Chamber of Commerce’s offices were closed on Monday, and a message seeking comment for this story was not returned.

Shifting economic development efforts to a nonprofit funded by the county is not unusual among local jurisdictions. In fact, it’s odd for a jurisdiction the size of Montgomery County to still operate its development activities through a county department. Prince George’s, Howard and Anne Arundel counties and Baltimore’s economic development efforts are all led by nonprofit corporations that are not government agencies.

Although the Montgomery County Economic Development Corp. will technically be independent of county government it will depend on the jurisdiction for funding. It’s unclear what the funding level of the new organization will be, but the county has committed to funding it at “a level competitive to other comparable jurisdictions.”

The timeline for shifting to a nonprofit to guide the county’s economic development has previously been criticized. This summer, when the council approved the shift, Councilman George Leventhal argued the new organization should be established and take over in a more timely fashion. But in a telephone interview Monday, Leventhal expressed satisfaction with the progress being made.

“I don’t want to be critical, the board has been appointed and they’re engaging in a process to hire a CEO. I think it’s urgent that that process be completed as rapidly as feasible, but you want to have a very strong person at the helm of the organization,” Leventhal said. “So, I think people of good will are moving with all due haste to implement the new entity.”