April 12, 2004
Breaking the mold | The private sector leads a new economic development initiative aimed at improving Aroostook County's fortunes
By Alan Elliott
As president and CEO of Katahdin Trust Company in Patten, Jon Prescott has fielded his fair share of funding requests from nonprofits and other do-gooders. Still, he did a double take last fall when he reached the bottom line of a proposal from the Aroostook Partnership for Progress, a new public/ private effort to resuscitate Aroostook County's economy. The requested commitment: $100,000 over the next four years.
But after a look at the organization's plan, which sets forth the ambitious goal of attracting 1,500 net new jobs and $50 million in capital investment to Aroostook County by 2007, the bank's board and management voted unanimously to support the request. And the reason is telling: "The way the organization was put together and is going to be run was more the attraction than any particular idea they've come up with so far," Prescott said, referring to the partnership's concrete list of goals and its board of directors, made up of investors who will manage the process of working toward those goals. "That appeals to business people," he said, "because that is how we run our own businesses."
Prescott's not the only one who feels that way. Since last September, several of the region's largest businesses ˆ including Maine Public Service Co. and Maine Mutual Group in Presque Isle, as well as Bangor-based Dead River Oil ˆ have announced their own four-year, $100,000 commitments to the Aroostook Partnership for Progress.
The announcements raised a kind of wary hope in Aroostook County, where decades of economic plans have come and gone. Farms continue to fail. And more than 1,000 residents continue to leave the county each year in search of fatter paychecks.
What the Aroostook Partnership for Progress hopes to accomplish to counteract those measures is substantial. In the short term ˆ possibly before the third quarter this year ˆ the organization plans to raise $3 million; $655,000 of that amount has already been committed. In the longer term, the organization plans to create new jobs and new capital investment, by partnering with a developer to build a tourism-based resort; attracting film deals; and identifying and pursuing businesses worldwide that are planning to start or expand operations, and convincing them to do so in northern Maine. The organization may even go so far as to buy troubled businesses and move them to Aroostook County. And the partnership plans to do it all via an economic development model its organizers describe as groundbreaking in its reliance on leadership from the private sector.
Barry McCrum, a Mars Hill resident and former Time Warner senior vice president who is president of the partnership, said the degree of commitment to Aroostook Partnership for Progress by area business leaders demonstrates a growing concern about the region's future. "The basis for our support seems to be that we are taking our destiny into our own hands here," McCrum said. "People are pretty much convinced that neither Augusta nor Washington is going to come riding up into Aroostook County on a white horse."
The private sector champion
The impetus for the partnership stemmed from the U.S. Department of Agriculture's January 2002 designation of three regions of Aroostook County as Rural Empowerment Zones. The announcement came after years of effort by the Caribou-based Northern Maine Development Commission, which has managed ongoing economic development efforts in northern Maine since 1967.
In 1998, efforts by NMDC led the USDA to assign "champion community" status to the three areas: one in the St. John Valley, one in central Aroostook and one surrounding Houlton. The designation led to $27 million in funds being channeled to 39 projects ˆ including an effort to build speculative buildings and construction of an experimental potato storage warehouse ˆ in those areas.
NMDC continued to push, and in 2002 the USDA cited long-term outmigration from the region as the main reason for increasing the region's status to that of an Empowerment Zone. The new label cleared the way for additional funds and various federal tax benefits, as well as federal technical assistance.
Since NMDC had administered the champion community projects, it took on management of a three-year strategic plan for the Empowerment Zone. In January last year, the agency invited Aroostook businesses to a roundtable to discuss how best to utilize the zone's opportunities. About 160 businesses showed up for the two-day gathering at the University of Maine's Presque Isle campus.
As the last participants filed out into the cold January air, the ball was rolling toward what would become northern Maine's first comprehensive regional effort at public/ private economic development. "We've tried to do it before," said Robert Clark, NMDC's executive director. "But it's always been the public sector trying to energize and get the private sector involved. What we were missing was what we call that private sector champion."
The champion appeared in the form of Nicholas Bayne, chief executive of Maine & Maritimes Corp., the Presque Isle-based parent of Aroostook County's power provider, Maine Public Service Co. A career energy industry pro, Bayne's credentials include roles as chief executive of Houston, Texas-based energy trading software firm Aspect, and as senior vice president for North American retail energy sales and operations at Charlotte, N.C.-based Duke Energy Corp.
In the late 1980s, Bayne had played a part in the West Virginia Partnership for Progress, organized by then-Gov. Gaston Caperton. The effective, well-received program had leaned heavily on the business community to accomplish its development goals, according to Bayne. "Great progress was made in the state by virtue of the governor's belief that it is business which creates wealth and jobs in this country, and it is government's role to create the climate that allows business to prosper and create good jobs," Bayne said.
A participant in the business roundtable, Bayne pitched Clark on creating a similar program in Aroostook County. Clark, who had managed NMDC's efforts for 14 years, saw the concept as a way to leverage the Empowerment Zone benefits across the entire region. The pair approached McCrum, whose reputation and experience as head of government and public affairs in New England for Time Warner made him a natural candidate to lead what eventually became the Aroostook Partnership for Progress.
Bayne, Clark and McCrum decided to structure the partnership as an initiative, not a new entity. Its board would be composed primarily of investors, and NMDC would act as administrator.
Bayne then took his case to the Maine & Maritimes board, which approved the partnership's first $100,000 donation and committed the services of two economic development specialists during the initial, four-year program. That time frame, Bayne and the others thought, would give them enough time to raise a significant amount of money and get a handle on what they can ˆ and can not ˆ accomplish. "It's a first step," Bayne said. "And we'll monitor very closely the success and the return on the investment by both the public and private sector. As we've said from day one, any time you make an investment, people should be held accountable and responsible."
The Aroostook diaspora
The business response that followed was substantial. Within weeks, several of the other $100,000 commitments were in place, including one from NMDC. By early this month, the partnership had cleared $655,000, aiming for a target of $1.5 million, which would trigger an additional $1.5 million in USDA matching funds.
And how will that $3 million be put to use?
"That's a darn good question," said Walt Elish, the director of economic development who Maine Public Service has assigned to act as point man on McCrum's marketing team.
The primary difference between the Aroostook Partnership and the traditional economic development approach, Elish said, is that the partnership will not wait for opportunities to come to it. Early this month the team planned to begin meeting with investment bankers and business brokers across New England and into New York, searching for relocation or acquisition candidates. They've also scheduled a prospecting trip to Montreal in June. "We want to put together deals before they actually happen," Elish said.
That means identifying potential candidates, performing due diligence on the company's needs, then designing an incentive package that combines funds from the Empowerment Zone, the Baldacci administration's Pine Tree Development Zone program, tax increment financing plans, or funds directly from the partnership. "Some of the [partnership's] money is going to be used to put together these transactions," Elish said. "Some will be used just to do downright marketing."
Elish also said discussions are underway with potential resort developers in Portland, as well as those in Oregon and Washington state. The shape the resort takes largely will be defined by the company that develops it, perhaps at the foot of Mars Hill or on an available piece of land near one of Aroostook County's lakes.
One thing the partnership won't do, Elish said, is work to attract low-wage, no-benefit, call center-type employers. Part of its goal, after all, is to woo back the Aroostook diaspora, who left in search of higher grade work. "And they're not going to move back for a call center job," Elish said.
The plan is clearly an ambitious one. But McCrum argued that the Aroostook Partnership for Progress is not taking a scattershot approach, nor has it committed to spread its resources too thin. It's a focused plan, he said, and the focus is on creating economic diversity. "The lack of diversification is really one of the reasons, I think, Aroostook County is in the situation it's in," he said. "Whether it is Loring Air Force Base or farming, it's always been [that] we don't just lose a business, we end up losing a sector."
The partnership, of course, hopes to change that pattern. For now, its investors agree that the organization has managed to gather the most precious of initial commodities: momentum.
But only time will tell whether leadership from the private sector is an effective model for economic development in northern Maine. And, in 2007, the Aroostook Partnership for Progress' investors will judge whether its progress justifies further support. "Always in the back of our mind is that, if the gods are good, and we are good, and the stars are aligned, and everything else," McCrum says, "at the end of that four-year period we will be encouraged, hopefully, by the investors to continue going forward."
But after a look at the organization's plan, which sets forth the ambitious goal of attracting 1,500 net new jobs and $50 million in capital investment to Aroostook County by 2007, the bank's board and management voted unanimously to support the request. And the reason is telling: "The way the organization was put together and is going to be run was more the attraction than any particular idea they've come up with so far," Prescott said, referring to the partnership's concrete list of goals and its board of directors, made up of investors who will manage the process of working toward those goals. "That appeals to business people," he said, "because that is how we run our own businesses."
Prescott's not the only one who feels that way. Since last September, several of the region's largest businesses ˆ including Maine Public Service Co. and Maine Mutual Group in Presque Isle, as well as Bangor-based Dead River Oil ˆ have announced their own four-year, $100,000 commitments to the Aroostook Partnership for Progress.
The announcements raised a kind of wary hope in Aroostook County, where decades of economic plans have come and gone. Farms continue to fail. And more than 1,000 residents continue to leave the county each year in search of fatter paychecks.
What the Aroostook Partnership for Progress hopes to accomplish to counteract those measures is substantial. In the short term ˆ possibly before the third quarter this year ˆ the organization plans to raise $3 million; $655,000 of that amount has already been committed. In the longer term, the organization plans to create new jobs and new capital investment, by partnering with a developer to build a tourism-based resort; attracting film deals; and identifying and pursuing businesses worldwide that are planning to start or expand operations, and convincing them to do so in northern Maine. The organization may even go so far as to buy troubled businesses and move them to Aroostook County. And the partnership plans to do it all via an economic development model its organizers describe as groundbreaking in its reliance on leadership from the private sector.
Barry McCrum, a Mars Hill resident and former Time Warner senior vice president who is president of the partnership, said the degree of commitment to Aroostook Partnership for Progress by area business leaders demonstrates a growing concern about the region's future. "The basis for our support seems to be that we are taking our destiny into our own hands here," McCrum said. "People are pretty much convinced that neither Augusta nor Washington is going to come riding up into Aroostook County on a white horse."
The private sector champion
The impetus for the partnership stemmed from the U.S. Department of Agriculture's January 2002 designation of three regions of Aroostook County as Rural Empowerment Zones. The announcement came after years of effort by the Caribou-based Northern Maine Development Commission, which has managed ongoing economic development efforts in northern Maine since 1967.
In 1998, efforts by NMDC led the USDA to assign "champion community" status to the three areas: one in the St. John Valley, one in central Aroostook and one surrounding Houlton. The designation led to $27 million in funds being channeled to 39 projects ˆ including an effort to build speculative buildings and construction of an experimental potato storage warehouse ˆ in those areas.
NMDC continued to push, and in 2002 the USDA cited long-term outmigration from the region as the main reason for increasing the region's status to that of an Empowerment Zone. The new label cleared the way for additional funds and various federal tax benefits, as well as federal technical assistance.
Since NMDC had administered the champion community projects, it took on management of a three-year strategic plan for the Empowerment Zone. In January last year, the agency invited Aroostook businesses to a roundtable to discuss how best to utilize the zone's opportunities. About 160 businesses showed up for the two-day gathering at the University of Maine's Presque Isle campus.
As the last participants filed out into the cold January air, the ball was rolling toward what would become northern Maine's first comprehensive regional effort at public/ private economic development. "We've tried to do it before," said Robert Clark, NMDC's executive director. "But it's always been the public sector trying to energize and get the private sector involved. What we were missing was what we call that private sector champion."
The champion appeared in the form of Nicholas Bayne, chief executive of Maine & Maritimes Corp., the Presque Isle-based parent of Aroostook County's power provider, Maine Public Service Co. A career energy industry pro, Bayne's credentials include roles as chief executive of Houston, Texas-based energy trading software firm Aspect, and as senior vice president for North American retail energy sales and operations at Charlotte, N.C.-based Duke Energy Corp.
In the late 1980s, Bayne had played a part in the West Virginia Partnership for Progress, organized by then-Gov. Gaston Caperton. The effective, well-received program had leaned heavily on the business community to accomplish its development goals, according to Bayne. "Great progress was made in the state by virtue of the governor's belief that it is business which creates wealth and jobs in this country, and it is government's role to create the climate that allows business to prosper and create good jobs," Bayne said.
A participant in the business roundtable, Bayne pitched Clark on creating a similar program in Aroostook County. Clark, who had managed NMDC's efforts for 14 years, saw the concept as a way to leverage the Empowerment Zone benefits across the entire region. The pair approached McCrum, whose reputation and experience as head of government and public affairs in New England for Time Warner made him a natural candidate to lead what eventually became the Aroostook Partnership for Progress.
Bayne, Clark and McCrum decided to structure the partnership as an initiative, not a new entity. Its board would be composed primarily of investors, and NMDC would act as administrator.
Bayne then took his case to the Maine & Maritimes board, which approved the partnership's first $100,000 donation and committed the services of two economic development specialists during the initial, four-year program. That time frame, Bayne and the others thought, would give them enough time to raise a significant amount of money and get a handle on what they can ˆ and can not ˆ accomplish. "It's a first step," Bayne said. "And we'll monitor very closely the success and the return on the investment by both the public and private sector. As we've said from day one, any time you make an investment, people should be held accountable and responsible."
The Aroostook diaspora
The business response that followed was substantial. Within weeks, several of the other $100,000 commitments were in place, including one from NMDC. By early this month, the partnership had cleared $655,000, aiming for a target of $1.5 million, which would trigger an additional $1.5 million in USDA matching funds.
And how will that $3 million be put to use?
"That's a darn good question," said Walt Elish, the director of economic development who Maine Public Service has assigned to act as point man on McCrum's marketing team.
The primary difference between the Aroostook Partnership and the traditional economic development approach, Elish said, is that the partnership will not wait for opportunities to come to it. Early this month the team planned to begin meeting with investment bankers and business brokers across New England and into New York, searching for relocation or acquisition candidates. They've also scheduled a prospecting trip to Montreal in June. "We want to put together deals before they actually happen," Elish said.
That means identifying potential candidates, performing due diligence on the company's needs, then designing an incentive package that combines funds from the Empowerment Zone, the Baldacci administration's Pine Tree Development Zone program, tax increment financing plans, or funds directly from the partnership. "Some of the [partnership's] money is going to be used to put together these transactions," Elish said. "Some will be used just to do downright marketing."
Elish also said discussions are underway with potential resort developers in Portland, as well as those in Oregon and Washington state. The shape the resort takes largely will be defined by the company that develops it, perhaps at the foot of Mars Hill or on an available piece of land near one of Aroostook County's lakes.
One thing the partnership won't do, Elish said, is work to attract low-wage, no-benefit, call center-type employers. Part of its goal, after all, is to woo back the Aroostook diaspora, who left in search of higher grade work. "And they're not going to move back for a call center job," Elish said.
The plan is clearly an ambitious one. But McCrum argued that the Aroostook Partnership for Progress is not taking a scattershot approach, nor has it committed to spread its resources too thin. It's a focused plan, he said, and the focus is on creating economic diversity. "The lack of diversification is really one of the reasons, I think, Aroostook County is in the situation it's in," he said. "Whether it is Loring Air Force Base or farming, it's always been [that] we don't just lose a business, we end up losing a sector."
The partnership, of course, hopes to change that pattern. For now, its investors agree that the organization has managed to gather the most precious of initial commodities: momentum.
But only time will tell whether leadership from the private sector is an effective model for economic development in northern Maine. And, in 2007, the Aroostook Partnership for Progress' investors will judge whether its progress justifies further support. "Always in the back of our mind is that, if the gods are good, and we are good, and the stars are aligned, and everything else," McCrum says, "at the end of that four-year period we will be encouraged, hopefully, by the investors to continue going forward."
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