Growth Council, redux | An economic development shakeup in Oxford Hills tries to stem the bad blood and get back to business

At the core of rural economic development is a mission driven by the interests of the public. In rural western Maine, where the traditional manufacturing foundation has slipped away, the mission of economic development is to help displaced workers stabilize their lives.

On this principal, and with the intention of saving a struggling economic development organization, a joint committee is now in the process of merging the troubled Growth Council of Oxford Hills with Community Concepts Inc., a social services agency based in South Paris. The proposed merger could pull the Growth Council out of a past scarred by missteps and abandoned plans, though even this merger ˆ— the council's best hope for a bright future ˆ— is endangered by the lingering consequences of the organization's former management.

"The need has never been greater. We need to do everything we can to facilitate the job growth and economy, and I am feeling a real sense of enthusiasm," about the merger, says Growth Council Chairman and Northeast Bank President Jim Delamater.

Combining a social services agency with a regional economic development organization is unusual, but Delamater believes the fusion will streamline operations and involve the community more in economic growth. By taking advantage of Community Concepts' resources, such as its business-lending expertise, the council intends to reinforce one of its primary objectives: to create higher-paying jobs by assisting businesses and boosting start-ups. The social service agency will benefit, too, by gaining access to the council's much larger lending pool. (For more on this, see "Micro money," below.)

The merger is critical for the Growth Council's survival. After years of bitter disappointment with the organization's performance, five towns this year denied the Growth Council funding appropriations at their annual town meetings, slicing the organization's budget by as much as $35,000, according to local news reports. Townspeople, selectmen and budget committee members were disappointed that the organization's former president, Brett Doney, hadn't effectively communicated with them about the council's projects and were dismayed the council's ambitious projects never materialized, like a 161-acre technology park planned for Norway that was abandoned last winter.

Soon after this dismal display of public support, board members and the council's new president, John Shattuck, dissolved the organization with the intention of merging it with Community Concepts. The Growth Council expects to complete the merger with Community Concepts by Oct. 1, under the new name Western Maine Economic Development Council.

Community Concepts, which employs about 350 people across Oxford, Franklin and Androscoggin Counties, deals with a range of issues, from workforce training to family support services and substance abuse. "Community Concepts is a robust, strong organization," Growth Council Chair Delamater says. "Once I started digging into the organization, I found the scope is significant. They do a ton of things related to economic development, like workforce development, housing and micro-lending."

Mary Ellen Therriault, a spokeswoman for Community Concepts, says the merger makes sense: "When you think about it, Community Concepts' mission fits in very nicely with the Growth Council, when you are trying to help people," she says. "And small-business development goes hand-in-hand with bringing people to self-sufficiency in the long term."

How the council, with a staff of three, will meld its services with Community Concepts is still being finalized. But Delamater says resources, staff and revenue will all be shared.

The nonprofits also are discussing what to do with the council's two properties: a gutted building in downtown Norway and a former mill site in Bridgton. Delamater says the council is trying to drop its real estate and pay off its debt, and although he would not reveal the extent of the debt, the nonprofit's 2005 tax forms, the most recent available, show it ended that year more than $174,000 in the red.

Delamater says the organization's current debt is so large that even if the properties could be sold, the money from the sales wouldn't cover it. The real estate liabilities are significant enough to threaten the merger. "The deal is going to go through only if it's going to work. It's not going to happen until [those liabilities are] worked out," says Community Concepts' Therriault. "We're not proposing to take over any properties they may own."

Big ideas, big debts
In the early 1990s, the Oxford Hills region, which includes Harrison, Hebron, Oxford, Otisfield, Norway, Paris, Waterford and West Paris, was reeling from the shutdown of mills, factories and farms that for decades had employed loyal workers. These businesses had sustained generations and propped up downtowns, and when they disappeared one after another, the area slumped into depression.

"It was a crisis," says Norway Town Manager David Holt, sitting in his downtown office where he has served for 18 years. The region lost 15% of its manufacturing jobs during those years and the area's unemployment remained stagnant at more than 10% ˆ— more than twice the current state average ˆ— for the next 10. Unemployment in Oxford Hills now hovers around six percent.

Something had to be done to revitalize the dried-up economy. Several VIPs in the area ˆ— including the then-president of the local hospital and a former president of Norway Savings Bank ˆ— banded together to create the Growth Council in 1994, which absorbed the Oxford Hills Development Corp. They collected a substantial amount of local funding, particularly from Norway Savings Bank, and hired Brett Doney, an up-and-coming economic developer educated at Harvard University's Kennedy School of Government and equipped with 12 years of experience in the Boston area. Doney set forth to create new and higher-paying jobs in Oxford Hills and to grow the council by investing in real estate ventures and building up the organization's loan fund.

Doney led the Growth Council until 2006, when he stepped down to take a job in Montana as president of Great Falls Development Authority. These days, his tenure in Oxford Hills is looked upon with both admiration and disparagement, although the latter sentiment is voiced more vociferously than the former.

Doney's method and vision highlighted the variety of economic development strategies. On the one hand, economic developers have the option of marketing their territory to entrepreneurs; providing financing and counseling to businesses; and investing in a few site development projects. This can lay the foundation for companies to emerge or expand organically in the area. Or, they can do as Doney did at the end of his term with the council, which is to use the organization's money to buy and develop sites to attract businesses. This is a riskier gamble that can work out well. But if the economy shifts ˆ— or just refuses to budge ˆ— a group can be left with expensive, unsellable properties and unfeasible projects.

By the time Doney left the Growth Council, Oxford Hills' unemployment rate had improved to around 5.6%, which was still above the state average. At the organization's 10-year anniversary, Doney credited the Growth Council with establishing the region's manufactured housing industry, which had five companies and employed more than 650 workers. He also said the council issued loans totaling $12.7 million, assisted more than 2,000 entrepreneurs, helped entice New Balance and L.L.Bean to the area and attracted more than $50 million in public funding for highway improvements, most notably to Route 26, the major corridor to Route 95 and Portland.

But Norway Town Manager Holt, who also served on the Growth Council board, dryly replies, "They might take credit for things that would have happened anyway."

Fergus Lea, a planner with Androscoggin Valley Council of Governments in Auburn, echoes this thought. "That's one of the things that is difficult in the area of economic development, who gets credit," he says. "Essentially, it is a team of people that make things happen."

But Doney is clear about the Council's input here: "We helped find sites and loans [for the modular housing companies] and we helped with workplace training," Doney says. "We invested a lot of time and effort."

The Growth Council also helped bring to South Paris the Western Maine University and Community College Center in 2004, which Holt and Lea say was the council's greatest contribution.

Mixed legacy
Council naysayers still have plenty to say about Doney's performance.

"Doney was good for blowing his own horn, and thank God he moved to Montana," says Forrie Everett, a member of the Paris Budget Committee, which last year recommended cutting $12,000 in town funding for the Growth Council. "I don't have a very good opinion for the Growth Council. All we got from [Doney] was the soft shoe and 'how great I am.'"

Barbara Payne, a former Paris selectman, says the Growth Council used to hand out glossy brochures listing its achievements every year around budget time. "But it didn't give the whole picture. They didn't track the businesses that closed or cut back or failed that they supported," she says.

Communication is imperative, Terry Ann Stevens of the Maine Office of Community Development says. "The councils and economic entities need to be very well supported by their local communities and agencies that are the funders and the driving forces behind them. They need to be in touch with the constituency."

Doney was known for his disinclination to be communicative about details, whether they dealt with project updates or snags. It's a lapse he now regrets. "We didn't spend enough time explaining what we were doing or why," he says.
(In a press release recently sent out by the Growth Council and Community Concepts, the two agencies promise they will seek input from communities and build productive relationships.)

Payne also criticizes the council's real estate ventures, which included a commerce center in Bridgton and plans for a technology park in Norway. "They over-extended themselves, getting into real estate and then thinking they were going to flip it and not being able to do so," says Payne.

Doney argues, however, that the council's real estate ventures actually catapulted economic investment in the area, and the only error here was not reinvesting more of the money.

"When we had a successful real estate development, we put that into economic development but didn't build up capital reserves," he says. "The towns are never going to invest the kind of money you need. You have to be entrepreneurial, and when you are entrepreneurial, you take risks ˆ— you have some wins, some losses."

Doney describes waging battles for public support. He says the council founders formed an entrepreneurial organization driven by the private sector that could make the changes called for by the collapse of the local economy. "It started out as a business-led group and it was a business-led group for a number of years with towns mostly coming in kicking and screaming," he recalls.

But Holt says, in the early days of the Growth Council, board members and town officials were eager to rally to address the clearly critical need for economic salvation.

Doney agrees that the earlier council was more aggressive. "We had designed the projects to increase the competitiveness of the area, and they were high-risk projects, and that is where the enthusiasm was. [We thought] if these are successful, they will make a substantial difference, and if we fail, we will fail at trying to do great things."

But as the region's employment ratio improved, it became easier for the board to splinter, Holt says. Doney, too, says he felt board support lean away from him. "We ended up with people too concerned with political opinion," he says, "and you can't run a business on popularity; you're not going to get anywhere fast."

Some in the economic development field say a high-risk, real estate and project-focused approach to developing a region's economy can be a dicey path.

"The opportunity to invest in real estate is very attractive," says Ron McKinnon, a business development specialist with the Maine Department of Economic and Community Development. "But the problem is good times don't last and then, in rural areas, it is more difficult to capitalize on them."

And in Maine, an ambitious, project-oriented approach to economic development can lead to resistance, where change is sometimes viewed with skepticism.

"Without it starting at the grassroots level, in Maine in particular, it is difficult to get things going," says Lea of the Androscoggin Valley Council of Governments. He believes a more successful model might be to let projects bubble up from the grassroots and then have economic developers step in to provide expertise and finance.

That approach requires communication and collaboration. "Community development is more about people working together than buildings built," Holt says.

Rebecca Goldfine, Mainebiz staff writer, can be reached at rgoldfine@mainebiz.biz.

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