During the citizens’ comments portion of last week’s council meeting, citizen and Republican candidate for borough council suggested the riverfront property and other property dispersion might be better handled through a municipal authority rather than via the Columbia Economic Development Corporation. The borough manager voiced disagreement with the citizen’s observation.  

We think information about each of these entities is worth your review. Today’s article is part one of a two-parted series that will provide more information about economic development corporations and municipal authorities. The second part will appear tomorrow. 

What is an Economic Development Corporation (EDC)? 

“Economic development corporations generally are established to assist existing and new businesses located in a particular geographic area through a variety of activities including grants, loans, provision of information and expertise, or creation of industrial parks. Incubators are a type of economic development corporation generally formed to provide assistance to induce new businesses to locate in communities whose economies are depressed or deteriorating, or to provide assistance to existing, emerging businesses so that they may remain in such communities. Incubators provide low-interest loans, facilities and equipment to new and emerging businesses as well as clerical and technical services in an effort to encourage such businesses to locate in the depressed areas. The services provided to the new businesses are offered by the incubator at reduced rates or even free of charge. Incubators may be set-up and/or sponsored by local and state governments, they may be affiliated with universities, or they may be an offshoot of an existing tax-exempt organization. In many cases, incubator organizations operate a “technology center” where businesses can be assisted (nurtured) through provision of business expertise, lower rental rates or pooled or shared services. 

“The theory behind recognizing economic development corporations as exempt under IRC 501(c)(3) is that although services are provided directly to for-profit businesses, the ultimate good received by the general public outweighs the private benefit accorded to the direct beneficiaries. 

(SOURCE: Economic Development Corporations article)

Whether the designation of the organization becomes an EDC (according to wikipedia, “An economic development corporation is an organization common in the United States, usually a 501 (c) 3) non-profit whose mission is to promote economic development within a specific geographical area. These organizations are similar to, and complementary to Chambers of Commerce.”) or a Community Development Corporation (CDC), the entity, ostensibly, becomes a proactive mechanism to grow the community’s corporate, housing and jobs development potential. Overwhelmingly, EDC and CDC entities are proactive and have Websites that promote their town or area as a good place to come to do business; here is an example of one of them. 

An E/CDC is legally the same as any other non-profit entity organized under section 501 (c) (3) of the Internal Revenue Code. Local residents that are interested in forming an E/CDC should get together and develop a set of by-laws, file for incorporation with their state government and once that is completed apply to the federal Internal Revenue Service for designation as a tax exempt non-profit organization. The IRS designation is necessary in order for the organization to obtain grants and gifts from any government, corporate, foundation sources or from individuals.

There is no national entity that certifies an organization as an E/CDC. In some states, Massachusetts and Minnesota for example, an organization must meet certain requirements in order to receive state funding as an E/CDC. Pennsylvania’s Department of Community and Economic Development (DCED) does provide a set of guidelines for certification of economic development corporations.