The Eastern Indiana Development District faces both a financial deficit and a "deficit of trust," according to a new report from the EIDD's restructuring committee.
About five months after the organization's former associate director was arrested for allegedly stealing about $150,000, the organization's board of directors held a long meeting in New Castle this week to discuss plans for the future.
The board of directors includes mayors, council members and commissioners from across the EIDD's five-county district. Also in attendance on Tuesday were three representatives from the U.S. Department of Commerce's Economic Development Administration.
At one point, a representative from the EDA, which has provided funding for the EIDD in the past, said the organization faces a "pivotal question": Will it continue to exist?
And Denny Burns, a commissioner from Wayne County, said bluntly during the meeting on Tuesday, "It would be easier to walk away."
In October, Troy Collier, the EIDD's former associate director, was arrested and charged with one count of corrupt business influence and six counts of theft. As the court case is ongoing, authorities allege that Collier used his position to steal about $150,000 from the EIDD to spend on his personal expenses.
The alleged thefts have crippled the development district. Two of its three employees have been laid off. And the third employee - former Executive Director Nancy Kinder - has resigned.
Over the years, government agencies in Henry, Randolph, Rush, Union and Wayne counties have contributed tens of thousands of taxpayer dollars to the EIDD, which serves as a regional planning organization.
Now, those counties have to decide whether to continue providing funding for the troubled organization. If they do, the EIDD might survive. If they don't, it might not.
Bill Cronk, a Henry County Commissioner who attended Tuesday's sessions, said he will likely recommend that Henry County continue providing about $12,000 in annual total funding, including an in-kind contribution of office space, for the EIDD for at least one more year. In that year, officials will be able to determine if the EIDD can right the ship, Cronk said.
But, he added, "It's in terrible shape."
Working together
In its report, the EIDD's restructuring committee, which includes Steve Croyle, the mayor of Winchester, and Jeff Plasterer, a Wayne County Council member, says the EIDD has accumulated a debt of about $210,000.
The organization has an insurance policy that the committee hopes will reimburse $100,000 of that debt. But as Plasterer said on Tuesday, the insurance company has questioned some of the forensic accounting examining Collier's alleged thefts.
The committee also says that the EIDD has challenged $27,500 of debt that was accrued on a credit card account that had a limit of only $5,000.
With the insurance policy and the credit card challenge, the EIDD's "best guess estimate" is that its net debt is about $100,000.
In addition to that, the restructuring committee says the EIDD faces a "deficit of trust between the leadership of the organization and the elected leadership of some member counties.
"It is imperative that we resolve that trust deficit immediately," the report says.
According to a recommended budget for 2012, the EIDD plans to have about $175,000 in income. Of that, $49,000 would come from member counties, $49,000 would come from the EDA, and $75,000 would come from the Indiana Department of Transportation.
The organization's expenses would be about $136,540 for 2012 under the budget, and of those expenses, $25,000 would go to pay off a loan from First Merchants Bank.
But the budget figures are dependent upon member counties committing their funding.
Plus, the EDA has suspended its contract with the EIDD and wants to see commitments from the member counties before renewing the relationship.
All the way from Chicago, Jeannette P. Tamayo, acting regional director of the EDA, attended Tuesday's meetings in New Castle.
She said the EDA wants to continue working with the five member counties of the EIDD, but if the organization survives, she said the EDA "will be looking very closely" at its expenses.
Plasterer, who will likely be the board's next president, said on Wednesday that overcoming the challenges facing the EIDD is necessary.
He added that it's "likely" the EIDD will survive. But he said Henry County's participation is key to that.
Plasterer said economic development efforts are going to be focused more regionally in the future.
And in the latest unemployment report, three of the worst 25 counties in unemployment were members of the EIDD.
"We need to work more closely together," Plasterer said.
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