This summer, then-deputy mayor Pat Mulloy went to City Hall to ask the Metro Council to support a burgeoning group of local business leaders who want to remake Louisville’s economic development framework.
The group, he said, would need $1.5 million in taxpayer money to get started. Its members would offset the rest of the budget by paying dues, he said — nearly $2 million worth.
Now, the Louisville Economic Development Alliance is facing criticism for a dues structure that some local lawmakers and small business advocates say is exclusionary and shuts out a large swath of the city’s private industry because the costs are too high.
“Perspectives of multimillion-dollar companies are different than the mom-and-pop stores in the city,” said Jennifer Rubenstein, the executive director of the Louisville Independent Business Alliance, a nonprofit that promotes locally-owned businesses. “We should have a voice.”
The group, known as LEDA, is under scrutiny for allegations of self-dealing and is at the center of an ethics complaint against Mayor Craig Greenberg. The 60-member board wants to reshape the city’s bonding systems and incentives program; it will create a new city brand and “will drive the economic development of the city,” Mulloy said.
But getting a hand on the steering wheel isn’t cheap.
The Kentucky Center for Investigative Reporting obtained records that show LEDA members pay between $5,000 and $100,000 to sit on the board. Most of the dues-paying members — 93% — pay at least $25,000. Mayor Craig Greenberg and five non-voting members, including three Metro Council members and representatives from Greater Louisville Inc. and the Greater Louisville Central Labor Council, do not pay dues.
Rubenstein said this fee structure makes joining the LEDA board unattainable for many small businesses in Louisville.
She said Mulloy asked her to recommend people to join the LEDA board, but the costs limited her choices. She thinks it’s made LEDA less representative of the city’s business landscape.
“There’s not many of our businesses that can afford a $5,000 fee,” Rubenstein said. “There’s a part of the conversation that’s missing from the table.”
Mulloy, in an interview with KyCIR, said the fee structure is not exclusionary and is similar to other public-private partnerships across the country that are designed to bolster economic development.
“We tried to build a thoughtful dues structure,” he said.
Board members, picked by Greenberg, serve three-year terms. Moving forward, the LEDA board will elect new members, according to the group’s bylaws.
Mulloy said small businesses, environmental groups, social justice groups and other entities that are largely absent from the LEDA board of directors will still have opportunities to weigh in on policy discussions.
Even with that assurance, Metro Council Member Shameka Parrish-Wright thinks the fee structure will perpetuate a lack of access.
“Too many people have told me that they don't feel like they have an inroad with the city and with something like LEDA, they never will,” Parrish-Wright, a District 3 Democrat, said.
LEDA’s fee structure should include cheaper options that lower-revenue generating businesses can afford, Parrish-Wright said.
“If you're not doing that, then who are you for?” she said.
Less costs, more voices
Lower fees would allow for a more diverse pool of board members and, in turn, more viewpoints about the city’s business climate, said David Lopez, the board chair of the Louisville Hispanic Chamber of Commerce.
Immigrants in Louisville have a combined spending power of about $1.8 billion, Lopez said.
“So we absolutely do want to see that community represented in the efforts of the region to further develop our economy,” he said. “It's also going to benefit everyone involved, because of that huge contribution that we're already making.”
Lopez said LEDA officials have reached out to the Hispanic chamber to learn more about the needs of immigrant business owners. The LEDA team floated the idea for a modified fee structure for small businesses, but, he said, the details weren’t clear.
If fees drop to $500, $1,000 or $2,500 Lopez said joining LEDA would become more accessible to the Latin and Hispanic business community. And he said he’s willing to give LEDA time to prove themselves.
“What are they doing over time to make themselves as inclusive and as representative of the community?” he said.
One fix would be to offer scholarships for small business representatives to join the LEDA board, said Shaun Spencer, the immediate past-president of the West Louisville Dream Team, a nonprofit that promotes economic development in the city’s predominately Black West End.
Spencer owns two small businesses and said the current fees are too high to be fully inclusive. For many small business owners, like herself, $5,000 could be better spent on equipment or employees.
“I just feel like this is just another organization that may or may not get things done,” she said.
There’s no reason small businesses should pay to be on LEDA’s board, Spencer said.
“It just kind of lends itself to the same pay to play type of mentality that Louisville has been known for for decades,” she said.
Josh Stewart, the Fern Creek Chamber of Commerce board president, agrees.
“Sounds like pay to play, to me,” he said.
He said small businesses are a pivotal piece of the city’s economy. And though they may not individually stack up against the city’s larger companies — like UPS, UofL or Humana — they, collectively, play an outsized role in Louisville’s job market.
“They do a lot to drive employment, to drive the city,” he said.
Levels of membership
The 11 members that pay $100,000 in board dues represent some of the city’s largest businesses including UPS, GE Appliances, LG&E, Norton Healthcare and UofL Health. More than half of LEDA’s board members pay $25,000 or $50,000 — including Kim Halbauer from Fifth Third Bank, who is LEDA’s board vice president ($50,000), and Jim Allen from Baird, who is board treasurer ($50,000).
Three members pay $5,000: Condrad Daniels, president of HJI Supply Chain Solutions, Mike Mays, co-founder and president of Heine Brothers’ Coffee, and Ashley Parker, the broker and owner with Parker and Klein Real Estate.
Board member dues are required in LEDA’s bylaws, and the amount “may vary from member to member as determined by the board.”
The bylaws would be better suited for inclusivity if they required a donation — of any amount — but not a set fee, said Metro Council Member Jecorey Arthur, a District 4 Independent.
A “class issue” arises when people who can afford the fees make decisions for people who cannot, he said.
“That is a problem,” he said. “Because then you're being led by the people who are in a much different tax bracket, who have much different interests, who are considered elite, at least financially, and of course, they're going to look out for themselves and do what's best for them.”
The city would do well to hear from “new voices,” Arthur said.
“We need to hear from the hardships of local business owners who have tried really hard and done everything right and still struggled in the city,” he said. “We don't need to hear from the multi-million dollar corporations who've already done it and don't necessarily need government support.”
Arthur said he’s not clear on why the board members need to pay such high fees to join LEDA: What costs will the group incur? How will the money be used? Questions, he said, council members didn’t vet deep enough when Mulloy came asking for the $1.5 million allocation this summer.
