Subject
title
Economic Development
end
Department
City Manager's Office (CMO)
Recommendation
Staff recommends that the Mayor and Council discuss the city’s current economic development model and direct staff accordingly following the discussion.
Change in Law or Policy
If directed to modify the city’s economic development delivery model, this may require amendments to the existing funding agreement and operation.
Discussion
At the March 24th, 2025, Mayor and Council meeting, a majority of the body requested a work session to discuss economic development.
Work session topics requested for discussion include:
1. An overview of the different types of frameworks/models used by municipalities/jurisdictions to tackle economic development
2. Identification of the different roles and responsibilities in economic development, what entity currently covers each, and whether we have any gaps
3. Discussion and clarification of the lines of communication, direction, and accountability of all involved
4. Discussion of outcomes-based measurements of success
5. Discussion of various mechanisms (to include funding agreement) to implement enhancements/changes identified in prior items
The majority of the body emphasized that this consideration should be more of a conversation among the members of the Mayor and Council, and not follow the typical work session format, where staff conducts in-depth research and seeks specific feedback on policy options.
Economic Development Models
The delivery of economic development services in local government can be achieved using different models. The two most common are:
1. The service is provided by a separate third-party entity, Economic Development Organizations (EDOs), such as Rockville Economic Development Inc. (REDI)
2. Government-run or “in-house”, such as an Economic Development Department or a division within a department or office.
Most third-party Economic Development Organizations operate as a 501(c)(3) non-profit with strategic collaboration from the cities they serve. This mode typically includes an autonomous board, relies on municipal funding, and lacks direct access to internal city systems. In most cases, they have their own administrative services, including information technology, human resources, legal, and record keeping.
Examples of third-party Economic Development Organization models in Maryland include Rockville Economic Development Inc <https://rockvilleredi.org/>., Cumberland Economic Development Corporation <https://www.choosecumberland.org/about>, and the Easton Economic Development Corporation <https://eastonedc.com/about-us/>.
In a government-run (“in-house”) economic development delivery model, the economic development functions in some jurisdictions are solely with the economic development department, while in others, the functions can be a division within the City Manager’s Office. In other jurisdictions, these functions can be combined within other departments, such as a Community and Economic Development Department, which combines land use and economic development functions within one department.
Examples of “in-house” economic development delivery models in Maryland include the City of Gaithersburg <https://www.gaithersburgmd.gov/government/departments/city-managers-office/economic-development>, the City of Frederick <https://www.businessinfrederickblog.com/>, and the City of Bowie <https://www.cityofbowie.org/35/Business>.
Current Practice
Currently, the City of Rockville uses the third-party economic development delivery model and has an existing Funding Agreement <https://rockvillemd.legistar.com/LegislationDetail.aspx?ID=7429784&GUID=9F9A8541-0D14-491C-B803-854EFDAB076A> with REDI for their provision of certain services.
REDI was aware of the Mayor and Council's impending work session on economic development and prepared a summary of key areas of economic development activity that they provide, including the current role and areas of coordination with the city. (See Attachment 1).
In addition, they prepared a document (Attachment 2) where they compared the pros and cons of how REDI would compare with an internal city economic development department.
Mayor and Council History
On June 16, 1997, the Mayor and Council established the Greater Rockville Partnership, Inc. (GRPI) and approved its Articles of Incorporation, which organized GRPI as a nonstock charitable “supporting organization”. GRPI was created, among other things, to support and assist the Mayor and Council by conducting and performing the functions previously conducted by the Economic Development Division of the Department of Community Development.
On November 19, 2003, Greater Rockville Partnership, Inc., with the consent and authorization of the Mayor and Council, amended its Articles of Incorporation and changed its name to “Rockville Economic Development, Inc.” (REDI). Since then, the Mayor and Council and REDI have entered into subsequent funding agreements.
On July 1, 2024, the Mayor and Council and REDI entered into and executed the REDI Funding Agreement - Fiscal Years 2025-2027.
On July 1, 2025, the Mayor and Council and REDI entered into and executed the First Amendment to the REDI Funding Agreement - Fiscal Years 2025-2027
Fiscal Impact
A detailed fiscal impact analysis would be prepared, pursuant to the direction provided by the body following the economic development work session.
Next Steps
Following the work session discussion, staff will follow up with any direction received from the body.