The Small Business Administration no longer considers La Plata, Montezuma and Archuleta counties to be economically disadvantaged.
While that might sound like a good thing, some local businesses say it could be disastrous for the local economy and will cause the area to lose millions of dollars in federal contracts each year.
“It will be devastating,” said Heather Liggett, director of sales and marketing for Chinook Medical Gear in Durango. “We are definitely freaking out a little bit.”
The latest census rolls and a few federal formulas determine which communities qualify as Historically Underutilized Business Zones, or HUBZones. Eligibility is based on specified unemployment levels being higher than the state average and income levels lower than the state average. The designation gives contractors in those communities a leg up in landing state and federal contracts, officials said. Some project awards can go only to companies and communities with the designation.
Nearly 40 percent of the nation’s HUBZone-qualified companies saw their designations expire Oct. 1, according to the HUBZone Council, a nonpartisan membership trade association.
There are 46 HUBZone-qualified businesses in La Plata County. And HUBZone-designated projects accounted for more than $1 million in sales for Chinook Medical Gear alone. The company was approved as a HUBZone small business when the county became a designated HUBZone area in 2003, Liggett said.
Other company representatives, including Parker Newby, president of Durango-based Goff Engineering and Surveying, said HUBZone-designated projects also constitute a formidable portion of its work portfolios.
“The designation has been good for us,” Newby said.
The U.S. Senate recently passed a bill that would extend HUBZone designations by three years.
U.S. Rep. Scott Tipton, R-Colo., announced Tuesday that he signed on to co-sponsor a similar bill, House Bill 2131.
“Times are tough,” Tipton said in a statement to The Durango Herald. “Unemployment has remained at or above 9 percent for 26 months, and now is not the time to make it even more challenging for small businesses to create jobs.”
In fact, “the timing and scope of this situation could not be worse for small businesses,” the HUBZone Council wrote in a letter to members about the issue.
The blow could be so damaging, Liggett and other area contractors and economic-development officials said, it could re-create the conditions that caused area counties to qualify in the first place.
“It has meant millions of dollars in contracts for companies in our area for the past few years,” said Joe Keck, director of the Southwest Colorado Small Business Development Center. “It is a really significant benefit.”
And there is more to consider than just the contracts, Keck said. The companies are using local supply chains and laborers for the work, he said, bringing even more “bang for the dollar” to the community.
And landing the HUBZone business designation isn’t easy or cheap, local business owners said.
Mike Russell, owner of HUBZone-qualified Russell Engineering, said the sudden loss of the benefit could be especially painful for those who only recently got through that process.
“Things are going the wrong way if you’re really trying to help small businesses,” Russell said.
