Enticing companies that will bring wealth into Gainesville, in the form of decent wages and profits, may be the only way to break a 30-year run in which average earnings for the city remained nearly flat, according to an economist specializing in municipal economies.

William Fruth, president of the POLICOM economics research firm based in Stuart, told more than 30 city officials, academics and business leaders Wednesday that though Gainesville's economy is not bad, the city must take a number of steps to see significant growth.

Fruth's talk was the main event in the daylong 2004 Economic Development Summit organized by the city government and the Council for Economic Outreach. Erik Bredfeldt, director of the city's Department of Economic Development, said the event was designed to discuss different ways to promote economic growth, and said he hoped to see the summit become an annual event.

Fruth described city economies as buckets that suffered from leaks, but were being constantly filled from the top. Water filling the bucket represented money flowing into businesses and individuals in the community, while water flowing out signified money going to businesses and individuals based outside the community.

"The wealth of a community is constantly being drained and there's nothing you can do to stop it," Fruth said.

In order to grow economically, a community must bring in more wealth than it sends to other communities, Fruth said. Local government can aid this process by encouraging the development of "contributory" businesses that add money to the local economy, either through profits or high wages, he added.

Industries such as manufacturing, which provide wages but do not take money from city residents, are usually contributory; other industries, such as retail, tend to take resources from city residents while providing little compensation in terms of wages, Fruth said.

The primary contributory business in Gainesville is also the city's largest employer, the University of Florida. Through the school, the community gains a significant amount of money in state funds, providing a relatively large, stable inflow, Fruth said. Communities that rely solely on one industry, however, tend to fare poorly economically, he said.

Fruth recommended diversifying the sources of money flowing into the city by encouraging businesses in the city to stay and expand, recruiting outside companies to build in the city and promoting the development of startups based on community and university projects.

Bredfeldt said the city must take steps to make sure it can encourage these industries.

"A big issue for this community is making sure a system is in place so we can take advantage of what's happening in our university and our community," Bredfeldt said.

An issue that often plays a decisive role in whether a company chooses to locate in a city are the obstacles it will face when getting started, Fruth said. Minimizing the cost and time a company needs to come into the city and working with businesses to address their issues can make a city more attractive, he added.

Bredfeldt said the city already was working to deal with problems in these areas.

"I think we're on the road to doing some of these things," Bredfeldt said. "But we could be doing better."

City Commissioner Tony Domenech said he was encouraged by agreement among commissioners present at the forum, but said the city must work harder to pursue companies.

"You've got to be aggressive," said Domenech, a former small-business owner. "If somebody wants to do something you say, 'Here are the things we need, here are the things we can do to help you make these things happen.' "

Jeff Adelson can be reached at (352) 374-5095 or adelsoj@gvillesun.com.

See June 3, 2004, issue of Gainesville Sun for original article.