Tag Archives: arizona economic development

Arizona Commerce Authority - AZ Business Magazine September/October 2011

Arizona Commerce Authority Aims To Bolster The Business Environment

The new kid on Arizona’s economic development scene is poised to shake things up. The Arizona Commerce Authority (ACA), a public/private entity, is not merely a name change, a rebranding of the Arizona Department of Commerce that over the years received its share of praise and an increasing level of criticism. And it’s not just a committee of top-shelf business leaders.

“It’s more than that,” says Don Cardon, president and CEO of the Arizona Commerce Authority. “It’s really a call to arms.”

Created by Gov. Jan Brewer through an executive order a year ago, and formally established by the Arizona Legislature early this year, the Arizona Commerce Authority is the cornerstone of the Arizona Competitiveness Package, a mix of tax benefits and incentives targeting quality job growth. The Arizona Commerce Authority’s leadership board consists of 17 of Arizona’s top CEOs who provide oversight and valuable input, with House Speaker Andy Tobin and Senate President Russell Pearce as ex officio members. Brewer chairs the Arizona Commerce Authority, and sports entrepreneur Jerry Colangelo serves as co-chairman.

The state’s university president, chair of the Rural Business Advisory Council and other committee chairs round out the balance of the 31-member ACA board.

The leadership board’s focus is on growing and diversifying Arizona’s economy and creating quality jobs throughout the state. The ACA works closely with such key partners as the Science Foundation Arizona, the three state universities, regional economic development groups and local communities.

The ACA is targeting these key base industries — aerospace and defense, renewable energy, science-technology, and small business and entrepreneurship. It is funded through existing payroll withholdings under an annual operating budget of $10 million, plus a so-called deal-closing fund of $25 million, some of which will be allocated for job training.

Michael Manson, an ACA board member and founder/executive chairman of Motor Excellence in Flagstaff, says he thinks the quasi-public agency will produce results for a number of reasons.

“By involving business leaders as we have and funding it by government we are removing some of the politics, enabling more performance and quicker response to commercial opportunities,” says Manson, who also founded PETsMART. “The pendulum swung a little far before the recession toward government regulations, but we need to get back to being more oriented toward entrepreneurial commercial opportunities.”

Mary Peters, president of Mary E. Peters Consulting Group, says the ACA draws from the successful endeavors of other states.

“We now have a mindset that Arizona is open for business,” says Peters, a former federal highway administrator with the U.S. Department of Transportation and former director of the Arizona Department of Transportation. “We’ll do what we can, especially in the aerospace and defense industries. If we’re not out there working to bring them to Arizona, other states will.”

Under the deal-closing Arizona Competes Fund, a company will need to achieve certain performance measures including average employees’ wages above the county’s average wage, health insurance coverage minimums and other requirements similar to the state’s existing job-training program. Backers say the fund will spur investment in projects in the targeted industries.

It replaced the inactive Commerce and Economic Development Council deal-closing fund, is controlled by CEO Cardon, and puts Arizona among the top one-third of states with aggressive economic development programs, supporters say.

Funds provided to growth projects must result in a net benefit to the state, consistent with the Arizona Constitution’s gift clause. In addition, an economic impact analysis by an independent third party will be conducted on all projects to determine potential return on investment benefits to the state. Furthermore, funding will be awarded with contractual provisions for performance and “claw-back” of funds for non-performing projects.

The Competitiveness Package extends the existing job-training program, a reimbursable grant program for job-specific training plans for employers creating new jobs or increasing the skill and wage levels of current employees.

Arizona’s Enterprise Zone Program is replaced with a new Quality Jobs Tax Credit for new job creation statewide. This tax credit is performance based on net new job creation and capital investment with specific eligibility qualifications for urban and rural businesses.

The tax credit for each new quality job created is $3,000 per year for three years and is limited to 400 new jobs per employer, per year. The program is capped at 10,000 new jobs per year. Experts say the program will increase Arizona’s competitiveness ranking to No. 3 from No. 9 in the Mountain West.

On the tax side of the equation, the electable sales factor for multistate corporations increases to 100 percent from 80 percent in equal increments from 2014 to 2017. A corporation that conducts business both in-state and out-of-state must apportion its income from business activity based on the ratio of property, payroll and sales in

Arizona compared to the corporation’s property, payroll and sales everywhere.

The corporate income tax rate is reduced by 30 percent to 4.9 percent from 6.97 percent in equal increments from 2014 to 2017. The change is expected to improve Arizona’s national ranking from 24th to No. 5, and from No. 6 to No. 3 in the Mountain West.

Arizona Commerce Authority

Under personal property, depreciation schedules are further enhanced for prospective acquisitions of commercial personal property on or after 2012.
Colangelo, partner of JDM Partners, explains his determination in agreeing to serve as co-chairman of the Arizona Commerce Authority.

“We will eliminate all distractions in pursuit of the ultimate goal — restoring economic vitality and stability to our state,” says Colangelo, former top executive of the Phoenix Suns and Arizona Diamondbacks. “Our new structure automatically eliminates the agency’s culture of entitlement and political sloth, and we have introduced what I believe to be a ferocious approach to both retaining and attracting business for the benefit of Arizonans, their families and our children.”

For more information about the Arizona Commerce Authority visit www.azcommerce.com.

San Tan Valley Sunrise, Valley Forward initiative Arizona Forward

New Arizona Forward Initiative Hopes To Balance Future Economic Development With Sustainability Concerns

The future of Arizona’s economic development is one that is still being decided. In order to help push Arizona in the right direction, Valley Forward has launched an initiative called Arizona Forward.

The more than 40-year-old group brings together business and government leaders to help improve the environment and livability of communities in the Valley. Arizona Forward is an idea that Valley Forward has had in the works for years. Until now, however, the organization hasn’t had the funds to act on the idea. That all changed recently when the group received a grant that will fund the initiative for one year. Depending on the results it drives, the initiative may or may not look for additional funding.View from Cleopatra Hill, Powder Box Church in foreground

“Our areas of focus have a far greater impact than the immediate geographic location we currently serve,” Diane Brossart, president of Valley Forward, said at a luncheon in February. “Arizona cities and towns are facing many common issues that should be addressed holistically and statewide.”

Arizona Forward will focus on bringing together cities and businesses to effectively put Arizona on the right path toward growth and sustainable development, turning ideas into reality.

“Arizona Forward will bring the business community, large companies and small businesses, and the government sector together to begin the dialogue,” Brossart said. “We want to reach consensus and drive a balanced public agenda.”

The initial goals of Arizona Forward are to establish cooperative relationships, convene public dialogue to improve Arizona’s sustainability, increase awareness and interest in the environment and serve as a technical resource for environmental issues in the state.

The main region Arizona Forward will focus its efforts on is the Sun Corridor, the area stretching from Phoenix to Tucson, which is home to 80 percent of the state’s population.

The Sun Corridor is a prime area for development in Arizona, and projects already are in the works, according to Morris Mennenga, president of the Central Arizona Regional Economic Development Foundation and president of
Discovery Building Companies.

“There were some great things happening in the Sun Corridor and then the recession came on,” Mennenga said. “They’re coming back into play now. For example, we’re putting in an incredible infrastructure in that area. There will be an I-10 expansion (six lanes) that will stretch all the way to Tucson.”

According to Lisa Lovallo, chair of the Tucson Regional Economic Opportunities and vice president and systems manager of Cox Communications, Southern Arizona, there are several issues that businesses and communities in Arizona need to focus on in order to have successful economic development in the Sun Corridor. Those issues include: high-skill high-wage jobs, a vibrant urban core, education, and government.

Creating high-skill high-wage jobs means bringing industries such as aerospace, biotechnology and information systems and logistics to Arizona. There is a need to make Arizona attractive to those industries so they will want to expand their business to the Sun Corridor. That in turn will bring development to the corridor — development that needs to be managed responsibly.

Roosevelt Lake Apache Trail, Valley Forward Arizona Forward“It will be a balance between economic development and economic equality,” Brossart said. “Our focus is going to be the issues related to land planning, open space, transportation, air quality issues, water management and energy.”

Gov. Jan Brewer signed new legislation in February that will make it easier for Arizona to recruit businesses to the Sun Corridor.
The new legislation, called the Arizona Competitiveness Package, includes business incentives and tax reforms that are designed to stimulate Arizona’s economy.

Another key opportunity for economic growth for Arizona lies with the solar industry. For a state that sees more than 300 days of sunshine a year, the chance to be at the front of the industry’s development is huge.

“There are a lot of good things happening in solar,” Lovallo said. “If we can keep the government positive to business corporate expansion, there’s no reason businesses won’t want to be here showing off their solar capabilities.”

The biggest challenge Arizona Forward faces is finding solutions that all Arizona cities can agree with and put into effect.
“For so long we have operated as separate cities,” Brossart said. “We’ve been focusing on Phoenix or Scottsdale instead of focusing on how we can market and benefit Arizona as a state.

“We have to do a better job of finding our commonalities between cities so we can make a difference in ensuring long-term development,” she added.

In terms of that long-term development, Arizona Forward will use data collected in 2008 by the Urban Land Development Institute during a Reality Check visioning exercise. ULI collected data from 300 Arizonans who worked together in groups to envision future job centers, transportation lines and housing.

While Arizona Forward will initially focus on the Sun Corridor, plans are to take the initiative to other parts of the state and work with existing environmental and economic development groups.San Tan Valley sunrise, Valley Forward Arizona Forward

“It is not our intent to duplicate efforts already underway in areas outside our traditional jurisdiction or to undermine existing civic structures,” Brossart said at the February luncheon. “Rather, we will foster relationships, build coalitions and maximize resources toward a sustainability agenda.”

Bill Pepicello, chair of the Greater Phoenix Economic Council and president of the University of Phoenix, says Valley leaders have to step up to the job of designing Arizona’s future.

“We think the growth should not be counted on again as we did in traditional areas of retail and real estate,” Pepicello said. “As we look at the cycles of our past we know that if we don’t position ourselves going forward, we’re doomed to repeat those cycles.”

Arizona Business Magazine May/June 2011


 

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People in lab coats working in a wet lab office environment

East Valley Energy: Leaders In Business, Government And Education Are Working To Keep The Region Growing

The East Valley has experienced unprecedented growth since 1980. With nearly 1.7 million residents and more than 54,000 businesses, community and business leaders alike are looking to the future to prepare for greater global competition. They also are working to sustain a strong and vital economy that will protect and preserve the quality of life that exists in the East Valley’s 17 communities. In this East Valley report, Arizona Business Magazine looks at some of the major economic engines powering the region.

Arizona State University
Arizona State University, the largest public research university in the United States, has been contributing to East Valley and state economic development efforts since 1885, when ASU was initially founded. The university’s core focus is training the labor force and turning out college graduates that will stay and work in Arizona.

ASU is also involved in community efforts, such as bringing the Insight Bowl to Tempe. In addition, ASU Gammage is a major driver of people to local restaurants, stores, parks and stadiums. The university’s research and development efforts produce spin-off companies, as well as attract those that want to be near a research university. The perfect example is SkySong. Scottsdale raised $100 million to partner with ASU and create the innovation park that currently has more than 40 small, startup companies from 12 different countries.

“SkySong is a global portal for metropolitan Phoenix, and companies are attracted to it because they want to be near the university,” says Virgil Renzulli, ASU’s vice president of public affairs. “ASU is one of 100 universities in the country that turn out new knowledge.”

At ASU’s Polytechnic campus in eastern Mesa, the university brought in some of the best solar researchers in the country to work in the research lab.They also have alternative energy research programs in place to look at creating energy from light, and creating regular fuel and jet fuel from algae and bacteria.

“Working with East Valley cities and organizations is important because so many things today need a group effort,” Renzulli says. “It’s all part of the modern knowledge economy infrastructure. ASU wants to see things improve. We are good citizens and the majority of the time we look at what’s good for the East Valley, as well as the state.”

The city of Chandler
With companies moving less nowadays, the city of Chandler is planning to grow its own companies in hopes of diversifying and stabilizing the community’s job market, as well as positioning the East Valley in the global marketplace.

Chandler’s new venture is a wet lab incubator called Innovations, and it’s aimed at young, startup science and technology companies seeking move-in-ready lab space. Innovations is located in a 40,000 square foot former Intel building on McClintock Road and Chandler Boulevard. Space will be available for lease starting May 1. Christine Mackay, Chandler’s economic development director, said Innovations would contain everything — soup to nuts — that a young startup company needs to work and succeed.

Chandler City Council approved a 10-year lease on the building in September, along with $5.7 million to renovate the building. “Many young companies start with a grant or on a shoestring budget, so traditional commercial space is too expensive,” Mackay says. “They need a partnership to succeed until they can commercialize on their own. They could find cheap space without us of course, but they wouldn’t have access to things like business managers and attorneys to help them succeed and move forward.”

Studies show that 80 percent of small companies that start up through incubators succeed — four times the average of other small business startups. Although Chandler has yet to market the incubator, it has received a lot of interest from entrepreneurs and is already 25 percent pre-committed. ASU has expressed interest in leasing space, as well, Mackay says.

“Right now, we’re in the process of forming a team of experts with backgrounds in renewable energies, engineering, biosciences, applied materials, etc., to help us pick companies with the ability to succeed,” Mackay says. “Our hope is that those companies stay in Chandler long term.”

Phoenix-Mesa Gateway Airport
Allegiant Air began offering passenger service at Phoenix-Mesa Gateway Airport in 2007, with two aircraft serving eight cities. Today, the airline serves 20 cities with five aircrafts, and this year more than 650,000 passengers are expected to pass through the terminal. In the last two years, Cessna and Hawker Beechcraft have both opened maintenance and repair facilities near the airport. Collectively, more than 35 aviation companies operate at the airport, generating more than $251 million in annual economic activity.

“The work we did in 2006 put the wheels in motion for the Phoenix-Gateway area,” says Roc Arnett, president and CEO of East Valley Partnership. “We make things move and shake to improve business and quality of life in the East Valley.”

William Jabjiniak, director of economic development for Mesa, considers EVP a great partner.

“We look to East Valley Partnership for leadership and policy direction that affects positive change for Mesa,” he says. “It’s also important for the East Valley to have a unified voice and that’s what EVP is for us and our neighboring cities.”

Mesa, which is just shy of 500,000 people, is currently focusing its economic development efforts on four key industry segments: health care, education, aerospace and tourism. The city’s economic development team also is working diligently with existing businesses in the community.

“Economic development is based on relationships, which we are trying to grow with existing businesses and the brokerage community,” Jabjiniak said. “About 80 percent of growth in a community comes from existing businesses, so essentially they are the bread and butter.”

One of Mesa’s biggest retention projects over the last several months has been hanging onto the Chicago Cubs. The Cubs have been holding spring training in Mesa for more than 50 years and provide the state with an annual economic impact of $52.2 million. In late January, officials with the Cubs announced the team would stay put in Mesa — if a new, multimillion-dollar stadium and practice complex is built.