Posts Tagged ‘Economic Development’

25th May
2011
written by JHiggins

Tucson was once a mecca for films and television productions.  Over the past few years our neighbor’s over in New Mexico have done a great job of recruiting and retaining  movie/TV production companies. New Mexico under Gov. Richardson’s questionable leadership, put on the full court press to get the cameras rolling. The state of NM offered lucrative tax incentives to directly rebate production companies to do business in their state.  Other states have followed but NM seems to have got it right.

Arizona enacted their own $50m incentive but with a cumbersome process and some strings attached the production companies haven’t jumped on.  Maybe our state legislators can look at the structure and try to make it more attractive. The problem is an entire creative class of technical movie makers have watched prospects dry up here and moved elsewhere. It may be too late to get them back. The entertainment industry is one of those business that pays labor well and thrives in good economies and bad.

From the Tucson Weekly – April 19, 2001 – Read article HERE.

While the Tucson Film Office attempts to bring film production dollars back to the region–a task that is more difficult now than ever before–the media with their ebullience seem star-struck and provincial, an image that belies Tucson’s status as an almost-major footnote in the history of the motion picture industry.

That being said, it is hard to blame the media for such zealousness, as Arizona in general and Tucson in particular have always had a contradictory, if not ironic, relationship with the movie industry.

With the sun incessantly shining and the scenery transformed with every step-up in elevation, Arizona–especially Southern Arizona–is an ideal place to make movies…

Canada had already created the production service tax credit, a stroke of genius that offered foreign film and television production companies tax breaks on production labor expenses. The PSTC, coupled with further tax incentives offered in individual Canadian provinces, created a production-crew employment boom, and left a lot of film industry workers in California–not to mention workers in smaller, ancillary markets like Tucson–out of work.

Though the Tucson Film Office has been working hard to overcome runaway production, it may be a hopeless cause. A recent Director’s Guild of America study reported that in 1998 alone, the nationwide economic impact of runaway production had reached $10.3 billion, a five-fold increase since 1990.

With no studio, no sound stages, no government incentives, and a dwindling, disheartened crew base, it is hard to imagine how sunshine and scenery alone will bring the productions back to Tucson.

“Up until the fire (Old Tucson Studios) this community maintained a level of film production higher than most places,” Shelton said. “But when they rebuilt (Old Tucson) they didn’t rebuild the qualities and the things in the town that the film companies came here to film. They have made it pretty clear that their interest is primarily in tourism.”

And now our competitors over in Albquerque click HERE:

  • MOVIES
    MovieMaker magazine, a major trade publication in the film industry, cited Albuquerque as a “hot spot” in the United States for movie production. Here’s proof.
  • Did someone say snakes? It was announced that the fourth “Indiana Jones” film, tentatively called “Indiana Jones and the City of the Gods,” is to be filmed in the Deming area. Like the other movies in the series, it features Harrison Ford. Since 2003, the film industry has generated $1.4 billion in economic activity in New Mexico, according to the New Mexico Film Office.
  • Seeing stars: Albuquerque Studios opened its $74 million motion picture and TV production studio at the city’s Mesa del Sol development. Set on 28 acres, it includes eight sound stages. Several films, including “The Spirit,” starring Samuel L. Jackson and Scarlett Johansson, and several TV shows, such as “Breaking Bad” and “In Plain Sight,” have used the studio.
  • And Sony announced it would bring part of its Sony Pictures Imageworks from California to Mesa del Sol in 2008. This means an initial 150 to 250 new jobs for the Duke City, likely with a few hundred more later.
  • Hollywood moves in at Budaghers: ÁTraditions!, the former outlet mall and marketplace on Interstate 25 between Albuquerque and Santa Fe, plans to become a movie studio. It will accommodate feature films, music videos and TV sitcoms and commercials.
  • From Inside Tucson Business (HERE) this summer,  Shellie Hall the director of Tucson Film Office has been trying to sell our community to the film industry.

    In the 2006-2007 fiscal year, Tucson had more than 400 days worth of film production, booked more than 11,000 nights of hotel rooms, and the equivalent of 7,650 days of work by local talent, according to Film Office Newsletter.

    “All without a single big budget, mega-watt, studio motion picture,” Hall said.

    While net numbers may be down a bit over previous efforts, Hall says her five-year comparison average still rings an impressive cash register.

    The average production this year was about $7 million.

    The Arizona Motion Picture Tax Incentive, approved by the Legislature and instituted three years ago, is a marketing tool intended to make filming in Arizona less taxing by returning 30 percent of expenditures to producers. The incentive started at 20 percent and was raised to 30 percent on expenditures in excess of $1 million. It has a cap of $50 million.

    “While we have tax credits and incentives, states like New Mexico (and Louisiana and Connecticut) have no cap at all on how much they will give as an inducement to film in their state, so they’re winning in the race to get the plum contracts,” Hall says. “We’re going back to our legislature to see if we can improve on our incentive package to be more competitive with New Mexico. We already have some competitive advantages with our neighboring state, particularly our close proximity to the Los Angeles film industry. We’re not asking for more money, just trying to make access to what we have easier. We can work within the mandated cap, we just need to change the way the current clunky and bureaucratic procedures are administered.”

    Despite costs continuing to increase and discretionary budgets continuing to shrink, Hall remains optimistic about the future of the film industry and the part the Tucson Film Office will play.

    “Even in the Depression, movies did well because people like the big screen and they need to escape,” she said.

    Lee Allen is a Tucson-based freelance writer.

    It’s encouraging that we do in fact have an office and an effort. It’s encouraging that the state legislature has given us some tools to be competitive.  It boils down to results and measuable increases in our regions film related revenues.  Getting the ball rolling may take some public and private sector support. Production companies will go to areas that are receptive, areas that are economically beneficial to their business models and where the support crews are in place and ready to work.  Like most of our economic issues in the region we have some ground work to lay before we see rusults.

    From Tucson Films latest newsletter:

    Some of the lows, well, those mostly have to do with the projects that got away…like a 3:10 to Yuma (the original shot here) or HAMLET 2 which claims to be Tucson in the film but was actually shot in Albuquerque (and we so wish it were the other way around).

    One loss, especially sad for the Tucson production community, is that the National Association of Latino Independent Producers (NALIP) decided, after 5 years of holding their 10-day Producers Academy here, to move it to Santa Fe. The city of Tucson, the MTCVB, UA Media Arts & Hanson Film Institute, TFO and others did everything we could to keep them here, but New Mexico did more.

    From the Tucson Citizen regarding ‘Hamlet 2′ a low budget film that pokes fun at Tucson HERE :

    “I guess they thought about filming in Tucson, but it all came down to money, as it always does,” Kreinbrink says. “With all the incentives New Mexico offers compared to Arizona, it was a no-brainer.
    “I don’t think they even looked here for locations.”
    “‘Hamlet 2′ is a low-budget film that came in under the radar,” says Hall. “I didn’t hear anything about the project until it got to Sundance.
    “Arizona does have a tax incentive program, too, but it is more awkward to use, not as film-friendly as the one in New Mexico,” Hall says. “We are trying to get the state Legislature to make Arizona’s incentives more film-friendly. We’ve been working on it for three years. We’re preparing now to make another push in January.”
    While the wheels of government turn much slower than the reels in Hollywood, Tucson’s film industry is shrinking just as Albuquerque is turning into the Movieland of Enchantment.
    “If I was able to relocate, I would probably give moving to New Mexico some serious thought,” Ginn says. “There simply isn’t enough work here, and it does affect the quality of one’s life.”
    Hall confirms the brain and talent drain. “A lot of our Arizona work force is over there right now . . . working,” she says. “Their families are here, but they are over there.”
    From the actual movie Hamlet 2, pretty much sums up the Tucson film industry efforts:
    The camera pans right to a weathered city limits sign reading “Tucson” as a voice-over narrator solemnly pronounces this is the city “where dreams go to die.”Granted, Coogan’s schoolteacher character gets no respect from anybody. Because most of the cast members play his disgruntled students, maybe it is appropriate to keep taking pot shots at the city.
    But at the movie’s end, one of the so-called responsible adults in the cast tells the students to cheer up: “No matter where you go in life after this, it will always be better than Tucson.”
    Hamlet 2 cast
    As recent as April of this year the Star ran a story about a possiblilty of an investment in a soundstage HERE :
    Hall said a soundstage might be “overstepping” the demand for movies right now, but she supports it in the long run. The community media center is needed, though, she said, especially given Tucson’s large “indigenous” independent movie community.
    Moviemaking has been a boon for Albuquerque’s economy, said Ann Lerner, director of the Albuquerque Film Office.
    Lerner said the direct spending from the film business has exploded since 2004, jumping from $11 million in 2004 to $83 million last year.
    In contrast, spring-training baseball in Tucson generates an estimated $30 million in direct investment — an amount that a group of Tucson business leaders says justifies $9 million in new taxes a year to save.
    In Albuquerque, the movie industry also has boosted Downtown, said Brian Morris of Albuquerque’s Downtown Action Team, allowing the city to keep its young talent with high-paying jobs while also recruiting young professionals around the county who are looking for an urban living environment.
    Hein: A leader is needed
    City Manager Mike Hein said the idea of collaborating in tough fiscal times is always worth exploring. But he said the project needs a leader who can bring together Tucson’s fractious interests. The idea that there are multiple potential revenue sources makes it more feasible, Hein said.
    “If there are multiple parties with multiple pockets, it’s certainly easier to put together deals,” Hein said. “It all comes down to a business plan.”
    The economic impact in New Mexico reached over $1.2 billion in 2007. Read it HERE.
    The state’s Film Office frequently touts its achievements, which include helping attract more than 85 films and television projects to the state since 2003. Officials say the activity has added over $1.2 billion to New Mexico’s economy.
    Incentive programs include a 25 percent tax rebate on all film expenditures subject to taxation by the state, loans of up to $15 million per project, with back-end participation instead of interest, and no state sales tax (an option that can’t be used with the tax rebate).
    New Mexico’s programs are “clean, simple and directly accessible by productions themselves,” Witt said. “I think that’s key to going forward.”
    28th May
    2009
    written by JHiggins

    Join us tomorrow for an interview with Clay Frey, a local financial planner turned movie producer. Clay is talking about his B horror movie Dead On Site. We’re going to talk about the process, ups and downs and Tucson’s film industry.

    At one time Tucson had vibrant film industry. It started during the popularity of the classic westerns and carried over to films into the 80′s, that I grew up with, like Can’t Buy Me Love. For a full listing HERE.

    Southern Arizona had an entire industry of film trades people that  movie and television production crews could tap into for the next TV miniseries or feature film. Within an hour of Tucson a production could be in saguaro forests or tall pined mountain tops.  The scenic back drops are incredible.

    With the arrival  of film production companies came a lot of money. They hire local actors and behind the scene support personnel. They stay in area hotels and eat at local restaurants.

    Even with great scenic locations, close proximity to L.A. and the creative talent needed, the film industry migrated away. New Mexico is where most of the productions and talent is now. NM went on a major buying spree for all types industries. Their plan to attract business came at a price. We are seeing now how New Mexico may have overstepped things a bit, which eventually lead to improprieties and scandals big enough to keep Gov. Richardson out of the Obama cabinet. Whether or not New Mexico’s investment will pay off remains to be seen.

    We did a complete story on our local film history HERE a few months back.

    The biggest hurdle facing Arizona’s film industry revolves around the structure of tax credits given to production companies to entice them to choose Arizona.

    Just like spring training baseball stadiums that used to cost $28m and have now escalated to $125m, the stakes in the film industry have risen dramatically. Like many other economic incentives the community that offers the most money gets the business. Arizona has tried to implement a tax credit program but New Mexico issued a better one. Last year only $8m out of the total possible of $50m was claimed. The issue has to do with the amounts and levels of payouts as compared to competing states.  It may not be the right year to sweeten the offering given our states financial mess but it’s going to take some work.

    26th April
    2009
    written by JHiggins

    CEO Magazineis one of my monthly reads. There are great insights and inside stories from top leaders in American and around the world. This months edition has a survey on CEO’s Confidence Index. They asked what the best and worst states to do business with in 2009. The best, Texas, North Carolina, Florida, Georgia and Tennessee. The worst, California, New York, Michigan, New Jersey and Massachusetts.

    A couple commnets from the article that are important:

    Unfortunately, those states with the worst records continue to practice the same policies, that alienate businesses. As the economic downturn worsens and unemployment rises one would think some states would rethink their punitive tax and regulatory structure, not to mention their unionization policies if they want to turn the page and attract new businesses and capital to their area.

    ..one CEO said, “Michigan and California literally need to do a 180 if they are ever to become competitive again. California has huge advantages with its size, quality of work force, particularly in high tech, as well as quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster, as is Michigan.”

    1st April
    2009
    written by JHiggins

    Forbes magazine ran their annual top 200 metro regions to do business in and Tucson didn’t do so well. The big numbers that jump out to me are the job creation and crime ratings.  Interesting how these two numbers, arguably our regions two biggest pressing problems are skewing down the entire rating. 

    We know the job creation number is directly related to the fact that Tucson relies too heavily on the growth and construction industry. During boom and bust cycles our collective fortunes rise and fall.  We’ve talked about diversifying our economic base for ages and yet nothing really ends up happening.  GTEC, predecessor to TREO, focused on call centers which may not be too far off base given our available labor pool.

    The stat that leaped off the page for me was the crime statistics. No matter how you slice it if the people aren’t safe they  don’t buy houses, shop in business and  come to our community. We are in the process of hiring a new police chief so I hope our elected officials don’t mess it up.  Public Safety funding is another important aspect of a safe community. We are well under national levels for police per population and it’s starting to strain the community.  Our government must start focusing on the basics before we tackle all the council pet projects.

    Best Places For Business And Careers

    #133 Tucson AZ

    03.25.09, 6:00 PM ET

     

      Rank
    Colleges 1 113
    Cost of Doing Business 2 105
    Cost of Living 3 128
    Crime Rate 4 190
    Culture and Leisure 5 102
    Educational Attainment 6 72
    Income Growth* 145
    Job Growth* 72
    Job Growth Projected 7 195
    Net Migration* 23
    Subprime Mortgages 8 84
     
    Education
    College Attainment 6 26.8%
    High School Attainment 83.7%
    Income
    Median Household Income $44,656
    Income Growth* 2.2%
    Employment
    Job Growth* 1.6%
    Job Growth Projected 7 -1.4%
    Unemployment (2008) 4.9%
    Housing
    Subprime Mortgages 8 17.1%
    Median Home Price $204,400
    Shutterstock

    Metro Area Population: 988,000

    Billionaires: None

    Best Big Companies: None

    Best Small Companies: Providence Service

    See Also:

    Arizona Metros

     

     

     

     

     

     

     

     

     

     

     

     

     

    21st March
    2009
    written by Mike

    What’s the deal with these baseball teams. It’s like each time one gets a shiny new stadium the rest of them want their multi-million dollar piece of the pie.  Catch the first line of the below post….opt out of a 20 year deal!  How about we all stop poaching each others teams and focus on Florida.

    From the Arizona Republic

    The Cubs could opt out of their 20-year lease with Mesa for $4.2 million and leave in 2012. The Cubs would be required to notify Mesa before spring training 2010.

    The Chicago White Sox opted out of a similar agreement this year and moved from Tucson to the new Camelback Ranch Glendale complex in northwest Phoenix.

    With the opt out clause looming and a change in team ownership pending, Smith said it was anticipated that the Cubs would ask for improvements. He expects to have a list in hand shortly.

    12th March
    2009
    written by JHiggins

    Oro Valley made a deal with a developer to put in the Oro Valley Marketplace. It’s been a hotly contested deal and cost a few council people their seat. The development agreement involved a $23 million sales tax rebate back to the developer.

    Goldwater Institute has taken a case to the Arizona Supreme Court arguing that the use of sales tax rebates are allowing local governments to selectively favor one private firm over another.

    OV put the payments they agreed to into an escrow account until the court issues a ruling.  From teh AZ Republic today:

    At issue is a 2007 agreement between the city and the development under which the developer, after constructing and opening 1.2 million square feet of retail space and parking garages with 3,180 free spaces, would receive 50 percent of sales taxes collected by the city from the development during the previous year. The agreement would go for 11 years, 3 months or until the total reached $97.4 million, whichever comes first.

    More broadly, the case is about the circumstances under which cities may enter economic development agreements with private organizations – whether it is sales-tax breaks to major retailers or property-tax breaks to proposed resorts or offices……

    WHAT HAPPENS NEXT

    The Goldwater Institute has until March 23 to respond. Then the other side is permitted a response. After that, the court will schedule the case for review. On that day, the court will decide whether or not to hear the case. If it rejects the case, the Appeals Court ruling banning the agreement stands. If it accepts the case, a briefing schedule will be drafted and a date will be set for oral argument. The court then would rule, but is not required to follow a particular schedule.

     

    The outcome on this has ramifications for a number of deals already done, not to mention future projects.

    9th March
    2009
    written by Arizona Kid

    From Arizona Republic – Looks like Gaylord is trying to get their resort/convention center project on the ballot for the voters of Mesa to decide. Read the full article – HERE.

    Gaylord, if you remember was eliminated as a finalist in the Rio Nuevo project back in 2007 – HERE.  Intersting point from the article included an explaination of a unionization requirement at the new hotel and convetion center;

    The union language is just a paragraph slipped into the hotel request for proposals requiring a “labor peace agreement” between the hotel operator and any labor organization that seeks to represent employees there. In turn, the peace agreement requires the union to promise not to go on strike against the hotel.

    The union agreement will also be popular with the city’s five-member Democratic majority, which includes several pro-union council members.

    Councilwoman Karin Uhlich said the agreement is obviously pro-union, but she said it is also pro-business because the union gives guarantees it won’t strike against the hotel.

    Some of the highlights of the Mesa deal;

    On Tuesday, Mesa voters will decide whether to buy into the vision, approving tax incentives to help finance the project, whose centerpiece would be a Gaylord hotel and convention center. Along with the second resort and other amenities, the initial private investment is estimated at about $1 billion.

    If voters say yes, and the vision pans out, proponents say it will transform Arizona’s third-largest city into an international business and tourism destination….

    Voters in 1999 turned down a $1.8 billion plan to build a stadium for the Arizona Cardinals in west Mesa. Several years later they approved a big tax subsidy for a retail development on the same piece of land, now known as Mesa Riverview, but critics say Riverview has failed to live up to its promise.

    A downtown water-themed project failed to materialize after the city spent millions to acquire land for it about a decade ago, and a more recent proposal for the Waveyard resort not far from Riverview has been stalled by the economy.

    So with a history of grandiose proposals in Mesa, what makes anyone think this is the one that will work?

    Critics, meanwhile, question whether tax incentives should be used to fuel a private enterprise, no matter how grand….

    Mesa will actually own the Gaylord convention center, and that is what triggered the election.

    Voters would need to approve rebates on hotel-bed taxes for the two resorts totaling $51 million over 30 years.

    Gaylord, DMB and Mesa marshaled an impressive list of business, political and civic leaders to provide ballot arguments for the election, and not one of them urged a “no” vote….

    “I guarantee that the businesses that move next to that hotel won’t be getting a tax break,” Gray said.

    His concerns are echoed by Clint Bolick, a lawyer for the libertarian Goldwater Institute.

    Bolick is fresh off a December court victory involving Phoenix and its CityNorth mixed-use development. Bolick argued that Phoenix’s $97.4 million subsidy to CityNorth violated the Arizona Constitution, which prohibits giving public money to private enterprise. The state Court of Appeals agreed.

    Bolick thinks Mesa’s Gaylord deal is similarly questionable, but he will not challenge it until the state Supreme Court rules on an appeal of the CityNorth ruling.

    Smith said the two cases are not comparable because bed taxes are used only to promote tourism, and the rebate arrangement requires the two resorts to continue to use the rebates for that purpose.

    Mesa officials have stressed that unlike CityNorth, no general-fund tax revenues will be rebated.

     

     

    8th March
    2009
    written by JHiggins

    Yes, it’s sunny here.

    But Arizonans are learning that it takes more than blazing rays to make Phoenix the “solar capital of the world.”

    The Sonoran Desert is among the most efficient spots on Earth for solar power plants and rooftop solar arrays. State requirements for utilities to get 15 percent of their energy from clean sources by 2025 also would seem an opportunity for solar manufacturing.

    But most solar panels, mirrors, frames and other equipment are made elsewhere. In case after case, the state has fallen short of the competition. At least 10 companies have looked at Arizona in the past two years but decided to move their factories and about 4,500 workers to other Western states.

    Business experts say the state needs to use some of the tax credits and other tools used by those other states to diversify its housing-dependent economy and deliver the state high-paying manufacturing jobs.

    Some business leaders and politicians have made it a mission to grow Arizona’s solar industry, saying it could anchor a strong economy.

    “Just because it’s sunny doesn’t mean we are going to get solar companies here,” said Rep. Michele Reagan, a Scottsdale Republican who is co-sponsoring a renewable-energy manufacturing-incentive bill with Sen. Barbara Leff, R-Paradise Valley.

    “We have not capitalized on any industry in the solar arena or renewable energy at all.

    “If you’re a company and you are trying to decide what state to move to, and some states are embracing you with open arms and you’ve got Arizona saying, ‘We are not doing anything,’ which one are you going to pick?”

     

    Tough competition

    In recent years, several states have offered financial incentives to the fledgling renewable-energy industry, helping to establish factories.

    With the industry getting much more attention under President Barack Obama, and with nationwide calls to produce more clean power, the future of those factories is looking brighter.

    The federal government’s economic-stimulus package includes $50 billion in spending and $20 billion in tax provisions for alternative energy that should spur the industry even further.

    With other manufacturing operations shedding their U.S. workforces, renewable-energy jobs are increasingly attractive.

    Nevada, California, Colorado, Texas, Oregon, New Mexico and Tennessee all have successfully courted solar manufacturers to their states.

    Oregon, for instance, offers a 50 percent tax credit to pay construction costs for renewable-energy equipment manufacturers. Development officials say it has helped them land seven international solar manufacturers in two years. Most of those companies had considered coming to Arizona.

    In the Midwest, Ohio is offering low taxes and incentives such as job-creation tax credits.

    And just next door to Arizona, New Mexico is looking to set itself apart.

    When Gov. Bill Richardson formed the state’s economic recruitment team in 2003, renewable energy was one of its primary targets.

    The state landed Advent Solar Inc. after that company licensed technology from New Mexico’s Sandia National Laboratories in 2003.

    Advent opened a small manufacturing and research facility in Albuquerque that began production in 2005.

    Then the state’s economic development team successfully used $130 million in a variety of tax incentives to recruit Schott Solar from Germany to build a plant near Advent.

    In December, the state announced that Signet Solar of California would build a manufacturing plant south of Albuquerque that could qualify for as much as $185 million in tax incentives.

    Both Schott and Signet also had considered sites in Arizona.

    New Mexico doesn’t just sweeten the pot with tax benefits. It also provides reimbursement to companies for job training and helps foot the bill for infrastructure needs.

    When Schott Solar announced last year it would build a plant in Albuquerque, it not only qualified for all the state’s tax breaks, but the governor said he would ask the Legislature for an additional $12 million to pay for infrastructure. The city itself kicked in $1 million.

    “When I was in Phoenix, we didn’t consider New Mexico competition,” said Jim Colson, a former economic-development official for New Mexico, Glendale and the Greater Phoenix Economic Council. “That has shifted. Now, New Mexico doesn’t consider Phoenix competition.”

     

    How Arizona rates

     

    That sun-soaked Arizona isn’t leading the solar-manufacturing frontier perplexes some experts in the field.

    The state is often one of the first places looked at by executives shopping for factory sites. But financial analyses usually keep Arizona off the short list when companies make their final decisions because the cost of doing business in other states is lower once incentives are factored in.

    Arizona traditionally has shunned tax incentives and relied on its climate and population growth to drive industry.

    Some oppose tax benefits for a few when they believe an overhaul of the tax code is needed to lower taxes on all businesses. When similar incentives were proposed last year during the final weeks of the legislative session, they didn’t pass.

    “Arizona should be more competitive than it is,” said Colson, now president of site selection for Austin-based Angelou- Economics Inc.

    With AngelouEconomics, he helps companies decide where to open new facilities, including solar companies trying to decide on U.S. locations.

    “I’ve had several projects where Arizona was included in the mix, and it didn’t stay there very long,” he said. “It wasn’t all because of the lack of incentives. The property-tax impacts were significant when comparing it to its neighbors.”

    The business property tax rate on a factory not in an enterprise zone is 2.95 percent in Arizona. Oregon has the next-highest rate in the West, at 1.52 percent. Rates are 1.13 percent in Nevada, 1.03 percent in New Mexico, 0.5 percent in California and 0.6 percent in Colorado, according to Scottsdale-based Incentives Advisors, which analyzed the effect incentives would have in Arizona.

    However, some of those states have higher levies than Arizona for corporate income, unemployment or other taxes. Incentives Advisors concluded that the tax incentives proposed at the Legislature would make Arizona more competitive for solar-manufacturing factories.

    Such incentives can help level the playing field.

    When a state has a particular weakness, such as a high commercial property tax, tax credits and other incentives can be the final factor that drives a factory to that location, said Andy Mace, a principal with Cushman and Wakefield Consulting in Pennsylvania.

    “It’s not always the place with the most incentives that wins, it’s the place with the total lowest cost of operating,” Mace said. “Over 10 years, where will I spend the least on labor, land, energy and transportation?”

    Arizona has strong selling points, such as its weather and a workforce with manufacturing skills. But factories require expensive buildings, lots of energy and hundreds of employees, making the economics much more important than, say, a corporate headquarters that simply needs office space for a few dozen employees.

    “If you’re comparing Portland, Albuquerque and Phoenix, I know I can get real estate, labor, transportation, they’re all within one or two points of each other,” Colson said. “Then I overlay the incentives on top of that. Albuquerque jumps up, Portland jumps up and Phoenix actually goes down.

    “That’s why the Greater Phoenix region is not winning these projects.”

     

    Arizona’s odds

    Economic development officials say the solar industry isn’t likely to spread evenly over the country but grow around those cities established as hubs.

    They say Arizona still has a narrowing chance at being one of those hubs.

    “Right now, there are 11 companies looking to decide (on factory sites) this year,” said Barry Broome, president of the Greater Phoenix Economic Council, a proponent of the incentive bill. “We may be in or out (of the industry) after two quarters.”

    Arizona has an available workforce, mostly because of continuing job losses in the semiconductor and construction industries.

    The state not only represents a large market for solar devices but is next door to California and its large population. Transportation is on par or better than some of its competition.

    The research taking place at Arizona State University, along with the recently upgraded solar-testing lab there that international companies use to certify their products, also are among its strengths.

    But those pluses haven’t added up to much yet.

    Arizona hasn’t had any major solar manufacturers move to the state. It boasts a few, small, homegrown companies and some German manufacturing companies that have opened small factories near Tucson.

    Even the companies that have so far passed up Arizona for factories say the state is a potential home of solar manufacturing.

    “I can’t fathom why this isn’t a hotbed of solar activity,” said Peter Green, president and chief executive of Advent Solar in Albuquerque and a former executive with ON Semiconductor in Phoenix.

    But Green said that building a solar-manufacturing industry in Arizona will be challenging.

    He agreed, when asked, that even if the tax-incentives bill passes, the state lacks the strong political backing, the money for sweeteners such as infrastructure improvements, and the word-of-mouth industry buzz that help foster a solar industry.

    “I think it is going to be a struggle,” he said.

     

    Reach the reporter at ryan .randazzo@arizonarepublic.com.

    Other states eclipse Arizona’s efforts to lure solar industry

    5th March
    2009
    written by JHiggins

    What can the Valley do to better position itself to succeed once the recession is over?
    Diversify our economy and work with public sector leaders to create sensible, new programs that bring high-wage industries to Arizona. During the last decade of the real estate explosion, Arizona was one of the leading job-producing states. Over the last two years, we have fallen to 49th in terms of new job creation. Business as usual will not work. Now is the time to change our metrics and compete for other industries to migrate to Arizona.

    You’ve seen first hand how important professional sports are to the local and regional economy. How can the Valley capitalize more on that in the future?
    Sports are important to Arizona and we need to support what we have now. But, again, we need to focus on diversifying our economy. Like a personal stock portfolio, we cannot become “over-weighted” in any single sector. We have all the teams we need, but it will be important to attract events with significant economic impacts and exposure like the Super Bowl in the future. Our regional success will depend largely on creating a diverse and vibrant economy around many new industries and we can’t look to real estate or sports to take us out of this downturn.  

    25th February
    2009
    written by Arizona Kid

    Teams boost Valley’s status as spring training hub

    Cactus League hits grand slam with Dodgers, White Sox, Indians and Reds

    Not long ago, spring training in Arizona had two strikes against it.

    In 2000, the state had 10 teams to Florida’s 20, and franchises talked about leaving the Arizona desert for locales such as Las Vegas.

    A bid for money to prop up the league stalled in the Legislature. After some intense arm-twisting, a proposal got enough votes at the Capitol to be placed on the fall ballot for voters.Even then, prospects didn’t look good. Spring-training money was lumped together with a new stadium for the then-woeful Arizona Cardinals. Then a funny thing happened.

    The frugal Cardinals opened their wallets for a sophisticated advertising blitz, which emphasized the proposal’s benefits to youth sports. Cardinals players went door to door asking for votes, and two days before the November election, the team pulled off an upset of the Washington Redskins.

    Maricopa County said yes to Proposition 302 with 51 percent of voters’ support, creating a sports and tourism authority that would levy taxes to build youth fields, a football facility and baseball stadiums.

    In an economic sense, Arizona had gotten something right.

    This year, as the recession hammers the economy, 1.5 million fans are expected to attend Cactus League games, the numbers to be swelled by the addition of the Los Angeles Dodgers and Cleveland Indians. The Chicago White Sox moving from Tucson to join the Dodgers is also expected to boost attendance.

    Games start Wednesday and run through April 2, and they are projected to pump more than $300 million into Arizona’s economy.

    The league is a far cry from what it was in 2000. By next year, when the Cincinnati Reds move in from Florida, the Cactus League will be up to 15 spring-training teams, the same as the Grapefruit League. In addition to five Florida teams lured to the Valley, the White Sox this year moved from Tucson, where two teams – the Arizona Diamondbacks and Colorado Rockies – still play but are considering moving to metro Phoenix.

    Cactus League President Robert Brinton said Prop. 302, which helped facilities only in Maricopa County, gave a vision not just for saving the league but expanding.

    “It allowed us to move from defense to offense,” he said.

    Brinton expects this year’s additional teams, along with a longer season because of the World Baseball Classic, to boost attendance more than 15 percent from last year’s record-setting total of 1.3 million visitors.

    Not fully recession-proof, Brinton said the average per-game attendance may drop to about 6,900 from last year’s record 7,436.

     

    One lawmaker’s impact

     

    The recent West Valley boom can be credited to a former state lawmaker, ambitious leaders in Glendale and Goodyear, and some good old-fashioned networking on a golf course.

    The architect of the sports funding measure was ex-state Sen. Scott Bundgaard, a fiscal conservative who shepherded the bill through the Legislature in spring 2000. Bundgaard was forced to use a procedural move to keep the bill alive after it initially failed in the Senate. It eventually passed that chamber and was approved in the 60-member House after six representatives changed their votes to “yes” after intense lobbying. The deciding 31st “yes” vote came when former Rep. Dan Schottel, R-Tucson, changed his vote.

    “I was studying it and getting notes from everyone on the (House) floor,” said Schottel, who also was encouraged to change his vote by former Gov. Fife Symington. “I think it has been good for the state, and that is what we were concerned about.”

    Bundgaard, who now lives in Peoria and works for an Internet startup, said he took plenty of heat in getting the measure passed.

    “It was an election year, these were tax increases, and there was uncertainty to the economic impact,” Bundgaard said. “In hindsight, it’s wonderful to see how our community came together with a long-term vision to push something through that has been very positive.”

    The public vote established the Arizona Sports and Tourism Authority, which uses hotel and car-rental taxes and taxes generated at University of Phoenix Stadium to fund the construction of Cactus League facilities in Maricopa County, the Cardinals’ new home and youth sports.

    Through 2031, the authority has roughly $400 million allocated for the construction and renovation of Maricopa County spring-training stadiums. While new stadiums have lured five teams from Florida, renovations are equally as important. Upgrades are done to existing stadiums in return for teams signing long-term leases to stay in Arizona. Authority money is not used for maintenance.

    Slightly more than half of the money comes from Prop 302 funds. The rest comes from the Maricopa County Stadium District, which the board of supervisors created in 1991 to help fund the Cactus League with a $2.50 surcharge on rental cars. With those funds, the county’s ballparks got upgrades, and facilities were built in Peoria and the Maryvale area of Phoenix.

    Some of the surcharge has been folded into the sports and tourism authority, after the two entities agreed in 2003 to have the stadium district transfer money that wasn’t needed. Cities also contribute to the construction and renovation of stadiums.

    Shortly after voters created the sports and tourism authority, work began on a new two-team stadium in Surprise. The ballpark opened in 2003 with two Grapefruit League refugees, the Texas Rangers and Kansas City Royals.

    Two years later, then-Gov. Janet Napolitano formed the Arizona Baseball and Softball Commission to build on the momentum and expand the then-dozen-team Cactus League.

     

    Glendale’s expertise

     

    Glendale got into the spring-training business after turning an alfalfa field off Loop 101 into Jobing.com Arena, a hockey facility for the Phoenix Coyotes, in 2003, and University of Phoenix Stadium in 2006.

    For years, the city had wanted to add spring training to its sports portfolio, but City Manager Ed Beasley said officials waited until they saw the right teams. With the White Sox and Dodgers, he said, Glendale assured itself of drawing big crowds.

    Dealings began in 2005, when the Dodgers, who had held spring training in Vero Beach, Fla., since 1948, authorized the White Sox to shop around for an Arizona city interested in building a ballpark for the teams to share.

    The White Sox had moved from Florida to Tucson in 1998 to share a facility with the then- expansion Diamondbacks. But White Sox owner Jerry Reinsdorf lives part time in Paradise Valley and made it known he found metro Phoenix more appealing.

    Glendale, riding its other sporting successes, entered negotiations, which remained under wraps until 2006. White Sox representative John Kaites said the team considered other cities but believed Glendale had the expertise to craft a deal. Representatives also liked the proximity of the football and hockey venues about three miles north.

    “They had gotten it done with the Cardinals stadium. They had gotten it done with the Coyotes arena,” Kaites said.

    But by the time Glendale and the teams announced in November 2006 they had a deal, Goodyear was ahead of the curve. The fast-growing southwest Valley city already had submitted a proposal for funding from the sports and tourism authority.

    Both proposals hinged on getting money from a limited pot, and it appeared the battle might pit the two West Valley communities against each other.

    The authority, however, decided to dip into money from the county stadium district, and both projects were funded.

     

    Goodyear’s ambition

     

    The emerging community of Goodyear had tried to host spring training since the 1990s but couldn’t finance a stadium.

    In 2003, it appeared the Los Angeles Angels of Anaheim, owned by Valley millionaire Arte Moreno, would move spring-training operations from Tempe. But the plan fell through a year later.

    The possibilities of spring training had city officials hooked, and they held on to voter-approved bonding authority in hopes of enticing another team.

    With that funding and money from the sports authority, Goodyear attracted two Ohio teams. But the ball only got rolling thanks to a fortuitous encounter.

    On May 5, 2006, Mayor Jim Cavanaugh, who was in a charity golf tournament, started talking about baseball with an attorney in his foursome. The lawyer had previously represented Goodyear and offered to put in a call to an Ohio-based colleague who had worked for the Indians.

    Within weeks, Goodyear was making a presentation to the Indians, and in September the city signed a deal with the team. The Reds followed after a connection with the Indians got Goodyear a chance to make a presentation, Cavanaugh said.

    “Both teams wanted to stay in Florida. They made that clear to me,” he said. “If their cities (in Florida) had treated them differently, they wouldn’t be here.”

    At a ballpark groundbreaking for the Reds in November, Chief Executive Bob Castellini said Goodyear had gone above and beyond in attracting baseball’s oldest professional team.

    “Nobody cares about being treated like a big shot, but everybody wants to feel like they’re wanted,” Castellini said. “And we truly feel like we’re wanted out here.”

     

    Future catches?

     

    Arizona communities continue to seek ways to land spring-training tenants, although future growth remains uncertain.

    The only team in Florida on a year-to-year lease is Baltimore, and Florida has invested $150 million in matching funds since 2001 to keep teams from leaving.

    If other Grapefruit League teams migrate west, they won’t be able to rely on the sports authority for a new stadium.

    Charles Foley, the authority’s chief financial officer, said all but $3.8 million of the roughly $400 million for Cactus League projects in Maricopa County is earmarked through 2031, when the funding ends.

    Yet other options remain.

    The Gila River Indian Community has considered building a ballpark, as has Casa Grande in Pinal County. Pima County is seeking approval from the Legislature to ask voters to build a new stadium in southern Arizona and to renovate ballparks in Tucson that are home to the Diamondbacks and Rockies.

    “In 2000, we risked losing the Cactus League. Now Arizona is the dominant force in spring training,” said Joe Yuhas, a political consultant who ran the Prop. 302 campaign. “I don’t think the growth of the Cactus League is over. I think we can continue to grow if we have the resources available.”

     

    Reach the reporter at craig.harris@arizonarepublic.com.

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