With many cities strapped for cash, a key economic-development group is scrambling for new money sources to support its efforts to recruit more businesses to the Valley.
The Greater Phoenix Economic Development Council has normally received more than half of its annual income from Valley cities, but for the new fiscal year that begins July 1, more than half of the agency's budget will come from private sources, said chief financial officer Ken Burns.
“Fortunately the private sector is excited about our regional economic development strategy, and the CEOs are jumping on board,” he said. Because of the soft economy, GPEC and 14 Valley cities that are members of the organization have negotiated a 10 percent reduction in the communities' contributions for the upcoming year, he said. Because the funding is based on a per capita formula, some cities will still increase their contributions from last year — primarily rapidly growing cities in the north West Valley, he said.
But most Valley cities will not pay as much, he said. With the increase in private-sector contributions, GPEC's budget will increase slightly to $3.8 million from $3.5 million in the current fiscal year. The new budget will allow the GPEC staff to increase its number of recruiting trips to 22, up from 13 this year, he said.
“We cut back last year because a lot of activities would not have been fruitful due to the economic climate,” he said. “Next year we have expanded or sales trips because we expect the business climate to be better, and it's time to get out.”
The council will base its activities on an economic development strategy that emphasizes recruiting in five industries that offer higher-paying jobs: Software, high-tech manufacturing, bioindustry, aerospace and advanced business services.
The agency plans no increase in the size of its staff, which consists of 22 full-time employees along with up to five interns, Burns said. Economic development officials in several East Valley cities said they are satisfied with GPEC services and are willing to fund the agency at the reduced rate.
Scottsdale and Tempe have already approved their GPEC contributions for the upcoming year. Scottsdale's contribution will decline to $83,800 from $91,800 during the past year, but because of GPEC's private-sector fund raising “we should get the same services,” said Dave Roderique, manager of the city's economic vitality department. He added there were no controversies when the city's contract with GPEC was reviewed by the City Council on Tuesday.
“Everything seems to be going well this year,” he said.
Kris Baxter, a spokeswoman for Tempe's economic development department, said, “We are extraordinarily satisfied with our relationship with GPEC and feel we're getting our money's worth.”
According to a report prepared for the Tempe City Council, GPEC helped four companies locate facilities in Tempe during the past year, which brought $12.5 million in capital investment, 665 jobs and more than 127,000 square feet in absorbed floor space. GPEC funding has been more of an issue in Mesa, where Councilwoman Janie Thom is questioning if the city should contribute any money to the organization when the contract comes up for review by the council later this month. She said Mesa receives little in return for its financial support, and GPEC overlaps work done by the Arizona Department of Commerce, the city's own economic development department and the Mesa Chamber of Commerce.
“They may have information I don't know, so I will be open-minded, but what I have seen in the past does not indicate to me that we are benefitting,” she said. “Whenever they bring in a new company it seems to go to Phoenix, Scottsdale, Chandler or Tempe.”
Thom said the best economic development work is being accomplished by consultants, and she cited efforts to bring Boeing's 7E7 manufacturing plant to Williams Gateway Airport.
“Private consultants are making the most progress on that,” she said. Another Mesa councilman, Rex Griswold, believes GPEC is improving its services for Mesa.
“In the past when they brought companies to the Valley, they seemed to steer them away from the East Valley,” he said. ”But I'm not hearing as much about that now. I think with Williams Gateway Airport, we are becoming more competitive.”