Mission goes on: While incentive debate persists, proponents tout benefit of economic development efforts
Offering incentives to entice companies to move to a community or encourage existing companies to add jobs can be a controversial proposition.
Detractors question why it’s necessary to tamper with the free market system and why some firms should receive land and tax breaks when others don’t. But those who support the economic development efforts of such organizations as the Grand Junction Economic Partnership believe the benefits outweigh any disadvantages.
“The only people who will ask that question are people who don’t understand how GJEP works,” says Steve Gunderson, Western Colorado region president of U.S. Bank and chairman of the GJEP board. “We’re open and desirous to sit down with anyone to explain the process.”
While companies receive incentives for creating jobs, they also must meet criteria to qualify for assistance arranged through GJEP. Companies must earn most of their revenue from sources outside of Mesa County, hire most of their new employees from inside the county and pay above average wages. A previous requirement that new businesses not compete with existing firms has been loosened over the years. As long as a company imports most of its revenue, it might be recruited even if it competes with a business already operating in Mesa County, Gunderson says.
Other proponents of economic development suggest there’s no other option than to continue to offer incentives to firms that hire local workers and offer higher than average compensation.
“Competition for business is competitive and it’s here to stay,” says J.J. Johnston, a former president of GJEP when the organization was known as the Mesa County Economic Development Council. Johnston since has worked for economic development offices under former Colorado Gov. Bill Owens and then Texas Gov. George W. Bush. Johnston currently works as vice president for business attraction for the San Antonio Economic Development Foundation.
Johnston says communities usually ensure companies are financially solvent and able to live up to obligations to receive incentives. “The company has to perform before it gets the incentives.”
During Johnston’s tenure in Grand Junction in the 1990s, manufacturing companies were more likely to relocate within the United States than they have been in the past decade. Many companies more recently have moved manufacturing operations overseas or to Mexico. The manufacture of such products as automobiles and construction materials drastically declined during the Great Recession of 2007 to 2009 and has yet to rebound to pre-recession levels.
Such trends have led GJEP to focus more on helping local businesses expand. Leitner-Poma and Lewis Engineering expanded and moved into new facilities in recent years. Still, recruitment efforts also have continued. The Colorado Bureau of Investigation moved its Western Slope operation from Montrose into a newly constructed facility in Grand Junction.
Expansion and recruitment efforts offer a shot in the arm for a community seeking higher-paying jobs, says Gunderson. And the businesses and their employees spend money that flows through Mesa County.
Kelly Marlin, interim president and chief executive officer of GJEP, sees the organization moving full speed ahead with those efforts. “I think our mission is as relative as it’s ever been.”
Marlin was named by the GJEP board to succeed Ann Driggers, who resigned in May but remains a consultant for GJEP through July. Marlin previously worked as business development manager for GJEP under Driggers.
A native of Idaho Springs, Colo., Marlin graduated from Loyola Chicago with a paralegal degree. She worked in the Chicago mayor’s office before moving back to Colorado to help lobby for legislation in the Denver Parks and Recreation Department. She was hired by GJEP in November 2008.
Marlin says she hopes the GJEP board will consider her a good candidate for the permanent position, but anticipates a national search.
“I think an economic development organization is needed more during tough economic times,” she says.
Dale Beede, a commercial real estate broker and partner in Coldwell Banker Prime Properties in Grand Junction, agrees. “There has never been a time since 1982 in this valley where economic development has been as critical as it is today,” Beede wrote in an e-mail to the Business Times in response to a request for business perspectives on economic development.
A Grand Junction native, Beede recalled the struggles the Grand Valley endured in the wake of the oil shale bust of the 1980s. But times are tough now, too. “We are in the midst of an 11 percent-plus unemployment rate with falling home values and quickly rising gasoline and food costs,” Beede wrote. “It is economic growth, i.e., the development of lasting jobs, that primes the pump so that a community may prosper.”
Gregg Palmer, the owner of Brown’s Shoe Fit in Grand Junction, voted for city funding for GJEP when he served on the Grand Junction City Council. Brown is also a former GJEP board member.
“Currently, few companies want to spend the capitol required to relocate for more advantageous locations, and economic development groups nationwide have done what we are doing — growing local businesses while watching the horizon for prospects that have dwindled to next to nothing,” Palmer wrote in an e-mail to the Business Times. “To completely abandon those efforts will leave us at a serious disadvantage to other communities when those few relocation opportunities do come along. Without an experienced organization to take the lead, we will lose out to better organized and better prepared cities. … The option of not trying at all is not a good answer to any community looking to expand its economic base, grow economically and offer its citizens better opportunities for careers and employment.”
One retired business person suggested community leaders focus on attracting retirees to the Grand Valley, as the community did during the 1980s bust. The so-called Grand Valley Marketing Council tried to fill empty homes by luring retirees to Mesa County with its mild weather, quality hospitals, golf courses and comparably inexpensive housing.
“The foregoing provided construction jobs. Retired did not need jobs, but spent their money here and that means car sales, etc.,” Ken Robar wrote in an e-mail to the Business Times. “I suggest that emphasis again be used.”
The retiree recruitment effort subsided as some community leaders became concerned the population could become top-heavy with seniors and not attract more jobs and workers who produce goods and services for seniors and the general population. Economists often point out expansion of goods and services is the main factor in strengthening an economy.
Gunderson says GJEP funding comes mostly from private sources, another fact detractors might not realize. The City of Grand Junction and Mesa County governments have contributed to GJEP over the years, but the total is a small percentage of overall funds. Local government contributes in a larger way by offering economic development incentives that include land and tax breaks.
While GJEP touts its successes in expanding the number of higher paying jobs over the years, it often declines to mention the companies that accepted the incentives, moved to Grand Junction, then left town. Recent examples include 3D Systems, which moved its Grand Junction operations back to California, and Hamilton-Sundstrand, an aviation parts manufacturer that moved the local operation to Singapore.
GJEP members insist, though, the departure of such companies doesn’t constitute a failed effort.
“We thrive because we were here when they were here,” Gunderson says, adding that the companies that departed helped grow the economy and some of those effects still ripple through the Grand Valley. “We have a much larger economy.”
Says Marlin: “Economic development did not fail because they left.”
The companies left behind buildings, equipment and infrastructure used by the businesses and people who remain in Mesa County, Marlin says. Lewis Engineering, for example, moved into the building vacated by 3D Systems on H Road near Grand Junction Regional Airport.
Workers at Hamilton-Sundstrand were offered to keep their jobs by moving to Singapore or stay behind and receive severance checks and college courses paid for by the company. Some who stayed behind used their severance money to start their own businesses or took courses at Mesa State College.
GJEP is in the middle of a larger coalition of organizations that collectively comprise the Economic Development Partners. The group also includes the Business Incubator Center, Grand Junction Area Chamber of Commerce; Grand Junction Visitor & Convention Bureau; Mesa County School District 51, Mesa State College; and the municipalities of Grand Junction, Fruita and Palisade
“We work together on the governor’s plan for economic development,” says Sue Tuffin, director of the Mesa County Workforce Center and Mesa County’s economic development representative.
ED Partners are working on a revised economic development plan for Mesa County that will be submitted to the state as part of regional and statewide plans.
Diane Schwenke, president and chief executive officer of the Grand Junction Area Chamber of Commerce, says the coalition constitutes an effort to reduce duplicative efforts at improving the local economy. She says chamber members support the coalition and efforts to lure companies to the Grand Valley. “I don’t hear anything from our members questioning the recruitment efforts,” she says. “I do hear concerns about overlapping and collaboration.”
ED Partners has identified a three-fold economic development plan, Schwenke says, involving research, development and innovation; community image; and existing business growth.
Research and development were identified due partly to the proximity of such traditional energy sources as coal, natural gas and uranium as well as such renewable sources as solar power. Mesa State College college could help facilitate research for the energy industry and other sectors.
“We’re already doing some of those things” Schwenke says, noting that energy companies continuously develop new technologies in the natural gas fields of Western Colorado.
A community image campaign might incorporate numerous marketing messages into a unified brand.
“We were talking about the silicon valley for energy,” says Schwenke, discussing a way to tap into the effects of the energy industry.
Speaking of energy, proponents of economic development often cite the need to diversify the local economy so it’s less subject to the ups and downs of a single industry — like energy. Yet, few dispute those ups and downs will likely be a factor in a community that counts more than 90 local job categories affected by energy production. So booms and busts in the energy sector likely will keep the line moving up and down the graph of local economic indicators.
“I don’t think you can totally straighten out the line,” Schwenke says.
As for the third factor, existing business growth, Schwenke says ED Partners focuses on legislation and regulation. Many businesses continue to complain the Grand Valley has more stringent development procedures than other communities.
ED Partners might need a small business advocate to work with the state Department of Regulatory Affairs, says Schwenke. Business people often complain about being placed on hold or not receiving return phone calls from the state when they ask about regulations or completion of paperwork. “A small business advocate could mitigate some of that,” Schwenke says.
Of course, businesses created and operated by entrepreneurs constitute job creation engines. That’s why the Business Incubator Center is a key component of the partners group. The center provides low-cost space and other support services for new businesses, a revolving loan fund that provides financing and low-cost workshops and training.
Says Marlin: “I think entrepreneurship is always important. The incubator helps fuel that.”
While the ED Partners continue to work on efforts to increase the number of businesses and good paying jobs in the county, the GJEP board soon will decide on its next permanent president while also participating in efforts to bolster the economy in a challenging time.
Says Gunderson: “We’re alive and well.”