How We Make the Most of Our Potential – What’s Next

“Statewide, we have many opportunities and momentum, but we need to come together to plan for the future,” says Carrie Kelly, executive director of Arizona Association for Economic Development, emphasizing the need for collaboration on a united, long-term economic development vision and goals.

“We need all Arizona residents to be covered by regional visioning processes, and we need regional economic development plans to be aligned with statewide goals.” These long-term visioning processes need to include economic development, land use, infrastructure and broadband, community planning, and sustainability.

Preparing for the Future

Focused on Greater Phoenix meeting the demands of current and future industry, Chris Camacho, president and CEO of Greater Phoenix Economic Council, says, “As business leaders place higher emphasis on talent and labor availability, cost containment, grid stability, pro-business policies and the advancement of diversity, equity and inclusion strategies, the region must continue to lead in these areas and make the requisite decisions that positively impact our regional competitive position and brand.”

He sees long-term, equitable growth being achieved through advantageous tax and economic development polices as well as significant investment in our region’s education system, infrastructure, and use of clean and renewable energy.

Actions he feels will be critical are advancing pro-business tax and regulatory policies, strategic investment in statewide infrastructure and transportation networks, promoting policies that encourage the use of clean and renewable energy, supporting the growth of univ research programs and grads through efforts like the New Economy Initiative, and aiding the alignment of Maricopa Community Colleges and local school districts with industries of the future.

The Importance of Resource Conscience

“Cities also should make sure that business attraction efforts are aligned with their economic development goals,” Micah Miranda, economic director for the City of Chandler, says. Sharing that Chandler has a number of target industries it focuses on because they fit the city’s workforce, create quality jobs and will continue to be relevant in an increasingly technology-based economy, he says, “We want the development of our remaining land to support the growth of these target industries.”

Being resource-conscious is also important, Miranda notes, observing that land and water are finite resources, and water especially has been getting a lot of attention lately. “In Chandler, we look to our Council-adopted water allocation policy when considering business projects,” he says. For example, a high-volume user is expected to generate an economic impact that justifies its resource use. “Adhering to this policy allows Chandler to grow while maintaining a sustainable water supply for existing and future users.” He believes water supply is a key issue for every community throughout Arizona.

Don Henninger, executive director of SCOTT, puts it more bluntly: “We also need to get our collective heads out of the sand and get serious about dealing with potential water shortages, as we are in a long-term drought that may continue for years to come.”

He believes we have become complacent over this issue due to having been lucky up to now in not having to deal with the negative effects. “We like to promote that fact that we don’t get earthquakes or tornadoes in Arizona,” he says. “That’s nice, but I sure wouldn’t want to say in 10 years that we don’t have enough water to sustain our economic growth.”

Water is one of five types of infrastructure Phoenix’s community and economic development director Christine Mackay names as most important — the others being streets, sewer, telecommunications and gas. Investing in infrastructure is key to making the most of our potential, she emphasizes, noting that infrastructure and sites have to be shovel-ready “because we’re competing in a global economy now, and that global economy has the infrastructure.”

Infrastructure Demands

The push and pull of those infrastructure requirements — to be able to redevelop and keep what we have and to allow growth to continue — is a struggle every city faces, Mackay explains, pointing out that there are water lines in the City of Phoenix that are more than 100 years old — such as the one outside her office window that was just recently replaced — while nearly a third of Phoenix’s land is still desert or farm and has never seen a shovel.

“We need a coordinated effort to get the lines in place,” Mackay says. She holds quarterly utilities meeting to share where the city is getting the greatest interest and where her department thinks the next big area for economic development growth is going to be, so that the utilities have time to plan for their conduits when the city puts in the streets.

More than that, she says, “We don’t just work on the company to get them here. We want to make sure those jobs stay. So we’re always thinking of what we can do in a leading-edge manner to make sure that workforce is happy.”

For instance, with the Loop 303 area experiencing growth from TSMC and all the suppliers coming in to support it, Mackay says, “We’re really after a lot of Asian restaurants, grocery stores.” Companies generally bring about 10% of the site’s needed workforce with them to keep continuity with training and company culture, so effective economic development includes making sure those in the area feel at home and comfortable.

“Businesses in Arizona’s rural communities also play a vital role in the economic development ecosystem,” says Mignonne Hollis, president of Arizona Association for Economic Development. Many of these rural communities operate incubators, hold classes and offer counselling for business owners and entrepreneurs.

Looking Forward

But Kelly notes that investment in broadband and education will be critical for future rural success. “Arizona can have the lowest tax rate and the best incentives or tax credits, but if Arizona does not have the infrastructure or a qualified workforce to sustain growth and investment, companies will look elsewhere,” she says.

Also coming to the forefront of economic development issues for cities and town is affordable workforce housing, especially as construction supply chains have been disrupted and costs are increasing for development. Says Kelly, “Affordable housing is an issue that all Arizona communities will need to address to sustain growth, and it will likely take policy intervention to solve, like an affordable housing tax credit.”

Past or even current success cannot be the end of the story. Says Lori Collins, president-elect of Arizona Association for Economic Development and deputy director of economic development at the City of Mesa, “We must continually evaluate Arizona’s competitiveness and not grow complacent with the successes we have had.”

Priorities for which AAED advocates are a tool kit to advance Arizona’s strong business climate that is modern and flexible, enabling legislation that encourages the creation and testing of new products as well as the scalable growth of innovative companies, and policies that aim to increase small business creation and ownership. “Finally,” she says, “we need to recognize that sustainable spending on education is an investment, not a cost.”

Mackay also emphasizes the importance of continued support of universities and colleges. “Because they’re spinning out the thing that a city can’t create: the workforce,” she says, observing that cities can create a place where the workforce wants to live, create a great place for their families, but can’t create the workforce. “That’s the job of our educational institutions.”

And they do, in fact, work very closely with the business community on a daily basis, according to Mackay, getting guidance and feedback. “For instance, for TSMC, ASU went with me to Taiwan to hear first-hand what they were looking for.”

Investing in our Community

Steve Seleznow, president and CEO of Arizona Community Foundation, believes that investing in talent within our communities is critical for us to live up to our full economic potential, no longer relying on bringing in talent from elsewhere but investing in education for students from Pre-K through postsecondary in every Arizona community. “An educated workforce brings in businesses that provide living wages and flexibility to those who need it,” he says, “and that talent pool attracts more businesses in a self-perpetuating cycle.”

To that end, ACF provides more than $5 million annually in scholarships for college and technical training to Arizona students, and invests in Arizona’s future through grants to nonprofits that support P-12 education in communities across our state.

But he notes that, as with any big challenge, the philanthropic sector can only do so much on its own. “Public-private partnerships and policy changes are needed to keep momentum going in a big way,” he says. “If Arizona hopes to continue growing the business sector, it needs to show a commitment to local talent and promote inclusion for all who contribute to our collective success.”

Henninger points also to the need for more creative partnerships at all levels of education, from universities and community colleges to K-12 schools, as he notes, “Right now, the state, and Metro Phoenix in particular, is creating more jobs than there is talent to fill them.” He believes the state’s community colleges, especially, can be effective life-long learning centers for the technology and manufacturing jobs that will be the foundation of the state’s economic growth.

But first, the state needs to get serious about funding all levels of education. Says Henninger, “If Arizona is to fill the talent pipeline then it better start investing more to develop it, and that’s all about the educational system. The state has yet to face up to that.”

Affirming the need for long-term economic development strategies at the state, regional and local levels to guide policy decisions, how we invest in human capital to drive economic growth and how we allocate our finite natural resources, Miranda says, “Vision and cooperation are needed to achieve our potential.”

Economic Expansion

Cooperation may, in fact, be our greatest strength, at least as Mackay describes our business environment. She credits the business community overall with being helpful to economic developers by providing an accurate overview of what’s going on in the market; what it’s like to be in the market; and being really welcoming to new business coming in, to help them get the lay of the land.

Regarding new businesses locating in this market, she says, “It’s hard to be the last one in the door. But there’s not anyone in our business community that I don’t call and say, ‘Can you go grab a beer with this company and tell them what it’s really like to be here, or could they come pick your brain on what it was like to hire your work force,’ who won’t take my call and take my request immediately.”

She acknowledges that outsiders might expect established business to shut out new ones because, for example, they would be fighting for the same workforce. “But Arizona is just different,” she says. “We have a different mentality. I think it goes back to our DNA. We built a city where a city should never have been able to be built in the middle of a desert. So we had to work together to survive.”

She points also to the overwhelming sense that everybody comes from someplace else, so there’s none of the exclusionary “we’ll lock you out if you don’t have roots here” or legacy companies that have been here for 200 years and tell everybody what to do.

“Our secret weapon in Arizona is how easy it is for companies to be new,” Mackay says. Other places can’t copy it in any sustainable way; it’s not in their nature. “For us, it works organically.”

Says Camacho, “By making the right policy and investment decisions, we’ll continue to bolster our position and remain the most attractive place for businesses and residents to operate and live, while ensuring equity is at the forefront of everything we do from an economic standpoint.”

Bill Jabjiniak, economic development director at the City of Mesa, shares figures that support optimistic expectations:

• The 2020 Census population count for Arizona was 7,151,502, an 11.9% increase over the previous decade, landing Arizona among the 10 fastest-growing states.
• “Although the pandemic is still influencing Arizona’s economic recovery, we expect to see continued recovery and growth,” he says.
• According to a University of Arizona report, Arizona has generated 236,700 new jobs over the last year, seeing a 71.4% replacement rate of jobs in our labor market compared to the U.S. replacement rate of 63.3%.

The report goes on to say we will reach pre-pandemic numbers sometime around Q4 of 2021 and then create as many as 778,000 new jobs over the next decade.

This is just one aspect of “Greater Expectations: New Economic Opportunity in Arizona.” To read the full story, click here.