Arizona Association for Economic Development

2021

INVESTING IN INFRASTRUCTURE

Utilities and transportation are important parts of Arizona’s economic development

By KYLE BACKER

Flicking a switch and filling a room with light is one of the most basic expectations of modern life. If darkness persists, the culprit is likely a dead bulb, not insufficient electricity. This reliability of power is easy to take for granted, but it is essential to the daily operations of society and the economy. Even small interruptions can have significant financial impacts.

In February 2021, Texas experienced a series of severe winter storms that caused a major power crisis in the state, leaving millions of people without power. The outage led to the loss of life and ground businesses to a halt.

“It was taken for granted that utilities have to be reliable and resilient. Now it’s very much at the forefront because of what happened in Texas,” says Karla Moran, senior project manager in economic development for the Salt River Project (SRP). “I had a client tell me that they were losing $1 million per hour throughout the emergency.”

Arizona’s well-regarded power grid is an enticement to companies that are going through the site selection process. As major industrial users, from data centers to advanced manufacturers, continue to choose Arizona, utilities are playing a vital role in the state’s continued economic development.

POWER PLAYERS

Three of Arizona’s major utility companies, SRP, Arizona Public Service (APS) and Tucson Electric Power (TEP), all have staff who work with companies that are considering moving to or building in the Grand Canyon State.

“We talk about the benefits of locating their businesses within our service territory from the perspective of what the entirety of the community brings, but then we home in on the unique aspects of their business as it relates to power,” explains Camila Martins-Bekat, external affairs representative at TEP. “For example, if we are working with a company that has a lot of really sensitive equipment or a high power demand, the focus is on reliability and resiliency.”

The two terms have specific meanings in the energy-generation sector. Reliability refers to the ability of customers to receive a stable flow of electrons within the appropriate voltage to their site. Hiccups in power lines can be devastating to the sensitive equipment in industrial spaces, such as manufacturing facilities and data centers.

Resiliency is the grid’s ability to function when energy demand is at its highest. In Arizona, the summer months put the most strain on the grid as temperatures push 115 degrees and air conditioners hum across the state. During the unexpected freezing conditions in Texas, the grid struggled to be resilient under immense pressure.

Kelly Patton, economic development manager at APS, says that providing outage history in areas that a business is scouting is one of many services offered by her department.

“Clients want to know if we can provide a certain number of kilowatts or megawatts within a defined timeline. We’ll run a rate analysis based on their power demand and load factors to give them their long-term cost per kilowatthour (kWh). That information can be put into their operational budget and the whole financial piece of it when they are looking to locate in an area,” Patton notes.

Depending on the nature of the project, economic developers at APS, SRP and TEP help companies navigate the state’s tax incentive programs. Tucson Electric Power also offers companies a specialty rider, which is similar to a rate but only for a specified time period. In TEP’s case, the rider expires after five years.

“The economic development rider provides companies an offset on their electric bill if they meet certain benchmarks related to the Quality Jobs and Quality Facilities

tax incentives the Arizona Commerce Authority administers. It’s not just about the increase in load but also the quality of the jobs and the amount of capital investment the customer brings,” Martins-Bekat says.

According to Patton, riders help attract companies that make significant capital investments and create jobs in the state while increasing the tax base. Like TEP, APS has a rider that gives qualifying businesses a kWh rate reduction for up to six years. The utility also offers various reimbursements to companies that build on sites that require new infrastructure.

TEAM ARIZONA

Electric vehicle (EV) manufacturer ElectraMeccanica conducted a year-long nationwide search to find the best place to build its first U.S.-based assembly facility and engineering technical center. After weighing a dozen or so options, the company chose Mesa. Its $35 million facility will bring approximately 500 high-tech jobs to the community. A collaborative effort between SRP and APS helped finalize the deal.

“When a client comes here, they don’t see SRP service territory and APS service territory, they see Greater Phoenix,” Moran says. “We wanted to show how this region wants to see EVs grow, so APS and SRP worked together to build some infrastructure that not just ElectraMeccanica can take advantage of, but future clients too. It’s helping advance our own goals for EVs and the environment.”

Partnerships between organizations that may seem like competitors are common to bring investment to the state. Martins-Bekat, Moran and Patton all agree that business attraction is a collective effort.

“We’re all here for the betterment of the state, our community and neighbors. As economic developers we’re competitive, but we’re also very philanthropic,” Patton explains. “We’re

Ed Aaronson Eric Anderson Camila MartinsBekat Lena Kent Karla Moran Kelly Patton

competitive because we believe in the companies and organizations that we work for, but we’re philanthropic in that we all have to come to the table with our piece of expertise and be able to collaborate to ensure that Arizona comes out on top.”

The relationships that power companies have with organizations such as the Greater Phoenix Economic Council and the municipalities within the utilities’ service area are critically important. After all, electricity is just one of the infrastructure needs that companies have when moving to Arizona.

No matter what product it manufactures or service it provides, a business today is going to require access to the internet. Cox has tens of thousands of miles of physical infrastructure throughout Greater Phoenix and into Southern Arizona that facilitates a connection to the internet. The company also makes significant proactive investments in areas that have been identified as business corridors to spur expansion into the market.

“Critical telecommunications infrastructure is important for economic growth,” says Ed Aaronson, vice president of Cox Business Arizona. “We’re frequently asked by the local economic development organizations within municipalities about availability of telecommunication infrastructure in a given geography to support their efforts.”

ElectraMeccanica: APS and SRP worked together to build infrastructure that both ElectraMeccanica and future clients can take advantage of.

DRIVING ECONOMIC GROWTH

The ability to move goods efficiently is also critical for businesses. BNSF Railway is Arizona’s largest rail service provider; it works closely with municipalities throughout the state. “In many cases, having rail is a requirement for certain industries and is a primary factor as to whether or not a company will choose a specific location for its business,” notes Lena Kent, general director of public affairs at BNSF Railway.

Kent adds that the railway has been instrumental in locating several new facilities to Arizona in recent years, including IRIS USA, a plastics manufacturing facility, and Trimaco paper products, both in Surprise. Together, these projects have created more than 200 jobs and generated $50 million of investments.

Like railways, freeways facilitate the movement of products throughout the state and the country. Eric Anderson, executive director for the Maricopa Association of Governments (MAG), argues, “You can talk about development, broadband, utilities, water — all of which are necessary — but if you have a piece of property and you can’t get to it, it’s not worth anything. Transportation is key to access, and access is key to property values and market size.”

Anderson adds that MAG is working with the utilities as EVs continue to become more viable for business purposes as driving ranges increase and costs decrease.

“We just finished our long-range transportation plan called Momentum, which goes out to 2050,” he says. “We’re looking to the utilities because we know that vehicle fleets are going to be a much higher percentage of EVs in the future. How do we provide the charging infrastructure as the fleet electrifies in the future?”

Martins-Bekat concludes, “Economic development is a team sport. There’s no other way to do it effectively, and the efforts of our economic development partners are key to ensuring that we’re all on the same page and rowing toward the same goal.”

Beyond the Valley

By KYLE BACKER

Cities outside of Greater Phoenix see big economic development wins

Even though the Valley receives the lion’s share of attention as the state’s capital and largest city, the commercial real estate (CRE) industry isn’t just booming in Phoenix. Around Arizona, companies are making large investments in communities, bringing with them jobs and increased tax revenue.

“In 2021, the greater Yuma region experienced very positive commercial and industrial activity,” says Julie Engel, president and CEO of Greater Yuma Economic Development Corporation. “More than 590,000 square feet of industrial space was absorbed or built by the food processing and manufacturing industry. Notable multinational companies such as BOSE Electronics, Shaw Carpets, Johnson Controls Battery, Michael Foods and Dole Fresh Vegetables made significant investments into their new or existing plants. At full build out, the projects will create approximately 900 new jobs.”

Here’s a roundup of other projects coming to cities across the Grand Canyon State.

TUCSON

Arizona’s second largest city is attracting both new investments and expansions of current facilities. Edmund Optics is a manufacturer and supplier of optics, imaging and photonics technology that serves the life sciences, biomedical, semiconductor and defense industries. The company opened a branch in Tucson about 25 years ago to be near University of Arizona’s top-ranked optical sciences program.

“Edmund Optics has a longtime presence in Tucson doing research and development. It recently moved into a new facility and expanded its space by about 100%,” notes Kevin Burke, economic initiatives deputy director for Tucson. The new 21,225-squarefoot warehouse supports Edmund Optics’ design efforts and high-volume manufacturing services.

In April 2021, global medical technology company Becton, Dickinson and Company (BD) announced that it will invest $65 million to construct a state-of-the-art facility in Tucson that will be a hub for its supply chain, serving as a final-stage manufacturing and sterilization center.

The 120,000-square-foot structure will be built on approximately 32 acres at the northeast corner of Valencia and Kolb roads and is planned to be operational in mid-2022. The site will bring approximately 40 new jobs to Tucson, including engineers, scientists, quality control specialists and other skilled talent. Sun Corridor Inc.

Kevin Burke Julie Englel Jack Fitchett John Heiney

CP TECHNOLOGIES:

Prescott

projects that BD’s investment will have a $122 million economic impact over the next 10 years.

Since 2017, TuSimple has worked on the world’s most advanced self-driving technologies for heavy-duty trucks near University of Arizona’s Tech Park. The company is expanding its existing facility to provide an additional 25,000 square feet of warehouse and lab space with another 10,000 square feet of office space. This expansion will advance its technology and support its mission of improving the safety and efficiency of self-driving truck technology, as well as provide space to accommodate an additional 75 jobs over the next five years.

FLAGSTAFF

Up in the largest ponderosa pine forest in the world, Flagstaff is celebrating the addition of one of the largest businesses to come to the city in the last five decades: UACJ Automotive Whitehall Industries, a leading supplier of precision extruded aluminum automotive components and assemblies. The plant will manufacture parts for electric vehicles and other automotive companies.

“Some of the company’s major clients include Tesla, Lucid Motors and Honda,” explains Jack Fitchett, business attraction manager for Flagstaff. “The production plant has the potential to be the largest new recruitment to Flagstaff since the arrival of Gore Medical.”

UACJ Whitehall plans to invest as much as $60 million dollars with this new expansion and is anticipated to bring 120 high-paying jobs to the region over the next year, and an additional 350 in five years. The average wage at the company will be 60% higher than Coconino County’s per capita income.

“The potential for UACJ Whitehall to expand here is limitless. As the electric vehicle market continues to grow, I imagine production in Whitehall’s facilities will increase as well,” Fitchett contends.

PRESCOTT

Known for its Fourth of July parade and entertainment along Whiskey Row, Prescott is also a welcoming place for industry. Combat Proven (CP) Technologies cut the ribbon on its $8 million, 50,000-square-foot facility in June.

“The primary business of CP Technologies is building battlehardened computers. Imagine taking apart a Dell computer and rebuilding it in such a way that it can withstand the concussion from a bomb blast,” says John Heiney, community outreach manager for Prescott. “In 2018, CP Technologies was acquired by an Israeli company, Rafael Defense Systems, and is now producing military drones.”

The organization currently has 75 employees and plans to expand as it is awarded more military contracts.

“This is huge for Prescott because CP Technologies is a high-tech company. The average salary is $76,000, which is a big deal for a rural area like ours.”

Champions of Economic Development

Behind every economic developer is a passionate and skilled support team

Economic development (ED) is more than just attracting businesses to an area. It’s about creating employment corridors, housing, education, infrastructure and more. And each deal — from the 20 million-square-foot industrial park to the new master-planned community and everything in between — takes a team of dedicated professionals to bring to fruition. Working tirelessly behind the scenes with city economic developers are government officials, business leaders, developers and more who put in long hours to attract and retain businesses, expand industries and prepare and promote communities as great places to live, work, play and invest.

To better understand the importance of ED in Arizona, we spoke with six local authorities whose knowledge and input have helped economic developers transform the Valley from a sleepy desert oasis into a one of the nation’s fastest-growing metropolises.

AZRE: What does economic development mean to you?

Christian Price, mayor, City of

Maricopa: Economic development is one of the key components to making all aspects of a city grow and expand but doing so in a more enriching way. It helps citizens’ overall quality of life in any given area to be more fulfilling and helps drive a sense of place with uniqueness and enjoyment.

Liza Noland, director of rural programs, Local First Arizona:

Economic development embodies all efforts that build strong, thriving and sustainable communities. Beyond business attraction, it supports business retention and expansion and can be measured in parallel to a community’s spirit of entrepreneurship. Economic development addresses opportunities to keep more dollars flowing within a community and enhances access to capital to spur local growth.

Tammy Carr, director of business

development, Mortenson: Economic development practitioners are the visionaries who think long-term, partnering with their city leadership to determine the highest and best use of land, planning early infrastructure as catalysts to create employment and entertainment corridors that really grow the culture and economic security of a community. If you’ve lived in Arizona the last 15 years, you can see the impact AAED, Greater Phoenix Economic Council and Arizona Commerce Authority have had on our state’s competitiveness in attracting a more diverse employment base offering the types of high-wage employment opportunities that anyone raising a family here can appreciate.

Aric Bopp, executive director of economic development, ASU

Knowledge Enterprise: Economic development is a way to facilitate favorable outcomes for your community that will benefit the greater good. Economic development is a catalyst that drives investment and job creation by the private sector.

AZRE: Why is it important to support the work of economic developers?

Sarah Murley, economic consultant and principal, Applied Economics:

Effective economic developers interact with a broad range of other departments within a city as they assist companies that are interested in relocating or expanding. This requires a larger vision as well as the ability to understand how the actions of all of the departments in the city influence ED competitiveness. Providing economic developers with the information they need to do their jobs effectively and present their city in the best light allows them to be successful and, more importantly, benefits the entire community.

Carr: Municipal, county and utility economic developers are strategic planners for the type of growth we

Aric Bopp Tammy Carr Keyvan Ghahreman Sarah Murley Liza Noland Christian Price

want to see in our communities. They are the front line with potential employers, developers and corporations representing our communities and working to execute a vision of what they believe will offer their community and families the best quality of life. Without economic developers, one of our communities’ greatest assets, land, would just be developed with various products at and to the market’s whim. Our ED partners visualize a plan, gain community consensus around the plan and then go actively compete to execute to the plan in, often times, international competitions. Our responsibility is to ensure they have the tools and support they need as they continue to diversify our communities with high-wage jobs, high-quality education, diverse housing options and community amenities.

Keyvan Ghahreman, director of client and pre-construction services,

Willmeng: Economic developers identify and create opportunities for the architect/engineer/contractor (A/E/C) industry and business community at large to contribute to a thriving community. Attracting and helping grow businesses in our region fosters employment growth and the need for facilities of all sorts.

Bopp: Altruism. Economic development is one of the most altruistic professions. Economic developers strive on a daily basis to create jobs and opportunities that will benefit others.

AZRE: How has AAED helped you?

Price: While there is a lot of competition between cities and companies for the next best-given area, having a place where the ED industry can come together, share ideas and best practices, reach out for help and, in general, cheer each other on and celebrate one another’s successes is what AAED is all about.

Ghahreman: AAED supports members to educate, connect and advocate for the industry as a whole, and that helps construction-related individuals position ourselves for business opportunities on behalf of our firms. The A/E/C industry relies heavily on the strength of relationships, and AAED provides many avenues to grow such relationships.

AZRE: Tell us about a specific impactful project that was the result of a close collaboration with an economic developer.

Noland: The Town of Camp Verde ED team is one of the most innovative and creative groups I’ve ever met. Their accomplishments in rural development, sustainability and even affordable housing with so few resources are remarkable. We worked with them to enhance their opportunities in the agricultural sector by developing an agritourism brand around their local growers and producers. Verde Grown has since become a recognized label, with more than 40 participating vendors contributing the growth and promotion of agriculture in the region. The label is even being used as a business attraction tool to bring in additional farmers and producers who are interested in growing, packaging and distributing food products from this region of the state.

Murley: One particularly interesting project that I worked on was Crystal Lagoons Island Resort in Glendale. The project broke ground in June 2021, but the planning and analysis started two years earlier. Applied Economics worked closely with the economic development department and its director, Brian Friedman, as well as with the city manager, city attorney and the developer, to gather detailed information about the project that we used to analyze the economic impacts and the estimate future tax revenues to the city. We also assisted in crafting an incentive package that would be meaningful to the developer and would yield a strong return on investment for the city. It was exciting to see it all come together. Crystal Lagoons Island Resort is on target to open prior to the Superbowl being played in Glendale in February 2023.

AZRE: Why should companies join AAED?

Carr: AAED is an association that supports jurisdictional ED practitioners, whose thought leadership serves a vital role in our communities. Support from private companies such as Mortenson is critical to the continued growth and success of AAED through volunteering and sponsorship to magnify the association’s impact on strategically managing the growth and economic wellness of our statewide communities.

Ghahreman: AAED promotes a high degree of collaboration among the various local and regional ED organizations. This collaboration ultimately results in a cooperative business environment that translates to many aspects of our industry. AAED provides numerous ED education and industry networking opportunities. When these opportunities are leveraged, they can yield long-lasting returns for a business.

A Bold Outlook

AAED president Lori Collins is navigating the organization out of the pandemic and into its future

By ELINOR TUTORA

Lori Collins, the 2021 president of the Arizona Association for Economic Development (AAED), is the deputy economic development director for the City of Mesa. Since 2019, she has been helping the fastgrowing city attract new businesses as well as retain and expand existing industries. Collins joined AAED in 2008 while working as an economic development specialist for the City of Chandler and has held numerous leadership positions over the years, from award committee chair to treasurer, vice president and presidentelect before taking the reins in July. “It has been through the encouragement of so many colleagues that I got more and more involved,” she says.

AZRE spoke with Collins about AAED, how it held up during the pandemic and what’s ahead for the organization.

AZRE: Why is AAED so important? Lori Collins: AAED unifies economic development professionals and stakeholders and focuses on professional education, public policy and collaboration. The most important aspect of it is the statewide presence.

AZRE: Did the pandemic affect AAED? Lori Collins: Networking and collaboration are so important to what our organization does, and we typically hold multiple events each year. The shutdown made that part of our work very difficult initially. In March 2020, just as things were coming to a halt, our new executive director, Carrie Kelly, came onboard. She brought a fresh perspective and was able to quickly adapt to a virtual environment. We held virtual events and had a chance to test out a lot of new content and new ways to interact with each other.

Overall, AAED is better off because of how we approached these challenges. We didn’t lose any of our members, either, which speaks to the strength of the organization. AAED is a statewide organization, and we are exploring different ways that we can continue to bring content to our more rural partners.

AZRE: What is AAED’s three-year initiative? Lori Collins: That three-year strategic plan provides a framework to focus our efforts as an organization. Much of our work is accomplished by a team of volunteers. They lead the committees, they do the work and they organize the events. So this framework helps us focus and strengthen the value we can provide to our members, and it also increases our visibility. Having a longer-term outlook helped sustain us through the pandemic and allowed us to unify around the strategic plan. It provides a great playbook for those volunteers who are working so hard to drive the organization forward.

AZRE: Arizona is in the midst of rapid economic expansion. What is AAED’s role in the current growth? Lori Collins: Our role is to support and educate our members and our stakeholders who are involved in economic development and to advocate for policies that lead to successful economic development outcomes. Our members are the ones who are involved in the day-to-day through their places of work. The association is there to support them, both in the professional education aspect as well as being a public-policy advocate.