The Arizona Commerce Authority is charged with recruiting, creating and growing businesses in our state. Greg Linaman, who is the Chief Operating Officer of the authority, will talk the organization’s mission and recent successes.
Ted Simons: The Arizona commerce authority is charged with recruiting, creating, and growing business. But how does the commerce authority drive jobs and business to Arizona, and how successful have those efforts been? Joining me to talk about recent business developments in the state is Greg Linaman, chief operating officer for the Arizona commerce authority. Good to have you here. Thanks for joining us.
Greg Linaman: Thank you, Ted. Great to be here.
Ted Simons: What exactly is the Arizona -- We've talked about it quite a bit on the show, but remind us what we're talking about.
Greg Linaman: We're created by the legislature and the governor in to drive Arizona's economy forward, particularly by pursuing high-quality jobs.
Ted Simons: Has the ACA evolved since its inception?
Greg Linaman: Absolutely. Our first year was sort of the foundational year, as with any organization, we developed policies and helped acclimate our board, and we got our bearings. So maybe a good part of the first year was about the transition and the foundation, this year it's been full speed ahead. We've been working hard and had a lot of great results.
Ted Simons: Let's talk about how the ACA drives jobs and business to Arizona.
Greg Linaman: Absolutely. We generally speaking -- Pursue three strategies -- Business creation, where we work with companies that are early stage and we help them get a foothold and commercialize. Number two, is business expansion. Which means working with existing Arizona companies of all sizes to help them grow, and number three, business attraction which essentially means recruiting other businesses from out of state and internationally to Arizona.
Ted Simons: Is there a focus on high wage jobs here?
Greg Linaman: Absolutely across the board our focus is always on high-wage jobs.
Ted Simons: Let's talk about some of the expansions here. GoDaddy, 300 jobs. How much was the ACA involved?
Greg Linaman: Extensively. In terms of delivering service and helping with site selection, helping them understand Arizona opportunity, projecting work force opportunities and delivering incentives, the commerce authority was involved from the get-go with go daddy.
Ted Simons: G.M. had expansion here as well, same kind of thing as far as what the commerce authority did and how it was involved?
Greg Linaman: Absolutely. We worked with General Motors for a long period of time. They went through a long internal process, they're a large company, as you understand, so their time line was longer than our other companies. But we advised them all along the way about the vantages of Arizona and we're very excited. Obviously they chose Arizona and Chandler in particular.
Ted Simons: Talk about the dynamics between a G.M. where you may need to remind them what Arizona is about, and a GoDaddy who should know what Arizona is all about.
Greg Linaman: Absolutely. That gets right to the difference between the attraction and the expansion strategy. The attraction is all about educating folks about Arizona in terms of what Arizona offers their business, as well as helping them understand the specific incentives and other programs we can deliver to help them -- Help their company take root.
Ted Simons: With these expansions -- Would these have not happened if ACA did not exist? Talk to us -- We've had critics on the program saying the commerce authority, nice idea, but the marketplace, this happened anyway.
Greg Linaman: Sure. Two responses. Number one, every state in the nation is doing what we're doing. So if we decide not to do it, we're at a huge advice advantage because all the other states are out there competing for these opportunities. Number two, we talk to these companies and we ask them, are we delivering value? And we hear in every case that absolutely they are making decisions on the basis of what we're telling them and the sevens the state is delivering.
Ted Simons: How do you make sure you don't deliver too much value? How do you make sure the Arizona's residents get what sometimes they're paying for?
Greg Linaman: Absolutely. Well, we have a very sophisticated valuation process for our discretionary programs, in terms of comparing the return to the state in terms of tax revenue versus the incentives they might receive. A lot of that analysis is done very capably and astutely by the legislature when they develop the programs in the first place.
Ted Simons: Are there algorithms, ways to look at these metrics and say, Ted's Hamburger Hamlet wants a little too much, is there -- As far as our equations go, how do you make sure you don't give up too much?
Greg Linaman: Absolutely. I don't know if they constitute algorithms, but there are two things you can do, industry accepted standards, one is REMY and the other is implan, and these are models developed by economists. You can plug project parameters into those models and they can give you information, and most pertly, state tax revenue that can be projected because you're able to compare the state tax revenue projections to the incentive.
Ted Simons: How much does -- Do federal grants, I know there's a manufacturing aspect with the ACA does and the federal grant is involved there, how much federal money is flowing through this project?
Greg Linaman: Through the manufacturing extension program in particular, it's a $5 million grant, $1 million per year for five years, extremely excited about it, it's a new program to help Arizona small and mid-size manufacturers. We're going to be able to deploy our resources, combine with federal resources to help small and mid-size manufacturers compete globally by helping them do what they already do better.
Ted Simons: I know the U.S. small business administration has a grant as well as part of what the ACA do.
Greg Linaman: Absolutely. Another small business targeted program, it's a loan participation program where we're able to provide loans in conscious with private equity funding in small businesses or private financing small businesses. Obviously leveraging existing financing opportunities.
Ted Simons: A couple of questions. Again, from folks we've had on the program who aren't enamored with the ACA they say the commerce authority essentially by offering incentives or focusing assistance is picking favorites. How do you respond to that?
Greg Linaman: I can tell you when it comes to trying to help facilitate high quality job creation, we're equal opportunity across the board, we will try to provide our assistance, whether it's financial or services in kind to any kind of employer that's helping create high-quality jobs from. That the wonderful thing about high quality jobs is that again, this gets back to the modeling we're talking about, the multiplier effect of the high quality jobs in terms of the indirect jobs they create and the economic activity they create and the tax revenue they create, they help create all the other kinding of jobs we might not be able to, because of limited staff and resources help as often.
Ted Simons: Back to Ted's Hamburger Hamlet.How do you explain to the small business guy orthopedic person who's been here for a while and struggling, they're seeing incentives, they're seeing assistance, how do you explain this is fair and up and up?
Greg Linaman: Absolutely. The first thing I point out is that the Arizona legislature is mindful of the Hamburger shack. For example, the Arizona legislature has reduced corporate tax rates some % over a five-year time line. So absolutely small businesses are targeted as well, but the other thing is that when we go out and attract high-quality jobs, the bigger employees, they're eating at the Hamburger shack. We think everyone benefits from the high quality jobs.
Ted Simons: When critics say too much government interference from the Commerce Authority, you say --
Greg Linaman: We are a public-private partnership in nature. Our board consists of private sector CEOs, we are engaged with the business community, we are not strictly a government entity. We are to help connect the dots of the economy so everyone benefits.
Ted Simons: I gotta ask about State Farm and Tempe. That is a humongous project. How much was ACA involved?
Greg Linaman Very involved, from very early on. Very exciting project. Largest office development in the history of Arizona.
Ted Simons: All right. We'll keep an eye on that one. Good to have you here.
Greg Linaman: Thanks for having me.
Greg Linaman:The Arizona Commerce Authority, Chief Operating Officer;