Arizona Technology and Innovation: Phoenix Innovation District

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Phoenix mayor Greg Stanton recently called for an innovation district in downtown Phoenix to attract startups, especially to the warehouse district. Phoenix Community and Economic Development Director Christine Mackay will tell us more about the emerging effort.

Ted Simons: Coming up next on "Arizona Horizon" analysis of the results of yesterday's special election. We'll also hear from an education official about what's next for Arizona schools and we'll learn about a new start-up area downtown Phoenix warehouse district. Those stories next on "Arizona Horizon."

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Ted Simons: Good evening, welcome to "Arizona Horizon." I'm Ted Simons. Governor Doug Ducey signed into law a bill that adds two more justices to the state Supreme Court. That despite Supreme Court chief justice school Bales saying expansion was not needed especially when court priorities are still upped-funded. Critics say it's meant to allow the governor to Pack the court with his own picks. Governor Ducey signed the Supreme Court expansion bill the day after a special election on two propositions, one of which, prop 123, uses increased distribution from state land trust to help settle an education funding lawsuit. It's still too close to call, which means it's not clear if voters approved the measure. Joining us are political consultants Chuck Coughlin, president of high ground, and Bob Grossfeld, president and CEO of the media guys. You surprised this thing is as tight as it is?

Chuck Coughlin: No, it isn't. I thought it was a proposition which was offered, which was complicated. It's not easy for the public to digest. It was portrayed in some ways that were had a lot of media discussion about it from the state treasurer and other people some claims made which were not accurate in terms it's not a tax increase when it may be. There's so much anxiety about funding education it got a lot of attention. I don't think they anticipated the amount of free media attention it got.

Ted Simons: but did you think voters for the most part knew what they were voting on?

Bob Grossfeld: Yes. And I think they didn't like it for the most part. This one should have been a slam dunk. It was education, it was do it for the kids. The spots were really nice. Made it simple. Vote yes. This happens, vote no, that. Here's a puppy. You vote the wrong way we're going to kill it. It should have gone through pretty easily. I think what happened is toxic environment, people are really nervous. Not particularly trusting of politicians or deals or that sort of thing.

Ted Simons: as far as the campaign is concerned what was the most effective message that you saw out there on either side?

Chuck Coughlin: Well, I think most effective message on the governor's team's part was that, hey, we're trying to do something for education here. I agree with Bob that it wasn't enough in the voters' minds that we weren't addressing the need to invest in human capital, the work force training, the true economic development engine of Arizona. It's going to be its people. That's how I think could have been sold much better. The most problematic message as I mentioned earlier, they said it wasn't a tax increase, and some of the nonqualifying districts in the state that don't qualify for state aid will pay. I don't know why you make a claim that patently not true.

Ted Simons: on the governor's side they were constantly emphasizing the fact that we're not raising taxes. Was that all that important to voters?

Bob Grossfeld: I don't think so. In all of the research I have done, Chuck has done over the last 20 years, people if given an opportunity to support education, we're there. Even if it's increasing taxes. I think this one, it wasn't so much the tax increase as he smelled a bad deal. There was something not right about it. The hook was we're going do -- and it's only the first step. With that I think that line is what really shook people up.

Ted Simons: the idea of trust us, we know what we're doing and we'll handle this later, a lot of voters said I'm not sure about this.

Chuck Coughlin: Your next guest will talk about what's next. That's still on the minds of the electorate in Arizona. Everything we have done in terms of public opinion gathering shows tremendous anxiety, bipartisan coalitions, large bipartisan coalitions that want to see higher degrees of investment in what we would call work force training, which would be your K through 12, your vocational, educational and higher education. That is the human capital element. That's our seed core. While the governor's policy agenda seems to focus on tax cuts that are focused more on corporate America, I think most of the electorate is focused on our human capital and investing in the people of Arizona and growing our economy organically out here.

Ted Simons: Regarding the best message out what was the message you thought hit hardest? What was the message you thought missed the most?

Bob Grossfeld: I think the one where they shot at and missed was if you do this, this, if you do that, no. It was pretty obvious. But it doesn't really push people to where they needed to be. And I may be a voice in the desert, so to speak, but I think the four most dangerous words in Arizona are and no new taxes. That is not doing us any good.

Chuck Coughlin: That message format plays to a very particular element of the Republican electorate. When we found when we were working with Governor Brewer on prop 100, for instance, we saw a very small majority of Republicans that would favor -- 52, 53, 54, all the time would favor increased funding to education. We found overwhelming amounts of party not disclosed and Ds, I tended to act more like Republicans but overwhelming majorities in those constituents. When you're elected governor you become governor to everybody and you govern from that coalition. The governor during prop 100 executed on a game plan which showed she was willing to sacrifice some political capital within that constituency-to-solve the bigger problems. That's what fundamentally political leadership is about. Are you willing to sacrifice some of your political capital to accomplish greater economic gains and policy gains for the over all electorate.

Ted Simons: interesting point. Do you think voters thought, well, the governor keeps acting like is this a compromise. Maybe it's not if all he's saying we're not raising taxes.

Bob Grossfeld: Yes. I think it came too soon, too big. He cut this deal, big celebration, now all we have to do is get the voters' approval. It just was too slick. There was a bigger plan. We talked to Governor Brewer. I talked to governor Ducey about a bigger plan to reform the state land trust to show a greater amount of return, for the trust to be able to generate greater returns. If you were to reform the trust you could go to the voters and say if we reform the trust give us more. There's unused capital in the trust. He was right about that. There's 5 billion earning 2.5%. Wouldn't that be better going to main street than Wall Street. That resonated, but to get the voters' trust to me you would have had to reform the trust, show a higher rate of return and put it into the 21st century land business in Arizona. I'm fond of saying you could swing -- well, probably not appropriate. A dead animal around in Scottsdale and hit a millionaire on every corn they're made his money on real estate. The state has 9 million acres. The question is why aren't we making more on our trust for our kids.

Ted Simons: We got 2.5, the governor is 6.9 he was saying why can't you go 4, split the difference, why did it have to be so much? I asked if they understood, maybe did they understand the nuance of taking money out of what is supposed to be a trust and all -- we have had a line of former treasurers saying don't do this.

Bob Grossfeld: We have also had a line of attempts to get the voters to do something with the trust land. Going back and back and back. They all go down. I suspect it has something -- I hate to be so linguistic about this, using the word trust. It's a state trust land. People take that very seriously. So when you go we're going to tamper with it, wire going to do this, this, this, people get nervous.

Chuck Coughlin: It's not easy to do but it is possible. We did it in '98, preserving Arizona. The current governor did it on lands surrounding military institutions. But the trust does need a big reform. To bring it into the 21st century model where it operates as a trust and generates revenue for the current year operating budget.

Ted Simons: Last question before you go. We're sounding like this thing lost when right now -- it probably will win. Who is the big -- who is the big winner, the big loser?

Chuck Coughlin: I think teachers nearing retirement are the big winners. You'll see a bump in salary and that will be important to them. I think the younger teachers, people still in the system, people concerned about the long term prospects of K through 12 probably not as big of a winner. Losers, you know -- I hate to say, I just wish we could do better. I hope the governor will take that and I hope you talk about it in your next segment. Tell me what's next.

Ted Simons: winners and losers.

Bob Grossfeld: I agree with Chuck. The teachers, big winners, hopefully they will get their money quickly. Politically, I think Ducey was the big loser. He was dealt four aces, and it's a struggle to get over the finish line.

Ted Simons: you can still lose even when you win.

Bob Grossfeld: Yep. Yogi bear, man.

Chuck Coughlin: he's got two more years.

Ted Simons: good discussion. Thanks.

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Ted Simons: Prop 123 may not be officially decided but schools are still thinking about what happens next in terms of budgeting and other policies. For more welcome Tim Ogle, executive director of the Arizona schooled boards association. Good to see you again.

Tim Ogle: thanks for having me.

Ted Simons: Your thoughts on this ever evolving election.

Tim Ogle: Certainly been quite an adventure over the last year. Here we are with the vote complete and plus or minus 100,000 votes to count in the next 24 hours or so. Right now prop 123 has about an 8800 vote advantage. About 76,000 of the remaining ballots we believe are in Maricopa County. The remaining portion -- good chunk from Pima County, a smattering around six others.

Ted Simons: What message did schools get from voters in they election?

Tim Ogle: Relative to -- I think the message, Ted, that came is that education in almost every voter's opinion is their top priority. We do have some exit polling that indicates that even the folks that voted no say education funding is their top priority. Almost three out of four people that cast a ballot said this is the number one issue facing our state.

Ted Simons: With that in mind, it looks as though this is more than likely going to win. Could be a slight, very edgy margin, but a win is a win. When will the money arrive, how will it be used? What happens next?

Tim Ogle: What happens next assuming it does pass, to your point, it's likely, still too close to call, of course, but if the current themes maintain themselves we have some degree of confidence that there will be a victory there. Schools have prepared two budgets. Most of our member districts have prepared a budget as if it passes and one as if it doesn't pass. As all of us know, we have teacher crisis. Our teachers are underpaid, undervalued. Leaving our state. Going across the border and getting gigantic differences in their compensation packages. That's the fire burning in the basement.

Ted Simons: But the flexibility involved in this measure suggests that teacher pay is not required. Nothing really is required. Is it?

Tim Ogle: That is actually the ultimate accountability is with the local school board. That's who -- our association. We represent the school boards of the 234 member districts. Those folks are ultimately accountable for every dollar. They are elected officials that sit in those chairs and make the value judgments for the best option for the local community.

Ted Simons: As far as oversight is concerned you're saying the only oversight that is there are the voters.

Tim Ogle: There's certainly that oversight for accountability to the local voter but then there's a sundry of accountability measures to state and federal agencies.

Ted Simons: The campaign said this was the first step as far as sufficiently funding education. What's the second step? What's the third step? The fourth, fifth and sixth?

Tim Ogle: Great comment. There's a lot of work to do. It's really interesting because an unusual partnership of allies has kind of emerged from this year with mediation and discussion and campaigns whereby now the education community really has true leverage with regards to telling our story and having policy makers pay attention. That is a gigantic under the rug advantage of what's happened here. We plan to leverage that to help our kids and our teachers.

Ted Simons: Does that leverage increase by the fact that it's such a slim margin of victory?

Tim Ogle: I think a win is a win. Something that is this complex and that with a special election has very low voter turnout we're projecting probably a 31% voter turnout. So you have the complexity, the low turnout, and angst about politics in general to get this over the top is a gigantic victory.

Ted Simons: I know classroom spending is supposed to be the target here.

Tim Ogle: Yes.

Ted Simons: what about capital needs? What about other needs out there?

Tim Ogle: The next steps are four fold. They have to do with capital and facilities. We have crumbling buildings that have been ignored. We have as you said restoring the cuts from 2009 that were the most devastating in the country. And of course we have full day kindergarten which we are one of the few states doesn't offer that. Of course we're only four years away from the renewal of prop 301, the expiration of the sales tax portion of prop 301, so there's a lot of work to do and we need to use this to leverage --

Ted Simons: Does it feel like you're in the eye of the hurricane? You just got through one side but the other could be four years away?

Tim Ogle: Yes, but hopefully one success leads to another to another to another.

Ted Simons: good to have you. Thanks for being here.

Tim Ogle: My pleasure. Thank you.

Ted Simons: Tonight's edition of Arizona technology and innovation looks add a planned innovation hub for downtown Phoenix warehouse district. Christine MacKay joins us with more. She's the Phoenix community and economic development director. Define for me an innovation district.

Christine MacKay: it really comes from a term we're all used to, science and technology parks that are more on the suburban scale. Over the last five years you have seen them change spacially, going more vertically, going more collaboratively. Collisions of major research institutions and start-ups and established firms taking place in an old, historic area, taking gritty, cool, fun buildings and working to create startups.

Ted Simons: what kind of startups? Is it manufacturing, is it high-tech, white collar stuff?

Christine MacKay: What you'll see are on the bio and medical device side. In this app-centric side applications are being created, web design. You will see some manufacturing on an advanced manufacturing scale but more on the small devices. Not like manufacturing big things.

Ted Simons: we're talking startups. Are we talking folks that may have.

Ted Simons: seeded somewhere else and need to expand or getting started here?

Christine MacKay: I think both. Some it's an idea they have co-working space or an incubator in the warehouse district. They have an idea. Now you have these thought leaders who have had successful spinups themselves helping these individuals create new companies.

Ted Simons: why focus on the warehouse district?

Christine MacKay: It's just a really cool area. When you look at these companies, they aren't interested in the traditional office space that you would see in other areas. They want the cool, fun, exec trick buildings. These are old pros warehouses, not something you see anywhere else in Arizona. They are taking off.

Ted Simons: what's the quality of the cool, fun, eccentric buildings?

Christine MacKay: It can be questionable in the beginning but we have a lot of great investors who believe in the buildings, in the historic nature of the area. They are restoring the buildings for the startups to move into.

Ted Simons: So we won't see much in the way of tear-downs? Folks do not want to see that stuff torn down.

Christine MacKay: they do not. A few have no structural integrity. They would be really challenging to do anything with. They are not safe, but those buildings are our jewels. They are how we go after companies and entice them to come into our area.

Ted Simons: Tell me the impact of this idea and transit. How does transit play into this? Light-rail doesn't necessarily go to the warehouse district although you have train tracks down there. So talk about that.

Christine MacKay: You bet. Innovation districts if you look at them across the country all happen around transit, never in a suburban area. They happen where mass transit is available. We have the transit lines that go as far as Jefferson making an easy connection. The next leg of light-rail will go to the warehouse district. The next stop will be Lincoln and center in the heart of the warehouse district making it easier to move around.

Ted Simons: do we have a timetable for that?

Christine MacKay: It's the next leg of proposition 104, so about 2019. Three years from now.

Ted Simons: that was part of 104.

Christine MacKay: It was.

Ted Simons: as far as ASU programs, the university, we're downtown right now, the warehouse district is just south of us. That impact.

Christine MacKay: it's huge. If you don't have those anchor institutions and leading edge institutions collaboration is not happening. The events can't happen. They are meant to really work together part and parcel of each other. One of the best assets is ASU actually has a physical presence in the warehouse district with their arts program. They have already been drawn into that area. Easy connection to this area.

Ted Simons: The impact of the biomedical campus.

Christine MacKay: it's huge. Without that having started I don't think you see an innovation district being planned here today. Those health care assets and medical assets that are from are a huge asset when it comes to the innovation district.

Ted Simons: what is the city doing to make it easier for a company to relocate down there or just get started down there?

Christine MacKay: It starts with our adoptive reuse program. We have an amazing planning team that can take the old buildings that don't meet current code. They don't meet the new way things are done. They can work to allow those buildings to be repurposed without having to meet new codes they just couldn't meet. They don't have to meet parking codes, landscape codes. They work closely with the building owners but things that have made the buildings easy to repurpose. That's number 1. We look at connection with light-rail, we look at bringing assets, amenities, the restaurants. Landing spaces where companies can collaborate easily together. Spaces for events and programs.

Ted Simons: what budget do you have for this?

Christine MacKay: at this point it will all happen within my existing economic development budget. We'll work together, find -- we're working to bring in a facilitator to bring 10 or 15 of the leading individuals within the community that were the concept of this to talk about what we should do first and how we should work towards that and then we'll work with city council as we see what we need.

Ted Simons: so a general ballpark figure,.

Christine MacKay: In the beginning my guess would be out of any existing budget probably $50,000 over the next year. Then we'll be working with the existing building owners and others to allow these to happen. I think that is probably what's most important about the innovation district is they happen organically, not because of government and not because of money. They happen because of each other.

Ted Simons: all right, warehouse district south of the ballpark and the arena for the Suns down there. Things are happening. Sounds like they will continue to happen. Good to have you here.

Christine MacKay: Thanks for having me.

Ted Simons: Thursday on "Arizona Horizon," we'll talk about what's being done to slow the spread of the Zika virus in Arizona and learn about the challenge of educating kids in foster care. That's at 5:30 and 10:00 on the next "Arizona Horizon." That is it for now. I'm Ted Simons. Thank you so much for joining us. You have a great evening.

Video: "Arizona Horizon" is made possible by contributions from the friends of Arizona PBS, members of your PBS station. Thank you.

Christine Mackay: Phoenix Community and Economic Development Director

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