In fiscal 2010-11, Oro Valley should create an economic development enterprise fund "to ensure long-term economic stability for the community," a committee of the Northern Pima County Chamber of Commerce has suggested to the town council.
To pay for economic development efforts, the town should dedicate half the revenues from its 6 percent bed tax to support its economic development department, as well as make contributions to Tucson Regional Economic Opportunities, the Metropolitan Tucson Convention and Visitors Bureau, and Critical Path Institute, the non-profit that works to get new drugs to markets.
Chamber leadership recognizes "the financial challenges facing Oro Valley" as it crafts a spending plan for the 2009-10 fiscal year that begins July 1. That's part of the reason TREO and MTCVB "are willing to partner and to accept a funding decrease" this time, the chamber panel said in its letter to the town.
A town council committee is recommending TREO receive $24,000, down from $50,000 in the current fiscal year, and that MTCVB receive $72,000, down from $120,000 a year ago.
David Welsh, senior vice president of strategic partnerships at TREO, told a chamber committee meeting Thursday at the Hilton Tucson El Conquistador that TREO, concerned with diminished funding from Oro Valley in the short term, has "faith" the reduction is "a one-time thing, and confidence we can work out a long-term agreement."
"We take this as a one-year blip," Welsh said. "These are tough times. We look forward to continuing this dialogue into the next year."
Even with a reduced commitment from the town, "there will not be any let-up in our marketing efforts for Oro Valley, or this property," MTCVB executive director Jonathan Walker said at the El Conquistador. "We told that to the council."
Last year, Critical Path received $25,000 from Oro Valley. It was recommended for $25,000 in fiscal 2009-10 by Town Manager David Andrews; the council committee is recommending no funds in the fiscal year that begins July 1.
For C-Path, $25,000 "isn't insignificant," said Colleen Coyle Mathis, director of communications and administrative services for C-Path. "It means a lot to us. We really can't accept money from a big sector of society," because to do so "tarnishes our credibility. It's really important we sustain the funding we have right now."
The chamber committee also suggests Oro Valley "temporarily postpone" building of its planned municipal operations center, and use those funds to offset the budget shortfall "for this year only." Last week, the town council decided to do so.
"We have not taken our decision to engage in this discussion lightly," chamber board chairman Greg Forszt wrote in an accompanying letter to town officials. "Just as we respect your commitment to public service, and understand the magnitude of the decisions before you, we are confident that you will recognize our shared commitment to the success of Oro Valley."
Nor would Welsh "throw rocks" at the town council. Its members are passionate, and care about the community, he said.
Permanent dedication of bed tax funds to an economic development enterprise fund would "insure long-term success and support for current and future business recruitment and expansion," the committee suggests.
"You are in effect taking it off the backs of local citizens, and passing it along to visitors who place limited demands on the resources of the community," the letter said.
"People who are going to pay are the visitors to the community, and it's self-feeding," said Lynn Ericksen, general manager of the Hilton Tucson El Conquistador Golf and Tennis Resort. "We think it makes a lot of sense. We think it's a conduit" to a brighter future.
The committee wants Oro Valley to fund "a strong, well-staffed economic development department," viewing it as "essential to increasing the revenues that are reflected in the "local taxes" line item in your budget projection." Oro Valley has "little control" over most of its revenue streams, but it can "positively influence and grow" its local tax revenue.
Return on investment in an economic development enterprise fund "would be tremendous," the panel believes. It also thinks patience is required, particularly in the recruitment and retention of "high-quality firms." Funding sources "need to be in place for an average of 2-5 years to recruit firms to a community."
"Our proposed economic development enterprise fund would demonstrate Oro Valley's continued commitment to a unified regional approach toward economic development, thus promoting the town's leadership in that effort," the letter concludes.
"It's so important it can't be set aside," Ericksen said Thursday.
"It's so heartening to see the chamber do this," Welsh said of the business advocacy role.
He recalled the council's decision a year ago not to provide funds to the chamber.
"I know it was a painful thing to have the funds" from Oro Valley "go away," but it gives the chamber an opportunity to be more vocal. "You're stepping into what this community really needs," he said. "The chamber is saying 'we're a force to be reckoned with.'"
"I'm truly invigorated by this new concept," C-Path's Mathis said. "I applaud your innovation. Hopefully, we'll be a part of it."
"One of the most important things the chamber has done is get out and take a definitive position," and to "put forth a solution," Ericksen said.
Dick Johnson, former town council member and now a part of the chamber panel, suggested Oro Valley look into its reserves as a source for short-term funding. "If it's not raining now, I don't know when it's going to rain," Johnson said. "I would suggest let's go use that to facilitate these income-generators."
Hilton manager wants OV to use rebate for 'engine'
The Hilton Tucson El Conquistador Golf and Tennis Resort gets back one-third of its 6 percent lodging tax collections as part of an economic development agreement executed by previous ownership and the Town of Oro Valley some 10 years ago.
The EDA is suspended and the money held in escrow, Oro Valley finance director Stacey Lemos said, pending the outcome of a court case, Turken v. Gordon, that challenges the legality of economic development agreements between Arizona governments and businesses.
The Hilton rebate agreement expires in mid-2010. When it does, property general manager Lynn Ericksen said, "let's put that back into the economic development engine that runs Oro Valley.
"We've got a solution," Ericksen said at a Northern Pima County Chamber of Commerce public policy committee meeting last week. "We're here to help you. We need to step out and say 'we are not the enemy.'"
In peak years, Ericksen said, "a point" of lodging tax from the Hilton El Conquistador brings in up to $170,000.
Across the community, Lemos said the 6 percent lodging tax brings in about $1.3 million a year. It is "already segregated, separate and apart" from the general fund.
In fiscal 2009-10, the town's proposed budget would move $700,000 in lodging tax funds into the general fund. About $500,000 would remain in the bed tax fund, Lemos said.
TREO pushes for area 'primary jobs'
Tucson Regional Economic Opportunities focuses on wealth generation, working to expand economic vitality "via primary jobs" created by companies that "look like Ventana Medical Systems" in Oro Valley, David Welsh told a Northern Pima County Chamber of Commerce committee last week.
"What we suffer from region-wide is an anemic private sector," said Welsh, a former Oro Valley employee who is now senior vice president of strategic partnerships for TREO. "We had our wagon hitched to too few industries."
TREO's four industries of focus are aerospace and defense, the "very nascent" solar industry, transportation and logistics, and biosciences, Welsh said.
"I can't impress upon you enough the unique position" Oro Valley and Southern Arizona enjoy with bioscience companies Ventana and Sanofi-Aventis, among others, Welsh said.
Raytheon Missile Systems, the defense contractor that is southern Arizona's largest private employer, is "the linchpin to so much of what's going on here," said Welsh. A number of its employees live in Oro Valley, he noted.
"It's important to see you're part of the region," Welsh said. "As goes Tucson, so goes Oro Valley."
Transportation and logistics are "under the radar," but have great potential, he believes. Union Pacific Railroad is doubling its tracks through Arizona, and shipments to and from the port in Long Beach, Calif., move through the state.
Welsh shared statistics indicating the direct and indirect effects of TREO's work in Oro Valley. TREO received $50,000 from the town of Oro Valley in the current fiscal year. For the fiscal year beginning July 1, a town council committee is recommending a $24,000 commitment.
C-Path helps bring drugs to market
Critical Path Institute serves as a "neutral third-party" in the pharmaceutical industry, working with government, industry and academia "to speed the development of safe and effective medical products," C-Path's Colleen Mathis told a Northern Pima County Chamber of Commerce committee meeting last week.
Mathis said C-Path, which now has 27 employees, is financed through grants from governments like Pima County, Tucson, Oro Valley and Marana, several foundations, local businesses and individuals.
"Neutral funding is the foundation of our success and critical to our future," Mathis said.
C-Path received $25,000 from the Town of Oro Valley last year. A town council committee has recommended no funding for the institute in the fiscal year that begins July 1.
Critical Path sees industry changes coming through "personalized medicine," and its specific determination of which drugs will most help an individual.
"Personalized medicine really is the future," said Ventana Medical Systems' Greg Forszt, who is also the chamber board's chairman.
"That's why we were purchased by Roche," Forszt told the chamber panel. "Organizations like C-Path can help us … get these drugs quickly to the market. We certainly support C-Path."
"C-Path is such an important organization," agreed Oro Valley Town Councilman Al Kunisch.
MTCVB works to promote region
Promotional efforts by the Metropolitan Tucson Convention and Visitors Bureau are responsible "for about 20 percent of the business in this property," Hilton Tucson El Conquistador general manager Lynn Ericksen told a Northern Pima County Chamber of Commerce public policy committee last Thursday.
Ericksen placed a value of MTCVB efforts for Oro Valley at about $10.7 million a year. The figure comes from direct and indirect employment and related economic activities. As examples, the El Conquistador's work force, though reduced, remains about 500, and tourists are responsible for about 25 percent of all income at Oro Valley's 61 restaurants, Ericksen said.
In terms of contact with groups looking at greater Tucson for conventions and meetings, "we can't do what they do," Ericksen said of the MTCVB.
The MTCVB received $120,000 from the town of Oro Valley during the current fiscal year. For fiscal 2009-10, a council committee is recommending MTCVB receive $72,000.
Former council member Dick Johnson, now part of the chamber's public policy committee that is urging town commitment to economic development, "cannot understand" why Oro Valley's return on investment with the MTCVB "isn't very clear to our town council folks.
"This is not some willy-nilly type of expenditure, but an investment in our community."