After JJ Johnston was hired as Oro Valley’s Director of Community and Economic Development last May, he began a seven month process of creating the Comprehensive Economic Development Strategy for the town. The 19-page report lists facts, trends and recommendations for the Town Council to guide Oro Valley’s actions and policies regarding economic development.
Johnston said the contents of the CEDS report reflects the input of 90 different community, business and industry leaders through a series of interviews.
“In the communities I’ve been before, the first 90 to 120 days I go out and talk with people,” he said. “I ask how they think we can improve the types of jobs that local people would want, just kind of doing an informal scan of the community as it pertains to expanding the economic base. It took me about 450 hours over a seven month period of interviews, doing research and writing the report and talking through it with our town manager.”
He said the revenues of the town are mostly sales tax, hotel occupancy and construction tax. Since there is no property tax within Oro Valley, it’s all about expanding the economic base: job creation, business retention, expansion, attraction and building on infrastructure.
The report analyzes the current state of Oro Valley’s local economy and identifies strategies for making some key changes. Johnston sees a variety of strengths in the town: proper land use, public safety, education, infrastructure, the community facilities and a strong budget. However, the town only has about 200 acres of developable employment land left, and Johnston said 300 acres are needed in the next 10 years to keep up with growth.
Because Oro Valley is approaching build-out, Johnston supports future annexations, including the possibility of annexing south where land is already developed in unincorporated areas of Pima County.
“The council wants to have an annexation strategy where we annex with the property owners’ consent, help them develop to Oro Valley standards, and we can bring those residents into our tax base,” he said.
The report stresses the necessity of “primary employers” to bring economic diversity to the town. Johnston said a primary employer is a business or a person that will export at least 50 percent of their finished goods or services outside of Pima County and bring in new money sources.
“You can have an office of engineers or management consultants or some highly-paid person or company where most of their customers reside outside of Pima County,” he said.
The report recommends the town develop and maintain an annual minimum of 70 primary employer prospects and successfully acquire at least 5 percent of those every year for the next 10 years. This plan would bring a minimum of 20 to 30 primary employers to Oro Valley over the next decade, adding 3,000 to 4,500 new jobs to the community.
Part of diversifying the town’s economic base includes diversifying the houses built within the community. Johnston said the prices of Oro Valley’s single-family homes are not compatible with people who work in service industry jobs. They usually buy homes 10 or 15 miles away and commute.
“Unless they’re in an apartment, they can’t afford to live here,” Johnston said. “Especially as we look at acquiring more land, the homebuilders will want to come in and give us more housing stock. A lot of people are empty nesters who want a smaller home, they don’t want a yard. The homebuilders we’re meeting with are aware of these market conditions and how most people are downsizing.”
Oro Valley Mayor Joe Winfield said the town has a good amount of diversity in housing stock but staff needs to be thoughtful and strategic about future developments. He expects an ongoing conversation about density levels, which is a point of tension within the community.
A conversation about empty buildings quickly points to the Oro Valley Marketplace, which has several vacancies.
“We’re not referring to it as ‘Main Street’ anymore, but the concepts behind it, the overlay districts, we’re going to apply to Oro Valley Marketplace and other retail areas,” Johnston said. “There’s a lot of things we can do to revisit the challenges, I can tell you with complete certainty that is a top priority for the council to look at.”
Some very specific actions will be coming from town staff in the next few months, according to Johnston. They will focus on generating more foot traffic and bringing more community assets to the marketplace in order to generate new business.
“That area, where there is a number of undeveloped lots, potentially might serve as higher density type of development, which wasn’t originally part of the plan … but I think we need to be open minded,” Winfield said. “I think we need to do a better job in terms of our dialogue and communication with the community on how we are funded and how we fund services.”
The CEDS plan recommends the town develops a combination of zoning codes and incentive program options that will drive new investment and visitors to the area. Johnston’s report highlights construction tax reimbursement, funding assistance for utility hook-ups, employee relocation assistance reimbursement, expedited development reviews, fee waivers and reductions and other incentives that have been used frequently elsewhere as possible options for Oro Valley.
“The incentive is earned before it’s paid,” Johnston said. “My proposal would be equally available to any employer existing or new that creates the same amount of net new capital investment: jobs, wages, that’s how you do the calculation.”
He hopes the council will direct the town staff to analyze incentives being offered throughout Arizona and develop a clear incentive policy. Johnston said Oro Valley has a competitive disadvantage without an incentive program and shovel-ready building sites. The town council will consider this matter during a study session on Wednesday, Feb. 27.
“In my conversations with Dave Perry and the [Oro Valley] Chamber, one of the things that have had a cloud in terms of Oro Valley’s reputation for being business-friendly is our plan, review and proposal process that is longer than what is needed,” Winfield said. “So we want to streamline that and help businesses open their doors as quickly as possible.”
Right now, Johnston said the CEDS report is just a list of recommendations. But once the council officially adopts the plan, some of the goals will be implemented by the staff, while others will require further processes or direction from the council.
“We can implement the plan whenever the council gives us the formal green light,” he said.