government subsidising tech companies

[David Schwartz]

Have you called the organization and looked into their charter?

The general idea is to invest a little up-front in tax abatements of various sorts to encourage companies to set up shop here. The theory is they’ll create a lot of good jobs and their employees will boost the overall tax base of the community, while the local economy will expand.

It’s great in theory, but these folks often don’t think things through very well.

About 30 years ago, the good folks with our State / Country / City decided they wanted to steal business from Wyoming or Montana or wherever and become the credit card processing capital of the nation. So they passed laws and provided tax incentives to draw these businesses — and jobs — to the Phoenix area.

After a few years they realized the error of their ways because it created a flood of minimum-wage jobs with high turnover rates. From what I’ve read, these companies have enjoyed lower taxes and higher profits, most of which went to headquarters located in other states (mostly Delaware), while the jobs they created did nothing to boost the ecoomy. 

Bringing in high-tech companies is a much smarter plan. The jobs tend to pay much higher than minimum-wage, although what I’m seeing is a lot of those software jobs are paying awfully low relative to other cities. I guess their argument is the cost of living is lower; relative to SF and Silicon Valley, yes. But not in comparison to other cities with large tech hubs (eg., Atlanta, D/FW, Houston, Austin, Denver, Portland, etc.)

Then there’s the obvious fact that AZ ranks 48th out of 51 in terms of school quality and funding, so who in their right mind would want to move here with school-age kids to take a job that pays a below-average salary in a state that protects businesses over consumers? (We’re a lot like Texas in that respect, these days.)

For as long as I’ve lived here (I’m a native and lived here most of my life), I’ve never seen much in the way of “smart policy” when it comes to business development here. It’s run by an Old-Boy’s Network, and the same Old-Boys get the benefits most of the time. 

Exceptions are mde now and then for encouraging corporations, but they can be fickle. Intel bought a huge chunk of land along I-17 and Beardsley way back in the 80’s, looking to build a huge campus. Then the City planners decided to run a freeway through the middle of it to appease some local (long-term) land-owners.

One thing has become painfully clear to me over the years: Govt planners like to bend over backwards to attract NEW business, but once you’re here, they don’t really give a rip. They spend money to woo new companies into an area where existing companies are going bankrupt, then just move on to lure the next one.

That area of Chandler is mostly NEW development.

Take a look at MetroCenter, Fiesta Mall, and some other areas where business has died for lack of investment and support by the community. I remember when these places were built! They were buzzing with all kinds of efforts by local politicians to attract new businesses. Now you’ve got the same handful of bottom-feeders who move in to these areas, like burrito vendors, payday loan places, thrift shops (that are tax-exempt), and other scrappy service providers. Fiesta Mall is turning into a huge office complex while buildings around it are being razed. There’s a new apartment complex going in South of Southern around Extension (E of Alma School) but …. where are the jobs and other services?

That’s what the Chandler Price Road Corridor will look like in 20 years!

That’s just how things roll here.

I was going to add that the only small-biz incentives I’ve heard of are focused on two groups: vets and the “disabled”. I put the latter in quotes because it refers to individuals who are served by non-profit entities that pay them a pittance to keep busy and supposedly learn some skills while employing lots of other “volunteers”, and ultimately sending the vast majority of their proceeds to a handful of executives.

There’s always money somewhere to do something to benefit vets, although most of it never ends up doing much good for anybody but the business founders. (Ask Univ. of Phoenix about that!)

I tried for years back in the 90’s to get any kind of funding I could find. Nobody was interested. I founded what might have been one of the first co-working tech spaces in the valley; at our peak, we had 6 businesses or so and about 15 employees there. Nobody would give me the time of day. (The building we were in at 16th St and Coulter was torn down last year. It’s still an empty lot. Some developer will probably buy it and put up more high-end luxury apartments or condos, which seems to be the rage in town right now.)

-David Schwartz




> On Dec 1, 2015, at 11:38 AM, Keith Smith <techlists at phpcoderusa.com> wrote:
> 
> 
> 
> Hi,
> 
> I'm doing research on government subsidising tech companies to entice them to move into a community.  In this case I'm wondering about the Chandler Price Road Corridor.  I know someone on the list must work in that area.
> 
> I discovered the Chandler Price Road Corridor existed a couple months ago.  Normally I would not be a fan of government spending millions a year for multiple years to build a business environment.  In this case I am intrigued and am wondering if this is a case where local government can create a sustainable high tech business environment.
> 
> I am wondering what ingredients will cause this environment to survive after the initial contract period.
> 
> Some of my thoughts are housing, shopping, entertainment, and a workforce that can be brought together to do things like build chips at Intel.
> 
> Does ASU aid this?  What about skills learned at the Maricopa Community College network of colleges?
> 
> At present the City of Chandler is only working with large companies like eBay, Wells Fargo... etc.  The City Council is looking at this and may modify this requirement so smaller companies can build and occupy within this corridor.
> 
> One thing I have not read about is venture capital.  Given the cost of doing business in Silicon Valley, I would think a tech rich environment might pull some from Silicon Valley.
> 
> What about Chandler Gang Plank?  Could this come into play?
> 
> Please help me discover what I should be looking at and how to look at it.
> 
> Your thoughts are much appreciated.
> 
> Keith
> 
> 
> 
> -- 
> Keith Smith
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