Economy & Economic Development  October 1, 1995

The search (or lack thereof) for jobs

Roland Mower could come to envy Bill Argo.

Mower, president of the Fort Collins Inc. economic-development agency, finds his desire to promote high-paying “primary” jobs stymied by anti-growth sentiments and the perception that unfair tax policies push companies away.

Not so with the president of the Greeley/Weld Economic Development Action Partnership Inc. Argo’s Weld County boasts ample land, a far-reaching enterprise zone that provides businesses with lucrative tax breaks and training incentives, and county and municipal governments that embrace his pitch for high-paying jobs.

“We’re probably the most aggressive economic-development operation in the state of Colorado,” Argo said.

Mower and Argo reflect the divergent approaches to economic development in Northern Colorado, where civic leaders debate how – or whether – to promote primary jobs.

Primary jobs pay workers at an above-average rate and spin off, on average, 2.6 additional jobs, economists estimate. Hence, primary jobs can be much more valuable to a community than lower-paying service-sector or retail jobs.

“Retail does nothing but transfer money from one person to another in the community,” Mower said. “It does not generate any new wealth, except when Greeley residents come in [to purchase goods].”

In Larimer County, manufacturing posts the highest average annual wage, at $37,408, and retail comes in lowest, at $13,213, according to the Fort Collins Job Service Center. About 59 percent of the county’s employment is in the retail or service sector, and those sectors posted the largest gains in employment last year, adding 3,599 workers.

“It’s pretty hard to build an economy on retail or service jobs by themselves,´ said Ann Garrison, associate economics professor at the University of Northern Colorado in Greeley.

Economic-development leaders in both Weld and Larimer counties see a need to promote high-paying jobs. Larimer County’s average wage stood at $24,220 in 1994, while Weld was even lower at $22,928, according to numbers released by the Fort Collins Job Service Center. Both counties lag the state, where the average wage comes in at $26,162. Boulder comes in at $26,946, while Denver rates even higher, at $30,305.

Larimer and Weld lag in per capita personal income as well, coming in at $19,189 in Larimer, $17,145 in Weld and $21,498 statewide in 1993, the most recent data available, according to Colorado Labor Force Review, published in June.

But while Weld County continues to lure companies from across the nation – including Boulder and Larimer counties – in an effort to boost incomes, anti-growth sentiment in Larimer makes such aggressiveness unlikely there.

“I don’t know whether they want to remain competitive,” Garrison said. “If they really want to remain competitive, for whom are they wanting to remain competitive?”

Argo said it’s Fort Collins’ elected officials, not economic-development officials, who are pulling back.

“I think the economic-development officials are fairly frustrated,” he said.

EDAP lured 16 new companies to Weld County last year, adding 1,500 jobs. The agency helped another 10 companies expand. This year, 10 companies have moved to the county, adding 500 jobs. Another four companies soon will announce relocations to the area, Argo said, adding that he targets jobs in the $12 to $18 range.

Argo said Fort Collins and Loveland used to participate in state investment missions and trade shows but that, “They don’t do any of that anymore.

“I just don’t think, from a marketing perspective, they are doing anything,” he said. “They’re answering the phones.”

In Fort Collins, a bitter business community is reeling from the loss of Hyundai Electronics America, which opted to bypass Fort Collins and Colorado Springs and build a $1.3 billion computer-chip plant in Eugene, Ore.

Greeley/Weld EDAP entered the competition late, when Fort Collins’ bid faltered. Argo and others said EDAP proposed an aggressive incentive package in an all-out effort to lure Hyundai.

“I think we had as good a chance as anybody in Colorado,” Argo said.

On the other hand, the Fort Collins City Council’s unwillingness to ease Hyundai’s tax burden alienated the city’s business community, with everyone from bankers to real estate executives to manufacturers lambasting the city for its perceived intransigence.

Fort Collins levies a 3 percent sales and use tax on manufacturing equipment, with an additional personal-property tax that can greatly increase a company’s tax bill. With Hyundai, for example, business leaders estimated that it would cost the computer-chip maker $100 million more to locate in Fort Collins than Eugene, partly because the company would frequently “retool” and thus have to pay the tax repeatedly.

“As the world marketplace becomes more competitive, people are looking for ways to trim costs, not add costs,” Mower said.

He added: “There’s been a dramatic decrease in the number of inquiries that have come to our office since Hyundai. There has certainly been a drop-off in the last six months.” Mower estimated the drop-off at 50 percent.

Fort Collins is reviewing its tax policies and the fiscal impact of large manufacturing operations. Although high-paying jobs are generally acknowledged to produce 2.6 additional jobs in a given economy, no study has ever demonstrated the exact impact of such jobs on Fort Collins, and exact numbers would have to be done on a case-by-case basis.

Frank Bruno, policy and special projects director for the city, said a review of the tax issues would take at least six months.

“There’s some pressure to get that done sooner rather than later,” Bruno said, adding that the city desires a “rational policy” relating to taxes on large employers.

“We want to make certain that we have policies that encourage capital expansion and don’t necessarily encourage population expansion,” Bruno said. Fort Collins should not aggressively pursue large numbers of new primary jobs, he added, but should be able to respond when an opportunity presents itself.

Bruno said Fort Collins already has an incentive program, one that allows the waiver of development fees. Advanced Energy Industries Inc.’s 55,000-square-foot expansion, he noted, will be facilitated over two years by a rebate of $130,000 in development fees. The company is expected to add about 600 jobs during the next five years.

Ed Stoner, president of Foxfire Property Management Inc., said such incentives fall short. Stoner is former mayor of Fort Collins, former president of Fort Collins Inc. and the new president of the Fort Collins Board of Realtors.

He leads an ad hoc group of business leaders from Fort Collins Inc., the Local Legislative Affairs Committee of the Fort Collins Area Chamber of Commerce and the Northern Colorado Manufacturers Council in preparing a recommendation to present to the city on a “more equitable tax policy for Fort Collins,” Stoner said.

The ad hoc group is examining the sales and use tax and the personal-property tax, and likely will recommend that the tax be capped.

“Equity has gone out the window,” Stoner said, noting the disparity between what a large manufacturer pays in taxes vs. a smaller business.

Mower said the city’s taxes would break down this way:

” Retailer: $65 per employee.

” Service company: $130 per employee.

” Traditional manufacturer: $600 per employee.

” New computer-chip manufacturer: $26,390 per employee.

Some business leaders believe that Fort Collins’ standard of living will decline without a change in the tax.

“Over the long run, [anti-growth sentiments] will drive some businesses out of the county,” Garrison said. She said some businesses will locate in the Del Camino area at Interstate 25 and Colorado Highway 119, in Greeley or Windsor.

Larry Kendall, chairman of The Group Inc. real estate firm, said, “Any job that is a high-paying job and is a clean industry I think is good for a community. Fort Collins is interested in them but not willing to pay for them.”

Roland Mower could come to envy Bill Argo.

Mower, president of the Fort Collins Inc. economic-development agency, finds his desire to promote high-paying “primary” jobs stymied by anti-growth sentiments and the perception that unfair tax policies push companies away.

Not so with the president of the Greeley/Weld Economic Development Action Partnership Inc. Argo’s Weld County boasts ample land, a far-reaching enterprise zone that provides businesses with lucrative tax breaks and training incentives, and county and municipal governments that embrace his pitch for high-paying jobs.

“We’re probably the most aggressive economic-development operation in the state of Colorado,” Argo said.

Mower and Argo reflect the divergent…

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