Commerce Authority President and CEO Don Cardon said the first grant could come soon, as the authority and Gov. Jan Brewer attempt to close deals with solar and other technology companies they met with during a recent trip to China.
“I think within the next month, some of the efforts that we did in China will result in situations where those funds are utilized, I anticipate,” he said.
Cardon said the authority will disclose the recipients of all awards from the Arizona Competes fund.
At its quarterly meeting on Tuesday, the board approved a host of guidelines aimed at ensuring that the fund is used only for quality investments that will bring jobs to Arizona for the long term. The guidelines were already established in state statute, but the authority was holding off on awarding any grants until after it formally approved them.
Cardon emphasized that Arizona Competes is a deal-closing fund, “not a deal-leading fund,” and will only be used to “close the gap” on projects that Arizona is in danger of losing to other states.
“Everything we do is performance-based. It is a quid pro quo. You do not get front-ended deal-closing money and then walk away,” he said.
The Commerce Authority has hired economists Alan Maguire, of The Maguire Company, and Jim Rounds, of Elliott D. Pollack and Company, to evaluate all requests for grants from the fund and determine what kind of return the state will get on its investment. Cardon said the authority won’t sign off on any request the two economists oppose.
Maguire told the board to look beyond the statutory requirements for the grants that were established by the Arizona Competitiveness Package, the massive economic development bill that created the Commerce Authority, and focus on companies that will bring high-wage jobs. State law already requires any recipient of deal-closing money pay its employees the median wage for the county.
When asked about the requirement that companies receiving money from Arizona Competes cover at least 65 percent of employees’ health care costs, Maguire referred to it as a “secondary consideration.”
“It’s a box you have to check, but if you have high incomes, you solve that problem,” Maguire said of the health care requirement.
A primary consideration, Maguire said, needs to be how much tax revenue the state would bring in from Arizona Competes grants.
“You are ultimately using public money to do this, so are you going to get your money back? That’s the real question,” he said. “A simple measure would be, how does the general fund get paid back for the amount of money it provided to you for the fund, and how long does it take? “
Cardon said companies won’t be able to take the money without meeting certain benchmarks. Arizona Competes has a “clawback” provision that allows the state to take back its grant if a company eliminates the jobs it promised to create within a few years, and Cardon said the authority will use a pay-as-you-go approach that awards the grants in portions based on how many jobs are created.