ACA to award deal-closing cash for Tempe company’s expansion

Caitlin Coakley Beckner//October 24, 2011

ACA to award deal-closing cash for Tempe company’s expansion

Caitlin Coakley Beckner//October 24, 2011

After being in place for four months, the Arizona Commerce Authority Oct. 24 announced its first award from its $25 million deal-closing fund.

Clear Energy Systems, a Tempe-based manufacturer of portable energy generation systems, is in line to receive a package of tax credits, incentives and potential job-training grants from the Commerce Authority.

The company says it will invest $10 million and create 225 jobs in the expansion and the launch of a new, one megawatt generator, called Genesis 1000, which is lighter and smaller than traditional diesel generators and runs on natural gas. It is meant to be used in oil exploration and mining operations.

Despite the announcement, ACA has not yet released details of the incentive package. Spokeswoman Kristen Hellmer said that some of the details, including the final amount that Clear Energy would receive from the Arizona Competes deal-closing fund, are still to be determined.

Some details of the package, such as the tax credits, are considered private taxpayer information and are therefore confidential. However, the amount of the award from the deal-closing fund will be released once it has been approved, Hellmer said. As of now, the ACA and Clear Energy are in final negotiations and there is no set timeline for when the contract would be approved by the ACA board.

Don Cardon, president and CEO of the Commerce Authority, said Clear Energy Systems’ decision to build its new facility in Arizona came after years of negotiation, and ultimately came down to a decision between Arizona and Michigan.

Arizona’s gain, he said, is proof that the Arizona Competitiveness Package and the newly established Arizona Competes fund – passed by the Legislature and signed into law earlier this year – is working. Cardon added that while this would be the first award given, the ACA has seen a significant response to the new law, including a 350 percent increase in business inquiries to the ACA compared to those received by the Department of Commerce.

Perhaps to head off accusations of a Solyndra-esque scandal, Cardon emphasized that the award package was based on very strict performance criteria for job creation and wages. The Arizona Competes fund, for instance, includes clawback provisions if Clear Energy Systems or any other recipient does not meet those standards.

“We do not want false investments,” he said. “This is an investment predicated upon them delivering jobs and performance. If they don’t, those can be returned back to the state.”

Hellmer explained that the award would function like a forgivable loan: The company would receive the money up front, but on the condition that it pay it back unless it meets certain agreed-upon performance requirements.

With the expansion, Clear Energy Systems would create 225 new jobs in the next three years, said president and CEO Tony Carmen, and would pay an average of $65,000 per job. The company is still in negotiations for the site of the expansion, he added, but it would be somewhere within the greater Phoenix area.

Barry Broome, president and CEO of the Greater Phoenix Economic Council, said that the decision by Clear Energy Systems to expand in Arizona is proof that the state has become a strong economic negotiator and is getting results.

“What would we have done five years ago, if we had been competing for this company?” he said. “I’m sure Tony likes to golf, but he might have needed a little bit more than that to pull the trigger on a $10 million investment.”

Jerry Colangelo, co-chairman of the ACA board of directors, said that the deal is a clear example of the work that can be done by the public-private partnership of the ACA.

“This fits right into our game plan,” he said. “This is the classic type of deal that can be made and be done quickly, and show results.”

Gov. Jan Brewer touted the decision as proof of Cardon’s hard work and thanked Carmen for his company’s decision to stay in Arizona.

“Tony, Arizona is very proud to have you here,” she said, “and even more proud that you chose to began the next phase of your business right here in our state.”