Final
Interim Committee on Economic Development

ECONOMIC DEVELOPMENT

Votes:
Action Taken:
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09:29 AM -- Call to Order

Representative Borodkin called the meeting to order and began by discussing the advisory board's activities. Members of the committee present were Representative Massey, Senator Tapia, and Representative Borodkin. Senator Evans arrived later. Members of the advisory board present were Mr. Bill Becker, Adams County Economic Development, Ms. Carolyn Siegel, AFL-CIO, Mr. Tom Clark, Metro Denver Economic Development Corporation, Ms. Carla Perez, Carter and Burgess, Mr. Matt Baker, Environment Colorado, Doug Aden, retired bank president, and Ms. Elaine Mariner, Colorado Council on the Arts. Legislative Council Staff present were Mr. Josh Harwood and Mr. Jason Schrock. Mr. Ed DeCecco and Ms. Nicole Hoffman from the Office of Legislative Legal Services were also in attendance. Representative Borodkin encouraged all the day's presenters to be in contact with the advisory board regarding their comments and recommendations.


09: 33 AM -- Presentation on the State's Enterprise Zone Program by Dr. Devon Lynch, University of Denver

Dr. Devon Lynch, University of Denver, discussed his research on the state's enterprise zone program. A copy of his research paper, co-authored by Dr. Jeffrey Zax, University of Colorado, entitled, "An Evaluation of Colorado's Enterprise Zone Program," was distributed to the committee (Attachment A). Overall, his research found that the program is generally not meeting its intended goal of improving employment and wages in the state's "depressed" areas. The agricultural industry is benefitting more than other industries from the program. His research found that the program is having positive effects on employment and wages in four of the state's seven rural zones, and that the program was having a negative impact on the Denver urban zone. He thought that people were commuting into zones in urban areas to work in order to benefit from the program's incentives and that jobs were not being filled with people living inside the zones. He explained that he did not want to conclusively state that the program is not effective because he was not able to look at investment data in his research; the investment tax credit is the most significantly used tax credit in the program. His research did look at investment indirectly, however. He stated that there is no evidence that the program is resulting in new firms, or leading to firm closures. In addition, his research found that the program was not improving income in the zone areas. He explained that he did not look at accountability issues of firms taking credits.

Dr. Lynch responded to committee questions about the large size of the state's enterprise zones. He stated that most of the state's economic activity occurs in non-enterprise zones. He noted that a large amount of incentives are being provided to firms and that he is not sure if the state is receiving economic benefits in return.


09:49 AM

Mr. Evan Metcalf, Enterprise Zone Administrator, Office of Economic Development and International Trade, stated that total investment data is not available for all businesses in Colorado.

Dr. Lynch explained that he did not find much evidence that the enterprise zone program was slowing the decline of certain industries. Mr. Metcalf stated that the agricultural industry was benefiting from the program. Mr. Metcalf discussed a study by BBC Research that found that certain counties in Colorado were benefitting from the program compared to counties in neighboring states that were not part of an enterprise zone program.

Mr. Tom Clark, advisory board member, explained that firms are frequently interested in whether there is an enterprise zone in Colorado. Dr. Lynch found that the number of new firms were not higher in enterprise zones compared to nonzones during the period 1990 to 2000. He explained that it is possible that most of the benefit of enterprise zones could have occurred after they were first created in 1986.

Senator Tapia stated that incentives are typically not an important factor in business location decisions. Dr. Lynch explained that there are many things that factor into a business location decision and that his research tried to control for all factors in location decisions. He thought that it is possible that certain struggling firms maybe attracted to zones to help them stay in business. Mr. Metcalf countered that businesses need to have a tax liability to qualify for the tax credit incentives and that the incentives are not as beneficial to struggling firms.

Mr. Bill Becker explained that businesses have significant interest in whether there is an enterprise zone program in Colorado. He stated that enterprise zones are a small incentive but they do factor in business decisions because businesses evaluate operating costs. He stated that it is possible that the only way to know whether the program is working is to take away the zones.


10:05 AM

Mr. J.J. Johnston, Northern Colorado Economic Development Corporation, discussed the importance of the charitable contribution tax credit and of enterprise zones overall in business location decisions.

Dr. Lynch responded to questions from Ms. Carolyn Siegel, advisory board member, regarding how his research tried to isolate the effect of enterprise zones given that there are many other incentives and factors that businesses consider in their location decisions. Representative Borodkin explained that the advisory board would look further into enterprise zones and incentives. She questioned whether an indepth survey or further study of enterprise zones was needed. She asked the advisory board to look into the issue and to consider making a recommendation to the committee.

10:16 AM -- Doing Business in Colorado

Mr. Patrick Leonard, Quovadx, began by discussing his company, a software development firm. He indicated that the company wants to grow in Colorado. The company did work with state when it considered a recent expansion; the company had considered moving to Georgia, which offered a more attractive incentive package than Colorado. However, the cost of moving was prohibitive. He explained that the state government's tax and job training incentives did help his company stay in Colorado. However, he was unsure whether the incentives would have prompted the company to move to the state. He continued by stating that his company competes globally and needs to attract and retain educated workers. He explained that his company sometimes has difficulty finding technologically-skilled people in Colorado and that many skilled workers left during the recent recession.

Mr. Leonard stated that his company has not had much experience working with the state regarding international business issues. He indicated that his company needs high caliber people with computer science and business degrees. Members of the advisory board discussed the higher level of incentives offered by other states. Mr. Leonard stated that his company is outsourcing and offshoring work when it is needed. He explained that outsourcing was not done to reduce costs, but to create products more effectively.

10:29 AM -- Mr. David Miller, CH2M HILL, began by discussing his company and its origin in Colorado. Most of CH2M HILL's work in Colorado involves engineering. He stated that the state government had no role in CH2M HILL's decision to locate in Colorado. The company moved its headquarters to Denver because it was difficult to operate from its original location in Corvallis, Oregon. The company decided to move to Denver because it was looking for a major metropolitan area, a major airport, a place with western culture and values, Denver was less expensive than most other major metropolitan areas, and it already had clients and projects in Denver. He stated that CH2M HILL stays in Denver because its employees like to live in Denver and the area provides a good business climate. He explained that CH2M HILL's presence in Colorado has not likely drawn other engineering firms, but it hires many engineers from the Denver area.

Senator Tapia stated that CH2M HILL is a quality company with quality employees. Mr. Miller stated that CH2M HILL would likely need more tax incentives and tax breaks if it were more capital-intensive.

10:42 AM -- Mr. David J Tyler, Raytheon, began by discussing his company, which mostly develops software for satellites and employs about 3,500 people in Colorado. It mostly employs software engineers who make an average salary of $77,000 per year. Raytheon has had a presence in Colorado for over 30 years. The company is in Colorado because its competition is here, the state has several Air Force bases which are Raytheon's customers, and the state has a good climate for the aerospace industry. There are several aerospace related-firms in the Denver area and the company often works with other companies on its projects. The company hires individuals with science backgrounds; it is critical to his industry that the state's higher education system continue to educate people with science backgrounds.

Raytheon recently considered where it would build its new campus, which he indicated was a "bottom-line" business decision. The company did look at other locations outside Colorado. He stated that a job incentive grant from the state helped offset the cost of the expansion in Colorado. This was a significant factor that allowed the company to grow in Colorado. He stated that what is most important to Raytheon's continued success is that Colorado's congressional delegation continue to keep potential customers sold on the need for Raytheon's products and services.

Mr. Tyler explained that there is a trend that students are less interested in the hard sciences. He explained that society needs to get kids interested in science at a young age. He explained that both the Colorado Space Coalition and the Colorado Institute of Technology are looking at this issue.

Senator Evans commented that Lockheed Martin and NASA have made investments at schools in science and aerospace outreach programs. He encouraged Raytheon to expand its outreach program to emphasize math and science at schools. Mr. Tyler discussed Raytheon's efforts at Aurora Public Schools to increase the educational awareness of the aerospace industry.

Senator Tapia asked whether the state's office of aerospace is helpful in developing the industry in Colorado. Mr. Tyler stated that Raytheon's ideas are being voiced more through the Colorado Space Coalition and that more industry representatives are working together through this organization.

Senator Tapia also discussed how Boeing was enticed to locate in Pueblo through the use of incentives and that the company moved out as soon as the incentives ended.

11:03 AM -- Mr. George Bye, Aviation Technology Group (ATG), discussed his company and explained that it is currently involved in the research and development of high performance aircraft for both civilian and military applications. The company will spend about $200 million before it will have a return on its investment. The company hires highly-paid engineers and executives; the company is highly sought after by other states who try to lure the company with large incentive programs. For example, Alabama has offered to loan the company money to build it a facility and then forgive the loan when the company hires employees.

Mr. Bye indicated that he wants to keep the company in Colorado and explained that the company needs good infrastructure, a high quality of life, a healthy economy, a good education system for engineers, and a trained and qualified workforce. In addition, the company looks for good flying weather, low housing and tax costs, (which he stated are a benefit of doing business in Colorado), proximity to vendors and customers, and that the community surrounding his company presents itself to the company's customers in a quality way. He stated that the tax incentive legislation that was passed in 2005 was a positive step to help keep his company in the state. (HB 05-1314 allows aircraft manufacturers that add new employees to claim an income tax credit of up to $1,200 for each new employee.) However, he encouraged the legislature to consider further legislation, such as allowing a credit instead of a deduction for taxes because the company is not currently generating any revenue. He discussed the importance of enterprise zones and training enhancements. He also discussed the need for the state to develop incentives to improve the venture capital climate in the state and to ensure that certain banking programs are in place that will improve the state's business climate.

In response to committee questions, Mr. Bye stated that in the next month or so he should be able to indicate whether the company will develop its manufacturing facility in the state or elsewhere. He stated that his company has had a lot of support from state and local officials. He indicated that the state Office of Economic Development could do much more with more resources.

Mr. Tom Clark explained that other state incentive packages to lure ATG's new facility were much more attractive than Colorado's. However, he acknowledged that offering large incentives in this case was difficult because ATG is not generating revenue yet. Mr. Becker thought that Mr. Bye's testimony highlighted the reality that Colorado competes in regarding incentives and that companies have to look at the bottom line when making business location decisions.

Mr. Bye stated that Colorado's economy was doing well, but that it could do better. He thought that Colorado was in the middle among states. It needs further diversification. He stated that most aerospace engineers that his company employs are recruited from out of the state.

11:24 AM -- Mr. Steve Orndorff, Accera, discussed his company, which is a drug discovery and development biotech company. The company is currently developing a drug for Alzheimer's disease. Prior to his current company, he also founded a biotech company that was involved with drug research and manufacturing. The reason his company is in Colorado is because he likes the state's quality of life. He stated that training grants and the equipment tax abatement were very important to his manufacturing company's operations. He stated that he also had a good experience with a summer intern program offered through the University of Colorado. He explained that one advantage of doing business in Colorado is its strong communications network since his current company outsources a lot of work. The transportation infrastructure is also important, especially the presence of Denver International Airport. He explained that the low cost of doing business in Colorado is also attractive. One drawback is that there is a lack of people with clinical development experience, so the company has to recruit people from out of the state.

Mr. Orndorff offered several suggestions for the state to assist the biotech industry in Colorado: portray an image that it supports the biotech industry; endorse scientific initiatives; increase funding to its educational system, especially to help the quality of its research programs and to preserve professor excellence; promote centers of excellence in colleges and universities for biotech work; and possibly charge lower fees for clinical trials at universities. He also mentioned that the state needed to improve the technological transfer at the University of Colorado; the university needs to do a better job of helping people with business acumen create successful businesses. He also indicated that he has had difficulty finding people to talk to at universities regarding the licensure of technology. Also, the state could require that its universities work more closely with the biotech industry. He discussed the importance of venture capital and that there was a lack of it in Colorado. He indicated that CAPCO funds should be more visible to startup biotech businesses in the state. He encouraged the state government to help bring in more venture capital.

Senator Tapia questioned whether the construction of the Health Sciences Center at Fitzsimons was helping make the state a hub for biotechnology. He discussed the need for the state to promote the new Health Sciences Center to help attract the biotech industry. Mr. Orndorff thought that the state needed to do a better job within the industry to promote Colorado.

11:40 AM -- Ms. Lucille Mantelli, Kodak, discussed her company and explained why the company moved to Colorado. She explained that most of its sales growth was occurring west of the Mississippi River in the 1960s. She explained that at that time the company was looking for large parcels of land, a good water supply, a good transportation system, including air, rail, and roads, a good education system, government cooperation, government financial stability, the availability of local suppliers, and quality health care. She explained that Kodak is rapidly changing and transitioning to more digital products which is causing employee retention issues. She discussed the products that the company is making in Colorado.

Ms. Mantelli continued by stating that Kodak does a significant amount for the community through the donation of products and services. It has $100 million in payroll in Colorado and has invested $2 billion in its history in the state. She indicated that the company presently has $500 million in equipment in Colorado. She indicated that the renewal of the enterprise zone that Kodak used to be located in would be beneficial, that the state needs to increase funding for its business training grants, needs to find a way to reduce the business personal property tax burden, continue to fund higher education, reinstate business incentive agreements, and make it more difficult for the state constitution to be amended because of the financial difficulty constitutional amendments have created for the state.

11:50 AM -- Mr. Fred Julander, Julander Energy Company, discussed his company, a natural gas exploration firm, and commented on the large natural gas reserves in Colorado. He explained that global demand for energy to improve the standard of living is making the energy industry a significant growth industry. He expressed his concerns regarding the oil and gas industry in the state. He stated that the industry needs a good educational system. The industry needs high school graduates that have learned basic skills and also needs technically skilled workers the from Colorado School of Mines, the University of Colorado, and Colorado State University. Also, the state needs to ensure that the tax revenue generated by the industry stay in local communities that are impacted by the industry to help the communities prosper. He also wanted the CEOs of energy companies to locate in Colorado so that they could become community leaders. The energy industry is the fastest growing industry in Colorado.

11:54 AM -- Mr. Jim Noon, Centennial Container Corporation, discussed his company, a packaging and corrugated box company. He provided a list of companies that have decided to totally or partially leave the state due to high property taxes (Attachment B). He explained that wholesalers are leaving Colorado because of high real and personal property taxes. Also, cities do not generally welcome large wholesalers because they do not generate sales tax revenue. He also mentioned that the state needed to fix the Gallagher Amendment to solve the business personal property tax issue. He said that many government fiscal problems are linked to the forcing down of the residential assessment rate caused by Gallagher. He stated that Colorado does not have the lowest tax burden if all taxing jurisdictions are counted.

Senator Evans explained that the state needed to reduce the regulatory burden on local governments to reduce taxes.

Ms. Mantelli indicated that Kodak pays $730 per employee in taxes in New York and $2000 per employee in Colorado.

12:35 PM -- Lunch at the Office of Economic Development and International Trade

Mr. Brian Vogt, Director of the Office of Economic Development and International Trade (OEDIT), welcomed the committee members present, Senator Evans and Representative Borodkin, and the rest of the attendees. A copy of OEDIT's agenda of briefings is provided as Attachment C. He commented on the relatively small budget of the office and explained how all the incentives that the state offers to businesses are performance based.

Ms. Leslie Madsen, Director of the Advance Colorado Center (ACC), stated that the ACC provides a common headquarters for nonprofit industry associations and help entrepreneurs grow profitable, sustainable businesses. She indicated that new trade associations may be joining the ACC in the future, including a nanotechnology industry association. She explained that the ACC creates a synergy among various trade associations by allowing different industries to brainstorm business ideas.

Ms. Sue Hawk, from the Colorado Internet and Software Association, discussed the benefits of the ACC to her industry and discussed her association.

Mr. Bud McGrath, from CEBA/P3, a trade association that assists its members to integrate social and environmental responsible business practices, discussed how ACC beneficially impacts his association. He discussed how the ACC was helping to relaunch the Colorado Film Commission.

12:45 PM

Mr. Brian Vogt explained that the ACC is funded using mostly federal funds and that a nonprofit foundation is being developed to help provide a sustainable funding source for the ACC so it would not rely on the state.

Ms. Laurel Albert, Director of the International Trade Division, discussed how her division helps market Colorado to the international marketplace, increase exports, and increase foreign investment in Colorado. The division provides business counseling, market research, and has overseas representatives that help market Colorado. The division helped companies with $364 million in export sales last year. She stated that over 20 percent of manufacturers in Colorado are involved with exporting internationally. The state exported $6.7 billion worth of products and services last year. She provided an article from the Denver Post that discussed how exports increased jobs in Colorado (Attachment D).

Senator Evans discussed his concern with whether the agricultural industry, especially specialty businesses, were involved sufficiently with international business. Ms. Albert discussed how the state helps the agricultural industry in the international marketplace.

Ms. Albert explained that her division has tried to find creative ways to be productive with less resources. For example, trade offices were closed in Germany and Japan, but the division has honorary trade representatives there. She discussed the presence of free trade zones in the state.

1:03 PM

Ms. Chris Shaphard, Business Development Representative, Biosciences and Emerging Industries, discussed her efforts to encourage the growth of biosciences and emerging industries, such as the nanotech, phototech, and renewable energy industries. She stated that the long term goal of her division is to help generate jobs in these industries. She stated that she is helping develop a statewide nanotech plan and commented that this industry would not be developed until 10 to 15 years in the future. She also discussed her work in helping the biotech industry to market itself. She expressed appreciation to the legislature for the creation of the Venture Capital Authority which could help provide seed funding to biotech start-ups in the state. The state is in intense competition with other states and countries which offer large incentives to attract biotech firms.

Mr. Vogt discussed the possible need for the creation of a net operating loss program so that biotech companies could sell their losses to more profitable companies in Colorado. Other states have such programs.

1:15 PM

Ms. Kim McNulte, Division Director, Colorado Tourism Office, discussed the goals of the tourism office. The division strives to increase visitors to Colorado. It has developed an advertising campaign, including a website and magazine, and helps local regions market themselves. She distributed the Colorado Official Vacation Guide to the committee. The new version of the Colorado.com website provides ideas for tourists for things to do in Colorado. In 2004, there were 25.8 million visitors to Colorado, bringing $7.3 billion into the economy. She discussed the 8 welcome centers that are located at entry points throughout the state which serve about 1 million people per year. Currently, her division is working on developing a heritage tourism plan with the Colorado Historical Society.

Mr. Vogt discussed how international trade and tourism are interrelated.

1:20 PM

Mr. Jeff Holwell, Division Director, Business Development, stated that his division is involved with business advocacy, attraction, and retention. He explained that business advocacy is his division's primary role. The division also helps local communities develop long range economic development plans to help them attract and retain businesses. He stated that it was important to help companies understand the value of doing business in Colorado.

Senator Evans and Mr. Vogt discussed the use of large incentives in attracting and retaining businesses. They both agreed that some companies seek too much money and that it is better to develop long term commitments and relationships with companies.

Mr. Holwell discussed software that helps communities become involved in the business retention process. He also commented on his division's efforts to attract businesses that are considering moving to Colorado and the use of creative incentives in economic development. He explained the Colorado First Program, a worker training program for businesses that are locating or expanding in Colorado, and how it benefits the Colorado workforce. Applications to the program must demonstrate that money for training will be used for resume building skills.


1:37 PM

Ms. Stephanie Dalgar, Director of Communications, commented on her division's efforts to help advance Colorado economically through its communications efforts. She discussed her division's branding initiative. The branding initiative involves making changes to OEDIT's materials to better communicate the office's economic development programs. She discussed other efforts to help generate interest in Colorado, such as meeting with business writers to relay Colorado's innovative approach to economic development and the organization of upcoming trade shows that will occur in Colorado, such as Tech Week. She explained the use of the office's e-newsletters to help better communicate with businesses and economic developers across the state.


1:52 PM

Mr. Leroy Romero, Director, Minority Business Office, explained that his office acts as an advocate for women and minority businesses. He stated that the most significant activity of his office was helping minority businesses with the government certification process so they can find out how they can do business with governments. The office also helps start-up minority businesses. There were 11,000 hits on his office's website last year. He provided statistics on the significant amount of women and minority businesses in the state.

Representative Borodkin commented on how Mr. Romero's office helps minority businesses deal with the barriers that minorities encounter in the business world.

1:58 PM

Mr. Brian Vogt discussed OEDIT's efforts to promote and the develop the telecommunications and information technology industries in the state. He also commented on his office's efforts to promote the tech industry by marketing Colorado during the upcoming tech week. Also, his office is helping spokespeople from the tech industry with outreach programs on the importance of education in a technological society.

2:00 PM

Mr. Evan Metcalf, Senior Division Director, explained how Small Business Development Centers work with local economic development officials and businesses in economic development. Also, the business assistance office advises people on how to start a business. The Small Business Resource Guide and OEDIT's database of business regulations is also a good resource. He explained that business finance should mostly be a private sector activity. However, there is a role for the public sector to help businesses obtain access to loans. He discussed the state's Certified Capital (CAPCO) program and the new Venture Capital Authority's efforts to provide venture capital to businesses. He also commented on the use of Community Development Block Grants and how they can help create jobs in lower income and rural areas.

Mr. Metcalf continued by discussing the Economic Development Commission (EDC). The EDC provides grant and loans to businesses in an effort to help attract and retain businesses in Colorado. He stated that the award amount of grants are based on the number of jobs created, the wage levels of the company's employees, and the economic conditions of an area. He stated that the grants and loans are performance-based as businesses do not receive any money unless they have created jobs.

Mr. Vogt closed by stating that OEDIT works diligently to partner with economic groups and businesses statewide in its economic development efforts and that OEDIT's staff bring a significant amount of expertise and passion to their work.

Representative Borodkin expressed the need to inform the rest of the legislature of the efforts of OEDIT. She apologized that there were not more committee members present. Mr. Vogt indicated that his office has produced a short visual CD that demonstrates OEDIT's functions.

2:32 PM -- The Impact of Housing Investment in Colorado

Ms. Britta Fisher, Colorado Housing Investment Fund Coalition spokesperson, discussed her organization and commented on the need for a housing investment fund in Colorado.

Ms. Meg Costella, Director of Development, Colfax Community Network, discussed the issue of affordable housing along Colfax Avenue. She commented on the impacts of the lack of housing on low-income Colorado families and explained the need for more investment in housing. She stated that poverty was the main cause of inadequate housing. Urban renewal authorities often displace families living in poverty.

Ms. Rosalinda Trevino, Family Services Associate, Habitat for Humanity of Metro Denver, explained how the home built by Habitat for Humanity benefited her family.

02:43 PM

Mr. Ken Hoagland, President, Community Capital Corporation, presented information on a study of the economic impact of a statewide housing investment fund. A copy of his presentation is provided as Attachment E. Materials providing information on a potential Colorado housing investment fund and on Habitat for Humanity were also distributed to the committee (Attachments F and G). He stated that there is a link between a strong economy and housing stability. He stated that research shows that for every $1 invested in a housing investment fund, the fund can generate between $8 and $10 for housing through the leveraging other funding sources. He stated that the study found that a $25 million housing investment fund could produce an additional 3,400 additional units per year, create 3,200 new jobs per year, and generate $334 million in total economic activity. Most of the economic activity would occur in construction and real estate. He explained that if lower income people could spend about 30 percent of their income on adequate housing, they could spend more money in the economy, generate more tax revenue, and gain more access to better education and health care.

Mr. Hoagland continued by explaining that the National Governor's Association has recently noted that housing costs are an important factor in attracting businesses and employees. Research shows that state government investment in affordable housing has beneficial effects on the economy.

Ms. Fisher commented on the numerous sources of funding for a housing investment fund that have been considered for Colorado. The study presented by Mr. Hoagland recommended three leading possible funding sources: a real estate transfer tax, a document recording fee increase, and an increase in the state sales tax. She commented that the Colorado Blue Ribbon Panel on Housing is also looking at possible sources for funding for affordable housing. She questioned whether a funding source for housing should be from the housing industry or from the community as a whole, such as through a sales tax. She stated that she has found that there are 38 states that have invested in housing. The most widely used funding sources are a real estate transfer tax or a sales tax. Ms. Fisher discussed the resources that are available for housing builders and property owners to discover how they can become involved with providing affordable housing.

Senator Tapia questioned how to best use affordable housing resources. Mr. Hoagland stated that it depended upon how a government prefers to utilize its resources. Denver prefers to use money provided directly from developers for affordable housing so they can target the money to people who have the greatest needs.

03:00 PM

Senator Evans discussed the large amount of Section 8 housing clustered in the Parker area. Ms. Fisher discussed the problem of people not wanting affordable housing in their area. She stated that the affordable housing industry was starting to build better projects and spread them out in different areas. She stated that studies have shown that it is better to not concentrate affordable housing in one area. She stated that incentives could be used so that developers would build affordable housing in different areas. Senator Evans indicated that perhaps a statewide approach was needed to reduce the concentration of affordable housing.


03:09 PM

Ms. Kris McClain, Colorado Housing Finance Authority, discussed her organization's efforts to provide affordable housing, such as providing financing for developers and first-time home buyers.


03:13 PM -- Perspectives on State Economic Development Incentives

Mr. Robert Olson, Denver Regional Director, Economic Development Administration, U.S. Department of Commerce, discussed his background in economic development and the federal Economic Development Administration (EDA), including economic development projects with which the Denver regional EDA is involved. A copy of his presentation was distributed to the committee (Attachment H). He stated that the EDA is coinvesting with Colorado in developing a nanotech development plan for the state. He noted that his views on incentives do not necessarily reflect those of the U.S. Department of Commerce. He explained that there is an evolution in thinking in economic development regarding the use of incentives and economic competitiveness. The EDA is currently rethinking about how best to invest economic development resources. He discussed an advisory committee on strengthening America's communities that he is serving on. He stated that much of the latest thinking on economic development is provided in the committee's July 2005 report (Attachment I).

Mr. Olson continued by noting that the Southeast and Midwest are the most aggressive areas of the country in the use of incentives. He discussed the bidding wars that occurred in the 1980s and 1990s among southern states for the automobile industry. He stated that the location of the industry in the southern states did have beneficial impacts. He also commented on other examples of bidding wars among states for companies. Colorado was involved in a state bidding war regarding the location of a United Airlines maintenance facility in the early 1990s, which Indiana won. United has now left the state and Indiana is trying to get the money back it provided to United. He discussed a pending court case involving the use of tax credits for economic development incentives (Cuno v. Daimler Chrysler) which could impact the use of economic development tax credits in the future.

Mr. Olson discussed the Amgen company expansion in Colorado. Amgen is the world's largest biotech company. The expansion occurred without the use of state incentives. However, the company received some small incentives from Longmont. He stated that Amgen placed its manufacturing plant in Colorado because of a doctor's research connection to the University of Colorado and because Amgen employees discovered that Colorado is a great place to live and work. It is easier to recruit and retain employees in Colorado. Also, the resources provided by the University of Colorado are important to Amgen. Colorado should use its livability and its highly trained workforce to market itself. He also noted that building industry clusters is an extremely important strategy for economic development.


03:34 PM -- Committee Discussion and Recommendations

Representative Borodkin discussed the need the begin discussions on recommendations from the committee due to upcoming deadlines.

Representative Massey commented on the common theme that the committee keeps hearing regarding the need to educate the Colorado workforce to help it compete in the global economy. The state may need to develop a better science and math curriculum and help graduate students with more science and math degrees in order to supply Colorado's workforce. He also discussed the need for broad-based economic development solutions that could attract all types of businesses to Colorado.

Senator Tapia discussed an incentive program that was passed last session to allow students to pursue college prep programs and receive a four-year tuition stipend for lower income students. He discussed the lack of preparation among high school seniors for higher education. He also discussed the possible need to develop incentives to help K-12 students pursue math and science fields.

Representative Borodkin stated that educating Colorado's workforce is the topic of the committee's next meeting. The meeting will include discussions on how to educate the portion of Colorado's workforce that is not going to college.

Senator Evans discussed the need for more data and understanding regarding Colorado students who are not going to go to postsecondary education.

Senator Tapia discussed the need for better information on whether the Enterprise Zone Program is working. He noted that a survey may be necessary to find out more information.

Mr. Becker, advisory board member, indicated that a survey could be conducted on businesses in the enterprise zones. He discussed the anecdotal evidence that enterprise zone incentives are important.

Ms. Carolyn Siegel, advisory board member, discussed whether a study on all the economic development incentives that businesses receive should be conducted.

Mr. Becker discussed how the status of enterprise zones are reviewed periodically based on economic conditions and census data.

The committee continued to discuss the need for an in-depth review or survey of the enterprise zone program.

The advisory board indicated that it would look at conducting a survey of the enterprise zones at its next meeting. Representative Borodkin stated that the committee would consult with the education committee regarding its discussions.

03:56 PM

The committee adjourned.