Eco-devo pros asking for help

This article ran back in 2005. Here's an update: Intel is pulling out of Colorado Springs. It sold the division that operates there and the new owner doesn't need the facility.

As you're reading the article, keep this in mind: Intel promised to hire 2,300 people to work in the plant. They hired 850. To date, Intel has raked in $3,184,455 in tax breaks through one of the business incentive agreements mentioned in the article. It's scheduled to get another $409,294 this year (unless we "renege" on the agreement, as the article puts it).

Since the purpose of the tax break was to attract businesses, it's hard to see why we should be paying them to pull out. After all of the money they've gotten so far, they can pay for their own moving van.

April 15, 2005
by Amy Fletcher
Denver Business Journal

While Colorado lawmakers try to stabilize the state budget, business leaders say they have done more harm than good when it comes to economic development. Of the dozen proposals economic development interests have supported, most are dead or on life support.

Business leaders are pinning their hopes to the few survivors that remain, including a proposal for more tax credits for new jobs, an enterprise zone for aviation and a different model to assess the impact of tax cuts, which business leaders hope will help make arguments in favor of business tax breaks more palatable to lawmakers.

Economic developers also are fighting a move that would allow the state to renege on its $2.3 million share of business incentive agreements, essentially tax credits given to recruit large companies. They say it sends the message to companies that the state won't honor its agreements.

"We are losing a lot of sleep as economic developers. ... Absolutely we need something out of this legislative session," said Debbie Woodward, president of the Economic Developers' Council of Colorado.

"We can't compete anymore -- not with other states and what they are offering. ... We are losing deals every day, and we can't even come close to coming to the same table with the incentives we need.

Businesses that really want to operate in Colorado, as opposed to those just looking for a handout, consistently tell us that they'd rather have good schools and good transportation than a tax break. Back to the article:

Lawmakers have some tough choices to make when it comes to how to spend taxpayer dollars. This session has been dominated by work on ways to avoid more budget cuts to such basic state programs as higher education, a top concern of businesses.

In November, Coloradans will vote on a plan lawmakers passed that allows the state to keep revenues in excess of limits established by the Taxpayer's Bill of Rights for five years.

"What legislators have been telling us is that until the budget issue is solved ... they are not very anxious to pass tax credits that [they believe] would reduce state revenue," said Chuck Berry, president of the Colorado Association of Commerce and Industry.

Rep. Jack Pommer, D-Boulder, pushed for the state not to fund its share of the business incentive agreements, saying the state was never a party to those contracts.

The agreements, made between companies and school districts, allow businesses a tax credit amounting to half the business personal property tax that goes to schools. But then the state must fund the tax credit. When the state doesn't, then businesses lose out.

What about when the business doesn't do what it was supposed to do in return for the tax credit? Then everyone in Colorado loses out.

Pommer called the incentives unfair, adding they don't play a big role in companies' decisions to locate in Colorado anyway.

"When we offer people good transportation, health care and good education, then people want to come here, and when people want to come here, that's good for business," he said. "Most of our jobs and job growth comes from small businesses, so making politically driven payments to a few giant corporations doesn't affect the people who hire most of the people here."

There isn't money to fund business incentives anyway, Pommer said.

"We are in a fiscal crisis, and this year we don't have the luxury of providing some of the special-interest tax credits," Pommer said. "We need to spend the money on education. If we reform TABOR and we have more money next year, then we take another look."

Berry said Colorado is losing ground to other states that are more aggressively recruiting companies, which are expanding operations as the national economy continues to recover. There are several examples of companies passing on Colorado when it comes to expanding facilities or locating headquarters here.

Last month, Boulder biotech company Sirna Therapeutics said it was moving its headquarters to San Francisco. City wage and sales tax exemptions played a role in the decision, the company's chief financial officer said.

Nice touch, choosing a company from my district (or near it). But notice the wording? "exemptions played a role in the decision." How big role? In its own announcement Sirna never mentions a sales tax exemption. And Boulder doesn't have a city wage tax, so San Francisco's exemption just leveled the playing field.

So why did Sirna select San Francisco? Turns out they chose a spot next to University of California San Francisco's 43-acre life sciences campus.

Here's more from Sirna's press release:

Howard W. Robin, President and Chief Executive Officer of Sirna Therapeutics, said, "The headquarters move will place Sirna firmly among its peers in the world's leading biotechnology community.

It also offers the Company both economic and business advantages. Economically, we will benefit from consolidating excess facilities thereby reducing costs. It also positions us in proximity to a large pool of highly trained scientific and research talent.

We were particularly impressed with the University of California San Francisco's focus on expanding facilities and creating what will be one of the finest clinical research facilities in the world. We look forward to collaborations with UCSF and are pleased to have them join Sirna's longstanding relationships with other universities."

Sirna choose to be near "one of the finest clinical research facilities in the world." And a large pool of highly trained scientific and research talent." Sound familiar?

Here's the tragic part. We had all of that.
World renowned professorshighly-trained students and a good start on a research campus.

In fact, CU Professor Thomas Cech won the 1989 Nobel Prize for his research into RNA interference. That led to small interfering RNA which can turn off genes. That's the key to understanding what a gene does. And it's the key to a new kind of drug that stops disease by turning off the gene that spreads it.

Scientist slang for small interfering RNA is "siRNA." As in Sirna Therapeutics. There's a connection. Sirna is a spin off from a company founded by Professor Cech.

Today Cech runs the Howard Hughes Medical Institute, but he's still at CU too. That's a lucky break. Cech's long-time affiliation with the Hughes Institute helps sustain his lab at CU.

We lost Nobel laureate (and U.S. Professor of the Year) Carl Wieman because we couldn't come up with the money to fund his lab. As of last year it looked like the state was going to pull the plug on CU's medical school.

While other cities and states are using their universities to attract new business, we're looking for ways to keep the lights on at CU. Just last month we lost a $60 million federal supercomputing center to Wyoming. That center will spin off new companies and new research for decades.

Real economic development is investing in people and the infrastructure they need to live and work well. We're failing at that. And with little money to spend, we waste too much of it on the kind of corporate welfare that attracts companies looking for a quick profit at our expense.

This article explains why. PR people place stories and lobbyists lobby for concentrated special interests that want something specific -- like a tax break that takes money from schools. Their efforts get them money with no strings attached; no clawback provisions for failing to fulfill their part of the bargain and no accountability like looking at the real results of the economic incentives.

Broad initiatives to benefit the public at large are too vague to attract much support. You can't identify exactly who, over the next decade, will benefit from better research facilities at universities. No one knows who won't get a job here because the supercomputing center went to Wyoming.