The Tucson region's economic development agency has decided to take municipal competition out of the equation and will stop accepting most public funding.

In its announcement, Tucson Regional Economic Opportunities Inc. said the money that the city of Tucson and area towns pay to TREO should go toward incentive packages when companies are looking to move into the region.

"What concerned me was the flaws in the current structure," CEO Joe Snell said. "There was always the question of whether we were doing enough for the money."

Instead of worrying about whose boundaries got the most companies or jobs, TREO will focus on recruiting to the cities of Tucson and South Tucson as well as the towns of Marana, Oro Valley and Sahuarita, Snell said.

"The city of South Tucson, for example, couldn't afford to join TREO," he said. "It became an 'If you can't pay, you can't play' situation.

"What we wanted to do is create greater access for everyone without sacrificing what we do, which is regional."

Since Tucson already was negotiating a reduction in its contribution to $400,000, the move will cost TREO about $466,000 - or 40 percent of its funding.

Snell said he already has commitments from the private sector to make up for that loss. He does not anticipate a reduction in TREO's eight-member staff.

TREO has invited all the municipalities to join its board of directors. Currently, Tucson, Pima County, Oro Valley and Sahuarita are represented on the board.

Pima County is the only government entity that will continue to pay TREO. Its contribution will be $350,000 a year.

Snell said that is because the cities and towns all reside within the county.

The chairman of the TREO board called it a "bold move."

"When you look at the natural evolution of economic development, … the more we can engage the private sector and have that become the source behind it, it becomes a win," Steve Eggen said. "We need to think big. If we think too small, we find ourselves thinking in details that don't help the region."

A successful economic development approach should not pit one municipality against another, said Eggen, who is the chief financial officer for Raytheon Missile Systems.

"We can't get hung up on 'What have you done for me lately?' " he said. "It takes everyone to make this happen."

The news was met with both skepticism and praise.

The town of Marana dropped its contract with TREO in 2008, but Town Manager Gilbert Davidson applauded the move.

"I know that TREO had been wanting to have economic development driven by the private sector versus having the government trying to run economic development activities," he said. "This could generate a different level of dialogue."

Jim Stahle, Sahuarita's town manager, said it is a "smart move" for TREO.

"Any time the local jurisdictions can save a little bit of money, that's a good thing," he said. "Frankly, we could have initiated this. … For them to suggest it is cool."

Tucson City Councilman Richard Fimbres said "building this government-private partnership to make it stronger" is a good effort.

Tucson Mayor Jonathan Roths- child said the city was reducing its contribution to TREO already with the goal of ending the paid relationship in two to three years.

"We expected to do that over time while they built their private contributions," he said.

Last year, Tucson paid TREO $530,000, Rothschild said, and in the process of renegotiating the contract was planning to cut that funding to $400,000 this year.

As for the suggestion that the city use those funds to create incentive packages, Rothschild said he will look at many alternatives.

"That is one suggestion," he said. "I'm sure we're going to look at a number of suggestions, but it's up to the city manager with the mayor and council's direction."

Rothschild said he will continue to serve on the TREO board.

Some council members expressed suspicion about the change and indicated they felt slighted because Pima County will remain the only paying government member.

Tucson Councilman Steve Kozachik said he's glad TREO is weaning itself off taxpayer dollars, but he finds it peculiar that the county remains as the sole paying government.

"This is the sort of private-sector-driven model that they correctly should be adopting," Kozachik said. "But to see that the county is left in a category that is different than the rest of the public-sector entities makes it clear that there's something going on other than simply inviting everybody to the table.

"TREO and the county had best remember that every taxpayer in the city is also a county resident, so their voice deserves an equal place as those in the unincorporated areas," he said.

Even though the city won't be paying dues any longer, TREO is still collecting money from Pima County, and that means it remains accountable to Tucson taxpayers, Tucson Councilwoman Karin Uhlich said.

"It's their prerogative to structure their funding as they see fit," Uhlich said. "County funds come from taxpayers throughout the region, so it doesn't lessen their accountability to the residents of Tucson."

She said this change reinforces the city's decision to appoint its own economic development team.

"We will continue to focus on the city's specific role as the major metropolitan entity in the region to create jobs and recruit employers to the region," Uhlich said. "And I expect the partnership between the city's economic development folks and TREO to remain strong."

Kozachik said he thinks part of the reason TREO made the move was to save Snell the ignominy of coming before the council every year and defending its performance numbers - something the city required as part of its contract with TREO.

Snell balked at the insinuation.

"Our plan is to still come in front of the council," he said. "There's no fear from us. Everything we do is credibly defensible."

For his part, County Administrator Chuck Huckelberry said the county is not concerned with how TREO chooses to structure itself.

"We care about performance," he said.

And since all the municipalities are within the county, Huckelberry said he'll work to bring businesses in wherever businesses want to be located.

"We don't care where it occurs," he said, "as long as it's in the region."

DID YOU KNOW?

Tucson Regional Economic Opportunities Inc. was formed in 2005 after the Greater Tucson Economic Council was disbanded. GTEC began in 1989 to spearhead local economic-development efforts. In 2004, local government and business officials began discussing a broader reach.

The Regional Economic Development Corp. was then formed in 2005. It carried the acronym REDC, which members pronounced "Red Sea." The group changed its name that year to Tucson Regional Economic Opportunities, known as TREO.

By the numbers

Public funding to TREO:

• Pima County will pay $350,000 a year.

Last year, municipalities paid:

• City of Tucson: $530,000

• Oro Valley: $41,000

• Sahuarita: $25,000

• Marana: $0

• South Tucson: $0

To contact reporters: Gabriela Rico at grico@azstarnet.com or 573-4232; or Darren DaRonco at ddaronco@azstarnet.com or 573-4243.