Council revises business incentive program

2013-10-23T00:00:00Z Council revises business incentive programBy Mariana Dale For the Arizona Daily Star Arizona Daily Star
October 23, 2013 12:00 am  • 

The City Council unanimously approved changes to its Primary Jobs Incentive Program on Tuesday to make it easier for more businesses to qualify for building-fee exemptions and to temporarily retain sales taxes for their own benefit.

The city launched the program in August 2011 to encourage businesses in the primary sector to expand, and in doing so, boost the economy.

“A primary job is one that exports a product and imports dollars into the economy versus retail, which just recirculates dollars,” said Chris Kaselemis, Economic Initiatives Program director.

Since it began, only two companies, American Tire Distributors and B/E Aerospace have successfully applied for the program.

The changes lower the wage businesses must pay some workers in order to get the incentive. “The average wage is a little lower and more in line with what we pay here in the Tucson area,” Kaselemis said. “By lowering the threshold, it will make more firms eligible.”

The city staff will also be able to propose candidates who don’t meet the criteria but might still benefit Tucson.

The updated criteria still require that businesses create 25 new non-retail jobs, but instead of paying 150 percent of average annual earnings in Tucson, they need only bump their salaries to 125 percent of this number.

Under the new provisions, workers would make about $52,400 annually versus $62,000 before the changes.

The old criteria also required the 51 percent of those paid at the higher level be hired locally. The higher-wage requirement applies only to the first 25 new employees. Others must be paid an average equal to Arizona’s mean annual earnings, currently $45,595.

Some application requirements remain unchanged. Businesses that want to take advantage of the incentives still have to invest $5 million in new facilities and pay at least 75 percent of employee health-care costs.

Besides waiving building permit fees, the city can redirect money from construction sales taxes to facility improvements and job-training programs for the businesses.

The council also voted 6-0 to approve incentives for OT Alegria, a company that owns two units in the Cadence and Plaza Centro Retail Project, a mixed-use project with student housing at 350 E. Congress St.

Under an agreement, OT Alegria will not have to pay property taxes for up to eight years. The city will own the property for up to eight years to allow the company to start making money before paying property taxes.

In September, the council approved a similar lease with another Cadence owner, Tucson Properties I, LLC. OT Alegria’s incentive had to be approved in a separate council decision because it is another company.

During an extended call to the audience, more than a dozen people spoke about recent immigration enforcement. Many called for the council to instruct police not to call the Border Patrol for a minor traffic infraction, such as the one that touched off a confrontation on Oct. 8.

Mariana Dale is a University of Arizona journalism student who is an apprentice at the Star. Contact her at starapprentice@azstarnet.com

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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