City works to be business friendly

By Rob Larimer rob.larimer@gazette.com - Published: January 19, 2014 | 12:00 am 0

There are several factors that can qualify a city as "business friendly."

Often, a city with low tax rates is considered business friendly. Sometimes, it's tax incentives for relocating companies and the promise of expedited business licensing.

In some cases, it's cold, hard cash handouts to relocating businesses. And in still other instances, it's the old-fashioned welcome wagon and red-carpet treatment.

While Colorado Springs does offer some tax incentives to new, relocating or expanding businesses, it has focused on the latter.

Such was the case with Fuse-Sport, an Australian sports software company that announced plans in May to move its international headquarters to Colorado Springs.

The company had 11 employees at the time of the announcement and expects to add 100 within four years.

"We need future generations of younger people like you to make sure our city is successful for the long term," Colorado Springs Mayor Steve Bach said to Chris Clark, the company's CEO, during a news conference announcing the move.

The friendly welcome is indicative of the city's zeal to attract young entrepreneurs, and especially sports businesses.

The city's burgeoning sports industry will likely get a boost if the City for Champions projects are realized, but Colorado Springs already has a strong foundation to support a growing sports economy.

The U.S. Olympic Committee calls Colorado Springs home along with two dozen Olympic national governing bodies.

Colorado Springs also boasts great outdoor opportunities, such as a parks and trail system and national forest land in its backyard.

Those were factors in Borealis Fat Bike's decision to start its operation in Colorado Springs in September.

Borealis, too, was greeted with open arms. "I went to the city and the business alliance and said I want to do this and this, and they said. 'OK, we'll do this and that,' and I couldn't believe it, they did everything they said they were going to," said Borealis co-owner Steve Kaczmarek, who also teaches an entrepreneurial studies course at Colorado College.

Kaczmarek said the Colorado Springs Regional Business Alliance invited him to a meeting in which economic development and government officials assured him they wanted to do anything they could to help him succeed.

"The reality is that as a startup, I was blown away with the attention I got," Kaczmarek said. "I mean, I only had a handful of employees and I wasn't even making a capital investment. I always tell my entrepreneurial students to seek government help, but even I didn't expect what I got."

Kaczmarek said he didn't receive any economic development incentives, but the support he received through those meetings was more than enough.

He said his company, now in its fourth month, is growing 10 times faster than he expected. It's expected to reach the $2 million sales mark this month. "We had an indication we were going to do well," he said.

As a college instructor, Kaczmarek said he has studied several economic development models, some that offer big incentives and some that don't, and noted there are benefits and drawbacks to each.

"For the types of businesses Colorado Springs wants to attract, I think their model is working well," he said.

Local economic development officials say an expeditious development review process, an environment that fosters existing businesses and not just seeks to attract them and few government regulatory burdens are key to their efforts.

Brian Yandell specializes in helping businesses relocate. He is co-owner and senior vice president of Issaquah, Wash.-based SEA CON Business Relocation Services. He said 25 years of relocation work has shown him some markets are easier to work with than others.

The biggest factors, he said, are government regulation and the speed of development review, the process in which new businesses and construction are approved and licensed. He said business incentives, such as tax breaks, are important but are usually a secondary concern.

A streamlining of the city's development review process is among several efforts made to improve the local business climate in the past few years. The city's sights are set on continuing to improve the business environment, said Bob Cope, principal analyst for the city's economic vitality division.

One step toward that is an increased effort to use its Rapid Response Team, which was created in 1994 but used more than ever during the past three years.

The team brings together representatives from the city Planning Department, the Fire Department, the Pikes Peak Regional Building Department and Colorado Springs Utilities to expedite the review timelines for primary employers, those companies that sell 50 percent or more of their goods or services outside El Paso County.

Companies that qualify for the expedited service are given a priority status at every department stop along the development review process.

An online tracking system allows companies to follow their progress, which varies from project to project.

"There's no standard timeline for development review. It's different for every company," Cope said. "But we estimate that since we instituted the Rapid Response Team, we've been able to cut the development review process in half. So, we think it's been a huge success."

Cope said two businesses that benefited from the expedited review process are Agilent Technologies and The Mining Exchange hotel.

Cope said California-based Agilent Technologies benefitted in 2011 when it struck a deal with the city for a $121 million, 55,000-square-foot expansion of its campus at 1900 Garden of the Gods Road.

The Mining Exchange benefited from the team's help to open in May 2012.

The Mining Exchange and Agilent received economic development incentives from the city.

Colorado Springs remains far from offering the type of incentive offered by Pueblo, which long ago enacted a half-cent city sales tax to create an economic development fund.

Agilent received about $650,000 in city incentives, including sales- and use-tax rebates on building materials used for its building expansion and for equipment bought locally. Agilent also received a 2 percent rebate on the city's personal property tax, which is levied on machinery and equipment.

Agilent spokeswoman Suzanne Patrick said Agilent expects to invest about $121 million in capital over 15 years.

"Agilent is pleased with the assistance it has received," she said. "The Rapid Response Team review of data center construction documents was conducted in an effective and timely manner."

Cope said that the city offers tax rebates that are determined by how many jobs the company will create.

"The main clarification that has to be made is that we do not offer cash," he said. "We have a limited ability to offer companies incentives. We always perform an economic impact analysis, and there's never a situation where we sit down and write a check."

Results of a September business-climate survey conducted by Springs-based Summit Economics shows local business workers favor fewer local government business regulations as well as government-funded economic development initiatives.

About 400 business workers responded to the 24-question survey. Among the questions was, "What role can local government play to improve the business climate for their organizations?" Respondents were allowed to check off more than one response.

Nearly 40 percent said local government should streamline the permit approval process, and nearly 56 percent said they want government to fund more economic development initiatives. When it came to the local tax rate, respondents were divided; 18.6 percent said local government should cut taxes to help business, and 17.6 percent said government should increase taxes.

That's feedback Cope is listening to.

"Our goal is to become the most business-friendly city in the state," he said.

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