Town looks at industrial authority to finance projects for development - The Explorer: Pima Pinal

Town looks at industrial authority to finance projects for development

OV had similar body from '85 to '06, but disbanded it for lack of interest

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Posted: Wednesday, February 17, 2010 12:00 am | Updated: 8:11 am, Thu Mar 24, 2011.

A proposal before the Oro Valley Town Council would institute the creation of an industrial development authority.

The authority would seek attract to commercial development by providing a vehicle to fund private enterprise. The authority also could help non-profit organizations receive loans, and in general aid with economic development.

The item appears on the council's agenda for this Wednesday, Feb. 17.

Longtime Oro Valley residents may recall a previous industrial development authority, instituted by the town council in 1985. The council voted to dissolve it in November 2006, a fact has some on the council scratching their heads as to why the issue has come up again.

"I'm wondering what kind of actions we would have on it now," Councilman Al Kunisch said.

The council make-up has changed since the dissolution of the authority. Mayor Paul Loomis and councilmen K.C. Carter, Barry Gillaspie and Kunisch were on the council at the time, and voted in favor of disbanding.

"We evaluated it then and decided it wasn't necessary to have it," Loomis said. In its 21-year existence, Oro Valley's Industrial Development Authority did not fund a single project.

Part of the reason the council decided to disband the authority in 2006 was that the town was undergoing an evaluation of boards and commissions. Also at the time, some members of the IDA board expressed a desire to no longer serve, Loomis said.

Communities across Arizona, including Pima County, Tucson, Phoenix, Maricopa County and numerous other municipalities, have IDAs. The groups are set up as non-profit corporations with quasi-governmental authority.

Councilwoman Salette Latas requested the item be placed on the Feb. 17 agenda. She did not return phone messages requesting an interview on the subject.

An authority could work as a low-cost way to foster economic development in Oro Valley, which today spends far less on economic development than it did in recent years.

The town economic development department has seen considerable budget cuts since fiscal 2007. That year, the department had a $1 million budget. In fiscal 2008, the budget slipped to $900,000. In the current fiscal year, the department has a $575,000 budget.

Oro Valley also stopped funding the Northern Pima County Chamber of Commerce, the Metropolitan Tucson Convention and Visitors Bureau and Tucson Regional Economic Opportunities in the past two years.

Loomis said part of the impetus to form a new IDA could emanate less from a desire to attract industry and more to tempt a highly regarded charter school to Oro Valley.

"One of the methods for financing charter schools is the industrial development authority," Loomis said.

BASIS Charter School, which has facilities in Tucson and Scottsdale, has been lauded as one of the top schools in Arizona and the country. In recent months the school's founders, Michael and Olga Block, have discussed the possibility of opening a new school in Oro Valley.

The Blocks have expressed an interest in relocating to Rancho Vistoso or to Foothills Business Park, on Oracle Road near First Avenue, according to a Dec. 29 memo written by Amanda Jacobs, the town's economic development manager.

Jacobs also indicated that one of the town's largest employers was keen to help the Blocks.

"Dr. Block held two presentations at Ventana Medical Systems, Inc.," Jacobs wrote. "Based on the feedback received, Dr. Block believes he will receive annual support from VMSI if he build a campus in Oro Valley."

Michael Block said BASIS still intends to move to Oro Valley, possibly in time for the 2010-'11 school term.

"I think it's 80 to 90 percent that we'll do that," Block said.

He said the school had inquired of the town whether it had an IDA, having worked with Pima County's IDA for funding in the past, but didn't suggest that Oro Valley start one to help the school. At this point, even if the council established an authority, Block said the school probably wouldn't be able to benefit from its service.

"I think it would be to late for us if they did initiate one," Block said.

The school has been the recipient of many accolades, including a recent visit from a pair of national political figures. Rev. Al Sharpton joined former U.S. House Speaker Newt Gingrich for a tour and press conference at BASIS Tucson. The two men were promoting a nationwide education-reform initiative and a documentary film about BASIS and other schools.

Over the past several years, industrial development authorities have become a popular avenue of financing for charter schools in Arizona. The Pima County Industrial Development Authority has helped secure more than $500 million in bond financing for charter schools since 2001.

According to state law, industrial development authorities are political subdivisions answerable to the municipality where they were incorporated. The authorities do not have taxing authority, and the governments under whose authority they are incorporated do not bear financial risks. Taxpayers similarly are not on the hook for the IDAs' activities.

An IDA can issue bonds to fund projects that have public benefit when normal avenues of financing aren't available. Such projects could be low-income housing, industrial business complexes or other projects designed for economic development.

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