Solar companies eye Chandler, tax incentives

More than a dozen international solar industry companies are eyeing Arizona for a major U.S. operations base, and Chandler is on the short list of at least half of them, local economic experts said.

Snagging just a few would mean adding hundreds of high-paying jobs, tens of millions of dollars in capital investment and international attention to the city and the state, said Christine Mackay, Chandler’s economic development director.

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But it all hinges on whether a budget-distracted state Legislature is willing to OK tax incentives to entice the sun-centered businesses.

“There are a handful of companies wanting to locate to Chandler, but if Senate Bill SB1403 doesn’t make it, they will go to other states,” said Jerry Bustamante, Chandler Chamber of Commerce chief executive officer. “Bringing solar-based businesses to the community would be a huge win, and Chandler is better positioned than any other community.”

The outlook is sunny.

SB1403, dubbed the “renewable, high-wage industries incentives” bill, passed the Senate and the House Ways and Means Committee with better than 2-to-1 support, said Barry Broome, chief executive officer of the Greater Phoenix Economic Council.

The House gave preliminary approval in a voice vote Friday. A formal roll call vote still is needed to send the bill to the governor.

Broome said he is hopeful the bill will breeze through the full House and earn the governor’s enthusiastic signature, but he’s not counting his new-to-the-state companies just yet.

“It doesn’t have unanimous support,” Broome said.

In fact, the proposed legislation would offer such hackle-raising perks as income tax credits and property tax reductions to companies that fill the bill. But it’s a pretty impressive bill to fill.

To qualify for up to 10 percent of the income tax credit, more than half the employees at the new facility would have to earn at least 125 percent of the median Arizona wage, and the company would have to foot the bill for 80 percent of the employees’ health care coverage.

To earn a property tax incentive, a company must, among other criteria, invest at least $25 million in the property.

But naysayers should realize that refunding or forgoing a portion of tax income is better than the zero amount of income that would come to the state if the companies don’t build here at all, Mackay said.

And when states like Oregon are wooing the solar companies with big incentives, there’s no question Arizona will lose if it can’t do the same, she said.

Two such foreign companies have narrowed their searches to Chandler or Portland, Ore., Mackay said, and five more are considering Chandler and other Western states.

All seven are waiting for the outcome of the incentive bill before highlighting or crossing out Chandler on their short lists, she said.

In fact, Broome said 14 solar industry companies are interested in Arizona and will make decisions about where to locate within the next 30 days. They range in size from $100 million to $2 billion businesses, he said.

And there are more to come if the price is right.

“We’re expecting the market to triple in size in 2010,” he said. “This is the fastest-growing energy source in the world.”

Chandler is especially well-suited to attract those companies, as the solar industry needs a work force skill set and environment similar to that of the semiconductor industry that is already well represented in the city, Mackay said.

But Broome said Mesa, Tempe, Scottsdale, several West Valley cities and other rural locations around the state are also in the running for some of the new solar businesses.

The DMB project at the Proving Grounds in Mesa has caught the attention of one or more major foreign companies, Broome said.

“There’s a lot of opportunity here in Arizona,“ he said. “These are engineering, production and (research and development) jobs.”

Offering incentives to lure new companies can draw the ire of businesses already in place and not enjoying similar perks. But the companies targeted by SB1403 develop — rather than distribute — solar resources and would more likely benefit — not compete with — local businesses such as Salt River Project, said SRP spokesman Scott Harelson.

Growing jobs and business in the state create more business for the local utility companies, he said.