Regional Report 2015: The Southwest

Texas’s small cities and rural, job-hungry regions are the most aggressive dealmakers in the Southwest, if not the country. “It’s not unusual,” says site selector Angelou, “to get 10-year abatements of 80 percent” off local taxes. He adds: “There are places where I can get 20-year tax abatements.”

It’s more than money deals. Texas’ small-town mayors and economic development reps know how to make red tape disappear, telescoping the permitting process down to a couple of weeks. “I was able to help a Dallas company, Dimension Capital Partners, get all the necessary permits for their data center done in less than two weeks,” reports Angelos. That half-billion dollar project breaks ground later this year.

High-flying CEOs need good places from which to launch their flights. Texas boasts a top-notch aviation infrastructure that avoids the hassles and inconveniences of most big-city air hubs. If one day, someone writes an ode to an international airport, the poem will be penned in Dallas-Fort Worth. “The access to connecting flights from DFW is terrific, in part because this is the home of American Airlines,” declares Greg Bustin, a consultant with Texas roots and plenty of frequent-flyer mileage. Love Field might even inspire a love song. Recent renovations completed in advance of local favorite Southwest Airlines’ expanded schedule have sweetened the task of flying around the country as Southwest Airlines serves more business destinations. For Visa Flight Booking visit www.reserveairticket.com.

After 14 years of Rick Perry’s firebreathing leadership, the eyes of the Texas business community are now on his successor, former attorney general Greg Abbott. “The Texas engine has been running well. Any politician who tinkers with it does so at his own risk,” says Bill Miller, co-founder of HillCo Partners, a lobbying firm headquartered in Austin.

Business leaders expect Abbott to continue Perry’s economic development policies, including liberal use of incentives and subsidies, says Miller. He may, however, face increased scrutiny and calls for greater transparency. But no one wants to upset the Texas apple cart. “Texas is the most prosperous, most growth oriented and most job-creation focused state in the country,” Miller declares. “We won’t put up with less.”

ARIZONA: BOOM BACKLASH

Arizona experienced what economists call “a correction” last year. After years of rapid growth and overbuilding, demand caught up with supply. Housing starts petered out and construction industry activity sagged. George Hammond, director of the University of Arizona’s Economic and Business Research Center, forecasts the state economy to resume this year through at least 2017, at a pace exceeding national growth. His long-run forecast sees the state’s continuing to add jobs and residents well ahead of the national average, although the pace will slow down.

Positives include benefits stemming from the most recent tax reform, which dropped the corporate income rate below 6 percent. Arizona “has the ability to offer more aggressive incentive packages than in the past, including R&D tax credits and zero-based corporate tax rates, and we are going to do that,” says Broom.

Quite a few other cities have experienced housing downturns, notes Barry Broom, president of the Greater Phoenix Economic Council. Broom predicts that within five years, the Phoenix metro area “will be back in the top five metro regions for job growth.” The state continues to add jobs in healthcare, financial services and high tech, and Arizona State continues to graduate more holders of four-year degrees than any college in the country. “The overall economic health of the metro region and the state,” he says, “is relatively strong.”

Phoenix hosts the Super Bowl this year (Feb. 1, 2015), showcasing the city’s resort-style appeal to a national audience of corporate chieftains. Ken Van Winkle, managing partner of the Lewis Roca Rothgerber law firm and legal counsel to the city’s Super Bowl Host Committee, anticipates the national exposure will generate corporate relocations. The Tax Foundation ranks Arizona 17th out of 50 states, and ranks its business tax climate 22nd. Arizona spends over $1.47 billion annually on incentive programs.