February 23, 2010
Host: Ted Simons
Economic Development Roundtable
- Three of the State’s top economic development leaders, Barry Broome, CEO and President of the Greater Phoenix Economic Council, Barry Albrecht, CEO of Central Arizona Regional Economic Development, and Joe Snell, President and CEO of Tucson Regional Economic Opportunities, talk about what they’re doing to create and retain jobs, and how Arizona can become more attractive to business.
- Barry Broome - CEO and President, Greater Phoenix Economic Council
- Barry Albrecht - CEO, Central Arizona Regional Economic Development
- Joe Snell - President and CEO, Tucson Regional Economic Opportunities
TED SIMONS: ARIZONA'S BUDGET CRISIS, JOB LOSSES AND EMPTY HOUSES ARE CLEAR INDICATORS THAT SOMETHING MUST BE DONE TO DIVERSIFY THE STATE'S ECONOMY. TONIGHT, ECONOMIC DEVELOPMENT. LEADERS ARE HERE TO TALK ABOUT PLANS OF ACTION THEY THINK THE STATE SHOULD TAKE. JOINING US IS BARRY BROOME, PRESIDENT AND CEO OF G-PEC, THE GREATER PHOENIX ECONOMIC COUNCIL, JOE SNELL, PRESIDENT AND CEO OF TUCSON REGIONAL ECONOMIC OPPORTUNITIES AND BARRY ALBRECHT,EXECUTIVE DIRECTOR AND CHIEF OPERATING OFFICER FOR THE CENTRAL ARIZONA REGIONAL ECONOMIC DEVELOPMENT FOUNDATION. THANK YOU, ALL, FOR JOINING US TONIGHT ON "HORIZON."
ALL: THANK YOU.
TED SIMONS: BARRY, LET'S START WITH YOU. IS ARIZONA PREPARED, PREPARED FOR AN ECONOMIC TURNAROUND?
BARRY BROOME: I WOULD SAY WE'RE NOT PREPARED. SOME OF THIS HAS TO DO WITH CLARITY OF THOUGHT, YOU KNOW, TAKING A CLOSE LOOK AT WHERE THE RECOVERY IS GOING TO OCCUR AND WHAT THE UNIQUE POSITION THE STATE IS TO TAKE ADVANTAGE OF RECOVERY, WHAT THE MECHANICS ARE THE EXECUTION, WHAT TYPE OF DELIVERY SYSTEM YOU NEED,YOU KNOW, I WOULD SAY WE'RE NOT IN A POSITION ON THAT SUBJECT MATTER. I DON'T KNOW IF ANY OF MY COLLEAGUES WANT TO COMMENT ON THAT.
TED SIMONS: DO YOU AGREE WITH THAT?
JOE SNELL: I AGREE. IT COMES DOWN TO ARE WE COMPETITIVE? ARE WE OPERATING AT A COMPETITIVE FRAMEWORK? I WOULD SAY AS PAINFUL AS IT IS, NO. AT THE END OF THE DAY, WE HAVE TO EXAMINE WHAT OUR TAX POLICY, WHETHER IT'S BUSINESS FRIENDLY, WHETHER WE HAVE THE RIGHT INFRASTRUCTURE, WHETHER WE'RE SUPPORTING BOTH HIGHER EDUCATION IN K-12 TO ADEQUATE LEVELS TO MAKE SURE BUSINESSES CAN COMPETE. I'D SAY RIGHT NOW THE OUTSIDE WORLD IS PROBABLY WEIGHING IN. THE ANSWER IS, NO, WE'VE GOT SOME WORK TO DO.
TED SIMONS: IT DOESN'T SOUND VERY ENCOURAGING. HAVING SOME WORK TO DO DOES BUT ARE WE READY FOR THE WORK?
BARRY ALBRECHT: THE FACT OF IT IS THAT DURING ECONOMIC DEVELOPMENT HERE IN -- I'VE BEEN DOING ECONOMIC DEVELOPMENT HERE IN ARIZONA FOR ALMOST 20 YEARS. WE'VE EVER ABOUT ANYONE SO CLOSE IN THE WAY WE DO BUSINESS IN ECONOMIC DEVELOPMENT IN THE STATE. WE'VE GOT THE ATTENTION OF THE GOVERNOR'S OFFICE AND THE LEGISLATORS LOOKING AND COMPARING ARIZONA TO OTHER STATES. WE CLEARLY CANNOT COMPETE, COMPARED TO OTHER STATES LIKE TEXAS, FLORIDA, VIRGINIA, WE'RE -- WE'RE AS A STATE, WE'RE AT AN AIR SHOW WITH A KITE. WE JUST ARE NOT COMPETITIVE.
TED SIMONS: WHAT DO WE NEED TO DO TO GET BACK IN THE AIR SHOW?
BARRY ALBRECHT: WELL, WE -- LET'S LOOK AT SOME GOOD EXAMPLES. UM, THERE'S SOME SENIOR -- FOR EXAMPLE TEXAS. ECONOMIC DEVELOPMENT SAY PRIORITY AT THE GOVERNOR'S LEVEL. THEY NO LONGER HAVE A DEPARTMENT OF COMMERCE. THEY HAVE AN OFFICE IN THE GOVERNMENT WITH THE GOVERNOR THAT IS COMMITTED AND THEIR PRIORITY IS JOB CREATION. THEY HAVE SET ASIDE TOOLS, FOR EXAMPLE, AT THE -- THEY'VE CREATED LEGISLATION THAT ACTUALLY PROVIDES CITIES THAT ALLOWS THEM TO CHARGE A HALF CENT SALES TAX DEDICATED TO ECONOMIC DEVELOPMENT SO THEY CAN DRIVE THEIR OWN DESTINY. ADDITIONALLY, THEY ALSO HAVE OVER A $200 MILLION JOB CREATION BUDGET. $200 MILLION! THAT'S A SUBSTANTIAL INVESTMENT. TODAY, LOOK AT TEXAS, THEY'RE ONE OF THE MOST STABLE ECONOMIES AS A STATE IN THE COUNTRY. AND THAT'S BECAUSE THEY MADE THE COMMITMENT FIVE OR 10 YEARS AGO.
BARRY BROOME: AND I THINK THIS IS REALLY IMPORTANT. THIS IS ABOUT BEING A STUDENT OF ECONOMIES. I THINK, YOU KNOW, YOU KNOW, I REALLY WANT TO APPLAUD KIRK ADAMS, SPEAKER OF THE HOUSE, FOR RETAINING POLACK AND TAKING A LOOK AT WHAT ARIZONA NEEDS TO DO IN BASE INDUSTRIES. THERE'S A LOT OF IMPROVED POLICY IN HIS MEASURE THAT IS NOW SITTING IN THE SENATE WAITING FOR A HEARING. ASIDE FROM THAT, JUST IN GENERAL, YOU KNOW, THE CULTURE OF OUR STATE AND THE BODY OF POLITICS IN OUR STATE ISN'T ABOUT GETTING BETTER AND WHEN YOU BRING UP TEXAS, THE FIRST THING A LEGISLATOR WILL TELL YOU IS, WELL WE'RE NOT TEXAS. WHAT THEY DON'T UNDERSTAND IS THE OVERWHELMING LEADER RIGHT NOW IN RENEWABLE ENERGY IN THE UNITED STATES OF AMERICA IS TEXAS. TEXAS IS THE NATION'S LEADER IN RENEWABLE ENERGY, NOT JUST OIL. IT'S ABOUT A CULTURE WHEN WE HAD TEXAS LEADERSHIP IN HERE, ONE OF THE THINGS THAT I ALWAYS JOKE ABOUT IS YOU SEE T-SHIRTS MADE, DON'T MESS WITH TEXAS. I'D LOVE TO SEE A T-SHIRT MADE, DON'T MESS WITH ARIZONA.
JOE SNELL: I AGREE WITH YOU, IT'S ABOUT INTENT. THAT'S WHAT YOU'RE SAYING, I THINK. WE'VE HAD IT EASY IN ARIZONA. OUR ECONOMY HAS GROWN BECAUSE OF THE SUNSHINE AND BECAUSE OF A LOT OF MIGRATION. THE REALITY IS I THINK WHAT YOU'RE SAYING IS WE HAVE TO GO IN IT NOW. WE HAVE THE TO HAVE INTENT. ONE OF THE BEST EXAMPLES OF THAT IS WE TEND TO -- YOU SAID, YOU KNOW, BASE EMPLOYERS OR PRIMARY JOBS OR WHATEVER YOU WANT TO CALL IT ANYONE WHO IS EXPORTING A PRODUCT AND IMPORTING NEW CAPITAL, NEW WEALTH, HAS GOT TO BE A PRIORITY FOR US. WE CAN'T TREAT ALL BUSINESSES THE SAME. UNFORTUNATELY, WE DO. WE TREAT ALL BUSINESSES WHETHER THEY'RE A LOCAL SHOE SHINE SHOP OR A MASSIVE MANUFACTURER LIKE RAYTHEON OR INTEL, WE PUT THEM ON THE SAME PAGE.
TED SIMONS: HOW DO YOU DO THAT? HOW DO YOU EMPHASIZE WEALTH CREATION AS OPPOSED TO SIMPLE JOB CREATION? OR SHOULD YOU EMPHASIZE WEALTH CREATION OVER JOB CREATION?
JOE SNELL: I DON'T THINK ALL JOBS ARE CREATED EQUAL. I THINK YOU EMPHASIZE IT BY FOCUSING ON THE BASE INDUSTRIES THAT HAVE A MULTIPLIER EFFECT THAT CREATE ADDITIONAL JOBS. LET ME PICK ON RAYTHEON DOWN IN THE TUCSON AREA. YOU KNOW, A COMPANY WHY WE SPEND SO MUCH TIME ON RAYTHEON, I KNOW BARRY DOES UP HERE IN PHOENIX, THE IMPACT IS $3 BILLION TO ARIZONA ON AN ANNUAL BASIS. 13,000 DIRECT EMPLOYEES AND 14,000 INDIRECT EMPLOYEES. AT THE END OF THE DAY, WE SHOULD HAVE A TOP 10 LIST. AT THE END OF THE DAY WHETHER IT'S RAYTHEON OR INTEL, WHAT HAVE WE DONE FOR RAYTHEON.
BARRY BROOME: IMPORTANT POINT, JOE, YOU'RE MAKING IS INTEL, FOR INSTANCE WHEN YOU GO DOWN TO THE LEGISLATURE, YOU KNOW, THEY LOVE TO MURMUR THAT THEY'RE GOING TO TAKE A SHOT AT INTEL. INTEL IS CREATING 10,000 TO 11,000 JOBS THAT PAY $122,000 A YEAR. WHY WOULD SOMETHING LIKE THAT EVER EXIT THE LIPS OF A POLICY MAKER IN ARIZONA? THE ONE THING JOE AND I HAVE TALKED ABOUT MANY A TIMES AND BARRY IS WE NEED TO TREAT INDUSTRY FAIRLY, NOT EQUALLY. LIKE A COACH SAYING I TREAT EVERYONE FAIRLY BUT THE STAR QUARTERBACK MAY GET DIFFERENT TREATMENT. INTEL HAS OVER 1,700 SMALL BUSINESS SUPPLIER RELATIONSHIPS HERE IN ARIZONA. I'M SURE RAYTHEON HAS A SIMILAR STATISTIC. YOU KNOW, THE AMAZING THING TOO, HERE IN ARIZONA AROUND SMALL BUSINESSES, ABOUT 60% OF ARIZONA SMALL BUSINESSES ARE EXPORT INDUSTRIES. BASE INDUSTRIES. SO WHEN YOU BUILD POLICY TOWARDS AN INTEL, TOWARDS A RAYTHEON, NOT ONLY DO YOU GET BETTER JOBS AND RETAIN JOBS BUT THAT SUPPLY CHAIN FEEDS RIGHT TO SMALL BUSINESSES IN ARIZONA AND GROWING SMALL BUSINESS THAT ARE EXPORT INDUSTRIES IS THE RIGHT SMALL BUSINESS STRATEGY IN ARIZONA.
JOE SNELL: AND THAT CREATES WEALTH.
BARRY BROOME: AND THAT CREATES WEALTH.
TED SIMONS: INDEED. CAN YOU DO THAT, THOUGH, WITHOUT FORCING THE ISSUE TO THE POINT WITH WHERE SOMETHING ARTIFICIAL GROWS AND IT'S JUST AS TENUOUS AND JUST AS DELICATE AS WHAT WE'VE BEEN GOING THROUGH WITH THE BOOM AND BUST CYCLE HERE FOR GOODNESS KNOWS HOW LONG?
BARRY ALBRECHT: I THINK YOU MADE A GOT DISTINCTION A LITTLE WHILE AGO, THE DIFFERENCE BETWEEN WEALTH AND JOB CREATION. WE'RE FEELING THE PAIN NOW. ARIZONA FOCUSED NOT JUST ON PRIMARY JOBS BUT WE EMBRACE TOURISM ANOTHER AND WE FACTORS AND THE RETIREMENT COMMUNITIES, AS WE SHOULD, BUT WE DIDN'T DEDICATE OUR INVESTMENT INTO PRIMARY JOB CREATION. TOURISM IS GOOD BUSINESS FOR ARIZONA. NO DOUBT. BUT WHEN YOU LOOK AT A RESORT AND THE PROFILE OF THE JOBS THAT A RESORT PROVIDES, YOU'LL LOOK AT OVER 90% OF THE EMPLOYEES ARE PART-TIME MINIMUM WAGE. THOSE AREN'T HOME BUYERS. THOSE AREN'T THE PEOPLE THAT JUSTIFY EXPANDING THE MEDICAL SERVICES AT OUR HOSPITAL. WHAT WE NEED TO DO IS BRING IN THE PRIMARY JOBS THAT INSPIRES ENTREPRENEURIALSHIP OF THE SPINOFF BUSINESS THAT HAS WILL EXPORT THOSE PRODUCTS.
TED SIMONS: HOW BEST DO WE DO THAT? DO WE MUSCLE UP THE COMMERCE DEPARTMENT OR START GETTING PUBLIC-PRIVATE PARTNERSHIPS THAT SUPERSEDE WHAT THE LAWMAKERS ARE TRYING TO DO OR THINK IT'S THEIR RESPONSIBILITY TO DO? WHERE DO WE GO? WHAT DO WE DO?
JOE SNELL: YES, YES, YES, YES. I'LL LET THESE GUYS JUMP IN I THINK, FIRST -- AND I WOULD SPEAK PROBABLY FOR THE THREE OF US, I THINK WE HAVE A PRETTY GOOD SENSE OF WHICH INDUSTRIES ARE GOING TO HELP SHAPE OUR FUTURE WHETHER THAT BE IN THE SOLAR SIDE OR DEFENSE INDUSTRIES OR BIO-TECH. AND I THINK WE ALL NEED TO GET ON THE SAME PAGE. WE NEED THE STATE TO DO THAT. WE NEED TO BE WORKING ARM TO ARM AND WE CAN'T HAVE SOMEONE OFF IN LEFT FIELD WHILE WE'RE IN RIGHT FIELD THAT KIND OF THING. I THINK WE'RE GOING TO HAVE TO LOOK AT A SYSTEM OVERHAUL. WE'RE GOING TO HAVE TO LOOK AT TORT REFORM, A TAX OVERHAUL, BECAUSE WE'VE GOT SOME AGGRESSIVE TAX STRUCTURE IN THIS STATE. WE HAVE GOT A SITUATION WHERE WE TALK ABOUT BEING BUSINESS-FRIENDLY. WE PUT A -- IN MY OPINION, A LARGE BURDEN ON THE CORPORATION AND MAYBE IT'S TIME TO SHARE THAT BURDEN WITH RESIDENTS. AND JUST LOOKING THAT THE KIND OF STUFF.
UNKNOWN: THAT'S RIGHT.
JOE SNELL: I THINK IT'S BEING VERY DELIBERATE IN UNDERSTANDING THAT I THINK WE FORGET SOMETIMES THAT THE OUTSIDE WORLD IS WATCHING OUR VERY MOVE. IT'S IMPORTANT TO REALIZE THAT EVERY DECISION WE MAKE HAS A LONG-TERM CONSEQUENCE AND PEOPLE ARE WATCHING. YOU GUYS MIGHT JUMP IN.
TED SIMONS: YEAH, PLEASE, PLEASE DO.
BARRY BROOME: A COUPLE OF THINGS. THERE'S A REALLY IMPORTANT POINT. NUMBER ONE, WORK TO YOUR STRENGTHS. WHAT ARE THE INDUSTRIES THAT ARE GROWING? WHAT ARE YOUR STRENGTHS? GOOD NEWS, ARIZONA HAS STRENGTHS IN DEFENSE, STRENGTHS IN HEALTH CARE AND STRENGTHS IN SOLAR RENEWABLE BUT YOU HAVE TO WORK ON THESE STRENGTHS AND MAKE A COMMITMENT TO IT. ABOUT THE WHOLE WORLD WATCHING, A GOOD EXAMPLE IS THE WHOLE RENEWABLE INDUSTRY HERE IN ARIZONA. GOODYEAR ARIZONA WAS SELECTED FOR THEIR NORTH AMERICAN MANUFACTURING LOGISTICS CENTER. TODAY, A BILL'S BEEN INTRODUCED TO ELIMINATE ARIZONA'S COMPETITIVE POSITION IN SOLAR. IT'S HOUSE BILL, I THINK, 2701. ONE OF THE SPONSORS SAY STATE REP FROM GOODYEAR WHERE SUN TECH IS LOCATED AND SUN TECH NOW ANNOUNCED TODAY THAT IF THAT BILL MOVES FORWARD, THEY'RE GOING TO LEAVE ARIZONA AND THE REPRESENTATIVE FROM THAT CITY IS SPONSORING THAT BILL, BECAUSE HIS POLITICAL PHILOSOPHY IS BIGGER THAN THE JOB CREATION THAT SUN TECH IS GOING TO DO FOR THE DISTRICT. THESE ARE THE KINDS OF THINGS THAT NEEDS TO GET ERODED. THIS IS ABOUT BUSINESS, BEING PRACTICAL AND BEING CONSISTENT AND ABOUT COMPETITIVENESS. IT'S REALLY NOT ABOUT IDEOLOGY AND PHILOSOPHY. IT'S ABOUT COMPETITIVENESS. WE NEED TO MOVE TOWARDS THAT DIRECTION.
TED SIMONS: SO MUCH OF WHAT IS GOING ON RIGHT NOW AT THE STATE CAPITOL IS ABOUT IDEOLOGY AND POLITICS. LET'S GET DOWN TO THE BRASS TAX HERE. IS ARIZONA CAPABLE? IS IT READY POLITICALLY? IS THE WILL THERE POLITICALLY TO DO WHAT NORTH CAROLINA, TEXAS, FLORIDA, ALL THESE OTHER REGIONS HAVE DONE?
BARRY ALBRECHT: WELL, I'LL TELL YOU, THE STATE RIGHT NOW YOU, LIKE I SAID EARLIER, HAS NEVER BEEN SO CLOSE, BECAUSE NOW WE'RE STARTING TO SEE THE RESULTS OF OUR FAILURES OF THE PAST. OUR ECONOMY HAS BEEN BASICALLY BREACHED. RIGHT NOW, WE DO NOT HAVE ANY BUSINESS ARGUMENT OR THE ARIZONA DIRTY WORD, INCENTIVES, TO BRING AND KEEP THE INDUSTRIES WE HAVE IN ARIZONA RIGHT NOW. JUST IN THE LAST SEVEN MONTHS, WE'VE LOST TWO HIGH-TECH UNMANED AERIAL VIEW COMPANIES TO UTAH BECAUSE THEY MADE A BUSINESS ARGUMENT TO MOVE THEM OUT OF ARIZONA. AND TEXAS AND THESE OTHER STATES ARE GOING TO CONTINUE TO PURSUE OUR COMPANIES UNTIL WE CREATE THE BUSINESS ARGUMENT TO NOT ONLY KEEP THEM HERE BUT BRING IN OTHER NEW INDUSTRIES.
JOE SNELL: YOU KNOW, IF -- IF -- GREAT QUESTION. IF NOT NOW, WHEN? I MEAN, WE'RE IN THE HEELS OF THE WORST RECESSION THAT I THINK THE STATE HAS EVER SEEN. I MEAN, I'VE NOT BEEN HERE FOR 100 YEARS BUT IF NOT, I THINK WE'RE AT A REAL MAJOR CROSSROADS. WE EITHER HAVE TO DECIDE TO GET IN THE GAME AND GET COMPETITIVE OR MY FEAR -- AND I DON'T KNOW IF MY COLLEAGUES SHARE IT -- BUT MY FEAR IS IT'S GOING TO BE LOSS WE MIGHT NOT EVER RECOVER FROM.
BARRY ALBRECHT: IF WE DON'T DO ANYTHING THIS YEAR, WE'LL BE IN THE SAME POSITION IN OUR ECONOMY TODAY FIVE YEARS FROM NOW. WHEN DO WE MAKE THE CHANGE? IT'S DIFFICULT TO MAKE THESE CHANGES. JUST BECAUSE IT'S DIFFICULT DOESN'T MEAN IT CAN'T BE DONE.
TED SIMONS: OK, IT CAN BE DONE AS WE'VE SEEN IN A VERY POOR AREA OF NORTH CAROLINA WHICH IS NOW A RESEARCH TRIANGLE AND AN EXAMPLE TO ALL THIS WAS DIRT POOR BEFORE THIS PROJECT GOT GOING SO IT CAN BE DONE. DOES ARIZONA HAVE THE TIME, BARRY TO WAIT FOR THE KIND OF DEVELOPMENT THEY SAW IN NORTH CAROLINA OR IN OTHER REGIONS? DO WE HAVE THE TIME TO WAIT FOR THAT KIND OF DEVELOPMENT?
BARRY BROOME: WELL, WE DON'T BUT IN SOME CASES -- YOU KNOW, IT'S A MIX OF SHORT-TERM AND LONG-TERM STRATEGIES. YOU KNOW, ONE OF THE THINGS THAT MAKES THIS BILL BEING INTRODUCED IN THE HOUSE THAT'S SO DISCERNING IS ENERGY IS A HUGE INDUSTRY AND THERE'S -- PEOPLE ARE JUST STARTING TO GET A HANDLE ON HOW HUGE A DOMESTIC INDUSTRY COULD BE FOR THE UNITED STATES OF AMERICA BECAUSE WE'VE BEEN IMPORTING OIL FROM ROGUE STATES THAT AREN'T FRIENDS OF THE UNITED STATES AND, YOU KNOW, IT'S ABOUT SITTING DOWN SAYING HOW DO WE WIN TODAY? HOW DO WE WIN LONG TERM? WHAT'S THE MIX OF ACTIVITIES THAT DO THAT. I THINK ON THE WILL SIDE, YOU KNOW, AND I THINK THIS IS REALLY IMPORTANT AND I TALK A LOT ABOUT THIS WITH MY CHAIRMAN, MIKE BEDWELL, THE WILL HAS TO BE DRIVEN BY THE BUSINESS LEADERSHIP. AND THERE'S TOO MANY BUSINESS LEADERS IN ARIZONA SITTING ON THE SIDELINES NOT IN THE TRENCHES WORKING WITH THE POLICYMAKERS TO MAKE A DIFFERENCE. I MEAN, MOST CREATIVE, SMART -- IF YOU GO INTO THE STATES WE'RE TALKING ABOUT, THEIR BUSINESS LEADERSHIP ARE INTIMATELY ENGAGED IN A VERY SERIOUS WAY WITH REAL RESOURCES AND REAL HOMEWORK, REAL EXPERTISE AND GUIDING THE POLICYMAKERS TO A COMPETITIVE PATH. ARIZONA DOESN'T HAVE A BUSINESS LEADERSHIP ENGAGED LIKE IT SHOULD BE EITHER THIS ALL CAN'T BE PLACED AT THE FEET OF POLICYMAKERS.
TED SIMONS: VERY QUICKLY, YOU HAVE 30 SECONDS LEFT. YES OR NO, WILL WE BE HAVING THE SAME DISCUSSION A YEAR FROM NOW?
BARRY BROOM: YES.
TED SIMONS: WHAT DO YOU THINK?
JOE SNELL: YES, BUT HOPEFULLY NOT.
TED SIMONS: WHAT DO YOU THINK?
BARRY ALBRECHT: I'M NOT WAITING FOR THE STATE TO GUIDE OUR DESTINY. WE'RE GOING TO CREATE THE KIND OF PROGRAMS WE NEED TO DO TODAY SO WE CAN HAVE THE JOBS FOR TOMORROW.
TED SIMONS: GENTLEMEN, THANK YOU VERY MUCH.
New Solar Power Plant
- The City of Phoenix has awarded a contract to Tessera Solar for a new 250-megawatt solar power plant to be located at the city’s landfill in Buckeye. It will be able to provide power to 50,000 homes. Phoenix Mayor Phil Gordon and a representative of Tessera Solar will discuss the project.
- Claude Maddox - Phoenix City Councilman Claude Maddox
- Peter Wilt - Tessera-Solar
Ted Simons: Good evening. Welcome to "Horizon." I’m Ted Simons. The city of Phoenix awarded a contract last week to Tessera-Solar of Houston to build a solar power plant next to the city's only active landfill. It's located on land the city owns in Buckeye. I'll talk with the Phoenix city councilman and a representative of Tessera-Solar but first, Mike Sauceda tells us more about the facility.
Mike Sauceda: Right now, this is Phoenix's only active landfill. In two years, it'll be an electric power plant putting out 250 megawatts of power, enough for 50,000 homes. The project will be built by Tessera-Solar. We use a concentrated solar thermal system, and a system that converts methane gas from the landfill to energy. The thermal system will focus the sun's rays on an engine which powers a generator to produce electricity. Project will create a billion dollars in investment and 300 construction jobs and 60 permanent jobs. Phoenix council woman Peggy Neely praised the project.
Peggy Neely: Today is a major milestone as the mayor said. We were given these challenges by Mayor Phil Gordon just awhile back saying we want to be the greenest city in the United States. I think yesterday moved us to that point. With the joint approval of the contract with Tessera-Solar, we've launched a chapter in our history that will transform our economy, our communities and our ability to sustain healthy growth for generations to come, not only here in Phoenix but across this region and with our partner in Buckeye. These days, the economy demands that we be creative in every decision we make on this project. Certainly being creative for the economic benefits, bringing a large-scale solar project, a utility scale project that's going to generate 250 mill watts, enough power for 50,000 homes annually with minimal water usage.
Ted Simons: And here now to discuss the new solar power plant is Phoenix City Councilman Claude Maddox and Peter Wilt, senior director for development for Tessera-Solar. Good to have you both on Horizon thanks for joining us. Why the contract to Tessera-Solar. What do they offer?
Claude Maddox: Tessera, basically we felt they were the ones that were most capable of doing the job. It is not -- we had several great companies that put in for the RFP but ultimately Tessera is the one that established that they can build and operate a utility-scale solar facility that was the deciding factor.
Ted Simons: Why this portion of city-owned land in buckeye?
Claude Maddox: We’ve got lots of land there. And we because of our reduction in our waste flow, um, taking out the recycling, taking out green waste and things of that effect, we’ve expanded the life of this landfill for many, many years. And with that being the case we have a lot of land to generate revenue or to use for a project like this that's why we decided to go and move it out there. Plus it's in the utility corridor. The power lines from Palo Verde are right there so it's easy access to connect in.
Ted Simons: For a project like this, one of the first concerns especially out there in the desert is water and energy production and water very closely related. How much water is this going to use?
Peter Wilt: Very little. Quite frankly, we use no water in the production of energy itself. We do use water to wash the mirrors. The mirrors tend to get dirty over time as dust and other materials settle on the mirrors but there's no water used in the production of energy itself. The water that we use essentially to wash the mirrors and potable water for the folks that work on the site. Has an approximation for 250 megawatts. We may use on an annual basis 500 feet of water. That's the amount of water that 5-10 residential houses may use in a year. It's a low use of water.
Ted Simons: And councilman Maddox mentioned the utility corridor and how convenient that was, talk about transmission lines where the power will go and who could possibly be buying this power?
Peter Wilt: We’re located two miles from a transmission corridor. We'll have to cross SR-85, which is about a two-mile construction project. Then there's three miles up to the nearest substation. That substation is owned by four large utilities. SRP is the operator of that substation. We'll have to file to interconnect there. Potential customers will include Arizona utilities, obviously APS, SRP, Tucson Electric, possibly the California Utilities but it's a great project and a very good connection point for this project.
Ted Simons: If the potential customers come through, will the city of Phoenix get some of that revenue?
Claude Maddox: Yes, there's a profit-sharing aspect to that I don't know the specific details to that I’m sure there's a threshold that Tessera is going to want to meet before we start participating. Truthfully, all our participation is at this point is land. We have the land to provide. Tessera will be building it all the capital improvements will be at their expense and then ultimately it's their responsibility to sell those contracts and generate that power. Then we participate in the profits.
Ted Simons: So when critics say the city of Phoenix has financial difficulties right now of a serious nature, what are they doing going to building power plants out in the desert in Buckeye. You're saying the city isn't on the hook for much except for the land?
Claude Maddox: No, not at all. We're on the hook for the land. Right now, it's being farmed. We're having a little bit of revenue generated off; we anticipate this'll be far greater for us.
Ted Simons: How expensive is this project? What kind of costs are you seeing?
Peter Wilt: We’re looking around $750 million for 250 megawatts. Keep in mind it's not only a solar plant but landfill to energy plant. Right now there's methane coming off the existing landfill that's being burned into the atmosphere. That's a very low use for this particular energy. We will install equipment that will convert that natural gas that methane to electricity just like the solar plant.
Ted Simons: Interesting, so that is being used also your technology I know it’s called Sun Catcher Technology. Explain what that means?
Peter Wilt: Sun Catcher Technology is, it’s a blend of old and new technology. The sterling engine which is the power conversion unit which sits at the end of the power conversion module, that technology, the sterling engine, has been around for about 200 years. We're just bringing it to use in terms of converting solar energy into electrical energy. The sun catcher itself looks like a very large catcher's mitt. It's about 38 feet across. It concentrates the sun's energy on the engine. The engine then converts that energy into electricity.
Ted Simons: Is there a way to store energy if we have like we've had this winter a little El Niño action and a few cloudy days in a row?
Peter Wilt: One of the biggest problems of solar energy, any kind of electricity for that matter other than storing in batteries, it's a very difficult product to store. So with this particular technology, there won't be any storage.
Ted Simon: Ok. Concern there but not a major concern?
Peter Wilt: Well, there are other ways of providing electricity during the off-peak hours. There are other ways of providing that other than solar. The good thing about solar particularly in Arizona is during the peak hours of the day when the electricity is needed most, that's when the solar plant will operate at its highest efficiency factor.
Claude Maddox: Well --
Ted Simons: Go ahead, please.
Claude Maddox: I’d like to go back to the economic comment that we were discussing a few minutes ago. There's a lot more than just the power generation that will help us from an economic perspective. You're right; we're in an economic difficult time for the city. We're talking about 300 construction jobs that will come out of this one of the things that we've requested is that they focus on the local labor force. We're talking about 60 permanent jobs. This is a good opportunity for us also to attract more business into the city of Phoenix that would support this. So manufacturing, tower, automotive is a manufacturing facility that makes the motors or the engines that operate these sun catchers. They're already looking to potentially locate in Phoenix which will be more jobs. There's a lot of economic value here not just in the generation or the power and the profit sharing but also in the economic development side of it.
Ted Simons: Along with the multiplier effect, I would imagine if Tessera is if project goes as planned and all things work out well that Tessera will look at other activity in Arizona?
Peter Wilt: Absolutely. And to highlight on Mr. Maddox comment tower automotive for example is looking at four to six hundred thousand square feet to locate in the valley. They're looking at something on the order of 250 jobs in terms of manufacturing jobs. And possibly as much as $150 million of investment. There's a multiplier effect beyond the project itself.
Ted Simons: Time line, what are we looking for in terms of this breaking ground and starting to get the power going?
Claude Maddox: I’ll have to defer to Peter on that one. He's very knowledgeable.
Peter Wilt: We’re very aggressive. We got a lot of permits to get we got to market to power we got to go through the Arizona corporation commission in terms of permitting and other authorizations. We hope to be C.O.D. by the end of 2012 or shortly thereafter. We hope to break ground sometime during the early part of 2012.
Ted Simons: All right, very good. Gentlemen, great conversation. Thank you very much for joining us.
Claude Maddox: Ted, thank you.
Peter Wilt: Thank you, Ted.