The down low on Denver/Colorado

The national buzz is all about creating jobs nowadays, but is metro Denver and Colorado a hot commodity among people who sell cities and regions to worldwide companies as a place to expand or relocate?

Only one of nine business site selectors who were wined and dined over the past three days by Denver economic-development recruiters cited the metro area and Colorado as a current hot spot. And that recruiter suggested the alternative-energy industry -- shaky ground during the current economic downturn -- is Colorado's strongest calling card.

But the site selectors were not brought here to pat Colorado and Denver on the back. The Metro Denver Economic Development Corp.'s annual site-selection conference traditionally seeks out the weaknesses of the area's attractions to national and international corporations in order to improve regional prospects for recruiting a corporate expansion or relocation in the future.

And why should small business in Colorado care? Because big business generates small business growth in an area where it operates. When a big company comes to Colorado and hires 100, 400, or 1,000 new employees, it also must look for local suppliers, construction contractors, maintenance firms and other service businesses -- sometimes even venture partners and bankers -- to accomplish their work.

And new jobs put money in the pockets of dry cleaners, sandwich shops and caterers, landlords and professional sports franchises, gas-station operators, home builders, teachers and government workers.

So what was the lowdown on site selection shared by the experts?

• Outsourcing is being reversed. Companies that sent work to China and India are bringing it back to the U.S., using domestic call centers, data centers, and distribution centers to better serve their customers.
• Companies are collaborating with each other to reduce costs of business services provided by third-party vendors: human resources, legal, some information technology, employee retention.
• Consolidations and mergers and acquisitions are causing longer decision-making cycles, up to 18 months, but when a company decides to "pull the trigger" on a move or an expansion, they want a winning-city bidder to act quickly, sometimes within 30 days, to accomplish what they've promised in their bid.
• Tax breaks and other incentives to lure businesses are being eliminated by some states, mostly for budget reasons; adjusted for different industries by others; and supplemented with cash funds, often under the control of a governor, to close deals in the hottest recruiting states. So the competition among states for new business is fierce. Colorado incentives are still graded a C- to D+ by most economic developers.

And no economic-development organization should assume current local businesses are not being recruited by other states. That's another reason small- to medium-sized businesses should pay attention to what these business-recruitment experts have to say about Denver and Colorado every year.

"You need to be in touch with your local businesses all the time," said Ann Harts, a Kansas City principal of Hickey & Associates, a national and international site-selection firm based in Minneapolis.

Another of the experts, Angelos Angelou, of Angelou Economics in Austin, Texas, said he visits Colorado and other states frequently without notice and when he hears a company has not been visited by its local business-development specialists, he wonders how his own client might be treated by that state if it chose to move or expand there.

"Colorado has never won a project on incentives," Angelou said, based on his experience working within the state. But he said Colorado can compete with any other state based on the talent of its workforce. "Focus on talent. Focus on the business proposition," he suggested to the 400 people in the audience.

Then, referring to Gov. John Hickenlooper who had spoken to the crowd to open the breakfast meeting, Angelou said Hickenlooper's vision of Colorado as a "pro-business" state is as competitive as any of the arguments of hot-spot recruiting states.

"Take the governor to places," Angelou said, "and let him speak." He seemed to think that might be Colorado's sharpest tool in its shed.

Mecca for creative small businesses

Over the river and through a bit of urban jungle, longtime developer Mickey Zeppelin and his partner/developer/son Kyle are building a mecca for 21st century "creative entrepreneurs."

And I don't mean artists.

The Zeppelins' three buildings, two that make up Taxi and a recent truck-terminal renovation they call Freight, are rife with cutting-edge art and even an artist's studio or two.

But the commercial development is more about business, and particularly collaborative, Internet-based small businesses -- search-engine optimization, Internet advertising, digital graphics and design -- than it is about the artsy, loft-like design that has become common to modern or renovated business districts.

Besides that, Taxi and Freight are located on the west side of the South Platte River, in the still more industrial area of what many people are now calling RiNo, the River North Art District. When Taxi opened nearly 10 years ago, Mickey Zeppelin's ties to the arts community usually rendered publicity about his business enterprise to a secondary status behind the dozens of arts-oriented businesses and residences that were spreading out on the east bank of the river.

But the Great Recession, which drove many middle managers and executives into starting their own businesses, and the explosive growth of some of those new, Internet-savvy firms, "played  into our hands in a lot of ways and is what got Freight leased" over the past year even before build out, said Kyle.

Kyle and Mickey Zeppelin

Kyle Zeppelin prefers to call those commercial tenants "new-economy businesses," and notes that their owners and employees fit perfectly into the open-air campus that Taxi and Freight have become.

He and Mickey bought the Freight building, the truck terminal still equipped with freight-bay garage doors that new tenants can open on mild and summer days, after building and filling the second Taxi building which includes residential units above a ground floor of commercial spaces.

The three buildings are 95 percent leased by about 60 businesses that employ about 300 people, Mickey said. Several original commercial tenants are still there, and some have grown from small spaces to larger ones, with one threatening now to take over the large leasing office Taxi had kept for itself.

The original Taxi building, 3455 Ringsby Court, was converted from the old headquarters of Yellow Cab and retains some of the concrete curbs and paving that were part of the original site. The Fuel Cafe, independently operated by a tenant, offers close-at-hand food and bar service; there's a Pilates studio and fitness center, free parking and a new childhood-education center in the Freight building.

"The Internet is not getting any smaller," Kyle said to explain Taxi and Freight's attraction to the new businesses leasing its space. "You look around at the inventory of real estate and it was primarily this pretty typical format of Class A and Class B office buildings that were very impersonal and in some cases very fancy and not very representative of the way this new generation of companies was working," he said.

It's "more collaborative, more open floor plans, more shared spaces, more opportunities for collaboration at a high level of specialization," he added, and both he and his father believe Taxi was ahead of the trend 10 years ago when it built just those kinds of innovations into its business "campus."

"You can't put them in a downtown office building next to a mortgage broker or an insurance company," Kyle said of his "new-economy" tenants.

"These guys want to come to work in their shorts; they don't necessarily have to answer to anyone. They're good at what they do and they want to keep their employees happy because their employees are in demand. And if they want to bring their dog to work, they'll bring their dog to work. If they want to play video games over lunch in their conference room, then that's what they're doing."

Mickey, at age 74, is quick to measure a potential tenant's interest in the culture of Taxi. "It's interesting," he said. "We generally will know within 10 minutes: They get it or they don't get it. It's the kind of place that has incredible energy around it, and people say, 'I love it,' or you just take one look at their face and say, 'This really isn't a fit."

The Zeppelin's next building -- new construction planned at about 95,000 square feet and a cost of about $20 million -- will be targeted to bigger companies, large tech firms that might be interested in 8,000 to 10,000 square feet to house up to a couple hundred employees.

"That's really the kind of Silicon Valley model," said Kyle. "Plug in the Apple or the Twitter or the Google and surround it with all these smaller groups and it creates an opportunity. The smaller groups create an opportunity for the bigger groups to tap into some of this innovation that needs that kind of small scale, and then the bigger groups present an opportunity for the small groups because they're out there functioning at a really big scale."

Sounds like the perfect formula for continuing to draw innovative small businesses to a 21st century business park -- with a little residential thrown in the mix.

Mickey Zeppelin said he and his partners have thrown about $50 million into the development so far, and their return on the investment is just now beginning to manifest itself. Rents range from $17 to $20 per square foot, which Kyle said is about 20 percent less than new construction in nearby downtown, and Taxi is actually able to help small firms finance custom tenant buildouts, adding another level of draw for smaller tenants.

And the urban atmosphere -- "We got a bus maintenance facility on one side, a concrete plant on the other," said Kyle -- remains in fashion among new businesses that are not only playing at the edges of their industries but that also appreciate locating in a place that's "got an edge to it."

That makes Taxi and Freight a little like the landlords who have developed the complex. "It's a little off center," said Kyle. "If you don't see the vision ...."

Romero promises economic development across state agencies

Dwayne Romero, the state's new economic development director, officially resigns from his seat as an Aspen city councilman today and has promised a cross-agency approach to economic development problems like mountain congestion on Interstate 70.

"I think that's an integrated approach, a cross-sectional, cross-agency state of mind, and a philosophical approach to how this particular administration chooses to pursue its work," Romero said in an interview last week.

I asked him whether he considers taking part in the decade-long discussion over how to fix I-70 congestion, largely the purview of the Colorado Department of Transportation, was a legitimate role for the director of the Colorado Office of Economic Development and International Trade.

"I do," said Romero. "You know traffic and congestion around I-70 isn't going to go away overnight," he said. "These are difficult, meaty, hairy issues." And I-70 traffic cannot be considered a narrow concern for just transportation experts.

"It clearly feeds jobs in the tourism economy," he said. "Every time a new business looks to the state, they measure things like the strength of our infrastructure, and how well it's adapted to, and it services our constituents," he said. "And choke points along I-70 do not help that story."

I asked him the question because I have long considered the economic development director to be in a unique position to influence practically any state government undertaking, since any new government undertaking is going to involve private businesses as contractors.

From straightening out the human-services department's computer problems, to building a transmission line across the state, to fixing the state's roads and bridges, government agencies don't do the work itself, but hire and pay private contractors to do it.

But hiring private contractors in Colorado has long been a convoluted and time-wasting (therefore money-wasting) process that often discourages local small businesses and even medium-sized firms from taking part. Romero would do well to involve his department in reforming that area of state government as well. Or at least inject itself into reforms on the side of small businesses and all Colorado companies.

Romero said during the interview that OEDIT, his department, will also be greatly concerned with carrying out Gov. John Hickenlooper's primary dictate to all state agencies, which, in Romero's words, is: "Getting our budget balanced and at the same time focus on how we improve the performance of government."

"We understand that at the state level we need to make sure that our government is run like a very effective business, and we're responsible for our revenues, and we're responsible for the delivery of our services," he said. He wants small business and all business across the state to respect the administration's business-like efficiency, and gain enough confidence in Colorado's economy to add jobs and grow.

That will require his department and other state agencies to craft "efficiencies and economies that help, if you will, deliver more effectively on the services that we provide, perhaps at a slightly less dollar value," suggesting a tightening of the state workforce in order to meet budget demands.

"That's where I would rely on my private-sector, small-business and business management experience," he said when I asked whether new duties would not stretch his current department's staffing requirements.

"No," he said. "That concept of dropping or diluting to zero other initiatives or other focuses is just foreign to me. You know, when you make priorities, you focus your resources and energies. Really strong leadership would suggest you still are able to perform your other missions and your other capacities. Having a priority of effort is what small business has to do every day." 

Eco-devo tour might get it right this time

Gov. Hick takes to the road today to do a little more of what his transition team started regarding Colorado's economic-development strategy.

So far, Hick has not named a director of the Office of Economic Development and International Trade, and to my mind that's a good thing. The last two governors did a poor job crafting a strategy for the office that actually accomplished something.

Which meant the state and its small businesses suffered for 12 years from a high-level lack of concern for the prosperity of Colorado's small-business owners. Small business, after all, generates the most jobs in our economy, and the state's interest in business owners who are job generators only makes sense.

That was not the strategy of the last two governors. Both Bill Owens, who thought a free market should allow small business to fend for itself, and Bill Ritter, who had a Democrat's instinct for stepping away from anything that smelled of the monied interests in Colorado, allowed the economic-development office to flounder.

I think both governors hoped the Denver Metro Chamber of Commerce and its own economic-development arm would cover their asses on the eco-devo front during their terms.

But the Denver chamber had its own problems of perception rooted in its sometimes blind following of big-business interests. It paid lip service to small business, but I think its leaders felt more comfortable, more powerful and more influential dealing with the bigs. They simply paid less attention to the smalls.

The Hickenlooper team's encore tour of statewide economic-development interests promises a broader approach our new governor calls "bottom-up."

Outstate eco-devo folks have learned from the past that the phrase might mean they are just in for another spanking. Here's hoping for more from the state's newest chief executive. 

Pro-business bills wait gov's signature

Gov. Bill Ritter has a chance to make up for some of the so-called "blows" dealt to the Colorado business community by his pro-labor administration by signing two economic-development bills sent to him by the legislature.

One bill, the Colorado Regional Tourism Act, would provide incentives to economic developers to undertake large "destination" development projects like a NASCAR racetrack or Olympic-game sports venues, future attractions for destination tourists from around the nation and the world.

I have long endorsed Colorado government efforts to attract tourism dollars to the state as well as government effort to attract new business to Colorado.

The second business-friendly bill awaiting a governor's signature would waive a long-standing requirement for a minimum of three bidders on large state procurement contracts, ostensibly to allow the state some flexibility in meeting the deadlines of the nation's economic stimulus package.

Waiting or arranging to get three bids on large state-funded projects can delay their start up, officials told The Denver Post, on whose reporting I am relying on to write this post.

I would normally be wary of the quick passage of such waiver legislation, but I have also been critical in the past of the state's byzantine procurement process, and can imagine the possibility of Colorado missing out on stimulus dollars because it couldn't get an expensive project through the process with dispatch.

Comments from readers on The Post's website were limited this morning to the tourism bill. One of the four comments was vacuous and the other three raised a cry against corporate welfare that is typical of knee-jerk liberal reaction to such economic incentives.

The newspaper quoted University of Colorado economist Jeff Zax saying the legislation was a clear attempt to use public money for private benefit. The story also cited a report by the Bell Policy Center that reportedly shows the state's long-standing enterprise-zone program has failed.

Neither criticism holds up. The tourism bill would use far less state money than private investors would risk to build a venue, and the benefits of a successful public-private venture would swamp the costs. The enterprise-zone effort was miniscule in terms of state dollars, so to criticize it for not having a big return rings somewhat hollow.

Ritter can sign both bills in the knowledge that provisions are made in each for state officials to monitor and prevent his or any future administration from going overboard to favor developers with state money that has no hope of achieving an economic benefit for a large number of the state's citizens.

A metro-area racetrack, even if it were to fail over the long haul (which continued growth of the state's ecnomomy would help prevent), would create small-business jobs among vendors to service it. Olympic games and the longer-lasting venues they often produce in a region also hold out the promise of attracting more tourist dollars over 50 years than the state might attract without them.

Ritter would be wise to sign both bills and prove to his Republican friends that a Democratic governor can be just as healthy for business, perhaps even more so, than one of their own.

Royal tiff in the Springs

How can the state let that happen?

That was my first reaction to reading the story in The Denver Post this morning about the dust up over a public-private partnership in Colorado Springs that is intended to keep the headquarters of the United States Olympic Committee in Colorado.

Great story, Jason Blevins.

So I fired off an e-mail to Don Elliman, executive director of the Colorado Office of Economic Development and International Trade, to ask my question.

Elliman answered graciously, but first allow me to briefly outline the problem, according to Blevins in The Post.

A three-way deal between the city of Colorado Springs, the USOC and a developer, Land Equity Partners, has gone sour because the developer has been sued by investors, the city has refused to go to a lousy bond market to borrow nearly $21 million it planned to contribute to the project, and the USOC has failed so far to lease a redeveloped downtown building in the Springs that is to serve as the committee's national headquarters.

That would make it seem state government has had no role in the controversy, but Elliman said his office was asked to participate and made a commitment to the project. What's fallen apart has so far been beyond the state's control.

"We agree the USOC is a very important presence in Colorado, and we certainly want to retain it," Elliman anwered. "As you are well aware," he said,"we have limited financial resources at the State level due to a host of constitutional and statutory constraints. If it were in our power to solve this deal, we would do so, but throwing large sums of money at it, beyond what we've already done is not an option."

So the answer to my question: "How can the state let this happen?" is evident. It couldn't prevent it.

Yet the importance of working out a solution would behoove the state to get active behind the scenes. Politics is exercised behind closed doors far more than in front of cameras, and economic development comes down to much more than holding news conferences.

That's why Tom Clark, of the Metro Denver Economic Development Corp., recently announced he was was going to start a blog that kept the public informed about the Denver Metro Chamber's own economic development efforts.

I've not yet been able to find the blog, but in an era of transparency brought on by the election of Barack Obama, I'm sure I'll find it soon enough.

Information is king and queen in a transgendered age that has been named for it. Of course, it can leave you royally screwed, too, but at least you know when it's happening.