A little history: The Greater Phoenix Economic Council was formed in the aftermath of the 1990 recession. Fueled by savings-and-loan grifters and spec-building con artists (Charlie Keating combined both roles), it was the worst downturn the city had faced since the Depression.
Up to that point, of course.
It stung that the "infamous" and "negative" Barron's article calling out Phoenix was correct. But there were enough locally headquartered companies, civic stewards and sane political leaders remaining to be concerned about more than image. Phoenix and Arizona started a serious effort to diversify beyond real estate, to recapture the efforts of the late 1940s through the 1960s aimed at creating a robust, high-quality economy.
And for several years, GPEC was successful. The keys were the first president, Ioanna Morfessis, who had a sophisticated understanding of economic competitiveness and development; also, she was backed by a board of business titans who could knock heads and write checks. One other element helped: the city of Phoenix was still the unquestioned center of gravity.
Unfortunately, the decade saw 40 percent population growth and massive new sprawl. At the same time, most of the city's corporate crown jewels were either bought or significantly downsized and almost all the stewards died or retreated. The appetite to seriously build a quality economy, to sustain the cluster strategy, waned. In this "drunk on growth" atmosphere, Morfessis left.
She was followed by Rick Weddle and Barry Broome, both capable. But GPEC and the metropolitan area had changed dramatically.
No wonder, then, that GPEC essentially became an arm of the Real Estate Industrial Complex. Recruiting call centers and other back-office work to fill spec office "parks" on the fringes became Job No. 1.
It's not that Weddle and Broome didn't understand the problem of these low-end, low-wage plays. But they had no major CEOs to back a push for quality, writing checks, knocking heads, and maintaining headquarters employing thousands and deploying billions of dollars. Not only that, but as the Legislature became more extreme, its members vehemently opposed the tools needed for serious economic development.
Metropolitan Phoenix's affluence, commerce and what remained of "corporate Arizona" made a remarkable shift out to the fringes or, at best, 24th Street and Camelback. It wasn't much in bulk or quality — no Valley National Bank, no (old) Dial. The legacy semiconductor and aerospace sectors were in some cases fading and were certainly not keeping up with population growth.
Meanwhile, competitors such as San Diego, Portland, Seattle, Austin and Denver only kept upping their game as the larger economy kept changing. The risks of Phoenix's complacency and limitations were cloaked by population growth.
The 2001 recession caused a momentary questioning of the status quo. By this time I was writing my column for the Arizona Republic, pointing out the decline in economic quality and the competitive risks. During a GPEC board meeting, I was told, someone said, "My god, Talton is right!" But soon the metro area was off to the races again, right over the cliff into an outright depression that makes 1990 look like a bad-hair day.
I offer this history lesson now that Broome has departed for Sacramento, to a much higher-quality economy and fully stocked eco-devo toolbox in California.
This is the time for the city of Phoenix to leave GPEC.
This is the time for Phoenix to form its own economic-development organization, focused on the city.
GPEC stated that during Broome's tenure, the organization had helped bring "more than 260 companies, nearly 50,000 jobs and more than $8 billion in capital investment to the Phoenix area," according to the Republic.
I hate to pick nits, but that comes out to 5,000 jobs a year in a civilian labor force that topped 2 million before the collapse. Are those net jobs? Does those billions include the Intel fabs? Too bad about the Apple "breakthrough," which was mostly driven by DMB's spec Eastmark project on the Mesa fringe. Employment has still not recovered to pre-recession levels.
It's not Broome's fault that metro Phoenix underperforms all its peer cities in measures of quality and competitiveness. As I wrote, GPEC can only be as strong as the business community backing it — and the cohesion of the city it serves. Today, GPEC's board chairman is a man named Donald Smith who heads something called CopperPoint Mutual. I'm sure it's a very nice company (it provides workers comp insurance) and at least it is located in Midtown. But John Teets and Dial, a Fortune 500 headquarters, it is not.
But the heart of the matter is that GPEC can't serve the special needs of Phoenix and the appetite of the sprawl boyz. Maybe a few projects to far north Phoenix. But what has GPEC done for downtown, the Central Corridor or to fill abundant empty land along the light-rail line in the city? Not much if anything.
You will be told that GPEC was formed to prevent cities in "the Valley" from engaging in self-destructive competition. But that wasn't the primary reason (see history above). And with the rise of giant suburbs, natural rivalry has become a Mad Max affair — specifically, cannibalizing the assets of Phoenix and shipping them to the 'burbs and the fringes. Also, the last major power in the local economy, the Real Estate Industrial Complex, is hostile to the core and the leasing boyz always have their latest favorite (currently the "Price Corridor").
Phoenix needs an economic-development organization geared for it alone, and especially for the core.
With Mayor Greg Stanton wanting to play nice and no one with even the heft of Jerry Colangelo in the private sector to fight for the city, this is an unlikely outcome.
But it should happen. An amicable divorce. With a host of its special problems, but also unique opportunities, Phoenix can no longer be served by GPEC.
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