Investments in Growth Stage Companies Could Create 8,000
Jobs, Generate $360 Million in Tax Revenues
PHOENIX – The Arizona Chamber Foundation today released a study that examines the economic and fiscal impact of the Arizona New Markets Jobs Growth Investment Initiative, a proposal aimed at encouraging private capital investment in existing growth stage Arizona businesses.
The study, prepared for the Foundation by Elliott D. Pollack & Company, finds that the $250 million capital investment that will be incentivized by the New Markets Initiative will generate 6,370 ongoing annual jobs, 1,666 construction related jobs, and over $360 million in state, county and local government tax revenues over ten years.
Modeled after and leveraging a proven federal incentive created in 2000, the New Markets Initiative proposes to offer private investors future state tax credits to be claimed over a seven-year period in exchange for providing up-front growth capital to Arizona businesses. While the capital investment would occur in year one of the program, investors would not begin claiming tax credits until year three. The full value of the credits would be exhausted at the conclusion of year seven. The tax credits are neither refundable nor transferable.
“Accessing capital through the traditional lending avenues remains a challenge for businesses in Arizona looking to expand,” Arizona Chamber Foundation Executive Director Suzanne Taylor said. “As policymakers continue their efforts to attract job-creating investment capital to Arizona, the New Markets Initiative is a tool worth considering because it brings to the table additional investors who would not otherwise participate in this market.”
The study also notes that investments from the Federal New Markets Initiative tend to increase in states that establish their own version of the incentive, as nine states have done since 2007 and it is reasonable to expect that Arizona would experience a similar increase.
“Making a successful transition from the start-up stage to the growth stage is critical to the survival of a business, and can require significant levels of capital investment,” Taylor said. “By making available additional sources of capital, the New Markets Initiative could play a key role in helping Arizona companies take this important step.”
The complete study
can be read here.