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Home My WebLink About121009WSPZ:\Council Packets\2012\WS10-9-12\121009WSA.doc Page 1 of 1 NOTICE OF THE WORK STUDY SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL TIME: 5:30 P.M. WHEN: TUESDAY, OCTOBER 9, 2012 WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call ; a quorum of the Town’s various Commissions or Boards may be in attendance at the Work-Study Session. ALL WORK-STUDY ITEMS LISTED ARE FOR DISCUSSION ONLY. NO ACTION CAN OR WILL BE TAKEN. The primary purpose of work session meetings is to provide the Town Council with the opportunity for in -depth discussion and study of specific subjects. Public comment is not provided for on the Agenda and may be made only a s approved by consensus of the Council. In appropriate circumstances, a brief presentation may be permitted by a member of the public or another interested party on an Agenda item if invited by the Mayor or the Town Manager to do so. The Presiding Office r may limit or end the time for such presentations. AGENDA  CALL TO ORDER AND ROLL CALL – Mayor Linda M. Kavanagh 1. PRESENTATION AND DISCUSSION relating to a REPORT entitled, “An Overview of Potential Economic Development Options for Fountain Hills,” prepared by Arizona State University’s New Venture Group at the request of the Strategic Planning Advisory Commission. 2. DISCUSSION regarding establishing a possible POLITICAL SIGN FREE ZONE within the Town of Fountain Hills, pursuant to ARIZ. REV. STAT. §16-1019. 3. ADJOURNMENT. DATED this 4th day of October 2012. Bevelyn J. Bender, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 480-816-5100 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to attend this meeting or to obtain agenda information in la rge print format. Supporting documentation and staff reports furnished the council with this agenda are available for review in t he Clerk’s office. Mayor Linda M. Kavanagh Councilmember Dennis Brown Vice Mayor Henry Leger Councilmember Ginny Dickey Councilmember Tait D. Elkie Councilmember Cassie Hansen Councilmember Cecil A. Yates Z:\Council Packets\2012\WS10-9-12\121009WSA.doc Page 1 of 1 NOTICE OF THE WORK STUDY SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL TIME: 5:30 P.M. WHEN: TUESDAY, OCTOBER 9, 2012 WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call; a quorum of the Town’s various Commissions or Boards may be in attendance at the Work-Study Session. ALL WORK-STUDY ITEMS LISTED ARE FOR DISCUSSION ONLY. NO ACTION CAN OR WILL BE TAKEN. The primary purpose of work session meetings is to provide the Town Council with the opportunity for in-depth discussion and study of specific subjects. Public comment is not provided for on the Agenda and may be made only as approved by consensus of the Council. In appropriate circumstances, a brief presentation may be permitted by a member of the public or another interested party on an Agenda item if invited by the Mayor or the Town Manager to do so. The Presiding Officer may limit or end the time for such presentations. AGENDA  CALL TO ORDER AND ROLL CALL – Mayor Linda M. Kavanagh 1. PRESENTATION AND DISCUSSION relating to a REPORT entitled, “An Overview of Potential Economic Development Options for Fountain Hills,” prepared by Arizona State University’s New Venture Group at the request of the Strategic Planning Advisory Commission. 2. DISCUSSION regarding establishing a possible POLITICAL SIGN FREE ZONE within the Town of Fountain Hills, pursuant to ARIZ. REV. STAT. §16-1019. 3. ADJOURNMENT. DATED this 4th day of October 2012. Bevelyn J. Bender, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 480-816-5100 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to attend this meeting or to obtain agenda information in large print format. Supporting documentation and staff reports furnished the council with this agenda are available for review in t he Clerk’s office. Mayor Linda M. Kavanagh Councilmember Dennis Brown Vice Mayor Henry Leger Councilmember Ginny Dickey Councilmember Tait D. Elkie Councilmember Cassie Hansen Councilmember Cecil A. Yates TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:10/9/2012 Meeting Type:WorkStudy Session Agenda Type:Regular Submitting Department:Administration Staff Contact Information:Town Manager Ken Buchanan;kbuchanan@fh.az.gov;480-816-5130 Strategic Value:Economic Vitality REQUEST TO COUNCIL (Agenda Language):PRESENTATION AND DISCUSSION ofa REPORT entitled,"AnOverview ofPotential Economic Development OptionsforFountain Hills,"prepared byArizona State University'sNewVenture Groupatthe request of the Strategic Planning Advisory Commission. Applicant:N/A Applicant Contact Information:N/A Property Location:N/A Related Ordinance,Policy or Guiding Principle:Strategic Plan 2010 Staff Summary (background):Over the past several months,SPAC has collaborated with ASU's New Venture Group (NVG)on the research project,"Competitive Advantages and Regional Collaborative Opportunities for Business Development in the Town of Fountain Hills."SPAC Chair Nick DePorter will introduce the project and Dr.Dan Brooks will review the findings of the report that was prepared byNVG and presented to SPAC on June 13,2012. Risk Analysis (options or alternatives with implications):N/A Fiscal Impact (initial and ongoing costs;budget status):N/A Budget Reference (page number):N/A Funding Source:NA If Multiple Fundsutilized,listhere:N/A Budgeted;if No,attach Budget Adjustment Form:NA Recommendation(s)by Board(s)or Commission(s):N/A Staff Recommendation(s):N/A List Attachment(s):Memorandum to Council from SPAC Chair Nick DePorter,dated August 7,2012;Report prepared byNew Venture Group entitled,"An Overview of Potential Economic Development Options for Fountain Hills," dated June 201;PowerPoint presentation prepared byDr.Dan Brooks. SUGGESTED MOTION (for council use): Approved: Ken Buchanan,Town Manager 9KenBudhanan,Town Manager ^9/25/2012 Page 1of1 TO".Fountain Hills TownCouncil CC:Ken Buchanan,Shaunna Williams From:Strategic Planning Advisory Commission Date:August 7,2012 Re:spac/asu Memo This memo isto serve as an introduction to the work SPAC has been doing with Arizona State University's New Venture Group. Project Scope New Venture Group (NVG)set forthto assist Fountain Hills'Strategic Planning Advisory Commission (SPAC)in the identification and evaluation of potential sources of economic competitive advantage and regional collaborative opportunities.For its part,NVG performed research into the existing businesses and infrastructure and attempt to demonstrate the benefit of various opportunities particular to the healthcare/wellness/medical/bio-medical business sector. Project Findings Dr.Dan Brooks serves as the Faculty Advisor forNVG and presented the final report to SPAC on June 13,2012.SPAC found the report insightful and requested to share the findings with Town Council.In particular,SPAC wanted to emphasize the troubling findings of the demographic trends for Fountain Hills, specifically highlighted on pages 27 ("Fountain Hills potential demographic future")and 33 ("Fountain Hills'potential economic future"),as well as the overall SWOT analysis,provided on pages 34 and 35. Itis important to note that SPAC members felt that the report fell short ona couple of fronts including: •Whether the healthcare/wellness/medical/bio-medical sector is a viable business sector •Providing business profiles of potential healthcare related entities •Demographic trends and impacts relative to the industry •Strategic analysis for implementing and leveraging competitive advantages Although the project findings were not as comprehensive as we originally thought,there are many valuable points of information throughout the report.We hope itwill serve as a foundation for future analysis of economic development opportunities for Fountain Hills. Page 2 An Overview of Potential Economic Development Options For Fountain Hills For: Strategic Planning Advisory Commission Fountain Hills By: New Venture Group June 2012 Definitions: Economic development and entrepreneurship Context Arizona Metro-Phoenix Fountain Hills Prioritizing: Defining and quantifying “overall attractiveness” of a new venture Ranking new venture options Fostering economic development Economic development in FH Economic development Not economic activity Not economic growth The increase in quality of life for a community contributed to be economic activity Foundation Infrastructure Education and training (human capital) Innovation (competitiveness) Definitions: Development Conventional small businesses vs. “start-ups” Growth potential Financial needs and timing (second round, etc.) Impact on the community New economic ventures Conventional Small Businesses Over 80% of financing is owner , family, friends Start-up Financing Over 90% of financing is owner , family, friends Small Businesses Expansion to meet needs outside of the community “Start-up” companies The difference: Second-stage funding Large infusion of funding here Failure Points Business Plan / Mentorship Conventional Businesses Financing / Inadequate Cash Flow Conventional: Small business loans Aggressive Growth Start-ups: Venture/Angel Capital Improper Business Structure Conventional Businesses Context Arizona ranked 2nd Behind Los Angeles Tied with Atlanta 15 Largest metro areas The West Arizona’s economic base: Agriculture, construction, basic services (tourism) Not very different from the beginning Arizona’s demographics: Less affluent Less educated Fewer technical skills Fewer language skills Regional challenges Hispanics start more businesses on average than other ethnic groups Increased entrepreneurship follows periods of unemployment Metro area presents a cost of living advantage Regional advantages City Price 3 Mo. Prior Y-O-Y Cost of Living Phoenix, AZ $114.18 -1.2% -10.9% 102 San Jose, CA $226.14 +0.9% -11.0% 172 Cambridge, MA $128.05 +0.5% -0.8% 176 New York City Scottsdale Gilbert Fountain Hills $135.49 $170 $129 $100 +0.1% -4.4% 159 Office Prices Fountain Hills: Demographics 0 1000 2000 3000 4000 5000 6000 7000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other Neighbors 0 5,000 10,000 15,000 20,000 25,000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other Closer neighbors 0 500 1000 1500 2000 2500 3000 3500 4000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other 0 10,000 20,000 30,000 40,000 50,000 60,000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other Older neighbors 0 500 1000 1500 2000 2500 3000 3500 4000 4500 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other 0 5000 10000 15000 20000 25000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other Demographic future? 0 1000 2000 3000 4000 5000 6000 7000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other 0 500 1000 1500 2000 2500 3000 3500 4000 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other 0 500 1000 1500 2000 2500 3000 3500 4000 4500 20 -24 25 -34 35 -49 50 -64 65 & over White African American Asian American Indian and Alaska Native Native Hawaiian and Pacific Islander Other ? Wholesale trade Supermarkets / grocery stores Retailers Administrative support Healthcare and social assistance Fountain Hills: Economics 0 10,000 20,000 30,000 40,000 50,000 60,000 Fountain Hills Annual Reveues 2007 Healthcare and ambulatory care Physicians’ offices Accommodations, hotels, food services Professional services Paradise Valley 0 20,000 40,000 60,000 80,000 100,000 120,000 Paradise Valley Annual Reveues 2007 Future? 0500000010000000150000002000000025000000 01000002000003000004000005000006000007000008000009000001000000 0 500000 1000000 1500000 2000000 2500000 3000000 0 500000 1000000 1500000 2000000 2500000 0 50000 100000 150000 200000 250000 0 100000 200000 300000 400000 500000 600000 700000 0 20000 40000 60000 80000 100000 120000 Phoenix Surprise Prescott Peoria Fountain Hills Goodyear Paradise Valley 0500000010000000150000002000000025000000 01000002000003000004000005000006000007000008000009000001000000 0 500000 1000000 1500000 2000000 2500000 3000000 0 500000 1000000 1500000 2000000 2500000 0 50000 100000 150000 200000 250000 0 100000 200000 300000 400000 500000 600000 700000 0 20000 40000 60000 80000 100000 120000 Phoenix Surprise Prescott Peoria Fountain Hills Goodyear Paradise Valley 0500000010000000150000002000000025000000 0100000200000300000400000500000600000700000800000900000100000005000001000000150000020000002500000300000005000001000000150000020000002500000 0 50000 100000 150000 200000 250000 0 100000 200000 300000 400000 500000 600000 700000 0 20000 40000 60000 80000 100000 120000 Phoenix Surprise Prescott Peoria Fountain Hills Goodyear Paradise Valley 0 50000 100000 150000 200000 250000 300000 350000 400000 Sun City ? Nice location, available space, community interest, quality of life, competitive operating costs, strong region of U.S. But… Challenging demographics, perceptions (location, cost, objectives), existing economic portfolio, network Development: FH Relative strengths Prioritizing: FH new-venture values Minimize the need for start-up capital and expensive resources Maximize the attractiveness of the type of customers Maximize the attractiveness, availability and compatibility of employees with FH Maximize the breadth, margins and longevity of the market Maximize the quality and objectives of the business model Medium Best Good Weak Worst .27 .18 .20 .15 .20 1.0 0.8 0.5 0.2 0.0 Maximize the overall attractiveness of a new economic venture A new venture is more attractive if it … Has a relatively short start-up cycle Requires little capital investment on the part of FH to start Brings revenues from outside the community (a start-up) Attracts a broad demographic to live in FH Support for schools, businesses, civic activities, social development Simplified value profile Employee type: All else equal, it would be in Fountain Hills’ best interest for the new venture to bring employees to the town who can be part of the revitalization of the life of the community in terms of education, skill set, family status, desire to locate, interest in civic and community affairs, willingness to invest in their own and the town’s development. Example attribute: Employees Best: The new venture brings a significant number of employees of the type described above Good: The new venture brings a mix of employees and most are of the type described above Medium: The new venture brings a mix of employees and some are good for the long- term interests of revitalization and some are not. Weak: Most of the employees in the new venture do not contribute to the town’s revitalization Worst: The employees of the new venture make the chances for revitalization much worse Example value metric: Employees Healthcare Short- to medium-term patient care facility Physical therapy / sports rehab Computer software development Wellness Lifestyle disability solutions Mail-order company Medical Mail-order pharmacy Processing lab Bio-medical / bio-tech Bio-tech development Tourism Destination resort Upscale accommodation for seasonal visitors Economic sectors considered Maximum score possible: 1000 (min: 0) Score can be read as: “% achievement of overall objectives” Overall attractiveness ranking New Venture Score Lifestyle Disability Solutions 685 Computer Software 675 Rehab Facility 642 Destination Resort 619 Mail Order Pharmacy 615 Upscale accommodations 571 Short-Med term Patient Care 556 Mail-order//Catalog Company 542 Bio-med/bio-tech Options 442 Processing Lab 432 Lifestyle Disability Solutions: Small start-up resource needs Can build business starting with local community Growing market Some employees skilled Contributes to tax base immediately Possible regional partnerships But, Challenging to grow beyond community Mostly medium-skilled, lower wages Brief discussion of scores Computer Software: Low start-up costs Skilled employee base Potential global market Fast-growing area Clean business, local skill providers But, Requires attracting skills to FH (not virtual) Slow growth curve Local tax contribution complex Rehab Facility: Growing market Can start with local community Attractive location Potential partnering with Mayo, local professional sports teams But, Location perceived as remote Start-up costs may be significant Range of employee skill set varies Growth limited to the relatively near region Destination resort Best business model Great market & attracts best customers Broad, positive and long-term impacts But… A lot of up-front capital Requires continued concessions Employees that are at the low end of services industry pay 400 450 500 550 600 650 700 750 800 Overall Attractiveness of New Business Ventures Old model: top down by policy The community government drives economic development through policy and incentive New model: clusters / portfolios of ventures Collaboration between government, companies, institutions, education and skill development People at all levels participate (not just institutional support) More of a “bottom-up” model of growth that is broadly inclusive Focus on “clusters” of activity, network of collaborators Concluding remarks Strengthening economy: funding / credit Increased entrepreneurial interest and activity Arizona entrepreneurism / growing population Challenges in neighboring states (NV, CA) Plus: Increasing consensus and energy in Fountain Hills Growing interest in More creative thinking on partnerships Opportunity THANK YOU QUESTIONS ? Venture group Tempe,Arizona An Overview of Potential Economic Development Options for Fountain Hills A report submitted to: Ms.Audra Koester Thomas Strategic Planning Advisory Commission Fountain Hills,Arizona By New Venture Group Tempe,Arizona June 2012 nV,g Table of Contents TABLE OF CONTENTS 2 NEW VENTURE GROUP 3 EXECUTIVE SUMMARY 4 ENTREPRENEURSHIP IN GENERAL 7 General background on entrepreneurial financing 7 National ENTREPRENEURIAL TRENDS 12 Additional comments on economic development and entrepreneurship 17 Facilitating entrepreneurship in Fountain Hills 17 Concluding Remarks on entrepreneurship 22 FOUNTAIN HILLS'DEMOGRAPHIC PROFILE 24 Fountain Hills relative to other communities 27 Fountain Hills potential demographic future 27 Fountain Hills'economic profile 28 Fountain Hills'potential economic future 33 RELATIVE STRENGTHS AND WEAKNESSES OF FOUNTAIN HILLS 34 DEFINING FOUNTAIN HILLS'METRIC FOR EVALUATING A NEW BUSINESS 36 Quantifying the overall attractiveness of a business venture 38 POTENTIAL SOURCES OF ECONOMIC DEVELOPMENT FOR FOUNTAIN HILLS 40 Sector definitions 40 Representative sector businesses 41 "Scoring"and ranking the business ventures 43 Discussion of overall attractiveness scores 44 FACILITATING ENTREPRENEURSHIP:FOUR EXAMPLE CITIES 47 A new model for economic development 49 Taiwan 49 Singapore 50 Malaysia and Kuala Lumpur 51 Be'er Sheva,Israel 51 Summary comments 53 CONCLUDING REMARKS 55 nVg Page 2 of 55 New Venture Group Explore.Visualize.Discover. New Venture Group (NVG)isa multidisciplinary management consulting organization basedin theW.P.Carey School of Business and Barrett,The Honors College,at Arizona State University's Tempe campus.NVG works with clients ina collaborative fashion toaidthe client in characterizing,identifying and evaluating opportunities for increasing the overall value of their organization.All work-products resulting from this collaboration are considered tobe "work for hire"andarethe property of theclient. NVGuseda team-based approach forthework reported herefor Fountain HillsStrategic Planning Advisory Commission (SPAC).Each of the topic areas addressed inthe research conducted for SPAC is described inthe report that follows. nVg Page 3 of 55 Executive summary This report summarizes research intoa number of types of businesses that might be either started newor developed by attracting existing operations to relocate to Fountain Hills (FH). This research was conducted on several levels.The general characteristics of entrepreneurial activity were reviewed in general and some of the specific aspects of new business activity were considered in particular.The current demographic and economic data for Fountain Hillswas investigated.Then five specific types of businesses were considered,pera request of the research,andthe relative attractiveness of each of these types of businesses was considered. Asageneral background totheresearch,areview of entrepreneurship research demonstrated the importance of distinguishing between conventional small business and startups.Not onlydo their financing needsvary greatly but their ultimate contribution to economic growth of urban areaisvery different.Conventionalsmall businesses receive a majority of their initial external financingfromsmall business loansin addition to personal loansand capital andare typically not designed to grow much larger than the area they serve.A single grocery store oralocal- services company might be examples of these businesses.Start-ups,ontheotherhand,often beginwithheavier amounts of personal capitalandcreditandare typically designedforlong- termgrowth;small manufacturing or technology firmsare examples of businesses of thistype. Intheservicessector,large-scale tourist activitythatbrings resources intoanareafromoutside theareaisanexample.A significant discriminating feature between thesetwotypes of ventures isthat,inlaterstages,start-upsrequiremuchlargercapital injections toreachtheirgrowth objectives. Althoughneithersmallconventionalbusinessesnorstart-upsuseventurecapitalorextensive externalfinancingintheirearlieststages,theybothstillneedfinancing.Thatcanbeabighurdle forsmallercommunitieswithoutmuchpersonalwealthorconnectionstothetraditionalfinancial institutions. Unemploymentplaysaroleinentrepreneurism,too.Althoughunemploymenttypically decreasestheavailability of capital,itmorethancompensatesforthiseffectbyincreasingthe needtochangemodes of generatingeconomicwealth.Asaresult,unemploymentis(generally) positivelycorrelatedwithincreased entrepreneurship.Followingtherecession,thereisthe potentialforanincreaseinsmallbusinessactivityincommunitieslikeFountainHills.The complicating factorforFountainHillsisitsagedistribution;as unemployment increasedin general,sodidtheproportion of peoplewhoareoldenoughtodropout of theworkforce,sothe economicincentivestoentrepreneurialactivityforthecommunitywerenotasintenseinFHas theymightbeincommunitieswithahigherproportion of growingfamilies. nVg Page 4 of 55 Interestingly,Hispanics makeupthesinglemost entrepreneurial ethnicgroupintheUnited States.The Hispanic community is,per capita,about twice as entrepreneurial as other ethnic groups,including whites.Theimpact of this Hispanic entrepreneurship ismutedtosomedegree bythefactthat Hispanics tendtoleanonpersonalfinancing rather thanbankfinancing.Thisisa disadvantage inthe long-run because a banking relationship offers external benefits toasmall business beyond capital loans asthe bank is invested inthe success of the business.These externalbenefitstaketheform of advising andbasic accounting help,forexample.Alongwith this trend in financing preferences,Hispanics tend to develop conventional small businesses rather than "start-ups"that expand economic activity beyond providing services tothe community. Fountain Hills is characterized byan older (on average)population with well-above-average personal wealth;itis predominantly white andthe economic base of the community is almost exclusively conventional small businesses.One of the most common means of enhancing the economic engine of such communities without changing the overall nature and quality of life (by,for example,bringing in manufacturing or other physical operations like commercial transportation)has traditionally been accomplished through enhancing thedelivery of professional services toabroad audience beyond the community or through high-scale tourism, as examples. Fountain Hills (through the City Council andits Strategic Planning Advisory Committee,or SPAC)requested investigation of potential economic developbyeither starting orattracting business operations inthe health sector of the economy,broadly defined.In particular,the followingtypes of business were of particular interest: •Healthcare •Wellness •Medical •Biomedical Theresearchsummarizedinthisreportconsideredafewrepresentativebusinessesineach of thesecategoriesasaway of evaluatingtheattractiveness of thesebusinesstypestoFHandthe ability of thesebusinesstypestogeneratethekind of economicdevelopmentthatFHdesires. Thefinalportion of thisresearchdiscussesthe"newmodel"foreconomicdevelopmentthat reliesnotsomuchon community incentives but rather leansmoreheavilyonthe collaboration of organizationsandinstitutionsfromallsectors,thataremore"bottomup"developments,that involvepeoplefromalldifferentlevelsinthecityandareseenasbroadlyinclusive of all segments of the community. nVg Page 5of55 Researchinentrepreneurshipandeconomicdevelopmentstressesthatanimportantkeytothe long-termsuccess of entrepreneurial activityisbeing realistic atthestartaboutthelocalassets uponwhichthatactivitycanbebuilt.Inthisway,thestudy of entrepreneurship andFH demographicsandeconomicdataare complementary activitiesbecauseeachareaisanimportant consideration in dealing withtheother. nVg Page 6 of 55 Entrepreneurship in general Economists havebeen clear for decades that three things are needed for there tobe economic development and growth:infrastructure,education and innovation. Infrastructure asafoundationfor economic development referstothepresence of goodmeans of travel and communication,the ability to conduct the logistics of living,the ability to move workers,goodsandservicestothelocationswheretheyhavethe highest values.Thereneedsto bethebasics of healthy living including availability of housing and healthcare.Beyond this, therehastobea functioning financial economy thatcan provide information,capitalandadvice. Education isa necessity for economic development.Itis impossible to provide valuetothe larger market economy without knowledge and skills.The level of education required depends onthetypes of innovation and development the community desirestodevelop,butforhigher- margin economic activity,higher levels of education are needed inthe work force. Finally,economic development and growth requires innovation:the ability to combine education with new ideas to create a good or service that isinthe right area atthe right timeor meets a need that is not being met as effectively by others inthe marketplace.Without the innovation that results in new and growing presence inthe economy,development and growth will not occur or,if it does,it will not be sustained. Thesearethethree requirements for economic development.Whenthat development isbrand new asina new business or "start-up"venture,there isa need for even more nurturing.The next section provides information onstart-up businesses andtheirspecialneedforfinancialsupportin the earliest stages. General background on entrepreneurial financing Itisimportanttodefinethedistinctionbetween"conventional"smallbusinessesandstartup firmsastheirneedsdiffergreatly.Conventionalsmallbusinessesaregenerallysmallretailor service establishments such as restaurants,clothing stores,etc.Start-ups are more aggressive growthorientedcompaniesthatspanavariety of industries.However,start-upsarecommonly technologyandbusinessserviceoriented. Smallbusinessloansandfinance companies makeup90%of financingfor conventional small businesses.Allothersources contribute approximately 10%.(SBAOffice of Advocacy 2011). nVg Page 7of55 100 i 80 - 60 - 40 20 - 2006 2007 20082009 2010 •Total small business loans * •Finance companies * •SBA loans * •Mezzanine &Buyouts •Angel Capital •Venture Capital •SBIR Awards *Outstanding Note:Totalsmall business loansare defined asallloans outstanding under $1 million,including SBA loans;SBA loans were measured asthe amount outstanding attheend of thefiscalyear. Finance company lending consists ofall business receivables outstanding.Notethatwith dollar amounts being outstanding,the figures arc greater than annual small business financing. Figure 1-Conventional small businesses rely heavily on traditional small business loans andarenot usually planned withlater round capital needslike start-up companies. Credit line 16% Owner/family loan 5% Business loan 19% Note:Firmsstartedin2004,reporting2008financingandabout one-third didnotusecapitalintheyear. Source:U.S.SmallBusiness Administration,Office of Advocacy,fromdata provided byKauffmanFirm Survey Figure 2-Share of smallbusinessfinancingdollarsforyoungfirms:Aboutone- third self finance,bypassingtheneedforbankorloancapital. nVg Page 8of 55 Owner/family equity 13% Outsider equity 6% Personal credit card debt 4% Bus.credit card debt 7% Personal loan 13% Small businesses finance themselves using a variety of methods (Fig 2).However,onethird of youngfirmsbegin without outside credit.Additionally,half never seek expansion financing. This represents the proportion of small businesses whodonotwishtogrow. "Startup"financing,by comparison,usesmore personal capitalandlines of credit inthe earliest stages,including personal or family savings,credit cards,or home equity.(Fig 3) Business loan 17% Credit line 5% Owner/family lcrr ^*equity 36% Bus.credit card 3% Personal credit card 4% Outsider equity/^\Owncr/femily 8%Personal loan ,oan9% 12% Note:Finns started in2004and about one-tenth didnotusecapitaltostart. Source:U.S.Small Business Administration,Office ofAdvocacy,fromdata provided byKauffman Finn Survey Figure 3-Despite"accesstoearlystageventurecapital"beingcitedasone of the primarychallenges of Arizonaentrepreneurs,venturecapitalisaverysmallpart of initialfundsfor young firms. Itappearsatfirstthatventurecapitalisaverysmallpartofstart-upfinancingandthisholdstrue intheearlieststages.Thisisbecauseventurecapital(andtheavailabilityofventurecapitalto start-ups)hasshiftedtolaterstagesandnowismostcommonlyneededwhenastartupneedsto expanditsproduction,distributionand/oruserbasebeyondthelocalcommunityinwhichitis located. Thepointofthissectionisthatbothsmall conventional businesses (whichare community-based insize)andstart-ups(whicharedesignedtoservelargemarketsoutsidethecommunity)use little external capitalandalmostno venture capitalintheirearliest stages.Akeypointisthat bothbusinessesneedcapital just thesame.Thesource of thiscapitalisheavilydrivenby personal investment alongwiththe contributions of family,friends,and networks of associates. The difference between conventional small businesses and start-ups isinthe second stage when mostsmallbusinessesdonotneedsignificantfurtherfundingwhilestart-upsdoandmustgoto theventurecapital(orother)marketsforthislargerfunding. nVg Page 9of55 Start-ups eventually need more capital to finance their growth andthis larger amount must come from venture capital sources or angels or others willing to make higher risk investments.This is a difficulty stepfor smaller community businesses in general butitis particularly challenging in Arizona andthe Phoenix metropolitan area where there isa history of modest venture capital investment. Table 1(onthe following page)listsall venture capital dealsinthe greater Phoenix area inthe first6 months of 2011 (Wall Street Journal Venture Capital Dispatch).Each listing describes a singledeal.Thesesevendealstotal$50Mfortheentirevalleyarea.Eachdealwasmadefora start-up inthe second round of financing and growth or beyond.Medical devices and equipment capturedthemostcapitalat$15.76Mfollowedcloselybymaterialsandchemicalsat $15.1M. nVg Page 10 of 55 Metro politan Amount IndustryIndustry Statistical Raised Round Round City Group Segment Area ($M)Bus Class Phoenix- Medical Mesa- Devices and Scottsdale,Generating Later Mesa Healthcare Equipment AZ 10.56 Revenue Stage Phoenix- Business and Business Mesa- Scotts-Financial Support Scottsdale,Generating Second dale Services Services AZ 4.5 Revenue Round Phoenix- Industrial Mesa- Mari Goods and Materials and Scottsdale,Generating Later copa Materials Chemicals AZ 15 Revenue Stage Phoenix- Industrial Machinery Mesa- Goods and and Industrial Scottsdale,Generating Later Gilbert Materials Goods AZ 8 Revenue Stage Phoenix- Industrial Mesa-Product Goods and Materials and Scottsdale,Develop Second Phoenix Materials Chemicals AZ 0.1 ment Round Phoenix- Medical Mesa- Scotts-Devices and Scottsdale,Later dale Healthcare Equipment AZ 5.2 Profitable Stage Phoenix- Mesa- Consumer Travel and Scottsdale,Later Phoenix Services Leisure AZ 6.32 Profitable Stage Table 1 -Venture capital investments Jan-Jun 2011. Phoenixdemonstratesarelativelysmallamountofventurecapitalinvestments relativetocitysize.Noinvestmentswerefirstround investments,consistent with findings from Figure 3.More important for start-ups than initial capital is secondroundorlaterstagecapital,whichshowsinvestmentinthemedical devices and equipment category. In comparison to,for example,San Jose's over$2 billion dollars in venture capital inthe same period,Phoenix's $50 million illustrates the drastic shortfall relative tothesizeofthe respective cities.Another challenge facing the Phoenix metro areaisthatonlyoneofthedealsoverthesix month period was forthecityof Phoenix itself—these investments arenot concentrated. nVg Page 11 of 55 The $15.76 million supporting medicaldevicesand equipment isapositiveindicatorforthe industryinArizona.Phoenix has established a Biomedical Campus which could potentially attract venture capital investments into health-related economic activity throughout the entire metro area,including Fountain Hills. Anotherpotentialbenefitto entrepreneurship inthePhoenixmetroareaisArizona'sHispanic population.Hispanics havethe highest rate of entrepreneurship of all ethnicities inthe United States.However,a study of small business financing bythe SBA findsthat Hispanics tend to use personal sources of fundinganddebt rather than building a banking relationship foraloan. Thisisa distinct disadvantage over the longer-term forthesesmall businesses as borrowing from abankhas external benefits,including such things as basic accounting help,advisory services, and collaboration duetothe bank having an investment inthe success of the business. A study examining the relationship between entrepreneurship,unemployment and growth demonstrated correlation between increased unemployment and increased entrepreneurship. Thisisan advantage forthe metro areain general duetothe preceding recessionary period. AsecondstudybySBA examined smallbusinessimpactsbyindustryonStategrowth.The most important conclusion relatedto achieving an optimal mix of industries rather than attracting asingleboomindustrymaybethe conclusion of anSBAreport "Understanding SmallBusiness Activity attheState Level:" Optimalindustriestotargetacrossgrowthmeasureschangeovertime.Relationships thatwerefoundin earlier years deteriorated inlateryears.If developers trytopick andsupportindustrywinnerstheyarecreatingaboom/bustenvironmentortheycan diversifytheirindustrymixwhichcouldachievemoreeconomicstabilitybutbe bereft of growth. Overall,thePhoenixmetroareaand,potentially,Fountain Hillshave advantages relatedtoits ethnic communities and entrepreneurship. National entrepreneurial trends SummarystatisticsonentrepreneurialactivitybyStateoverthepastfiveyearsshowssome trendsthatare consistent withtheoverall implications for entrepreneurship discussedabove(the positive influence ofHispanicsandtoughereconomictimesleadingtomore entrepreneurial activity. Consideringthelevel of entrepreneurialactivitybyStatefor 2010,Arizonaranksinthetopone- third of the States as seen inthe Figure below. nVg Page 12 of 55 West Virginia Pennsylvania Wisconsin South Dakota Indiana MJnnesota Wyoming Delaware South Carolina Hawaii Washington Connecticut Virginia Maryland New lossy Michigan Alabama New Hampshire Rhode Island 1 H-0'5 Kentucky Mal-.e iSilssoiiirt North Dakota Iowa Nebraska Ohio District of Columbia Oklahoma Oregon Massadugeife Haw Mexico Arizona Kansas North Carolina New York Utah Arkansas Idaho Montana Florida Texas Tennessee Alaska Mississippi Verm ant £c~.c:i-:U'. LouMana California Georgia Nevada Kauffman Indexof Entrepreneurial Activity byState with 95 Percent Confidence Intervals,2010 0.00 %O-lOPi DL20%030%0M%0.50%0.60% SOURCE Rrfctn W.larite UNMC&y cf Califtmla,Sana Qua;Bbg ihr Cuirctii ftculacii.Snap Figure 4:EntrepreneurialactivitybyStatefor 2010 Thesame information was summarized recently for 2011 andtheFigure below showsthat Arizona is ranked firstamongall50 States.In fact,CNNmadethisnewsacoverstoryfortheir Money show because Arizona was some far ahead ofthe second State,Texas,which traditionally viewedasone of thestrongesteconomicperformersintheU.S. nVg Page 13of55 10 most entrepreneurial states @®]Money Opening up a small business ina tough economy is a risky gamble.~\q comments But these 10 states saw more startup activity than anywhere else nationwide,according to the Kauffman Index of Entrepreneurial Activity.Here's why. BRecommend 136 JJTweet 1011 [gjShare 28 J^+1 5 1.Arizona 2011 startup rate:520 per 100.000 adults Arizona isasizzling spot for startups People were more likelyto launch businesses here than in any other state in the country last year. Arizona has benefited froma steady stream of entrepreneurs migrating from less business-friendly states like California.The lure?Business and property taxes are low.as are workers' compensation costs,according to the Arizona Commerce Authority. Email Print «BACK NEXT » What's more,the labor poolishighly educated,as schools such as Arizona State University and the Universityof Arizona churn outa steady stream of science and technology grads.The state encourages firmsto upgrade employees'skills,giving grants to those thatoffer in-house job training. That's key.since techfirms dominate Arizona'snew business landscape.Software and semiconductor makers are big here,as are solar,clean-tech and renewable energy technology firms.More traditional fields like retail and tourism also are hot. The graphics belowshowhowArizona compares tootherStatesintermsofitslevelof entrepreneurial activity. nVg Page 14of55 West Virginia Pennsylvania I lawal Illinois Indiana Virginia Oklahoma Wyoming Michigan Rhode Island Minnesota Wisconsin Washington Iowa New Mexico Oregon Mississippi Massachusetts .Alabama MewJersey Ohio Delaware New Hampshire Kansas North Carolina Nebraska North Dakota Utah South Carolina Maryland Tennessee District of Columbia South Dakota Montana Louisiana Connecticut Arkansas Georgia Maine Kentucky New fort Honda Idaho Vermont Nevada Missouri Alaska Colorado .QHrvmla Texas Arizona 0.60% Kauffman Indexof Entrepreneurial Activity byState with 95 Percent Confidence Intervals,2011 I -• i- :- 0.10%0.20- t- —:- wm- 1130%0.40&.o.so%0.60':0.70°0.B0:-= SOUKS Prion W.!a!-llr.Unvcnilyd Cilllnrrla.S:rn On/,jting ihc Qlim I'xu'.: Figure 5:Entrepreneurial activity byStatefor 2011 Itis informative to consider theroots of thislevel of entrepreneurship.Although the statistical summaries thatfollowareona national basis,they reflect the relative strengths of Arizona nVg Page 15of55 0.6% 0.5% 0.4'• 0.3*> 0.2*:;. o.i%- 0.0% Kauffman Index of Entrepreneurial ActivitybyRace (1996-2011) 1996 1997 19981999 2000 2001 20022003 2004 2005 20062007 20082009 2010 2011 White Black Lalino Asian Figure 6:Entrepreneurial activity byrace,1996-20 SOURCE;Robert W.Fairlie.UniversityofCalifornia, Santa Cruz,usingtheCurrentPopulationSurvey. The graph above shows the predominance of Hispanics in entrepreneurial activity. 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% KauffmanIndexof Entrepreneurial ActivitybyAge (1996-2011) 1996 199719981999 2000 2001 2002 2003 2004 2005 20062007 2008 2009 2010 2011 Ages Ages Ages Ages 20-34 35-44 43-54 55-64 SOURCE:RobertW.Fairlie,Universityof California. Santa Ciu/.usingtheCurrentPopulation Survey. Figure 7:Entrepreneurialactivitybyage,1996-2011 nV£'g Page 16of55 The"age"graph,Figure7,showsthattheparticipation of those55andabovedropped off in 2011. Thechangeinthelevel of participation bythoseinthe55+demographic isviewedbysome economistsaspotentiallyreflectingaproportion of thisagegroupleavingtheworkforce altogetherandtakingretirementorwhateverotherfinancialbasetheyhaveandpreservingit rather than investing itina new economic venture. Additional comments on economic development and entrepreneurship Economicdevelopmentassumesthatthereisafoundation of infrastructure,educationinthe form of aneducatedworkforceandcitizenry,andinnovationthatcombinesinfrastructural resourcesbyaneducatedworkforceintoproductsandorservicesthatarevaluedbythe marketplace. Smallbusinessesandstart-upsaretwoapproachestoneweconomicactivitythatdifferinterms of theirinitialneedsandinthedegreetowhichtheygrow economically inthelonger-term. Whilesmall businesses tendtostay "local"inthesensethattheymeetbuttonotexceedthelocal community'sneeds,start-upsaimatgrowingbeyondtheeconomicbounds of thelocal community. Overthepastthreeyears,Arizona's entrepreneurial activityhasbeenwellaboveaverage compared toother States andin 2011 Arizona wasthemost entrepreneurial bya substantial margin.Thismaybedueinparttothe relatively high proportion of Hispanics,themost entrepreneurial of ethnic groups,andthe significance oftherecent economic contraction thathit Arizona more heavily than most otherStates. Considering the economic objectives of Fountain Hills,the economic conditions oftheStatemay havesomerelevance.Thenextsection discusses thebasics of developing asuccessful entrepreneurialcoreinthelocaleconomy. Facilitating entrepreneurship in Fountain Hills Fountain Hillshasthe greatest potential to impact newly forming businesses during theirfirst steps.There are several critical points where new businesses commonly fail.Local government or support agencies or other organizations could identify new business ventures and communicatewiththemtotracktheirprogressandensuretheyareconnectedwiththecorrect resources inthe Phoenix area.Here the most common mistakes andlocal resources than can connect tohelp prevent them. nVg Page 17 of 55 Poor Business Plan/Not Usinga Mentor -If an entrepreneur is identified before creating thebusiness,theyshouldbedirectedtocounselingandmentorshipimmediately,free resourcesandeducationhelpreduceerrorsandboostsuccessrates.Thefollowing resources have offices in Phoenix: o SCORE -Free resources tools,and volunteer mentors tohelp businesses succeed. oTiE Arizona:The Indus Entrepreneurs -Workshops,seminars,free online resources,and community events for entrepreneurs in Arizona, o Small Business Development Center -SBDCs offer existing andfuture entrepreneurs free one-to-one expert business adviceand low-cost trainings. Includes veteran representatives, o Chicanos PorLaCausa-The economic development division provides business lending,commercial development,neighborhood revitalization,and financial empowerment. Inadequate Cash Reserves (Conventional Business) oSBA Microloan Intermediaries -The local SBA office has experts inthe various ways small businesses can finance.A strong relationship with entrepreneurs and the office could boost successful businesses. o SBA Partial Loan Guarantees o Chicanos PorLa Causa -Mentioned under business plan,also provides business lending. Inadequate Cash Reserves/Financing (Aggressive Start-ups) o Identify young start-ups and direct them to existing venture capital in Arizona. o Cayenne Consulting reportsatleast 13 Venture CapitalandAngelFundsin Phoenix alone with at least S336M under management.37inthestate. http://www.cavcon.com/arizona-venture-capital.php o Small Business Investment Companies SBICs -Licensed and regulated bythe SBA,but offering Venture Capital including loans,mezzanine financing and equity.Twoexistin Arizona,Grayhawk Capitaland Magnet Capital. Choosing theRight Business Structure o Arizona Corporation Commission -Information about incorporating abusiness. nVg Page 18of55 •Arizona Entrepreneur Conference o Occurs this year in October in Chandler.Fountain Hills should seek tohostthis eventtobring entrepreneurs totheareaandbuild relationships. Anadditionalconcernistheavailability of therighttype of officespacesandbuildingsfor growing businesses.OfficepriceshavedroppeddramaticallyinPhoenix.10.9%inthelastyear alone.Pricesshowthatcurrentlyonanofficecostbasis,Phoenixislessexpensivethanother cities thathave been attracting entrepreneurs. Additionally,Phoenix competes very aggressively oncost of living;thecost of livingis significantly cheaper. Asking Prices Office for Sale Phoenixr AZ (35/SF) $2401 Metro LoopNet Figure 8-Askingpricesforofficespacehave continually droppedandappeartonot yet have bottomed. nVg Page 19of 55 City Price 3 Mo.Prior Y-O-Y Cost of Living Phoenix,AZ $114.18 -1.2%-10.9%102 San Jose,CA $226.14 +0.9%-11.0%172 Cambridge,MA $128.05 +0.5%-0.8%176 New York City $135.49 +0.1%-4.4%159 Scottsdale $170 Gilbert $129 Fountain Hills $100 Table 2-Onacostadvantage,Phoenixislessexpensivethanotherentrepreneurial locations.Datafrom LoopNet.com. Table2aboveshowstheurbanPhoenixcost of livingindexrelativetohighcommercialreal estatecities.Thisisanimportantaspect of Phoenix's abilitytobethehome of ethnic entrepreneurship. ThisinformationiscomparedbelowtosimilarrentalratesinScottsdale(anearcompetitorto FH). Office Property Asking Price Index -Sale Trends Asking Prices Officefor Sale Scottsdale,AZ ($/SF) $300-i $250- $200- $150- $100 2006 nVg Page 20of55 LoopNet Industrial Property Asking Price Index -Sale Trends Asking Prices Industrial for Sale Scottsdale,AZ (S/SF) S140-I $120- S100- 2006 2007 2008 2009 2010 State Metro 2011 County Retail Property Asking Price Index -Sale Trends Asking Prices Retail for Sale Scottsdale,AZ (S/SF) $4001 2006 2007 2008 2009 2010 2011 2012 dp LoopNet 2012 <s»Embed vs.3 mo. Mar12 prior Y-O-Y -State 575.16 -0.5%-7.4% -Metro 576.79 -0.4%-8.2% -County S78.24 -0.2%-3.6% For industrial properties in the metro area,the average asking price was S76.79 per square footfor the month.This shows a drop of 8.2% year-over-year,and a decline of 0.6%from the end of the fourth quarter of 2011.Asking prices for industrial properties have fallen toa new three-year low this month.The previous three-year low was in January 2012 at S76.99. Embed vs.3 mo. Mar12prior Y-O-Y -State S140.45 -1.0%-3.4% -Metro 5150.15 +0.1%+0.0% -County SI59.49 +0.2%+2.8% •City 5227.08 -0.4%+1.5% Asking prices for retail properties hit a three-year peak in July 2007 at S253.79 per square foot In comparison,the median asking price is now 31.4%lower.The lowest asking price in the past three years was S147.53 set inMay 2011. State •Metro County City .-jjUp LoopNet' Figure 9:IndustrialandretailpropertycostsinScottsdale,2011 ThecostinFountainHillsforretailspaceis approximately $95to$105persquarefoot, comparing favorablywith Phoenix and extremely favorablywith Scottsdale. nVg Page 21of55 Concluding Remarks on entrepreneurship •Conduct a campaign to encourage start-ups and catalog entrepreneurs ina database. Researchshowedthatafterperiods of unemployment periods of increased entrepreneurial activity followed.Our findings also showed that the Hispanic population starts more businesses on average than other ethnicities.FHmaybeableto capitalize onthesefactors withan effort to promote small businesses and start-ups through marketing and relationships withthelocal entrepreneurial resources. •Aggressive start-up firms need to be identified and connected with the existing Venture Capital and SBICs.Additionally,start-ups could be attracted toFH through rent subsidies ortax incentives.However itis important to note fromtheSBA study on "Small Business andState Growth1'that attracting the correct industries hasafar greater impact than policies inthelongterm.Research indicates that professional services firms,construction,and financial activities experience growth following a period of increased unemployment. •Act asa liaison between owners and key organizations.In addition to promoting a "start up environment,"FH could tracksmall businesses and start-ups through their growthstages, acting asa liaison to connect entrepreneurs with critical resources atthekeytimes.These checkpoints aremost commonly business plan development and mentorship,financing rounds,and incorporation.FH entrepreneurs have a wealth of resources at their disposal but maynotbeaware of the variety orthe importance of utilizing themfromdayone. •Host the next Arizona Entrepreneur Conference in Fountain Hills! This would bean effective wayto meet the entrepreneur community inthe Phoenix area and advertise downtown asasitefor business expansion. •Organizational partnerships to connect with entrepreneurs Organization Phone E-mail Address SCORE Phoenix 602-745-7250 info@scorephoenix.org 2828 N.Central Ave. Ste.800 Phoenix,AZ 85004 Small Business Development Center Phoenix 480-731-8720 janice.washington @domail.maricopa.edu 2400 N.Central Ave. Ste.104 Phoenix AZ 85004 TiE Arizona 602-852-5560 http://arizona.tie.org/ contact-us 2398 East Camelback Road Suite 1020 Phoenix,AZ 85016 Chicanos Por La Causa 602-257-0700 info@cplc.org 1112 E.Buckeye Rd. Phoenix,AZ 85034 nVg Page 22of55 Thenext section presents some summary information about Fountain Hillsthathelpputthe community incontextwhenconsideringstart-upandothereconomicdevelopment activity. nVg Page 23of 55 Fountain Hills'demographic profile The 2010 census data below show Fountain Hills relative to a number of other communities in Arizona. Fountain Hills Smallercommunities looking for economic growth Surprise 25,000 20,000 15,000 10,000 JL 20-24 25-34 35-49 50-64 65 &over Peoria 20-24 25-34 35-49 50-64 65&over nVg Page 24of55 •White •African American •Asian •American Indian and Alaska Native •Native Hawaiian and Pacific Islander I African American I American Indian and Alaska Native I Native Hawaiian and Pacific Islander I White I African American I Asian I American Indian and Alaska Native I Native Hawaiian and Pacific Islander Economicallv-eslab/ished and growing communities Paradise Valley Scottsdale 35-49 50-64 65 E.over nVg Page 25of55 I African American I American Indian and Alaska Native I Native Hawaiian 3nd Pacific Islander I White I African American I American Indian and Alaska Native I Native Hawaiian and Pacific Islander Retiremenl-orienled communities Gold Canyon Sun City West Arizona (State) 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 £ 20-24 25-34 35-49 50-64 65&over I White I African American I Asian I American Indian and Alaska Native I Native Hawaiian and Pacific Islander I African American I American Indian and Alaska Native I Native Hawaiian and Pacific Islander •White ,.\•African American j£j ^H •Asian •American Indian and Alaska Native }^m •Native Hawaiian and V Pacific Islander ^BOther nVg Page 26of55 Fountain Hills relative to other communities A review of thissmallset of communities inthe Phoenix metro area shows the following general patterns.Fountain Hillsis: •Most similar to Paradise Valley interms of both itsage distribution andits ethnic mix •Less diverse than Scottsdale •Much less diverse than Surprise or Peoria,two communities facing similar economic challenges •More diverse thanthe retirement communities of Gold Canyon andSunCity Although the graphics arenot included here,FHismuch less diverse than Prescott,a growing community,and much more diverse than Sun Lakes,a retirement community. Fountain Hills potential demographic future Comparingthe 2010 censusdatawith2000censusdataindicatesa possible trendinFountain Hills'development:in2000FHwas more similar to Peoria and Surprise thanitisnow.Over the intervening decade,FHhasaged,on average,more rapidly than other communities andasa resultithas become demographically more similar to Paradise Valley andheadedinthe direction of Gold Canyon. ItispossiblethatFHisat something of a demographic turningpointoverthenextdecade:it could over this decade continue itsdrift toward Gold Canyon andtakeonthe profile of a retirement community,or it could change direction and become more diverse and similar to either Scottsdale or even Surprise orPeoria.At present,Fountain Hills doesn't havethe economic structure to sustain a demographic profile like Paradise Valley. Thenextsection compares the economic profiles of these communities. nVg Page 27 of 55 Fountain Hills'economic profile Fountain Hills Annual Reveues 2007 60,000 50,000 40,000 30,000 20,000 Leading sources of revenues for Fountain Hills: Wholesale trade Supermarkets /grocery stores Retailers Administrative support Healthcare and social assistance nVg Page 28of55 Leading sources of revenues for Scottsdale: •Manufacturing •Retail trade •Automobile dealers •Professional services (consulting of allkinds,technical support) •Computer technology /design •Healthcare and social assistance •Accommodations and food services nVfrg Page 29of55 ParadiseValley Annual Reveues 2007 120,000 100,000 3,000 60,000 40,000 20,000 Leading sources of revenues for Paradise Valley: •Healthcare and ambulatory care •Physicians'offices •Accommodations,hotels,food services •Professional services nV£rg Page 30of55 Sun City West Annual Revenues 2007 400,000 Leading sources of revenues forSunCity West: •Healthcare and social assistance •Physicians'offices i nVg Page 31of55 if .?Sf ////«#>*rb ///*-* *#<f £;//*, 3000000 i 2500000 2000000 1500000 1000000 i 500000 - 0 •&«"*O5 «oST#!#^° o"o" ^y <**• Phoenix 2500000 i 2000000 1500000 1000000 500000 0 I •-- A'J»' .#• >0 &,f &&i?$•&J"•y .<?•/*•£/'f /<////, Page 32of 55 Fountain Hills'potential economic future A couple of aspects of Fountain Hills'economic profile help characterize its current economic profile and portfolio of revenue sources relative to other communities.Fountain Hills'portfolio of revenue sources is: •MuchlessdiversethanParadiseValleyorScottsdale,establishedeconomiccommunities •LessdiverseandsignificantlysmallerthanPrescott,GoodyearandSurprise •Less diverse than Peoria •Similar inSizeto Paradise Valley but must less diverse •More diverse than Sun City It appears that there may bea similar trajectory for Fountain Hills in terms of both its demographics and economic portfolio:itisless diverse than growing or established communities but more diverse than retirement communities.The trend over the past ten years hasmovedFHfartherfromthegrowingcommunitiesandclosertotheretirement communities. Thenextdecade,whichisareasonableplanninghorizon,maydefinethefuturenature of FountainHills.Historical datashowsthatitisvery difficult torestartagrowing economic base ina retirement community because itisvery challenging tochangethevaluesandthe voting patterns ofthe residents.Because the residents share,in large part,a relatively short time horizon anda relative narrow set of economic needs,the community decision-making constrains the range of alternatives thatthe community asawholecan entertain,letalone allocate significant resources toward. nVg Page 33 of 55 Relative strengths and weaknesses of Fountain Hills Fountain Hills appears tobepoised between economically established and growing (oratleast replenishing)communities and retirement communities in which there isa very narrow economic rangeofactivitiesandanarrowrangeoflife-needsforthe community. An accurate assessment of Fountain Hills'relative strengths and weaknesses with respect to either growing or attracting new economic activity canbeanaidin determining howbestto pursue that objective.The assessment that follows was constructed without the benefit of direct input from knowledgeable members ofthe Fountain Hills community.The purpose of including itinthis report is two-fold:it provides a basis forthe evaluation of alternative businesses thatis to come laterinthereportandit provides abasisfromwhichto develop amore accurate and comprehensive assessment in collaboration with Fountain Hills representatives ifa more precise evaluation of alternative courses of action is desired for the future. Relative strengths Available office space Easyaccessfrommanyparts of theNorthand East Valley areas ProximitytoPaysonandpointsNorth ProximitytoMayoClinic Upscalehousing,views,amenities Some manufacturing capabilities Chamber /Council are open to progress Available real estate,no property tax Developedartscene(yearlyartshows)and other cultural markers Proximitytogreatairport(SkyHarbor) Relative weaknesses Perceived remoteness (interms of traveltime) Aging population Reducedage&ethnicdiversity Overall cost of living Few restaurants with outside seating Expensive living(difficultforsome of the youngerpopulation) No established city center No nightlife foryoungadults(e.g.,nomovie theater,variety of clubs,etc.) Reducedrange of entertainmentoptions Reduced economic portfolio /base Limitedinvestmentcapital/taxbase Opportunities •Market poisedforgrowth •Arizona's entrepreneurial strength •Marketing of uniqueFHfeatures,locaion •Fountain venue blank slate •Varied Products/services •StrategicallianceswithMayClinic,ASU or other entities possible •Upscaledestination •Capitalizeonviews&experiencesuniqueto area •Californiabudget&emigrationEastward Threats •Economic weakness:localtoglobal •Lack of financial resources •Cash flow •Limited/reduced staff •Increased competition fromneighboring cities/towns •Limited tax revenues •Limited or weak consensus of residents on commitment tochange,commitment of resources •Local/neighbor community competition Fountain Hills relative strengths seem to position the town totake advantage of some ofthe opportunities current present:the town has available space,a great location,upscale environment,easy access from a wide range of locations in the Valley and has positive interest in nVg Page 34of55 fosteringneweconomicactivity.Thesealignwellwiththe State's entrepreneurialresurgence, the renewed interest in smaller businesses,the availability of quality personnel asa result of the recent economic downturn andthe town's proximity thatmayproveusefulfor partnering opportunities. Onthe other hand,some of the relative weaknesses make FH vulnerable to current threats:in particular,therelativelack of investmentcapitalandavailableworkforcemakesinvestmentin newbusinesseschallengingandthelack of consensusamongtheresidentstomakethe commitment necessarytoattractnewbusinessmaymakethe creation of awarm,welcomingand attractive environment for new business difficult. nVg Page 35of55 Defining Fountain Hills'metric for evaluating a new business Before considering a range of potential areasofeconomic development,itis useful to specify the grounds upon which these alternatives will be evaluated.Thisis sometimes referred toas defining objectives,or defining thesetof attributes thatwillbeusedto measure the overall attractivenessofanopportunity,orsometimesreferredtoasthe"valuemodel"usedtoestimate theoverall"value"of anopportunityintermsofthedegreetowhichthatopportunityachieves the objectives of thetown. Thisvalue model is typically developed in collaboration withthe organization orentity making theultimatechoice—inthiscase,thevaluemodelwouldbedevelopedincollaborationwith representatives of Fountain Hills.Itis important to note that there is usually a single value model;thismeansthatthereisconsensusaroundwhatdefinesvalueforthetown.Ifthedecision makersaredividedinterms of theirultimateobjectives(say,forexample,somevaluefast economic growth highlywhileothersvalue environmental protection and community qualityof life highly),then two value models canbe constructed andbothare used to evaluate every option.Theonly options that move forward insuchacaseare those thatare valued highly by both sets of decision makers. Forthis research,a"proxy"valuemodelwasdefinedto characterize the economicobjectives thatare desired by Fountain Hills decision makers.Tomakethisvaluemodel accurately represent real FH decision makers,members ofthe community representing town economic values would needtospendtime (following a structured process)todevelopthesetofvaluesthat wouldbeusedto evaluated competing economic options. The diagram below specifies thesetof objectives that were usedinthis exercise to evaluate the economicoptionsthatarediscussedlaterinthisreport. Minimizethe need for start-up capital and expensive resources Maximize the overall economic valueofa new economic venture Maximize the attractiveness of the type of customers Maximize the attractiveness, availability and compatibility of employees with FH Maximizethe breadth,margins and longevity of the market Maximizethe quality and objectives of the business model Figure 10:Proposed Fountain Hills value structure for evaluating potential new business ventures Each objective or attribute has a metric that is used to estimate the degree to which a proposed business achieves that objective.These metrics are described here. nVg Page 36 of55 Start-up capital:Allelse equal,it would be better and easier for Fountain Hills if anew business didnot require large,complicated or capital-intensive resources toget started.Whilethisrefers primarily tofinancial capital,italso applies tothetype of facilitythatisneeded,thedegree of renovation and time consumed in making the space workable,the type of expertise to configure a suitable work environment and other aspects of start-up costs and requirements. The metric forthis attribute is the following: •Best:Noor minimal capital and other resources necessary tostart;self-funding •Good:Some capital that canbe provided inkindor through other outside sources •Medium:A modest amount of capital (or in-kindprovision)needed fromFHandsome on-going financial consideration •Weak:Both capital and on-going financial consideration required tostart •Worst:Significant capital and on-going consideration (rent reduction,other amenities) Customer type:Allelse equal,it would bein Fountain Hills'best interest forthe venture to attract or work with customers that donot place a burden onthe infrastructure of the town but rather addtoits quality of activities,operations,variety and economic vitality. •Best:customers who either don't burden FH resources atallor whose presence isa significant enhancement of the overall economic and aesthetic quality of life •Good:Customers require little adjustment inthe normal activities and operations of the town(orareno impact onthetown)andareanet benefit tothe overall quality of life •Medium:Customers neither addtoor detract fromthe overall quality of lifeinFH •Weak:Customers require modifications in either the operations orthe aesthetics of lifein FH •Worst:Customers placea significant drainonthe town's operations and quality of life Emplovee type:Allelseequal,it would bein Fountain Hills'best interest forthenewventureto bring employees tothetownwhocanbepart of the revitalization of thelife of thecommunityin terms of education,skillset,family status,desire to locate,interest in civic and community affairs,willingness to invest intheirownandthe town's development. •Best:Thenew venture brings a significant number of employees of thetype described above •Good:Thenew venture bringsamix of employees andmostare of thetypedescribed above •Medium:Thenewventurebringsamix of employees andsomearegoodforthelong- term interests of revitalization and some are not. •Weak:Most of the employees inthenew venture donot contribute tothe town's revitalization •Worst:The employees of thenewventuremakethe chances for revitalization much worse nVg Page 37of55 Marketstrength:Allelseequal,itwouldbeinthebestinterest of FountainHillsforthenew venturetoseekanddevelopamarketthatisstrong,deep,hashighmargins,haslongevityand thatsupportsdevelopmentbeyondthecommunitylevelsothattheeconomicgrowthcan continuetobring greater economic andciviclifetothetown. •Best:The market is broad anddeepand economically productive andwill sustain long- term growth in Fountain Hills •Good:Themarketisstrong,marginsare competitive,andthe outlook forthefutureis goodbut competitive •Medium:The market is reasonable butnot especially promising butcanbe pursued with diligence. •Weak:Themarketis characterized bypoormargins,commoditized productsand services,and requires constant adaptation or re-investment •Worst:The market hasno promise of either short-term or long-term economic wealth Business model:Allelseequal,it would bein Fountain Hills'best interest forthenew venture tobean existing or well-thought-out start-up,nota conventional smallbusinessthatwillendup beingsizedtothesize of the community demandforgoodsandorservices. •Best:Thenewventureisdesignedtoexpect long-term andadvancedgrowthduetothe extensiveness of the market and the interest in sizable investment •Good:Thenew venture seeksto develop a modest but high-margin and high-quality and stable market size that is larger than the community •Medium:Thenew venture is based ona model of starting locally but expanding asself- funding opportunities materialize •Weak:The new venture is unlikely toget much bigger than thelocal market •Worst:Thenewventureisunlikelytoevergroweventoasizethatservestheentirelocal marketandissusceptibleto competition forthatmarketfromoutsidesources. Quantifying the overall attractiveness of a business venture Tofacilitate "scoring"eachbusiness,themetricshaveanumerical score value: •Best:1 •Good:0.8 •Medium:0.5 •Weak:0.2 •Worst:0 TheobjectivesarenotnecessarilyequallyimportanttoFountainHills.To facilitate thescoring process,theresearchteamusedthefollowing weights: •Start-up costs:0.27 •Type of customers:0.18 •Type of employees:0.20 •Market strength:0.15 •Business model:0.20 nVg Page 38of55 Notethattheweightsaddto 1.0.Thismeansthatifabusinessgotaperfectscore of "1"oneach objective,thentheoverallscorewouldbe"1".Thisallowsastraightforwardinterpretation of theoverallscoreasthepercentage of achievement of theoverallobjective of economic development.For example,anoverallscoreof0.67foracompanywouldmeanthat company is abouttwo-thirds of thewaytofullyachievingFountainHills'overalleconomicrevitalization objectives foranew business. Note,also,thatthe metric values andthe weights areeasilymodifiedtomoreaccuratelyreflect the tradeoff values of the Fountain Hills'decision makers. Thecompletedvaluemodelisshownherewiththemetricvaluesandtheattributeweights shown. 27 Minimize the need for start-up capital and expensive resources 1.0 —Best 0.8 —Good 0.5 Medium 0.2 -Weak 0.0 Worst Maximizethe overall economic valueof a new economic venture Maximizethe attractiveness of the type of customers .20 Maximizethe attractiveness, availability and compatibility of employees with FH Maximizethe breadth,margins and longevity of the market .20 Maximizethe quality and objectives of the business model Figure 11:Completed value model with attributes,weights and indicated metrics nVg Page 39of55 Potential sources of economic development for Fountain Hills Thefour economic sectors listed below were suggested by SPAC for consideration as potential areas of economic development forFH.Thesesectorsaredefinedbelow.TheNorthAmerican IndustryClassificationSystem (NAICS)of theU.S.CensusBureauwasusedasareferenceto define each of the aforementioned sectors. Sector definitions Healthcare Thissectoris comprised of establishments thatsolelyprovide healthcare services,of whichare deliveredbyhighlytrained professionals.A health serviceisonegenerallyprovidedbya practitionerandwouldthusexcludenonmedicalweightreducingcenters. Examplebusinesses:Typically,dentistoffices,health practitioners,offices of physicians, laboratories,and outpatient carefacilitiesfallintothissector.Thelevel of education (degree) heldby practitioners guidethe definition of the exclusivity of thesector. Wellness WellnessiscategorizedunderFitnessandRecreationalSportsCentersundertheArts, Entertainment,and Recreation industryinNAICS.This subsector primarily provides nonmedical services to assist clients in maintaining a desired weight,andor reaching health goals. Examplebusinesses:Healthclubfacilities,healthstudios,strengthdevelopmentcenters,and healthspasamongothersportingfacilitiesfallintothissubsectoraswell. Medical The medical sector falls under the Healthcare and Social Assistance Industry.Services provided inthissector involve the diagnosis,andtreatmentofillnessand injury.Similarly to the healthcare sector,the level of education defines whether the service is medical ornot.The exclusivepracticeinonefieldinthemedicalindustryiswhatservestodistinguishthe medical industryfromhealthcarewherebypractitionersarehighlyskilledand knowledgeable inone area. Example businesses:Pediatrics,Ophthalmology,Medicine,andAnesthetics,Pharmaceutics fall into this sector. nVg Page 40 of 55 Bio-Medical Professionalsinthissectorarehighlyskilledintheapplication of scienceandtechnologyin delivering the diagnosing,treatment,andcareto patients.The facilities in which theirworkis conducted is specialised to accommodate thetypeof activity in which a particular enterprise is focused. Example businesses:Blood testing,forensic laboratories,DNA testing,and research facilities providingservicestomedicalsectorsfallunderthebio-medicalsector. Representative sector businesses Some representative typesof businesses were considered foreachareaasawayof illustrating someoftheeconomicstrengthsandweaknesses of thateconomicsectorasabaseforfuture development by Fountain Hills. HealthCare: Short-to-midterm Patient Care This option wouldfitwellin Fountain Hills because itcould make useof existing infrastructure whileservingalocalneedandbringmedium-to-highpayingjobstoFountain Hills.A short-to-midterm patientcarefacilitywouldconsistofroughly20fulltime residents inneed of assistedlivingduetoAlzheimer's,dementia,orrelatedailments.Itwouldcreate around20wellpaidjobsin nursing,care-giving,andvarious administrative positions.It wouldhouseafixed number of customers atamonthlyratewhichwould contribute to FountainHills'tax revenue.AfacilitysuchasthiswouldservecustomersfromFountainHills and surrounding areas,and create a market todrawin younger employees.Thishasthe potential tobea clean business ina highly demanded arena and could bea good option for FountainHills,givenitscurrentdemographic. Physical Therapy/Sports Rehabilitation Facility A rehabilitation facility would bringhighlyskilledjobsto Fountain Hillswhile satisfying the demands ofthecurrent demographic.Though distance isalwaysafactorwhen considering possibilities in Fountain Hills,given the aging local population and prevalence of major and minor league baseball during the spring,a rehabilitation center is certainly demanded inthe area.High healthcare costs would provide substantial tax revenue to buoy the town's revenue stream. nVg Page 41of55 Computer Software Development Company A software development company focused on healthcare products could beagoodwaytostart building a younger demographic.The software industry is extremely young,anda potential partnershipwithMayocliniccouldenticea healthcare basedsoftwarecompanytostartin Fountain Hills.There willbe relatively low startup costs and infrastructure problems fora start-up software company,anditwillbeableto access alarge customer base beyond just Fountain Hillsorthe greater Phoenix area. Wellness: Lifestyle Disability Solutions Thisoptionwouldworkwellbecauseitdoesnotrequiremuchofficespaceandcouldstart productioninFountainHillsrelativelyeasy.Sinceitwouldbesellingaphysical product (ex. electric wheelchairs)there would bea substantial sales tax element that would goto Fountain Hills.Thereisthepotentialforlocalandregional customers,whichmakeitareasonably scalablebusiness.Fountain Hillsmayhave difficulty findinga company thatfitsthisprofile becausetherearenotverymanyoutthere,butitwouldfitwelliftheywereabletofindone seeking anew location. Mail-Order Company Acompanyinthiscategorywouldbea mail-order catalog of wellnessitemssuchascanes, herbs,orlowtech accessories.There willbe relatively low startup costs andhighsalestax revenuebecause of itsphysicalinventory.Withbabyboomersaging,thereisagrowing marketforwellnessproductsandacompanysuchasthiscouldsatisfycustomersalloverthe country.AdisadvantagethatacatalogcompanymayfindinFountainHillsisthatitisnotina centralizedregionallocation,thoughitsrelativelycloseproximitytoPhoenix'sSkyHarbor Airportcouldlessenthisdrawback. Medical: Mail-Order Pharmacy A mail-order pharmacywouldbeanotherwaytoreachalargemarketandcollecthighrevenue viasalestax.Itwouldrequiremoderatelyskilledemployeesandbringnamerecognitionto FountainHills.Again,shippingwouldbethemainprobleminattractingthistype of business toFountainHills,asa centralized regionallocationwould probably bemore efficient in lowering shipping time and costs. Processing Lab A processing lab would bea good optionduetoits small infrastructure needs.Onecould easily move into Fountain Hills without requiring major renovations or construction.It would nVg Page 42of55 bring in white collar,highly skilled workto Fountain Hills.Itcouldbea destination for local doctorstotestbloodsamplesusinghightech machinery.Thedrawbackofputtinga processing labin Fountain Hills would bethefactthatitmaybeseenasan inconvenient locationfordoctorsinthePhoenixareawhomay prefer a closer locationsoasnotto contaminate samples in transport. Bio-Medical: Bio-Technology Research Center This option would bring research and highly skilled laborinto Fountain Hills.There isa possible drawbasedona partnership withMayoClinic.Any significant advancements or discoverieswithinthefacilitywouldbringattentionandnamerecognitiontoFountainHills. Thehigh upside ofthis industry leaves the possibility forhightax revenues or incentive for related businesses to move into Fountain Hills tobe closer tothe research facility.A possible barrierwouldbeapublicrelationsproblemiftheagingpopulationofFountainHillshad significant objections tothe perceived safety or ethics involved in biomedical research. "Scoring"and ranking the business ventures The scoring of each new business venture would be conducted bythe ultimate decision makers, the Fountain Hills'residents or representatives.To facilitate the process,however,the research team scored eachoftheoptionsusingthevalue model thatwas constructed to"define"and measure overall economic attractiveness of businesses for Fountain Hills. The scoring process was conducted inthe following way:eachnew business venture was described in enough detailthatallthe members oftheteam were clearonwhatit was.Then each teammemberscoredthe business venture individually.Aftertheindividualscoreswere completed,the scores were revealed and discussed.Once the scores were stable,they were averaged.The average team score for each attribute was treated asthe final score for that business venture on that attribute.The value model wasusedto calculate thefinal overall score. Thefinal scores are listed in the table below.The final score,a number between 0 and 1,was multiplied by 1000 to make it easier to read.This means that the highest possible score is 1000 andthelowestis0.Ascore of 750wouldbea"good"scoreandwouldbeinterpretedas indicating that the business venture being evaluated would about 75%of the way toward being a totally attractive venture. nVg Page 43 of55 New Venture Score Lifestyle Disability Solutions 685 Computer Software 675 Rehab Facility 642 Mail Order Pharmacy 615 Short-Med term Patient Care 556 Mail-order//Catalog Company 542 Bio-med/bio-tech Options 442 Processing Lab 432 Table 3:Potential business ventures and their overall ''value"score Discussion of overall attractiveness scores First,note thatthe scores arenotthat different.Thetopthree scores are within about 40 points of eachother,sothe options arenot drastically different intheir attractiveness.Thiscouldvery wellbea result of the team not having a clear idea of FH values andthe "averaging"of team scores may have further diminished differences. Nevertheless,there are differences andthe following short paragraphs capture the nature of the team's discussion following the scoring process. 1.Lifestyle DisabilitySolutions:This option received a high ranking because itdoesnot requirealarge office building,hasalargelocal customer base,provides a relatively clean business model,andwouldserveauniqueand growing market.Notall employees would necessarily behighly skilled,buttherewouldbea number of skilled directors of thework andthere would bethe motivation to increase training because of available jobs,which is what Fountain Hillsis looking for.It requires verylittle up-front investment,contribute totaxrevenuesrightaway,anditsgrowth,whilelimited,couldbeself-fundedandit could draw clients from a broad area. 2.Computer Software:This option rankedhighly because of itslow startup costs,large potentialcustomerbase,andhighlyskilledemployees.Thereisafast-growingmarket for healthcare related computer software thatcanbe satisfied withinthe confines of Fountain Hills,whichcanbe accomplished withaclean,productive business model. Drawbacksmayincludethelack of computerscientistsinthearea,butthiscanbeeasily addressedbyrecruitingfromthelocal junior colleges,techtraining centers,and universities. nVg Page 44of55 Rehab Facility:This option scored relatively wellin every category,except for start-up resources.Wethinkthatthereisahigh demand forsportsrehaband physical therapy in thearea,and believe that Fountain Hills would benefit fromthe highly skilled workers needed toruna rehab facility.The business would potentially foster relationships with Mayoandwith major-league sports(Spring Training,basketball,Diamondbacks,arena leaguefootball,etc.)and expand into full-blown sports rehab.Themainworrywouldbe whetherpeopleoutside of FountainHillswouldbewillingtodriveinregularlytoget physical therapy. Mail-Order Pharmacy:Benefits forthistype of company arealow startup costsand highlyskilledemployees.Customers wouldbeallacrossthenation,whichprovidesfora large consumer baseandhighrevenues,andtheywouldnotberequiredtocometo Fountain Hills.The market is neither exciting nor bleak,but there is some concern about the business model because in addition tolargeand low-cost competition from other locations (Louisiana,for example)theremaybe chemical by-products thatwouldneedto be disposed of. Short-to-Medium Term Patient Care:This option would bea sustainable business model andcatertotheaging population inthearea,butmaybeenteringa competitive market. Itwouldprovide jobs foryoung employees,butonly half of them,atmost,wouldbe muchabove minimum wage,letalonebehighly skilled.A significant proportion of the workwouldbe maintenance,cooking,and cleaning duties.Startupresourcescouldprove tobeaproblem if thereisalack of facilitiesthatcouldhouse20ormorefull-time residents. Mail-Order Catalog:Thelargestbenefit of a mail-order catalog isthelack of infrastructureneeds.Thecompanycouldberunout of asmallofficebuildingandsatisfy customersaroundthecountry.Themaindrawbackisthenumberandskilllevel of employees,whichwouldbothbelow.Therecouldbeasignificanttaxrevenueboostif thecompanytookoff,butitwouldnotimprovetheproblem of anagingFountainHills populationorphysicallybringinanycustomers. Bio-Technology ResearchCenter:A significant challenge withthisoptionistheup-front capitalrequiredtogetgoing,theneedforveryspecialquarterstoresidein,andthe potentialforfuturecapitalneedstoaresignificantandcriticaltothelong-termsuccessof theventure.Inaddition,theremaybesomerisk if thereare objections bylocalresidents onthegroundsthatitisperceivedtobe dangerous.Ontheplusside,itwouldreacha potential customer basethat extends beyond the community (in fact,the customer base wouldbesolesoutsidethecommunity)andprovide jobs foryoungerandhighlyskilled workerswhowouldbelikelytorelocatetoFH,aswellasprovideabasefortaxrevenue nVg Page 45 of 55 growth andname recognition.Other upsides arethatitcouldattract complimentary industriesand partner withregionallabsandMayoClinic. Processing Lab:Though itwouldnotrequirea large facility,a processing labmaynotbe thewaytogo because of Fountain Hills'relative isolation.Itmightnotmakesenseto transportdelicatesampleslongdistancesbecausethatwouldonlyincreasetheroomfor error in terms of time lagand contamination.It would require few employees,mostly at lowwagelevels,andmaybe entering a saturated market. Overall Attractiveness of New Business Ventures 800 -I 750 - 700 - »»., 650 • 600 %',„ 550 -»—... 500 \ 450 • • • 400 —i 1 1 1 1 1 1 1 ^»/<*N<* //// £/^ / 9*- Figure 12:Potential business ventures and their overall "attractiveness"score nV£'g Page 46 of 55 '« Facilitating entrepreneurship:four example cities Facilitating entrepreneurship and economic development within a community with limited capital and demographic resources isvery challenging. Ontheother hand,being aware ofthereal challenges to developing new business isan important key to facilitating entrepreneurship ina community.Without consideration ofthe local population,demographics,culture,education base,income levels and employment alternatives, business development ismuchless likely toenjoy long-term success thanit would ifallthese issues were taken into full account. Successful entrepreneurship withan objective of long-term success with local and organic roots must take into account both the nature of the local communities and the nature of economic activity desired.Whenthesetwoare aligned,thechancesofsuccessare greater. TheresearchteamconductedinterviewswithsomelocalentrepreneursinthePhoenixmetro area.These entrepreneurs suggested the following items be considered when a community thinksabouthowbesttofacilitatelocalentrepreneurshipandbusinessgrowth. 1.Providing an opportunity foranew business tobe successful (that is,a long-term and growing resident activity that contributes to economic growth and employment)means taking into account the need forthat company to develop a network of other complementary organizations,including suppliers,distribution capabilities,and other related activities that provide a network of support and create an economic identity for thatareaof economic activity.This includes sources of skilled labor,repairand maintenance of equipment,facility management of space is required,and legal and financialadviceasthe company develops. 2.Financial incentives are important to develop and even to retain a new businesses.This often means an outright financial grant to help them get started,space with the opportunity to modify and grow,graduated rental agreements,and facilitation of some services,as examples.It can also be provided in the form of"in kind"grants such as legal aid,zoning allowances,free advertising in city instruments,or introductions to potential markets. 3.The focus in development should notbeon individual businesses buton "clusters"of related orsimilar businesses.The previous two suggestions should be considered inthe development ofa "portfolio"of small businesses that can collaborate in developing an economic center and attracting both attention and business asa group.The chances of the cluster succeeding are much greater than the chances ofanyone business. nVg Page 47 of55 4.Akeytobeing successful isto find an emphasis or special areathatis complimentary to thoseareasalreadyinexistencesothatthecompanycanbenefitfromcollaborationand addtotheoverallcapabilitiesofthearearatherthancompetedirectlywithsomecenter thathasalready started.Thisis related tothe"cluster"suggestion ofitem3 above. 5.Related to#4above,if anewcompany(orarelocatingcompany)canbeidentifiedthat canbenefitfromsomeoftheexistingstrengthsandcurrentcompaniesalreadyinarea (suppliers,collaborators,etc.),thiscanbea way to help existing companies inthe process of investing timeand attention and counsel inanew company andhasthe added "portfolio"benefit,aswell. These suggestions are consistent with the conditions that support the development and growth of competitive economic activity shown in the diagram below based on categories developed by Michael Porter. Determinants of Competitiveness Enhancing the Business Environment Factor (Input) Conditions Availability of specialized inputs available to firms -Human resources -Capital resources -Physical infrastructure -Administrative infrastructure (e.g.registration,permits) -Information infrastructure (e.g. economic data,corporate disclosure) Context for Firm Strategy and Rivalry A local context and rules that encourage productivity -e.g.,incentivesforcapital investments,intellectual property protection Incentive systems based on. merit Open and vigorous local competition,especially among locally based rivals ' \ Related and Supporting Industries Demand Conditions More sophisticated and demanding local customer(s) Access to capable,locally based suppliers and firms in related fields Presence of clusters instead of isolated industries Successful economic development isaprocessof successive economicupgrading,in which the business environment evolves to support and encourage increasinglysophisticatedwaysofcompeting nVg Page 48of55 A new model for economic development The suggestions of thelocal entrepreneurs provides some understanding of the thinking thathas ledtoanewway of viewinghowbestto stimulate economic development thathashigh prospects of notonly being successful inthe long-term butalso stays resident forthe long-term rather than developing locally and then moving to another location tofully develop. •Old model oThe community government drives economic development through policy and incentives •New model o Collaboration between government,companies,institutions,education andskill development o People atall levels participate (not just institutional support) oMore of a "bottom-up"model of growth thatis broadly inclusive Four highly-summarized examples of the application of the thinking itemized inthese suggestions are provided below. Taiwan Inthelate 1970's andearly 1980's,Taiwan decided tomake micro-electronics atthe cutting edge akey component of the country's economic plan.Thischoicetookinto account severalreal features of Taiwan's setting:theyhaveverylittleland available for development so whatever theymakeorsellhastotakeuplittlespace if itistogeneratelargerevenues.Inaddition, Taiwanalreadyhadagreat university and existing skillsinthe electronics industryattheR&D level.Finally,Taiwanhas relatively easyaccesstoaverylargeand developing part of theworld inAsiaandeasy shipping access totheWest. Tofacilitatethisprocess,theydevelopedpropertieswherestart-upscouldlocateinclose proximitytoeachother,sharetalent,shareideas,sharesuppliersanddevelopacultureand communitythat sustained themwhen economic challenges were encountered.Inaddition,the governmentprovidedtiestolocaluniversitiesandtechnicalcentersalongwithsome financial considerations.Theyhelpedinprovidingalegalenvironmentinwhichitwaseasiertoship goods,receivesupplies,dealwithtariffsandtaxes,andcompeteinternationallysothatthere wouldbeanetgain of revenuesbroughtintothecountryandnot just sellinggoodsandservices toeachother.The result is that Taiwan hasone of the most productive economies per square inch of real estate in the world. nVg Page 49of55 Singapore Singapore hasno natural resources,is smaller thanNew York,ishalfthesizeof Phoenix city boundaries,andwashometoarelativelysmallpopulation(inglobalterms)of alittleoverone million.Ithasthree ethnicities thatmakeupits population baseandfourofficiallanguages. While the population iswellItwas occupied until 1963 and became independent 1965;ithada percapita GDP ofabout$500atthattime,slightly higherthanthatof Zimbabwe today. What Singapore didhavewascrucialto developing itsplanfor economic development:ithada great location for shipping,ithadaccesstoalotof relatively cheaplaborin Malaysia rightnext door,andithadagreat infrastructure developedduringtheBritish occupation ofthe previous many decades. In 2011,ithadapercapitalGDP of $62,000,oneofthehighestintheworld.Howwasitableto develop an productive economy? Singapore wasvery deliberate in building economic capabilities thatwere consistent withits existing capabilities.Because itwassmallboth geographically andin human resources ithadto engage in activities thatdidn't require large amounts of human capital relative tothe financial revenues it generated. Toincreasethechances of success of variousenterprises,thegovernmentlimitedthetypes of activities thatit would participate inand support,encouraging instead the development of clusters of businesses in specified areas of activity.For example,asthe economy first started to develop,Singapore put great stress on developing its capability to engage in entrepot.This is development that focuses on shipping (inand out)and communications,banking,insurance, infrastructure,andservicesto shippers—all designedtosupportimportingand exporting. Asthe economy began to grow,manufacturing work in electronics was added because of Singapore's access to cheap labor in Malaysia.Then Singapore developed itsoiland gas capabilities along with the supporting businesses for financing and shipping. Recently,Singapore has decided on developing its capabilities in medical devices and biotechnicalareas.Thisisanareathatcanbeintegratedwiththeirexistingmedicalservices, their strong educational foundation,the effective use ofthe small amount of real estate they have availableandtheiraccesstofinancialinstitutionsandglobaldistributioncapabilities.Itisalso timed to align withthe economic development of countries suchas China,India and Vietnam andtheirincreasedappetiteforgreatermedicalservices. „Vg Page 50of55 Indecidingtoinvestinmedicaldevicesand biotechnical areas,Singapore isconsideringhow besttodevelopa cluster of companies inthis area ratherthantryingtoattractoneverylarge enterprise.Theywanttodevelopanetwork of economicunitsthatemploylocalpeople, collaborate with local education and research institutions and that are dependent onthe shipping capabilities of Singapore.Thisallowsthecountrytoconstructaportfolio of economicactivities thatinteractandhelpsustaineachotheranditalsoincreasesthechancesthattheseactivities, oncehighly productive,willstayinSingapore. Malaysia and Kuala Lumpur MalaysiabordersSingaporebuthasadifferenteconomicmodelandhasexperienceddifferent results.KualaLumpuristhecapitalandlargestcityinMalaysiaand80%of Malaysia's population resides inthe Malaysian peninsula.Malaysia became independent in 1963 andhad thebenefitatindependence of theinfrastructureandotherinstitutionsthattheBritishhad developedduringtheoccupation. TheMalaysianeconomyhasamuchhardertimegeneratingtheeconomic development that Singapore has because government policies explicitly favorsome ethnicities over others.This actsnotonlyasadisincentivetoperformforsomewhoarefavoredbutasanincentivetore locateforthosewhohaveskillsbutnoopportunitytoemploythemproductively. Thisstructureisinoppositiontothe"newmodel"ofdevelopmentthatcallsforcollaboration between the government andother institutions andisbroadly inclusive ofpeopleatall levels.In addition,structures of thissortareoftenplaguedbycorruptionatalllevelsandMalaysiahasa relatively high corruption index. One tangible example ofthis approach to economic development isthetwin towers in Kuala Lumpur's center,housing stores like Gucci's and Louis Vetton while the surrounding neighborhoods have low quality apartment dwellings.There isno local,organic economic growth in that area soitis dependent on direct government investment to keep it developing. Be'er Sheva,Israel Be'er Sheva isacityin Southern Israel that dates backfour thousand years.Because ofits locationnearawatersource,ithasalwaysservedtherole of a"gateway"totheNegevtothe south.NorthofBe'erShevaare agriculturally rich developments andsouthofBe'erShevais desert. nVg Page 51of55 The cityhas traditionally been relatively small and because ofits location inthe South,sitting on the edge ofthe desert,ithasnot been a center for economic investment or development.But the city had several assets that made it attractive for growth:it had much lower living costs than the big business centers to the North in Tel Aviv and Jerusalem and Haifa.It's population was made of amix of ethnicities that included Arabs and Bedouins.Italsohad water,sothe population could grow.What itdidn't have was the infrastructure and education that would provide for sustained economic growth. DavidBen Gurion,Israel'sfirstPrimeMinister,believedthefutureofIsraelwasintheNegev. Although he was almost alone in this belief at the time,it now looks as though he was prophetic in this forecast.Because the Negev constitutes 60 percent ofIsrael's land mass and its available land reserves,this area,and Be'er-Sheva in particular,is considered by many tobea base for Israel's future development. One key to the change in views about Be'er Sheva was the founding,in 1969,ofa university in the city.It was then called University of the Negev but when Ben Gurion died in 1973,the university took his name.There were a number of problems at the beginning that made the university's contribution tothe development ofBe'er Sheva difficult. The university was small and many of the young people in the area were not prepared to attend university-level studies.Those who did attend gained skills that they could not employ once they graduated.The challenge to the university was to make a difference in Be'er Sheva. The University started a number of aggressive outreach programs in which thousands of their students wentto various locations inthecityto stimulate education at various levels to increase the number of students who would qualify for entrance tothe University.Atthe same time, faculty and students started small economic ventures in the city that would provide summer employment and hopefully full employment at some point so that graduates would have the option to stay in the area and pursue a career when they finished their studies. The University decided to focus on technology.This grass-roots development of start-ups flourished and now the city is engaged in the development ofa new Advanced Technologies Park to house both start-ups as well as providing a base for existing larger firms to locate research activities.In addition,a large-scale plan is being implemented to transfer major army bases from central Israel to the Negev,including the Intelligence,Communications and Training bases of the Israeli Defense Forces. The small businesses thatwere started earlier were ableto collaborate and form the network and basis for the investment inthe new and large Technologies Park.Be'er-Sheva is planning for the nVg Page 52of55 future.In addition to Ben-Gurion University,thecity now hasa number of other respected educational institutions,most stressing science and technology. Whenitis completed,thenew Advanced Technologies Parkis expected to introduce atleast 10,000new jobs tothecity,whichwillhavea tremendous impactonthelocaleconomy. Currently,people who decide tolivein Be'er Sheva because of familytiesora desire forahome pricethatismuch cheaper thanthecentralregion of thecountryoftenenduphavingtotravelto TelAviv every daytowork."The university hasa problem,"one resident of thecitysays."It's bestand brightest have extremely limited opportunities." Thenew 150-acre Advanced Technologies Park is expected tohelp address that problem.A source of success forthe venture isthefull support ishas received fromalltheIsraeli Ministries andthe Municipality of Be'er Sheva,whoisa partner intheproject,alongwithBenGurion University. Therearealreadyevidences of economicdevelopmentinthecityandregion.Inthepast15 years,Be'er-Sheva's populationhasdoubledto200,000residents,withtens of thousands of new immigrants fromabout60countries,aswellasyoungandveteranIsraelicoupleschoosingto makethecitytheirhometosavemoneyandtobepart of thenewopportunitiesthataretherefor educationandemployment.Morethan 100,000 of Be'er-Sheva's residentstodayareunderthe age of 34. Summary comments ThesefourexamplesareseenasrelevanttotheobjectivesofFountainHillsindifferentways. Taiwanand Singapore showthepotentialimpactofthinkinginterms of portfolios or clusters of businessactivities,notjuststartingasmallbusinesshereorthereorsupportingonekeyideaor another.Theabilitytofosteranenvironment of economicdevelopmentthatinvolves collaborationamongcomplementaryactivitieswasakeytotheirsuccess. Malaysia shows the potentially deleterious effects oftoo much government involvement when collaboration mighthavebeenabigger stimulant to growth than government subsidies and favoritism of programsthatchangedfromeratoera. Be'er Shevaisanillustration of thechallenges of developinganexistingpopulationwhile creating opportunity for those who have benefited from more education and higher levels of skills.By creating outreach programs that encouraged locals to prepare betterfor more educationandatthesametimecreatingsmallclusters of technologycompanies,thecity eventually developed an economic basisformajor investment and growth. nVg Page 53of55 Allthecitieshadin common thefactthattheywere relatively young intheireffortsto develop economically.When older United States cities were themselves young,theyhad populations (often largely immigrant)with limited education,skills and access to capital.Where FHhasa local population thatis beyond the typical working years,these communities had populations thatwere otherwise ill-suited for economic performance.These cities grew these local populations intolocal economies that have stayed inthe cities and developed economic engines forthemthat create a quality of lifethatawiderange of people find attractive. nVg Page 54 of 55 Concluding Remarks The research conducted forthis report supports the insight that entrepreneurship isan important waytodeveloplocal,organicand long-term economic development andgrowth.Thisisa differentapproachthantryingtoattractanalready-successful,relativelylargeorganizationthat willbringeconomic development withit.Notonlyisthat approach expensive and competitive, but even when itis successful,it bases the community's economic strength ona single entity.If thatorganizationcouldleavewhereveritwasbeforetocometothisFH,itcanobviously leave FH,too. Nurturinglocalentrepreneurshipisaslowerapproachbutitisstrategicallyalignedwiththe objective of sustained,long-termeconomicstrengththatisanorganicpart of thecommunity. Forthisapproachtobesuccessful,theresearchconductedforthisreportindicatesthatthose economic efforts should be aligned with thelocalassets:the geography,the existing population objectives,theavailability of education,theincomenecessarytoresideinFHandother employmentopportunities.Inaddition,itshouldbeconductedincollaborationwithother institutionsandorganizations.Itshouldbe"bottomup"andbroadlyinclusiveandshouldbe networkedto people—to real individuals—at alllevelsinthe community anditsvarious organizations. Whilecapitalisanimportantcontributortothesuccess of earlyeconomicventures,theresearch indicatesthereareothervitalaspects:aninfrastructurethatissupportive of economic development,linkagetoskillsandtrainingandeducationforgrowth,spurstoinnovationand continueddevelopment,accesstocomplementaryeconomicactivitiesinotherbusinessesand organizations,andgovernmentalawarenessandfacilitation of growth. Theobjective of thislocaldevelopmentistogrowit andto growitinplace(thatis,keepit). TaiwanwantedtogrowbusinessesthatstayedinTaiwan;Be'er Shevawantedtodevelopan economicsector(technology)thatcreatedanopportunityforbothlocalsandcollegegraduates fromthelocalUniversitytostayinthecityandhaveaproductivecareerandanattractivequality of life. nVg Page 55 of 55 TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:10/9/2012 Meeting Type:Work Study Session Agenda Type:Regular Submitting Department:Development Services Staff Contact Information:Bob Rodgers,Senior Planner (480)816-5138 rrodgers@fh.az.gov Strategic Values:Not Applicable (NA)Council Goal:Not Applicable (NA) REQUEST TO COUNCIL (Agenda Language): DISCUSSION regarding establishing a possible POLITICAL SIGN FREE ZONE within the Town of Fountain Hills,pursuant toARIZ.REV.STAT.§16-1019. Applicant:Town of Fountain Hills Applicant Contact Information:Bob Rodgers,Senior Planner,(480)816-5138 rrodgers@fh.az.gov Property Location:Town Wide Related Ordinance,Policy or Guiding Principle: ARS S16-1019.F Political signs;printed materials;tampering;classification Staff Summary (background): Town Council requested that staff lookinto the creation ofapolitical sign-free zone as permitted by the recently adopted Arizona Revised Statute noted above. Section 16-1019.F provides that the Town can designate by Resolution specific Commercial Tourism, Commercial Resort and Hotelpolitical sign-free zones.The Town must determine that placing political signs within the rights-of-ways within the sign-free zones will detract from the scenic and aesthetic appeal of the area and deter its appeal to tourists.Uptotwo zones may beidentifiedinTownwitha maximum combined totalof3 square miles in size. Staff has generated a map showing one potential location of such a sign-free zone.This map has been generated for discussion purposes onlyatthistime. Information to note is: 1.The area of Shea Blvd only,which could potentially be a stand-alone sign-free zone is 0.2 sq.miles. 2.If we designated every current street right-of-wayintown as a sign-free zone wewouldbeat2.3sq. miles.And,if we include all the right-of-ways in Elman's property we wouldstill be under three sq miles. 3.The draft map displays a sign-free zone of.7sq.miles. Page 1of2 Risk Analysis (options or alternatives with implications): Adoptionofpolitical sign-free zones will prohibit candidates forpoliticalofficefromplacingtheir campaign signs within thepublicright-of-wayinsidethe boundaries ofthe zone only.There will benorestrictionsregarding placing political signs on private property. Not adopting political sign-free zones will maintain the current abilities ofpolitical candidates to place their campaign signs within the publicright-of-way anywhere within the townlimits subject tolimited safety restrictions. Fiscal Impact (initial and ongoing costs;budget status):N/A Budget Reference (page number):N/A Funding Source:N/A IfMultiple Funds utilized,listhere:N/A Budgeted;if No,attach Budget Adjustment Form:NA Recommendation(s)by Board(s)or Commission(s):N/A Staff Recommendation(s):N/A List Attachment(s): 1.ARS 16-1019 2.Sign-Free Zone Map SUGGESTED MOTION (forCou.No action required. Prepared by: odgers,Senior Planner 10/2/2012 Director's Approval: Paul Mood,Development Services Director X 10/2,0/2/2012 Approved: Kerf Buchanan,I own"Manager 110/3/2012 Page 2 of2 I(>-1019.Politicalsigns;printedmaterials;tampering;classification A.It isaclass2misdemeanorforanypersontoknowingly remove,alter,defaceorcoveranypoliticalsignofany candidateforpublicofficeorknowingly remove,alterordefaceanypolitical mailers,handouts,flyersorotherprinted materials ofacandidatethataredeliveredbyhandtoaresidencefortheperiodcommencing forty-Five daysbeforea primary election andendingsevendaysafterthegeneral election. B.This sectiondoesnotapplytothe removal,alteration,defacing or covering ofapoliticalsignorotherprintedmaterials bythe candidate orthe authorized agentofthe candidate insupportofwhose election thesignwasplaced,bythe owner or authorized agentofthe owner o\"private property onwhichsuch signs are placed withor without permission of the owner orplacedinviolationofstatelawor county,cityortown ordinance or regulation. C.Notwithstanding any other statute,ordinance or regulation,a city,townorcountyofthisstaleshallnotremove,alter, defaceor cover anypoliticalsignifthefollowing conditions aremet: 1.Thesignisplacedinapublic right-of-way thatisownedor controlled bythat jurisdiction. 2.Thesign supports or opposes a candidate forpublicofficeorit supports or opposes aballotmeasure. 3.Thesignisnotplacedinalocationthatis hazardous topublic safety,obstructs clear visionintheareaor interferes with the requirements ofthe Americans with disabilities act(42UnitedStatesCode sections 12 101 through 12213 and47 United States Code sections 225 and 611). 4.Thesignhasamaximumareaofsixteensquare feet,ifthesignislocatedinanareazonedforresidentialuse.ora maximum area of thirty-two square feetifthesignis located inany other area. 5.Thesign contains thenameand telephone numberofthe candidate or campaign committee contact person. I).Ifthe city,townor county deems thatthe placement ofa political sign constitutes an emergency,the jurisdiction may immediately relocatethesign.The jurisdiction shallnotifythe candidate or campaign committee thatplacedthesign within twenty-four hoursafterthe relocation.Ifasignisplacedinviolationof subsection Candtheplacementisnot deemedto constitute an emergency,thecity,townorcountymaynotifythe candidate or campaign committee thatplaced thesignofthe violation.If thesign remains in violation atleast twenty-four hours after the jurisdiction notified (he candidate or campaign committee,the jurisdiction mayremovethesign.The jurisdiction shallcontactthe candidate or campaign committee contact and shall retainthesignforatleastten business days to allow the candidate or campaign committee to retrieve thesign without penalty. E.A city,townorcounty employee actingwithinthescopeofthe employee's employment isnotliableforaninjury causedbythefailuretoremoveasignpursuanttosubsectionDunlesstheemployeeintendedtocauseinjuryorwas grossly negligent. F.Subsection Cdoesnotapplyto commercial tourism,commercial resortandhotelsignfreezonesasthosezonesare designatedbymunicipalities.Thetotalareaofthosezonesshallnotbelargerthanthreesquare miles,andeachzoneshall beidentifiedasaspecific contiguous area where,byresolution o\'themunicipal governing body,the municipality has determinedthatbased on apredominanceofcommercial tourism,resortandhoteluseswithinthezonetheplacementof politicalsignswithintherights-of-wayinthezonewilldetractfromthescenicandaestheticappealoftheareawithinthe zoneanddeteritsappealtotourists.Notmorethantwozonesmaybeidentifiedwithinamunicipality. G.Acity,townorcountymayprohibittheinstallationofasignonanystructureownedbythe jurisdiction. H.SubsectionCappliesonlyduringtheperiodcommencingsixtydaysbeforeaprimaryelectionandending fifteen days afterthegeneral election,exceptthatforasignforacandidateinaprimaryelectionwhodoesnotadvancetothegeneral election,theperiod ends fifteen days after the primary election. I.Thissectiondoesnotapplytostate highways or routes,or overpasses over thosestatehighwaysorroutes.