Flagstaff: Economy

Major Industries and Commercial Activity

New scientific and high tech research and development industries have located to Flagstaff, broadening the economic base of tourism, government, education, and transportation, which replaced the lumber, railroad, and ranching eras.

Research activities are important to the city's economy. The most well-known facility, Lowell Observatory, is currently celebrating the 75th anniversary of the discovery of Pluto, and has done pioneering work in observations of near-Earth phenomena such as asteroids, comets, and belt systems; and in the field of interferometric studies, in which a distributed network of small telescopes together create images of celestial bodies with much higher resolutions than any other single telescope can produce.

Items and goods produced: dog and cat food; surgical/medical instruments and apparatus; wind generators; circuit boards; packaging products; recycled paper products for commercial use

Incentive Programs—New and Existing Companies

Most programs in Arizona are offered at the state level. The Greater Flagstaff Economic Council is a public/private agency that serves the city, county, Chamber of Commerce, and local businesses.

Local programs

The city offers an Infrastructure Assistance Incentive Fund with up to $100,000 available per economic development project.

State programs

Flagstaff businesses in recently expanded Enterprise Zone areas may receive direct state income tax credits based on the number of net new employees hired. Any qualified position is eligible if the position is a full-time permanent job, if the employer pays an hourly wage of above $7.55 an hour (raised from $5.77 in 1997); and if the employer provides health insurance and pays at least 50 percent of the insurance cost. If at least 35 percent of new employees live in any Enterprise Zone areas, then all new net employees qualify for eligibility. Any unused state income tax credits may be carried forward for up to five taxable years, providing the business remains in the Enterprise Zone. Other Enterprise Zone incentives include tax breaks for companies that make more than a $1 million investment and retain a new hire for more than three years. Other programs give tax credits on the cost of installing recycling equipment, exemptions for contractors and vendors of solar energy devices, for pollution control, purchase of construction materials, and research and development investment. State lottery proceeds provide fixed-asset loans to companies for expansion, relocation, and consolidation.

Job training programs

The Flagstaff Job Service Center gives aid to employers in advertising openings, evaluating applicants, and immigration certification. The state of Arizona offers matching funds of up to 75 percent to businesses for the training of workers for new jobs in the state. Through the new federal Workforce Investment Act (WIA), formerly Job Training Partnership Act, employers may receive up to 50 percent of their wages back during initial training periods. Customized training programs are also available.

The Small Business Development Center is jointly funded by the U.S. Small Business Administration and Coconino County Community College. This one-stop center offers free one-on-one counseling, training, and technical assistance in all aspects of small business management.

Development Projects

Downtown Flagstaff completed a major $7 million project upgrading its commercial area surrounding the Visitors Center in the 1990's. Flagstaff 2020 Vision Project began then, when some citizens began to question whether increasing development was compatible with preservation of what made the area special. The plan laid out a five year plan to balance economic opportunity with growth limits, and was replaced in 2002 with the Regional Growth and Transportation Plan, which governs land use, transportation, open space, and trail systems. Another development project in the works is dependant upon pending federal legislation, which will authorize the procurement of 1,100 acres surrounding the airport for business park, light industrial, residential development, runway expansion, and municipal uses.

In 2003, the Lowell Observatory and Discovery Communications announced a cooperative effort on a $30 million telescope that will bring unprecedented wide range views and deep imaging surveys of the night skies. The Discovery Channel Telescope's unique design will allow it to switch from extremely wide-field focus to much more detailed spectroscopy, infrared imaging and other applications. In addition to significantly advancing capacity for research, the telescope will also be used for real-time worldwide broadcasting and for science education programs for the public. The expected completion date for the telescope is 2009.

Commercial Shipping

Air cargo carriers flying direct from Flagstaff Pulliam Airport are Federal Express and United Parcel Service. The city has ten motor freight carriers. The one-day truck radius extends to Salt Lake City, San Francisco, Albuquerque, El Paso, Los Angeles, and parts of Mexico. Flagstaff is served by Burlington Northern and Santa Fe Railways.

Labor Force and Employment Outlook

Northern Arizona, which includes Flagstaff, Sedona, and Payson, has experienced a massive influx of tourists and retirees in recent years. After concerns were voiced by residents about the continued development and its impact on the environment, developers and environmentalists are working together to achieve a balance between economy and landscape preservation. Government is one of the largest employment sectors in Flagstaff. Tourism, and the service and construction industries in concert, create employment opportunities as well.

The following is a summary of data regarding the Coconino County labor force, 2004 annual averages:

Size of nonagricultural labor force: 60,000

Number of workers employed in . . .

construction and mining: 3,400

manufacturing: 3,100

trade, transportation, and utilities: 9,200

information: 400

financial activities: 1,600

professional and business services: 3,300

educational and health services: 6,700

leisure and hospitality: 11,800

other services: 1,800

government: 18,400

Average hourly earning of production workers employed in manufacturing: $16.56

Unemployment rate: 5.4% (January 2005)

Cost of Living

Housing costs in Flagstaff run somewhat higher than the national average. The typical rent for a two-bedroom apartment is about $850 per month. Food and health care also run a bit higher than the nation as a whole.

The following is a summary of data regarding several key cost of living factor in the Flagstaff area.

2004 (3rd Quarter) ACCRA Average House price: $336,338

2004 (3rd Quarter) ACCRA Cost of Living Index: 111.5 (U.S. average = 100.0)

State income tax rate: Ranges from 2.87% to 5.04%

State sales tax rate: 5.60%

Local income tax rate: none

Local sales tax rate: 1.51% city; .80% county

Property tax rate: $9.89 per $100 of assessed value (2003)

Economic Information: Flagstaff Chamber of Commerce, 101 W. Route 66, Flagstaff, AZ 86001-5598; telephone (520)774-4505. Greater Flagstaff Economic Council, S. Milton Road, Flagstaff, AZ 86001; telephone (520)779-7658; toll-free (800)595-7658; fax (520)556-0940