Posted: April 01, 2014
Colorado city loses tech jobs due to fracking ban
(Sponsored Energy Section)
Sometimes the appearance of anti-business regulation can deter business development as much as the reality of it. That appeared to be the case earlier this year when a Boulder-based company looking to relocate to a larger space ultimately chose Louisville over Lafayette. The company, XetaWave, cited concern over the Lafayette Community Rights Act, passed last November, which bans all new oil and gas drilling within city limits.
XetaWave, which makes wireless technology platforms and long-range radios often used by oil and gas operators among others, weighed the uncertainty and chose to move to a 17,000-square-foot building in Louisville.
XetaWave founder and CEO Jonathan Sawyer told the Boulder Daily Camera he was concerned about the language in the Lafayette ballot measure that reads: “It shall be unlawful for any corporation, or person using a corporation, to engage in the creation of fossil fuel, nuclear or other non-sustainable energy production and delivery infrastructures, such as pipelines, processing facilities, compressors, or storage and transportation facilities that support or facilitate industrial activities related to the extraction of natural gas and oil.”
“My read of it is that we sell to the oil and gas industry, and our equipment is used in the infrastructure of fracking,” Sawyer told the Daily Camera. “The way the ordinance reads is that it doesn’t matter where the fracking infrastructure is.”
Sawyer said he sought counsel from Lafayette’s city attorney and didn’t come away assured that XetaWave would not be in violation of an ordinance as a Lafayette-based business serving oil and gas interests.
Lafayette was one of three Front Range cities that passed anti-fracking measures last year. While Boulder and Fort Collins passed five-year moratoriums on fracking, Lafayette went even further in banning any new oil and gas drilling altogether. Broomfield voters also narrowly approved a five-year ban on fracking, but the voting results have been challenged and the final numbers await resolution.
Tom Clark, CEO of the Metro Denver Economic Development Corp., says businesses considering where to set up shop seek predictability when it comes to business regulation. The uncertainty created by some ballot measures can be “lethal” to business investment and job creation, Clark says.
“You just don’t know how far it’s going to go,” Clark said, citing the chilling effect that ballot measures calling for more regulation can have on business development. To make his point, Clark offers the example of Amendment 66, the $900 million school tax measure that was defeated last November.
“Amendment 66 hit the S Corporations (in which shareholders are taxed) very significantly because they would pay the high tax rates. The C Corps – their rates were at 4.63 percent and would have been kept there,” Clark said. “I had more calls of concern from the C Corps than from the S Corps because they said, ‘We think this is the camel’s nose under the tent, and we’ll be next.’ And these are guys who were untouched by Amendment 66. So there’s the reality and there’s the hint of a threat. You want to have a very predictable regulatory environment so people know where you’re going.
“We’ve always prided ourselves in being a moderate tax and moderate regulatory place where we’re not confiscatory in our taxation and we’re not a bully when it comes to regulation,” Clark said. “Regulation is typically data-backed or science-backed as it relates to oil and gas. What you send into the marketplace, though, is a signal, with a heavy regulatory burden in one industry. And then you do get that camel’s-nose-under-the-tent conversation.”