Commentary: Colorado companies should patronize Colorado companies,

Colorado Springs Business Journal, Aug 22, 2003 by Marylou Doehrman

There is an old tale about the friendly pharmacist who garnered a lot of support from his community. Once his business grew, he decided to put a garden in front of his pharmacy. The local landscaper reaped the benefits of the pharmacist's good fortune, and he was finally able to send his daughter to the orthodontist, whose son was getting married and needed flowers from the local florist, who then was able to hire the local electrician to rewire her kitchen. The local electrician had his truck repaired at the local auto shop, and so on. You get the gist of the story.

Buying local and supporting locally-based businesses and state- based companies is one way to keep the cycle moving in one's own backyard. And one Colorado-owned and operated company recently filed a grievance with the state because of its decision to contract with an advertising agency headquartered in Phoenix, Ariz., although the Arizona company has a legitimate limited liability company in Denver.

Carl Thompson is the owner of CTA Public Relations, which has been operating in Colorado for 18 years. Thompson met with the state on August 12 to contest the decision to award Colorado's wine industry campaign to Reister-Robb, the Arizona-based parent company of Reister- Robb Colorado LLC. I don't have a problem if the state goes outside, if the skill is not found within your borders, said Thompson, who was one of three finalists bidding for the wine campaign. Is it sour grapes, or is the state snubbing its own?

Reister-Robb applied on May 21, 2002, as a Colorado limited liability company - the wine campaign had not been uncorked. And since the incorporation date, Reister-Robb has maintained an office in Denver with three employees. Reister-Robb tossed their hat in the ring for the wine industry bid in May 2003, and the state didn't begin to review bids until June. I can understand their (CTA's) disappointment, said Jim Dissett, public relations manager for Reister-Robb, but we obviously put together a proposal they (the state) liked, and they thought we could do a better job.

Jeff Woodhouse is the public information officer for the state department of personnel and administration, and he confirmed Reister- Robb's contract win: It was very close, but Reister-Robb won the bid after the oral presentation because they did a better presentation, and they were $20,000 less. Thompson also said the process was flawed because the state did not notify his company in a timely manner of the exact date and time of the oral presentation. Woodhouse said all three finalists were telephoned on the Friday prior to the Thursday presentation and faxed again on the following Monday.

Even if they weren't a Colorado LLC or didn't have an office here, it wouldn't make a difference, said Woodhouse. The state will choose a company based on its ability to do the job for the best price available, added Woodhouse. Carl Thompson said the state will render a final decision on Sept. 14, but Woodhouse said Reister-Robb Colorado LLC will more than likely keep the bid.

Any corporation, no matter where its headquarters or home base exists, can set up a limited liability company (LLC) under Colorado law without having a physical presence, such as an office or employees. The LLC is formed pursuant to a specific state law, said Keith M. Olivia, an attorney with Hogan & Hartson's Boulder office. It could simply be a shell formed under the laws of Colorado & with no significant assets or employees. And taxes, said Olivia, are based on business operations actually conducted in the state. Maintaining an office and employing people are two important factors in terms of a company doing business in a particular state, added Olivia. Does the company have an office and employees in Colorado? Those factors give the company a significant Colorado connection.

And that connection affords credibility to the company and gives them a more equal playing field when competing for Colorado contracts. Reister-Robb has the connection with its office and employees housed on Wazee Street in Denver, but the grievance filed be Thompson brings to the forefront other examples of corporations going outside of the state or community for various contracts.

Adolph Coors Co. is moving to reincorporate in Delaware after 90 years as a Colorado-based corporation (The Denver Post, Friday, Aug. 15). From The Denver Post: We believe the reincorporation will be beneficial to the company and its shareholders through obtaining the benefits of Delaware's comprehensive, widely used and extensively interpreted corporate law, chairman Peter Coors said in a statement.

Its Golden headquarters will remain the same, and nothing changes regarding issues like employment or state taxes paid. A Denver corporate and securities attorney, Brad Lam, was quoted in the same article saying, Delaware has one of the most developed bodies of law of any state.

Budget-friendly concepts are another reason corporations aren't adhering to the buy local theme. Walsh Associates, Inc. is a New York- based purchasing company recently contracted by Cheyenne Mountain Resort in Colorado Springs to manage its renovation project and purchase nearly $1 million of furniture, fixtures and equipment.