The Republic | azcentral.com Fri Feb 21, 2014 11:57 PM

Economic-development groups and business leaders, perhaps stung by memories of the backlash from a tough anti-immigration law in 2010, expressed concern over the latest controversial bill headed to Gov. Jan Brewer’s desk.

Just as the Arizona economy begins gaining momentum, the new legislation could hurt its recovery — and the state’s reputation as a place to do business — they said. In 2010, boycotts of the state hit the tourism industry especially hard after Senate Bill 1070 was passed.

The Greater Phoenix Economic Council urged a veto of the controversial legislation that would allow discrimination against gays, saying it could affect Super Bowl XLIX in Glendale and have “profound, negative” economic effects for years.

Another group, the Greater Phoenix Chamber of Commerce, said it had no official position yet on SB 1062. “But our review of the bill raises concerns about the uncertainties this would create for our member businesses,” the group said in a statement.

Supporters said the proposed law only is trying to protect people from being sued for practicing their beliefs in their businesses.

But many other business owners — and the Arizonans who buy from them — expressed frustration Friday over a potential law that could make the state and its people appear unwelcoming.

“The state already is known as being discriminatory,” said Howard Fleischmann, majority owner of six Community Tire Pros and Auto Repair outlets in the Valley. “This would muddy the water and give Arizona a more terrible reputation.”

The controversy comes at a time when Arizona’s economy appears to be shifting into higher gear. BMO Capital Markets, in a report this month, said Arizona’s economy is poised to grow faster than the nation both this year and next.

The legislation clouds the economic picture, some business leaders said.

Representatives of Arizona’s tourism industry are especially worried, with hotel occupancy and other measures on an upswing and with the nation’s biggest sporting event scheduled in Glendale on Feb. 1, 2015.

“We’re greatly concerned,” said Kristen Jarnagin, senior vice president of communications for the Arizona Lodging & Tourism Association. “We’ve already received countless phone calls and e-mails from people canceling trips or threatening not to return.”

Some critics already are calling for the National Football League to move the big game to another state, she said.

Economists at Scottsdale-based Elliott D. Pollack & Co., which was commissioned in 2010 by the Center for American Progress to study SB 1070’s effect on the state’s hotel industry, estimated the damage would be more than $140 million in lost business from meetings and conventions over a three-year period.

National reputation

Many of those raising objections Friday cited the impact of the right-to-refuse-service bill on the state’s reputation, the likelihood of the relatively affluent gay community to spend its dollars elsewhere, and the potential challenges in recruiting workers to a state that might feel less than inclusive.

In Jerome, Anne Conlon, owner of the Connor Hotel, said the bill sends the wrong message in light of Arizona’s fight in the 1990s over celebrating Martin Luther King Jr. Day as a paid state holiday and the controversy over SB 1070.

“We are going to send the message nationally that we are nothing but a bunch of rednecks,” Conlon said.

Rabbi Dean Shapiro of Temple Emanuel of Tempe said he is hiring at his synagogue but worries about his prospects.

“It is harder for me to convince civic-minded, sophisticated people to move to Arizona if they know that as Jews, they might be refused public accommodation. This bill makes it harder to attract talent to Arizona. This bill scares me.”

Dennis Hoffman, economics professor at Arizona State University’s W.P. Carey School of Business, said that in business, perception is reality, which could affect the state’s ability to attract good workers.

Outside Arizona, he said, people ask, “What are you guys doing out there? What is going on? Why do you persist on policies that (are) going to be perceived nationally as unwelcoming?”

Years ago, “we welcomed everyone who worked hard. Now we want to select who works hard; it is a problem,” he said.

ONE Community, an interactive Web and events community for the lesbian, gay, bisexual and transgender community and allied individuals and businesses, urged a veto of the bill.

“This legislation is very bad for business in Arizona,” said the group’s president, Angela Hughey, although she called the outpouring of criticism a positive sign. “This can put us at great risk ... or it could be a turning point for Arizona becoming more inclusive.”

In a news release, ONE Community offered possible examples of harm if the bill were to become law:

A taxi driver could refuse to drive someone to a synagogue because it goes against his or her religion.

Women could be in danger of losing jobs because, in some religions, they are not equal.

Restaurateurs could refuse to serve a Mormon family on the grounds that they disapprove of their religion.

More than 850 companies and non-profit groups in Arizona have signed a Unity Pledge encouraging diversity and support of LGBT employees, according to ONE Community. These include large employers such as PetSmart, Liberty Mutual, Allstate and Apollo Group, the parent company of the University of Phoenix.

LGBT people represent $830 billion in combined annual spending across the nation, the group said.

Impact on economy?

Opponents frequently cited the potential economic backlash if the bill were to become law, including companies choosing not to locate here.

In a letter to the governor, GPEC Chairman James Lundy, CEO of Alliance Bank of Arizona, and Barry Broome, president and CEO of GPEC, warned that signing the bill “will upset the current balance between the right of business owners to manage their businesses and the right of employees to refuse on religious grounds to follow company policy or management directions.”

Arizona is witnessing a business comeback, the letter said.

“With major events approaching in the coming year, including Super Bowl XLIX, Arizona will be the center of the world’s stage,” the letter says. “This legislation has the potential of subjecting the Super Bowl, and major events surrounding it, to the threats of boycotts.

“In addition to the concerns with the growing negative attention already being portrayed across both national and social media, we have already been contacted by four companies we are working on with the Arizona Commerce Authority who will look to locate elsewhere if this legislation is signed.”

The letter urges Brewer to continue showing “political courage” and veto the bill.

The bill, written by the conservative advocacy group Center for Arizona Policy and the Christian legal organization Alliance Defending Freedom, would allow individuals to use religious beliefs as a defense against a lawsuit.

Proponents say it is a tweak to existing state religious-freedom laws to ensure individuals and businesses are not forced to do something that goes against their beliefs.

Brewer has five days from when she gets it to sign, veto or ignore the bill.

As vocal as the opposition has been to the bill, its full impact can’t be known, as was demonstrated after SB 1070.

“You don’t know who doesn’t call you,” said Jarnagin of the Arizona Lodging & Tourism Association. “You don’t know the loss of business.”

Attorney Carissa Jakobe of Phoenix, among other small business owners, said she would show her opposition to the religion bill by the way she does business: continuing to represent any person of any color or sexual orientation.

Several people, commenting on the azcentral.com Facebook page, said they would take their business elsewhere if they were aware a business discriminated against particular shoppers.

The leader of the Scottsdale Gallery Association said that its downtown art dealers would support inclusiveness.

“We feel that art is for everyone and will never discriminate against anybody,” said Veronica Grassius, head of the group that represents many of more than 100 art galleries in downtown Scottsdale. “We welcome everyone.”

Republic reporter Megan Finnerty contributed to this article.