Archive for October, 2008

30th October
2008
written by Arizona Kid

City of Phoenix proposing bus fair increase – Read the Republic article HERE. It will be fun to watch and see if our neighbors up north can pull this off.

If you remember a few months back,  Tucson city government almost crumbled over a proposed .25 cent bus fare increase.  Here is a timeline of events from the Star:

1. Hein submitted a budget to M&C showing a large loss at Sun Tran.

Then – read more about the story by clicking.

2. Uhlich accused Hein of lowering the subsidy for Sun Tran, causing a shortfall that forced the council to consider a hike in bus fares. Uhlich demanded to the AZ Star editorial board that Hein:  ”own his mistakes” — apologize and explain why the $36 million general fund subsidy of Sun Tran and Van Tran was reduced in the next two years’ budgets.

3. Hein fired off an e-mail earlier Thursday in which he slammed council aides for meddling in council affairs and took offense at the council’s implication he had purposely cut the transit-fund subsidy to hurt the poor.

4.Uhlich said she has not been getting timely or accurate information from the manager’s office, adding that she doesn’t know if “deceit, incompetence or just being overwhelmed” were the reasons behind it. (I loved that statement)  

5.Council member pile on: Leal jumped in with Romero criticizing Hein for moving the Greyhound station. Scott complained about Hein’s treatment of the police union. Romero objected to Rio Nuevo’s handling of west side projects and general accountability.
  

 

6.Hein, who returns from vacation in two weeks, laid much of the blame on council aides who do their own research and “do not have the strongest public-finance background or technical experience.” That’s coupled with aides’ historical distrust of the city staff, which he said is “hyper-reactive, but sometimes lacks the political acumen and a pulse on the community.”

7.
Leal fires off an email demanding Hein’s head – while Hein is on personal vacation. The email apparently got sent PRIOR to the vacation but it got lost in Internet land. The Geek Squad looked into it and couldn’t confirm it was sent, lost or written early.
  

 


8.
Everyone backs away from Leal and goes out of their way to praise Hein.  

9. Tempers cool,  Uhlich calls for a budget auditor which Tucson voters voted against 20+ years ago but hey, another layer of government can’t hurt…or can it?

This story goes right up there with Leal locking himself in Pima County jail over night. This is better than Barney Fife and an episode of The Andy Griffen Show. Great You Tube HERE.

Back to the actual issue at hand – Tucson heads into a $55m budget short fall and can’t seem to increase a bus fare that hasn’t increased in over 8 years.  In the eight years Sun Tran increased routes, service times and ridership is way up.
As a result, Glock said, the share of Sun Tran’s operating cost covered by fare revenues has dropped from 23 percent in 2000 to about 19 percent today.
Without the fare increases, or an increased taxpayer subsidy, transportation officials calculate Sun Tran would rack up a $1.1 million shortfall next year, and a $3 million shortage the following year.
She said she doesn’t want to burden passengers with higher fares, especially when other costs are rising steadily. But she also doesn’t want to see service cuts, which transportation officials say will be needed without the fare increase.
“My goal is to keep the fares as low as we can while still being fiscally responsible with our bus services. I would not keep fares low if we had to scale back bus service,” Uhlich said.

Read the Star article HERE.

The fares in other major markets:
Phoenix $1.25,
Albuquerque $1,
Colorado Springs $1.25,
El Paso $1,
Las Vegas $1.25.
30th October
2008
written by Arizona Kid

Pima County voters approved the Regional Transportation Authority (RTA) financing in 2006.  I can bet you that the road builders, engineers, underground utility contractors, landscaping companies to name a few,  are dying to know; WHEN CAN THEY GET TO WORK? All the above put there effort and support behind getting the measure passed and are anxious to get to work.

Conservation Corps - Circa 1935

Conservation Corps - Circa 1935

Flashback to the great depression, a far cry from today’s financial troubles but maybe we can learn something. FDR started the the Civilian Conservation Corps and invested heavily in the US infrastructure and park systems as a way to get the country back to work and stimulate the economy. Our very own Sabino Canyon got a little  of the trickled down benefits.  An asset bubble in 1986 caused Japan to experience a terrible economic downturn what followed was called the lost decade. Japan used infrastructure and public works investments as a way to get their economy back on track.

Pima County could use a little stimulus right about now.

The RTA plan included a .5 cent county wide sales tax and a commercial rent tax (as a landlord I’m not nuts about that one).  There was a full court press from the business community, neighborhood and environmental groups and government to finally take a long range look at regional transportation. The County must start releasing the major projects that are quick and easy to start. Tangerine, much of La Canada jump out right off the top.

I’ve been digging for the actual numbers but from my recollection;

  • Tucson tried a total of 5 times unsuccessfully to pass a transportation initiative
  • Maricopa County passed their regional transportation financing 20 years ago.
  • Maricopa has been pouring in $300 million a year into capital road improvements – for 20 years!
  • Couple this spending with a disproportionate share state spending and you can see how far they’ve come.

Notice the lack of anything resembling a networked freeway system. We are a community of over 1 million people and surface streets continue to be the main way we get across town. It’s too late to create an ideal freeway system so we have to work with what we’ve got.

Conentric circles expanding out from a town center with linking spokes. This system creates a managable system to get around quickly and plans for growth. Take a look at Houston’s infrastructure as an example;

The Tucson Regional Town Hall, found that our regions actual transporation needs exceed $6 billion. The  RTA’s $2.1 billion is well short, but it’s a start.

We have the need, the financing, the plan and willing contractors, all we need now is for the government agencies to open the spigot and get the money FLOWING!

You can reveiw the actual RTA plan HERE.

29th October
2008
written by JHiggins

Ventana Medical is a local Tucson (Oro Valley and Marana that is) success story. The company started here in our valley with automated blood testing equipment. Venatana Medical started by a UofA pathologist 20 years ago and went public in 1996. From FORBESyou can read the saga around the Roche buy out but it amounted to arriving at the right price and Ventana owners and stock holders walking away with A LOT OF MONEY.

I understand a group from TREO and Oro Valley went out to Switzerland to meet with the CEO and incoming management team. I’m sure they will love our valley and Oro Valley in particular. 

It will be curious to see how the Pima County schools compare to the European education system, I would imagine the executives will be bringing families to our region. 

From today’s AZ Daily Star HERE;

The CEO of a global drug company laid out big plans Tuesday for Oro Valley-based Ventana Medical Systems — including an increase in work force by roughly 250 employees over the next year and an expansion of research-and-development facilities.
Roche CEO Severin Schwan

Roche CEO Severin Schwan

Folks, Ventana is a shining example of how it should work;
  • UofA professor and students develop a great technology
  • A company is formed and first stage R&D funding is attained
  • Company goes to market with superior product
  • Company goes public injecting cash to grow and expand.
  • Hundreds of educated workers are hired from UofA and local employment pool
  • Dozens of local feeder small businesses benefit from Ventana’s success
  • 20 years later the company takes a $3 billion buyout and the new company stays in Tucson

I’m not asking for much just a dozen or so more Ventana’s or Hughes/Raytheon’s to diversify our economic base – preferably in a vertical industry like defense or bio medical or solar so we can finally be known for something other than tourism.

The best thing about a Raytheon or Ventana Medical is that they don’t require much support from the government entities. All they want is a pool of educated workers (like thousands of graduate from the UofA each year), a great place to live, a convenient airport (we are so so here),  and if they intend to expand or grow that the local government entities make that process as smooth as possible.

28th October
2008
written by JHiggins

Tucson and Arizona in general rely on the big three industries for the bulk of our economic development. Read the post HERE. Tourism, construction and the government sector are the 800 lb gorillas that fuel our local economy. With two out of three of our local drivers in the tank it’s going to be a long winter.

Read the Oct. 27th AZ Republic article HERE.

The weak economy, stumbling stock market and airline flight cuts have crimped travel to the area at a time when new hotels are adding to the room supply at a rate well above the national average.

Hotels around the country are hurting, or at least starting to see a slowdown, leading to the recent national sales launched by Hyatt, Starwood and other large hotel chains to spur business.

The pain is especially acute in metropolitan Phoenix, a major vacation and meetings destination that accounts for $10 billion of the $17 billion in annual visitor spending in the state.

Many of the trips to Phoenix are discretionary compared with trips to, say, New York and other major business centers that have a steady stream of corporate travelers flying in and out routinely in good times and bad.

Reduction in tourism translates into reduction in tourism related taxes like the bed tax, rental car tax and RV taxes. The influx of tourist dollars into our economy  is a multi billion industry. Let’s hope economic troubles facing the US and the world work themselves out before next seasons travelers decide on a staycation.

28th October
2008
written by JHiggins

Small business owners struggling

Oct. 28: Hudson Cleaners owner Brian Ferwerda, one of the nation’s 27 million small business owners, is feeling the effects of the economy hard – and he’s not alone. NBC’s Tom Costello reports on Congress’s plan for ailing small businesses.

 http://www.msnbc.msn.com/id/3032619/vp/27425809#27425809

Small businesses employ over 50% of Americans. A poll this month stated 74% feel the economy getting worse and 38% admit having cash flow problems in the last 90 days.

 

28th October
2008
written by madge
From the Arizona Daily Star – HERE. Sometimes the editorial staff actually get it right. Now when it comes to endorsements…..not so much.

As a community, we tend to belabor the obvious. It’s one of the most enduring of Tucson’s problems.

We act as though we have no idea what to do about issues like transportation, growth, land-use planning and water conservation, as though these topics were so new that the solutions were impenetrably obscure.

In fact, we’ve treated all of these issues as though we were engaged in a complicated basketball game where all the players are watching one another and nobody is watching the ball.

The real issue is not knowledge — we have plenty of that in our three state universities, which are giant information reservoirs packed with experts we can turn to if we wish. The problem is really a combination of civic amnesia, myopia, lethargy and an inability to tap into resources sitting on our doorstep.

It isn’t knowledge that we lack; it’s will.

Fortunately, there is a way out of this malaise. But the journey won’t be easy because people who have organized their lives around little power nodes are most comfortable around others who share their beliefs.

Walls are often easier to build than to tear down, but various private groups can at least make a start.

How would it be, for example, if some members of the Southern Arizona Leadership Council, or SALC, a group of senior business executives, were invited to join the board of the Nature Conservancy, the Audubon Society or the Center for Biological Diversity?

And can you imagine the lively exchanges that might occur if members of the Sierra Club, the Sonoran Institute or the Coalition for Sonoran Desert Protection were invited to participate at meetings of SALC or the Tucson Metropolitan Chamber of Commerce?

If members of these isolated little power nodes won’t invite each other in as members, they should at least invite each other in as guest speakers who may share divergent viewpoints. That might help move various groups closer to consensus.

If divergent groups begin to overlap, two things may happen. First, each group will be less inclined to demonize the other, and eventually an actual community will emerge. If that community builds critical mass, it can start looking for visionary leaders who can lead Tucson into a better future.

Diverse groups need to team up for Tucson’s sake

Our idea: Clubs and other organizations should open their doors to mutual efforts aimed at solving our community’s problems

Tucson, Arizona | Published: 10.20.2007

27th October
2008
written by JHiggins

A consistent theme I’ve been blogging about recently is how Tucson and Arizona are overly dependent on growth to fuel our economy.  Growth of people moving in to our community creates a new influx of capital and a new set of consumers that need housing, cars, appliances, haircuts and an entire host of other services.

A highlight of the Nov. 3rd U.S. News and World Report article highlights;

Q. With tax revenues evaporating and no housing bubble propping up the economy, how serious is the situation in your state?

A. It’s quite serious….But historically our economy has been tied to housing, so when the housing bubble burst, California, Arizona, Nevada, Florida – those states got hit early and particularly hard.

 The states that will tend to do better are those that have a diversified economic base. New Mexico, Texas and much of the Pacific Northwest is looking pretty good. 

 

 

27th October
2008
written by JHiggins

I covered the fact that Arizona and Tucson in particular has relied too heavily on growth for our economic prosperity. Read the posts HERE and HERE.  An email that came a cross my desk this weekend exemplifies the problem we are having even clearer. Byron Schlomack, Ph.D from the Goldwater Institute noted that:

A few weeks ago, I pointed out that Arizona’s economy has been disproportionately fueled by the construction industry. In 2006, the proportion of Arizona’s total economic output from construction stood at 7.4 percent, 50 percent higher than the U.S. proportion of 4.8 percent. I attributed this to the relatively high commercial property taxes assessed at a rate twice as high as that of residential property.
 
Interestingly, manufacturing contributed more to Arizona’s total economic output, 8.1 percent, in 2006 than construction did. But at 11.8 percent, the share of U.S. output from manufacturing is almost 50 percent higher than Arizona’s.

Arizona’s property tax structure contributes to this volatility. Residential property taxes are assessed at half the rate of commercial property taxes. As a result, commercial property, which constitutes less than a third of total property value in the state, pays nearly half of all property taxes according to the Arizona Tax Research Association.

To create a fully diversified economy, Arizona policymakers should pay close attention to what they tax. They’ve rolled out the welcome mat to the volatile construction industry, which is fine, but they need to do the same for other industries. If we want people in all those homes, we have to welcome other businesses too, and that means lowering taxes on commercial property.

We’ve established that construction is a major engine on our state. The goal in any economy is for NEW MONEY to enter the system. Construction fueled by people moving to our state is new money. Foriegn firms investing in our state is new money. Manufacturing and exporting goods out of the state or country is new money into our system.  From 2001 to 2005 Arizona’s value-added from manufacturing decreased, in fact we dropped more than anyone in the U.S.

While most of our regional competitors (Colorado, New Mexico, Utah, Nevada, Idaho) were increasing their manufacturing sectors, New Mexico by 200 percent, Arizona’s decreased 16 percent. This is all the more evidence that our tax structure is determining our fate.

 Scholmach points to our states need to equalize the income tax system:

If we choose to get government spending at all levels under control and then rationalize our tax system by making it more lucrative to open a business, we can avoid becoming the biggest bedroom community in the nation. It’s worth rising to the challenge. 

26th October
2008
written by JHiggins

Another in depth look at Rio Nuevo in todays Arizona Daily Star.

Nine years later, Downtown Tucson has two refurbished movie theaters, a re-creation of the Presidio wall and a wider freeway underpass.

Can a community redevelop a downtown? Check out the WSJ article HERE.It covers the successful revitalization of El Paso’s downtown. From WSJ;

The difference between this and earlier revitalization efforts that fizzled is the involvement of deep-pocketed investors, who decided in 2004 to gather their own resources and chart a course for revival.

Everyone realizes there must be a public private partnership to get Rio Nuevo off the ground and successful. Tucson missed the opportunity during the big boom to attract the private sector. Feet dragging, buearucratic wrangling and road blocks caused costly delays. Our downtown redevelopment is as much a case of timing as it is planning.  We missed the housing boom. We couldn’t capitalize on the commercial boom because the residential base wasn’t there. Add in the red tape delays and we see developers unwillingness to re-develop or start new projects. We are left with ‘big hats and no cattle‘ or lots of talk and no action.

They key to the El Paso plan? Business leaders created the plan with MINIMAL neighborhood input.

The group brought in city officials to advise it on the plan’s feasibility, but in a move that proved controversial, the business group elected not to subject the plan to widespread public scrutiny in its early phases, reasoning that too many opposing viewpoints might stymie the process.

“El Paso is going into the 21st century with our running shoes on,” he says. “Right now, this town is poised for takeoff.”

Hey can’t Tucson get ‘poised for takeoff’ in my lifetime?

Now, a bit of opinion on Tucson’s downtown revitalizing efforts. Read the full Steve Emerine story HERE.

The city persuaded the Legislature in 1999 to approve a district containing Tucson’s downtown area and a strip along both sides of Broadway all the way to Park Place, where incremental revenues from state sales taxes would go to finance Rio Nuevo downtown revitalization.

But apparently no one under Keene or Hein really knew how to revitalize a downtown. Just as the fictional emperor feared his subjects would realize he had no clothes, city bureaucrats have feared Tucsonans would realize they were naked with no ideas of how to fix downtown.

They have rejected or ignored some proposals from private investors, invented reasons to delay others and insisted on complete control – plus city ownership if possible – for most downtown proposals.

Now, city officials are hesitating to build a new downtown arena because they aren’t sure when they can build a convention hotel to go with it.

They haven’t started the hotel because they’re not sure they can afford the arena.

The city has no strong and experienced elected leader, and it continues to show.

Couple El Paso’s capital investment in it’s downtown with an incentive program to entice employers to locate in geographic areas with higher paying jobs and you have a working program. Click HERE to learn more.

Read some great background stories on our Rio Nuevo challenges – HEREHEREHEREHEREHERE- And Foraker’s detailed analysis HERE.

With the pending wold wide financial crisis and complete shut down of funding options don’t look for any Rio Nuevo success in the near future.  From the East Valley Tribune (Phoenix) projects all over the state are being put on hold. Of interesting note, the Gaylord Hotel deal to build a convection center and hotel in Mesa is being put on hold. Gaylord proposed a similar deal here in Tucson but our Rio Nuevo team cut them.

23rd October
2008
written by clothcutter
They all love to talk about economic development: The media, the politicians and the bureaucrats that serve them. It has become a buzzword that makes the above-mentioned personnel and the business cloth that consorts with them warm and fuzzy inside. We create an extra layer of government bureaucracy (TREO) to attract companies to either move or expand here. (This supposed independent organization is a convenient office consolidation for Pima County and City of Tucson employees with this poor guy they hoodwinked into running the thing. But I digress.)
Any company who is considering moving or expanding to a new city will perform some sort of due diligence. This process should include the following questions:
1-What is the quality of the education system?
2-How safe is the city are we possibly moving to?
3-How business-friendly is the local government for the area we are moving to?

4-What kind of taxes are we going to be paying? And are they worth it?

5-Is Lute really retiring?

Some not so happy answers:

1-As we all know our public education system is not doing a very good job of getting our youngsters ready for a viable future. It is a system without much accountability or impending improvement. It will be tough for prospective companies to convince their key employees to move to the area and subject their kids to our educational system.
2-All they have to do is look at various websites that deal with crime statistics, such as:

http://www.fbi.gov/ucr/cius2006/data/table_10_az.html

County

Violent crime






Murder and nonnegligent manslaughter

Forcible rape

Robbery

Aggravated assault

Property crime






Burglary

Larceny-theft

Motor vehicle theft

Arson1

Maricopa(3.8 Mil. Pop)


850






25






30






94






701






6,698






1,734






3,936






1,028






69






Mohave

204

9

4

22

169

3,111

1,165

1,559

387

26

Pima (1.003 Mil. Pop)

783






18






88






214






463






13,674






2,643






9,237






1,794






121






Pinal

298

11

39

42

206

5,079

1,067

3,176

836

24

Yavapai

354

5

13

10

326

1,703

408

1,092

203

7

Yuma

215

3

6

32

174

1,577

330

1,009

238

9

Cochise2

0

17

22

1,531

580

755

196

15

Gila

100

1

7

6

86

559

229

264

66

7

Graham

243

0

2

1

240

203

58

134

11

8

La Paz

84

0

0

6

78

417

82

290

45

1

Navajo

61

1

7

2

51

661

386

189

86

8

Santa Cruz

8

0

1

2

5

368

136

164

68

0

According my awe inspiring math skills:
We have about 26% of the population of Maricopa, but 92% of their violent crimes! We also exceed them in forcible rape, robbery, property crime, burglary, larceny-theft, motor vehicle theft and arson. Hold your head high, Pima County!
3-As you can see below, ASBA named Tucson as the most unfriendly municipality in Arizona to do business in. In my experience, Pima County isn’t far behind. Their combination of poor development services, sign laws and meddling councils/boards is not an attractive package for any company.

4-The previous blog by jhiggins cites the marvelous amount of taxes we pay, either as individuals or companies. What have we gotten for them? Bad roads, a baseball park in the middle of nowhere, Rio Nuevo, Garbage taxes, the inept Downtown Partnership, a $9 million dollar Visitors bureau with no accountability, many potholes and many other blunders. Our high taxes don’t sound like they are worth it.

5-Yes, he really is retiring. The reason he is so popular is that he is the only government employee in Arizona that successfully ran his department over a long period time. But I digress again.

The point of this is simple. The governments of State of Arizona, Pima, Tucson, Oro Valley, Marana and others need to make this the best place possible to work, own a business, live, play and raise a family that they can. Then and only then should we worry about going out into the void and convincing companies to move here. So until then, Good-Bye TREO. Good Bye, Joe Snell. Vaya con Dios!

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