February 20, 2008, 12:19 a.m.

TEYA VITU
Tucson Citizen  HERE

Uncertainty reigns supreme for a luxury condo proposal at Speedway Boulevard and Stone Avenue that stirred up controversy in the Dunbar/Spring neighborhood for more than two years.

In fall 2006, neighborhood residents were evenly divided on the proposal to have 10 affordable housing units within the 110-condo development. The prevailing half of the Dunbar/Spring Neighborhood Association stuck to its earlier demand for 33 percent affordable units.

One West went away for more than a year.

This week, One West and a new partner, International Sonoran Desert Alliance, returned to Dunbar/Spring with an updated proposal providing 32 affordable units, or 29 percent of the 110-condo proposal.

A few more uncertainties trump obstacles Dunbar/Spring put into play.

Will the City Council override the neighborhood association? Will the alliance get the state low-income housing tax credits necessary to secure $8 million in financing to “buy” the affordable units from One West? What will alliance project manager Jim Wilcox tell his board later this week?

City Council member Regina Romero, who represents Dunbar/Spring, sides with One West, the alliance and the 29 percent affordable commitment more than the split neighborhood’s leaning toward 33 percent.

“I think the right thing to do is give (the alliance) my support to go for the tax credits,” said Romero, whose passion is affordable housing.

Romero lauds Dunbar/Spring for tenaciously sticking to the affordable housing demands for two years, but she believes the split neighborhood’s continued resistance is counterproductive.

“I think they’re stuck on something else,” she said. “I’m really disappointed that the neighborhood is not celebrating their victory (in getting a 29 percent commitment).”

The primary opposition to One West was the 33/29 percent affordable housing dilemma, but individual agendas also surfaced at the neighborhood meeting attended by about 60 people. These ranged from complaints that One West would block the view of the mountains to demands insisting on 100 percent affordable housing for the debated southwest corner of Speedway and Stone.

Yeah, you buy a 1920′s 800 sq ft home in the middle of town for the mountain views and why not hold out for a developer that throws out all concern of breaking even let alone turning a profit. Good luck with that.

The siege between Dunbar/Spring and One West dates back to March 2006. In the preceding months, Dunbar/Spring Neighborhood Association officers won a number of concessions from One West, including lowering the building’s height along Ninth Avenue; enclosing parking within the complex; and building to Leadership in Energy and Environmental Design standards.

All that was for naught when the proposal was presented to a broader group of 40 neighbors. All that mattered then was the affordable housing question.

One West offered six affordable units measuring 750 square feet with the 110-condo proposal, where the typical condo size was 1,500 square feet.

By the time that March 2006 neighborhood meeting was over, the association set a standard that One West must have 33 percent affordable housing. The neighborhood association has a say because about one-third of the land under consideration is city-owned, and the City Council gives serious consideration to neighborhood association decisions.

Surprise ‘serious consideration’ code word for rubber stamp.

Neighborhood affordable housing advocates derived the 33 percent figure from the 2000 city Stone Avenue Corridor Plan, which provided “measures for a livable corridor.” The plan recommends mixed-income housing for Stone with “approximately one-third affordable.”

The One West saga became surreal in August and September 2006. One West went door-to-door in Dunbar/Spring to curry enough support to get neighborhood approval with a 64-40 vote for a complex now offering 10 affordable units. That meeting was the largest known gathering for a Dunbar/Spring Neighborhood Association meeting.

The next month, another sizable gathering of neighbors reversed the August vote, and since then the decision has stood that Dunbar/Spring wanted 33 percent affordable housing from One West.

2007 was a quiet year. One West regrouped and Dunbar/Spring tried to establish a process to avoid month-to-month vote reversals.

One West returned this month to Dunbar/Spring with a revised proposal and a new partner willing to provide 32 affordable units, 29 percent of the 110-condo total.

Albuquerque gets it. Albuquerque is a peer western city that has been beating us to the punch recently. They’ve been scooping businesses, working hard to keep the younger educated class and redeveloping downtown like their future depends on it..wait a minute their future DOES depend on it!

The part that jumps out to me about this post is Albq breathed life into their downtown WITHOUT a $600 million investment from a government taxing district. Groups from different backgrounds came together to get something done. The housing built downtown was affordable, in the $175k range. If you remember the myriad of downtown projects that made big splashes when they hit the local Tucson papers, they all were based on a condo selling price in the high $300k range. That cut out the student and young professionals, the very target you need to jump start a downtown. These are actually pretty good – The Post – El Mirador – Academy Lofts – A Tucson Weekly story

The Arizona Daily Star did a story on Lessons we can learn from Albuquerque, read it HERE.

Since Tucson and Albuquerque both initiated moves to revitalized moribund downtowns in 1999, Albuquerque has surged ahead in amenities, night life and residents, while Tucson remains pretty much as it was.

All this despite Tucson having $100 million Rio Nuevo tax increment financing to work with — now increased to $600 million, something Albuquerque couldn’t fall back on.

So how did Albuquerque make its big move? Five possible factors:

Think small

Downtown-redevelopment endeavors often spend big money on big projects that don’t give a “human face” and a sense of place to downtowns

Make sure the price is right

The biggest mistake condo developers make is getting “too aggressive on prices,” said Vince Garcia, president of the Blue Dot Corp., an Albuquerque condo builder.

Several developers in Albuquerque said that if they can bring in the bulk of their condos in the $175,000 to $275,000 range, they will sell quickly. Albuquerque developments priced higher than that — including the Gold Avenue Lofts and the Banque Lofts — don’t do well and are left with vacant units.

Save (and fix up) your history

Tucson often gets ripped for tearing down much of its history.

Part of Albuquerque’s resurgence has been in redeveloping existing buildings for new uses, creating a uniqueness and a sense of place for downtown.

Hooray for Hollywood

Big tax breaks given by the state of New Mexico have the movie industry booming in Albuquerque, making many young professionals really excited about the city’s downtown.

Losing bureaucratic handcuffs

Many said a huge key to sparking Albuquerque’s renaissance has been scrapping traditional zoning downtown and going to a code that regulates how buildings are constructed instead of setting rules on usage.

What’s in our way of getting Rio Nuevo?

Richard Dineen, the city’s planning director, said the department tries to do a one-stop-shop meeting with developers so they can get all their issues ironed out at once.

“You help people get their things built,” Dineen said. “They have a problem; you help them solve it.”

Good zoning should “make the right thing easy and the wrong thing hard,” said Leinberger, of the Brookings Institution.

That hasn’t been the case in Tucson, where the city hasn’t been kind economically or politically to infill developers, Hein said.

He cautioned that similar zoning in Tucson would be politically difficult because of the commitment to protect the character of neighborhoods.

Here is a great editorial from Priscilla Storm on one of our major issues, land use planning. Priscilla has a daily inside look at our regions issues as the lead government liaison for Diamond Ventures. Diamond is one of the most influential people and companies in our county. Don Diamond started back in 1965 and gained big AZ holdings like the 12,000 acres purchased from Howard Hughes into the Rocking K (Vail area).

Diamond Ventures are masters at taking a long range look. DV deals in the land business as if it were a casual game of monopoly. They land bank to big and small builders, influence the political process locally and give a large amount back to the community via their foundation. Diamond even made some national news during the McCain for President race. From the NY Times

Mr. Diamond, for his part, said Mr. McCain had only done his job. “I think that is what Congress people are supposed to do for constituents,” he said. “When you have a big, significant businessman like myself, why wouldn’t you want to help move things along? What else would they do? They waste so much time with legislation.”

In building his empire, Mr. Diamond said he had struggled with local elected officials over land use and zoning issues just like any other developer. “They are a pain in the ‘you-know-what,’ ” he said.

But associates say he revels in his ability to “work the system,” as his friend and sometimes partner, Stanley Abrams, put it: “Nobody is as connected as Donald.”

Mr. Diamond is close to most of Arizona’s Congressional delegation and is candid about his expectations as a fund-raiser. “I want my money back, for Christ’s sake. Do you know how many cocktail parties I have to go to?”

And Priscilla’s story from the Nov. 16th Inside Arizona Business:

When I moved to Arizona several years ago, I learned about the “Five C’s” economic drivers of our state: copper, cattle, cotton, citrus and climate. I also realized just how important land use was to the economic future of our region. Now, public opinion on our Five C’s seems to have changed.

On Dec. 3, a diverse group of citizens, community experts and leaders will gather to discuss regional land use at the Tucson Regional Town Hall. With the economic outlook dim and all sectors suffering, now is the time to discuss what role land will play in our shared, bright future.

Below is an overview of our current land profile published by public sources. As you can see, only 14 percent of our county’s land is privately owned.

Pima County (total) 100% 9,186 sq. miles, 5.9 million acres

Native American land 42% 3,858 sq. miles, 2.5 million acres

Federal agency/national park lands 28% 2,572 sq. miles, 1.6 million acres

Arizona State Land Department 15% 1,378 sq. miles, 882,144 acres

Private lands 14% 1,286 sq. miles, 823,066 acres

Military bases 1% 92 sq. miles, 58,810 acres

While state land may be available for private development through public auction, in Southern Arizona that process has not been ideal. Of the 14 percent private lands, much is already developed or is undevelopable. In general, there is not an abundance of private land readily available for development, and it is often not in the most preferable location.

Local land-use policies also reduce private land available for future regional development. For example, development proposals are required to set aside 30 percent acreage within each project for compliance with the Native Plant Preservation Ordinance. In addition, the nationally-recognized Sonoran Desert Conservation Plan has regional guidelines for natural, undisturbed open space set-aside acreage ranging from 66.66 percent to 95 percent throughout the region.

Important riparian areas – 95% open space

Biological core – 80% open space

Special species management areas – 80% open space

Multiple use management areas – 66.66% open space

Additionally, in 2004 voters approved bonds for the acquisition of open space, further limiting private lands for future development. It is also important to consider that public infrastructure may require an additional 15 percent to 20 percent of the land.

Our community’s shared vision and values will impact future land use and the crafting of a regional land use plan. Some key items to consider:

• Historic and current versus future residential densities. Historically, even our most dense neighborhoods are low density by urban planning standards. Redevelopment of low-density areas and strong market acceptance for higher density are important considerations.

• “Growth” has not been perceived as a community benefit. Citizens often protest residential, apartment, commercial, office, retail or manufacturing land uses. Thus, crafting a regional land use plan that promotes quality growth AND preserves our important cultural and natural resources is important.

• Priority has been given to the “unbuilt” environment. As a community, we traditionally tackle one land use topic at a time. Now, it is important to consider and advance several key aspects of land use planning simultaneously; including the “built” environment.

• Our community is dependent upon public sector jobs. Attracting and retaining companies and higher wage jobs to our area and allocating land and resources for job creation is important to our region’s future viability.

• Equitable sharing of the costs for maintenance and expansion of roads, water and wastewater required for a healthy, progressive regional community.

• Regional common long-term goals and differing interests of member jurisdictions.The members of Pima Association of Governments vary in geography, control over land, resources and population. Balancing interests throughout the region for shared success is critical to crafting a regional community.

• Sustainability should be shared by both existing community members and future development. Federal, state and local regulation may provide new incentives and options to advance these concepts. In planning our shared future, market-driven solutions should be considered.

In preparing for the Dec. 3 Regional Town Hall, I propose “Five New C’s” for community-wide discussion on successful future regional land use planning:

• Candid discussions

• Changes in how we work together

• Collaboration and compromise

• Costs shared by current residents and future growth

• Community inclusively defined, a “regional community” deserves priority

We must work to build trust among stakeholders that have been historically distrustful. The traditional model of leadership, decision-making and public policy influence must be modified. A shared regional vision and land use plan will come with a large price tag and a long-term commitment from every current and future resident, business owner and organization.

Growth is not the “enemy” of this community. The balanced use of land and natural resources for jobs, community services and housing are essential to our shared quality of life.

To attend the Tucson Regional Town Hall on land use, call 1-800-321-5011 or email Shelia.hamilton@uli.org. Priscilla Storm is vice president of Public Policy and Community Planning for Diamond Ventures, a Tucson-based real estate development and investment company.

A step towards a regional fix to our problems OR another group that does nothing? Only time will tell.

The 2007 Tucson Regional Town Hall was an exercise held last summer here in Tucson. The Town Hall was designed to indentify and hopefully fix some of our regions issues.

The Town Hall was organized by Southern Arizona Leadership Council. SALC is Tucson’s CEO brain trust. So far the group is good at putting these things on but we’re not sure how good they are at the implementation. SALC’s effectiveness during the recent Regional Transportation Authority plan is notable, let’s hope they can repeat.

With the Town Hall behind us, we’ve identified what our problems are but the million dollar question is ‘NOW WHAT?’.

The AZ Star’s Sam Negri had some interesting thoughts on the Town Hall:

It was with a clenched jaw and a stiff neck that we approached the report and recommendations of the Tucson Regional Town Hall, a document released to the public on Wednesday.

After all, the town hall, a meeting that involved approximately 160 participants selected from a much larger group of applicants, had spent roughly 30 hours in May focused on issues that are hardly new to Tucson residents.

We cannot say anyone will be startled by the findings in the town hall report. But that’s less a reductive statement than it is an acknowledgement, sadly, that the region’s problems have remained more or less constant for years.

It is impossible to overstate the importance of building a community that remains focused on the need to convert talk into practical decisions. In the past, we’ve tended to react to problems later rather than sooner, in the process creating the negative consequences we then criticize and organize town hall discussion groups to address.

It’s a closed loop that needs to be broken.

The town hall discussions were initiated by the Southern Arizona Leadership Council, or SALC, and conducted under the sponsorship of 33 public and private organizations, including the Arizona Daily Star. Each of these groups has a vested interest in practical results.

In the end, the town hall discussion pointed to a simple fact: The Tucson region must do more for itself.
The town hall that SALC put together dealt with much of what we already know, including the belief that there is considerable talent in our region. It also illustrated that there is a nucleus of individuals who are genuinely concerned with the future.

Those participants were a fraction of a much larger group that is ready to set aside the cynicism of the past and finally address the future as though we will all be here forever. For that, future generations will be thankful.

Contact editorial writer Sam Negri at snegri@azstarnet.com

Two months ago, a novel concept was introduced for the Tucson Regional Town Hall: This gathering slated for Sunday through Wednesday at Loews Ventana Canyon Resort would feature not just the “usual suspects” but would include people who range across the socioeconomic spectrum.

Guess what? The 159-delegate field is woefully top-heavy with usual suspects, with barely a trace of the worker bee beneath the executive level.

There’s a freelance writer and a creative writing teacher in the prison system, but beyond that the region’s future will be discussed almost exclusively by top-boss types. Some 74 participants have the title “president” in some way, 23 are executive directors, 14 are chief executives, all the county’s mayors are on board as are six of seven members of the Tucson City Council and three of five Pima County supervisors.

Not a soul from the retail-sector trenches to be seen. Not a single teacher from the K-12 trenches.

The common man (or woman) will not be present.

That is a travesty because the non-titled folks – likely those among the 700 who applied for the Town Hall but weren’t picked – often bring up practical and even profound ideas that would never bounce around in boardrooms but could just be the solutions for Tucson’s woes.

The roster was picked by the Southern Arizona Leadership Council, which is coordinating the Town Hall, and the Arizona Town Hall, the organization that is moderating the event. SALC did the hand picking of mayor and CEO types, and SALC culled the field of general applicants – and sadly picked out the exact same executive-caliber candidates.

Diana Rhoades, 40, applied while she was an outreach specialist at the Sonoran Institute but was not picked – not high enough on any totem pole, apparently.

“I was disappointed,” said Rhoades, now campaign manager for City Council candidate Regina Romero (a chosen delegate). “Some people who were invited said this is the same old people. I was excited about taking part. They said they wanted young people, new people. I wanted to bring the conservation angle, smart growth angle. I live downtown. I walk everywhere.”

Arizona Town Hall President Tara Jackson in an earlier interview said she looked for applicants with demonstrated leadership skills. That’s fine for part of the field, but you can’t have a delegation entirely composed of leaders.

Tucson needs fresh voices, input from the younger generations, people new to the process who can break through the doldrums of thinking in baby steps.

The Tucson establishment of “usual suspects” has proved that by itself it doesn’t have the moxie to give Tucson the push needed to get the region ready to become a 2 million population metro area.

Ron Shoopman, SALC’s president, insists that this Town Hall process will inject new vigor in these “usual suspects.” He pointed out the embryonic successes at regional cooperation last year with voter approval of the regional transportation plan and Joint Technological Education District, which will allow the region’s school districts to have shared technology education resources.

“The RTA and JTED are both examples of groups from different walks of life coming together for a common cause,” said Shoopman, a retired Air Force brigadier general. “I think there’s energy in this community we haven’t seen before. We’ve always had the same outcome because we’ve had 100 groups working independently on the same issue. Now, if we can get those groups working together on those issues, we have a chance to make changes for the better.”

This Town Hall was an ideal opportunity to bring a new generation to the table.

Now we will once again have to desperately hope these 159 people can get through Tucson’s brick wall: We meet fantastically but don’t have much of a track record to take the next steps after a meeting.

Teya Vitu covers downtown for the Tucson Citizen and for six years has watched the endless false starts or tiny steps taken here in economic development.

National and local retailers are closing their Tucson stores.

Bankruptcies continue strong, and more home foreclosures are predicted.

The City of Tucson already has set a record for most murders in one year. Property crimes are holding their own, and courts and jails are crowded.

Rio Nuevo, the vehicle for renovating Tucson’s downtown, is stuck in park … or reverse.

Some reports indicate that some of the shows that make February gem and mineral month for us will be off to Las Vegas or elsewhere by 2010.

Tucson has no firm agreements to start a new downtown arena, convention hotel or exhibition hall. Some state legislators want to reduce or eliminate the tax-increment financing they approved in 1999 for Rio Nuevo.

Financial observers say Tucson’s bond rating may be so low that most of the money it could raise by selling state-backed bonds for Rio Nuevo would go directly to pay off interest.

Major League Baseball’s spring training presence here since 1947 is in danger. The Chicago White Sox will start training in Glendale in March, and with no replacement team in sight, the Arizona Diamondbacks and Colorado Rockies will probably follow them out of Tucson.

For the second year in a row, city sales tax receipts are far less than expected. So are state-shared sales and gas taxes that help keep Tucson’s government going.

If the situation sounds gloomy or serious, it is.

Yet Republican Mayor Bob Walkup and Democratic ouncil members Regina Romero, Rodney Glassman, Karin Uhlich, Steve Leal and Nina Trasoff seem more interested in other things.

Democratic Councilwoman Shirley Scott has talked openly about some of the problems and possible solutions while some of her colleagues have been traveling to Israel, China and elsewhere in recent months.

When in town, the council members discuss plastic sacks, join their aides in making clay figures of imaginary Martians, propose transfer fees for property sales and cut contributions to nonprofits that are already stretched thin from helping Tucsonans find food and try to keep their jobs, homes or savings.

Most recent council proposals have had little to do with the economy, employment, crime or encouraging development.

When City Manager Mike Hein told council members last month that Tucson’s anticipated shortfall for this fiscal year was more than anticipated, they told him to return later to suggest what cuts to make.

Then they tossed out ideas to raise building costs in the city by adding requirements for handling gray water and irrigating trees and bushes with rain harvested from rooftops and parking lots.

Walkup and Glassman tapped their office funds to buy canvas tote bags with their names on them, hoping people will use them instead of plastic sacks to carry their purchases.

Want to bet dog owners won’t switch from plastic to canvas for Fido’s droppings?

City officials should focus on accelerating public and private projects that will put Tucsonans back to work so they can keep their houses, pay their taxes and have enough left to buy food and other items that will boost sales tax collections.

The only out-of-state trips elected officials should take are to visit firms Tucson Regional Economic Opportunities feels are hot prospects to move here.

They should forget about new rules for certificates of occupancy and let small businesses open, move to larger quarters or add local branches more easily.

The council also shouldn’t waste money appealing Superior Court Judge John Kelly’s ruling that their new demolition ordinance is unconstitutional. Giving neighbors and other busybodies veto power over an owner’s right to tear down his own property was a bad idea.

Instead of no longer helping the Community Food Bank load and transport food for the poor, the council should cut or reassign employees who censor, print and mail neighborhood newsletters or who delay every proposal Tucsonans submit to them.

Then the city could hire more people to arrest criminals, fight fires and patch potholes.

What a novel idea!

Contact Steve Emerine or e-mail comments for publication to editor@azbiz.com. Emerine, a Tucson resident since 1960, has run Steve Emerine Strategic Public Relations since 1994. He is a former local newspaper reporter, editor and columnist and served as Pima County Assessor from 1973 to 1980. He is a regular Monday guest on the John C. Scott radio talk show, which airs from 7 a.m. to 8 a.m. and from noon to 1 p.m. weekdays on The Voice KVOI 690-AM. This column appears weekly in Inside Tucson Business.

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We’ve reported here in the past that Arizona and Tucson in particular is too dependent on growth related industries for it’s economic engine. The premise of this article is that from the ashes a phoenix will arise. The darkest hour is just before dawn.  Our economy is taking such a hit due to our over dependence on housing that our leaders and elected officials are looking to diversify away from growth and construction to diversify our income stream.  In order to make that step we must take a long range look at the underlying variable. We must train our workers to be prepared for the new industries. We must bring along our elected officials and government bureaucracies so they have time to get out of the way or create pathways to help industry get things done.

Experts: Now is time to retool Ariz. economy

14 commentsby Chad Graham – Nov. 16, 2008 12:00 AM
The Arizona Republic

The Valley’s economy could start to recover in 2010.

That is when some economists believe the glut of excess homes will be absorbed and new residents will spark new construction.

But if history is a guide, metropolitan Phoenix will only seem to rebound. Despite decades of real- estate run-ups, quality-of-life measures for the region continue to fall.

The region remains incredibly vulnerable to wrenching booms and busts because it’s too dependent on industries related to population growth.

Seeing the damage inflicted by the current crisis, a growing number of development experts, business leaders and lawmakers say it’s more critical than ever to diversify the economy. Recruiting companies that make products for the solar-energy industry and luring other advanced-manufacturing jobs could help, experts said

“The wake-up call is really, really loud this time,” said Rob Melnick, executive director of ASU’s Global Institute of Sustainability.

When the housing market rebounds, it could be less profitable. Expected changes to the financial industry will keep lenders from “giving away all these mortgages that made Arizona look so good,” he said.

Arizona has made some inroads to diversify its economy.

The state has a fledgling bioscience sector. In June, the nation of Luxembourg announced a $200 million research partnership that included the Translational Genomics Research Institute and Arizona State University.

There is also Arizona’s traditionally strong semiconductor and defense manufacturing foundation, even though those industries have taken near-term hits. This month, for example, Phoenix-based Honeywell Aerospace said it plans to move 700 manufacturing jobs from Phoenix to Mexico and the Czech Republic.

Although further diversifying an economy during troubled times may seem impossible, it has worked for other ailing regions that once depended too much on a single industry. San Diego, for example, added biomedical sciences to balance its military- and real-estate-based economy.

“One hundred percent of the best economic work done in the United States is done during periods like this,” said Barry Broome, president and CEO of the Greater Phoenix Economic Council. “Periods of prosperity usually create periods of complacency.”

Rep. Lucy Mason said the economic downturn was a wake-up call. “It feels like we’ve been sucker-punched,” said the Prescott Republican. It’s a sign that Arizona should have better diversified its economy over the past decade, said Mason, who last session got a bill passed that extended a property-tax break for renewable-energy plants.

The tax break was a key incentive for the Solana Generating Station. Billed as the world’s largest solar-power plant if it were operating today, it is on track to start producing renewable energy in 2011. Its total economic impact is estimated to be $1 billion.

The economic council and other groups continue to support calls for additional tax incentives for solar-energy companies.

Cultivating a solar industry is but one initiative economic leaders are pushing.

Finding better ways to develop the state’s workforce, establishing better cooperation among companies and increasing partnerships with universities will be the focus of the Governor’s Manufacturing Summit next month.

The economic crisis has given the event a new sense of urgency, said John Little, director of operations for the Arizona Manufacturing Extension Partnership, which helps manufacturers become more globally competitive.

Manufacturing pays high wages and is a counterbalance to the service and tourism industries, he said.

“So many people look at manufacturing like it’s the old, dirty machine shop,” he said. “It’s not, especially when you get into advanced manufacturing.” Those jobs defy old stereotypes of assembly-line setups, employing workers with more skills and even college degrees to turn out precision parts for a high-tech economy.

To be sure, diversifying the economy does not replace growth-related industries like housing. Construction and service-industry jobs typically indicate that an economy is growing.

“People are still going to move (here). Those fundamentals are not going to change,” Melnick said. “The only thing we can change is our investment strategy to try to diversify the portfolio.”

 

Another great article HERE.

Boom-bust cycle leaves lessons still unlearned

1 commentby Chad Graham – Nov. 16, 2008 12:00 AM
The Arizona Republic

For decades, leaders have worried that Phoenix was too dependent on growth. With each bust, they vowed to add a better mix of jobs and industries.

But then another growth spurt would wash over the state and drown out the concern.

Some experts argue that is how the economy will always function.

But this strategy keeps the region from being a serious competitor in the global economy and decreases the quality of life, federal and state data suggest.

About 20 years ago, the Valley found itself in an all-too-familiar predicament.

The savings-and-loan scandal and the ensuing real-estate crisis sank home values and increased foreclosures.

“Arizona has been on a binge, a long one,” one banking regulator told the Los Angeles Times.

Business leaders vowed to diversify the economy.

But the next boom that started in the mid-1990s and lasted through 2007 was fueled by growth. The only real period of decline came after the dot-com bust of the early 2000s.

From 1991 to 2006, job growth in the Phoenix area measured in the top 10 nationally.

Despite the prosperity, concerns mounted.

The economy “disproportionately contains industries that respond to sheer growth: construction, real estate and utilities,” a Maricopa Association of Governments report warned in 2003.

In the end, the boom did not appear to improve the quality of life of Valley residents.

In 1990, Valley per capita personal income ranked 110th out of 363 U.S. metropolitan areas. In 2006, it slipped to 123.

Reach the reporter at chad .graham@arizonarepublic.com.

Another HERE.

Manufacturing helps cushion against crash

Unlike housing, industry weathering slump without big cuts

2 commentsby Chad Graham – Nov. 16, 2008 12:00 AM
The Arizona Republic

Vantage Mobility International is the kind of manufacturer that adds diversity to the Valley’s growth-based economy.

From its Phoenix assembly line, it retrofits mostly Honda and Chrysler mini-vans for disabled drivers. It is the only company in the world with permission to alter American Honda Corp.’s vans.

Its workers range from engineers to assembly-line workers. Last year, it even recruited laid-off auto-industry workers from Detroit.

The company boomed along with metro Phoenix.

In 1992, VMI employed about a dozen workers who retrofitted about 70 vehicles annually. In 2007, it employed about 220 who turned out about 2,500 vehicles.

The Valley’s manufacturing industry and construction industry have performed very differently in the current crisis, according to Arizona Department of Commerce data.

Between September 2007 and September 2008, manufacturing lost 1 percent of its workforce compared with 18 percent for construction.

Advanced manufacturing, which employs workers with higher levels of education and training, did better, as well. Employment at computer and electronics parts makers in the Valley fell 1 percent. Aerospace products and parts makers gained 0.7 percent.

Although overall job losses in manufacturing could widen as the economy sputters, the industry has provided some economic stability during the burst of the real-estate bubble.

If the state wants “to tip the scale so that we’ve got a balance between the service industry . . . and high-tech manufacturing, it’s going to take a statewide acknowledgement that you have to invest to keep that,” said John Little, director of operations for the Arizona Manufacturing Extension Partnership.

“A cohesive state strategy could find ways to invest in the growth of the manufacturing community and the growth and education of its workforce. This leads to high-paying jobs with benefits.”

The partnership, a non-profit organization that provides training and assistance to manufacturers, is a host of the Governor’s Manufacturing Summit next month. The event will examine ways the state can develop its manufacturing workforce and better unify the industry.

That will be even more critical as the global economic crisis impacts much more than the housing industry.

VMI, like other Valley companies, has taken a hit. It had no choice but to recently lay off about 15 percent of its workforce.

Still, VMI remains an employer of high-tech jobs. The company continues to make research and development a priority. It employs a wide range of engineers.

It has launched the retrofit of the 2008 Chrysler/Dodge minivan and a new kind of ramp for the Honda Odyssey.

“We’re still developing quality products,” President and CEO Doug Eaton said.

Dave Hatfield over at Inside Tucson Business put out an editorial last week and finally came out and said it. TUSD was formed from 4 or 5 school districts back in the day where when it came to education, bigger was better.  In our current day and age that concept just won’t cut it. Students and parents demand more up close and personal experiences. The charter schools are flourishing because they are addressing the needs of the student/parent better than the one size fits all humongous school district model.

Our poor education system can most definately benefit from additional dollars. Voters lack confidence in the way their dollars are being spent so they refuse to vote for more money down the rabbit hole.

TUSD’s problems can’t be fixed

By David Hatfield, Inside Tucson Business
Published on Saturday, November 15, 2008 Click HERE to read the full article.

Tucson Unified School District lost another one when voters Nov. 4 once again rejected the district’s request to exceed a 10 percent override of its operations budget. A person in business might be tempted to shrug off the loss without much surprise. After all, any business that has operated as poorly as TUSD would have been out of business long ago.

But as a taxpayer-supported entity, TUSD’s bloated bureaucracy, mismanagement and arrogance survived.

Being the largest school district in Pima County, TUSD’s failures are hurting this region’s hopes of being able to develop an educated, competitive workforce for when we ever get ourselves out of the national economic mess we’re in right now.

TUSD officials need look no further than themselves for the reasons why the override failed. 

Yes, this was not the best year to ask taxpayers for more money but voters in Altar Valley, Catalina Foothills and Flowing Wells all approved school spending measures on Nov. 4.

Yes, teachers are underpaid but they’re notoriously underpaid throughout Arizona. Teacher salaries in TUSD are higher than most other local districts.

Yes, more children should have exposure to TUSD’s Opening Minds Through the Arts program but not everyone would have received it, even if the override had passed. Voters were left to figure out for themselves if their neighborhood school would have received it. Not a good position to be in with TUSD administrators’ history of not being forthright.

Yes, students stuck in TUSD’s academically underperforming schools should have the resources they need to get on pace. But TUSD’s decision-makers still don’t get it: A few weeks ago I drove by Duffy Elementary School, 5145 E. Fifth St., and the marquee carried this notice: “Yeah—We’re a performing plus school.” That’s it? That’s what you’re going to boast about? Getting an achievement profile from the Arizona Department of Education that is the equivalent of getting a C+ or B- on a report card. 

It took TUSD a long time to get as bad as it is. It could take longer to try to fix it. So let’s not fix it.

That’s right. Let’s do away with TUSD as we know it now. Break the district up into, say, three or four separate school districts. Some of the fringe areas could be moved into the neighboring districts of Flowing Wells, Tanque Verde, Catalina Foothills or Vail. They’re all districts that have better community support and more success in educating children.  

Studies disagree on the optimum size for a school district, but most generally agree smaller school districts allow for better student achievement because of the closer interaction between educators and families.

Further, virtually every study has found there are few efficiencies that come from very large school districts. Andrew Coulson, of the Cato Institute’s Center for Educational Freedom, studied optimal district size in five states (California, Florida, New York, Michigan and Texas) and concluded: “If (the) goal is to save tax revenues, then deconsolidation is a better option.”

Public schools aren’t broken. TUSD is broken. It’s time to get rid of it.

E-mail comments for publication to editor@azbiz.com. Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237.

Regional Land Use Roundtable: Challenges and Opportunities

With Pima County population reaching one million and with over $2.5 Billion in land transactions since 2000, Tucson is planning for the next one million people. Regional land use will play an increasingly important role in how current communities develop and new growth areas emerge. The initial ground work has been laid for the next generation of large scale master-planned communities and mixed-use activity centers.

Posted in Features | Keywords:April 2008, Cover Feature

Cover Feature April 2008

In dealing with the region’s land use constraints and transportation options, there are community leaders and organizations working diligently to ensure that Tucson’s future is as exciting and vibrant as its past. This month TREND report sat down with community leaders including Ken Abrahams, Executive Vice President, Diamond Ventures, Andy Gunning, Director of Planning, Pima Association of Governments, Mike Hammond, President/CEO, PICOR and SO. AZ ULI Chair, Robin Shambach, AIA, Principal, Burns Wald-Hopkins Architects and past-president of So. AZ AIA, and Ron Shoopman, President, Southern Arizona Leadership Council.

Ron: The Southern Arizona Leadership Council co-sponsored a Tucson Regional Town Hall last May in an effort to find consensus solutions for top issues facing the region. We evaluated the work in progress in our region and we selected topics where there was a possibility for success. One of those areas was land use. The American Institute of Architects, Southern AZ chapter was completing a design sustainability assessment team project. ULI was planning some major land use planning meetings. We knew that PAG, and all cities and towns were interested in the land use process. So we felt that land use planning was an area where the community was ready to engage. The people around this table have all been in land use discussions with us about what to do next and to highlight the work that’s being done by AIA, by ULI and meet some of the goals that the municipalities and PAG would like to see happen. So you catch us at a time when we’re still identifying how we would do this process. We’re using the RTA success model, thinking “How do you make change in this region?” On any topic we start by elevating the understanding and awareness of the people who live in the region, then bring a diverse group of people to the table to share ideas and find common ground. Finally we will use the results to formulate a plan for positive change.

Mike: Tucson’s not unusual compared to other communities. All across the U.S., there’s more of a grass roots need to get information to make decisions and our politicians, in my opinion, struggle immensely to understand their constituencies because we send mixed messages. So the need for some sort of consensus building process in all the debates on the major issues facing this community is very important. And that’s what’s happening with the Star’s Growth Forum, the Arizona town hall, and the Tucson town hall. They’re trying to find consensus and trying to create processes that include more and more people so that when we get a result it’s clearly a community consensus. And right now, we have not built that majority view on a lot of important issues. So we need clarity of message and we need to change the way we’ve been doing it in the past. It just hasn’t worked well. So, ULI for example is trying to take a stronger role with what they bring to the table, which are best practices. Also, they have a broader constituency-the environmentalists, the academics, the developers, and the politicians are all in their tent, so they have a lot of credibility when they become part of the process. We don’t have the luxury of the inefficiencies of past processes. These problems are coming too fast. They’re too expensive and they’re too complex. Unfortunately the process of getting the involvement is what’s hard. I think the clarity of message, if we can get the consensus building process in place, will flow from that as much as you can in a community like Tucson.

Robin: Are we at a point in Tucson where not only are we faced with these land use issues, but is it also a more difficult development climate in terms of certainty?

Ken: It’s a very important question. And it gets to why Tucson has such great potential but hasn’t achieved it. One reason is that Tucson is an undercapitalized community compared to any million population community. Why? Capital goes to where it has the greatest return and the lowest risk and because it operates the way it does, in many ways Tucson represents a higher risk for the rate of return compared to other places. So capital flows to places where it has more security and either equal or greater rate of return.

Robin: I think that idea of certainty or some level of predictability is one of things that inspired us initiate the sustainable design assessment team report. The idea of sustainable design is not new. It’s all the things that we’ve been talking about; we just came at it from a slightly different direction. But some of the smaller discussions that inspired us to do something were more project by project based where within the city limits there is that level of uncertainty. Whether it’s by interaction with neighborhoods, or whether it’s by unpredictable interpretation of our land use code. And so those are some of the pressures people trying to do neighborhood sensitive projects, the timelines drag on, the success rate of the projects in terms of the business model is very frustrating.

Ken: Our architects talk about the same thing. At the ULI Trends Day in Phoenix, the keynote speaker was the Mayor of Phoenix. His goal is to make Phoenix a model sustainable city and he said they cannot get there without completely redoing the land use code because they can’t build density and activity centers and then went one step further saying “we have to change the way our referenda can repeal zoning.” They couldn’t get anything through the zoning process to increase density because while everyone loves it, nobody wants it near them. I think Tucson is behind where Phoenix is. We’re kind of caught-We met the enemy. It’s us.

Mike: There are a lot of overlays that make development difficult here, but when it comes to land use, there are those who think that by creating these hurdles, they can slow growth. What they do is redirect it. They squeeze out the little guy. They bring in the folks with cash that can buy a property and sit on it. So you get winners and losers. When you make it so tough to develop, you raise prices, money transfers to those with entitlements and patience. It’s the folks that invest their money that take the big risk and hopefully obtain the big reward. But we are creating huge uncertainties and in that uncertainty there is risk, and in that risk there is reward. What we’re trying to do in this discussion on the debate on land use and growth is really “What are the trade-offs? Do we want to trade off affordable housing for, for example growth rings, where you’ve got to be in it? That’s one of the trade-offs. You don’t get affordable housing in growth rings. You’ve got winners inside, you’ve got losers outside. The debate on land use is really one of priorities. Tucson is going to continue to grow, but I’m not sure it’s the kind of growth we want. I think, on balance, we want good growth, not bad growth.

Ken: One of the things we talked about recently with the ULI steering committee is how do we do regional planning? There’s all this mistrust. It’s part of that winners/losers mentality. Our regional discussions, whether it is water, land use planning, are a challenge. I think we had a victory with the RTA, but there’s no question that there’s going to be another plan, another funding round or two in the future and they’re going to get tougher. But whatever it is, when we look regionally, it is set up as a win/lose and we have to get past that. The RTA was successful because it was a win/win. It wasn’t the perfect package, but everybody could agree on it. It started with some general principles and then got down to specific projects.

Mike: Don’t forget there was great consensus building and community involvement.

Ken: Right, it started with that, but then got down to some agreed upon principles. It’s a process of bringing everybody together on some common basis, developing some broad principles we can agree on, then setting the level of detail at the appropriate level to get at least a broad vision. What hurts us is while we’re trying to calm the waters, there are people firing things in all the time. It rocks the whole landscape and it needs to be quieted now. If you look at great communities, there’s usually an individual who rises up and pulls everyone together. There doesn’t seem to be that individual in Tucson. So we are disadvantaged from that. It takes leadership. That’s why SALC has gotten to where it is.

Andy: Great observations. I think we can rise up and find a win/win situation from a regional standpoint. We call it sort of a regional framework. We’ve got an opportunity right now where because of growing smarter planning statutes, some of the agencies may be updating their general long range plans starting next year and wrapping them up by 2010. PAG’s also going to update our long range transportation plan that includes the RTA projects. But if we operate at some broad framework where we understand where jurisdictions want to grow and don’t want to grow, then we can come up with some ideas to make our infrastructure, capital improvement plans, wastewater plans, transportation plans more in sync with these growth areas. We just get everyone’s growth areas and land use plans on a map. We figure out how we can serve them. It also gets to a public finance issue. We know we’ve got at least a $4+ billion shortfall between now and the year 2030 with all the transportation infrastructure need we have out there. One of the things we’ve been looking at is how much revenue over a thirty year period is going to be generated. On the other side of the ledger, what are our big infrastructure needs going to be over that 30 year period and when do we go into the red or have we gone into it already. That should help us move toward getting our infrastructure in sync with our jurisdictions’ growth areas.”

Mike: I know a developer who built industrial buildings in Tucson and whenever he’d do a pro forma for a building, he would add 10%. When asked why, he said, “I can’t pick any one thing, but on balance it costs us 10% more to develop here than in Phoenix.”

Robin: One of the things I’ve really noticed in Phoenix is the quality of the development work, communities, and commercial buildings. They’re generating more interesting designs and using nicer materials. And that has to be part of what you were talking about with capital injection. I still think there are things we can learn from how that community has grown that I would prefer not to see here. But that’s why we’re having this conversation now instead of when we are six million people. There are some things I’d really love to see here in terms of quality. I think that leads to what we are all talking about-job creation. I know there’s going to be growth, but what kind of growth? Good or bad?

Ken: This capital investment issue may be framed in a broader discussion, which you’re touching on. It goes to the culture, the educational institutions and job opportunities. How does Tucson rank as a performing community? If we were compared to other 1-3 million population cities, how would we rank in terms of GDP, number and quality of jobs that are created, the educational performance of our institutions? We export our greatest natural resource, which is our children. We have a great climate, beautiful natural resources, proximity to Mexico, a wonderful southwestern lifestyle, and underdeveloped infrastructure. So why is it that we are where we are? I think if we rated Tucson on a performance basis, we’d rate relatively low. We may be one of the greatest underperforming communities in the developed world. Certainly in the southwest and maybe in the United States. So you have to ask yourself “Why? Why is that that way?” Why are we less competitive? Why don’t we attract capital? When TREO did its blueprint, “poor leadership” was number one on the scorecard. We’re losing out on the dynamism of that million population base because we do not have a collective sense of direction. When you get to a certain population base, that dynamism is supposed to kick in.

Robin: It seems like the time is right. We have momentum and interest. I would like to see us do something more-the next thing. The idea is not to do a land use plan but it’s more to instill in the community as a whole the need to create that kind of dynamism, really harness that energy to make some decisions.

Ken: I like where you’re going. We need to figure out what the next step is going to be. We’ve been working hard in our ULI steering committee with how the Reality Check is going to fit in. One of the sticking points is the magnitude of it as well as the difference between doing one in Phoenix vs. doing one here. There are serious differences in terms of how everything works. Phoenix is very used to pulling together. They’ve decided to be a great regional center. Tucson, I can’t say what we’ve decided to be. We want to observe what it is all about before we fully sign on to the Reality Check down here. The other is we’re not sure it’s going to work here. If we don’t have buy in to the process as a legitimate planning effort, and as a follow-up to the Tucson town hall process, with its results having meaning in whatever the official land use regional discussion is, then it’s probably not worth doing.

Robin: I really like the idea. Because it’s education and it’s also light bulbs going on. The idea of choice. And what if we do choose that we’re going to be a big small town?? Great. What does that mean to us? And when you talk about a framework, I have no idea what that means. So, giving some examples that people could respond to might be useful.

Ken: Andy said something that was very important though. And that is the financial reality. What’s happening across the United States, is the cost of infrastructure has spiraled out of all proportionality to the revenue streams that growth is able to fund. Ultimately, Reality Check says you can’t have it all. You have to make choices. The problem with planning here in Tucson is that it’s a kind of ‘you can have it all’ kind of planning. If we’re going to do real regional planning, it has to be based on certain fiscal assumptions as well. In Phoenix, they’ve decided to be a prosperous regional hub. They’ve committed the resources to make it happen. We haven’t made that fundamental statement as to what we’re going to be. If we say we’re going to be the last big ‘small town’, then we can start taking things off the list.

Andy: We’ve got a million people, and if we’re going to have room for another million, what does that look like using the same land mass? Can we afford all the service and infrastructure demands under that scenario?

Ken: The first insight into this is the Southwest Infrastructure Study that the county just did that concludes that the impact fees for all the physical infrastructure is close to $20,000 a house. That’s where the affordable houses are going to go. The county has designated that a growth area but I think those costs are going to prove problematic for most people wanting to live there. The county plans to do a series of these studies in the region. This could result in forcing growth to other areas that will accommodate it. So what we get is kind of an older urban center that is relatively low density.

Ron: I do see a shift in the way that this community views itself. I now see people working together with a whole different attitude. We’ve got to be able to get the elected officials to start hearing the public’s desire for change. If we’re successful in continuing this conversation, I think we start moving and keep the pressure on. I think we need to keep moving the community towards the things that will give us the choice. Not to choose the direction for the community, but to allow the community to decide for itself. Whether we become a vibrant community with a high quality of life or a big ‘small town’ with low paying jobs, that should be a conscious choice by all the people who live here.

Mike: I do think there is more interest in the business community to get into the game. Whether it results in the elected officials hearing remains to be seen. But that’s when they will change is when they hear the message. So we’ve got to keep the debate out there.

Ken: We know we want to have a discussion on land use and regional planning, then what happens after that? Let’s assume one option would be there’s a Reality Check early next year. The other question is “What would we do programmatically to segue way from the Arizona Daily Star survey and forum to a conversation on regional land use. What would be the follow up if we didn’t have Reality Check? Is it really talking about principles and trying to refine it or would that be a product of the conversation?

Ron: It could be something as simple as, we come out of that meeting with information that we provide to every municipality and say “We had 700 people, here are the surveys we conducted. Here are the results. You ought to consider this in your plans, because the message was strong. They said they wanted this, regardless of where they lived.” I think it would be possible to come up with something that feeds into the planning process.

Ken: How do we get the municipalities on board?

Ron: Part of it may be that we have to go in and disarm them and tell them that what we want to accomplish with them is first, non-threatening to them, and second will help them. And there’s something in it for them.

Robin: I do believe there’s a place for government to define some of the things we are talking about in terms of infrastructure and taking the financial burden that individual developers can’t afford to do. If that’s transportation infrastructure or wastewater infrastructure, then these kinds of activities and consensus building mean that maybe people are more open to supporting that financial picture. Instead of impact fees we have a more structured governmental approach to support infrastructure and the kinds of things we want to see in our community. If these are the kinds of things that we’re saying as a community that we want, then somebody better pony up and pay for them. And maybe it’s all of us. Because we’re not going to have people invest in our community until it looks like we want to invest in our community.

Ken: You made a key point. Why would someone else come in if we don’t even have the interest ourselves? If you look at what Phoenix has done, they’ve created a magnet, because they created a statement, “We’re going for it. And we’re going to be a great thriving community and economic engine.” That’s what they did. And everyone said “OK, I want to be a part of that.”

Ron: We need to create that statement for us.

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← Pima County’s SWIP May Set Precedent for Valley

As a the owner of a commercial retail center with a tenant that moved out in the middle of the night, I’m a tad bit concerned about the current retail leasing market.  The phone hasn’t exactly been ringing off the hook. The national and local downturn is hitting our center as it’s hitting retail spaces around the our region.  In a growth cycle, housing booms, commercial follows rooftops and all is well. In a downward spiral the retail slows after housing. Well retail has ground to a halt in a matter of months. Read  more here:

More retail closures, and vacancies, loom in Tucson area

By Josh Brodesky

Arizona Daily Star

Tucson, Arizona | Published: 11.07.2008

As the economy slumps, the list of retailers closing in Tucson will likely get longer, making vacant storefronts and empty big boxes common sites across the Old Pueblo.

Already, American Home furniture stores, Linens ‘n’ Things and Mervyns have announced closures. Retail vacancy in and around Tucson has risen to more than 8 percent, and many working in commercial real estate say they expect that number to keep rising.

As it does, they said, rents will likely decline and many commercial projects will be put on hold.

“I don’t think we’ve hit bottom,” said Linda Montani, a retail specialist with Commercial Retail Advisors. “It’s a real volatile time right now.”

Most estimates through the second quarter place retail commercial vacancies at about 8.5 percent, up from 6.9 percent at the end of last year, according to the commercial real estate firm CB Richard Ellis.

“I think that between now and the end of the year that number will climb higher,” said Pete Villaescusa, first vice president for CB Richard Ellis. “Consumers are not spending like they were a year ago, and the retailers are feeling that. People are holding off on major purchases.”

Third-quarter reports from Picor Commercial Real Estate Services for office and industrial space in the Tucson area placed vacancies at 8.7 and 6 percent, respectively.

Many in the retail side of the industry are bracing for the closing of major retailers. Chains such as Mervyns use large commercial spaces, which in the current economy can be difficult to fill as fewer retailers are looking to expand.

American Home has four locations across Tucson, ranging in size from about 86,000 to 220,000 square feet. Messages left at its corporate headquarters were not returned, but the company recently filed for Chapter 11 bankruptcy and announced the closing of its Tucson stores, among others.

Greg Furrier, a principal with Picor Commercial Real Estate Services who is the broker for three of the four properties, said he is confident he can quickly find tenants for at least two of the spaces. American Home’s warehouse, 2020 W. Prince Road, is a prime location because of its proximity to Interstate 10 and the Oracle Road corridor.

“When you go into the industrial properties, being near the freeway makes them better,” Furrier said.

And a showroom at 4690 N. Oracle Road near the Tucson Mall also has a good location.

But the third showroom, at 9559 E. Golf Links Road, could prove trickier because the area has less commercial traffic and the building is a former Kmart.

If Furrier can’t find a tenant, it’s possible the building could be split into several different storefronts, he said. But that also has its challenges as prospective tenants may want only a small portion of the space, or the divisions could end up in awkward L-shapes.

Finding tenants to fill large spaces is daunting, but even more so in the current economy as there are few businesses expanding, Montani said.

“The tenants are large. It’s expensive to lease,” said Montani. “There are a lot less anchor tenants out there that are actually looking to expand now. So, you know, unfortunately they leave big vacancies.”

The growing number of vacancies has led to cheaper rents, but so far that hasn’t drawn very many tenants.

“It’s a good time to rent; however, the phones aren’t ringing,” Montani said.

Meanwhile, a number of commercial projects are being put on hold, and there is concern that, in the long term, foreclosures might start hitting the commercial market in the same way they have rocked the residential market.

“It is possible,” said Villaescusa, who said he has worked through times with higher vacancy rates. “I think that wouldn’t be noticeable until maybe a year from now.”

● Contact reporter Josh Brodesky at 573-4178 or jbrodesky@azstarnet.com.