Archive for January 28th, 2009

Builder says fee hike comes at worst possible time

By Patrick McNamara, The Explorer

Published:

January-28-2009

The cost of a new home in Oro Valley just got higher.

Last Wednesday, Jan. 21, the Oro Valley Town Council voted 6-1 to raise residential and commercial development review fees.

Councilman Al Kunisch voted against the increase.

“I think this is the wrong time,” Kunisch said about the increase.

The councilman noted the lagging economy nationwide and the nearly stagnant home-building sector of the local economy.

Last October, for example, the town approved four single-house building permits, as opposed to 18 approved the previous October.

Other town officials, though, said the increases are necessary to cover personnel costs.

“We need to get back every penny and dime that’s spent out,” Councilwoman Paula Abbott said at last week’s meeting.

The new price structure would increase the costs for development review of a 100-unit subdivision from $19,945 to $73,310. The fees have not been changed since 2003.

In fiscal 2008, development review services generated more than $2.7 million, but the department’s total expenses topped $3.2 million.

At least one Oro Valley homebuilder, however, questions that rationale.

“Why have they randomly chosen that development services should be self-sustaining when no other departments are?” asked Steve Solomon, owner of Cañada Vistas Homes.

Solomon said the town should use money generated through its 4-percent construction-materials sales tax to make up the shortfall.

“That more than covers development services for that project,” Solomon said. “It’s ludicrous to say that developers aren’t paying enough to the town to cover expenses.”

But it’s not just how the new fees and recently increased impact fees, which made it more expensive to build in Oro Valley, that have him concerned. He thinks the policies will have unintended consequences.

He thinks the ever-increasing prices will force out small builders like him and leave room only for national builders.

“I’m afraid that what it’s going to result in is that the large national builders who have deep pockets will be the only ones left building in Oro Valley,” Solomon said.

He speculates that if that happens, the town would lose its unique qualities and begin to resemble many other communities around the West, where most of the houses look the same and are built on smaller lots.

Others question the timing of the new fees when the construction industry across the country has come to a near standstill.

“I would advocate for any type of fees to be postponed until the industry gets back on its feet,” said David Godlewski of the Southern Arizona Home Builders Association.

Last December, Godlewski and SAHBA sent a letter to town officials requesting they seek alternatives to the then-proposed fee increases.

The group calculated that the change would amount to a four-fold increase in development review fees and would disproportionately affect local builders.

They proposed phasing-in the new fees over two years or, like Solomon suggested, using construction sales tax money to supplement development review departments’ budgets.

The council did not discuss any of those options at last Wednesday’s meeting.

Solomon also questioned the timing of the increases, noting the difficulty of securing funding in the midst of the current banking difficulties.

“Right now, it’s nearly impossible to get any kind of funding for construction,” Solomon said. “The financing is totally dried up.”

Putting new fees on building now, Solomon argued, would only further harm a struggling industry that, until now, had been a major part of the regional economy.

“That $2 billion economic engine is completely gone,” Solomon said.

Cost of building in Oro Valley

The Oro Valley Town Council voted in September to raise water impact fees and launch additional fees for new home construction. These prices don’t reflect the costs of development review services.

Fees for single-family homes are:

• $2,699 for parks and recreation

• $694 for libraries

• $513 for police

• $389 for other government needs

• $1,908 for transportation projects

• $7,749 for water*

• Total: $13,952

*Includes two categories of water-related fees. The figures represent the cost for a single-family home with a 5/8-inch water meter. More than 80 percent of Oro Valley Water Utility customers have that size meter. The existing water fees totaled $4,283 for a single-family home.

Tucson was once a mecca for films and television productions.  Over the past few years our neighbor’s over in New Mexico have done a great job of recruiting and retaining  movie/TV production companies. New Mexico under Gov. Richardson’s questionable leadership, put on the full court press to get the cameras rolling. The state of NM offered lucrative tax incentives to directly rebate production companies to do business in their state.  Other states have followed but NM seems to have got it right.

Arizona enacted their own $50m incentive but with a cumbersome process and some strings attached the production companies haven’t jumped on.  Maybe our state legislators can look at the structure and try to make it more attractive. The problem is an entire creative class of technical movie makers have watched prospects dry up here and moved elsewhere. It may be too late to get them back. The entertainment industry is one of those business that pays labor well and thrives in good economies and bad.

From the Tucson Weekly - April 19, 2001 - Read article HERE.

While the Tucson Film Office attempts to bring film production dollars back to the region–a task that is more difficult now than ever before–the media with their ebullience seem star-struck and provincial, an image that belies Tucson’s status as an almost-major footnote in the history of the motion picture industry. 

That being said, it is hard to blame the media for such zealousness, as Arizona in general and Tucson in particular have always had a contradictory, if not ironic, relationship with the movie industry.

With the sun incessantly shining and the scenery transformed with every step-up in elevation, Arizona–especially Southern Arizona–is an ideal place to make movies… 

Canada had already created the production service tax credit, a stroke of genius that offered foreign film and television production companies tax breaks on production labor expenses. The PSTC, coupled with further tax incentives offered in individual Canadian provinces, created a production-crew employment boom, and left a lot of film industry workers in California–not to mention workers in smaller, ancillary markets like Tucson–out of work.

Though the Tucson Film Office has been working hard to overcome runaway production, it may be a hopeless cause. A recent Director’s Guild of America study reported that in 1998 alone, the nationwide economic impact of runaway production had reached $10.3 billion, a five-fold increase since 1990.

With no studio, no sound stages, no government incentives, and a dwindling, disheartened crew base, it is hard to imagine how sunshine and scenery alone will bring the productions back to Tucson.

“Up until the fire (Old Tucson Studios) this community maintained a level of film production higher than most places,” Shelton said. “But when they rebuilt (Old Tucson) they didn’t rebuild the qualities and the things in the town that the film companies came here to film. They have made it pretty clear that their interest is primarily in tourism.”

 

And now our competitors over in Albquerque click HERE:

MOVIES
    MovieMaker magazine, a major trade publication in the film industry, cited Albuquerque as a “hot spot” in the United States for movie production. Here’s proof.
   

Did someone say snakes? It was announced that the fourth “Indiana Jones” film, tentatively called “Indiana Jones and the City of the Gods,” is to be filmed in the Deming area. Like the other movies in the series, it features Harrison Ford. Since 2003, the film industry has generated $1.4 billion in economic activity in New Mexico, according to the New Mexico Film Office.
   

Seeing stars: Albuquerque Studios opened its $74 million motion picture and TV production studio at the city’s Mesa del Sol development. Set on 28 acres, it includes eight sound stages. Several films, including “The Spirit,” starring Samuel L. Jackson and Scarlett Johansson, and several TV shows, such as “Breaking Bad” and “In Plain Sight,” have used the studio.

And Sony announced it would bring part of its Sony Pictures Imageworks from California to Mesa del Sol in 2008. This means an initial 150 to 250 new jobs for the Duke City, likely with a few hundred more later.
   

Hollywood moves in at Budaghers: ÁTraditions!, the former outlet mall and marketplace on Interstate 25 between Albuquerque and Santa Fe, plans to become a movie studio. It will accommodate feature films, music videos and TV sitcoms and commercials.  

From Inside Tucson Business (HERE) this summer,  Shellie Hall the director of Tucson Film Office has been trying to sell our community to the film industry.  

In the 2006-2007 fiscal year, Tucson had more than 400 days worth of film production, booked more than 11,000 nights of hotel rooms, and the equivalent of 7,650 days of work by local talent, according to Film Office Newsletter.

“All without a single big budget, mega-watt, studio motion picture,” Hall said.

While net numbers may be down a bit over previous efforts, Hall says her five-year comparison average still rings an impressive cash register.

The average production this year was about $7 million.

The Arizona Motion Picture Tax Incentive, approved by the Legislature and instituted three years ago, is a marketing tool intended to make filming in Arizona less taxing by returning 30 percent of expenditures to producers. The incentive started at 20 percent and was raised to 30 percent on expenditures in excess of $1 million. It has a cap of $50 million.

“While we have tax credits and incentives, states like New Mexico (and Louisiana and Connecticut) have no cap at all on how much they will give as an inducement to film in their state, so they’re winning in the race to get the plum contracts,” Hall says. “We’re going back to our legislature to see if we can improve on our incentive package to be more competitive with New Mexico. We already have some competitive advantages with our neighboring state, particularly our close proximity to the Los Angeles film industry. We’re not asking for more money, just trying to make access to what we have easier. We can work within the mandated cap, we just need to change the way the current clunky and bureaucratic procedures are administered.”

Despite costs continuing to increase and discretionary budgets continuing to shrink, Hall remains optimistic about the future of the film industry and the part the Tucson Film Office will play.

“Even in the Depression, movies did well because people like the big screen and they need to escape,” she said.

Lee Allen is a Tucson-based freelance writer. 

It’s encouraging that we do in fact have an office and an effort. It’s encouraging that the state legislature has given us some tools to be competitive.  It boils down to results and measuable increases in our regions film related revenues.  Getting the ball rolling may take some public and private sector support. Production companies will go to areas that are receptive, areas that are economically beneficial to their business models and where the support crews are in place and ready to work.  Like most of our economic issues in the region we have some ground work to lay before we see rusults. 

From Tucson Films latest newsletter:

Some of the lows, well, those mostly have to do with the projects that got away…like a 3:10 to Yuma (the original shot here) or HAMLET 2 which claims to be Tucson in the film but was actually shot in Albuquerque (and we so wish it were the other way around).

One loss, especially sad for the Tucson production community, is that the National Association of Latino Independent Producers (NALIP) decided, after 5 years of holding their 10-day Producers Academy here, to move it to Santa Fe. The city of Tucson, the MTCVB, UA Media Arts & Hanson Film Institute, TFO and others did everything we could to keep them here, but New Mexico did more.

 

From the Tucson Citizen regarding ‘Hamlet 2′ a low budget film that pokes fun at Tucson HERE :

“I guess they thought about filming in Tucson, but it all came down to money, as it always does,” Kreinbrink says. “With all the incentives New Mexico offers compared to Arizona, it was a no-brainer.

“I don’t think they even looked here for locations.”

“‘Hamlet 2′ is a low-budget film that came in under the radar,” says Hall. “I didn’t hear anything about the project until it got to Sundance.

“Arizona does have a tax incentive program, too, but it is more awkward to use, not as film-friendly as the one in New Mexico,” Hall says. “We are trying to get the state Legislature to make Arizona’s incentives more film-friendly. We’ve been working on it for three years. We’re preparing now to make another push in January.”

While the wheels of government turn much slower than the reels in Hollywood, Tucson’s film industry is shrinking just as Albuquerque is turning into the Movieland of Enchantment.

“If I was able to relocate, I would probably give moving to New Mexico some serious thought,” Ginn says. “There simply isn’t enough work here, and it does affect the quality of one’s life.”

Hall confirms the brain and talent drain. “A lot of our Arizona work force is over there right now . . . working,” she says. “Their families are here, but they are over there.”

The camera pans right to a weathered city limits sign reading “Tucson” as a voice-over narrator solemnly pronounces this is the city “where dreams go to die.”Granted, Coogan’s schoolteacher character gets no respect from anybody. Because most of the cast members play his disgruntled students, maybe it is appropriate to keep taking pot shots at the city.

But at the movie’s end, one of the so-called responsible adults in the cast tells the students to cheer up: “No matter where you go in life after this, it will always be better than Tucson.”

Hamlet 2 cast

As recent as April of this year the Star ran a story about a possiblilty of an investment in a soundstage HERE :

Hall said a soundstage might be “overstepping” the demand for movies right now, but she supports it in the long run. The community media center is needed, though, she said, especially given Tucson’s large “indigenous” independent movie community.

Moviemaking has been a boon for Albuquerque’s economy, said Ann Lerner, director of the Albuquerque Film Office.

Lerner said the direct spending from the film business has exploded since 2004, jumping from $11 million in 2004 to $83 million last year.

In contrast, spring-training baseball in Tucson generates an estimated $30 million in direct investment — an amount that a group of Tucson business leaders says justifies $9 million in new taxes a year to save.

In Albuquerque, the movie industry also has boosted Downtown, said Brian Morris of Albuquerque’s Downtown Action Team, allowing the city to keep its young talent with high-paying jobs while also recruiting young professionals around the county who are looking for an urban living environment.

Hein: A leader is needed

City Manager Mike Hein said the idea of collaborating in tough fiscal times is always worth exploring. But he said the project needs a leader who can bring together Tucson’s fractious interests. The idea that there are multiple potential revenue sources makes it more feasible, Hein said.

“If there are multiple parties with multiple pockets, it’s certainly easier to put together deals,” Hein said. “It all comes down to a business plan.”

The economic impact in New Mexico reached over $1.2 billion in 2007. Read it HERE.

The state’s Film Office frequently touts its achievements, which include helping attract more than 85 films and television projects to the state since 2003. Officials say the activity has added over $1.2 billion to New Mexico’s economy.
    Incentive programs include a 25 percent tax rebate on all film expenditures subject to taxation by the state, loans of up to $15 million per project, with back-end participation instead of interest, and no state sales tax (an option that can’t be used with the tax rebate).
    New Mexico’s programs are “clean, simple and directly accessible by productions themselves,” Witt said. “I think that’s key to going forward.”

New Mexico Fast Becoming The Land of Taxpayer Disenchantment

(Washington, D.C.) - Today in Albuquerque, New Mexico, the Rio Grande Foundation and Citizens Against Government Waste (CAGW) released the 2008 New Mexico Piglet Book, focusing on government waste, fraud, and abuse in the New Mexico state budget.

New Mexico state spending rose from $3.9 billion to $6.0 billion between 2003 and 2008, an increase of approximately 54 percent.  Pork-barrel spending itself amounted to $341 million in FY 2008 and accounts for 5.6 percent of New Mexico’s $6 billion General Fund budget.  Though state spending between 1995 and 2003 was relatively steady, it exploded under Governor Bill Richardson, rising from $3.9 billion to $6.0 billion.  The Legislative Finance Committee projects that over the next six years revenues will rise by only 10.8 percent so the state is facing challenging economic times and policymakers should heed the calls for spending restraint.  The 2008 New Mexico Piglet Book should serve as a template for reducing spending.  The Piglet details some specific boondoggles, including:

The Economic Development Department (EDD) program, which received $9.3 million in 2008 in order to “build a diverse economy with high-wage, high-impact jobs that provide opportunity and prosperity for the city’s residents, businesses and entrepreneurs.”  EDD features tax credits like the High-Wage Jobs Tax Credit, the Manufacturer’s Investment Tax Credit, New Markets Tax Credit, the Rural Jobs Tax Credit, the Technology Jobs Tax Credit, and the Angel Investment Tax Credit.  It has also lavished subsidies on the film industry, Eclipse Aviation (which recently declared bankruptcy), and Tesla Motors (which vacated New Mexico for greener pastures in California.)  Other examples include:

• $9 million to fund the X-Prize Cup, an annual air and space expo which brings together all sectors of the aerospace industry to demonstrate their capabilities;
• $1.67 million to expand and renovate the New Mexico Farm and Ranch Heritage Museum, which will include a rural life center, a special events arena, and a gallery;
• $500,000 to plan and construct a rail spur and platform at Balloon Fiesta Park in Albuquerque. 
• $280,000 to put on a peace conference in Santa Fe in May, 2007; and
• $250,000 to purchase maintenance equipment for the Riverview golf course in the Central Consolidated School District in San Juan County.  

Anyone see this in any Tucson media outlets?

Qantas closing Tucson call center

Phoenix Business Journal - by Mike Sunnucks

Australia’s Qantas Airways is closing its customer service and reservations call center in Tucson.

The center is slated to close at the end of February with 50 workers being cut, according to the airline’s layoff notification to the Arizona Department of Economic Security.

Qantas said last year it would be closing call centers in Tucson and London and would centralize such operations in Australia and New Zealand. The Tucson closure is part of bigger cost-savings effort by the airline, which is looking to trim 1,500 jobs via attrition, voluntary severance and layoffs.