Archive for March, 2010

In North Carolina, in the second half of the 50′s, some smart guys had the idea of creating a centralized “park” where universities and businesses could come together to conduct research and foster ideas in the context of economic development.  In Chapel Hill, North Carolina, Howard Odum, Romeo Guest, and Karl Robbins had an idea, and Robbins provided $700,000 to buy 3,600 acres of land.  The project, Research Triangle Park (RTP), started slowly in the late 50′s and early 60′s.  IBM arrived in 1965, and by 1969, 21 companies had located research-oriented operations on the site.  By 1979, Research Triangle Park had 38 companies.

In 1980, Congress injected considerable energy into the concept by passing the Bayh-Dole Act, which allowed universities to keep the rights to government-financed research conducted in their labs.  Researchers would be able to patent their results for profit.  In 1983, Reagan signed a modified version of Bayh-Dole that invited corporations and small businesses to the party.  Now all parties could profit from patents arising out of government-funded research.  The average number of patents issued each year to universities jumped from 250 to 1,500 over the next fifteen years, and the number of companies at Research Triangle Park blossomed to 66 over the next ten years.  In a research park closely tied to government funded-research at the University of North Carolina at Chapel Hill, the number of companies went triple digit by the year 2000.

2006 data on the Research Triangle Park: 

Size:  7,000 acres
Companies:  145, 119 R & D Related
Employees:  39,000 at average salary of $56,000
Company Size:  42% had 10 employees or less
Capital investment exceeded $2 billion
Total payroll:  $2.7 billion

Everything came together perfectly.  Chapel Hill expressed the triangle as Universities, Government, and Corporations.  Some of the smartest people on the planet converged into a tight area and brewed extraordinary results.  Later we will get to a sharp guy in Austin who took a good look at RTP, but he brilliantly crafted different language for the triangle, generalizing the threesome to “business, government, and education.”

The academic literature that developed would express the concept as the “triple helix” of education, state, and market.  Some wrote of entrepreneurial universities and the commercialization of higher education.  As the conversation matured, the distinction of academic capitalism developed to explain the permeation of market like behavior into higher education institutions.  All of this activity applied tremendous pressure to produce results, and who was going to drive and manage this stuff?  Hence, positions for smart people opened up to insure results. 

Started by the “Seven Visionaries” in 1975, the “Society of University Patent Administrators” exploded as a result of Bayh-Dole and decided to give itself a more impressive name than “patent administrators,” becoming the Association of University Technology Managers, or AUTM.  In 1986, AUTM had 381 members.  In 1990 this had doubled to 771.  In 2003, AUTM had 3200 members.

In addition to the growth of AUTM, the top leaders of corporations and universities created the Business Higher Education Forum, consisting exclusively of the CEO’s of large corporations and the presidents of universities.  Various professionals formed other organizations such as the NIH, NSF, AURP, and so on.

Research parks represented an attempt to harness regional creativity and innovation to spur economic development.  Some did rather well but most were money pits.  Skipping the lecture on institutional isomorphism, suffice to say that in the decade following the Bayh-Dole act, the notion of the research park was institutionalized.  Any real research university had to have a tech park, a tech transfer office, and an office of economic development.  Whether these functions made a thin red cent, a research university became second rate without one, so the University of Arizona jumped in where IBM had jumped out. 

In 1994, after Microsoft and various other tenants had spent some time coming and going, the University of Arizona forked over the cash to acquire some of the buildings to house its office of economic development, tech transfer staff, and its tech park.  Just like RTP and other tech parks, the facility tried to recruit incubator companies to spend their time and pay rent in entrepreneurial efforts to strike it big.  They rented space to a high school and continued working to build the location as a center for research, industry, and the entrepreneurial spirit.

By the mid-90′s there were enough university research parks to do what professionals liked to do, which was form an association so they could fly to some resort, eat fabulous food, look at the women in bikinis (or guys in Speedos) and impress one another other with slide presentations and nice brochures.  This gave rise to the Association of University Research Parks.

The fateful day of September 11, 2001 altered human history.  3,000 people lost their lives, and this would lead to matters far worse, a fiasco of untold proportions.

In the late 70s, much of the country groaned, “Never again” about a protracted overseas war where we sent hundreds of thousands of soldiers and support staff into a quagmire we did not understand, executing the wrong methods in the wrong place for the wrong reasons and killing or wounding dozens of thousands of soldiers and hundreds of thousands of foreigners over many years without an effective exit strategy, squandering obscene fortunes to insatiable war profiteers.  When the bloody fiasco was over, we figured out we should never have gone there in the first place.

We tearfully mourned the casualties in Washington at a wall that ripped out our hearts.  Out of touch with reality, we arrogantly charged into Vietnam without a clue and paid dearly, dearly, dearly, killing our own children.

Even your average Joe picked completely at random off the street is smart enough to make sure we never do that again.

Oh, wait.

SHIT.

Tucson First has embarked on shedding the light on issues that are hurting the Tucson business climate. Part of their mission is to bring accountability at the Tucson Chamber of Commerce. A survey sent out to the chamber members asked a series of questions about the chamber, their effectiveness in the political process and the general business climate in the Tucson area. Go to their web site for full analysis. Below are the comments from the surveys. They haven’t been screened or edited. Looks like the Chamber has a lot of work to do.  

 
These are all the comments made by the Chamber Membership
1. I manage a place owned by local entrepreneurs. I don’t use the chamber very often, don’t attend meetings on a regular basis, etc so part of my lack of faith in their business practices may be due to inactivity. However, I have seen no signs of initiative on their part either. Aside from the monthly breakfasts and luncheons, guest speakers that don’t interest me, there is little done to promote local businesses that i can see.

2. The chamber should be the powerhouse marketing/political agent for promoting the wants and needs of business, and also challenging the anti-business climate that is ingrained in the city of Tucson.

3. The person running it needs to be removed and replaced at least every 4 years. Jack is a nice guy, but he’s not a benefit to Tucson businesses.

4. The Chamber needs to be more active in change the city land use code so it is not so punitive to business development.

5. Canceled membership last month.

6. The only reason with are in the chamber is for our workman’s comp insurance with SCF. We have had a lot of problems with SCF and the chamber is of no help. We are switching our workman’s comp insurance to another carrier so we will no longer belong to the chamber. If you look at the board of the chamber all big companies no small companies.

7. To the credit of the chamber, I might get more out of it if i were more active; BUT, being a new business in these times I can’t pay for gas sometimes, much less pay to get into these silly events! It’s like getting punched in the face twice, I paid a boat load when i joined and shouldn’t have to ALSO pay to get into these networking events.

8. The Chamber has done an outstanding job. What has your group done?

9. If you are so dissatisfied, why not get involved and work from within the Chamber to effect positive changes.

10. I do not believe that anything about Pima County lends itself to be “pro-business”, with the possible exception of Town of Marana. When I moved here in 1981, the rally-cry was always, “We don’t want to be another Phoenix!” Congratulations, we got it.

11. I am a member of the Chamber for one reason. I get a discount on my Worker’s Comp insurance. Otherwise the membership is of no benefit to my organization.

12. The only time we were promoted is when we gave them something for free….

13. I am a Store Director for my company. I am sure they will renew the membership. The observations are mine. My owners do not live or work in the Tucson area.

14. I keep hearing about how important it is to attract businesses to Tucson, yet there are politicians that promote “local first”. Seems to me that they are saying “come here but we’ll campaign against you”. What am I missing here??? Elected officials shouldn’t promote one type of ownership over another.

15. TMCC never shined me on. This wasn’t the case with ASBA and other groups.

16. The Military Affairs Committee helps our uniformed personnel at DMAFB with awards, Savings Bonds and gifts to very deserving personnel. Too bad that I have never seen an accounting of funds used for the benefit of our Military. Lots of fundraising, no demonstration of how funds are used.

17. Time for a complete change at the Metro Chamber

18. Mr. Camper has been there for 32 years, it’s time to go.

19. Leadership must change. Focus must be on small business and the economic health of Tucson.

20. I dropped my membership due to a lack of progress and any real business activity.

21. We are a small part of a very large business. Advertising etc will not help us in the way it will small businesses…

22. You guys are naive idiots with no sense whatsoever about how to get anything done!!!!!!!!

23. You can’t blame Jack Camper for all of the shortcoming of the Chamber – he follows directions given to him by the Board of Directors and if the Board doesn’t change neither will the effectiveness of the Chamber

24. I have vowed that 2010 was my year to get more involved with the Chamber. I have already volunteered for 2 programs this year. I look forward to seeing not only what the chamber can do for me, but what I can do for the Chamber.

25. Tucson is a city that has no desire to obtain more business they do all they can to get rid of what we have. The ballteams are gone, gem show will leave shortly. The city doe not understand that Tucson is not a small college town that can survie on the college not even close. Our resorts are going down if we do not have a good winter vistor and covention year yet from what I see it is not taking place. As much as everyone in Tucson says they hate the valley they better start taking some advise from them, they know how to grow business of all types while Tucson is not even in the game.

26. I agree the market reports about Tucson are shocking but I am not clear on how much responsibility the Chamber has with this vs city and stat government.

27. I stopped being a member of the Chamber serveral years ago. This was due to our company’s decision to put our time and money in other organizations who do a better job of leadership to attempt to help Tucson’s business community. We want the Chamber to again be THE leader of the local business community. We want new Chamber leadership to take over to make this happen.

28. The chamber has been a complete waste similar to the ineptness of the city council. They need to hire folks to bring large business to Tucson and fight the environmental liberal agenda that has stricken the growth here while exploiting the low income by providing jobs that are only manual labor or low income possibilities for the residence here.

29. I do not actively partipate in many of the functions because they are not centrally located – I have gone to some luncheons but not the breakfasts because I am on the far west side of town – I enjoyed the luncheons and used them predominately for networking. However I wish the Chamber had taken a
stronger stance on things like Rio Nuevo – and the amount of money spent outside of the Tucson area – I \ always thought that the Federal Courthouse was an architectural opportunity to showcase southwestern design rather than NYC glass and steel – and i would like to see the chamber advocate for locals to get such business.

30. Life Member

31. Tucson lacks synergy between TREO, MTCVB, Tucson Chamber, SAHBA and other business/trade organizations.

32. I view the Chamber as a voice for the community and an advocate for the business community. Our city/county/state government is a mess. Now is the time to promote change, advancement and being progressive to make our city vibrant as a destination, employment base and a progressive community
that serves its citizens. I see none of that in our city. I am very disappointed in Tucson, Pima County and our Chamber. We are located in a beautiful area that should be a jewel and a beautiful community – instead our city is beginning to look like a mess, nothing is improving and our government and leadership are doing the same old thing. We need strong leadership and promotion of business to make our city into a vibrant wonderful place to live and work.

33. I have not yet renewed for 2010. I am contemplating alternatives to invest this money. TCC provides a networking platform for me but I think the Leadership needs to be more effective in cutting through the city council and other COT entities to allow small business to thrive. This is more important than networking. After all, I will not have anyone with whom to network shortly since current business’ need support to maintain in this environment and new business’ are stonewalled from the beginning. Goal Setting and a Plan of Action to change the COT business environment is first and foremost. All the concomitant details of support services for business will be moot unless COT welcomes business. Its almost as if the COT is imploding with rules and regs that are destroying the very foundational elements of business.

34. I feel that the focus in the Chamber is directed far too much towards small business members. I have been to the Chamber seeking aid and netwroking opportunities and have left feeling as if my questions and ask for assistance was a burden to the representatives that I spoke with. I believe that the Chamber is focused too heavily on political campaigning for issues that are not important for me or my business and far too little on actually growing business and exchanging business opportunities in Tucson. If I did not feel that I had more to try to encourage my business growth at the Chamber evenets, I would have already cancelled any memberships, yet I will continue to try and see if I can create positives.

35. I already have let my membership expire. I don’t need any more social events and couldn’t bear to go to any event that thinks Fitz is a good choice of emcee. Why haven’t they been hammering on the development services department as much as possible? Even the liberal newspaper has taken note ofhow bad they are.

36. Quit causeing trouble and start helping – You can do more good by working with the Chamber than just passing blame

37. This should be called Tucson Last, there has never been a Tucson first in this community from City, County, State or Federal, I have been in Business here for 23 years with no help from the Chamber or Local Government

38. I am a member of the Chamber, I do not make time to participate in the functions like I should, but I don’t require much from them either. My involment was primarily for the Workers Comp association dividend. That was great! and I must say Thank You!

39. The Chamber could not have been more detrimental to our business than they have been considering they contracted with a competitor for office supplies for themselves and all of the members without a word to us!

40. The Tucson Chamber of Commerce is a highly respected organization and in many respects, only as good as its member involvement/support. I am a home builder in this community that is politically attacked all the time as we are an easy target. The Chamber has been supportive of opposing all new fees (impact fees, meter fees fees, permit fees and all the like). It falls on deaf ears when only the Chamber and a couple of builders/HBA representatives show up and oppose what I consider to be a business and consumer negative impact. Quite frankly, the entire business community and the citizens of our community must come to realize that that all fees impact our ability to make a living or live in this community. Nobody realizes this until the cost of doing business goes up. Members of all pro-business groups need to step up and aggressively oppose unreasonable fees of doing business. The business community must be there in numbers and heard loud and clear!!

41. I appreciate the role the Chamber has in the community. We do not rely on the Chamber to create business, but I bet the networking opportunities are great.

42. I have been quite pleased with my membership with the Chamber. I think any organization is a sum of its parts. When I attend functions I seem to get a better return on my investment with them. When I get too busy to engage with them I notice a slight downturn to the leads I acquire with them. I might be one of the few who respond to your survey positively but they seem to feed me referrals regularly the more I engage with their staff and members. Yeah I also think Camper will eventually move on in the next 18-24 months but you’re deluding yourself if you think you can get all of the Chambers in our community to merge together. The respective egos and animosities amongst the various boards will never let that happen in my opinion. Try doing that stunt in Phoenix and see how many “legs” the movement would have there. I think continuing to apply pressure to the Tucson developmental services department is the Achilles heel. Those are the ones that are true obstructionists to the business community. They run the department like a cartel.
If the city council can’t reign them in then we need to get new city council members.

Tucson is about to embark on a public financing agreement to build a 500 plus room hotel adjoining the Tucson Convention Center. Is it a smart move for a city with our track record in financing and getting projects completed on time and on budget to embark on a risky hotel? The room construction cost is projected as $318,000 per room.

Taking an aggressive 10% CAP rate (maybe 2007 values), even with the projections set forth in the hotel feasibility study, the value of this hotel on the open market is $100 million. The projected cost to build the hotel…..$168 million.  Good enough for government work.

By Sean P. Smith

Last night, Sunstone Hotel Investors (SHO) announced that the company would turn over its W San Diego hotel property to its lenders, as opposed to making its June 1st debt service payment on the property’s mortgage. This move speaks volumes about the deterioration of the hotel operating environment in recent months, and in turn, the value of hotel properties.

Sunstone, a hotel REIT, acquired the W hotel in San Diego in 2006 for $96 million, or roughly $370,000 per room. At the time, the purchase price equated to a multiple of 12x projected 2006 EBITDA.

In conjunction with the purchase, the company closed on a $65 million first mortgage, bearing an interest rate of 6.14%.

The local hotel operating environment has weakened to the point that the company has decided to simply hand over the keys to the lender, as opposed to making another debt service payment, as management now believe that the property is worth “meaningfully below” the principal amount of the debt.

While there have been many hotel defaults in recent months, this is a high-profile transaction, involving a publicly held hotel REIT and a premium hotel brand. The W hotel brand is owned by Starwood Hotels & Resorts (HOT), which also manages the W San Diego property. There are currently only 29 W hotels worldwide, although the company has an additional 22 W hotels in its pipeline.

As the hotel operating environment remains weak, we expect that more hotel owners will come to the conclusion that they would be better off walking away from properties that are now worth less than their outstanding debt balances. This would in turn put additional pressure on hotel values, just as a residential foreclosure or short sale negatively impacts all the houses in the vicinity.

From Zack’s.com

Despite the continuing deterioration in operating fundamentals, hotel stocks have rallied in recent months, including Marriott, Starwood, Intercontinental Hotels Group (IHG – Snapshot Report) and Wyndham Worldwide (WYN – Analyst Report). We believe that these moves have been overdone, and are unwarranted. The sector has a history of false starts, as investors prematurely bid up shares in hopes of a quick recovery in the group. We expect that this will again be the case in this situation, and believe that hotel stocks are due for a correction.

We project that the current steps being taken by hotel companies to lower room rates in an effort to fill rooms will have long-lasting negative repercussions. In the short-term, the reductions to room rates are unlikely to be offset by occupancy gains, thus resulting in lower overall profitability.

More importantly, however, is our belief that the reductions in ADR will result in depressed room rates even after the economy stabilizes and begins to improve. This may in turn extend the downturn in the lodging industry.

From San Francisco Business Times:

Millennium Partners is in default on its two-year $90 million loan for the 277-room Four Seasons Hotel San Francisco, according to the developer.

The luxury condo and hotel developer and operator has purposefully stopped making debt payments as a strategy to jump start renegotiating the debt with the special server, LNR Property Corp. The Four Seasons is the second luxury hotel to default on its debt payments in recent weeks. The owners of the 393-room Renaissance Stanford Court Hotel in Nob Hill, funds controlled by JER Partners, defaulted on a $89 million loan, according to lender Barclays Capital.

……. “To see the caliber of hotel like Renaissance Stanford Court and the Four Seasons going into default in the early stages of this downturn is not a good sign,” said Reay. “It means this is going to be deep, it’s going to be long, and this is going to effect everybody.”

In the last 60 days 213 hotel owners have defaulted on their loans in California, a 184 percent jump over the previous 60 days, Reay said. Reay predicted that the vast majority of hotels that were financed with loans that tapped the commercial mortgage-backed securities market between 2005 and 2007 will end up in default, a number that could top 2,000 in California alone.

“We’re in a deep recession and hotels are suffering the most of any real estate class right now,” said Reay.

A report by Atlas Hospitality estimates that room revenues in California are down 21.5 percent in 2009 and that values are 50 to 80 percent lower than they were at the market’s peak from 2005 to 2007.

From Bloomberg – 2009

Sept. 24, 2009 (Bloomberg) — Luxury hotel owners risk defaulting on their debt as the recession cuts occupancies and the credit crunch constrains refinancing.

Loans secured by more than 1,500 hotels with a total outstanding balance of $24.5 billion may be in danger of default, according to Realpoint LLC, a credit rating company that tracks commercial mortgage-backed securities. Some of the biggest loans, put on the company’s watch list because of late payments, decreasing occupancies or cash flow, were made to luxury properties where rooms can cost more than $850 a night.

“All segments are showing signs of distress but the luxury segment carries much higher loan balances and is more clearly affected,” Frank Innaurato, managing director of CMBS analytical services at Horsham, Pennsylvania-based Realpoint, said in a telephone interview.

 

San Francisco – A $90 million loan secured by the Four Seasons San Francisco, a 277-room, five-star property, is 90 days delinquent and foreclosure proceedings have begun, according to Realpoint. A notice of default has been filed, according to Bloomberg data.

The borrower was Millennium Partners LLC, a real estate firm founded in 1990 by Christopher Jeffries. The company controls 1,860 residential units, more than 2,000 hotel rooms and 1 million square feet (93,000 square meters) of office space, Realpoint said.

Nicola Blazier, a spokeswoman for Four Seasons San Francisco, didn’t respond to e-mails and phone calls for comment. Millennium principal Jeffries didn’t return a call.

The Dream Hotel, a 220-room hotel on West 55th Street in New York City that features 300-thread count Egyptian bed linens and iPods, is collateral for a $100 million loan taken by Surrey Hotel Associates LLC that’s at risk of default, Realpoint said.

Occupancy Decline

Phoenix - A $190 million loan secured by the 640-room Arizona Grand Resort is 90 days delinquent, according to Realpoint. If the loan is liquidated it may lead to a $111.9 million loss, the credit rating company said.

The property’s occupancy rate fell to 64 percent as of December 2008 from 70 percent a year earlier, Realpoint said. The borrower was Pointe South Mountain Resort LLC, a Grossman Company Properties affiliate. Pamela Kerner, a spokeswoman for Phoenix-based Grossman, declined to comment.

Realpoint also is monitoring a $1 billion loan taken by CNL Hotels and Resorts, a company acquired by a Morgan Stanley real estate fund. The loan is secured by five properties with 14 golf courses, including the Arizona Biltmore in Phoenix and the Grand Wailea Resort Hotel & Spa in Maui, Hawaii.

.

Westin Aruba

The Westin Aruba Resort & Spa, managed by Starwood Hotels & Resorts Worldwide Inc., was foreclosed on in May, according to Realpoint. The property is controlled by Wachovia Corp., the ratings company said.

The property’s occupancy rate dropped to 41 percent in May from an average of 63 percent in 2008, the report said. Servicers are used when a loan is in or near default and needs to be reviewed or modified, according to Innaurato.

The Westin Aruba has been hurt by competition from a 450- room luxury resort built next door, Realpoint said.

Another property on Realpoint’s watch list is the Four Seasons New York, where a standard room with a king-sized bed starts at $855 a night. The hotel is among four used as collateral for a $344.6 million loan, Realpoint said.

The properties’ occupancy rate fell to 57 percent in the 12 months through June. At the end of 2007 and 2008 it was 73 percent and 69 percent, respectively, Realpoint said.

‘Moderate’ Risk

New York – Four Seasons New York’s net cash flow “is well below historical trends,” the credit rating company said, without being more specific. While the property’s revenue per available room and net cash flow have jumped since bottoming in 2003, the hotel “is more recently showing signs of New York’s weakening economy,” Realpoint said.

The property is owned by Ty Warner Hotels & Resorts.

“We consider this loan a moderate default risk based on declining performance along with the lower expectations on the lodging-resort industry given the current economic conditions,” Realpoint said in its report. “Our analysis of the collateral suggests that the combined value of the assets are below the current loan amount.”

Donna Snopek, chief financial officer of Ty Warner Hotels, said in an e-mail that the loan “is performing well.”

‘No Impact’

“Moreover, the properties in the pool are all performing at the top of their respective markets,” Snopek said. “We are fully committed to our loan and can assure you that there is no impact to the current high standard of services at this property.”

Los Angeles – Lowe Enterprises Inc. of Los Angeles, the operator and developer of a 582-room resort on the Pacific Coast, said in August it’s trying to restructure a mezzanine loan after defaulting two months after the hotel opened.

The Terranea Resort in Rancho Palos Verdes, California, a $480 million property, opened June 12 with a golf course, three pools and eight restaurants. Lowe is among a group of investors in the property and is in negotiations about restructuring the loan, spokeswoman Jann Diehl said.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

Last Updated: September 24, 2009 18:29 EDT

From Rueters:

Resorts International is latest hotel default-Fitch

Thu Sep 3, 2009 12:51pm EDT

Sponsors on the Resort International loan are Colony Investors VI, Colony Investors VII and RIH Coinvestment Partners, Fitch said. The loan is collateral for the JPM 2007-FL1 commercial mortgage-backed security.

NEW YORK, Sept 3 (Reuters) – Borrowers have defaulted on a $227.9 million loan for three Resorts International hotel-casinos in New Jersey and Mississippi, according to Fitch Ratings, in one of the largest transactions hit by the real estate crisis.

“Properties directly tied to consumer spending such as hotels are the first to exhibit signs of performance declines,” Adam Fox, a senior director at Fitch, said in the statement.

The loan on properties in Atlantic City, New Jersey, and Tunica, Mississippi, was transferred on July 23 to a servicer specializing in troubled loans after the borrower failed to make a payment, Fitch said in a statement. The borrower said cash flow had declined significantly, Fitch said.

Hotels have been among the hardest hit sectors as the recession cuts down on travel and the credit crisis choked off credit on commercial properties, especially those laden with debt made under easy conditions. Since May, Extended Stay Hotels filed for bankruptcy protection and Red Roof Inns Inc. defaulted on $361 million in loans.

From the Wall Street Journal -

By KRIS HUDSON

For the past two years, Phoenix has wrestled with the fallout from the most severe housing bust in decades. Now comes the hotel bust.

Since January, when the luxury W Scottsdale Hotel & Residences received a notice of foreclosure related to a $73 million construction loan just a few months after it opened its doors, the list of troubled hotel properties in Phoenix has continued to grow.

In March, German lender Eurohypo AG sued the developer of Phoenix’s 293-room InterContinental Montelucia Hotel, alleging default on a $180 million construction loan. In April, the 640-room Arizona Grand Resort, formerly known as the Pointe South Mountain Resort, became delinquent on its $190 million securitized mortgage. Two weeks ago, Kabuto Arizona Properties LLC, owner of the 331-room Wigwam Golf Resort & Spa, filed for Chapter 11 bankruptcy protection to thwart Citigroup Inc.’s efforts to foreclose on the resort.

View Full Image

Anton Troianovski/The Wall Street Journal

The W Scottsdale Hotel & Residences got a notice of foreclosure tied to a construction loan just a few months after it opened last fall.

In all, at least six major Phoenix-area hotels, five of them resorts, have gone delinquent on their loans or sought bankruptcy protection since last fall. Two of those had opened in recent months, and two others had recently completed renovations. All told, the six encompass nearly 1,900 rooms, or roughly 3% of the area’s total of roughly 58,000 rooms.

“Phoenix suffers from the dual challenges of overbuilding and shrinking demand due to the national drop-off in corporate conferences,” said David Loeb, a hotel-industry analyst with Robert W. Baird & Co. “All of this means that Phoenix’s hotel market has experienced one of the steepest downturns among the big markets.”

Of all the commercial-property types, hotels arguably have fared the worst in this recession as travelers cut back, companies curtail conferences, and hotels slash rates to haggle for the business that remains.

Nationwide, occupancy at hotels in the top 25 U.S. markets was 62.8% in April, down nearly eight percentage points from a year earlier, according to Smith Travel Research. Revenue per available room, a key measure of the industry’s sales, fell more than 22% in the same span.

The problems are more pronounced in Phoenix, where construction activity was more robust than for the nation as a whole because of plentiful land and relatively low construction costs.

The area is now experiencing a bigger decline in vacation and conference travel than most other places, in part because it is a “fly-to” resort area beyond easy driving distance from larger metropolitan areas.

Hotel occupancy in Phoenix was 58% in April, and revenue per available room declined 28% from April 2008 to April 2009, according to Smith Travel Research. Phoenix’s occupancy for the first four months of this year was the lowest the market has reported in the first third of any year since Smith Travel began tracking the figures in 1987.

Meanwhile, Phoenix has added 4,196 rooms since 2006, ranking it as the 10th-fastest-growing U.S. market by number of rooms added. Another 15,748 rooms are in planning and development, representing a potential 26% expansion of Phoenix’s existing inventory, according to Lodging Econometrics.

The problems have ignited battles between borrowers and lenders. Among the most contentious is the fight between the owners of the W Scottsdale, Los Angeles-based Triyar Cos. and German lender HSH Nordbank AG. Triyar, a closely held real-estate company, owns 40 properties in several states, including malls, office buildings and apartment complexes.

In December 2005, Triyar, which is controlled by brothers Steven and Shahrod Yari, took out a $73 million construction loan from Nordbank to build Phoenix’s first W hotel. They planned a trendy hotel fitting Starwood Hotels & Resorts Worldwide Inc.’s profile for the brand: a luxury hotel complemented by contemporary restaurants, spas and nightclubs.

To the W’s 224 rooms and 18 penthouse residences, the Yaris added a Bliss spa and Sushi Roku, a popular eatery in Los Angeles and Las Vegas. The hotel’s exterior features white brick and, on its top floors, floor-to-ceiling windows. 

But construction of the W dragged on longer than planned, resulting in the hotel opening a year late last fall. A bevy of lawsuits ensued.

General contractor Hunt Construction Group Inc. in October sued the project’s architect, engineers, interior designer and others, alleging they delivered work that was “incomplete, uncoordinated and contained multiple errors and omissions.” Triyar sued Hunt in November, accusing Hunt of failing to complete the hotel on time and on budget.

In February, Nordbank, the lender, sued the Yaris, alleging they failed to make payments on the now-$82 million construction loan, which came due in December. Nordbank also claims, despite the loan’s requirements that Triyar sell at least nine condos at the W by last June, that no sales had occurred by the time the bank filed its lawsuit.

Triyar responded by suing Nordbank in March, arguing that Nordbank didn’t meet its funding commitments even as Triyar ponied up more capital for the project.

Steven and Shahrod Yari didn’t respond to messages seeking comment. Michael Mahoney, chief executive of Triyar’s hotel division, said the parties in the lawsuits “are in negotiations to resolve the issues.”

A Nordbank representative didn’t return messages seeking comment. Hunt’s attorney didn’t return calls seeking comment.

Write to Kris Hudson at kris.hudson@wsj.com

City Development Services needs change council members need to butt out
WAKE UP, TUCSON: The ‘fixer’ cometh
By Joe Higgins, Inside Tucson Business, or Chris DeSimone, Inside Tucson Business
Published on Monday, March 15, 2010

According to an article by reporter Rob O’Dell in the Arizona Daily Star, the City of Tucson is actively searching for an individual to be the Development Services Department “fixer.” O’Dell wrote that the idea is this person  would “be able to navigate the roadblocks for businesses” in the department. As a couple of full-time small business owners and part-time radio hosts, we’ve had the pleasure of navigating through the maze of those roadblocks.

The “fixer” will report to the director of Development Services who reports to the city manager who reports to the city council.

Does the department need to be fixed?
 
  Can Tucson be more business friendly? Yes.

Will bringing in a “fixer” do the trick? That depends.

While it sounds like a nice idea, the employment of such an individual is a far cry from the institutional reforms the department and the city needs.

The first solution we’d like to suggest is that the council’s meddling in Development Services processes end. Like a good board of directors, the council should set policies and get out of the way. We know it’s hard for council members to avoid major donors’ requests to “grease the wheels,” and we understand their temptation to stick their noses into neighborhood complaints about business. But the council needs to focus on the big picture and leave the execution to staff. Every time an elected official jumps into the middle of the process, staff is sent a message.

Development Services and all city departments need to be able to perform their duties in a fair and even manner. Staff must be allowed to function free of the political whims of part-time council members.

Take a look at best practices from Development Services departments elsewhere. San Diego has set up a concierge service concept. From the first day at Development Services to the day a new business opens, the applicant has one person who is an advocate. Phoenix has implemented bonuses based on customer satisfaction surveys. Imagine using positive reinforcement to encourage a customer focused experience. A free market principle.

In the past, the attitude in Tucson’s Development Services Department has been directly tied to the attitude of  the city council members who do the most meddling. As we have pointed out before, 97 percent of politicians are driven by one motivating factor: getting re-elected. At this point in Tucson, neighborhoods have organized and created voter blocks that can produce the most votes at election time. That’s why council members pander to them. And they’re very good at saying “no.”

You don’t believe us? Take a look at practically any vacant lot in the city and you’ll hear stories of how NIMBY neighbors — sometimes only a couple of them — successfully blocked a big bad developer. Over the past 20 years, neighborhood associations have been successful at stopping things. The delays cost money and chase out businesses and capital that leaves the city, never looking back.

Meanwhile, Tucson’s business sector hasn’t been very good at influencing elections. It happens, as we saw last  year, but only when enough businesses have been pushed to the edge.

So how does this tie back to Development Services? If the members of the city’s board of directors — the council — have a voting base that is not interested in developing new businesses, why should employees of Development Services stick their necks out for a business person? Elected officials need to resist the temptation to meddle   in the daily workings of staff. If something is broken, do your homework and suggest solutions that can be considered by the entire body. If the solutions aren’t considered or implemented, then work to change staff.

If the business sector wants to see structural, long-term change, we have to stop sleepwalking when it comes time to run and elect candidates who support progress.

We pray the city’s “fixer” is given the authority and freedom to make the changes needed to get things done. But it is really only the first step of a long journey in making Tucson more business friendly. Making the process easier for new businesses is essential to the city’s economic comeback. The people behind new enterprises who are setting foot in Development Services today are the revenue building blocks of tomorrow.

It’s time for the mayor and council members to start fixing the playing field. And it when it comes to specific development projects, they need to get out of the way.

Contact Joe Higgins at joe@joehigginsinc.com or Chris DeSimone at provenpartners@comcast.net. They’re the hosts of “Wake Up Tucson,” which airs 6-8 a.m. weekdays on The Voice KVOI 1030-AM. Check out their blog at www.TucsonChoices.com.

Copyright © 2010 Inside Tucson Business

Tucson is known as “one of the worst places to do business”, “the ant capital of the world” and the Vistors Bureau’s favorite “Real, Natural Arizona”(that really separates us the rest of the state!).  We have hit the big time with our ranking over at dailybeast.com.  I can see the cover of the new Visitors Guide now, Jack Camper(Chamber), Joe Snell(TREO), and Jon Walker(CVB) playing golf for free at a local resort with the caption:  “Tucson is Nuts for Your Business!”.  It really gets the tears going.

Tucson ranks high on ‘crazy cities’ list

By Brian J. Pedersen Arizona Daily Star

At one point or another everyone in Tucson has muttered, yelled or even just thought this city is crazy.

Now there’s proof. Well, sort of.

Online news collaboration site The Daily Beast has ranked Tucson as the No. 8 on its list of America’s 57 craziest cities.

The list uses four criteria – number of psychiatrists per capita, a city’s stress level, its eccentricity and its issues with drinking – to determine the ranking.

Tucson is considered the fourth-worst when it comes to drinking, which can’t in any way attributed to the tens of thousands of law-abiding students at the University of Arizona.

We’re the 17th-most stressful city on the list, and our head-shrinker rate is 21st.

One thing Tucson isn’t according to the list: very eccentric. The Old Pueblo is only 35th in that category.

Ranking ahead of Tucson on the overall list (from first to seventh) is Cincinnati, San Francisco, Providence, Milwaukee, Las Vegas, Philadelphia and New York City.

Here’s the top 10.

#1, Cincinnati
Psychiatrists per capita: 31 out of 57
Stress: 5 out of 57
Eccentricity: 12 out of 57
Drinking: 17 (tie) out of 57

Colorful Character: Jim Bonaminio won a local contest by creating a suite that looked like a grubby port-a-potty on the outside, but really led to a 10-stall restroom replete with flowers, marble, soft tile and tropical pictures.
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#2, San Francisco
Psychiatrists per capita: 1
Stress: 57
Eccentricity: 2
Drinking: 11 (tie)

Local Character: Samir “Sammy” Keishk spent 18 months and $12,000 working on a 2,260-pound rubber-band ball in a quest to set a Guinness world record.
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#3, Providence
Psychiatrists per capita: 6
Stress: 38
Eccentricity: 21
Drinking: 7

Local Color: An local group last year created a 1,350-foot-long strand of red and white beads, breaking the Guinness world record.
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#4, Milwaukee
Psychiatrists per capita: 10
Stress: 33 (tie)
Eccentricity: 29
Drinking: 1 (tie)

Colorful Character: 36-year-old Don Gorske, who lives an hour away from Milwaukee, is known as the “Big Mac Enthusiast” for having eaten over 23,000 Big Macs in his lifetime. That’s two a day for 30 years.
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 Las Vegas, Nevada (Jae C. Hong / AP Photo) #5, Las Vegas
Psychiatrists per capita: 55
Stress: 9
Eccentricity: 9
Drinking: 1 (tie)

Local Color: Gamblers looking to make an apt political statement should visit Las Vegas’ Main Street Station Casino, where male patrons are invited to relieve themselves on a large chunk of the Berlin Wall.
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#6, Philadelphia
Psychiatrists per capita: 30
Stress: 2 (tie)
Eccentricity: 16
Drinking: 27

Local Color: In Philadelphia, New Year’s Day means one thing: Mummers. Every year on January 1, some 10,000 men and women dress up in exotic, often satirical, brilliantly colored costumes and sashay up one of the city’s main streets.
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#7, New York City
Psychiatrists per capita: 4
Stress: 19
Eccentricity: 4
Drinking: 49 (tie)

Colorful Character: Robert John Burck, better known as the Naked Cowboy to anyone who’s ever walked through (or heard of) Times Square, stuns and entertains passersby with his outfit: cowboy boots, a hat, and briefs that he hides with a guitar.
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#8, Tucson
Psychiatrists per capita: 21
Stress: 17
Eccentricity: 35
Drinking: 4

Crazy Law: If attacked by a criminal or burglar, you may only protect yourself with the same weapon that the other person possesses.
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#9, San Antonio
Psychiatrists per capita: 42
Stress: 8
Eccentricity: 23
Drinking: 9

Colorful Character: Retired plumber Barney Smith is a master toilet seat-decorator, with more than 600 on display at his museum in San Antonio.
 

#10  New Orleans, Louisiana (Chris Graythen / Getty Images) #10, New Orleans
Psychiatrists per capita: 3
Stress: 30
Eccentricity: 1
Drinking: 49 (tie)

Colorful Character: Bloody Mary (nee Mary Millan) is a New Orleans native who brings paying (and gullible) tourists on ghost hunts and voodoo rituals throughout the city.

Decent idea, we are losing between $6 and $7 million per year. When money dries up it’s time to start looking at outside of the box ideas to save tax payers dollars.

Let’s take a look at the City Mangers Office direct responses regarding the pluses and minuses of outsourcing:

1. Let’s Let A Private Management Firm Bid On The Contract: Currently there is little opportunity for private management to run these facilities (TCC, Music Hall, Fox Theater, Leo Rich Theater, Tucson Arena) and show even modest financial improvement. Private management succeeds to the extent that existing public management provides opportunities for improvement. Here are the traditional major opportunities and quick assessment of each:

2. Corruption – None. Typical examples include employees on payrolls that do not work, embezzlement, and services in exchange for personal favors. None of this exist today in Tucson.

3. Bloated Operational Budgets – Not a problem. Significant savings can be realized when facility management budgets are unnecessarily large. Extravagant spending and too many employees can be fixed by private management. Even before recent budget cuts our buildings were running on very slim budgets. With current cuts of 60%, or more there is little opportunity for private management to find significant savings.

4. Political Decisions Rather Than Business Decisions – Very little opportunity. Compared to many public management environments, Tucson rarely operates based upon politics rather than business principals. This has improved over the years. As an example, rates are now set by the staff based upon market driven decisions. Only once or twice a year does this happen today.

5. Dysfunctional Human Resources or Purchasing Policies: Very little opportunity. Over recent years these functions have improved greatly. The availability of pCards is an example of significant improvement.

6. Opportunities to bring more Events – Very little opportunity. Sometimes private companies can book more events in the same facilities. Here is a look at our buildings:

      Tucson Music Hall – Very little room for growth as the calendar in full during the performing arts season.

      Leo Rich Theater – This facility is too small to attract more concerts or other performances. It’s real potential lies with presentations at conventions. This growth ca best be realized by the creation of a headquarters hotel. The hotel staff is the ideal private sector booking partner with national booking strength.

      Tucson Arena – This facility is too small, too old, too run down and the ceiling is too low. Additionally half the current use dates are for exhibit events and not arena style events. All of this means that no significant new use can be added.

      Tucson Convention Center – Like the Leo Rich Theater, this space will be increased use with the addition of a headquarters hotel. If a hotel is not added, no one can bring more business.

      Fox Theater – There is room for event growth here. Due to their similar size, significant growth would best be realized by competing with the Rialto for concerts. This could be done but not without damage to the Rialto calendar.

7. Quality Management Staff: Very little opportunity. At times, private companies can bring quality management personnel to facilities for the first time. We have quality professionals staffing the TCC and Fox Theaters today. Over the last few years, at least 2 of these key staffers have been invited to go to work for private management companies and have declined. Additionally two of our staffers are board members are two prestigious venue management schools.

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Reminder not to violate the publics trust.

Being a small business owner I’ve seen first hand the difficulties, challenges and rewards of the life of an entrepreneur. The ability to get capital to start and grow my businesses has always been a challenge. In the early stages funding sources were credit cards, vendor terms and refi’s of our home. As things evolved we were able to fund our ventures from savings and re investments from one business into another.  It took a long time before a bank would say yes. We tried option after option for years will little success. 

From first hand experience the pendulum has swung and the small business lending options have all but dried up. Signature loan approvals that would have taken hours now take weeks to get to the ‘no’. If this country doesn’t figure out how to get the capital flowing to small business owners this recession will linger for a long, long time.

From  this weekends Wall Street Journal:

A year and a half after the financial crisis hit, the U.S. credit machine is still malfunctioning. During the boom, credit was too abundant. Now the pendulum has swung. With an eye toward limiting such swings, Sen. Christopher Dodd is expected to unveil a bill Monday that would be especially tough on big banks while preserving the Fed’s regulatory role, but the bill’s prospects remain uncertain.
…….
For a recovery to take hold, hundreds of thousands of small businesses must find the confidence to expand and create jobs. But when they get to that point, the local banks they depend on—worried about borrowers’ financial strength, scrutinized by regulators and slammed by souring real-estate loans—might not be willing or able to provide the credit they need.

While big companies have been able to borrow in bond markets, smaller companies rely mainly on bank credit, which has been shrinking. In 2009, total lending by U.S. banks fell 7.4%, the steepest drop since 1942. In all, the credit pulled out of the economy by banks since the downfall of Lehman Brothers in September 2008 amounts to about $700 billion, more than double the amount so far distributed under President Barack Obama’s $787 billion stimulus program.

“It’s a dismal situation,” says Diane Swonk, chief economist at Chicago-based financial-services firm Mesirow Financial. “Banks won’t lend to businesses because they’re afraid they’ll go bad, but that can become a self-fulfilling prophecy.”

The dearth of credit for small businesses could have a big effect on prospects for restoring the 8.4 million jobs lost since the recession began. From 1992 through the beginning of the latest recession, companies with fewer than 100 employees accounted for about 45% of net job growth, according to Labor Department data.

Policy makers have been looking for ways to reopen the spigot. President Obama has proposed creating a $30 billion fund to support small-business lending. Last month, in an unusual show of solidarity, the Federal Reserve, the Federal Deposit Insurance Corp. and other state and federal regulators issued a joint statement urging banks to continue lending to credit-worthy small enterprises.

Making sure small firms get access to credit “is crucial to avoiding a Japan-type scenario of persistent stagnation,” says Mark Gertler, a New York University economist who has done seminal research with Fed Chairman Ben Bernanke, then a Princeton University professor, on how troubles with bank lending can aggravate economic downturns.
Getting banks to lend more won’t be easy, given the rising tide of defaults on loans made to finance housing developments, office buildings, shopping malls and other commercial real estate. Deutsche Bank expects banks to suffer at least $250 billion in losses on such loans, with about half coming in the next few years. Together with an estimated $250 billion in further charge-offs on home mortgages, that’s more than double banks’ current reserves against losses on all types of loans.

The stakes are particularly high for community banks, which tend to be much more active in commercial real estate than their larger counterparts. As of December 2009, such loans comprised about 42% of all loans held by the 7,344 banks with less than $1 billion in assets, compared to about 17% for the hundred or so banks with more than $10 billion in assets.

Some bankers say policy makers’ desire to encourage lending isn’t always reflected on the ground, where they say bank inspectors are getting tougher about lending standards. “For the first time in my 37 years in banking, we’re having to say to our clients that we’re not sure this will pass muster with the regulators,” says Larry Barbour, president and chief executive of North State Bank in Raleigh, N.C. “That’s not healthy.”

Washtenaw County, Mich., which includes Ann Arbor, Ypsilanti and Saline, offers a glimpse of how the cycle of economic malaise and shrinking credit is playing out across the country. The county includes the Willow Run plant, where Ford Motor Co. once produced the B-24 Liberator bombers that helped win World War II, the University of Michigan football stadium, and hospital complexes and high-tech start-ups in Ann Arbor. As of December, Washtenaw’s unemployment rate stood at 9%, close to the national average.

Michigan Ladder’s Mr. Harrison, 44 years old, remembers vividly the day in September 2008 when the recession hit home. The company, which manufactures wooden ladders and distributes imported aluminum and fiberglass models, had been doing well despite the financial crisis. Sales were up 6% over the previous year, and Mr. Harrison had expanded the company’s staff to about 28, from 20 at the beginning of the year.
But during the week of Sept. 15, the company’s largest supplier of aluminum and fiberglass ladders suddenly refused to deliver ladders unless it was paid in advance. Within days, says Mr. Harrison, Michigan Ladder lost as much as $1 million of the supplier credit on which it relied to pay for raw materials and maintain its inventory of ladders. At the same time, its customers started failing to pay for ladders it had already delivered.

“Literally overnight, the whole world changed for us,” says Mr. Harrison. “It was simply too much of a shock—too much of a change, too quickly.” He laid off eight workers in December 2008 and another eight in 2009 as sales fell 40%.

Mr. Harrison has since lined up new credit from suppliers, and he says sales are on track to rise 15% this year. He thinks the time has come to implement the expansion project he shelved when the crisis hit. The plan: Produce in Michigan the aluminum and fiberglass ladders he currently imports from places such as Mexico and China. He already has the customers, and he calculates that manufacturing in Michigan will actually boost his profit margins, in part because the savings on shipping will offset the higher cost of U.S. labor.

“We can do this,” he says. “We can be a low-cost producer, and we will have a made-in-USA product, which we think will have some appeal to people.”

The Bank of Ann Arbor is Mr. Harrison’s best bet to finance his project. Larger banks typically don’t deal with companies the size of Michigan Ladder. Also, Bank of Ann Arbor, which has $543 million in assets, has weathered the crisis much better than most of its peers. It turned profits every year, expanded overall lending and declined the support of the government Troubled Asset Relief Program.

The bank has made loans to finance expansions for some of its stronger customers, such as Solohill Engineering, which makes products used in the manufacture of vaccines and more than doubled sales in 2009. Nonetheless, says its president, Mr. Marshall, fears about a weak recovery are prompting even healthy banks to be careful, a trend he recognizes could help make those fears a reality.

“It’s kind of a vicious cycle,” he says. “Anytime you’re in an economic environment like we are, bankers are going to be more conservative.”

One of bankers’ main concerns is the damage the recession has done to many companies’ finances. Values of real estate and other things small business owners can put up as collateral for loans have fallen so far, so fast, that many businesses have little to offer. Also, a year or more of losses have eroded the value of owners’ stakes in companies, leaving less of a cushion against bankruptcy.

Mr. Marshall says such financial concerns are a big reason he’s not ready to lend to Mr. Harrison, who says his company took heavy losses in 2008 before returning to profitability in 2009. Mr. Harrison says he’s exploring ways to raise new money from investors, but so far to no avail. “It’s not reasonable to expect that [the Bank of Ann Arbor] can make up for all the credit companies like ours have lost,” he says.

…..

A year and a half after the financial crisis hit, the U.S. credit machine is still malfunctioning. During the boom, credit was too abundant. Now the pendulum has swung. With an eye toward limiting such swings, Sen. Christopher Dodd is expected to unveil a bill Monday that would be especially tough on big banks while preserving the Fed’s regulatory role, but the bill’s prospects remain uncertain.

Tom Harrison wants to create jobs at his ladder company. But his chances of getting the loan he needs to do so depend in part on what happens to folks like home builder Jim Haeussler. See how their stories connect.

 

Rio Neuvo is looking fairly, well broke. Their is a contract being prepared for the full audit of Rio Nuevo finances and we are hearing that full results will be available by October (just in time for the November elections).  The auditor general is going all the way back to day one . From what we understand they are REALLY looking forward to doing the audit.

Here’s some preliminary findings:

Here is a list of funds spent to date = $214,989,482.28 through 01/31/2010.  
Keep in mind that the City is required to match these expenditures dollar-for-dollar in cash of ‘projects’.  This means that OVER $400 million has been spent on Rio Nuevo. The city has until the end of the TIF (2025) to match the total TIF revenues. See – SB1003  pg 20  section D

 
So what do we have to show for it?  I call your attention to the Audited Financial Statements for 2009 (CAFR ’09) page 15 where the ‘Total Net Assets’ for Rio Nuevo = $ (1,927,188)  [no typo here; negative $1.9 million]
 
 
http://cms3.tucsonaz.gov/sites/default/files/FY10_Jan_Flow_of_Funds.pdf
 
http://www.tucsonaz.gov/finance/CAFR09.pdf

Let’s see how our vaunted municipalities handle this one!

Beavers look to Tucson as ‘temporary home’ for start of 2011 season

By Aaron Fentress, The Oregonian
February 12, 2010, 6:38PM

The renovation of PGE Park for Major League Soccer has prompted the Portland Beavers to seek a new home stadium. With prospects uncertain in Portland, the team is considering Tucson, Ariz., as a temporary location for the start of the 2011 season. The Portland Beavers, in what ultimately might be the first step in relocating, are searching for a temporary home for the start of the 2011 Triple-A baseball season in case a new Portland-area stadium is not completed in time.

The Beavers’ current home, PGE Park, is being renovated in anticipation of the Portland Timbers’ first season of Major League Soccer in 2011. The Beavers have been unable to secure a site for a replacement stadium in or near Portland.

A report from the (Tucson) Arizona Daily Star stated that the Beavers have explored the Tucson area as “a temporary home in time for opening day in 2011.” Chris Metz, vice president of baseball operations and communications, confirmed to the Star and The Oregonian that the team was exploring other markets but would not name specific cities.

“My goal remains to keep the Beavers in Portland or the Portland-area,” Merritt Paulson, owner of the Beavers and the Timbers, said Friday in a statement, “and in the past year we’ve advanced three good, but unsuccessful, stadium financing plans to do just that. …”

Paulson was not available for comment.

Should the Beavers not get funding for a new stadium, any temporary move could logically become permanent. The Beavers will play the 2010 season at PGE Park.

Metz said the Beavers would need to find a stadium satisfying the requirements of Major League Baseball. Tucson has two: Hi Corbett Field and Tucson Electric Park.

Paulson’s statement said: “With no immediate local solution at this time, however, I have been approached by other locales with potential contingency plans for the Beavers outside the area. Given the rich history of the Beavers in Portland and the loyalty of our fans, this is not our preferred option, but one that we have no choice but to consider, given the timelines involved.”

The Portland City Council this month approved a $31 million agreement with Paulson to renovate PGE Park for the Timbers.