Archive for May, 2010
From our friends at Inside Tucson Business:
The reality is that we Mexicans will still shop in Tucson
Published on Thursday, May 27th, 2010
Editor’s note: While there’s been much publicity about boycotting Arizona to protest passage of the state’s anti-illegal immigration law, this commentary from the Sonora news website www.entretodos.com.mx offered a perspective for its Mexican audience. It appeared in Spanish and is translated here.
Don’t listen to me, be true to yourself. Are you sure you are going to participate in a boycott because of the “Arizona Law?”
I can’t see people from Sonora not going to the other side of the border to do their famous summer, winter or any kind of shopping. Print this storyEmail this storyPost a CommentShareThis
I can imagine a family gathered around the table, deciding whether to support the boycott or just go discreetly without letting their friends know so as not be subject of jokes and comments.
Their decision will be “let’s go early in the morning so nobody will see us.” The curious thing is that once you get there, you will find all of your friends from Mexico, and you’ll no longer need to justify the trip so as not be the subject of their jokes and comments.
In Arizona, merchants, hoteliers and restaurateurs are biting their nails being nervous of a boycott. They are doing their own efforts and offering deals upon deals.
That means the average 65,000 Mexicans who cross legally on a daily basis will continue. And the $7.3 million that we Mexicans spend are still being spent.
That is why a boycott of Arizona is not feasible.
Perhaps that’s the way the media sees it but that can be deceiving. In real life, things continue as usual.
What’s worse though, is the boycott has electoral “stains,” as in the case of Representatives of Congress using the media to try to convince people not to shop in Arizona. That is something really ridiculous, because who in their right mind is going to believe them, that they or their families will no longer go shopping?
It seems that few understand the real problem. It is not the people who occasionally are going shopping or vacationing in Arizona. The problem is people who live there and those who work there.
The problem will be seen in Nogales and other border cities that will become filled with unemployed people fleeing to avoid being held in jail.
I understand that those of us who go to Arizona occasionally will now have show our visa and that will be enough. And, of course we will have to be careful when we’re among friends and family who have no papers.
But something that I can be sure of is that we will not change our habits by what is happening.
Now that I’ve written these lines, I ask you again. Will you stop going to Tucson?
This commentary appeared as a column called El Serrucho (The Saw) on www.entretodos.com.mx in Sonora. Author Victor Mendoza is a TV commentator in Hermosillo who has also written columns in the city’s daily newspaper El Imparcial.
The Tucson INSIDER: No Buddy’s downtown
Insights and trends on developing and ongoing Tucson regional business news.
Published on Friday, May 21st, 2010
Despite having lined up financing and a lease, Buddy’s Grill has killed its plans to open up a location in downtown Tucson. The locally owned restaurant wanted to open its third location at 186 E. Broadway in the Julian Drew Building, but choked when confronted with $40,000 to $50,000 the City of Tucson wanted in permitting fees.
The location was already designed specifically to launch a “$10 price point” concept. The landlord tried to work out a deal but with the city refusing to budge on the fees, Buddy’s walked
Dear Bob(Andy G.), Regina(Raul), Karin, Shirley, Mike, Ernie, Jack and Paul,
Do you get it? Will you ever get it?
2) Dear Buddy’s Grill,
Obviously, you did not throw the right fundraiser for the right politician(s). Remember, always do hot finger foods and the margarita fountain……
In the early stages, supporters of big-ticket projects in Kansas City walk on the sunny side of the street. They offer cost estimates and propose public subsidies that often sound quite reasonable.
It’s only later that the dark clouds move in, as expenses and taxpayer financing go up, sometimes dramatically.
Those are good history lessons to keep in mind as the city studies its latest mega-deal — a $315 million, 1,000-room downtown hotel. It will be the subject of more scrutiny today at a meeting of the Convention Hotel Steering Committee.
Supporters say the hotel would attract more conventions and tourist dollars. A few large conventions have moved elsewhere in recent years because the city lacks an adequate number of rooms near Bartle Hall. Bulking up on hotel space could woo larger conventions that now skip the area.
However, the financing of the project is far from a done deal. The subject requires much more scrutiny today and in the coming weeks.
Mayor Mark Funkhouser and the City Council must drive down the potential cost to taxpayers. They need to find a developer willing to shovel the most private funds into a strong hotel proposal. (Public/Private deal unlike Rio Nuevo’s Public only deal)
Eventually, the elected officials will have to determine whether going into further debt for yet another large convention-oriented facility is even a good idea. The city already has granted millions of public dollars to support the Kansas City Marriott Downtown, the Hilton President and the Hotel Phillips, among others.
The financial numbers for the new hotel already look problematic.
The city’s consultants estimate that a new hotel could create revenues of $18 million a year. But the annual debt for its bonds could reach $21 million, according to a civic leader involved in studying the issue. City officials say the figure could be higher or lower in the final financing plan.
Ultimately, taxpayers could be on the hook for tens of millions of dollars. For instance, it’s already a good bet that all of the new tax revenue that the hotel creates would be plowed back into the project.
Boosters contend that the hotel should bring in additional taxes from tourists who visit entertainment spots such as the Country Club Plaza. However, those tax funds could be wiped out if debt payments for the hotel soar. The result: no real increase in money for basic city services.
Recent history shows Kansas Citians can’t just look at one side of the equation when it comes to pursuing costly public-private projects.
Early optimism ruled discussions of the Power & Light District, when tax revenues were anticipated to cover 100 percent of the bonds sold for the project. Unfortunately, taxes are covering less than 50 percent of those costs. Taxpayers are picking up the rest — $8.1 million in the last city budget and $10.8 million this year.
Overland Park’s experience offers another cautionary tale: The city-supported convention hotel cost taxpayers $2.4 million to fully cover bond debt payments in 2009, far more than once expected.
Kansas City’s hotel steering panel soon is likely to request competitive proposals from developers asking what they could build, and at what cost, at the preferred site next to the Power & Light office tower.
Council members and the public would love to see a project that puts the full burden on the private sector. That’s the most optimistic way to look at the deal at this point.
“Tucson has always been that way and it always will be!” I’m not sure, but I think attitudinally this is pervasive in the core thinking of every small business owner in Pima County. Not unlike the movie The President’s Analyst”, there is some force that put this thought into the minds of small business owners. Each then adopts the attitude, “There’s nothing that can be done to change it – it’s the way things are in the Old Pueblo”.
I was recently in a meeting where a young U of A graduate spoke about this mindset. I certainly wish all of you could have heard him speak. All you gentlemen have made hundreds of millions of dollars in this marketplace, and you have been most generous and philanthropic. But have you ever asked, what is the state of affairs you are leaving to the young minds who want to stay in Tucson? It really isn’t pretty. As examples, The Wall Street Journal’s MarketWatch ranks Tucson at the bottom of the heap of places to be in business, and The Rose Institute ranked Tucson as one of the top ten MOST expensive cities to do business in. This is, in part, your legacy.
We have a Chamber of Commerce, where some of you are members, whose leadership openly supports tax increases. Most certainly this has a chilling effect on small businesses as noted by the Chamber’s declining membership. Yet nobody with new thinking gets on the board of directors that hasn’t been hand picked by the leadership. There is an executive director who doesn’t understand that perception can be reality, and who additionally and openly rants that if you are not a member of the chamber you are of no concern to him. The deterioration of this organization has happened on your watch. Heck, it still is! As influential as you are and regardless of what you have in wealth, you lack in numbers. And, it takes numbers to bring about changes at city hall and with county commissioners. Conversely small business owners have numbers on their side. What they have been lacking is a voice – a voice that makes it be known to every elected official, “If you think you can take it out of our hide any longer think again.” Anyone running for public or private office in Pima County, and looking for a nod from us, should consider signing a “Contract with Small Business Owners”: “If it’s going to drive up the cost of doing business in Pima County, I’ll fight against it.”
If the local government needs more money and the money is used for the benefit of the populace at large, everyone adds to the kitty, but piling it on small businesses must stop.
Every office seeker must solemnly pledge to put forth a plan (not just an “idea”) that will make sure every year Tucson improves its position in MarketWatch and in the Rose Institute.
Until now small business owners have been their own worst enemy. “We have met the enemy and it is us”, may once have described us, but now we know what we have to do. In just the few groups where I associate, we already have 700 small business owners who want change—a number which grows in direct proportion to the undercurrent of unhappiness with public and private leadership.
As a business broker, the most common phrase I hear is, “Gene, find me someone who will pay me $XXXXXXX for my business”. I call them “Dreamonaires”, but we’re not dreaming. Many of these small business owners have done business with the companies some of you own, so please help us change our respective legacies. It certainly will enhance yours to be noted as helping small business owners find leaders committed to changing Tucson’s anti-business image. We need a NEW OLD PUEBLO! We need your help.
Gene Hildreth, Friend of Small Business Owners
Great stats from David Frances, Inside Tucson Business finance contributor:
Sitting on the Mexican border, Arizona has a tough illegal-immigrant problem. That population grew from 330,000 in 2000 to 560,000 by 2008. Some 95 to 98 percent of those are Hispanic, says Krikorian. Of these, at least 60 percent are Mexican, about 20 percent from Central America.
Earlier state action regarding illegal immigrants, plus a recession, have already cut their number by perhaps 18 percent between 2008 and 2009 to about 460,000. Nationwide, the number of undocumented immigrants has shrunk from an estimated 12.5 million in 2007 to under 11 million now, estimates Krikorian.
But just because the illegal population is slipping is no reason to ignore the problem. For example: Krikorian’s analysis finds that illegal immigrants commit modestly more crime than average in Arizona. About 12 percent of workers in the state are illegal. They and their legal U.S.-born children (under 18) make up a fifth of those living in poverty in the state, a third of those without health insurance, and a sixth of school students.
Arizona acted because Washington has not tackled illegal immigration seriously. A fence is going up across the state’s 700-mile border with Mexico. For most of its length, though, it may stop vehicles, but not people. “Grandma could jump across it,” says Krikorian. Republicans promise to introduce bills to strengthen the fence.
HERE – immigration, La Raza, guns and federalism v. states rights…
By Joe Higgins and Chris DeSimone, Inside Tucson Business
Published on Friday, May 21st, 2010
Champagne corks a-poppin’. Pictures being snapped for posterity. The good old boys of Tucson are slapping each other on the backs even harder than usual. They’re going to build an asset that is going to help rejuvenate a depressed part of Tucson and bring in new outside development and greenbacks.
No, we’re not talking about the final inking of the Garfield Traub hotel deal downtown.
This was the deal that brought the Kino Sports Complex into existence. Yes, we know some things by Major League Baseball teams are beyond the control of local officials, but there were options to do things differently.
Building a very nice baseball facility on Ajo Way next to a hospital that would later emphasize mental treatment — “A Flyball Over the Cuckoo’s Nest” — and the county’s juvenile detention facility would indicate that not all factors were considered when the deal was finalized.
It’s still not unusual to hear someone ask, “Why didn’t they build the ballpark downtown?”
Tucson doesn’t need to make a similar mistake with a downtown hotel.
The new board of the Rio Nuevo Multipurpose Facilities District is tackling the issues surrounding the hotel in a diligent manner. It’s a tough task. And the district has no money.
Nearly all of the tax increment financing revenue that will come in next year will be spent in debt service for the sins of the past. The board has little other option than to defer to the Tucson City Council to back the funding of a new 500-room hotel.
On May 13, the Rio Nuevo board spent hours hearing from Garfield Traub and its allies. But one things was missing: the other side of the story.
We won’t argue that a rehabbed Tucson Convention Center and 500 new hotel rooms downtown wouldn’t be a plus for the economy. Our questions are: Is it feasible? Is it affordable? Is it what the city should do right now?
Let’s break down the proposal as offered up by consultant HVS Convention, Sports and Entertainment, developer Garfield Traub and bond advisor Piper Jaffray. This tandem is in the business of building hotels and convention centers financed by municipalities.
They’ve worked together before – sometimes two of them, sometimes all three – building hotel and convention center projects including a Hilton hotel in Vancouver, Wash.; a Hyatt in Dallas; a Doubletree in Bay City, Mich.; a Hilton in Baltimore, Md.; and a Sheraton in Overland Park, Kan.
The city manager of Overland Park sent a letter of support touting the benefits of his city’s 412-room hotel. So let’s take a closer look at that situation.
Overland Park, which publicly funded its 412-room hotel in 2002, is a well-to-do suburb of Kansas City. It is home to the headquarters of Fortune 500 companies Sprint/Nextel (18,500 employees), Yellow Cab and Trucking (55,000 employees), and Embarq, a $6 billion telecom company (18,000 employees). It also has Black & Veatch Corporation engineering (10,000 employees), Waddell & Reed Financial Investment and others.
These facts are important because the projections for the Overland Park hotel and convention center included the larger local corporate business base that is there. Tucson’s local business base is slim to non-existent.
Standard and Poors credit rating analysis of the Overland Park-backed hotel found “there is uncertainty regarding the convention center’s ability to attract events over the long term. About half of the Sheraton’s room-nights come from associations and corporate groups using the convention center. As a mid-market facility, it competes with convention centers located in the state and region.”
On that last point, it needs to be noted Phoenix just invested $650 million in its 1,000-room hotel and convention center.
Overland Park’s Sheraton has underperformed HVS projections and, as of year four, has an average daily room rate of $132 and average occupancy rate of 67 percent. In Tucson, HVS is projecting that by year four a new convention hotel will have an average daily room rate of $163 and 69 percent occupancy.
Without a corporate base in Tucson for rooms and with increased competition an hour and half away in Phoenix, can the City of Tucson be expected to cover the bond funding? The answer is yes. The city will cover the bond payments using its road pothole repair fund, or money it would have spent on public safety or graffiti removal.
It’s time for all sides to be heard on the downtown convention center hotel – before the city gets itself into a financial pickle.
The City of Tucson doesn’t have a good record on downtown redevelopment. We trust the Rio Nuevo board will recommend the right thing, but all the options need to be vetted.
Let’s not build another Kino Sports Complex that will cause us to look back and wonder – woulda, coulda, shoulda.
Contact Joe Higgins and Chris DeSimone at firstname.lastname@example.org. They host “Wake Up Tucson,” 6-8 a.m. weekdays on The Voice KVOI 1030-AM. Their blog is at www.TucsonChoices.com.
Copyright © 2010 Inside Tucson Business
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