Archive for September 4th, 2010

Imagine If Humans Behaved Differently
From Inside Tucson Business – Alan Willenbrock, former treasurer of Rio Nuevo Board
 
Imagine if humans behaved differently.  Not just 10% or 15% differently, but 100% differently.  All of us would eat a full six servings of fruits and veggies each day.  We could run twice as fast and jump twice as high.  Read twice as fast and get twice as much work done each day,…
The financial projections for the proposed Rio Nuevo Hotel are also based upon the assumption that humans will behave dramatically different in Tucson than they do just about anywhere else.
 
HVS prepared a Market Study for the proposed Rio Nuevo Hotel.  This study offers projections for the occupancy for the hotel, the average rate they would pay, and outlines projected financial results. This study is the foundation for everything related to the hotel.  As a former Rio Nuevo board member and Treasurer, I felt it was my duty to determine if these consultant reports offered an accurate description of likely outcomes.  I poked and prodded and asked challenging questions.  Rio Nuevo is where it is partly because these types of reports were previously accepted at face value rather than being challenged.  Sometimes I received acceptable answers; many times the answers were unsatisfactory.
 
Convention Attendees = Hotel Room Nights
 
A financial analyst will focus on the ‘Convention and Trade Show’ part of the HVS analysis.  These are the ‘high margin’ activities that produce the overwhelming majority of room nights and related economic activity.  The ‘Consumer Shows’ and other activities are welcomed, but generate very few room nights and much less economic activity.  When people stay at the hotel they pay the going rate for the room and many site-specific room taxes.  These help pay for the debt service for the hotel – which could be approximately $190 million.  If fewer people stay at the hotel, there will be less money to pay the debt service.
 
The HVS Market Study projects a certain number of convention and trade show attendees.  For some reason, the HVS study for Tucson assumes a massive change in human behavior.  For Tucson, HVS assumes that the same human beings will generate twice as many room nights per attendee than just about any other study I have seen, or even other HVS studies.
 
HVS Tucson:  Projects 2.40 room nights per attendee of conventions or trade shows
 
C.H. Johnson Tucson Feasibility Analysis:  Projects 1.02 room nights per delegate
 
HVS Phoenix:  Projects 1.16 room nights per delegate
 
HVS Dallas:  Projects 1.40 room nights per delegate
 
 
The assumptions for HVS Tucson are as much as DOUBLE that of similar facilities – WHY?  If we simply apply the same assumptions HVS uses at other similar hotels, the occupancy for the Tucson hotel could be 50% lower than projected – that’s a big problem – who will pay the debt service that could be $1 million per month?  The answer is YOU the taxpayer would make up the difference.
 
I am not for or against the hotel.  I am against misleading tax payers and the community.  Rio Nuevo has a long history of over-promising and under-delivering.  The weight of the evidence clearly shows that the actual results will probably be significantly lower than that predicted from the HVS Market Study – by 50% or more.  This means that taxpayers are likely to pay much higher ongoing subsidies than they are currently being told.  These subsidies will be an ongoing drain on the City of Tucson’s general fund at a time when they are running large, ongoing structural budget deficits of $50 million or more. 
 
Taxpayers: Caveat Emptor!

Tucson: When did we peak?

By Earl Wettstein, special for Inside Tucson Business
Published on Friday, September 3rd, 2010

Tucson started to grow up in 1958 when Interstate 10 came to town, making the Miracle Mile entrance obsolete. What had been a town was now trying to become a city.

Then in 1963, ZIP (Zone Improvement Plan) codes arrived, and Tucson had more than one!

It said something about us in 1964 when 80 acres of barrios along Meyer Street downtown were torn down and 1,200 residents were evicted in order to build a Tucson Community Center. It was a harbinger of changes ahead. Print this story

 
When the annual Rodeo Parade was downtown, it created national exposure for Tucson and commerce for downtown merchants.
 
In 1967, the beautiful 200-room resort named the Tucson El Conquistador Hotel on East Broadway was torn down to make way for what became El Con Mall.

Was that the year Tucson hit its peak?

Or, was it in 1969 when Levy’s department store left downtown and went to the new El Con Mall?

Did we peak in 1970 when John Wayne filmed “Rio Lobo,” his last movie here?

Somewhere in here, copper companies stopped coming to Tucson to promote their industry, and stopped displaying the 11-foot diameter tires that fit on their 240-ton haul trucks.

A page was turned on Dec. 20, 1970, when the landmark Pioneer Hotel burned, and no longer was the center of Tucson’s social and business life. Downtown has never been the same since.

Did Tucson peak in 1971 when the acclaimed TV series “High Chaparral” that was filmed at Old Tucson ended its four-year run on NBC?

Or was it in August 1973 when the city’s two daily newspapers, the Arizona Daily Star and Tucson Daily Citizen, left the building they had been in for 33 years at 208 N. Stone Ave. for a much larger facility on the south side?

Was it in 1974 when the Balkanization of Tucson began with the incorporation of Oro Valley as a separate town? It was in this period also when Tucson Mayor Lew Murphy asked for “mountain to mountain annexation” which, as we see, never happened.

Was it in 1975 when Southern Arizona Bank, the financial backbone of the city, closed up downtown?

Was it in 1976 when the two-year NBC prime-time series “Petrocelli” finished filming here?

Was it when Steinfeld’s Department Store closed its downtown location and moved to El Con?

Or 1980 when Jácome’s department store closed forever?

Was it in 1982 when the Sunshine Climate Club morphed into the Tucson Convention and Visitor’s Bureau? And then added “Metropolitan” to the front of its name to embrace the suburban resorts and show how sophisticated we were?

Some people think Tucson peaked around 1985 when the Metropolitan Tucson Convention and Visitors Bureau decided to stop selling sunshine, climate and the Old West, and instead started selling the new resorts circling the city. It was no longer the logo of that smiling sun wearing a cowboy hat and saying “I’d Rather Be In Tucson!”

We gave away our old west identity. The new theme for this new regime was “Resort to the Unexpected.”

Or did it happen in 1987 when Murphy retired after 16 years – four terms – as Tucson’s mayor?

It didn’t help when in 1988 the town’s premier deal-making venue, the Old Pueblo Club, left the top floor of the Tucson Federal Building and moved to a high-rise on East Broadway. Downtown was now mortally wounded.

Then in 1990, the Rodeo parade, billed as “the world’s longest non-motorized parade” and a downtown tradition since 1925 was moved to the south side, thus making Tucson’s downtown officially dead.

Even Biosphere 2 in Oracle couldn’t get us going back uphill when it encapsulated eight residents as a scientific experiment on Sept. 26, 1991, for two years and 20 seconds before the “Biospherans” went bonkers.

The Cleveland Indians, who started coming here for Spring Training in 1947, left us for Florida in 1992. That hurt a lot.

Tucson was well past the peak on April 25, 1995, when Old Tucson Movie Studios burned down. It didn’t help that it was  later rebuilt as a dull plastic replica.

It didn’t help that we lost our AAA professional baseball team, the Toros/Sidewinders in 1997 after 38 years here.

In 1998, perhaps the peak could have been put off had the new baseball stadium been built downtown instead of on the south side where it was difficult for many folks to get to.

In 2003, the Mountain Oyster Club, exclusive enclave of cowboys, cattle ranchers and artists, left its downtown roots in the historic Jácome home on Stone Avenue and moved into a former French restaurant on the eastside.

About this time, some major airlines decided that our town did not warrant as many flights, and airline service from Tucson International Airport to the nation declined.

Now many find it better to drive up I-10 to Phoenix and catch a flight from Sky Harbor.

Tucson had peaked well before 2007 when leaders of the downtown revitalization effort called Rio Nuevo turned down a big idea to create something people might want to come here to see. It was a plan for a Tucson Wild West Museum located in an iconic, dramatic 10-story cowboy hat on I-10 at Congress Street, the entrance to downtown.

The idea originated with Bob Shelton, who had the vision that created Old Tucson as a movie-producing venue and tourist attraction and from me, Earl Wettstein, a retired ad man who had the idea for the 10,000,000 gallon cowboy hat. 

And the peak was way past in 2008 when the Tucson Mayor and Council decided to recapture some of our history by rebuilding an old church called the Convento on the west side.

Mayor Bob Walkup was so proud the night that was approved. That hole in the ground lay dormant for 18 months until they filled it in. Most of the money is gone now, we know not where.

The final coffin nails

It was also long after the peak when in 2008 Major League Baseball Spring Training evaporated in Tucson and the Arizona Diamondbacks played their last game here. But this just emphasized how far we had declined.

And then in 2009 our Mayor and Council got all excited about a modernized railroad underpass connecting Fourth Avenue with downtown as part of a streetcar line to nowhere.

It was a sad day on May 16, 2009, when the last edition of the Tucson Citizen rolled off the presses.

This year, we’ve heard that Raytheon Missile Systems picked Alabama as the site of a new missile production plant with hundreds of jobs; and the U.S. Air Force has decided its new F-35s aren’t coming here very soon, if ever.

So here we are

So what’s left? We love the University of Arizona, right? Go Wildcats! So we have that.

And we may have another minor league sport: indoor arena football.

Tucson is supposed to be considered Optics Valley. And Raytheon officials say they still like us. The annual gem and mineral shows keep coming each February. The Rodeo continues along with its parade. And the Mariachi Festival has been revived. There are the casinos. And the Pima Air and Space Museum is a must-see.

We don’t rate a Dean Martin, Bob Hope, or Joe Garagiola anymore, but we’ve managed to lure an annual major professional golf championship. The Arizona-Sonora Desert Museum is world-class. We have some very good theaters. And great Mexican food.

The sun keeps shining, and the wildlife is spectacular. Our unique saguaros. And the incredible mountains. There’s still a lot to like here. It’s just not as special as it was.

Tucson has been good to me and my family. But the area has become a Toledo of the west. A Tulsa. A big Eloy. A suburb. I hate to say it because I love this town. I’m here for the long run. I don’t think we’re going to become a Pearce or a Helvetia until our water runs out, but the glory days are over. I hope you enjoyed them as much I did.

Contact Earl Wettstein, who is now a playwright, author and established artist, at www.oiloiloil.com.

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