Archive for December, 2010

The TUSD board voted unanimously to comply with the States request regarding ethnic studies. What does that mean? Will there be changes to the program?  Does the program help keep Latino kids engaged and in school? Does the program teach activism and encourage students to rise up? Should it be an elective or a core class that can replace US history?  Should TUSD be investing this much time and money in this program while the district is clearly struggling to remain viable?

January first the issue comes to a head.

The TUSD board passed a resolution addressing the 4 phones of the new law and says their program is in complaince. A show down will ensue in the court system.

Here is a clip from a student in an ethnic studies class:

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This is what happens when the businesses leave and the tax revenues dry up. They have been hit hard as a suburb of Detroit by the decline of General Motors.

Hamtramck is relatively poor to middle class with 27% of the population living below the poverty line.  The minority population is over 42% with a heavy migration of Muslims.  Hamtramck has a population of about 25,000 which is bigger than Sahuarita and smaller than Oro Valley.  Are there parallels to Tucson?

New York Times - December 27, 2010
HAMTRAMCK, Mich. – Leaders of this city met for more than seven hours on a Saturday not long ago, searching for something to cut from a budget that has already been cut, over and over. This time they slashed money for boarding up abandoned houses – aside from circumstances like vagrants or obvious rats, said William J. Cooper, the city manager. They shrank money for trimming trees and cutting grass on hundreds of lots that have been left to the city. And Mr. Cooper is hoping that predictions of a ferocious snow season prove false; once state road money runs out, the city has set nothing aside to plow streets. “We can make it until March 1 – maybe,” Mr. Cooper said of Hamtramck’s ability to pay its bills. Beyond that? The political leaders of this old working-class city almost surrounded by Detroit are pleading with the state to let them declare bankruptcy, a desperate move the state is not even willing to admit as an option under the current circumstances.
 
“The state is concerned that if they say yes to one, if that door is opened, they’ll have 30 more cities right behind us,” Mr. Cooper said, as flurries fell outside his City Hall window. “But anything else is just a stop gap.”

“We’re going to continue to pursue bankruptcy until the door is shut, locked, barricaded, bolted.” Bankruptcy, increasingly common among corporations and individuals, remains rare for municipalities. Local leaders who want to win elections find it unappealing and often have other choices for solving financial woes. Besides, states have a say in whether a municipality may pursue bankruptcy at all, and they have every reason to avoid such an outcome, not least of all for fear of a creating a ripple effect that could cripple the municipal bond market and drive up the cost of borrowing.

My wish for Tucson is:

“… that the state will significantly build upon my executive order creating the Arizona Commerce Authority and strongly support this new model to advance our economy. The authority is a private-sector leadership board, chaired by me and future governors, designed to position Arizona to be more responsive to business needs and opportunities.

It will coordinate and integrate the efforts of key partners like Science Foundation Arizona, the universities, regional economic development groups, and other key stakeholders – all working together to secure success for the State of Arizona.”

— Gov. Jan Brewer

“… for the private and public sector to work together to enhance economic growth and recovery. We need public policy that is business friendly and brings that attitude to our tax and regulatory burdens.  We need leadership that is passionate in achieving those goals. We need to tilt finance policy toward economic growth, because the number one issue today is jobs.”

— Peter D. Herder, the Herder Companies

“… that our city be attractive.  There is blight everywhere, clutter, weeds and potholes. While preserving our heritage, lush native landscaping, smooth roads, great schools, and a cross-town parkway would be nice. I would like Tucson to be what it once was: the Jewel of the Southwest. Then, one metro government. It’s a shame to spend so much taxpayer money on two very large government bureaucracies.

Plus, just a couple of Fortune 1000 companies to locate here. Great companies provide a much-needed stimulus and community leadership. Their tax proceeds and local spending provide a revenue base.  They can be the catalyst for positive change.  Unfortunately, they won’t come if we look like a border town.”

— Hank Amos, Tucson Realty & Trust Co.

“… that the business community work together as a collective voice in collaboration with other sectors of the community (non-profit, government, etc.) to make our region a vibrant and healthy place to live, work, learn and play for current and future generations of all ages.”

— Keri Silvyn, attorney with Lewis and Roca and general counsel to the Rio Nuevo Multipurpose Facilities District

“… for less rancor and more tolerance from each side of the political aisle; an awareness from elected leaders that funding education at all levels leads to more quality jobs; and clean up the weeds in public areas and fix the nasty potholes in our roads.”

— Mike Bolchalk, Bolchalk FReY Marketing

“… that the business community realize that without their regular involvement in our political environment, we as a community will fail.  We can’t just throw money at candidates and expect them to do our bidding.  We must follow through with an investment of time and educate our elected bodies so they can better understand the whole picture.”

— Rick Grinnell, Smart United Business Strategies

“… that everyone become just a little more involved and engaged. Oh what a blessing it would be if most of us (myself included) complained a bit less and provided a bit more constructive help and support to our schools, community leaders, and charities.”

—  Jim Marian, Chapman Lindsey Commercial Real Estate

The Arizona Daily Star ran a story on the plight of the Mount Graham Red Squirrel. Apparently over the past 20 plus years the same 250 squirrels have called Mt. Graham home.  They don’t seem to be multiplying like their little cousins, the rabbits. To ‘level the field’ the  Center For Biological Diversity have started a law suit to shut down the telescopes and all activity on the mountain. 

I encourage our readers to check out Jonathan DuHamel from the Tucson Citizen and his expose on the finances behind these legal advocacy groups. Long story short the US Taxapayer is paying BILLIONS of dollar every year to these groups to start these law suits. Good old entreprenuerial spirit. Only in America.

Here’s the details from the DuHamel article;

Environmental litigation gravy train 

Opinion piece by Karen Budd-Falen, Budd-Falen Law Offices 

September 16, 2009 

Consider these facts: 

• Between 2000 and 2009, Western Watersheds Project (“WWP”) filed at least 91 lawsuits in the federal district courts and at least 31 appeals in the federal appellate courts; 

• Between 2000 and 2009, Forest Guardians (now known as WildEarth Guardians) filed at least 180 lawsuits in the federal district courts and at least 61 appeals in the federal appellate courts; 

• Between 2000 and 2009, Center for Biological Diversity (“CBD”) filed at least 409 lawsuits in the federal district courts and at least 165 appeals in the federal appellate courts. 

• In addition, over the last 15 years, the Wilderness Society has filed 149 federal court lawsuits, the Idaho Conservation League has filed 69 federal court lawsuits, the Oregon Natural Desert Association has filed 58 lawsuits, the Southern Utah Wilderness Association has filed 88 lawsuits and the National Wildlife Federation has filed 427 lawsuits. 

• In total, the eight environmental groups listed above have filed at least 1596 federal court cases against the federal government. 

• Every one of the groups listed above are tax exempt, non-profit organizations. Every one of those groups listed above receives attorney fees for suing the federal government from the federal government. 

• These statistics do not include cases filed in the administrative courts, such as BLM administrative permit appeals before the Office of Hearings and Appeals or Forest Service administrative appeals. These statistics only include federal district court cases. 

On the other end, these same environmental groups are receiving billions of federal tax payer dollars in attorney fees for settling or “winning” cases against the federal government. Accurate statistics have not been kept by the Justice Department or the federal agencies, thus there is no accounting for the total amount of tax dollars paid, however, we were able to uncover these facts: 

There are two major sources for attorney fees that can be paid to plaintiffs that “prevail” in litigation either by winning a case on the merits or by the Justice Department agreeing that the group “prevailed” in a settlement by achieving the purpose of the litigation. One source of funding is called the “Judgment Fund.” The Judgment Fund is a Congressional line-item appropriation and is used for Endangered Species Act cases, Clean Water Act cases, and with other statutes that directly allow a plaintiff to recover attorney fees. There is no central data base for tracking the payment of these fees, thus neither the taxpayers, members of Congress nor the federal government knows the total amount of taxpayer dollars spent from the Judgment Fund on individual cases. The only information regarding these fees that is available is: 

• In fiscal year 2003, the federal government made 10,595 individual payments from the Judgment Fund to federal court plaintiffs for a price tag of $1,081,328,420. 

• In 2004, the federal government made 8,161 payments from the Judgment Fund for $800,450,029. 

• In 2005, 7,794 payments were made from the Judgment Fund for a total of $1,074,131,007. 

• In 2006, the federal government made 8,736 payments from the Judgment Fund for $697,968,132. 

• In only the first half of fiscal year 2007, the federal government made 6,595 payments from the Judgment Fund for $1,062,387,142. 

• In total, $4,716,264,730.00 (that is billion with a “b”) in total payments were paid in taxpayer dollars from the Judgment Fund from 2003 through July 2007 for attorney fees and costs in cases against the federal government. 

The second major source of payments to “winning” litigants against the federal government is the Equal Access to Justice Act (“EAJA”). EAJA funds are taken from the “losing” federal agencies’ budget. Thus, for example, the attorneys fees paid under EAJA come from the “losing” BLM office’s budget. That is money that could be used for range monitoring, NEPA compliance, timber projects, archeology and cultural clearances and other agency programs. Within the federal government, there is no central data system or tracking of these payments from the agency’s budgets. The only statistics we were able to compile are as follows: 

• Between 2003 to 2005, Region 1 of the Forest Service (Montana, North Dakota, northern Idaho) paid $383,094 in EAJA fees. 

• Between 2003 to 2005, Region 2 of the Forest Service (Wyoming, South Dakota, Colorado, Nebraska, Oklahoma) paid $97,750 in EAJA fees. 

• Between 2003 to 2005, Region 3 of the Forest Service (Arizona, New Mexico) paid $261,289.85 in EAJA fees. 

• Between 2003 to 2005, Region 4 of the Forest Service (southern Idaho, Utah, Nevada) paid $297,705 in EAJA fees. 

• Between 2003 to 2005, Region 5 (California) of the Forest Service paid $357, 023 in EAJA fees. 

• Between 2003 to 2005, Region 6 (Washington state, Oregon) of the Forest Service paid $282,302 in EAJA fees. 

• Out of the 44 total cases in which the Forest Service paid EAJA fees between 2003 and 2005, nine plaintiffs were NOT environmental groups and 35 payments went to environmental group plaintiffs. 

We also tried to track the fees paid to environmental groups in certain federal courts. For example, in the Federal District Court for the District of Idaho, over the last 10 years, WWP received a total of $999,190 in tax dollars for “reimbursement” for attorney fees and costs. Of the total cases filed by WWP in the Federal Court in Idaho, 19 were before Judge Winmill; eight of those cases resulted in a decision on the merits with WWP prevailing and with the total attorney fees being awarded of $746,184; six of the cases were settled by the federal government with a total attorney fees still being awarded of $118,000. WWP won one case but attorney fees were not paid. WWP lost six cases. There were two cases in which the documents indicated that the federal government agreed to pay attorney fees, but the payment amount was kept confidential from the public. 

In my opinion, there are a lot of things wrong with this picture. The federal government is spending billions in tax payer dollars without any accounting of where the money is going or to whom it is going. There is no oversight in spending this money, especially the money that is coming out of agency budgets that should be funding on the ground programs to protect public lands, national forests, ranchers, recreationists, wildlife and other land uses. 

Nonprofit, tax exempt groups are making billions of dollars in funding; the majority of that funding is not going into programs to protect people, wildlife, plants, and animals, but to fund more law suits. Ranchers and other citizens are being forced to expend millions of their own money to intervene or participate in these lawsuits to protect their way of life when they have no chance of the same attorney fee recovery if they prevail. In fact, they are paying for both sides of the case–for their defense of their ranch and for the attorney fees environmental groups receive to sue the federal government to get them off their land. There are also numerous cases where the federal government agrees to pay attorney fees, but the amount paid is hidden from public view. This has to stop and the government has to be held accountable for the money it’s spending. (Source ) 

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HERE

From the ‘this can’t be good news’ department. The Downtown Phoenix Hotel Corporation just had their 2005 A rated bonds dropped down to a Ba1 status. Citing sub par revenue performance and missed projections the ratings agency Moody’s downgraded the debt.  60 Minutes did a piece of municipal debt this weekend, (catch it HERE).  The gist of the story is that the States are spending more and going into debt for unfunded pensions at an alarming rate.

The municipalities that are in the most trouble, those that are near bankruptcy, have all bet big on an economic idea that hasn’t paid off. To finance these ideas a City floats bonds to the financial market backed by the full faith and credit of their various revenue streams. When these deals don’t pan out the tax payers are left with little choice but to cut core services like police and fire, raise taxes or default on their debt.

Tucson had it’s brush with economic ‘Hail Mary’s', including a failed downtown hotel. Here is the Moody report on the Phoenix Downtown Hotel project. The City pumped in $650m into a convention center and billions into light rail, sporting arenas and public private projects to make it all happen. Looks like it ain’t happening.

NEW YORK, Dec 20, 2010 — Moody’s Investors Service has downgraded the Downtown Phoenix Hotel Corporation’s $156.71 million Series 2005A Senior Revenue Bonds to Ba1 from Baa3 and assigned a negative outlook. The rating on the corporation’s $164.425 million Series 2005B Subordinate Revenue Bonds and $28.865 million Subordinate Revenue Bonds, Taxable Series 2005C were also downgraded one notch to A2 from A1 and were assigned a stable outlook. The Series 2005 Bonds were initially issued to construct and furnish the 1,000-room full service headquarters Sheraton hotel which is located near the Phoenix’s recently expanded convention center. The hotel started operations on October 2008 as expected. The Series 2005B and 2005C subordinate bonds have different security provisions that provide substantial support from the City of Phoenix (GO rated Aa1/Negative outlook) in the form of city sports facilities taxes in the event that hotel revenues are insufficient
for subordinated debt service.

RATINGS RATIONALE

The downgrade on the senior bonds reflects the lower than projected performance of the hotel for FY 2009 and estimated FY 2010 (eight months of actuals and four months of estimated). The occupancy rate and the average daily rate of the hotel fell significantly below expectations due to the economic conditions at the time of hotel’s initial operating period. Recent operating performance resulted in low coverage ratios that has put downward pressure on the rating. The downgrade on the subordinate bonds reflects city’s decreased sports facility taxes.

LEGAL SECURITY: The senior bonds are secured by net revenues of the headquarters hotel project as well as the balances of various operating, replacement and debt service reserves totaling more than $32 million ($10.3 million can be released to the city once the hotel meets sustained debt service coverage targets). The subordinate bonds are secured by a junior claim on the hotel’s net operating revenues but, in the event such revenues are insufficient, also benefit from the City of Phoenix’s unconditional pledge under a room block leaseback agreement to provide sports facilities taxes (1% on hotel room rentals and 2% on car rentals). The claim to the sports facilities taxes are junior to the city’s outstanding senior excise tax obligations, of which sports facilities taxes are a small component. The pledged trust estate also includes the corporation’s leasehold interest in the hotel and project site which, in the event of default, the trustee may foreclose upon for the benefit of
senior and subordinate bondholders.

INTEREST RATE DERIVATIVES: None. OUTLOOK
The negative outlook on the senior rating is based upon Moody’s expectation the over the next 12 to 18 months the hotel will likely struggle to increase its occupancy levels and average daily rates to generate higher revenues and debt service coverages. The sports facility taxes have also experienced declines in 2009 and 2010, however the taxes are already recovering and are expected to exceed the subordinate debt service requirement going forward.

What Could Change the Rating – UP

The rating could move up if the hotel reaches its initially projected operating and coverage targets. What Could Change the Rating – DOWN
The rating could face further downward pressure if the operating performance of the hotel declines further and results in narrower financial margins to support debt service requirements.

STRENGTHS:

* The hotel is located near the Phoenix Convention Center, which has became one of the top 20 largest conference venues in the nation after its expansion in 2009, and is centrally located within walking distance to the city’s downtown entertainment districts

* Strong management provided by Starwood Hotels and marketing of the facility by the Greater Phoenix Convention and Visitor’s Bureau help the hotel to compete against the large supply of hotels in the area

* The hotel has ample reserves for senior bonds and available funds for subordinate bonds

* Subordinate bonds benefit from the availability of substantial city support in the form of sports facilities taxes that are projected to exceed subordinated debt service requirements

CHALLENGES:

* The demand has declined drastically in Phoenix due to the economic conditions during the hotel’s ramp up period, resulting in lower than expected operating performance for the first 2 years of operations that is critical to establishing dominance in the market

* Hotel is operating in a volatile and highly competitive industry and is vulnerable to regional and national economic downturns and the additions to the downtown Phoenix hotel room supply since its initial rating

* Sheraton Phoenix is recovering slower than the Metro Phoenix area in terms of occupancy and RevPaR levels

* While the subordinated bonds benefit from a pledge of the city’s sports facilities taxes, this revenue stream is affected by the decreased performance of the local hotel market as the taxes are derived from hotel and car rentals; this has resulted in narrow margins

* In 2012 the debt service requirements for the hotel will be increasing, since the hotel will start amortizing principal. MARKET POSITION: HOTEL IS OPERATING SIGNIFICANTLY BELOW EXPECTATIONS
In 2004, before the Downtown Phoenix Hotel was built, availability of rooms in Phoenix Metro area was around 50,000 with over 20,000 falling under the first class category. At the same time, the availability of rooms within one mile of the convention center block was under 2,000. This shows that while Phoenix was in good position to serve the market, it was undersupplied with hotel rooms in immediate proximity of the convention center. An initiative to grow the downtown Phoenix area started during that time and a significant amount of progress has been made. There has been a large supply growth of hotels in the area, as well as the expansion of the convention center to triple its original size. Currently there are many sporting and entertainment venues in downtown area and the city is still looking to develop further. At the end of 2009, the total available rooms in Phoenix Metro area reached 60,000.

The Sheraton Phoenix hotel completed its first full year of operations under a severe economic downturn and could not reach its projected ramp up levels. At the time of the initial rating, the hotel was expected to stabilize by 2011/2012 (June 30 year end) at $182 ADR and 69% occupancy levels. The hotel’s 2009 occupancy levels ended up at 49%, approximately 20% below expectations. In comparison, U.S. lodging market occupancy rate have went down 8% in 2009 to 55% and is estimated to increase to 58% in 2010. And U.S. market’s RevPAR decreased 16% to
$54 and is estimated to increase 4% to $56 in 2010. In 2009, Phoenix Metro area’s occupancy rate was down 11.8% and is estimated to increase by 5.3% in 2010 to 52.4%.

The approved budget for the hotel for fiscal year 2011 (The Downtown Phoenix Hotel Corporation’s fiscal year is January through December) assumes an ADR of $159 and occupancy of 56.3 %. Moody’s expects the performance decline to stop in 2011 and remain flat or experience slight improvement in 2012 and onwards and will monitor the rating to ensure that it will reach the new estimates for a sustained basis.

COMPETITIVE STRATEGY: THE HOTEL IS COMPETING WITH OTHER HOTELS IN DOWNTOWN AREA FOR THE CONVENTION CENTER BUSINESS

The Ba1 rating incorporates the benefits of the hotel’s location near the recently expanded nearby Phoenix Convention Center and anticipates some demand through advance bookings through the center. The convention center was expanded to 900,000 square feet center and is competing against comparable facilities in Austin, Denver, Milwaukee, Salt Lake City, and Tampa.

The hotel heavily relies on the Phoenix convention center and expects to receive 60% of its customers from groups with approximately 25% of that coming from the convention center. The convention center operated well in 2009 and 2010 and expecting similar results for 2011. Since the booking window has shorten for convention centers in general to 14-18 months, from 3- 4 years in advance, Sheraton hotel will also focus on attracting in-house groups to counter possibly lower city-wide convention activity in 2011 and 2012. Sheraton hotel is competing against other hotels for the convention center’s business including the Hyatt Phoenix Downtown Hotel and the Wyndham Phoenix which together have 1,242 rooms.

A 250-room Westin Hotel is scheduled to open right across from the hotel in 2011. The management believes that this would help them to capture more groups for their hotel since they could send the transient customers to Westin. Also, Downtown Sheraton Hotel believes that having Westin nearby would help in terms of rates since having more expensive hotels around the area would create a more balanced market.

FINANCIAL PERFORMANCE: COVERAGE RATIOS ARE EXPECTED TO STAY AT THE CURRENT LEVELS

The hotel is currently generating weaker financial coverage ratios than anticipated. Estimated senior bond coverage for FY 2010 is 1.65x and the FY 2011 senior bond coverage is expected to be at 1.73x. However the stronger estimates going forward could be hard to reach, as the principal payments for the senior bonds are scheduled to start in FY 2012 (with the part of the increase that is paid from FY 2011 cash flows already incorporated into the FY 2011 forecast) and the senior FF&E reserve requirements are increasing in FY 2011 to 4% from 3% (which is also included in the FY 2011 forecast).

The $10.3 million senior special debt service reserve fund is subject to be release to the city if the senior debt service coverage ratio (calculated based on indenture) exceeds 2.75x for 3 years in a row. For the intermediate future, the corporation is not expected to meet the 2.75x senior coverage, therefore the $10.3 million senior special debt service reserve will not be available to the city, and could be used to pay deficiencies in the senior debt service account. The hotel also has $10 million operating reserve fund.

SUBORDINATE BONDS BENEFIT FROM CITY SALES TAX SUPPORT

The higher rating on the subordinate debt reflects the substantial support of the City of Phoenix (GO Rated Aa1/Stable rating) city sports facilities taxes. The subordinate bonds are secured by a junior claim on the hotel’s net operating revenues but, in the event such revenues are insufficient, also benefit from the City of Phoenix’s unconditional pledge under a room block leaseback agreement to provide revenue subsidies from sports facilities taxes (1% on hotel room rentals and 2% on car rentals). The claim to the sports facilities taxes are junior to the city’s outstanding senior excise tax obligations (Aa2 rated), of which sports facilities taxes are a small component.

The portion of the sports facility tax that the hotel has access to historically increased double digits, however both in fiscal years 2009 and 2010, tax collections experienced 11% declines. Currently, the subordinate bonds could meet their debt service requirement just through the sportsfacility tax and without the support from the hotel revenues. For the subordinate bonds, in 2010 the hotel reached 2.15x coverage with the cash flow available for subordinate debt. The coverage was 1.37x without the support of the hotel’s revenues. The coverage is expected to be 1.66x and 1.10x in 2011.

In 2012, the subordinate debt service requirement will increase to $12.7 million due to principal payments, which could narrow debt service coverages. However ,the city expects to see improvements in its sports facility tax by 2012 with an increase of approximately 5%. The sports facility fund has a balance of approximately $35 million as of June 30, 2010, which may be used to pay subordinate debt service. The stable outlook reflects our expectation that the tax levels will be sufficient for the debt service requirements going forward.

CAPITAL PLAN: HOTEL STARTED OPERATIONS; NO ADDITIONAL BORROWING EXPECTED

The company completed construction on time and within budget and the hotel started operations on October 2008 as scheduled. While the company has the authority to issue additional bonds secured by a subordinated claim on net revenues and city sports facilities taxes, officials report that no such borrowing is anticipated.

KEY STATISTICS: Hotel flag: Sheraton Room count: 1,000
Occupancy rate (Estimated FY 2010): 52.2% ADR (Estimated FY 2010): $158.61
RevPAR (Estimated FY 2010): $82.85

Senior debt service coverage (Estimated FY 2010): 1.65

Subordinate debt service coverage (Estimated FY 2010): 2.15

Consolidated debt service coverage (Estimated FY 2010): 1.18

Senior Debt Service Reserve Fund: $12.25 million

Senior Special Debt Service Reserve Fund (subject to be release to the city provided the hotel meeting sustained debt service coverage levels):
$10.3 million

ISSUER CONTACT: Jeff Dewitt
Finance Director

602-262-7168

Esra Akyol
Analyst
Public Finance Group
Moody’s Investors Service

John Medina
Backup Analyst
Public Finance Group
Moody’s Investors Service
Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653

By Joe Higgins and Chris DeSimone, Inside Tucson Business
Published on Friday, December 17th, 2010

What a year 2010 has been. We’ve seen plenty of transition, turmoil and ups and downs. One of the top questions we continue to hear: “Is the political environment for business getting any better in Tucson?”

As we get ready to wrap up 2010, we take a look back to reflect on the top 10 positive steps towards making the Tucson region and Southern Arizona more business friendly.

We’ll do this David Letterman countdown style: Print this story

10. Kozachik joins City Council

Technically, this happened at the end of 2009 but what a difference Steve Kozachik has made on the Tucson City Council. The Koz isn’t your typical politician. In fact, he is the everyman in all of us who got sick of watching his city stumble so he decided to do something about it.

Kozachik’s background is in building major government projects at the University of Arizona — on time and on budget. Compare that to the skill set of the person he replaced, Councilwoman Nina Trasoff, a former TV news anchor and PR consultant, and you see how important it was that Kozachik was elected in November 2009.

He has shown he can read a contract, understand issues from multiple angles and use the news media to bypass the fact that he is only one vote out of seven. Kozachik actually gets things done. Now, if we can find him three more votes on the council.

9. Downtown hotel stopped

Despite Mayor Bob Walkup’s attempted force-feeding, the over-priced proposal to build a downtown convention center hotel that would have been albatross was mercifully put out of its misery. The process had a cast of characters and plenty of drama. We flew in Heywood Sanders, a professor at the University of Texas-San Antonio, to educate council members of the folly of such a hotel. He provided horrific examples from other cities that had bought into the same types of projects.

At the same time, the board of directors of the downtown redevelopment Rio Nuevo Multipurpose Facilities District got a makeover by the Legislature, which appointed new members, took control from the city and narrowed the focus. The most vocal of the new members, and the one with the most municipal funding experience, was found to have “a conflict of interest” after he was critical of the hotel’s funding in interviews with the news media.

Meanwhile, former council members and business association executives were hired as consultants on the project.

Businessman Humberto Lopez and the Tucson Tea Party launched a failed attempt to recall Walkup and counciwomen Karin Uhlich and Regina Romero.

In the end the hotel was scrapped, though $4 million was spent on a new entrance to the Tucson Convention Center and another $15 million was spent on plans that will never be used.

8. New leadership at chamber

After 32 years as president of the Tucson Metropolitan Chamber of Commerce, Jack Camper’s retirement in March should end the years in which the chamber has been a non-player in the business and political arenas. In that time, competing groups have sprouted up, each diluting the business community’s influence and place in the political process. Over time, membership in the chamber dwindled. A group of small business owners finally said enough is enough and elevated the discussion.

We encourage the chamber to look for a few things in their next leader:

• Look locally, we need someone who understands the current playing field.

• Has to command the respect of small business, local governments and the big boys alike.

• Must have the personal courage to be the true standard bearer for the “Party of Business” rather than the political parties that put “D”s and “R”s after politicans’ names.

It’s time for this chamber to truly be a force on Election Day. Too many jobs and businesses are on the line.

7. Arizona Policy Institute

Modeled after the Goldwater Institute in Phoenix, the Arizona Policy Institute is a public policy group that seeks to hold governments accountable. Just as the Goldwater Institute has successfully used the court system to “encourage” government entities to run their affairs in the light of day and within the boundaries of the law, the Arizona Policy Institute has filed its first case against the City of Tucson over rent concessions to private businesses in certain city-owned buildings as a violation of the state constitution’s gift clause.

The plaintiff’s name on the lawsuit is Shelby Hawkins, owner of Five Star Pest Control, who has learned first hand what can happen when you fall out of favor with city inspectors.

6. Visitors bureau scrutiny

The tourism industry is one of the largest and most important business sectors in the Tucson region, especially in light of the community’s unwillingness to support other kinds of industries. Unfortunately, it’s a mystery as to how well our region stacks up competitively against other markets for tourism dollars.

The Metropolitan Tucson Convention and Visitors Bureau is supposed to be the head cheerleader on that front and now the Pima County Board of Supervisors, Tucson City Council, Town of Oro Valley and Green Valley Sahuarita Chamber of Commerce are starting to ask tough questions about how taxpayer money is being spent. The MTCVB now must realize accountability is the “new normal.”

5. Raytheon goes to Alabama

When Raytheon Missile Systems, our region’s largest employer with a history dating back to when Howard Hughes brought his Hughes Aircraft here in 1951 (with the help of local businessman Roy Drachman), decided to spend $75 million and put 300 jobs in Huntsville, Ala., it was a wake-up call for Tucson. Where was Mayor Walkup, a former Raytheon executive, in the process?

In contrast to Tucson’s effort, Huntsville had a team of economic development leaders from its chamber of commerce and political leaders from multiple jurisdictions all the way up to the state level all working in a coordinated effort to win Raytheon. Pima County got the message and has launched an effort to put infrastructure in place that could benefit Raytheon and other industries.

4. GOP at the state capitol

November’s mid-term elections solidified Arizona as a red state. For the first time in at least a generation, Republicans have veto-proof control of both houses of the Legislature as well as all the top state-wide offices.

The ball is in the Republican court and the pressure is on to get it right. Will we see more anti-illegal immigration legislation, a la SB 1070? Or will state lawmakers do something to start encouraging businesses evacuating California to stop overlooking our state on their way to Texas?

3. Close congressional races

The re-election races for Southern Arizona’s two Congressional seats turned out to be closer than most people thought with political novices Ruth McClung seriously challenging Raúl Grijalva for the first time in a general election and Jesse Kelly putting up a fight to the finish against Gabrielle Giffords.

Both Democratic incumbents won, but the November mid-term elections brought about a 63-seat swing in the U.S. House of Representatives. The grassroots effort was encouraging and speaks a lot about the future of our democracy.

2. Oro Valley politics

Paul Loomis, long-time mayor of Oro Valley, was upset in his primary re-election bid by two “no name” upstarts. Satish Hiremath, a dentist, won the election promising a balanced approach to growth and a decided change to becoming a more business friendly town.

Oro Valley and its neighbor Marana are doing the right things to ensure their economic survival while preserving quality of life. While Tucson languishes, these municipalities are maintaining their streets, providing public safety and planning for the future.

1. Defeat of Proposition 400

In a resounding vote of no confidence in how the City of Tucson is being run, voters in November rejected leaders’ pleas for a half-cent increase to its sales tax. City leaders pulled the usual levers, threatening cuts to police and fire and holding “stakeholder” forums threatening other dire consequences. Voters didn’t buy it.

There are a few more “honorable mentions” that didn’t make our top 10:

• Accountability measures for the management of the Tucson Convention Center.

• The election of reformer Mike Hicks to the school board in the Tucson Unified School District.

• Losing Major League Baseball Spring Training after 64 years.

• The award of $63 million in federal stimulus money to help fund a $160 million four-mile “modern streetcar” route from the University of Arizona through downtown.

The downturn in the economy has put stress on families, business and governments throughout Southern Arizona. Although it’s painful it can also be transformative. There are businesses that won’t survive the recession but those that do will emerge smarter, leaner and more prepared for the future. Can we say the same for local governments?

Contact Joe Higgins and Chris DeSimone at wakeuptucson@gmail.com. They host “Wake Up Tucson,” 6-8 a.m. weekdays on The Voice KVOI 1030-AM. Their blog is at www.TucsonChoices.com.

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