Economic Development

PHOENIX – Saying the Pima County administrator needs to be restrained, a House panel voted Thursday to create a special committee to oversee county bond elections.
The party-line vote in the Republican-controlled Committee on Technology and Infrastructure came after a plea from Marana Town Attorney Frank Cassidy, who said the county has created a “culture of intimidation.”
He said part of that is because County Administrator Chuck Huckelberry proposes bond elections with more than 100 individual projects – and sub-projects within them – to a point where advisory committee members are so overwhelmed that they defer to Huckelberry’s recommendations of what gets funded and what does not.
HB 2656, sponsored by Rep. Terri Proud, R-Tucson, would require Pima County – and only Pima County – to establish a bond oversight committee with veto power over what projects get put on the ballot and any changes in how already-approved bond money is spent.
Proud said the special legislation is justified.
“Southern Arizona is really no stranger to corruption,” she said, citing the failed Rio Nuevo revitalization project. And Proud said Pima County has more bond debt than even the far larger Maricopa County.
Proud also made it clear she believes the blame lies with Huckelberry.
“For too long we’ve had one man control everything,” she said. “And I think that needs to stop.”
Proud’s bill would do more than simply create an oversight panel. It would give the county and each of its five cities one vote.
County lobbyist Mike Racy said that would allow representatives of just three communities, with as little as 6.5 percent of total county population, to block anything until they could get what they want.
“Our concern is just how grossly inequitable one vote per jurisdiction would be,” he said.
Proud said she sees nothing wrong with that, contending that’s the way it works at the Legislature.
“I represent a larger district than someone else may represent,” she said.
However, under federal law, all legislative districts are required to have roughly the same population. That is why new district lines are redrawn after every census, to adjust for population changes and keep them the same size.
Cassidy, however, said the weighted voting system is justified – and far better than what exists now.
“This is simply an opportunity to provide more transparency to the process and to give real feedback in the nature of an actual, meaningful vote to those communities affected by it,” he said.
He said each supervisor gets to name three members to the current advisory committee, with three named by the county administrator, each of the two tribes getting one member and each incorporated city naming one member.
That, he said, dilutes the ability of affected communities to make their needs known. By contrast, Cassidy said, each community getting one-sixth of the power on the committee ensures “a meaningful and binding, realistic piece of feedback” on the process.
Cassidy conceded Racy’s point that Proud’s legislation would let any three communities, no matter how small, effectively hold up the process and block public votes on multimillion-dollar bond projects for the entire county, or any change in funding priorities. But he said that’s not necessarily a bad thing because it would produce “the happy result of our taxes finally going down.”
While this new oversight panel would have veto power over new bond projects, the main argument of proponents is that it is designed to prevent shifting of priorities after voters approve the borrowing.
Cassidy told lawmakers a prime example involves $22 million approved as part of a 2004 bond to build a joint city-county courthouse. He said Huckelberry instead shifted some of the money to remodel one floor of the Superior Court Building.
Huckelberry called that “a good story until you tell the other side of it.”
He said the court project ran into unexpected delays and an extra $18 million in costs when it unearthed an old cemetery with 1,500 bodies that had to be relocated.
While the project was on hold, Huckelberry said, the county bond advisory committee agreed to spend $9.8 million to remodel the existing court, on the condition the county repay the money for the new courthouse from regular tax dollars, which has been done.
He said the fund shift went through multiple public hearings “and it was always intended as a stopgap measure for court overcrowding.”
While all the Republicans on the House panel supported Proud’s legislation, Rep. Carl Seel, R-Phoenix, said he is less than comfortable with giving the county’s smallest communities an equal vote with not only Tucson but with the Board of Supervisors, which represents the 36 percent of the population living in unincorporated areas. Seel said he may propose a change when the measure goes to the full House.

Read more: http://azstarnet.com/news/local/govt-and-politics/pima-bond-oversight-advances-in-house/article_a345fd97-585a-5fdd-a411-75c33d107151.html#ixzz1lJrZ1xlY

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The Daily Beast

Have We Got a Convention Center to Sell You!

From Boston to Austin, politicians spend money on fancy white elephants..

By STEVEN MALANGA – WSJ

For two decades, America’s convention center business has been declining, resulting in a nationwide surplus of empty meeting facilities, struggling convention halls and vacant hotel rooms. How have governments responded to this glut? By building more convention centers, of course, financed by debt backed by new taxes and fees on already struggling taxpayers.

Back in 2007, before the recession began, a report from Destination Marketing Association International described America’s convention industry as a “buyer’s market” suffering excess capacity. It’s only gotten worse, attracting just 86 million attendees in 2010, compared to 126 million in 2000. Meanwhile, the amount of convention space angling for business has increased to 70 million square feet, up from 53 million in 2000 and 40 million two decades ago.

That’s largely because governments refuse to stop making convention centers bigger and hotels even more dazzling, arguing that whatever business remains will flow to the places with the fanciest amenities. To finance these risky projects—which the private sector won’t build by itself—cities float debt backed by new taxes and fees on already struggling taxpayers. As Charles Chieppo, a former board member of Massachusetts Convention Center Authority, lamented last year, “Logic rarely has a place in the convention business.”

Take Illinois, an industry leader,where officials have invested heavily to keep Chicago’s McCormick Place, long one of the three most-used centers in the nation, on top. They spent $1 billion in the early 1990s to build a 840,000-square foot expansion financed by fees on auto rentals, a hotel tax and a surcharge on restaurant meals in downtown Chicago. In 2007 they opened a new building, McCormick West, at a cost of an additional $900 million. The result? According to the Chicago Tribune, the center operates at 55% capacity.

Then there’s Boston, perhaps the quintessential example of a city that interprets failure in the convention business as a license to spend more on it. Massachusetts officials shelled out $230 million to renovate Hynes Convention Center in the late 1980s. When the makeover produced virtually no economic bounce, officials decided that the city needed a new, $800 million center financed by a hotel occupancy excise tax, a rental-car surcharge, and the sale of taxi medallions. Opened in 2004, that new Boston Convention and Exhibition Center was projected (by consultants hired by the state) to have Boston renting some 670,000 additional hotel rooms annually within five years. Instead, Beantown saw just 310,000 additional hotel room rentals in 2009.

Chicago political and labor leaders, including Mayor Rahm Emanuel (arms crossed), appear at the expanded McCormick Place convention center in October.
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Now Massachusetts officials want to spend $2 billion to double the size of the Boston Convention Center and add a hotel. Of course, they predict that the expanded facilities would bring an additional $222 million into the local economy each year, including 140,000 hotel room rentals. Even with these bullish projections, officials claim that the hotel would need $200 million in public subsidies.

“The whole thing is a racket,” Boston Globe columnist Jeff Jacoby recently observed. “Once again the politicos will expand their empire. Once again crony capitalism will enrich a handful of wired business operators. And once again Joe and Jane Taxpayer will pay through the nose. How many times must we see this movie before we finally shut it off?”

Many times, if officials in Baltimore have their way. Several years ago they built a $300 million city-owned hotel, (the Hilton Baltimore Convention Center Hotel) to boost the fortunes of the city’s struggling convention center. Having opened in 2008, the hotel lost $11 million last year. Now the city is considering a public-private expansion plan that would add a downtown arena, an additional convention hotel, and 400,000 feet of new convention space at the cost of $400 million in public money.

The list goes on—everywhere from Columbus, Ohio, to Dallas, Austin, Phoenix and places in between. One problem is that optimistic projections about new facilities fail to account for how other cities are expanding, too. Why did Minneapolis struggle to hit projected targets after it enlarged its convention center in 2002? “Other cities expanded right along with us,” Minneapolis’s convention center director, Jeff Johnson, said this year.

The surest sign that taxpayers should be leery of such public investments is that officials have changed their sales pitch. Convention and meeting centers shouldn’t be judged, they now say, by how many hotel rooms, restaurants, and local attractions they help fill. That’s “narrow-minded thinking,” said James Rooney of the Massachusetts Convention Center Authority this year. Instead, as Boston Mayor Thomas Menino has said, expanding a convention center can “demonstrate to the world that we have unlimited confidence in our city and what it can do, not only as a convention destination but as the center of the most important trends in hospitality, science, health and education.”

This new metric—a city’s amorphous brand value—is little more than a convenient way to ignore the failure of publicly sponsored facilities to live up to exaggerated projections. But as far as city officials are concerned, that failure is nothing that hundreds of millions more in taxpayer dollars can’t fix.

Mr. Malanga is a senior editor at City Journal. A longer version of this article appears in City Journal’s Winter 2012 issue.

Glendale city manager to end tenure defined by sports

Glendale exec pushed entertainment-hub plan

by Cecilia Chan – Dec. 28, 2011 09:33 PM
The Arizona Republic
Glendale City Manager Ed Beasley’s rise came hand-in-hand with the city’s transformation from a bedroom community to a professional sports hub that will host its second Super Bowl.

Glendale rode high on its newly honed image until the recession called into question whether the city bankrolled an overly ambitious plan.

As the 53-year-old deal-maker retires in the coming year, Beasley’s tenure will largely be judged by the success of the projects he shaped and how well Glendale recovers from setbacks to those projects.

Beasley stands firm behind the city’s heavy investment in its sports and entertainment district, near the Loop 101 and Glendale Avenue.

“The city has assets now it didn’t have before,” said Beasley, who steadfastly maintains those assets will attract other investment and jobs.

“It’s a 30-year deal,” he said. “Judging them five years out, especially when the economy is bad, is not a fair judgment.”

Still, the City Council is in the political hot seat as an increasing number of residents question the sports-related debt.

A council majority continues to support Beasley, although some criticize the sports debt and the thus-far failed attempts to resolve the Phoenix Coyotes ownership saga.

Deal-making streak

The ambitious Beasley became Arizona’s first African-American, and youngest, city manager in 1988 when he took the helm in Eloy, a small city between Phoenix and Tucson.

Six years later, the Kansas City native became an assistant city manager in Glendale, where he made his reputation as a deal-maker, starting to lure what would become the city’s first professional sports team.

The council appointed Beasley to city manager in the midst of the deal to land the Phoenix Coyotes hockey team. Glendale spent $180 million to open the arena in 2003, the first visible step of the city’s metamorphosis into a sports and entertainment mecca.

Not long after the hockey deal, the city landed the University of Phoenix Stadium for the Arizona Cardinals and Fiesta Bowl.

Commercial development soon surrounded the publicly funded sports venues: the massive Cabela’s hunting store, Westgate City Center, a four-star hotel and office projects.

As the wins tilted the Valley’s development axis westward, Beasley responded to skeptics with quiet confidence.

“Every successful team needs a good point guard or quarterback … Ed has been that for the city of Glendale,” said Ray Artigue, a Valley sports marketing executive.

Longtime Glendale Planning Director Jon Froke described Beasley as “a visionary, a big-picture thinker.”

He said Beasley looked for development that would make the community more valuable and a better place to live.

And he pushed staff to make it happen.

“He raises people’s game to a higher level,” Froke said.

As Glendale snagged the vaunted 2008 Super Bowl, bringing the city to international attention, it turned its coup into its marketing mantra: Glendale’s Got Game.

In 2008, the city borrowed $200 million to build a spring-training facility for the Los Angeles Dodgers and Chicago White Sox.

In the same year, as financial markets buckled, USA Basketball announced it would move its headquarters to Glendale.

Falling down

The recession ended some of the city’s projects and hurt nearly all of them. Professional hockey, which had propelled the city’s foray into sports, led what seemed a chain reaction of woes.

The Coyotes filed for bankruptcy protection in 2009. The team continues under ownership of the National Hockey League until a permanent buyer is secured.

Since then, the city has spent or promised a total of $50 million toward team and arena operating costs.

“While you are scrambling to get a deal with a new Coyotes buyer … please don’t give away millions of our tax dollars this time,” resident Ken Jones recently told the council, among a growing number of residents concerned about the debt.

USA Basketball last fall canceled its relocation plans after the city’s development partner failed to secure financing.

Westgate, the shopping and entertainment complex near the arena, is lender owned after its developer lost the property to foreclosure earlier this year.

Glendale’s spring-training project also faces difficulty as none of the expected private development to help the city pay for the ballpark has occurred. The city is paying a $200 million debt with borrowed reserves, which will run out in about three years.

The sputtering projects put pressure on the Glendale council and, therefore, Beasley, who admits the past three years have been trying.

Several council members praise Beasley as a tough negotiator with the city’s best interests in mind, while others find him difficult to work with.

A former Coyotes executive came to Beasley seeking concessions in the arena lease nearly a year before the owner ended up filing the team into bankruptcy. Beasley said the city was willing to help but first wanted to see how the management was handling its debt.

Since then, talks to secure the arena’s main tenant have consumed Beasley. Known for his reserve, Beasley became increasingly guarded. Rather than answer questions from the media, Beasley’s staff would frequently issue written statements.

After a deal with Matthew Hulsizer to purchase the Coyotes fell apart last summer, Mayor Elaine Scruggs criticized city administrators for not always providing council with updates, saying her efforts to get more details and to be more involved in guiding negotiations were rebuffed.

Beasley said Hulsizer’s deal wouldn’t work in today’s market or without going against a council directive that a deal not adversely impact city revenues.

Hulsizer would not comment on his dealings with Beasley.

Scruggs skirted questions about her working relationship with Beasley, saying only in an e-mail: “Ed and I are very aware of our many responsibilities and we both work for the best interests of Glendale.”

Councilman Phil Lieberman has been the most vocal council member to express concern about the city’s debt.

Glendale borrowed about $500 million for its sports district. The city will have spent close to $1 billion by the time it is repaid with interest over 30 years.

“He brought mammoth debt,” Lieberman said of Beasley.

However, the council voted in favor of the projects, often unanimously.

Most council members continue to support Beasley.

“He saw the big picture for what Glendale could be, and if it hadn’t been for the bad economic times there would even be more successes,” Councilwoman Yvonne Knaack said.

Despite the economy, Artigue doubted many would want to wipe the slate clean and take back the sports venues built in Glendale.

“We are still better off, in my view, for having that infrastructure and to build upon it as the economy turns around and the West Valley continues to grow,” Artigue said.

Moving on

Beasley has said his retirement will wait as he tries to complete some of the tasks remaining in the city, including a Coyotes ownership deal.

Upcoming budget talks will look at restructuring the spring-training debt, he said.

Beasley said he is “leaving the city in the best possible situation.”

After 27 years in city management, Beasley is ready for a break. At some point next year, he’ll leave the City Hall office decorated with framed awards, newspaper articles like a New York Times article on the University of Phoenix Stadium and a shovel from the stadium ground breaking.

The father of four, who has family photos lining the shelves above his desk, says it’s time to change focus.

Retirement doesn’t necessarily mean disappearing from view: Beasley hasn’t ruled out another position in the public or private sector.

“Just because I’m retiring from the city of Glendale doesn’t mean I’m retiring from life,” Beasley said.

Whether that means he will be involved in some way in the city’s second Super Bowl, slated for 2015, is unknown.

But someone else will be Glendale city manager.

Read more: http://www.azcentral.com/arizonarepublic/local/articles/2011/12/15/20111215glendale-city-manager-sports-tenure.html#ixzz1hyrLrGWO

Online-commerce firm expanding, plans to hire 125
Russ Wiles – Dec. 27, 2011 03:13 PM
The Arizona Republic

A northern California company that provides highly targeted online marketing and supports reward/loyalty programs for large financial firms plans a major burst of hiring in its Scottsdale office.

Rearden Commerce, a privately held firm based in Foster City, Calif., intends to hire roughly 250 people in 2012, with half of those positions in Scottsdale, said Mathew Caldwell, the company’s director of talent acquisition.

The Scottsdale positions, primarily in sales, include benefits such as medical and dental insurance and a 401(k) retirement plan. Total compensation likely would range from more than $50,000 a year to upwards of $115,000, depending on commissions, Caldwell said. Most are inside-sales jobs that involve contacting merchants around the nation.
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Helpful qualifications include past sales experience, business acumen and some negotiation skills, he said. Rearden is looking for candidates with a range of backgrounds, from recent college graduates with business degrees to people with more than a decade of sales experience.

Founded in 2000, Rearden offers various online marketing platforms that aim to connect merchants and customers through local and highly personalized deals that cut through the information overload and clutter.

Read more: http://www.azcentral.com/arizonarepublic/business/articles/2011/12/27/20111227online-commerce-firm-expanding-plans-hire.html#ixzz1hpxJ0McG

Tucson is fairing much worse than it’s western neighboring cities because of the lack of leadership, lack of economic diversification and no growth mentality.  What we’ve succeeded to do is fight growth at ever stage yet continue to grow.  The transportation infrastructure, the economic infrastructure and the leadership infrastructure has been ignored for a generation.  It may be too late for the Old Pueblo. Over the next decade the suburbs will flourish and the city core will continue to decay.  It takes leadership folks. Something sorely missing from the political and business rulers in Tucson.

AZ Star - The West is recovering faster than the nation as a whole, but employment across the region remained far below pre-recession levels in the third quarter, and the housing market showed few signs of improvement.
Those are the findings of a report Thursday by Brookings Mountain West researchers at the University of Nevada-Las Vegas. It focused on economic growth in 10 metropolitan areas in the states of Arizona, Nevada, New Mexico, Utah, Colorado and Idaho.
Tucson is struggling more than most, ranking in the bottom 20 in overall recovery among the nation’s 100 largest metro areas, the researchers said.
Among the reasons for Tucson’s woes: “Its economy is heavily dependent on ‘eds and meds’ (education and health-care sectors) and now-stagnant federal spending in industries like defense – bulwarks in the early years of recession, now insufficient catalysts for recovery,” the report said.
Overall, the Mountain West region saw a modest 0.3 percent growth in employment in the quarter ending in September, compared to the national rate of 0.1 percent, the study found. Utah, Colorado and New Mexico – states that have built broad economic bases – struggled the least, researchers said.
In Arizona and Nevada, the housing collapse continued to limit job growth.

Tucson has a new Mayor with a similar platform….being business friendly. Let’s remember this statement…..

KOLD News Asked what his top priority is he says “jobs and making sure small business can do business and help entrepreneurs get going.”

Have we killed the entrepreneurial spirit?

Posted: Friday, December 2, 2011 7:00 am
by   Joe Higgins

It’s hard to pick up a newspaper or watch TV news and not see what America is going through right now. People are frustrated and political solutions seem hollow. The uncertainty coming from government has the entire U.S. economy on hold.

Despite what economic experts say, the Great Recession continues. We are in for a long-haul; a new normal.

We see this malaise in shuttered business, home foreclosures and employee layoffs. Like downturns in the late 1980s and early 1990s, we thought “here we go again.” Before long business will come back to normal.

But as we turn the corner into our fourth year of the deepest recession since the Great Depression, it’s settling in that this one is different.

We can break down the causes of the Great Recession from multiple angles but they are topics that will be debated for years and ultimately determined by historians decades after the chips have fallen.

This opinion is about the fallout and the future of Tucson, Arizona and America.

Being an entrepreneur is the most gratifying, hardest thing I’ve ever done. As a serial business start-up person, I’ve rolled the dice more than a dozen times. Each time I start a new business, I research, study, plan and ultimately go all-in on an idea I think is better than anyone else in my market.

As others like me know, sometimes you get it right, others times you miss the mark.

Having mortgaged my home, maxed out credit cards and risked my family’s future on ideas more than once, I’m here to tell you that it has been worth it.

Up until now.

Early on, this Great Recession cleaned out those who who were over-leveraged and bought investments such as houses on interest-only deals that made no sense. Restaurants that went out of business already were teetering on the brink. Businesses that closed in 2008 and 2009 were too leveraged, too concentrated in crowded industries or were run by poor managers. That’s what the capitalist system does.

But now we are seeing a different kind of business failures. Entrepreneurs who played it safe are now watching their lifetime idea slowly slip away.

I’ve lived this journey myself and I’ve talked with my small business friends who are in the same rudderless boat. Many of us have had to close stores. We’ve laid off long-time employees who helped us from the very beginning. These people are more than employees, they’re family.

Most small business owners are wondering two things: How am I going to make payroll next Friday? And will this ever end? Start-ups have notoriously high failure rates but now we are starting to see established businesses buckling under financial pressures. Second-generation businesses handed down from father to son or daughter may not be left to hand down to a third generation.

Last week, I had two high school kids from different schools search me out as part of their career research. They wanted to be entrepreneurs. When I asked why, they responded that they each had a great idea, believed in their abilities, dreamed of potential riches and fame and they loved the variety of skills and duties that come with launching and running a business.

It was difficult for me to be upbeat and positive. It was hard not to tell them what it’s really like. I wanted to explain the dozens of agencies that will be regulating their every move. I wanted to explain how fierce competition can be when you’re up against a Fortune 500 company that has a fleet of lobbyists that can get waivers from federal healthcare mandates or build in a new regulation that is going to wipe out any margin you’ve been able to build.

I didn’t want to tell them the process of going through a local zoning review or the joy of having conflicting opinions come from two different city inspectors and that your only recourse it to say “thank you sir, may I have another.”

I held back on telling these future entrepreneurs about the headaches that come to your life when you hire an employee – from workers compensation claims, to equal employment complaints, to unemployment insurance, to layers of laws to protect employee rights but nothing about who pays the bills.

What I decided to share with the future capitalists was about the days when I didn’t know better and just got up every morning and worked through it.

My formative years came while Ronald Reagan was president, coming in to lead the nation out of the Jimmy Carter mailaise. Reagan won his election in 1980 and reinstated hope in the future with his “It’s Morning Again In America” and tapped into the American ideal of hard work, personal responsibility, patriotism and limited government.

Reagan knew the importance of the small business owner and he understood the power of the free market in getting this country back on track.

I can only imagine most people were wondering in 1979 – as they are today – are America’s best days behind us?

As a serial entrepreneur, I’ve come to the point where my local and federal governments don’t appreciate me and couldn’t care less if I practice my skill at all. As an entrepreneur, I don’t want to be stimulated or bailed out. Until my governments’ attitudes change, I’m going to sit on the sidelines and watch.

Joe Higgins, who is a regular contributor, wrote this column to express his personal feelings. His Tucson business start-ups include Talking Trash Waste Removal, Sports Buzz Haircuts and Gotta Go Wireless. Contact Higgins at wakeuptucson@gmail.com. He and Chris DeSimone host “Wake Up Tucson,” 6 to 8 a.m. weekdays on The Voice KVOI 1030-AM.