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NOVEMBER // DECEMBER 2013
CYBER SCAMS With customers more engaged through technology, Arizona banks develop methods to protect them from cybercriminals
$4.95
Mike Thorell is president and CEO OF Pinnacle Bank
CORPORATE ANGELS
.45
CFO AWARDS
.59
Arizona Bankers Association
.89
Arizona Forward
.105
Doctor-driven health care? Imagine that. With Aetna, you no longer have to. It’s time to fi x what’s broken with health care. At Aetna, we are collaborating with Banner Health Network to create new business models designed to share technology, tools and insight—so that your doctors can deliver better patient care at a significantly lower cost. Call your broker or Aetna Sales Agent to learn more. Or visit aetnaACS.com/employers
Plans are offered and/or underwritten by Aetna Health Inc., Aetna Health Insurance Company and/or Aetna Life Insurance Company (Aetna). Each insurer has sole financial responsibility for its own products. © 2013 Aetna, Inc. 2012130
Table Of Contents
6 CEO Series
Armando Contreras makes an impact through UCP
8 First Job
Founder of Brookfield Communities was a teen rock star
10 Small Biz
America's Taco Shop gets a taste of national success
12 Alpha Women
AWEE's CEO helps create hope for the hopeless
14 Healthcare
New education programs help leaders navigate the ACA
18 Technology
What does it take to get an angel to invest in a start-up?
26 Legal
Advice for CEOs who need to hire an attorney
30 Real estate
Recovering housing market gives a boost to banking industry
34 Marketing
How to stay ahead of technology to understand buyers' behaviors
36 Holiday guide
> Some ideas for the executive on your gift list > No party planned? It's not too late to put one together
44 Corporate Angels
A look at some of the nonprofits that impact our communities
59 CFO of the Year Awards
Profiles of the financial wizards who are this year's finalists
89 Arizona Bankers Association
> The impact of cybercrime on customers and institutions > Banks' improving health boosts Arizona's economy
> Water: An examination of Arizona's most precious resource > Balancing environmental quality with economic vitality
105 Arizona Forward Cover photo by Lillian Reid
Az Business on the Go: AzBusinessMagazine.com 2 AB | November-December 2013
DIDN’T SEE IT COMING
Like an increasing number of people, I was the victim of cyber crime. And, like most people, I thought I did everything right to protect myself from becoming a victim. I never clicked on links from suspicious emails. I created complicated passwords that I changed frequently. I only used secure networks when I engaged in any type of online commerce. But I still became a victim. The bad guys got the password to my home Wi-Fi system, camped out in front of my house until they were able to retrieve the passwords to my financial accounts and then drain them before I even knew what happened. I’m not alone. Globally, there will be 556 million victims of cyber crime this year, or 18 victims per second. And, like me, most victims won’t be able to recover their losses. According to recent cyber crime studies, these are the loss and recovery statistics of bank fund fraud cases: * 22 percent were able to hold on to funds * 10 percent were able to recover fraudulently transferred funds * 68 percent were declared unrecoverable * 37 percent caused loss to banks due to reimbursements These disturbing trends are some of the many reasons I am so happy to see the Arizona Bankers Association taking such proactive steps to protect their customers from cyber attacks. You can read about the group’s effort inside this issue of Az Business magazine. Trust me, heed their advice. Before you finish reading this sentence, there will be 72 more victims of cyber crime.
Michael Gossie Editor in Chief michael.gossie@azbigmedia.com
Shout Outs Harper drives economy
Plaza Companies President and CEO Sharon Harper earned a Citizen Leadership Award from the International Economic Development Council. One of Harper’s biggest accomplishments is her partnership with ASU to open SkySong. Since its 2007 inception, SkySong has generated an economic impact of more than $460 million for the region.
SRP helps build home
Salt River Project made a $50,000 donation toward the construction of a new Ronald McDonald House on the campus of Cardon Children’s Medical Center in Mesa. The new House, which offers a comfortable, welcoming and affordable home-away-from-home, will be the first in the East Valley and the third in the Phoenix metropolitan area.
SEEKING Alzheimer’s BREAKTHROUGH
Banner Alzheimer’s Institute has embarked on a major prevention trial to evaluate a treatment in cognitively healthy older adults at the highest known genetic risk for developing Alzheimer’s disease. An NIH grant, expected to total $33.2 million, will support this research. The study is part of the Alzheimer’s Prevention Initiative, led by BAI, to accelerate the evaluation of promising but unproven prevention therapies.
Bioindustry innovators honored
The Arizona Bioindustry Association honored the state's innovators and companies with AZBio Awards. Those earning awards are Thomas M. Grogan, M.D., founder of Ventana Medical Systems, AZBio Pioneer Award for Lifetime Achievement; Linda Hunt, president and CEO of Dignity Health Arizona, Jon W. McGarity Arizona Bioscience Leader of the Year; Amanda Grimes of the Mesa Biotechnology Academy, Michael A. Cusanovich Arizona Bioscience Educator of the Year Award; Leslie Boyer, M.D., founding director of the VIPER Institute at The University of Arizona, Researcher of the Year; W.L. Gore & Associates, Inc., Arizona Bioscience Company of the Year; Dr. Robert Bowser, Iron Horse Diagnostics, Inc., AZBio Fast Lane Award; Dr. Garrett Smith, co-founder of Nasseo, Inc., AZBio Fast Lane Award; and Jeff Martin, CEO of Yulex Corporation, AZBio Fast Lane Award.
4 AB | November-December 2013
President and CEO: Michael Atkinson Publisher: Cheryl Green Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Associate editor: Amanda Ventura Interns: Lauren Gephart | Sara Healy | Meg Krivanec | Alexa Renfroe Az BUSINESS MAGAZINE Senior account manager: David Harken Account managers: Ann McSherry | Shannon Spigelman ART Art director: Mike Mertes Graphic designer: Lillian Reid Graphics intern: Deborah Missel DIGITAL MEDIA Web developer: Eric Shepperd Digital manager: Perri Collins MARKETING/EVENTS Manager: Whitney Fletcher OFFICE Special projects manager: Sara Fregapane Executive assistant: Mayra Rivera Database solutions manager: Cindy Johnson SCOTTSDALE LIVING MAGAZINE AZRE | Arizona Commercial Real Estate Director of sales: Steve Koslowski AZ BUSINESS LEADERS Director of sales: Jeff Craig RANKING ARIZONA Director of sales: Sheri King EXPERIENCE ARIZONA | Play Ball Director of sales and marketing: Zoe Terrill AZ BIG MEDIA EXPOS SCOTTSDALE SUPER EXPO/MARCH SCOTTSDALE SUPER EXPO/NOVEMBER Exhibit directors: Kerri Blumsack Tina Robinson | Marianne Avila
Az Business magazine is published bi-monthly by AZ BIG Media, 3101 N. Central Ave. Suite 1070, Phoenix, Arizona 85012, (602) 277-6045. The publisher accepts no responsibility for unsolicited manuscripts, photographs or artwork. Submissions will not be returned unless accompanied by a SASE. Single copy price $4.95. Bulk rates available. Copyright 2013 by AZ BIG Media. All rights reserved. No part of this publication can be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from AZ BIG Media.
CEO Series
Armando Contreras CEO | United Cerebral Palsy of Central Arizona By AMANDA VENTURA Photograph by LILLIAN REID
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rmando Contreras’ office window overlooks a courtyard playground where he can see children served by his nonprofit play on a daily basis. This is one of many reasons why he, literally and figuratively, never loses sight of UCP’s mission, a quality he counts among the most important for a CEO to possess. Since assuming his role at UCP in 2010, the nonprofit has seen bottom-to-top changes that have made fund raising and its public services the strongest in the chapter’s history. WHAT QUALITIES MAKE AN EFFECTIVE CEO? You need to have a vision. As a CEO, if you don’t have that vision within you, it’s going to be pretty difficult to lead. Another important quality is willingness to take calculated risk. Good CEOs roll up their sleeves, build capacity and then begin to take some calculated risks. HOW IS BEING A CEO OF UCP DIFFERENT THAN LEADING A MORE TRADITIONAL COMPANY? UCP is unique. Not that we’re the only agency, but we care for children and adults with disabilities. It’s our job to integrate them into society. We have to provide them the tools and the education for them to be part of the fabric of what society is. We want them to enjoy everything a typical kid enjoys. At UCP, we don’t believe in segregating the kids and society. I’d love to see more kids in the parks, more kids in the theaters, more kids being part of the arts out there and that’s what we do here; we provide those tools here ... We want to maximize their potential in life. WHAT’S THE BIGGEST CHANGE YOU’VE SEEN IN YOUR INDUSTRY? We see more adaptive technology for our kids. In the past, families would spend 6 AB | November-December 2013
thousands and thousands of dollars on technology. Today, the iPad really serves in a great way for kids’ mobility for learning, for communicating. In the past, they had these big apparatuses that would be $100,000. Technology has become a lot more effective and a lot less expensive for families.
MAKING A DIFFERENCE: Armando Contreras became the chief executive officer of United Cerebral Palsy in June 2010. UCP provides developmental and educational services to more than 7,000 children and adults with various disabilities. Phoenix’s involvement in the national association dates back to 1952.
WHAT’S YOUR BIGGEST CHALLENGE AT UCP? I think it’s related to the name United Cerebral Palsy of Central Arizona. When anybody in the community hears it, they think we serve those who have cerebral palsy. The challenge is that we serve kids and adults with not only cerebral palsy but also with Down Syndrome, autism, developmental delays, learning disabilities and other conditions. There’s been a concerted effort throughout the organization to put the word out that we serve not only those with cerebral palsy but those with other conditions as well.
WHAT ACCOMPLISHMENT GIVES YOU THE MOST PRIDE? When I first started here, our budget was $10.1 million. We’ve projected for this fiscal year a budget of $15.6 million, so there’s been an increase in our budget. This is a whole new place. The talented people I’ve hired have turned UCP around in a huge way. The other thing we’re proud of is our administrative and fundraising costs, combined, are approximately 11 percent, which means the rest of the funds are going to our programs, children and adults. We’re very proud of that.
FIRST JOB Phil Petersen
Founder and president | Brookfield Communities By MICHAEL GOSSIE Photograph of Phil Petersen by LILLIAN REID
WHAT WAS YOUR FIRST JOB? As a very shy and quiet 13-year-old, one of the popular guys in eighth grade, Greg Fox, asked if I wanted to play bass guitar in an Omaha rock band that three friends were starting. That simple invitation changed my life forever and The Chevrons were born. We played ‘60s rock — Beatles, Stones, Who, etc. — all across the Midwest. (Editor’s note: The Chevrons recorded the hit record “Lullabye” in 1960 and were inducted into the Nebraska Music Hall of Fame in 1998.) WHAT LESSONS DID YOU LEARN FROM THAT FIRST JOB? We practiced relentlessly until we were one of the top rock bands in the middle part of the U.S. I developed a very strong
work ethic and found my self-confidence. We were booked months in advance and — in season — played seven days a week, sometimes in front of several thousand teens. We opened for bands like The Zombies, The Association and the Dave Clark Five. WHAT WAS YOUR FIRST JOB IN YOUR CURRENT INDUSTRY? My real estate industry start was as marketing manager for Del Webb Development Company. I was promoted to vice president, overseeing advertising, public relations and market research. DO YOU REMEMBER YOUR SALARIES FROM THOSE FIRST JOBS? On my first night as a Chevron, we
played for a high school dance. They took a collection, and we made about $14. Within two years, we were four 15-year-old kids making $5,000 a week, in the 1960’s. I started at Webb, in 1984, at $39,000 a year. HOW DID YOU TRANSITION FROM ROCK ’N’ ROLL TO REAL ESTATE? I knew I had to grow up. I left the band in my second year of college. After graduating, my career began focusing on marketing. WHAT QUALITIES DO YOU HAVE THAT HAVE ALLOWED YOU TO BE SUCCESSFUL IN BOTH ROCK ’N’ ROLL AND REAL ESTATE? With my friends in The Chevrons, I learned to be tenacious and driven to succeed. I had seen the benefits. I’m from the Midwest, so I am conservative with money. I don’t use debt to conduct business. At Brookfield Communities, we own all of our business and land holdings free and clear. And I build enduring relationships with the people I do business with. WHAT HAS BEEN YOUR BIGGEST CHALLENGE AT BROOKFIELD COMMUNITIES? Given a good strong economy, finding success in business is not that difficult. Brookfield has grown into a $130 million company. My biggest challenge was to keep a large homebuilding business in the black during the last five years. We made it. WHAT ACCOMPLISHMENT GIVES YOU THE MOST PRIDE? My 37-year marriage to my wonderful wife, Kim. Great kids, grown, through college, through law school. And finishing my first full Ironman Triathlon during the recession. IF YOU WEREN’T DOING WHAT YOU ARE DOING NOW, WHAT WOULD YOU LIKE TO BE DOING? I’ve always been drawn to African wildlife, especially gorillas, rhinos and elephants. I would probably be working on the ground to protect all three. Oh, and did I tell you, I was born and spent my early years in the carnival, the son of the owner of Tivoli Shows, Inc.?
8 AB | November-December 2013
SMALL BIZ America conquers new world Phoenix-based taco shop owner uses childhood lessons to build a national success By JACOB GREEN Photograph by LILLIAN REID
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rmed with nothing but a passion for cooking quality homestyle Mexican food, America Corrales has managed to turn her mother’s beloved recipes into a national franchise. “Some of my earliest memories are cooking salsa and carne asada with my mother,” Corrales said. “Everything I do now is what my mother taught me back home.” Corrales grew up in a small Mexican town before moving to the United States and working as a teacher in Phoenix for several years. In 2008, after years of endless compliments from family and friends on her ability to replicate her mother’s cuisine, Corrales and her husband Terry Bortin decided her skills were worth monetizing. “I felt pretty confident that the food I was making wasn’t available anywhere else in Phoenix,” she said. Despite the intimidating nature of launching a business venture at the dawn of the recession, Corrales said she believed the quality of her product could sustain the business. The first America’s Taco Shop in Phoenix was a huge success and instantly became popular for its authentic and qualitydriven cuisine in a city saturated with uninspired Mexican restaurants. Corrales said that she could not have imagined America’s Taco Shop would expand beyond its original location. “When we first decided to do this, we thought ‘we’ll just do one and keep it at that,’” she said. “But it didn’t happen like that.” The first store was eye-opening for Corrales and her husband, who said they quickly realized the demand for America’s tacos was higher than anticipated. Just six months after opening the first Phoenix location, Corrales and her husband expanded the restaurant to another location in Phoenix, and then expanded into Tempe a year later. 10 AB | November-December 2013
Corrales’ initial expectation, which was to open a restaurant in order to exercise her passion for cooking, was further exceeded in 2010 when Kahala Corp. — the franchising minds behind Cold Stone Creamery, Great Steak and Blimpie — approached Corrales about franchising her taco shop. There are now nine America’s Taco Shops in Arizona alone, as well as a location in Bethesda, Md., and one set to open in Corpus Christi, Texas. As well was making
America’s Taco Shop available for franchise, Corrales and her husband are opening another location under their management in Phoenix Sky Harbor Airport. Corrales attributes the success of her company to her legitimate passion for what she does, which she said has allowed her to “have really high standards and pay close attention to detail,” instead of being overly focused on money. That is a trait Warren Buffett and Steve Jobs deemed paramount to their successes as well.
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Rate is per room/per night based on single occupancy, exclusive of taxes, gratuities, fees and other charges; does not apply to groups; cannot be combined with any other offer and blackout dates apply. Daily American breakfast for one available in-room or at restaurant. Garment pressing available up to three items. Void where prohibited. ©2012 The Ritz-Carlton Hotel Company, L.L.C. 11 AB | November-December 2013
ALPHA WOMEN
Impact player
AWEE’s CEO is in the business of creating renewed hope for the hopeless By MICHAEL GOSSIE Photograph by LILLIAN REID
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or more than 30 years, Arizona Women’s Education and Employment (AWEE) has given hope and helped improve employment opportunities for more than 90,000 women, men and young adults. Az Business magazine caught up with Marie Sullivan, president and CEO of AWEE, to talk about the impact her organization has had on the community. Az Business: What does the community need to know about AWEE? Marie Sullivan: AWEE is a constantly evolving organization that has shown the ability to respond to shifting environments while sustaining our core mission to change people’s lives through the dignity of work. AWEE teaches, coaches and connects people to jobs and education that will positively impact their quality of life – that includes primarily women, but men and older youth. We are vibrant and have a unique place in the market – a boutique business enterprise serving thousands of individuals a year. A Mighty Mouse in our industry. AB: How is being CEO of AWEE different from leading a more traditional company? MS: AWEE is a small business enterprise. Instead of selling a traditional “product,” AWEE markets a mission and serves people who want to make that mission part of their lives, whether as a participant, an employee, a volunteer or a donor. We are similar in that we identify our customers and pursue a dedicated agenda to serve them. We are different in that we need multiple partners to achieve the measure of our success: changing people’s lives through the dignity of work. Being a CEO of AWEE means balancing 12 AB | November-December 2013
the demands of a small business with fulfilling a mission that resonates to multiple stakeholders without harming or compromising those we have been called to serve. AB: How has the struggling economy impacted AWEE? MS: The economy has hit AWEE hard just as it has other nonprofits and small businesses. With a lagging economy, despite all the good will, our resources have been impacted. Balancing our resources with growing numbers of individuals to be served has been the most obvious way the struggling economy has impacted AWEE. AB: What has been your biggest challenge? MS: The biggest challenge AWEE has faced has been in the past few years, mostly due to a shift in resources available to support the work we do. In response, we have explored and implemented new ways to do business to maintain
MAKING A DIFFERENCE: Marie Sullivan leads Arizona Women’s Education and Employment (AWEE), which offers a diverse range of training and support services throughout Maricopa and Yavapai counties.
integrity to our mission and continue serving those struggling to find work with those employers struggling to find good employees. It’s the ability to be flexible and nimble in the face of these challenges that gives us the opportunity to sustain our organization and serve our community. AB: What accomplishment gives you the most pride? MS: The absolute greatest accomplishment is the knowledge that individuals’ and families’ lives are changed in a positive way through the dignity of work because of their motivation and commitment to improve their lives, and the skills and support the AWEE staff give each day to make that happen.
13 AB | November-December 2013
HEALTHCARE
Help at the top
New education programs assist healthcare leaders in navigating the changes that impact the industry By LORIN PARKHURST
T
here is no doubt that the Affordable Care Act is changing healthcare as we know it. But the impact extends beyond its impact of existing healthcare workers and facilities and employers who are trying to navigate the maze that is the ACA. It’s also changing education. “The ACA has created a tremendous need for healthcare education,” said Scott D. Peters, CEO of Healthcare Trust of America. “There is going to be an
14 AB | November-December 2013
increasing demand for educators who can train added number of physicians’ assistants, technicians and nurses that will be needed to service the additional 30 million or 40 million additional people who will be seeking healthcare.” Not only is there an increasing need to educate the healthcare workers who will be in the trenches, there is also a critical need to better train health care administrators and give them the tools they need to steer through the choppy
waters of the coming flood of health issues facing Baby Boomers and the uncertainty of the Affordable Care Act. “The need for leadership will only get greater as the health care landscape unfolds,” said Anne McNamara, dean and professor of nursing in the College of Nursing and Health Care Professions at Grand Canyon University. To help guide healthcare leaders through the challenges of the ACA, GCU has created an emphasis in Health Care
15 AB | November-December 2013
“Nothing’s changing faster than the healthcare profession, and if you can navigate an organization through that, you – and it – will be fine,” –Dr. Wayne Schmidt, content chair in the College of Doctoral Studies.
Administration in its Doctor of Education in Organizational Leadership.The parttime program, which will take an average of three years to complete, purposefully has a flexible curriculum that will enable it to adapt to changes in the rapidly evolving healthcare industry. “Nothing’s changing faster than the healthcare profession, and if you can navigate an organization through that, you – and it – will be fine,” said Dr. Wayne Schmidt, content chair in the College of Doctoral Studies. Az Business met with Schmidt to discuss the new program. Az Business: What made you decide to launch the program aimed at helping healthcare administrators understand the ACA? Wayne Schmidt: We are always looking to add doctoral programs that will be a benefit to people who look to grow their career. Our dean, Dr. Hank Radda, asked us to look into the healthcare field because it’s a growing field with changes happening all the time. There is a great need for people to further their education in this area. We took a look at [the industry’s understanding of the ACA] and analyzed if there was a need for such a program. We determined there is, and decided to run with it. AB: Who are you targeting as potential students for the program? WS: We are looking at people who are already in the healthcare field — mostly 16 AB | November-December 2013
the administrators of a doctoral group or possible involved in the administrative side of running a hospital. Our target group is people currenty administrating some kind of a medical facility, be that a doctoral conglomerate or something like that. AB: How did your staff develop the curriculum for the program? WS: We brought in two “subject matter experts” (SMEs) along with three other people from our curriculum development department. I kind of locked us all in a room for two and a half days to come up with the overall framework of the program. We did not come up with all the individual syllabi. We said, “What do we want this program to cover? What do we want our courses to cover?” And then we slotted our goals and objectives. We got all the way down to defining objectives course by course with detailed descriptions. That was the first phase of development. Now we take all that information and hire a third SME who essentially works with the curriculum development department to create the individual courses. Dr. Anne McNamara selected the two SMEs we hired for the first phase of planning this program. Those were her recommendations.
18 months - because it won’t run until nearly two more years. Actually, we just had our first students start around the first of September. They won’t get to their final course until almost two years from now. All of the curriculum is run by a health practitioner in our college of nursing. We have them involved every step of the way. AB: How will you adapt the program if the ACA changes in any way? WS: Well that’s the really nice thing. Take for example HCA817 - that’s one of the courses. Let’s say something happens now that changes the way that course is structured or taught. We can do that in a very dynamic way. We can go out, hire a SME, redevelop the course around the changes, modify what’s in there, and then the course is ready to go for the next group of students that come through. It’s all very fluid. We can change that course around in a matter of eight weeks or so. AB: What do you think this says about the uncertainty in the healthcare industry that this program is needed?
WS: I think dynamic does not necessarily mean uncertain. It just means that things are changing — particularly as you AB: When do you expect this second stage consider an aging population like we have to be completed? in our country. However, it does mean that we have to stay very current with what is WS: Understand that this is a two and a happening so that the program we offer half year program. I figure we won’t be meets the needs of people that are in the done with the last course for about another healthcare industry.
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17 AB | November-December 2013
TECHNOLOGY
Getting an angel to open the checkbook Scalability is the difference between a start-up and an enterprise By ERIC JAY TOLL
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overnor Jan Brewer touts her policies and business regulatory climate as the reason Arizona is growing new businesses. That may be a factor, but it’s not the major reason Arizona topped the Kaufman Foundation Index of Entrepreneurial Activity in 2012. If it were the case, Arizona would have been on top again in 2013—instead of plummeting to No. 20 nationally. “Just because there are a lot of startups,” observes Barry Broome, CEO of the Greater Phoenix Economic Council, “doesn’t provide a measure of the economic growth in the Valley.” A start-up can be someone opening a consultancy, a contractor or the next Apple. Selfemployment is a form of start-up. The challenge is nurturing a start-up so it grows with high-value jobs. Local governments and the Arizona Commerce Authority see major value with growing Arizona start-ups into enterprises. Chris Mackay, economic development director in Chandler says, “There’s staying
18 AB | November-December 2013
power when a business is local. It’s connected to the local community and if the economy falters, the owners are more willing to keep going locally as opposed to closing up shop.” That local staying power is one reason Mackay says Chandler makes big investments in growing future enterprises. Planting the seeds Arizona’s new economy needs startups to scale up into enterprises. Those growing small businesses become hiring employers offering high-value jobs paying home-buying income. Government policy supporting businesses that can scale up is based on simple economics. Businesses with more than 20 employees, says the Small Business Administration, generate two of three Arizona paychecks. Those same businesses cut checks for more than 70 percent of Arizona’s private payrolls. The value in 2012 was more than $100 billion. All new businesses are “start-ups,” but not all start-up businesses will be
entrepreneurial enterprises. “There is no relation between starting a business and starting a company,” says Daniel Isenberg, professor of entrepreneurship practice and founding executive director of the Babson College Entrepreneurship Ecosystem Project in Boston. “Ninety percent of companies formed don’t grow high-value jobs.” Isenberg says the difference between a start-up and enterprise is a matter of scale. He is an international advocate for scaling a business to grow as opposed to opening a business. An entrepreneur, he points out, is a business founder with a large company that just happens to be small right now. Arizona State University, as the new American university, is at the cutting edge of helping turn ideas into enterprise. Recently, the college joined the elite ranks of schools offering a stand-alone degree in entrepreneurship. It’s on that list with Harvard Business School, Babson, and University of Texas. Its goal is getting new businesses that can grow into the market.
19 AB | November-December 2013
Locally grown ASU says more than 70 percent of its W.P. Carey School of Business MBA graduates remain in Arizona. Keeping these graduates in state provides the human resources necessary to building new enterprises fueling the future economy. “Starting a company — as opposed to just starting a business — is hard work,” says Isenberg. “An entrepreneur looks at the business and sees it growing. It’s a time of sleep deprivation, hard work and endless pitches.” Few start-ups achieve quality growth—less than 10 percent, he believes. “The golden triangle of a growing enterprise,” he continues, “is cash, customers and people.” “An entrepreneurial endeavor isn’t limited to start-ups,” Isenberg emphasizes. “University research, family businesses, mature companies, all can be turned into a growing enterprise. Most startups tend to stay small.” The key to the economic contribution of start-ups in Arizona is scalability. He is adamant about it. “Ambition is not a dirty word. A business founder without ambition does not significantly contribute to overall economic growth. “There are a number of entrepreneurial success stories arising from a new direction for an existing, mature business,” Isenberg says. "Sometimes it takes a new owner with a vision; sometimes the existing management team finds a new direction. It can be a license from a university, a new product, or an innovative use of an existing product. Entrepreneurship can occur anywhere in a business’ lifecycle.” Bringing ideas to market Arizona colleges are on that licensing bandwagon. Entrepreneurs complain that it takes years to license patents or transfer technology from most universities. In ASU’s Office of Knowledge and Enterprise Development, the Arizona Furnace Technology Transfer Accelerator — first project of its type in the world — slashes technology transfer time from years to months. The AZ Furnace is a joint venture of ASU, University of Arizona, Northern Arizona University and Dignity Health. Funding partners include the Arizona Commerce Authority, BioAccel and additional support from Thunderbird School of Global Management. “There are hundreds of patents sitting on shelves at universities that could be in the market earning money for creators, 20 AB | November-December 2013
colleges and businesses,” enthuses Gordon McConnell, assistant vice president, Entrepreneurship & Innovation Group in OKED. “We started a program to get patents into the market quickly.” The start-ups selected for incubation in AZ Furnace are either entrepreneurs in search of an idea to market or idea-creators ready to market through a business entity. The fledgling enterprises are capital-ready in 12 months or less. Enterprise starts with a leader and a vision. The scale of the vision is what makes the difference, says Isenberg. The vast majority of business owners are thinking of a model that gets them to the point that they’re putting money in the bank. He says, “Entrepreneurs are
AMERICA THE LAND OF ENTREPRENEURS In the US
543,000 NEW BUSINESSES ARE CREATED every month THAT IS
6,516,000 NEW BUSINESSES IN 2011
What are the best states to be an entrepreneur?
California | Alaska | Arizona | Colorado | Texas Source: Kauffman Index of Entrepreneurial Activity http://www.kauffman.org/uploadedFiles/KIEA_2013_report.pdf
thinking of a model that finds smart people, willing customers and puts the cash to back into the enterprise.” “Angels invest in businesses they understand or CEOs they respect,” says Broome. “There’s a need for more of that in the Valley. We’re just not seeing the next Apple or Google evolving here.” Gaining visibility “The biggest challenge about getting angel and venture money is visibility,” says Brandon Clark, region coordinator for Start-up Arizona. “If you’re a promising digital start-up locally, it’s a little harder to get noticed nationally being from a region not known for its digital startups. That’s starting to slowly shift.” National publications, FastCompany and Entrepreneur Magazine, have eyed Arizona as an emerging technology region. The development opportunity for the small business is capital. Combine the “Broome Factor”—known businesses; known leaders—with the large number of start-ups, and there are too many funding requests heading toward too few checkbooks. What makes early investors open pocketbooks to start-up businesses is scalability. Businesses with potential to grow create the greatest return on investment for the angels. “It also makes a difference to the local economy,” says Isenberg. “Local policymakers need to change their focus from ‘start-up’ to a ‘high value growth business’.” Cities like helping scalable startups — and provide resources that build success. There’s a loyalty factor when the business grows; it typically remains in the hometown that helped it succeed. This is important to Chandler, Mesa, Peoria, Phoenix, Scottsdale and Surprise. These five cities have specifically invested in incubators and accelerators to nurture and graduate businesses achieving market traction. Chandler, Phoenix and Tucson have involvement with collaborative workspaces — Gangplank and Co+Hoots — as well. While an employee or two in a collaborative workspace works well for a while, the time comes when a move up is needed. Clairvoyant, an enterprise and analytics start-up now in Chandler Innovations started with Gangplank. “We grew from four employees in March to 12 in April,” smiles Amber Anderson, a firm partner and its business developer. “We
602.247.7600 AB | September-October
Barry Broome
Brandon Clark
Dr. Daniel Isenberg
Clate Mask
needed a place to meet with clients and work with a growing team.” Still selffunded, the growing entity plans to hit 20 employees by January. Mackay explains, “We help a company like this grow and hope that as it expands it continues to locate in Chandler.” To that end, the city is working with landlords in its Price Corridor to offer “teenage” space that lets a business move from the heavily subsidized rents and back office support of the incubator into its own place—without too much sticker shock.
platforms, the start-up has to hire people, start a company, raise money, and all the while, it’s competing in the marketplace. That’s tough work.” After incubation, the business must gain market traction. At this phase, the fledgling enterprise has product going out and customers paying for it. The kinks are being smoothed, and it’s time to move up to the next stage and grow. Isenberg says the high growth criterion is simply 20 percent annual increases in sales or staff for five years.
Support from cities The difference by which start-up is accepted into a city’s incubator is the ability to scale up from the garage to commercial space; from one employee to more than 20. Chandler and Mesa are looking for businesses with this capacity. Innovations gives lab and office space to businesses that have formed entities — LLCs, corporations, partnerships — and a business plan. Mesa’s new Technology Accelerator is planned with a similar focus, but is looking for businesses at an earlier stage. Surprise’s Arizona TechCelerator wants to shepherd a business to the angel investor stage. In Surprise, scalability is one of the criteria to be accepted into Arizona’s oldest incubator. The TechCelerator is looking for businesses offering something outside the box or creating a new niche. “The company has to be started before we’ll consider them,” says Julie Neal, the economic development coordinator for the city’s enterprise. “They need a mentor, a plan and have to know where they are going.” “Scaling up is difficult,” says Isenberg, “but doing it right defines the difference between the successful entrepreneur with a growth business and a start-up that just stays small. Marketplaces are competitive. The start-up has to acquire customers. That means overcoming inertia or changing buyer behavior. While established companies are cruising on their business
Getting capital To make this leap requires high levels of capital — the checks venture capitalists cut. The biggest challenge in Phoenix is that there are few sources for local venture capital. The venturists hang out in places like Silicon Valley, Boston, San Diego and
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RESOURCES FOR START-UPS Arizona Commerce Authority: AZCommerce.com Arizona TechCelerator: AZTechCelerator.com Babson Entrepreneurship Ecosystem Project: Babson.edu/enterprise-education programs Chandler Innovations: ChandlerAZ.gov/default.aspx?pageid=335 Furnace Technology Transfer Accelerator: AZFurnace.org Greater Phoenix Economic Council: GPEC.org Mesa Technology Accelerator: MesaAZ.gov/economic
Chris Mackay
Gordon McConnell
Seattle. “There are even a couple of funds with deep ties to the Valley,” says Clark, “but they have very little involvement in local start-ups.” Clate Mask, CEO of Infusionsoft, had to travel out of town for his venture capital. “At one time, I was told that a fund wouldn’t cut a check for a firm in Phoenix because we didn’t have the workforce for success,” he says. “That’s no longer true; venture funds are seeing that there is a real climate for success in the Valley.” Another resource for a growing business is the Arizona Commerce Authority’s “Growing Your Arizona Business” services. The quasi-public agency provides mentorship, regulatory assistance, access to incentive programs and site selection. It also works as a liaison connecting the growing business with other business resources. The agency mentors businesses in accessing federal procurement and grant opportunities as well as serving as an entrée to international trade. Overall, the major resource in Arizona for start-up businesses is the universities. Anemic legislative funding for the schools causes their efforts to help to face the same struggles growing businesses face. Their efforts to improve Arizona’s longterm economy are stymied by a declining source of capital. “ASU is underfunded,” says Broome. “The school has done an amazing job despite being financially crippled by budget cuts. It’s suffering from a lack of resources to take its programs to scale.” “Scalability” is applicable to the businessdevelopment programs at the universities and other public agencies just as it is for growing enterprises. “Getting money for those programs is the top job for the next governor,” predicts Broome. Opportunity in Arizona will come from the core of businesses growing today. They will create the jobs for the new economy and drive economic success for the next generation.
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TECHNOLOGY
Sustaining
growth
Critical trends shape the technology landscape in Arizona
U
nless partisan politics in Washington drives the economy back into a recession, there are critical trends in the technology industry that are pointing to continued slow but steady growth for Arizona. Most recently, the Semiconductor Industry Associated reported that U.S. semiconductor sales in August increased by 23.3 percent compared with August 2012, and global August sales were 1.3 percent higher than the previous month’s total of $25.53 billion. This makes the sixth consecutive month of growth globally. The news is positive for the Phoenix area, which employs close to 20,000 workers in the industry at companies like Intel Corp., Microchip Technology and ON Semiconductor. The ability to sustain growth in this sector will hang in part on whether or not consumers open up their wallets and spend on electronics during the critical holiday period. Particularly vulnerable to austerity measures out of Washington, our Aerospace & Defense industry could certainly feel the impact in terms of lost jobs. The long-term outlook remains strong, however, as Arizona remains home to the some of the most renowned names in aerospace and aviation with local presence that dates back to WWII. A technology trend that is giving Arizona a big boost, as highlighted by new research from Savvis, is the major shift in IT infrastructure models. Nearly 90 percent of enterprises are using cloud services
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today according to a Savvis report, but only five percent of enterprises depend on the outsourced cloud for the bulk of their IT resources. The report goes on to predict that scenario will change Steven G. Zylstra dramatically over Technology the next five years, leading to the outsourced cloud as the dominant model. With our low catastrophic risk and predictable climate, Greater Phoenix has long been a popular location for datacenter companies and the numbers will most certainly increase. This is especially predictable given our modestly priced power costs and a package of incentives which became law this year. Cited as “a quantum leap forward” by Jim Grice, a partner with Lathrop & Gage LLP and a primary architect of the bill, this important legislation was advanced by the Arizona Technology Council in partnership with the Arizona Data Center Coalition. The rise of the innovation economy is another important trend. A report from the Kaufmann Foundation showed Arizona had the highest entrepreneurial activity rate of any state in 2012. A white paper released by the same Foundation in September of this year ranks Phoenix as 13th among the top twenty large metropolitan areas and metropolitan divisions by high-tech startup
density in 2010. Entrepreneurs make Arizona’s economy stronger by creating jobs and with new players emerging every day, the innovation ecosystem in Arizona will continue to grow and improve. The area of healthcare innovation is a great example. Arizona is fast becoming a hub with top research institutions like TGen, world-class healthcare brands such as Blue Cross Blue Shield AZ, Cancer Treatment Centers of America and Mayo Clinic, and well-funded startups like WebPT, GlobalMed and others. One trend not in Arizona’s favor has to be the continued loss of rebates and other incentives in the Renewable Energy sector. The economics given this point of time has made it particular difficult. As a result, residential solar will continue to struggle in 2014, with utility scale solar suffering less. Arizona needs to continue to prepare for these trends and possible disruptions – externally and internally generated. Our focus needs to remain on ensuring that our workforce is prepared for the opportunities to come by updating the skills they need now. We also need to keep our lawmakers and community informed of the importance of technology to the growth of our state so that Arizona can build an economy based on high growth industries with higher than average wages. Let’s hope Washington comes along for the ride. Steven G. Zylstra is president and CEO of the Arizona Technology Council.
25 AB | November-December 2013
LEGAL
Need a lawyer? Advice for CEOs and business leaders to follow before engaging counsel
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lawyer should be a companyâ&#x20AC;&#x2122;s best friend, or at least, its best trusted advisor. Like choosing any professional services assistance, the right lawyer can make all the difference. If you are a CEO or the decision maker for legal counsel, taking into consideration the factors discussed below will help you navigate the right path to ensure you have the right representation. Expertise is key. Whatever the issue is, be sure to pick counsel who is a subject matter expert in the area of law. Are you trying to protect intellectual property? Choose a patent specialist. If you have a business dispute, go with a commercial litigator. This may all seem intuitive, but 26 AB | November-December 2013
mismatches occur and can result in missteps and increased costs and elongated resolution timeframes. To take this one step further, be sure to pick counsel who doesnâ&#x20AC;&#x2122;t just Bradley Vynalek have the expertise; Law knowledge of your industry is really critical, too. It creates efficiencies, limits upfront costs and creates a better partnership. If you are a franchisor, be sure to seek out a lawyer
who understands the franchise industry. After expertise, consider whether you want to develop a full-service relationship. Do you have a variety of legal needs? If so, make sure the firms you are considering have lawyers who specialize in disputes, transactions, tax and the like. Make sure to have a relationship partner at the firm who can (on a non-billable basis) get you to the right expert within the firm on a momentâ&#x20AC;&#x2122;s notice. Also, for the more complex matters, ask the relationship lawyer for budgets and insist on strong project management. If your needs are more narrow, boutique law firms can often provide the expertise in that area. Boutique law firms are
27 AB | November-December 2013
"Remember that your counsel is a reflection of who you are and who you want to be in the market." also great at partnering up with other specialists – whether in large or small firms – who can supplement your needs. Remember that your counsel is a reflection of who you are and who you want to be in the market. Know that your attorney's representation of you tells the world something about you. Keep that in mind. Do you want someone who is really assertive and perceived as such? Does that drive your business goals? Or, does your business culture and your customer base necessitate reasonable and efficient interactions from your counsel? Seek out and demand the face of business that is optimal for your company. For example, if you are a children’s clothing franchisor, retaining an overly aggressive and litigious law firm may actually hurt your business or your
reputation. On the flip side, if you have a “bet the company” issue, you should retain the most assertive counsel who still is reflective of your company ethics and consistent with your customer base. Costs are definitely a factor to take into consideration. That said, like in nearly all things, you pay for what you get. Specialists tend to charge higher hourly rates. Flat fees may be appropriate for commodity work. Have a discussion of fees early on in the relationship and ask your counsel to limit surprises. Finally, at the end of the day, your counsel — if even your primary relationship manager at a law firm — should be a trusted advisor. They should focus on your business, drive legal resolution that takes into consideration your goals, and be a valued partner. That
means knowing your business, industry and short- and long-term plans. Sharing that early on with your attorney will align interests and lead to long-term value. The attorney-client relationship at its core is all about confidentiality and judgment. Your trusted advisor should have both. And, picking the right counsel ultimately becomes cost-saving. Picking the wrong counsel costs more and is no fun. Brad Vynalek is a partner in Quarles & Brady’s Commercial Litigation Group, where he works with financial service, banking, high tech, internet, software, manufacturing, e-commerce, health care, start-up and tech transfer clients. Vynalek focuses on efficient dispute resolution and project management and he works very closely with law departments to create and manage budgets.
ADVICE FROM THE EXPERTS
Joseph M. Crabb
L. Eric Dowell
Andrew M. Federhar
Edwin D. Fleming
Here is what legal experts say CEOs need to – but often don’t – consider when engaging counsel:
and retain a lawyer with substantial specific experience with the subject matter of the threatened litigation.”
Joseph M. Crabb, partner, Squire Sanders: “Hire counsel who’s been down this road before — you want someone who can anticipate what the other side is going to be throwing at you. You need a level-headed strategist who isn’t afraid to give you his or her honest opinion, even when it’s bad news that you may not want to hear.”
Andrew M. Federhar, director, Fennemore Craig: “Litigation is not the end of the world. It is simply one method of resolving disputes. You should select and trust your lawyer, providing all of the information about the dispute to get good advice. Without such advice, you cannot make the business decision about how to handle the litigation.”
L. Eric Dowell, shareholder, Ogletree, Deakins, Nash, Smoak & Stewart, P.C.: “Take a deep breath. Stay focused. Treat the threat like any other important business decision. Robotically turning to legal counsel with whom you are acquainted could be a mistake. Consult trusted colleagues, conduct interviews
Edwin D. Fleming, shareholder, Burch & Cracchiolo: “Unfortunately, litigation is a reality in the businesses world today. Prior to taking any steps when there has been a threat of litigation made, or when a lawsuit has been filed, the leader of an organization should retain competent, experienced counsel to help
28 AB | November-December 2013
Susan Wells
them understand the claim(s) being made and the process through which the claim will be handled whether it be through arbitration or through the court system. It is important to hire counsel at once so that appropriate safeguards can be maintained which include retention of documents, identification of witnesses and the gathering of facts all necessary to present the best possible case in the event matters actually are litigated.” Susan Wells, partner, Jaburg Wilk: “Think and act logically and don’t take it personally. Try to understand the other party’s viewpoint. Review the facts and any contract to confirm that you are taking an appropriate and reasonable position. When hiring legal counsel, hire an attorney who will give you honest, practical, strategic advice and take a reasonable position.”
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Call for Information 602-241-1517 or go to FinancialFest.com
29 AB | November-December 2013
REAL ESTATE Riding the wave
Explosive housing market becomes a catalyst for Arizona's economy and the banking industry By MICHAEL GOSSIE
R
eal estate has been a traditional catalyst for Arizona’s economy. As the state slowly recovers from the economic downturn, real estate is once again setting the pace for the rebound and has helped boost the state’s banking industry in the process. “We were one of the hardest states hit, so it makes sense that our recovery would happen quicker,” said Christine Espinoza, real estate agent with HomeSmart Elite Group. “Also, we have many big corporations transferring their employees here and we have room for new construction.” Phoenix-area home prices have shot up since hitting a low point in September 2011. From last August to this August, the median single-family-home price rose 28 percent – from $150,000 to $192,000. The average price per square foot also shot up 22 percent. The median townhouse/condo price rose 31 percent.
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“We predicted the price-increase slowdown that happened over the summer months,” said Mike Orr, director of the Center for Real Estate Theory and Practice at Arizona State University’s W. P. Carey School of Business. “Now that temperatures are cooling, prices will start rising again, at least for the near term. However, they’re likely to go up at a less furious pace than the last two years.” The types of transactions happening in the market have also noticeably shifted. Luxury homes priced higher than $500,000 grew their market share from 15 to 21 percent of the money being spent over the past year, while the lowest-priced homes (below $150,000) fell from 25 to 14 percent of the market.
“The recovering housing market is very positive for the Arizona banking industry,” said Kevin Sellers, executive vice president with First Fidelity Bank in Arizona. “Banks have been able to dispose of foreclosed residential properties at less of a loss. And renewed buyer interest is creating opportunities to finance the purchase and construction of both single-family and multi-family housing properties.” The increased equity people now have in their homes is also allowing them to
RESPECT IT COMES IN ALL SHAPES AND SIZES.
TPC SCOT TSDALE | JANUARY 27 - FEBRUARY 2, 2014 W M P H O E N I XO P E N . C O M
Bob Blakemore
Christine Espinoza
Steve Johnson
Mike Orr
* Along with a strong stock market, increased housing values contribute to the wealth effect that makes everyone, consumers and businesses alike, feel more confident about the future and therefore more likely to borrow for investment. borrow to pay for home improvement projects or other large purchases, according to Steve Johnson, Arizona president for BMO Harris Bank. “Another bright spot is the increased percentage of renters who are now qualifying to purchase a home,” Johnson said. “For BMO Harris Bank, the recovering market has allowed us to add mortgage bankers to support the increased number of loan requests we are seeing.” Since housing is the largest asset class in the country, improving home values have been the single most important driver behind the significant strengthening of bank balance sheets, according to Roy Whitehead, chairman, president and CEO of Washington Federal. Not only that, but the recovering housing market has impacted the banking industry in other ways, Whitehead said: * Mortgage loan delinquencies have declined, construction lending opportunities have increased, and ancillary businesses like furniture, hardware and building supply companies are easier to lend to. Properties that were foreclosed on earlier in the cycle are now selling for higher prices than their carrying value, contributing to our current prosperity. 32 AB | November-December 2013
* Along with a strong stock market, increased housing values contribute to the wealth effect that makes everyone, consumers and businesses alike, feel more confident about the future and therefore more likely to borrow for investment. “In the simplest terms, the recovering housing market has made bad collateral better, helping borrowers and lenders alike to restructure debt,” said Bob Blakemore, senior vice president of wealth management for Mutual of Omaha Bank. “The good news-bad news story for financial institutions is that their loan portfolios are refinancing in a lower yielding environment. The resulting netinterest margin compression is hurting earnings, forcing banks to find other ways to meet earnings expectations.” So can we expect this positive real estate trend to continue in 2014? Orr said an increase in the number of homes for sale is helping temper the price boom. As of Sept. 1, the area had 29 percent more active listings than at the same time last year. As supply has been going up, demand has gone down, with sales of single-family homes 12 percent lower this August than last August. “Although demand still exceeds supply,
Kevin Sellers
Roy Whitehead
they are quickly moving toward each other,” Orr said. “If the current pace of change continues, they are likely to be in balance before the end of the year. The seller is no longer holding all the cards in the Greater Phoenix housing market, and if their offers are countered aggressively, some potential buyers may walk away because they now have more alternatives.” Despite the wide fluctuations the industry has seen over the last decade, Espinoza and Orr predict that the chances of Arizona experiencing another housing bubble are slim. “The chance of another housing bubble is close to zero in the short- or mediumterm,” Orr said. “In Phoenix, homes have appreciated slower than inflation over the last 13 years.” Orr said a housing bubble might be possible more than six years down the road, but the chance of even that happening is unlikely. “If you take out the last seven or eight crazy years of the ups and downs, we are right on track with normal appreciation numbers,” Espinoza said. “In addition, our prices are still comparable or less than other similar cities in the U.S.” Espinoza said 2014 should continue to see be a strong real estate market as consumer confidence has improved, but her endorsement comes with some caveats. “I have not had a buyer since 2013 tell me they don’t want to buy now because they think prices or interest rates will drop if they wait,” she said. “The demand is still outweighing the supply, so the inventory has remained low. However, as prices have increased, I’ve noticed it taking a little longer for my listings to sell. This tells me that we are reaching the threshold in pricing.”
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MARKETING RESPONSIVE WEBSITE As technology has advanced, consumers expect to digitally connect anywhere, at any time, and from multiple devices. Whether users access your web site by Smartphone, tablet or desktop, a responsive web design (RWD) of the companyâ&#x20AC;&#x2122;s website is the ideal way for providing the best visual experience for its users. Although there is limited space for information and there is a cost incurred in redesigning an old site, a positive or negative experience with a website is often the first impression when the consumer determines whether or not to stick with a brand, or go elsewhere.
One step beyond Solid marketing includes staying ahead of technology and understanding buyersâ&#x20AC;&#x2122; behaviors
W
hen it comes to the speed at which digital technology evolves, LaneTerralever understands it cannot rest on its laurels of being one of the longest tenured agencies in the Southwest. In order to be relevant to clients, LaneTerralever must understand buyer behavior, be able to forecast changing technology and stay ahead of the trends. We counsel our clients on a daily basis about the opportunities and obstacles inherent in digital tools and technology for marketing their products and services, while maintaining the integrity of their brand.
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SOCIAL MEDIA One of the fastest growing digital trends is marketing through social media. The ability to interact directly with customers through social media platforms Beau Lane has enabled the Marketing consumer to feel closer to the brand and encourages a platform for customers to share what they actually think about the brand. Look at it as a virtual focus group. When done right, engagement and loyalty for the brand increases through the sharing of relevant, entertaining and educational content in the way of videos, photos and information. While social media seems easy enough for any brand to embrace, companies must beware that engagement requires round-the-clock monitoring, consistency and frequency in sharing content, and the understanding that controlling the message is virtually an impossible task.
MOBILE APPS Mobile applications, or mobile apps, have been around for some time, yet they are still gaining momentum. For a brand to determine whether or not a mobile app makes sense for them, they need to think utilitarian. A question to consider is what will a mobile app provide the consumer that is useful, entertaining or educational? For frequent interaction with a mobile app, there must be a sticky factor â&#x20AC;&#x201C; a reason for the user to keep coming back. One marketing benefit of having a mobile app is the ability to sell ad space. On the flipside, there also are costs involved for promoting the app, and maintaining the app with regular technology updates and fresh, relevant content. ACCESS TO DATA As technology has advanced, so has the ability to better understand the consumer. Analytics have enabled us to track behavior, demographics, psychographics and geographic location. Digital tracking can be used for real time research, which then can be turned into a roadmap for optimizing marketing campaigns and maximizing returns. Consumer insights gleaned through analytics and rich data can drive the most successful campaigns. Just make sure you have the help of a highly technical support staff who are marketing savvy and armed with analytic software skills. Beau Lane, CEO of LaneTerralever, is a second-generation Lane to oversee the operations of one of the largest and longest established marketing and public relations agencies in the Southwest.
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3:33 P
GIFT Guide
You To : : FROM
Executive decisions Here are some great holiday gift ideas that will put smiles on the faces of every executive By ALEXA RENFROE
Your bosses don’t want you to feel obligated to buy them a holiday gift. Let’s face it, you feel obligated anyway. The holidays are rapidly approaching. They will be here before you know it and before you have a chance to think of a great gift for your boss or for the hard-to-buy-for executive in your life who is someone else’s boss. That said, here are seven great gifts that will blow the roof off any executive’s holiday gift exchange:
JET SETTING: If you really want to blow the socks off Santa this year, send your executive wherever she or he wants to go with a chartered flight from Scottsdale-based Pinnacle Aviation. The company has become the preferred private travel choice for professional athletes, business executives, and celebrities such as Ben Stiller, Mel Gibson, Phil Mickelson and Goldie Hawn. Pinnacle also leads the industry in safety awards, technology advancements, premier aircrafts and an unparalleled level of service.
Information: pinnacleaviation.com
PUMP SOME ADRENALINE: What better way to get the heart pumping than to give the executive a weekend of 2,300-foot drops at Arizona Snowbowl in Flagstaff. The resort, which opened in 1938, is now one of the oldest continually operated ski areas in the country. There are two lodges — Hart Prairie and Agassiz — located at the ski area to warm you up after a day of cool fun.
Information: arizonasnowbowl.com 36 AB | November-December 2013
TIS THE SEASON CELEBRATE OUR 66TH YEAR! Join us December 20-31 and receive a $66 credit per person for an activity such as horseback riding, golf or spa.
Call for reservations: 1-800-684-5030 ranchodeloscaballeros.com
H O R S E S
|
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Restrictions may apply.
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GIFT Guide COWBOY UP: Rancho de los Caballeros is Arizona’s premier guest ranch and the perfect place to send an executive for an amazing getaway or to be challenged with a round of golf at one of Golf Digest’s Top 100 U.S. courses. Rancho de los Caballeros isn’t your average dude ranch: it’s a historic ranch resort on 20,000 acres of lush open range, with 100 saddle horses and the soul of a bed and breakfast. The ranch offers full resort amenities and privacy, yet with the charm and intimacy of yesteryear. Information: ranchodeloscaballeros.com
MAKE A BID: Rev up some holiday cheer this year with a week-long pass to Barrett-Jackson when “the world’s greatest collector car auction returns to Scottsdale Jan. 12–19. Let the executive in your life see the variety of classics, exotics, muscle cars, hot rods, and contemporary collectibles that will be up for grabs. Advanced purchase week-long passes are available for $100 ($75 off the gate price if purchased in advance). Information: barrett-jackson.com
MAKE IT SPARKLE: “The staples of a jewelry wardrobe for a professional woman are diamond stud earrings, cufflinks, a fine jewelry brooch, a fine timepiece and of course a diamond ring that is appropriate for daywear,” said Al Molina, owner of Molina Fine Jewelers. For men, “cufflinks are a great opportunity to express their tastes and can break the monotony of a man’s wardrobe,” Molina said. “Today, I believe that men are judged by the quality of their timepiece. The more complications a watch possesses the greater the culture and refinement of the man.” Information: molinafinejewelers.com 38 AB | November-December 2013
SIPPING GOLD: If you’re looking for the next big thing that will literally make the executive on your shopping list bubble over with excitement, look no further than XXIV Karat Grande Cuvée, a sparkling wine infused with indulgent 24 karat gold flakes. Introduced earlier this year, Scottsdalebased XXIV Karat Grande Cuvée has quickly found its place in the trendiest clubs, bars and restaurants and has become a status symbol and the go-to brand for glamour and fun. Information: xxivkarat.com
FAST TRACK: Give the executive on your list the ultimate adrenaline rush by letting her or him unleash their inner speed demon at the Bob Bondurant School of High Performance Driving. The 60-acre racing facility offers courses that range from four hours to four days and they have beginner driving courses designed for people wanting a thrill of a lifetime and advanced racing courses for experienced racers or professionals. Information: bondurant.com
‘Tis the Season for a
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*Event subject to availability. Room rate is non-inclusive of resort fee and tax. Some restrictions may apply. 2400 EAST MISSOURI AVENUE PHOENIX, ARIZONA | ARIZONABILTMORE.COM 39 AB | November-December 2013
HOLIDAY PLANNING
Last call If you’ve waited until the last minute to plan your holiday office party, experts offer advice on creating the perfect event By ALEXA RENFROE
I
t’s almost the most wonderful time of the year again, which means your office needs to start preparing for its annual holiday party. Due to the change in the economy, corporate holiday parties have a new normal, said Stephanie Mahrer from the Phoenician. Parties are less elaborate and more focused on celebrating the employees. “While value and costs remain at the forefront, it appears companies want to get back to the holiday celebrations of the past,” said Mark Scheller, vice president of sales for Casino Del Sol Resort, Spa and Conference Center in Tucson. Party planners said most businesses wait until November to book holiday parties and stress that the sooner businesses book their party, the more likely they are to get their preferred date, theme and menu. If your business is among the majority that has waited, here are a few tips to get you started: Food Food at a party is extremely important. Keep your guest not hungry and happy by serving refreshments. “Any time you have food or drinks, it’s a celebration,” said Ron Pacioni of Rendezvous Catering said. Every party will have a different style and it is the catering company’s obligation to fit your style and budget. You may want finger food or a big sit-down meal. Make a point to talk to the
40 AB | November-December 2013
catering companies so they know what you want and will be able to fit your company’s needs. Budgeting You can throw a great party without breaking the bank. Try renting the location of your dreams on its off days. Jennifer Rueb of the Hotel Valley Ho reveals that off days usually include Sunday through Thursday. Your office space can even be transformed from work to play with a little rearranging and decorations. Lunch parties are also better for the budget. Lunch parties do not require alcohol, since they are held in the middle of the day. Plus, having a party at lunchtime will feel like a day off well spent. Food costs can be kept within budget constraints without it tasting cheap or looking like a sandwich platter from Wal-Mart. Hors d’oeuvres, veggie platters, or Mediterranean pita platters can be done at low cost. You may want to add a shrimp option to make the meal seem higher end. You can serve great food for as low as $20 per person, Pacioni said. Location If you want everyone to come to your party, pick a location that is central and convenient for everyone to get to. If you don’t know where most of your guests live, stay close to the office.
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41 AB | November-December 2013
HOLIDAY PLANNING You can have many different styles of parties. Here in sunny Arizona, outdoor parties are really popular. Whether you are going to have your party in a courtyard, on a roof, or at the Botanical Gardens make sure you have weather backups. Weather backups include tents, heaters or just an indoor space to fall back on. Still looking for a space? Museums hold a lot of people while providing a beautiful and sophisticated décor. If you want your party to have a more traditional feel you can’t go wrong with booking a room in a hotel or resort. Many people find hotels like the Arizona Biltmore, Hotel Valley ho or The Phoenician ideal because they are “one stop shops,” said Denise Seomin of the Phoenician. Hotels and resorts will help take care of the food and party planning, making your experience much more stress free enjoyable. “You walk in the front door, and we take care of the rest.” Mahrer said. Another hot spot for holiday parties are casinos. Talking Stick, Desert Diamond Casinos, Twin Arrows, and Wild Horse Pass Hotel & Casino are just some of the casinos that will work within your budget to create a memorable holiday party. TIMING Every holiday has a season, and this is a big one for catering and party venues. Holiday hot spots get reserved quickly, so don’t get left with nothing to eat and nowhere to have your party. Rueb said that Hotel Valley Ho starts getting booked as early as the summer by repeat groups. To get the location that is right for your company, try reserving your location and catering choice at least six months in advance. Smaller parties have an easier time planning last-minute parties. However to ensure quality and stability, retain your food and site as soon as possible. Attire Every party is different. Your party may be right after work and you are expected to be in something you wore to the office or would wear to the office. Some parties may even have an ugly Christmas sweater theme, but usually your office’s holiday party is pretty dressy. To ensure that you won’t be underdressed, you can’t go wrong with a cocktail dress or a suit. Some parties go as formal as gowns and tuxedos. Entertainment This is the time for employees to get together and have some fun. Rueb said entertainment is important, “so people aren’t standing around looking at each other. A lot of parties have a DJ or a band, but if the people in your office are not the dancing type, there are other entertainment options. Alternatives include fun with photo booths, an employee-run fashion show, secret Santas, and well-prepared casino card games. Edict Although it is a party, you should not be letting loose completely. Remember, you will have to return to work after the holidays. Show your co-workers your fun side without getting too wild or inappropriate. Food should always be served, if for no other reason than to help soak up any alcohol that is going to served. “You are among friends, but you are still in a business setting,” Mahrer said. “You are going to face your office again after the party.” 42 AB | November-December 2013
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43 AB | November-December 2013
“ I N N O VAT I O N DISTINGUISHES BETWEEN A LEADER AND A FOLLOWER.” -STEVE JOBS Do you know great business leaders? Nominate them today at AzNow.Biz. Nominations close December 31, 2013.
Learn from the best in: • Banking/Finance/Wealth Management • CEOs & CFOs • Commercial & Residential Real Estate • Education • Healthcare • Manufacturing & Technology • Professional/Accounting/Law • Tourism/Entertainment/Sports • Who’s Who and More
This annual book of who’s who in Arizona business is a must-read for every company owner and manager. Sponsor this impressive book and gain year-long visibility and branding for your company.
For advertising and sponsorship information, call 602.277.6045 44 AB | November-December 2013
ARIZONA CORPORATE ANGELS
The fruits of philanthropy Arizona businesses make an impact on their communities through volunteerism and financial support
I
tâ&#x20AC;&#x2122;s no secret that Arizona companies place tremendous value on giving back to their communities. One study shows that almost one-third of Arizona companies embrace some form of employee volunteering, an increase of more than 150 percent over the last two decades. Millennials in particular value office perks that include the opportunity to volunteer as a part of their companyâ&#x20AC;&#x2122;s culture. In addition to increasing the number of volunteer hours they give to their communities, Arizona business are also predicting a third-straight year of modest increases in cash gifts to charities. More than threequarters of corporate leaders say their giving budgets will be about the same in 2014, but about 16 percent said they will give more. Each November, Az Business spotlights the organizations that benefit from the generosity of their corporate supporters. Corporate Angels features some of the nonprofits who are making a difference in their communities and the businesses that help them make the magic happen. During this holiday season, itâ&#x20AC;&#x2122;s a great time to find ways we can all make an impact on Arizona.
45 AB | November-December 2013
ARIZONA CORPORATE ANGELS
ASU Foundation
Mission Statement: To support Arizona State University as a New American University. We connect investors who provide access to the university to all qualified students, help ASU acquire and retain topnotch faculty to deliver excellence in teaching and discovery, and who impact society and the community through their support of the university. Did you know: The ASU Foundation ranks highest for accountability and transparency among 105 educational
nonprofits measured by Charity Navigator, the largest and most utilized evaluator of charities. How to help: Invest in ASU today. A New American University calls for new partnerships between the university and its supporters â&#x20AC;&#x201D; partnerships that produce solutions to the challenges we face. Your gift strengthens ASU faculty, expands opportunities for students, advances research and discovery. We welcome and we need your investment in the future.
ASU Foundation for A New American University 300 East University Drive, P.O. Box 2260 Tempe, Ariz. 85280-2260 480-965-3759 asufoundation.org
46 AB | November-December 2013
philanthropy is opening doors At Arizona State University, philanthropy has helped create the top university in the state, one of the greatest 100 in the world and one of America’s most affordable. Philanthropy opens doors, providing scholarships for nearly 40,000 ASU students each year. Philanthropy is your commitment to a better tomorrow where solutions to our greatest challenges are discovered. Invest in ASU — you’re not only creating your own legacy, you’re helping students see that, at ASU, if you can dream it, you can do it.
Together we have the talent, energy and will to open doors. Invest in ASU at asu.edu/give
47 AB | November-December 2013
ARIZONA CORPORATE ANGELS
United Cerebral Palsy of Central Arizona
Mission Statement: UCP of Central Arizona provides comprehensive services to individuals with disabilities and their families by providing physical and developmental support, as well as educational growth which is the foundation for independent living. To contribute: Donations can be made at your neighborhood Circle K stores in the coin collection cannisters.
To volunteer: Volunteers, interns, peer mentors, administrative work and help with special events are always needed. Achievements: Opened Cafe Without Limits, a snack bar and retail store that provides job skills training for adults with disabilities.
United Cerebral Palsy of Central Arizona 1802 W. Parkside Lane Phoenix, AZ 85027 (602) 943-5472 ucpofcentralaz.org
48 AB | November-December 2013
of Central Arizona
UCP of Central Arizona assists individuals with disabilities and their families. Those served have disabilities including cerebral palsy, autism, Down syndrome, developmental delays and learning disabilities. Our services include early intervention, an early learning center, day treatment & training, home & community based services, and information & referral.
To learn more about our services and how you can help visit www.UCPofCentralAZ.org 49 AB | November-December 2013 1802 West Parkside Lane - Phoenix, AZ - 85027 1-888-943-5472
ARIZONA CORPORATE ANGELS
Playworks Arizona
Mission Statement: Playworks believes in the power of play to bring out the best in every kid. Playworks creates a place for every kid on the playground — a place where every kid belongs, has fun and is part of the game. It doesn’t matter if they have never even played the game before, we ensure they have a place that is safe and welcoming, where they can play and thrive, belong and contribute. Playworks’ goal is to help every kid take this positive experience back to the classroom, back to learning, and back to their communities. Did you know?: Playworks Arizona transforms recess by placing full time coaches at
schools to teach the kids how to play together, resolve conflicts through rock-paper-scissors, and how to be inclusive. The results are amazing, as bullying decreases, students feel safer and healthier, and students return to class ready to learn.
How to help: Playworks Arizona is looking for donations, sponsors and volunteers who are naturally motivated and possess clear and open communication skills. As a Playworks ambassador, you will mirror its core values of respect, inclusion, healthy play and healthy community, and have an opportunity to be a part of this important growing movement across the nation.
Playworks Arizona 2002 E. Clarendon Avenue Phoenix, AZ 85016 (480) 525-6566 playworks.org/communities/arizona
50 AB | November-December 2013
THANk YOU to our Partners GOLD Sponsors Chompies GCU Rural Metro Scottsdale 20/30 Club Swift Transportation The Scottsdale Charros
SILVER Sponsors Standard Aero Wells Fargo
BRONZE Sponsors Arizona Cardinals Athletes Performance Fairmont Hotels Flight Options GPS Insight Grant Thorton Phoenix Suns
Polsinelli PWC Safeway Snell & Wilmer Special Devices Squire Sanders ZMC Hotels
Upcoming Events visit www.playworks.org/arizona for details Corporate Kickball February 7, 2014 Run the Runway 5K April 5, 2014
ARIZONA
51 AB | November-December 2013
ARIZONA CORPORATE ANGELS
John C. Lincoln Health Foundation
Mission Statement: John C. Lincoln Health Foundationâ&#x20AC;&#x2122;s mission is to assist each person entrusted to its care to enjoy the highest quality healthcare possible and to work with others to build healthy communities. Did you know: The John C. Lincoln Health Network began in 1927 as Desert Mission, addressing the health and social needs of struggling families in North Phoenix.
How to help: Give, Learn, Act! Give: Gifts to Desert Mission qualify for the Working Poor Tax Credit. This is a direct credit, not a deduction up to $200 for individuals and $400 for married couples filing jointly. Learn: Like the foundation on Facebook at facebook. com/jclfoundation to find out new ways to get involved. Act: Volunteer. This can be a one-time event or an ongoing activity. Last year, more than 375 individuals and 75 groups donated more than 45,000 hours of volunteer service.
John C. Lincoln Health Foundation 9100 N 2nd Street, Suite 301 Phoenix, AZ 85020 (602) 331-7868 JCL.com/foundation
52 AB | November-December 2013
Lang Herndon knew he wanted to make a difference. He just didnâ&#x20AC;&#x2122;t know he could change a life. A pair of socks. Thatâ&#x20AC;&#x2122;s all a little boy wanted.
community members. Through volunteerism, in-kind
But Lang felt he was able to do more. Today,
support and philanthropic contributions, Republic
Lang and his co-workers at Republic Services
Services is a leading partner in our efforts to
are proud to support John C. Lincoln Health
Change Lives and Save Lives.
Foundation and Desert Mission community programs. What began as one man giving back
Learn how your organization
during the holiday season has turned into an
can make a difference.
entire company impacting our most vulnerable
Visit JCL.com/foundation.
JCL.com 53 AB | November-December 2013
ARIZONA CORPORATE ANGELS
Magellan Cares
Mission statement: The Magellan Cares corporate citizenship program enables employees of Magellan Health Services to take social action, support their community and develop as leaders while helping to solve social problems across central Arizona. Together we are “One Magellan,” a company with heart made up of people who care about doing the right thing to help our clients, our colleagues and our community.
“ Volunteers from the Magellan Cares program always arrive at our Houses with kindness and energy - this happens to be exactly what the families staying here need and that is why were are so thankful to have the wonderful, thoughtful and selfless people from Magellan walk through our doors.” – Nelson Evangelista Volunteer Programs Coordinator Ronald McDonald House Charities of Phoenix, Inc.
Magellan Health Services of Arizona 4801 E. Washington St., #100, Phoenix, AZ 85034 (602) 572-2300 MagellanofAZ.com
54 AB | November-December 2013
Did you know: Four of Magellan’s businesses are located here in Arizona, and employees from all four come together as One Magellan to volunteer. How to help: Friends and family of Magellan’s employees also volunteer with us. Magellan encourages other businesses to join with them in supporting nonprofits in need.
55 AB | November-December 2013
ARIZONA CORPORATE ANGELS
SpoFit
Mission Statement: SpoFitâ&#x20AC;&#x2122;s mission is to provide exceptional adaptive sports, recreation, aquatic and fitness programs that promote the independence, health and overall well being of people with disabilities and their family members. Did you know: SpoFit, the Virginia G. Piper Sports & Fitness Center for Persons with Disabilities, is one of only two such facilities in the entire United States. All military members, past or present, are never charged a fee to workout.
How to help: As a nonprofit, SpoFit relies on donations from corporations, individuals and foundations to offset the costs involved in operating the center. Contributions are used to sponsor members, provide for key programs and support the many costs associated with operating the center. SpoFit also relies on volunteers in many capacities. Please visit SpoFitâ&#x20AC;&#x2122;s website for more details.
SpoFit 5031 E. Washington Street Phoenix, AZ 85034-2005 602-386-4566 spofit.org
56 AB | November-December 2013
â&#x20AC;&#x153;The greatest accomplishment is not in never falling, but in rising again after you fall.â&#x20AC;? Vince Lombardi
Joe Jackson, #10 Phoenix Heat Wheelchair Rugby
(former Hamilton High School football player)
SpoFit is a program of Arizona Bridge to Independent Living
www.spofit.org
57 AB | November-December 2013
Wet Wetyour yourwhistle... whistleâ&#x20AC;Ś
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azBIGmedia.com
azbigmedia.com 58 AB | November-December 2013
financial executives international
2013 Recognizing professionals for outstanding performance in their roles as corporate financial stewards
59 AB | November-December 2013
PR ES I D EN TS L E T T ER From the president of the Arizona Chapter of the Financial Executives International
T
he Arizona Chapter of the Financial Executives International (FEI) appreciates and thanks you for your interest in the 7th annual CFO of the Year Awards. FEI Arizona is presenting the CFO of the Year Awards to senior level financial professionals for outstanding performance in their roles as corporate financial leaders and stewards. The nominations and awards recognize exemplary financial management in three business sectors: public, private and nonprofit. An independent set of carefully selected and well-qualified judges from Arizona’s business community and academia have selected winners based on their contributions to their respective organizations and their overall involvement in the Arizona business community. FEI’s mission is to advance the success of senior level financial executives, their organizations and the profession. The FEI Arizona chapter is comprised of Phoenix Metro-area executives who represent and advocate for the interests of finance professionals of companies in all industries and all sizes within the public, private and nonprofit sectors throughout the state. FEI Arizona serves the community by offering its members opportunities to network with their peers, stay apprised of current financial policy, standards and regulatory guidelines, continue their professional development and form valuable relationships with community leaders. We also maintain an academic awards program to encourage professional advancement of promising, finance-focused students, and offer career assistance and development to members as well as contribute to the research and advocacy activities of our national FEI organization which impact the strategic planning of the profession’s policy, standards and regulatory structure. FEI continuously recruits new members who meet our membership criteria and who are interested in the value gained from becoming an FEI chapter member. Membership is open to CFOs, controllers, treasurers, tax executives, academic professors, and other senior-level finance professionals whose positions and company size meet FEI’s membership criteria. Additional information may be found on the national and chapter websites, financialexecutives.org and feiaz.org. Finally, FEI Arizona would like to thank our sponsors who have worked so closely and diligently with us to make this event a success: Az Business magazine, Deloitte, Bank of Arizona, Keyser, Marsh USA and VACO Resources.
CFO of the Year Sponsor Representatives
Cheryl Vogt, Head of Office, Managing Director, Marsh USA Inc.
Jonathan Keyser, Principal, Keyser
Christine Nowaczyk, SVP Corporate Banking Director, Bank of Arizona
Jonas McCormick, Managing Partner, Deloitte, LLP
Mike Green, Partner, Vaco Media Sponsor
Cheryl Green, Publisher, AZ BIG Media
FEI Arizona Chapter officers
Very truly yours,
President: Bret Lawson, CFO, IPro Tech First vice president: Richard Skufza, executive vice president and CFO, LaneTerralever Second vice president: Helen Swiatek, partner, B2B CFO Secretary/treasurer: Tom Wellman Past president: Michelle Hoffman, CFO, Real Time Companies
FEI Arizona Board members
Bret Lawson President FEI Arizona
Gil Christopher Chairman CFO of the Year Committee
Stephanie Brun, manager, U-Haul International; Daniel Hutto, vice president of business operations, Cox Communications; Marcus Feder, audit group, Salt River Project; Chris Niezgodzki, director, budget and financial analysis, Grand Canyon Education, Inc.; Karen Whitney, vice president, Northcentral University; Gil Christopher, president and CEO, The Logistics Group.
financial executives international 60 AB | November-December 2013
61 AB | November-December 2013
2013 FI N A L I STS
Bradley C. Anderson
Executive vice president of finance and CFO Time in position: 7 years Amtech Systems, Inc. What they do: Systems for solar and semiconductor industries amtechsystems.com Anderson joined Amtech in 2006. Prior to that, he spent several years in a consulting role implementing the internal control requirements of the Sarbanes-Oxley Act for a broad range of publicly held companies. From 1996 to 2002, Anderson served as vice president of finance and then as CFO of Zila, Inc., an international provider of healthcare technology and products. Anderson began his career with Deloitte, where he worked for more than 11 years.
Impact at Amtech:
Shortly after joining Amtech, Anderson’s leadership, organization and communication skills led to the completion of two successful stock offerings that raised more than $57 million in new capital. That capital allowed the company to make the necessary investments to generate record revenue in 2010 and again in 2011.
John Barravecchia
CFO Time in position: 2 years Stat Health Services Inc. What they do: Offers patients 24/7 access to physicians statdoctors.com Barravecchia’s primary role is to ensure the financial strength of the organization and execution of its operational metrics. As an early stage and small company, this starts with a budgetary process involving input from all stakeholders. More than simply a budget, this also involves the company’s strategic positioning in a rapidly expanding marketplace. Barravecchia also oversees the operations team, which ranges across technology, sales, marketing and client services. This allows him to monitor not only the financial key performance indicators but also the operational ones to ensure the company is fulfilling on its brand promise and value proposition.
Impact on Stat Health Services Inc.:
Barravecchia was the lead in identifying the opportunity to be recognized by the Arizona Commerce Authority and Arizona Innovation Challenge as an Arizona-based promising technology venture. Barravecchia’s persistence led to the organization being recognized as a finalist and being awarded a grant of $250,000.
financial executives international 62 AB | November-December 2013
FASTEST GROWING COMPANIES IN AMERICA 2007-2013 VACO â&#x2DC;&#x2026; EST. 2002
We offer more than just people. We offer solutions - solutions that allow you to free yourself to focus on what you do best. Vaco Resources provides the highest quality, senior-level financial and accounting professionals on a consulting and project basis. Vaco Financial provides the highest quality, senior-level financial and accounting professionals for permanent placement. Vaco Technology provides information technology professionals on a contract, contract-to-hire and permanent basis.
Phone 602.633.1300 Fax 602.633.1301 3131 E. Camelback Road, Suite 212 Phoenix, AZ 85016
PLEASE CONTACT: Valdo Melton Managing Partner vmelton@vaco.com
Atlanta | Austin | Birmingham | Charlotte | Chicago | Dallas | Denver | Detroit | Ft. Worth Indianapolis | Knoxville | Los Angeles | LA-Westlake | Memphis | Nashville | New Jersey New York | Orange County | Orlando | Philadelphia | Phoenix | Raleigh | Richmond San Antonio | San Diego | San Fransisco | Seattle | Silicon Valley | Tampa | Tucson 63 AB | November-December 2013
2013 FI N A L I STS
Dan Behrendt
Jerome Bruggeman
Behrendt, who joined TASER in 2004, oversees all aspects of corporate finance, information technology, HR and investor relations. Prior to TASER, he served in a number of financial management positions for the Imperial Home Décor Group, including director of financial planning and analysis, vice president and corporate controller and finally senior vice president and CFO. Behrendt holds a B.S. degree in accounting, cum laude, from Mount Union College and an MBA from The Weatherhead School of Management at Case Western Reserve University.
Bruggeman wears many hats at RMJ. In addition to accounting, he reviews all contracts and subcontracts as well as all other functions of the business that require legal support for the corporate attorneys. He negotiates all insurance purchases. He maintains working relationships with RMJ’s vendors and customers and serves as the sole or one of RMJ’s main points of contact with CFMA, ABA and ASA.
CFO Time in position: 9 years TASER International What they do: TASER weapons, wearable cameras, software as a service taser.com
Impact on TASER:
Behrendt helped lead the charge to institute a company-wide bonus program based on seven company-wide metrics. This use of clear metrics tied to every employee’s income resulted in a rapid alignment of all employees to the company’s financial goals and was a key element in the dramatic financial turnaround from 2011 to 2012.
CFO Time in position: 11 years RMJ Electrical Contractors, Inc. What they do: Commercial and industrial electrical service and install rmjelectric.com
Impact on RMJ Electrical Contractors:
Bruggeman is largely responsible for the content in RMJ’s handbook and has been charged with editing it periodically. Human resource conflicts are mediated “by the book.” RMJ has a long list of people that have been employed for several years because of Bruggeman’s candor and sense of fair play. Potential employees, because of RMJ’s reputation, often seek out employment at RMJ.
financial executives international 64 AB | November-December 2013
One change can change everything Change is happening in big ways and small. Middle market companies are searching for the next disruptive innovations, looking to cloud-based solutions, eyeing foreign markets, considering M&A transactions. At Deloitte Growth Enterprise Services, we’re right there with you. Providing knowledge, insight, and services tailored to the changes you see in the world. And your company.
To learn more about Deloitte Growth Enterprise Services, contact Jonas McCormick at +1 602 234 5215 or email us at dges@deloitte.com Gain insight with Perspectives, our series of reports, webcasts, and events for mid-market and privately held companies at www.deloitte.com/us/dges
As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, and Deloitte Tax LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2013 Deloitte Development LLC. All rights reserved. 36 USC 220506 Member of Deloitte Touche Tohmatsu Limited
65 AB | November-December 2013
2013 FI N A L I STS
Christina Cancino
Senior vice president and CFO Time in position: 7 years Arizona’s Children Association What they do: Behavioral health treatment and child welfare services arizonaschildren.org Cancino’s role as CFO goes beyond the accounting and finance department. She impacts the entire agency. Cancino has an opendoor policy and an excellent relationship with the board of directors, management and staff. She offers advice to the accounting and finance staff, program staff and senior management on ways to streamline their operations while still adhering to the policies and procedures that are required by the agency’s funders and board.
Impact on Arizona’s Children Association:
Since coming to Arizona’s Children Association, Cancino has changed the budgeting outlook from one of a budget to that of an operating plan. She provided the vision of “run, grow, transform” to program staff. This was a much different approach for an agency that was struggling financially. She helped define the terms and provided a vision for what the process should look like in the future.
Sandy Catour
CFO Time in position: 10 years Sitewire What they do: Full-service digital marketing agency sitewire.com Catour’s role with Sitewire is that of a dogged protector and guardian of its integrity. Much of her work consists of keeping a focused eye on areas of risk, as well as the financial health of the organization and the assets it holds. Because of Catour’s work, Sitewire has become a more tactful, purposeful, profitable and financially stable company.
Impact on Sitewire:
One of Catour’s biggest contributions is the automation of Sitewire’s internal and external reporting. Through her vision, leadership and skills, this long-term, highly-impactful initiative was successfully implemented and indoctrinated. Not only did the project dramatically improve the quality of Sitewire’s product, completely removing any aspect of human error in reporting, but the ripple effect of this automation changed the way that Sitewire does business in many aspects. It also allowed employees who were previously consumed by rote and time-consuming tasks to focus more on creative work.
financial executives international 66 AB | November-December 2013
67 AB | November-December 2013
2013 FI N A L I STS
Ed Czemerych
Thomas B. Fischer
Czemerych was born and raised in Erie, Pa. and spent 21 years as a partner with an Erie-based accounting firm. In 1981, Liberty Iron hired Czemerych’s firm to provide accounting and tax services. In 1995, the family patriarch retired to Phoenix. In 2001, his son, the current CEO, also relocated to Phoenix. In 2007, Czemerych was approached by the family to consider a move to the Valley to establish an in-house accounting and finance department and to assist in the growth and expansion of the Liberty Group, including the development of the company’s operations in Arizona.
Since taking the role in 2000, Fischer has navigated business reorganizations, led the implementation of optimized business practices and collaborated toward the successful launches in five new states, helping to diversify the company’s services and increase customer value. His responsibilities include daily operations of financial and fiscal management.
CFO Time in position: 6 years Liberty Iron and Metal Holdings, LLC What they do: Recycling of ferrous and non-ferrous scrap metals libertyiron.com
Impact on Liberty Iron:
Liberty’s employment prior to Czemerych’s arrival 2007 was about 100 people. Today, Liberty employs 250 people in Arizona alone. It employs another 300 people in its Eastern U.S. operations, plus 375 employees in its Mexican operations.
CFO and vice president of finance Time in position: 13 years OnTrac What they do: Provides an alternative, cost-effective means of delivery ontrac.com
Impact on OnTrac:
In 2013, Fischer coordinated $40 million in new borrowings, which facilitated the buyback of employee stock option plans and the implementation of material handling, as well as allowing for the working capital for increase of business. More than $20 million has been invested into equipment that will help OnTrac increase its package delivery from 50,000 packages a day to more than 300,000 packages a day. This type of automation significantly reduces the cost of delivery to the company.
financial executives international 68 AB | November-December 2013
69 AB | November-December 2013
2013 FI N A L I STS
Tom Harris
Ward Huseth
Harris oversees all financial operations, risk management, administration, stadium operations and ownership relations. His tenure in this organization and in the industry make him an integral officer in assisting the president and CEO and other executives in guiding the organization to success. His knowledge of the inner workings of local government is essential in the day-to-day affairs of stadium related matters.
Huseth has been a transformational CFO, coming into Great Hearts to stabilize it during an inflection point in its growth. In just a few years, Great Hearts has grown to serve 7,600 students across Phoenix at 16 academy school sites with 775 employees. Its mission is to deliver a world-class liberal arts education in a public school setting. Huseth sets clear financial metrics for his staff that frees up funding for academic performance. He created facility and financing models that allow the schools to fulfill their liberal arts mission while still protecting teacher compensation.
Executive vice president and CFO Time in position: 19 years Arizona Diamondbacks What they do: Major League Baseball team dbacks.com
Impact on Diamondbacks:
CFO Time in position: 2 years Great Hearts Academies What they do: K-12 education greatheartsaz.org
Harris spearheaded a 2011 debt refinancing, bond tender offer and line of credit with JP Morgan that reduced long-term debt by $1 million and provides for reduced interest expense and improved cash flow going forward. In 2011, he also spearheaded a modification of the teamâ&#x20AC;&#x2122;s concessions agreement that has significantly improved its concessions revenue share.
Impact on Great Hearts Academies:
Huseth is leading the strategic planning process that will allow Great Hearts to grow into other states. His business plan calls for growing to 23 schools in Phoenix within five years and opening 30 schools in Texas over 10 years.
financial executives international 70 AB | November-December 2013
CONGRATS TO OUR FINALIST
DAN BEHRENDT
The employees of TASER International would like to congratulate our CFO, Dan Behrendt, on being a CFO of the Year 2013 finalist. TASER and © are registered trademarks of TASER International, Inc., registered in the U.S. © 2013 TASER International, Inc. All rights reserved.
71 AB | November-December 2013
2013 FI N A L I STS
Joseph Ivenz
CFO Time in position: 14 years Marcolin USA What they do: Manufacture designer eyewear and sunwear marcolinusa.com Ivenz brings a high level of specialized expertise to his position and carefully plans any new implementation to minimize problems and maximize results. Over the last five years, Ivenz has used that ability and expertise to help bring Marcolin to such a solid level of profitability and growth that a private equity fund ultimately purchased the company from the Marcolin family.
Impact on Marcolin:
Ivenz is involved with all U.S. and international business and real estate transactions, essentially setting up non-U.S. operations. Ivenz has researched and implemented the best situations possible for the company. He sets his own priority list while simultaneously driving his team to close or follow up on all matters of importance. Ivenz identifies problems and does not stop until he finds a solution. His impact on the community was evident when he initiated and coordinated free eyeglasses for victims of the Moore, Okla., tornado.
Renee Krug
Executive vice president and CFO Time in position: 2 years Clear Channel Outdoor What they do: Out-of-home advertising media clearchannel.com Krug developed a strategic plan focused on increasing revenue and reducing expenses to improve operating margins. She was instrumental in identifying and implementing more than $30 million in cost savings, partnering with sales to identify revenue opportunities and leading capital initiatives to invest in growth for the business. Clear Channel Outdoor is navigating a dynamic media marketplace and is poised against enormous growth opportunities that require financial discipline and creativity.
Impact on Clear Channel Outdoor:
The improvements Krug put into place are significant. The finance team has delivered much richer and more timely insight into the business, aiding decision-making and improving customer satisfaction; implemented $30 million in cost savings; delivered more than $35 million in working capital benefits; improved forecast accuracy by more than 25 percent; and overhauled the budget and forecast systems â&#x20AC;&#x201D; all in just two years.
financial executives international 72 AB | November-December 2013
73 AB | November-December 2013
2013 FI N A L I STS
Thomas C. Lavoy
CFO Time in position: 16 years Veolia Transportation on Demand What they do: Shared ride, taxi, sedan and bus transportation supershuttle.com In addition to his duties as CFO, Lavoy is involved in managing VTOD’s reservation and dispatch system, gives strategic guidance on how VTOD invests in new technologies and oversees key operational issues that typically would be done by a chief operating officer.
Impact on VTOD:
Over the past seven years, VTOD has invested $125 million with a goal of becoming the safest and most reliable on-demand transportation company in the country. Lavoy has been the team leader when performing financial due diligence and assessing which targets are worth moving forward on. The industry has seen a big shift in the use of technology and Lavoy was instrumental in making the case that acquiring a company whose focus was 100 percent technology was a key long-term strategic move. His vision allowed the company to compete in the mobile apps arena.
Amin Maredia
CFO Time in position: 2 years Sprouts Farmers Market What they do: Natural and organic grocery sprouts.com In less than two years, Maredia has established a public company finance function while completing a major strategic acquisition, more than $700 million debt refinancing, and leading Sprouts’ initial public offering efforts. In addition, he designed Sprouts’ finance infrastructure, including implementation of analytical tools, which provide the ability to monitor current and accurately forecast future performance. Maredia has also used his vast retail experience to help Sprouts execute its new store selection process and strengthen its position in the market.
Impact on Sprouts:
Maredia has been instrumental in establishing the company’s internal control systems. He is a tireless advocate for transparency in not only financial reporting, but all areas of the operations. He has taken a lead role in developing a delegation of authority policy and code of conduct applicable to all company team members.
financial executives international 74 AB | November-December 2013
Chris Power, LifeLock, Inc. CFO of the Year Finalist
Congratulations Chris! The entire LifeLock team thanks you for your passion, leadership and commitment.
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75 AB | November-December 2013
2013 FI N A L I STS
Shaun McMeans
David Miller
McMeans is responsible for administrative areas such as IT, finance, plays a key role in financing, cash management and business systems. McMeans joined the company just after the close of its Series D financing and has been instrumental in investor management and oversight of its Series D-1 financing. McMeans’ ability to raise money in this difficult economic environment has allowed the company to invest in growth.
Miller produced not only timely financial statements, but over time has created important mangerial reports that have allowed Jokake to improve its performance on procuring work, using cash and making strategic decisions in its business units. He leads by example with impeccable integrity and thoughtfulness. He is also a board member of the Valley of the Sun YMCA and an officer with the local CFMA chapter. His external presence in the community has helped Jokake in making decisions, as well as being a respected representative for the firm.
Vice president of administration and CFO Time in position: 2 years HTG Molecular Diagnostics What they do: Life science and diagnostic equipment and tests htgmolecular.com
Impact on HTG:
McMeans’ leadership and insight greatly assisted the CEO in raising an additional $16 million in Series D financing that has kept the company well financed and able to invest in growth areas. Raising additional capital has been McMeans’ biggest objective and contribution. HTG basically re-started the company in 2011 with a new strategy and is cash flow negative. Therefore, McMeans’ ability to raise capital has been invaluable.
CFO Time in position: 7 years Jokake Construction Services, Inc. What they do: General commercial construction services jokake.com
Impact on Jokake:
Miller reshaped Jokake’s IT approach through cloud computing for its office and personnel, saving time and money in software rollouts and IT support. Miller has also been a strong leader in providing information and strategic approaches to profit claiming on Jokake projects, which has created more accurate financial reporting and allowed managers to see project management performance faster.
financial executives international 76 AB | November-December 2013
77 AB | November-December 2013
2013 FI N A L I STS
Tanya Muñiz
CFO Time in position: 5 years Valley of the Sun United Way What they do: Initiate and support health and human services programs vsuw.org Muñiz administers all financial operations and analysis. Under her leadership, the annual budget has grown from $50 million to $114 million in five years. United Way has very complex financials and undergoes six audits annually, with consistently excellent results and zero findings. Muñiz oversees a department of 20 employees who have flourished under her leadership. She led the development of organizational scorecards for measuring and managing performance. Customer satisfaction with accounting has increased by 25 percent since she became CFO.
Impact on United Way:
Muñiz built a 10-year economic model that enables the organization to better plan its work and serves as a foundation for its strategic plans. The model enables Valley of the Sun United Way to see the effects of multi-year grants and major gifts, as well as recognizing that many expenses are long-term investments requiring up-front financing.
Doug Noblitt
Executive vice president, finance and accounting Time in position: 3 years Tallwave What they do: Helps start-ups accelerate their growth tallwave.com Noblitt is not only the CFO for Tallwave, but also the CFO for four of Tallwave’s portfolio companies. He is also responsible for most model and budget development for Tallwave’s High Tide start-up competition finalist companies. This means that at any given time, Noblitt has oversight for financial leadership and management for anywhere from eight to a dozen companies. This is only accomplished through a sophisticated finance and accounting practice that optimizes systems, processes, people and workflow to deliver work product as efficiently as possible.
Impact on Tallwave:
Noblitt helps Tallwave and its portfolio companies strengthen market position through cost management, driving the balance between revenue growth strategies and the investment needed to achieve them. As companies’ annual revenue growth has exceeded 70 percent, the fastest-growing companies have also generated positive operating cash flow — especially rare for startups.
financial executives international 78 AB | November-December 2013
79 AB | November-December 2013
2013 FI N A L I STS
Chris Power
Carlos L. Rojas
Power’s leadership has helped establish the strategic goals of the organization, protected its culture and delivered on numerous decisive points in its success. An example was the successful acquisition of ID Analytics, LifeLock’s most critical data provider. It gave LifeLock a competitive advantage and allowed the company to complete an initial public offering only six months later. With his leadership, the company has seen an increase of almost 40 percent in its stock price this year and the best organic revenue growth in more than four years.
Rojas’ accomplishments include upgrading the budgeting process to include a cost containment program that realized $1.2 million in savings the past two years; accelerating the financial close from 10 business days to five; and accelerating the completion of the financial audits and tax returns by four and six months.
CFO Time in position: 3 years LifeLock, Inc. What they do: Identity theft protection lifelock.com
Impact on LifeLock:
CFO Time in position: 2 years Heard Museum What they do: Museum of art and history heard.org
The other bidder for ID Analytics offered $165 million cash and LifeLock had about $30 million in cash on its balance sheet. Power helped raise more than $100 million in new equity, sign a senior secured debt instrument worth $65 million and out-negotiate the other entity with a merger agreement that all closed simultaneously.
Impact at Heard Museum:
In 2011, Rojas established a capital fund to pay for major repairs at the museum’s campus. Through the efforts of donors and trustees, the capital fund has captured $400,000 in pledges and $363,000 in cash. One half of future bequests to the museum will be used to replenish the fund. The cash from the capital fund and the savings from the cost containment program paid off a $1 million bank obligation in August. Previously, the lack of reserves forced the museum to borrow to fund major repairs.
financial executives international 80 AB | November-December 2013
You could spend hours searching for financial salary information. Or just seconds.
[ roberthalf.com/salary-center ] + For hiring news, industry trends and salary information, download your free Salary Guide today at roberthalf.com/salary-center. Phoenix 602-224-1273 Š 2013 Robert Half International Inc. An Equal Opportunity Employer. 0913-9013c
81 AB | November-December 2013
2013 FI N A L I STS
Ashley Sanders
Richard Skufza
Sanders oversees the cash flow planning at Angel MedFlight and presides over cash and investment management. She handles banking relationships and financing strategies for the company while also developing models and financial analyses to provide insight into the companyâ&#x20AC;&#x2122;s operations.
Skufza works closely with the CEO and other executive leadership to accomplish corporate strategic objectives. He is one of three key contributors to the development and execution of LaneTerralever â&#x20AC;&#x2122;s corporate strategy while maintaining important external relationships with banks, clients, external auditors and suppliers.
Vice president of finance Time in position: 4 years Angel MedFlight What they do: International air ambulance angelmedflight.com
Impact on Angel MedFlight:
Executive vice president and CFO Time in position: 15 years LaneTerralever What they do: Advertising and marketing services eblane.com
By implementing strong internal controls, Sanders has been able to encourage appropriate financial safeguards. She has created a working environment that fosters open communication so that issues may be addressed in a prompt manner. This allows the company to be proactive rather than reactive. Sanders has also shown exemplary skills in budgeting as well as cash flow management at Angel MedFlight. She helps to ensure that the company has strong business relationships vendors and bankers. These strong relationships allow the company to have the finest equipment and best processes in place.
Impact on LaneTerralever:
For the past several years, LaneTerralever has embarked on an aggressive growth strategy to improve its market position and provide more opportunities for its stakeholders. This strategy not only included organic growth, but also included focus on expansion by merger and acquisitions. Skufza analyzed the acquisition pros and cons of more than five companies for the goal of strengthening E.B. Laneâ&#x20AC;&#x2122;s market position and reach its growth projections and goals. Skufza also promotes and encourages the staff to live a healthy lifestyle through a bi-monthly health coach in partnership with the Arizona Wellness Council.
financial executives international 82 AB | November-December 2013
83 AB | November-December 2013
2013 FI N A L I STS
Debra Thompson
Christopher L. Turner
Thompson directs the district’s annual budget process, taking each year’s budget through formative stages to final approval by the district’s governing board. She oversees a budget that in the 2013-14 fiscal year stands at $1.66 billion, including a $715 million general fund budget. She serves as the CFO for the district governing board, which each year must decide whether to maintain or raise tuition and the property tax levy.
Turner’s success as CFO is contingent on his ability to establish strong relationships across the enterprise, as well as with external stakeholders. His focus includes business strategy, risk management, technological innovation, enhanced productivity, cost containment, revenue opportunities, process efficiency, control and sustainability. Moreover, ongoing changes in healthcare regulation, compliance and technology pose a considerable burden on the company’s resources; finance is stretched to the limit to manage their impact. The imaginative application of IT internally and as a service offering continually opens up opportunities for cost containment, new revenue streams and novel means of engagement.
Vice chancellor for business services Time in position: 10 years Maricopa Community Colleges What they do: Courses and educational programs; job training maricopa.edu
Impact on Maricopa Community Colleges:
While helping Maricopa to do more with less, Thompson’s financial leadership helped the district successfully weather the Great Recession without significant layoffs or furloughs. These accomplishments came despite the fact that the district lost $62 million in state aid during the recession and faced a significant increase in the number of students served.
Director of finance Time in position: 3 years GlobalMed What they do: Medical devices and cloud-based software globalmed.com
Impact on GlobalMed:
GlobalMed has been named as one of Inc. 500’s fastest growing private companies for the last three consecutive years. To make it into the Inc. 500 for 2013, GlobalMed had to grow more than 910 percent from the start of 2010.
financial executives international 84 AB | November-December 2013
Ashley Sanders
Director of Corporate Finance As Angel MedFlight’s Director of Corporate Finance and Senior Vice President, Ashley Sanders presides over cash and investment management. She handles banking relationships and financing strategies for the company while also developing models and financial analyses to provide insight into the company’s operations. Sanders joined the company in 2009 and has over seven years of accounting experience. She received her Bachelor of Science in Accountancy from Arizona State University and holds a Master of Science in Accountancy from the University of Phoenix.
877.264.3570 | AngelMedFlight.com
CONGRATULATIONS
RICHARD SKUFZA, CFO OF THE YEAR FINALIST. Your contributions have always added up to more than just numbers.
LaneTerralever.com 602-258-5263
85 AB | November-December 2013
2013 FI N A L I STS
Dennis M. Via
Shane Wells
Viaâ&#x20AC;&#x2122;s responsibilities include oversight of all agency accounting and finance functions, budget and plan development, cost savings and liaison with outside professionals. He provides advice and consultation to owners and management on financial performance. He handles related financial issues, conducts monthly close, balancing and reconciliation and is hands on in daily operations and processing as needed, including trouble-shooting administration and IT operational issues. He provides special operational and strategic support to the CEO, including assisting in the evaluation and execution of mergers and acquisitions.
Wells has a strong background in the operations and strategic direction of the healthcare business from a medical-economics standpoint. With his profound understanding and extensive experience, he is a vital player when it comes to external investor confidence and is able to translate operations into financial numbers. Wells stays current on changes within the healthcare industry to ensure that the financial aspect is addressed and the changes are reflected in a positive aspect to the external investors as well as within IASIS. He is viewed as the key influence within his Arizona-Nevada territory by his peers. His goals are to increase business within IASIS at all levels.
Impact on NFP Property & Casualty Services:
Impact on IASIS Healthcare:
CFO Time in position: 3 years NFP Property & Casualty Services, Inc. What they do: Commercial and personal insurance lines, surety, benefits nfppc.com
Via provided significant due diligence support to private equity groups in the capital markets, ultimately supporting the successful sale of the agency to NFP Corporation in 2011 and becoming its national headquarters for P&C insurance operations. He has significant insurance and accounting expertise.
Arizona-Nevada market CFO Time in position: 2 years IASIS Healthcare What they do: Acute and behavioral healthcare iasishealthcare.com
Wells has aligned himself with case management, risk management, quality and compliance and the legal departments, providing his market with a competitive strategy and edge.
financial executives international 86 AB | November-December 2013
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88 AB | November-December 2013
2013 CYBERCRIME:
Itâ&#x20AC;&#x2122;s becoming pervasive and impacts both banks and their customers. Whoâ&#x20AC;&#x2122;s being impacted and what does it mean for the mobile banking movement?
HEALTHY AMID SLUGGISH ECONOMY:
Fewer banks are failing than at any time since the financial crisis erupted in 2008 and the healthier banking industry is helping sustain an Arizona economy that continues to be slowed by lackluster hiring and weak manufacturing.
TALK FROM THE TOP:
A Q&A with Mike Thorell, president, Pinnacle Bank, who is also the 2013-2014 chairman of the Arizona Bankers Association.
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91 AB | November-December 2013
Easy access Cybercrime concerns grow as banks and their customers embrace mobile banking By MICHAEL GOSSIE
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F
orget Bonnie and Clyde. Today’s bank robbers don’t need masks or guns or getaway cars. Today’s criminals relax in remote locations, where they generate sophisticated software that compromises the security of financial institutions and allows them to remove large sums of money at their convenience. “The threat of cybercrime is getting bigger and bigger every day,” said Mike Thorell, president and CEO of Pinnacle Bank and chairman of the Arizona Bankers Association. “Even the smallest banks, who never thought they would move into the mobile space as quickly as they have, know that mobile banking is neccesary to attract new customers, but it’s also introduced a whole new level of risk.” Cyberattacks continue to be on the rise, according to software company Symantec, which estimates that crimes against firms in the United States — particularly financial institutions — increased by more than 40 percent in 2012. Experts expect cyberattacks to continue to be the crime of choice as few banks keep significant funds in retail locations. Richard McFeely, executive assistant director of the FBI’s Criminal, Cyber,
Response, and Services Branch, put the level of concern related to cybercrime into perspective when he briefed the Senate last June. “It is difficult to overstate the potential impact these threats pose to our economy, our national security, and the critical infrastructure upon which our country relies,” he said. “The bottom line is we are losing data, money, ideas, and innovation to a wide range of cyber adversaries and much more is at stake.” IMPACT ON INDUSTRY Cyberattacks have become such a threat that President Barack Obama voiced concern during his State of the Union address about the increasing threat in criminal hacking against the banking industry. “Banks need to be extremely vigilant because the attacks made against the
COVERING YOUR ASSETS
Here is what experts said consumers can do to protect themselves from cybercrime:
Desirae D. Outcalt
Al Palimenio
Branch operations manager Biltmore Bank of Arizona
Vice president of information security Mutual of Omaha Bank
“Do not share user names and passwords ... Work with your bank to see what services they offer to assist in fraud prevention and detection.”
“Customers need to keep their computer systems and software up to date ... Customers must also install antivirus software that offers complete protection and keep it updated.” 93 AB | November-December 2013
financial sector are quite sophisticated,” said Kris Carlson, who practices cybersecurity law at Polsinelli. “Cyber criminals have posed as technicians and installed malicious hardware on the machines they were supposed to be servicing. Criminals have also posed as ATM maintenance workers and ATMs have been delivered with malware already installed on the system. Banks need to educate their employees about all of the possible threats.” Arizona banking leaders said they have taken steps to reduce the threat of cybercrime. “Biltmore Bank implemented Trusteer Rapport, which provides instant PC and Mac anti-fraud protection for our customers,” said Desirae D. Outcalt, branch operations manager at Biltmore Bank of Arizona. “Trusteer Rapport protects against financial malware and phishing attacks.” Potential loss of deposits from cyberattacks isn’t the threat to banks’ bottom lines. Banks are impacted the most by the cost of monitoring the ever changing threats, as well as implementing, maintaining and adjusting the safeguards to reduce the risks, said Al Palimenio vice president of information security for Mutual of Omaha Bank. “Banks must not only consider their environment, but also that of their business partners,” Palimenio said. “Additionally, we must do what we can to
educate our customers about the threats.” To reduce the risk of cybercrime, Palimenio said Mutual of Omaha Bank employs “defense in depth” methods to protect customer information. The program includes regular monitoring and reporting of the bank’s risk posture, which is explained in the bank’s Information Security Program, which follows industryaccepted frameworks. Cyber experts agree that attacks will continue to become more sophisticated and financial institutions will need to stay ahead of the curve to avoid a drop in customer confidence. “Though we can’t control many of the sources of cybercrime, we can educate our clients and the public about ways to protect their personal information in our branches and online,” said Kevin Sellers, executive vice president with First Fidelity Bank in Arizona. “Hopefully, the advice we give makes an impact and helps consumers to think twice before their security is compromised.” THE TECH EFFECT The increasing use of technology opened the window for the rise in cybercrime, experts said, and the popularity of mobile banking has provided an additional layer of vulnerability. “As more mobile devices are being utilized in banking, more criminals are
COVERING YOUR ASSETS
developing malware to capture Personally Identifiable Information (PII),” Carlson said. “Cyber criminals can send text messages containing links which will install the malware on a mobile device. The malware then captures log-in information — usernames and passwords — when the banking app is used and that PII is sent to the cyber criminals.” Sellers said using mobile banking with an unsecured or public internet connection — like a coffee shop — can mean compromising your safety. “Individuals need to be vigilant about viewing any private information over secure networks only,” he said. “We encourage individuals to use mobile banking to watch their accounts in real time. Viewing bank statements on your PC, tablet or phone rather than on paper is recommended, and eliminates a statement sitting in your mailbox, which could fall into the wrong hands.” So what happens if a consumer becomes a victim of cybercrime? Often, it’s their loss. “Often, there is no legal recourse but that depends somewhat on the facts of the crime,” Carlson said. “If the customer allowed the breach of security by falling for a scam, then the customer probably will not recover his or her assets. However, if the exploit was directed against the bank, then the loss generally falls upon the financial institution. Customers should notify their banks as soon as the customer discovers an error in the account.”
Here is what experts said consumers can do to protect themselves from cyber crime:
Kris Carlson
Kevin Sellers
Kimberly Shedd
Associate Polsinelli
Executive vice president First Fidelity Bank
Account executive MJ Insurance, Inc.
“Customers are frequently falling victim to phishing scams ... Unfortunately, sophisticated criminals have the ability to send malicious messages that appear to be from people that you know. So pay close attention to any message containing a link. If it appears suspicious, call your friend and ask if he/she really sent you that message.” 94 AB | November-December 2013
“Watch out for copycat websites that deliberately use a name or Web address very similar to your bank’s URL. Avoid clicking on links in unsolicited e-mails. In fact, be wary of any unsolicited requests – your bank will not call, text or email you and request account-related or personal information.”
“Be diligent. Monitor your credit using a service that notifies you of credit applications/ checks, build stronger passwords, purchase from trusted websites — all these are among the simple steps you can take as a consumer to protect yourself from cybercrime.”
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95 AB | November-December 2013
Leading the charge New Arizona Bankers Association chairman hopes to direct industry into an improved regulatory and economic climate By MICHAEL GOSSIE
M
ike Thorell, president and CEO of Pinnacle Bank, is the 2013-2014 chairman of the board of directors for the Arizona Bankers Association. Az Business magazine caught up with Thorell to talk about the state of the industry and his goals as chairman. Az Business: How is the banking business? Mike Thorell : Generally, it’s improving. We are still in the midst of slow, slow economic recovery. We are seeing modest growth, but it’s certainly below everybody in the industry’s expectations this far out of the recession. AB: What are the industry’s biggest challenges? MT: Dealing with our own regulators. We are still dealing with implementation of (The) Dodd-Frank (Wall Street Reform and Consumer Protection Act), which is the single biggest piece of banking regulation that’s ever come through Congress and passed. It’s not fully implemented and I think the challenge we are having in our industry is that it’s created a level of uncertainty. So aside from the economic uncertainty we are dealing with, we have regulatory uncertainty. We have an industry that is grappling with a couple different issues of uncertainty that haven’t been resolved yet. AB: Do you agree that the banking industry has become a stabilizing force in Arizona’s economy?
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MT: To a certain degree. It’s hard to feel like you are the stabilizer when you don’t understand all your rules. We feel like we bring stability to the climate; but internally, we understand there is still more to come. There is a lot of pressure from new regulations, how we’re going to adapt to them and whether or not we can adapt to them quickly. We’ve dealt with all the issues we’ve had to deal with in the wake of the Recession, but behind the curtain, we know there is more to deal with. AB: How has the housing market impacted banks? MT: It’s been favorable. About 36 months ago, we had a lot of customers who came in with concerns over first or second mortgages because a lot of those homes were under water. The improved housing
What is the anti-deficiency statute? Arizona’s anti-deficiency statute says that if a person or corporation owns a residential property on 2.5 acres or less that is used as a dwelling, the owner is not responsible for any deficiency occurring after a foreclosure. Many bankers say the statute absolutely contributed to Arizona’s housing bubble as investors knew they could buy residential real estate in Arizona and walk away if the investment became negative.
market has mitigated some of those losses, so it’s taken pressure off the loss side. It’s also taken pressure off clients who have been able to sell their homes and avoid a credit collision with the bank. AB: What are your goals as chairman of the ABA? MT: The association established an initiative to work with the real estate industry on anti-deficiency. We want to find common ground to make sure we have good statutes in place that balances what the real estate community wants and what the banking industry needs in a way that creates fairness so the system isn’t gamed. When people are gaming the system, everyone ends up losing. It causes dysfunction in the system. We don’t want to take away the original intent of the statute, but we’ve taken the approach of, “Let’s talk about it.” We’ve reached out to the real estate industry to try to figure something out without it becoming a war. In the end, both industries want to find a solution that will be beneficial for Arizona. AB: Any objectives from a personal perspective? MT: My other goal, as CEO of a smaller bank, is to take a step to try and bring balance to banking regulations that are really geared around the megastore banks. Not all regulations are created equal. We need to create balance so regulations are put into place to protect the industry, but are also fair to the smaller banks.
97 AB | November-December 2013
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Bouncing back W Banking industry helps sustain an Arizona economy that continues to be sluggish By MICHAEL GOSSIE
hile it's no secret that the underlying cause of the Recession was the real estate bubble bursting, the financial punch that the banking industry took from the drop in home prices led the country into the worst economic free-fall since the Great Depression. While the recovery hasnâ&#x20AC;&#x2122;t comes at a pace most financial experts would have expected, experts say the healthier banking industry is helping sustain an Arizona economy that continues to be slowed by lackluster hiring and weak manufacturing.
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“Arizona banks are actively providing debt capital to operating companies,” says Kevin Sellers, executive vice president with First Fidelity Bank in Arizona. “As a result, businesses are able to expand and increase payrolls, creating a positive ripple effect in the entire economy.” In the initial stages of Arizona’s recovery, the primary catalyst has been investors seeking real estate bargains, according to Bob Blakemore, senior vice president of wealth management for Mutual of Omaha Bank. “Banks are normally the primary source of funds in the beginning stages of a recovery, but many banks have been faced with credit, collateral and regulatory challenges,” Blakemore says. “As the economy has stabilized, so have bank balance sheets, perhaps setting the stage for credit expansion in the year ahead.” But a contributing factor to the stabilization of the banking industry in Arizona has not been expansion. It’s been retraction. Between 2008 and 2011, FDIC data show Arizona lost 12 banks — all with less than $1 billion in assets. The reduction in the number of banks isn’t necessarily a bad thing, experts point out. “Some Arizona banks have either been dismantled or absorbed by larger institutions during the last cycle,” says John Media, senior vice president and division manager for business banking at Washington Federal. “The result is the banking sector has a more robust financial
“My advice? Have sound business and risk management practices in place during the good times because it’s too late if you wait to install them when the going gets tough.”
entrepreneurial,” says Curtis J. Hansen, director of wholesale banking for National Bank of Arizona. “For example, our bank has educated itself on lending in new industries. We also have been aggressive in lending to Arizona companies, even those that have struggled, but now have improving fundamentals. Banks must find ways to make new loans, especially when margins have tightened in this low-rate environment.” Other banks have also adapted to the new normal to grow revenue through this struggling economy.
BBVA Compass: “We have focused on – Roy Whitehead a broad industry approach,” says Lynne footing and deeper, more reliable capacity. This is timely in that Arizona businesses can capitalize on the bank capacity at this early stage in the up cycle.” GROWING REVENUE While the economic recovery has been slow, Arizona banks — even the smaller banks who were hit hardest by the Recession — have been able to take advantage of the improving economic environment to return to profitability. In 2012, 11 of 17 Metropolitan Phoenix banks with less than $1 billion in assets earned a profit, compared with only six who were profitable in 2011. “We’ve become more creative and more
THE UPSIDE OF THE DOWNTURN
Herndon, city president. “In other words, we have been lending to healthcare, automobile dealers, municipalities, and schools in addition to general industries.”
BMO Harris Bank: “All of our lines of
business are actively calling on prospects and demonstrating how we can bring creative thinking and constructive solutions to their financial decisionmaking process,” says Steve Johnson, Arizona president. “We are selling deeper to our existing client base. Additionally, we are specifically focused on providing niche products and services available through speciality channels.”
Enterprise Bank & Trust: “The
demand for bank loans from businesses
Here is how banking experts say the economic downturn changed the banking industry in Arizona:
Jack Barry
Curtis J. Hansen
Lynne Herndon
Chairman, Arizona Region, Enterprise Bank & Trust
Director of wholesale banking National Bank of Arizona
City president BBVA Compass
“The significant declines in real estate values during the downturn have encouraged banks to be more diligent on proper loan-tovalue standards. It has also heightened awareness of the need to diversify into a range of industry sectors.”
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“The downturn has presented the banking industry with an opportunity to improve efficiencies and focus on how to better serve our customers. However, new regulations will reduce variety in mortgage products, availability of credit in some areas due to capital requirements, and I would expect additional change in a number of consumer products.”
“Banks are now very focused on portfolio diversification, meaning that there is a healthy balance between business loans and commercial real estate. Many of the banks prior to the recession were heavily dependent on commercial real estate, which caused major capital constraints. Banks are focused on healthy capital and portfolio diversification today.”
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101 AB | November-December 2013
has been soft,” says Jack Barry, chairman, Arizona Region. “To offset this fact, (we have) focused on specific areas of expertise including tax credit financing, enterprise value lending and private banking that give us a competitive advantage to serve middlemarket businesses and their owner families.”
First Fidelity Bank: “We have increased our focus on services that are a valueadd for our commercial clients, especially our treasury services, a suite of services that create efficient cash management for businesses of all sizes,” Sellers says. “By streamlining cash flow and reducing time invested, they reduce clerical costs, interest expense, and processing costs, thereby improving overall efficiency.”
Washington Federal: “Business lending has been the fastest growing part of the company,” says Roy Whitehead, chairman, president and CEO of Washington Federal, “helped along in large part by a very successful equipment finance arm that we established and headquartered in Phoenix. Because of our strong financial position, we’ve also been in a position to acquire a number of other banks at very reasonable prices, which has kept the top line growing.” LESSONS LEARNED While the losses banks suffered because of falling home prices exposed a host of
“The banks that failed were too aggressive with underwriting standards and in particular, extended too much credit to commercial real estate investors with relatively low levels of equity contribution from the owners,” – Kevin Sellers fundamental problems in the industry during the economic downturn, banking leaders say they took away valuable lessons that will help them weather economic downturns in the future. “The banks that failed were too aggressive with underwriting standards and in particular, extended too much credit to commercial real estate investors with relatively low levels of equity contribution from the owners,” Sellers says. “Another lesson is to maintain adequate diversification in the loan portfolio and avoid becoming concentrated
THE UPSIDE OF THE DOWNTURN
in riskier real estate development projects.” The need to diversify is the overwhelming message bankers took away from the Recession. “The over-allocation of loans to any one sector can put banks at great risk should that industry experience a major downturn,” Barry says. “Although the entire economy declined during this recession, the significant impact to the real estate industry created a heavy burden on those banks primarily invested in real estate loans.” Despite having the hard-fought lessons fresh in their minds, Whitehead says it seems that every generation of bankers has to go through hard times on their own and many of the same mistakes are made again with each recession. “My advice?” Whitehead offers. “Have sound business and risk management practices in place during the good times because it’s too late if you wait to install them when the going gets tough.” Also, experts warn, the industry needs to remember to extend its memory. “Bankers tend to have pretty short memories,” says Mike Thorell, president and CEO of Pinnacle Bank. “The banking business is so driven by growth and the challenges we face when growing. You hope we don’t forget to keep administering the discipline that’s needed to do what’s right despite the pressure to grow.”
Here is how banking experts say the economic downturn changed the banking industry in Arizona:
Steve Johnson
Kevin Sellers
Roy Whitehead
Arizona president BMO Harris Bank
Executive vice president First Fidelity Bank
Chairman, president and CEO Washington Federal
“The downturn provided the industry an opportunity to balance their portfolio and not be so dependent on a single industry. We’ve begun to see more activity across our market as commercial developers are slowly building out projects. We are now seeing signs of greater loan utilization and an increase in construction. This is a good sign for the economy as a whole.”
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“There are fewer banks in Arizona but those that remain are stronger, better capitalized and poised to participate in the recovery. Arizona banks will generate higher levels of net income which will, in turn, attract other financial institutions to the state.”
“One of the outcomes of the downturn is that banking leaders have a more significant regulatory compliance burden which is a top concern ... Despite the compliance areas, banks with a fortressed financial position and steady vision will have the flexibility and muscle to be a greater service in the early up cycle here in Arizona. So the upside of the recent downturn in Arizona is that we have banks with deeper pockets and more reliability.”
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Renewable force Diversity of membership helps Arizona Forward transition its mission to a statewide audience By DIANE BROSSART Photograph by LILLIAN REID
W
e’re Arizona’s oldest new organization! After more than four decades of service in the Valley, our businessbased environmental public interest organization took its mission statewide this year. As 2013 draws to a close, we have much to celebrate. Timing is everything and clearly business and civic leaders throughout the Grand Canyon State are ready to look at Arizona holistically to collaborate on a statewide agenda to make the place they call home more sustainable and economically viable. Arizona Forward is uniquely poised to answer the calling. We’ve made great strides in expanding our broad-based coalition, adding 24 new members in Southern Arizona and 10 in the Northern region. The diversity of our membership is our greatest strength, with companies large and small, government agencies, educational institutions and nonprofits
coming together toward a common vision for a stronger Arizona. Together, we’re serving as an objective, educational resource on complex issues surrounding energy, air quality, transportation, water and land use planning. We heard first-hand from participants in the Navajo Generating Station negotiations on how they propose to balance EPA requirements and meet the needs of NGS shareholders. We vetted all sides of the deregulation debate and issues surrounding net metering. We’re advocating for a balanced transportation system for Arizona, supporting the I-11 Canamex Trade Corridor and passenger rail in the Sun Corridor, further positioning the Arizona as a key player in the global economy. Our outreach on Arizona’s most precious natural resource – water – was presented at the League of Arizona Cities and Towns Annual Conference and will help residents better understand the true
cost of municipal water delivered to their tap and why all of us should care. We’re exploring ways to ensure a dedicated funding source for Arizona parks and open space, as well as how to activate vacant lots through innovative land use planning and smart growth strategies. We participated in a summit on the health of Arizona’s forests and watersheds featuring former U.S. Sen. Jon Kyl, U.S. Reps. Paul Gosar and Ann Kirkpatrick and others. We spotlighted environmental excellence throughout the state in a gala that attracted nearly 600 community leaders, and we provided free environmental education resources to Arizona K-12 teachers through EarthFest Educators Night. We hope you enjoy reading about some of our initiatives and the people who make them happen. Please join us in moving Arizona Forward! Diane Brossart is president and CEO of Arizona Forward. 109 AB | November-December 2013
Consider the source Residents need to view water as Arizona’s most precious resource, experts say
by MICHAEL GOSSIE
H
ere’s a riddle: What product is scarce in Arizona, you use it every day, think you pay for it every month, but you don’t actually pay for it? Give up? It’s water. “Water rates typically reflect the cost of extracting, treating and distributing the water, but do not reflect any cost of the actual water,” says Michael W. Patten, member, Roshka DeWulf & Patten. But, Patten is quick to point out, water is not free. “Even though water sources may seem abundant,” he says, “there are significant costs in extracting, transporting, treating and distributing water to ensure that the water supply provided to consumers is safe to drink and under sufficient pressure to be used.”
Where does it come from? We live in the desert. Most Arizona residents rarely see rain. So where does the water that comes out of the shower every morning come from? 110 AB | November-December 2013
“That is actually a complicated question as the supplies vary by regions around the state,” says Bradley M. Hill, R.G., utilities director and hydrologist for the City of Flagstaff. Typically, Hill says, most Arizona communities utilize one or all three of the following sources: groundwater, surface water and reclaimed water. “If you’re located in Central Arizona, most of your surface water is either from the Salt and Verde rivers and is delivered via the Salt River Project, and/ or it’s Colorado River water delivered via the Central Arizona Project (CAP),” Hill says. “Western Arizona uses water from the Colorado River directly and some communities in Northern Arizona use local surface water. For example, Flagstaff uses upper Lake Mary and springs within the Inner Basin. Again, most of these communities also use groundwater and some directly deliver reclaimed water for irrigation purposes, etc.” Arizona also puts a significant amount of recycled wastewater, or effluent, to
use, according to Joel M. Reiker, vice president of rates and revenues for Arizona Water Company.
How is it priced? Sharon B. Megdal, director of the Water Resources Research Center at the University of Arizona, says the cost of water recognized by utilities includes the cost of acquiring (for example, CAP water), extracting (groundwater) and diverting (surface) water, treating, and delivering the water. The costs the utility passes on to customers will include the administrative costs of the utility. “Water rates are typically set after an in-depth review of all costs of domestic water service, such as infrastructure, treatment, electricity and financing costs,” says Margaret Gallogly, director at Fennemore Craig. “The rate-setting process is public — water rates are approved by city or town councils, or by the Arizona Corporation Commission.” Reiker points out that the process, if any, required to treat the water and the
111 AB | November-December 2013
Margaret Gallogly
Bradley M. Hill
magnitude and age of the infrastructure necessary to deliver it to the consumer are the two biggest factors affecting the cost of water in Arizona. “Utilities are most often operated in a way such that the costs to the utility are passed on to water customers,” Megdal says. “Most utilities are run as enterprise operations, whereby others do not subsidize the cost of water for the utility, nor does the utility cover costs not associated with its water service operations. As the costs incurred by utilities increase, so do the rates paid.” Surface water generally requires the highest level of treatment before it can be delivered to customers and is therefore the highest-cost source of drinking water,”
Sharon B. Megdal
Michael Patten
higher per-capita costs and fewer — if any — large commercial and industrial users to shift their costs to. People in rural communities should be particularly concerned with the costs associated with securing future supplies and replacing aging infrastructure and the effect those costs will have on rates.” Another primary difference between rural and metropolitan utilities is the number of customers that each utility serves, which then translates into how much money each region has to develop sustainable water supplies. “Typically, in a community’s history, they tap the cheapest resource first,” Hill says. “Then as a community grows, they reach out to import additional supplies,
“People need to recognize that water is scarce relative to demand and that water management should be the concern of all,” – Sharon B. Megdal Reiker says. Groundwater generally requires little treatment other than chlorination, making it less costly. “Additionally, customers served by a distribution system that was installed 60, 70 or even 100 years ago that has been essentially paid for,” Reiker says, “will be charged lower rates than customers served by a newer system in the same general area.”
Impacting price The disparity in the age of the infrastructure often creates big differences between rural and metropolitan utilities. “Metropolitan utilities have a larger, more diversified customer base over which to spread their costs,” Reiker says. “Rural utilities are much smaller, with 112 AB | November-December 2013
which are typically more expensive — for example, Phoenix-Tucson metro areas importing Colorado River water via the Central Arizona Project starting in 1993). Smaller rural communities that are now reaching the limit of their existing supplies are now planning ways to supplement their water needs.” The problem, Hill points out, is that they do not have the tax or bonding base to afford large water importation projects alone. “Therefore,” Hill says, “ areas outside of the large metro regions need a couple things different than urban utilities: First is access to long-term revolving loans in order to obtain the capital money to build the projects. Second is the legal ability to collaborate together with multiple
Joel M. Reiker
communities to create water augmentation authorities or taxing districts to repay the revolving loans, similar to how the Legislature created the Central Arizona Water Conservation District several decades ago.”
Making it last There is a price that extends beyond the dollars it takes to build or maintain a stable water supply, experts say, because having the proper utilities in place is imperative for future economic development in the state. “A stable and sustainable water supply – both in availability and pricing — is important for many industrial businesses that use significant water,” Patten says. “Further, new residential development — which is important to maintaining affordable housing stock — is dependent on having sufficient future water available to meet expected demand.” Patten thinks that Arizona needs to focus on water conservation, using all options available to reduce per capita consumption of water. “Reducing water demand helps mitigate the cost of acquiring new, more expensive water resources, which will help keep water prices in check,” he says. Environmental experts believe Arizona needs to focus on the long-term issues related to water supply and not wait for a crisis to develop. “People need to recognize that water is scarce relative to demand and that water management should be the concern of all,” Megdal says. “People should pay attention to debates and forums on future water supplies. Those planning and managing land use and water supplies need to work together more than they currently do. We should not take cheap water for granted and work together to address the imbalance in water supply and demand.”
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Green vs. green Experts try to guide Arizona toward an agenda that balances environmental quality with economic vitality by MICHAEL GOSSIE
O
ne of the missions of Arizona Forward is to guide the state toward an agenda that maintains the delicate balance between environmental quality and economic vitality for the state. Establishing that balance is easier said than done. To help understand what the state needs to do economically and environmentally, Az Business assembled a virtual roundtable of environmental experts. We asked them what the challenges are to establishing a statewide sustainability agenda that balances environmental quality and economic vitality, the steps we needs to take to get there, and what it will mean to Arizona once we arrive.
The challenges Lattie F. Coor, chairman and CEO, Center for the Future of Arizona: “The biggest challenge is finding and implementing an effective way for all Arizonans to understand the importance of sustainability to a healthy economy.” Lori Singleton, director of emerging customer programs for solar, sustainability and telecom, SRP: “Every region in our state has issues unique to the region, yet many issues are important to all of us. Joining together with a collective voice to find solutions that address topics such as a continued low cost water and energy supply, open space, air quality and transportation are key to advancing a statewide sustainability issue. Arizona Forward is an organization with a proven track record and can serve as the catalyst 114 AB | November-December 2013
for convening dialogue and finding balanced solutions.” Michelle De Blasi, shareholder, Greenberg Traurig: “When economic times are tough, government and business alike tend to focus on preservation of the status quo rather than pursuing new programs. Ironically, many sustainable practices are implemented out of necessity during difficult economic times. Unfortunately those practices often tend to be abandoned when economic conditions improve.” Melisa Camp, LEED Green Associate at HomeSmart and founder of Greenhab: “One large roadblock is the fact that large wealthy corporations tend to directly and indirectly control much of the decision making at our government level. Nature has very limited rights in our capitalistic economy. We allow big businesses to dominate the way we live and nature needs to be legally recognized for all the things it gives us for free that we seem to be destroying.” Liz Grobsmith, senior advisor to the president for strategic and international initiatives, Northern Arizona University: “I think the biggest challenge will be to meet local and regional needs while still keeping in mind statewide goals. Large cities have different priorities for sustainability and conservation than do small towns or rural areas; so the challenge will be to advance efforts that have broader implications for all areas of the state.” Robin Shambach, AIA LEED AP, principal, Burns Wald-Hopkins Shambach Architects: “The lack of fiscal
and tax policies to provide diverse and lasting funding mechanisms to invest in education, infrastructure and the environment; and the need for new forms of governance, primarily regional, that advance a common environmental and economic agenda across the Sun Corridor.” Steve Lopez, founder of Clean Air Cab: “There is an incorrect assumption that in order for us to have a new economic engine in Arizona, we would need government intervention. We also have old, archaic business models that are incapable of nurturing and maintaining a sustainability business model. It takes more thought and more money to create a more conscious product or service.”
The benefits Steve Krum, director of global communications, First Solar: “As Arizona Forward has branched out to be a statewide organization, we found that there are common themes shared by virtually every civic organization and environmental group engaged in sustainability efforts. We all want to ensure Arizona is a place that our children and grandchildren choose as their home. Clean air, clean water, appropriate transportation infrastructure and a healthy business climate are key elements of communities that not only attract visitors, but people who call this place home.” Singleton: “We can address issues and find common solutions that make Arizona a better place to live before we get to a crisis. Recognizing and defining the issues and working together to find solutions can enhance our reputation as a state and can
Lattie F. Coor
Melisa Camp
make Arizona a better place for all of us.” Shambach: “Job creation and a strong diverse economy depends on an educated workforce, supporting existing businesses and attracting new employers. More and better jobs in diverse industries offer a variety of economic opportunities for everyone. Such an economy attracts talented workers, retains young people and provides stability that fosters risk-taking and entrepreneurship.” Coor: “Using water as an example: the entire state has a stake in understanding and committing to a sound and effective statewide sustainability. It will be difficult, but important, to accomplish.” De Blasi: “By implementing a statewide agenda that allows Arizona’s vast resources to be efficiently utilized while supporting economic vitality, Arizona will increase its ability to compete with other states as well as provide opportunities for growth well into the future.” Kuldip Verma, founder and CEO OF Vermaland, a land banking and land development company based in Phoenix: “Having a clear agenda, especially around the solar industry, would brand Arizona as a leader in renewable energy. It would both increase capital investment and jobs in the state.”
The first step Verma: “Our state legislative body needs to impose a higher renewable energy mandate on the utilities to purchase more renewable energy. If this isn’t done, utilities will have no incentive to purchase renewable energy, thereby, preventing developers around the world from coming to Arizona and establishing facilities. Other states such as California have significantly higher renewable energy mandates than we do.” De Blasi: “The first step is educating both the public and private sectors about what sustainability means. The
Michelle De Blasi
Liz Grobsmith
concept has been overused and tends to be misunderstood. Sustainable practices are not one size fits all and must fit the specific parameters of each type of entity in which they are being implemented.” Phil Petersen, founder and president, Brookfield Communities: “This must start as a public/private partnership. The business community must work hand-inhand with state and federal officials to start a realistic dialogue that will have a real impact.”
MEMBER SPOTLIGHT Kurt Wadlington, AIA, DBIA, LEED AP Employee owner Sundt Construction, Inc.
Interest in Arizona Forward: “Arizona Forward brings together public and private stakeholders to synergize economic and environmental interests on a statewide platform. The organization is uniquely equipped to convene local and regional entities and broaden these important discussions so that they both benefit the population and leverage the combined voice of the entire state of Arizona.”
Most critical environmental issue: “Transportation. With the Sun Corridor poised to be one of the United States’ great mega regions, transportation is both a threat and an opportunity for Arizona’s future sustainability. This is an issue that must be planned before growth occurs and Arizona Forward has commenced the discussion through its 2012 Transportation Primer, which provides important background documentation for ongoing discussions regarding current and future transportation solutions that will support our state’s increased population, trade and tourism in the coming decades.”
Lori Singleton
Grobsmith: “We have to look at the areas affecting the entire state—water conservation, energy production and consumption, open space, transportation—and bring together those with the greatest expertise to establish statewide goals and measures for assessing our accomplishments. While it’s great to see so many groups and agencies advancing so many projects focused on statewide sustainability, how to link those together into a strategic plan for the state will be most critical. The first step is bringing those groups into dialogue and planning to set goals that will have the broadest impact on the state.” Shambach: “We need to establish a strong cohesive identity for our state and consensus for public decision-making and collective action for our future.” Lopez: “We need to educate community leaders, business owners and the public at large about the benefits of creating a self-sustaining city. Your mindset has to change from the tradition of being a customer to being an educated consumer.” Camp: “Start with implementing a carbon footprint tax and make companies that adversely affect nature pay for the damage they are doing to our shared resources. Make it so that it costs more to do business not to be green and sustainable.”
Making the case Krum: “We cannot afford to let the rest of the world define what Arizona is. We must proactively and aggressively establish collaborative efforts to shape our communities and protect our natural resources in a way that demands favorable perceptions. If we don’t create a worthwhile story, others will create one for us.” De Blasi: “Sustainability is more than just a buzzword for protecting the environment. To have a sustainable business means to utilize all resources 115 AB | November-December 2013
Steve Krum
Steve Lopez
efficiently to not only make those resources go further, but to increase your company’s bottom line. By looking at all facets of your business from a “sustainability” standpoint, you are increasing your edge over your competitors.” Coor: “Arizona is a state of unparalleled beauty. If we are to preserve that beauty as we develop in the years ahead, we should be cognizant of the examples of sustainable and non-sustainable practices that have occurred in Arizona throughout our history, and recognize that a healthy economy and healthy society for the future requires an increased commitment to sustainability in the future.” Verma: “We need to show our business leaders the economic benefit our state would have if we did, in fact, become a leader in renewable energy. This would be a tremendous boost to our economy. This statewide benefit would in turn benefit and grow their respective companies.” Grobsmith: “I would imagine that most CEOs care — at least to some extent — about conserving energy use and creating a more sustainable society; they may need to be inspired to get their respective organizations and companies actively involved in reducing energy consumption, altering corporate practices in uses of water, accepting the initial cost of using more sustainable equipment, reducing the use of fossil fuels—and creating incentives and rewards for their companies to reap the benefit of this change. It’s not easy to change behavior or practices, particularly in a corporate environment, but it has to be done to help Arizona reach its sustainability goals.” Shambach: “Citizens want to see increased wages, a diversified and resilient economy and more economic activity in the region. Therefore, we must collectively promote and leverage our state’s strengths, develop a welleducated and skilled workforce, support 116 AB | November-December 2013
Phil Petersen
Robin Shambach
small and local businesses, They also want to conserve resources and honor our natural environment and so again, together, we must continue to improve water conservation, increase efficiency in the buildings, maintain the quality of our air , protect and conserve unique and biologically sensitive lands, expand natural outdoor recreation opportunities, and increase the value of developable private and state trust lands.” Lopez: “The more we look at our environment as renewable and reusable, the less business owners see it as
MEMBER SPOTLIGHT Ginger Spencer
Special assistant to the city manager City of Phoenix
Interest in Arizona Forward: “As an environmental steward, it is a great opportunity to network with other leaders from around the state and to advocate for environmental quality and sustainability.”
Impact of Arizona Forward: “I definitely believe our focus on energy and Arizona being a leader in solar and renewable energy technology has the potential of having the greatest impact and aligns with our energy conservation initiatives in Phoenix.”
Most critical environmental issue: “Extended drought is probably the most critical environmental issue facing the state today. Drought not only impacts our water supply, but also has other serious consequences – loss of forests, loss of habitat for animals, reduced water supply, poorer water quality, less capacity in reservoirs, and poor air quality.”
Kuldip Verma
disposable—setting up a future where conscious products are being sold to conscientious consumers.”
The potential impact Grobsmith: “This is a difficult balancing act. Obviously, economic vitality is critical to the state’s future, but it cannot be at the cost of the environmental degradation that can ensue is the goals are only economic. A model in which energy savings can be seen as a way to reinvest in a company would create a winwin situation. Given the challenges that Arizona already has with environmental concerns — both in urban and rural areas — it is in all of our best interests to find ways of mitigating environmental damage as we promote economic growth.” Krum: “By definition, true sustainability requires a balance of environmental, social and economic components. This doesn’t need to be a win/lose situation that obstructs the integration of any one aspect. I think we can create an organic synergy that honors the perspective of all stakeholders while working toward common goals. Arizona’s comprehensive health depends on us all working together.” Shambach: “Being responsible stewards for our environment not only conserves irreplaceable resources for future generations, it also strengthens our economy by attracting quality businesses and providing a place where workers want to live and tourists want to visit.” De Blasi: “A statewide sustainability agenda would mean that Arizona is maximizing its economic development potential while at the same time preserving its resources for future generations.” Singleton: “A statewide sustainability agenda means that we can have both environmental quality and economic vitality. They can compliment each other rather than sacrificing one over the other.”
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117 AB | November-December 2013
2013 Environmental Excellence Awards Arizona Forward and SRP presented 16 first-place Crescordia winners and 33 Awards of Merit at Arizona Forward’s 33rd annual Valley Forward Environmental Excellence Awards. For more information, visit valleyforward.org. BUILDINGS AND STRUCTURES - Residential CRESCORDIA: Encore on Farmer, submitted by Okland Construction AWARDS OF MERIT: Gordon Estates, submitted by Mandalay Homes; Lofts at McKinley, submitted by Gorman & Company, Inc. BUILDINGS AND STRUCTURES – Civic CRESCORDIA: Tom’s Thumb Trailhead in the Scottsdale McDowell Sonoran Preserve, submitted by Fucello Architects AWARDS OF MERIT: LEED Platinum Phoenix Fire Station No. 59, submitted by LEAArchitects, LLC; Maricopa County South Court Tower, submitted by Gilbane Building Company
SITE DEVELOPMENT AND LANDSCAPE – Private Sector AWARD OF MERIT: DARTS, submitted by Gabor Lorant Architects Inc.
BUILDINGS AND STRUCTURES – Historic Preservation CRESCORDIA: 1891 Second Pinal County Courthouse Rehabilitation, submitted by Pinal County Board of Supervisors AWARD OF MERIT: EMCC Buckeye Educational Center at 1928 BUHS A-Wing, submitted by Michael Wilson Kelly - Architects, Ltd.
ART IN PUBLIC PLACES CRESCORDIA: Nodal Water Garden, submitted by Scottsdale Public Art AWARDS OF MERIT: HI-BROW, submitted by Colab Studio, LLC; PHX Sky Train Terminal 4 Connector Bridges Glass Mural Project, submitted by Phoenix Office of Arts and Culture
BUILDINGS AND STRUCTURES – Commercial & Mixed Use CRESCORDIA: DARTS, submitted by Gabor Lorant Architects Inc. AWARD OF MERIT: 4400 Civic Center, submitted by John Douglas Architects
ENVIRONMENTAL TECHNOLOGIES – Public Sector CRESCORDIA: DVL UAV Rainwater Harvesting Innovative Technologies Project, submitted by Desert View Landscape, LLC AWARD OF MERIT: Surface Aeration for the Removal of Disinfection Byproducts from Drinking Water, submitted by City of Phoenix Water Services Department
BUILDINGS AND STRUCTURES – Institutional CRESCORDIA: Fireside Elementary School, submitted by DLR Group AWARDS OF MERIT: Central Arizona College - Superstition Mountain Campus, submitted by Adolfson & Peterson Construction; University of Arizona Health Sciences Education Building, submitted by Ayers Saint Gross BUILDINGS AND STRUCTURES – Industrial & Public Works AWARD OF MERIT: City of Phoenix - Corona Service Yard, submitted by Gabor Lorant Architects Inc. LIVABLE COMMUNITIES – Sustainable Communities CRESCORDIA: Stabilizing Phoenix Neighborhoods Using Sustainable Green Standards and Strategies, submitted by City of Phoenix Neighborhood Services Department AWARDS OF MERIT: Aeroterra Redevelopment Project, submitted by City of Phoenix Housing Department; PHX Renews, submitted by Keep Phoenix Beautiful LIVABLE COMMUNITIES – Adaptive Reuse AWARD OF MERIT: Canvas Corner, submitted by C & H Associates LIVABLE COMMUNITIES – Multimodal Transportation & Connectivity CRESCORDIA: The Sky Train Phoenix Sky Harbor International Airport, submitted by City of Phoenix Aviation Department AWARD OF MERIT: City of Avondale Zoom Neighborhood Circulator, submitted by City of Avondale LIVABLE COMMUNITIES - Public Policy/Plans AWARDS OF MERIT: General Plan 2030, submitted by City of Avondale; Sustainable Community Master Plan for the Navajo Nation, submitted by Swaback Partners, pllc SITE DEVELOPMENT AND LANDSCAPE – Public Sector AWARDS OF MERIT: Centennial Way Federal Aid Transportation Enhancement, submitted by Achen-Gardner Construction, LLC; City of Peoria Green Campus, submitted by City of Peoria 118 AB | November-December 2013
SITE DEVELOPMENT AND LANDSCAPE – Trails AWARDS OF MERIT: Skip Rimsza Paseo in the Phoenix Sonoran Preserve, submitted by City of Phoenix; Scottsdale Via Dona Trail, submitted by City of Scottsdale SITE DEVELOPMENT AND LANDSCAPE - Parks CRESCORDIA: Westwing Neighborhood Park, submitted by EPG AWARDS OF MERIT: Avondale Community Garden, submitted by City of Avondale; Downtown Owls, submitted by Audubon Arizona
ENVIRONMENTAL TECHNOLOGIES – Private Sector CRESCORDIA: PepsiCo Tolleson Sustainability Program, submitted by PepsiCo AWARD OF MERIT: Inovus, submitted by Strategies 360 ENVIRONMENTAL EDUCATION/COMMUNICATION – Public Sector CRESCORDIA: City of Avondale Solar Demonstration Project, submitted by City of Avondale AWARDS OF MERIT: Chandler Water Audit Program, submitted by City of Chandler; Do More Blue (Jeans), submitted by Town of Queen Creek ENVIRONMENTAL EDUCATION/COMMUNICATION – Educators, Students & Nonprofits CRESCORDIA: River Pathways, submitted by Audubon Arizona ENVIRONMENTAL STEWARDSHIP – Central Arizona CRESCORDIA: Wilderness Stewardship Program, submitted by Arizona Wilderness Coalition AWARDS OF MERIT: McDowell Sonoran Field Institute Citizen-Science Program, submitted by Daniel G. Gruber; Janice Miano, submitted by Arizona Heritage Alliance ENVIRONMENTAL STEWARDSHIP – Northern Arizona CRESCORDIA: Grand Canyon Trust Volunteer Program, submitted by Grand Canyon Trust AWARD OF MERIT: Chip Norton, submitted by Jane Whitmire, Ph.D. ENVIRONMENTAL STEWARDSHIP – Southern Arizona CRESCORDIA: Tucson Electric Power - University of Arizona Science and Technology Park, submitted by Tucson Electric Power AWARDS OF MERIT: Trees for Tucson, submitted by Tucson Clean & Beautiful, Inc.; Pima County Sustainable Action Plan for County Operations, submitted by Pima County PRESIDENT’S AWARD (Best of Show) Grand Canyon Trust Volunteer Program, submitted by Grand Canyon Trust
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impact $4.4
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In the last ten years, Arizona State University has torn down academic walls and forged new disciplines, tripled research expenditures, created new campuses and awarded 146,000 degrees while increasing academic performance and impact. We have brokered new partnerships, created jobs and fostered new business development that drives the stateâ&#x20AC;&#x2122;s economy. Please contact Keith Walton (keith.walton@asu.edu) to see what we can accomplish together.
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dream it. do it.