COOL, CLEAR WATER Tucson firm rm st stakes ity claim on water purity PAGE 10
Your Weekly Business Journal al fo for the Tucson Metro Area WWW.INSIDETUCSONBUSINESS.COM • MARCH 15, 2013 • VOL. VO OL 22, NO. 42 • $1
Sun burned Tax-credit’s end could harm solar unit installers Page 4
SSpecial pecia al Rep Report port Inside
HEALTHCARE REFORM
More than words Value of communication focus at SHRM-GT awards Page 5
Incremental increases Small gains in home prices are holding up Page 27
An inside look at the possible impacts of the Affordable Health Act PAGE 11
Historic Manning House noticed for foreclosure auction Inside Tucson Business After 14 years of financial struggles under its current ownership, the historic downtown Manning House, which has been up for sale since it closed as an events venue last July, has been noticed for foreclosure auction. According to the notice, Manning House LLC is delinquent on an original note of $1.89 million. At the time it was put up for sale last summer, owner and CEO Colleen E. Concannon said the asking price was $2.48 million for the 37,204 square-foot building on two parcels of land at 450 W. Paseo Redondo totalling 5.1 acres.
In a 2005 attempt to sell the property, it was offered at $6.25 million, or $5 million for just the Manning House and its immediate 3.5-acre parcel. Concannon, her brother Dr. Kevin Concannon and other family members bought the building in 1997 for $2.19 million from Pochter Group, Chicago. The Concannon family subsequently invested $3 million renovating and restoring the building and buying the adjacent 1.6 acres. In 1998, the Concannons’ company filed for bankruptcy. Over the years, the Concannons made at least two public efforts to sell it, once to the Tucson Convention and Visitors Bureau and another to
Tucson Electric Power. Neither came to fruition. Last July before closing it and putting it up for sale, the Concannons reached a purchase option agreement with the downtown Rio Nuevo Multipurpose Facilities District to acquire it, providing that the agency could find a development partner. But that failed, too. The original 12,000 square-foot mansion was designed by architect Henry Trost for Levi Manning, a prominent businessman and Tucson’s mayor from 1905 to 1907. The Manning family moved out of the home in 1949 and it became the Elks Club Lodge. The group added 20,000
square feet to the building and converted the atrium/courtyard into a ballroom. In 1979, the city’s Downtown Development Corporation acquired the worn building and re-purposed it as office space. In 1994, the Pochter Group bought the property. It is listed on the National Register of Historic Places. The trustee’s sale is being handled by the Scottsdale law firm of Kutak Rock. The beneficiary is City National Bank, Los Angeles. The foreclosure auction is scheduled for 11 a.m., May 29 at the on the steps of the Pima County Superior Court Building, 110 W. Congress St.
2 MARCH 15, 2013
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MARCH 15, 2013
3
NEWS
Corporation Commission rule change could hurt solar system installers
Patrick McNamara
Tucson region’s population is still below 1 million
Solar industry representatives worry that interest in solar installations at commercial and nonprofit sites, like this one at the Benedictine Sanctuary of Perpetual Adoration, 800 N. Country Club Road, will die because tax incentives were eliminated.
By Patrick McNamara Inside Tucson Business When the Arizona Corporation Commission unanimously ruled in January to end tax credits for companies that purchased and installed photovoltaic solar systems on their businesses, members of environmental and solar industry sectors were outraged. Among the complaints were claims the elimination of incentives would kill demand for solar power from the business commu-
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nity. Now, at least anecdotally, that appears to be happening. “I think what you will see in the industry is that companies will be cutting commercial installer crews,” said Michael Neary, executive director of the Arizona Solar Energy Industries Association, the state affiliate of the national Solar Energy Industries Association. In fact, Neary said he knew of at least one Tucson-based solar company that already had laid off installers. Inside Tucson Business tried to contact the company for
confirmation but could not get a respons and we’re not naming the company. It wasn’t the only company that apparently didn’t want to talk. What the Corporation Commission ruling did was eliminate the incentives for commercial solar installations in the service areas for Tucson Electric Power (TEP) and Arizona Public Service (APS) in Phoenix. The incentives had allowed commercial, industrial and nonprofit groups CONTINUED ON NEXT PAGE
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The Tucson region continues to grow, but at a slow pace that still has yet to reach 1 million in population. Figures released Thursday (March 14) by the U.S. Census Bureau show the Tucson region had 992,394 residents as of July 2012. That represents a growth rate of 1.1 percent, or just 10,479, since July 2010 when the populations was 981,915. The metropolitan Phoenix area grew 2.9 percent, or by 120,000. Elsewhere in the state, population growth was similar to the Tucson region. Population totals for other metro areas in the state are: • Flagstaff : 136,011 • Lake Havasu, Kingman: 203,334 • Phoenix, Mesa, Scottsdale: 4,329,534 • Prescott: 212,637 • Sierra Vista, Douglas: 132,088 • Yuma: 200,022 Statisticians in October 2007 claimed the Tucson region had topped 1 million population, a figure they based on growth rates projected from the 2000 Census. But based on the official 2010 Census, it was determined those projections had been over-estimating the region’s growth since about 2004. University of Arizona economist Marshall Vest has for the last two years been projecting that the region will finally cross the magic 1 million mark some time early in 2014.
East-side hotel, office complex planned by HSL A new east-side hotel and office complex with a possible restaurant is in the planning stages on 17 acres of land adjacent to Dorado Country Club Estates on Speedway, east of Wilmot Road. Residents of the area have been informed the HSL Properties, owned by developer Humberto Lopez, of the plans which include realignment of the first, ninth and 10th holes of the par-62 golf course. HSL’s proposal is for a four-story, 144room hotel that would be branded as an Embassy Suites. The hope is that Hilton, parent company will give the green-light so that construction can begin before the end of the year. Meanwhile, a committee of residents of Dorado Country Club Estates is continuing to meet with HSL to address concerns that may crop up.
EDITION INDEX Public Notices 6 Arts and Culture 8 Meals and Entertainment 8 Briefs 9 Inside Media 9 Profile 10 Lists 19-21
Calendar Finance Real Estate & Construction Biz Buzz Editorial Classifieds
24-25 26 27 28 28 31
4 MARCH 15, 2013
INSIDE TUCSON BUSINESS
NEWS What next for Marana, Pima on wastewater? With Tuesday’s voter approval in Marana for a pair of ballot measures giving the town authorization to operate a wastewater system, Pima County and Marana officials now appear willing to leave past animosity behind. Pima County Administrator Chuck Huckelberry said the county would help the town in its efforts to operate the system and a treatment plant in north Marana, which it acquired from the county last year. Marana was empowered to take the wastewater facility from the county’s regional system following a change in state law pushed by Republican lawmakers. A deal struck prior to this week’s election would let the town purchase the facility from the county for $18.2 million. Marana also would have to lobby for repeal of the law that allowed it to take ownership of the treatment facility. The county currently has a court challenge to the constitutionality of the law. The two governments have been disputing ownership of the facility, which serves a few thousand customers in north Marana, since 2007.
SOLAR INSTALLERS CONTINUED FROM PAGE 3
to receive a tax credit of 10 percent, or up to $25,000, of the installed cost of a solar power system. The tax credits were capped at $1 million per year. In making the decision, Corporation Commission leaders noted that in the case of TEP, the renewable-energy power generation threshold for commercial systems had been met, making the incentives unnecessary. Commissioners also argued in a guest opinion in the Arizona Daily Star that incentives have aided the solar industry for several years and the time had come for it to stand on its own. Industry representatives like Neary say solar has made impressive strides in the years since the incentives were enacted and that costs of solar-power systems and solar power have begun to fall as a result. “The commercial programs have been very popular,” he said. “With the loss of the program it breaks the momentum.” The incentives were implemented, in
part, to help power companies meet goals set in the state’s Renewable Energy Standard of 2006. The intent of the standard was to have 15 percent of Arizona’s power come from renewable sources by 2025. Under those rules, utilities are required to meet the 15-percent threshold incrementally by a larger percentage each year. In 2013, for example, utilities are required to reach 4 percent of power generation from renewable sources. In addition, 30 percent of the renewable energy generated has to come from distributed renewable resources, meaning commercial and residential installations. Neary said the long-term effect of the Corporation Commission ruling would be a loss of human capital. “We’ve built up a workforce,” he said. “Arizona will be losing those people who we’ve trained to install solar systems.” As solar systems proliferated, the costper-watt of solar power has declined. By some estimates the per-watt costs have
fallen from nearly $3 to 75 cents. While the cost has fallen, traditional coal- and gas-fueled power costs as little as 3 cents and 5 cents per watt, respectively. As result, all utility customers are charged additional surcharges to help make up the cost differential. For TEP customers, those come in the form of “Green Energy Charges” on monthly bills. Neary said solar power suffers as result of government policies that create an unlevel playing field. “There’s billions of dollars that go to coal, oil and gas (in the form of tax breaks),” he said. As for what the future has in store for the people who install commercial solar systems, Neary wasn’t optimistic. “It’s going to be difficult for the commercial side to recover,” he said.
Contact reporter Patrick McNamara at pmcnamara@azbiz.com or (520) 295-4259.
Brewer unveils AHCCCS plan; fighting can begin
CBRE boosts capital markets division; hires Jim Sellers
In what could develop as one of the biggest showdowns of this session of the Legislature, Gov. Jan Brewer on Monday (March 11) unveiled her promised proposal to expand Medicaid to cover another 400,000 people. “I’ve always been proud to be a member of a pro-life party,” Brewer said at a rally. “I refuse to stand by and let this many people needlessly suffer, especially when we have a solution.” The Republican governor is facing divided support among members of her own party in the state House and Senate and is counting on enough of them to join with Democrats to get a measure passed. She is predicating her arguments on the idea that expanding the state’s Medicaid program, the Arizona Health Care Cost Containment System (AHCCCS), will help the state’s health care providers who are being saddled with caring for uninsured patients. Brewer said that without expansion of AHCCCS, 50,000 people would be dropped from Medicaid coverage when a federal waiver expires at the end of this year. The Arizona Hospital and Healthcare Association has come out in favor of the draft legislation, which proposes that hospitals kick in money to trigger federal matching funds of $7.9 billion over the next four years. The plan would put more than $8 billion into Arizona’s economy over the next four years while preserving a safety net for hospitals facing millions of dollars in uncompensated care.
By Roger Yohem Inside Tucson Business Jim Sellers, president of Heritage Advisory Corp. and a leading mortgage banker in the Tucson region, this week joined CBRE’s Capital Markets Debt & Equity Finance Group as senior vice president. Sellers teams up with CBRE first vice president Tim Prouty to co-lead the capital market group’s Tucson operations. With four decades of industry expertise, Sellers is almost an icon among local and national mortgage professionals. As sole owner of Heritage Advisory, Sellers operated a full-service commercial mortgage banking company. As part of his move, CBRE is acquiring part of Heritage Advisory’s loan servicing portfolio. Sellers brings to CBRE a network of capital sources that include life insurance companies, pension funds, foreign and domestic banks, and securitized lenders. “The only real change is going under a new flag with great enthusiasm,” said Sellers. “This is a great opportunity to bring more capital into the community and CBRE has the tools to do that in a bigger way.” Sellers will work out of the CBRE office at 3719 N. Campbell Ave. Ike Isaacson, managing director of CBRE’s Tucson office, said Sellers’ experience, market knowledge and deep contacts will “complement our team of professionals. Jim is considered one of the most respected mortgage bankers in the busi-
Jim Sellers
ness and a leader in the Tucson community.” “I am excited to have Jim here. I’ve only been recruiting him for 15 years,” added Prouty. “Our goal was to emerge from this economic cycle with a much stronger market share.” Heritage Advisory specialized in loan origination, negotiation and the placement of debt. Sellers transaction expertise includes permanent loans, acquisitions financing, construction loans, joint ventures
and acquisitions. Brian Stoffers, president of CBRE Debt & Equity Finance, said hiring Sellers enables CBRE to offer additional capital sources and enhance its financial solutions for investors. Theresa Witz, who has worked at Heritage Advisory since 1997, also joins CBRE as a senior analyst.
Contact reporter Roger Yohem at ryohem@azbiz.com or (520) 295-4254.
InsideTucsonBusiness.com
MARCH 15, 2013
5
NEWS This Week’s
Individuals, businesses honored as HR innovators
Good News Silver award goes to ... This is the time of year tourists relish Tucson and its weather — and we in turn should be relishing tourists for the money they bring into the economy. One local business that’s making a good impression is Rincon Country West RV Resort, 4555 S. Mission Road, which was honored with a second-place award for best RV camp in the U.S. from the readers of MotorHome Magazine. Congratulations to owner George O’Leary and his teams at both Rincon Country Resorts.
The Tucson
INSIDER Insights and trends on developing and ongoing Tucson regional business news.
Samantha Sais
Not so bright solar
Employee Communications expert Pamela Jett.
By Lauren Shores Inside Tucson Business Nine individuals and five businesses were honored Tuesday (March 12) with Innovation Awards for their dedication to engaging employees. The awards were part of the Society for Human Resource Management of Greater Tucson’s (SHRM–GT) 2013 Innovation in the Workplace Celebration at the DoubletreeTucson Reid Park Hotel. “We need innovative, better ways to develop company leadership, educational tools, technology incorporation and working with the community,” said Ann Berkman, president of SHRM–GT, who explained the program was structured to focus on people who work towards the future and impact the community.” Pamela Jett, an internationally recognized expert in communication skills, was the keynote speaker. In her humorous hour-long talk, “Communicate To Keep ’Em: Enhance Employee Engagement Through Remarkable Communication,” she said positivity, respect and future focus are the three keys to successful employee communication within a company. “Communication is the thread which runs through a pearl necklace. It is invisible, but without it everything would fall apart,” Jett emphasized, stating it twice in her presentation. Jett noted the No. 1 reason employees become disengaged at work — which tends to happen around the two-year mark — occurs because employees are dissatisfied with their
immediate supervisors. Most are dissatisfied because their supervisors are moody, emotional roller coasters. This dissatisfaction can be prevented from the employer down, Jett says, by allowing self-happiness, rather than promoting a toxic, pessimistic work environment. She also gave tips on how to make employees feel respected rather than criticized, particularly by encouraging their good work and suggesting future improvement simultaneously. However, word choice is crucial. For example, she suggests banning the word “should” from an employer’s vocabulary. “Don’t ‘should’ all over people,” Jett joked. “Don’t say ‘You should do it this way.’ It implies that whoever is saying so really means ‘I am better than you.’ Use ‘It would be better if you did it this way’ instead.” Individual Innovation Award winners this year were: • Hannah Lozon, University of Arizona Residence Life, for promoting diversity and inclusion. • Diane-Marie Landsinger, Pima Community College, for helping to incorporate veterans into the community. • Stephanie Pella, Town of Oro Valley, for increasing engagement through metrics and action plans. • David Dowling, IBM, for engaging HR professionals through the SHRM study group. • Hilda Slanina, Xeridium, for integrating company values as core to the company lifecycle. • Kim Murray and Brenda Schemel, both with Universal Avionics, for partnering with
the community in workforce readiness programs. • Sandra Abby, Tucson Airport Authority, for creating two new HR programs. • Kate Goldman, the Offshore Group, for promoting diversity and reducing microaggression in the workplace. Company winners were: • Tucson Airport Authority, for creating an onboarding program to ensure future employee success. • Lazydays RV, for partnering with various organizations in the community. • SynCardia Systems, for creating internships. • Arizona’s Generation and Transmission Cooperatives, Benson, for helping develop a certification course that teaches skills in technical math, blueprint reading and computer essentials that has become a pipeline for recruitment. The honorees were chosen from 20 individuals and 11 companies that were finalists. More than 50 people and companies were nominated for the awards. “The nominations were so fabulous this year, and we were amazed by everybody,” said Berkman. “These people think everybody’s doing what they’re doing and it’s no big deal, but it is a big deal. They’re all doing significant stuff.” SHRM-GT provides resources for small businesses and human resources departments in the Tucson region, including monthly workshops with highly regarded speakers, a study group program for HR professionals, and outreach to high school students, to prepare the future workforce.
Tucsonans familiar with the solar industry know all too well how foreign manufacturers are able to make solar panels cheaper than they can be made in this country. Then came word Tuesday that China-based Suntech Power Holdings is closing its panel assembly plant in Goodyear, blaming tariffs the U.S. imposed last year and unfair subsidies and product dumping by other companies. It took less than 24 hours to find out that wasn’t the only issue facing Suntech. The company has $541 billion in bond debt payments due and is having trouble securing more financing. It’s also looking at a possible government takeover in China. Beyond those issues, the New York Times reported Suntech is facing inquiries into business dealings by the company’s founder and former chairman. The Times also reported Suntech put its plant in Goodyear so it could claim it was assembling solar panels on U.S. soil and qualify under “Buy American” poilicies and procurement rules.
We’re adults Considering how politicians are acting about the federal spending cuts called the sequester, it’s apropos that their actions are being compared to children’s stories. But is it Chicken Little’s the sky is falling? Or is it the Aesop’s Fable, “The Boy Who Cried Wolf”? Despite the dire threats, it’s true that the immediate impact of the cuts hasn’t been felt by most Americans. On the other hand, it could be that people are numb to the “crises every month” that seems to be coming from Washington, D.C. There are real issues that will hurt people the longer the sequester drags on — and that will affect social programs as well as people employed in the defense industry. And that doesn’t event take into account the time, effort and cost that’s being wasted to prepare for it, if it’s not going to happen. So are is Insider Chicken Little or ignoring the boy who cried wolf?
6 MARCH 15, 2013
INSIDE TUCSON BUSINESS
NEWS PUBLIC NOTICES Selected public records of Southern Arizona bankruptcies and liens.
BANKRUPTCIES Chapter 11 Business reorganization William C. Oetting and Patricia A. Oetting, 5121 N. Amapola Drive. Principal: William C. Oetting and Patricia A. Oetting, joint debtors. Estimated assets: $50,000 or less. Estimated liabilities: More than $1 million to $10 million. Largest creditor(s): Schedule not filed. Case No. 4:13-bk-02411 filed Feb. 21. Law firm: Eric Slocum Sparks Florence Hospital at Anthem LLC, 4545 N. Hunt Highway, Florence. Principal: Timothy A. Johns, manager. Estimated assets: More than $1 million to $10 million. Estimated liabilities: More than $10 million to $50 million. Largest creditor(s): Morrison Management Specialists, Atlanta, Ga., $67,809.67; Professional Hospital Supply, Pasadena, Calif., $64,116.27; and Blood Systems Inc., Phoenix, $51,955.00. Case No. 4:13-bk-03201 filed March 6. Law firm: Allen Sala & Bayne, Phoenix MV Apartments LLC, 4400 E. Busby Drive, Sierra Vista. Principal: Michael Rosberg. Estimated assets: $50,000 or less. Estimated liabilities: $50,000 or less. Largest creditor(s): Schedule not filed. Case No. 4:13-bk-03240 filed March 7. Law firm: Waterfall Economidis Caldwell Hanshaw & Villamana Stinger Welding Inc., 4248 N. Highway 87, Coolidge. Principal: Stephanie Jordan, corporate secretary. Estimated assets: More than $1 million to $10 million. Estimated liabilities: More than $10 million to $50 million. Largest creditor(s): Schedule not filed. Case No. 4:13-bk-03240 filed March 8. Law firm: Ryan Raypp & Underwood, Phoenix Ajax Concepts LLC, 7286 N. Oracle Road. Principal: Brian E. Metzger, manager. Estimated assets: More than $100,000 to $1 million. Estimated liabilities: More than $100,000 to $1 million. Largest creditor(s): Schedule not filed. Case No. 4:13bk-03371 filed March 8. Law firm: Thompson Krone Gibson
FORECLOSURE NOTICES Manning House LLC 450 W. Paseo Redondo 85701 Tax parcel: 116-19-226C Original Principal: $1,890,000.00 Beneficiary: City National Bank, Los Angeles Auction time and date: 11:30 a.m. May 29, 2013 Trustee: Joy A. Sullivan, Kutak Rock, 8601 N. Scottsdale Road, Suite 200, Scottsdale
LIENS Federal tax liens San Ignacio Yaqui Council LLC, 785 W. Sahuaro St. Amount owed: $5,898.02. ECS Construction Services LLLP LLC and Ernest C. Santamaria, 3114 E. District St. Amount owed: $15,883.42. Zainab 76 Union and Mohammad S. Rana, 6401 N. Oracle Road. Amount owed: $11,572.41. Supplemental Human Resources Inc., 1150 E. Pennsylvania St., Suite 605. Amount owed: $175,050.09. J.R. Tuttle Co., PO Box 41553, 85717. Amount owed: $2,094.00. A&K Transportation, 1137 N. Winstel Blvd. Amount owed: $14,450.50. El Coqui Puerta Rican Restaurant Inc., 6610 S. Empire Vista Drive. Amount owed: $12,872.52. Rhino Linings Southern Arizona LLC and Kevin Stnatka, 2440 N. Coyote Drive, Suite 130. Amount owed: $5,324.40. Las Cazuelitas De Tucson and AJF & Sons Inc., 1365 W. Grant Road. Amount owed: $18,682.91. Cimaco Floor Service Inc., 3812 E. 37th St., Suite 200. Amount owed: $10,903.03. Floors To Go Tucson LLC and Suzanna T. Harrison, PO Box 89655, 85752 (9150 N. Desert Ironwood Place). Amount owed: $12,422.45.
State liens (Liens of $1,000 or more filed by the Arizona Department of Revenue or Arizona Department of Economic Security.) Garcia Metal Products Inc., 4201 S. Randolph Way. Amount owed: $8,542.43. One Call Cleaning LLC, 9661 E. Stonehaven Way. Amount owed: $1,227.09.
Is border secure enough? Reforms could hinge on answer By Lourdes Medrano The Christian Science Monitor Twenty-five miles north of the U.S.-Mexico border, a giant white canopy stretches over the northbound lanes of Interstate 19, with greenshirted border patrol agents and drug-sniffing dogs buzzing around the checkpoint. Farther south in Nogales green-andwhite border patrol vehicles are as conspicuous as yellow cabs in major cities and stadium lights trained on the border fence dwarf the rustic Sonoran homes below. Ten years ago, the permanent checkpoint, the stadium lights, and the ubiquity of those green-and-white cars would have seemed jarring. But since 9/11, the southern border has changed. President George W. Bush’s most famous surge might have been in Iraq, but along the U.S.-Mexico border, he also presided over a doubling of manpower and a shift in the border patrol’s mission to make it a tool in the war on terror. Now, as Washington considers immigration reform, the border patrol and its mission are again in the spotlight. A Republican-based opinion says reform, without increased border security, is a nonstarter. But Bush’s surge offers lessons about what can realistically be accomplished — and what tops an unfinished to-do list. Statistical and anecdotal evidence show there has been progress in reining in illegal immigration, most agree. But there have been unintended consequences, such as the rise in human trafficking to avert the border buildup. Moreover, stakeholders remain divided about whether the border needs even more attention, or whether the United States should shift its focus on immigration-enforcement efforts inward. “While we have made enormous progress in improving border security, the job is not finished,” says Jessica Vaughan, director of policy studies at the Center for Immigration Studies, which advocates tighter border enforcement. That sentiment is echoed by Republicans whose support could be crucial to immigration reform. During the first Senate hearing on the topic this year, GOP senators challenged the assertion by Department of Homeland Security Secretary Janet Napolitano that “our borders have, in fact, never been stronger.” Sen. John Cornyn, R-Texas, responded: “I do not believe the border is secure, and I still believe we have a long, long way to go.” Going forward, a central question in the immigration-reform debate will be what more can — or should — be done. While the massive rise in illegal immigration throughout the 1980s and ‘90s brought some increases in manpower and technology to the Southwest border, 9/11
started a sea change. In 2003, the border patrol had 10,717 agents. In 2012, the number totaled 21,394, with 18,516 stationed along a Southwest border reinforced with state-of-the-art technology that includes ground sensors, handheld thermal-imaging equipment, surveillance cameras, and predator drones. During that time, the border patrol budget increased from $1.4 billion to $3.5 billion, according to agency data. Those increases have been supplemented by other initiatives. In 2006, Bush signed the Secure Fence Act, which authorized 700 miles of fencing — as well as infrastructure such as vehicle barriers, roads, and checkpoints — along the 2,000-mile border with Mexico. The same year, the Bush administration endorsed plans for a “virtual fence” of surveillance equipment to run almost the entire length of the border. The Secure Fence Act aimed to achieve “operational control” over the entire border, defining the phrase as “the prevention of all unlawful entries into the United States, including entries by terrorists, other unlawful aliens, instruments of terrorism, narcotics, and other contraband.” That, experts say, was an unrealistic expectation. There will never be a secure border by that definition, says Donald Kerwin, executive director at the Center for Migration Studies, which defends migrants’ rights, who noted that the Berlin Wall failed by that measure. “At that point they were shooting at unauthorized crossers. Even on a heavily fortified, militarized 37-mile wall, people were crossing,” Kerwin said. “To think that nobody will cross illegally over a 2,000-mile border is fanciful.” In 2010, that realization — together with rising costs and technological challenges — led the Obama administration to kill the virtual fence. That doesn’t mean the border surge was a failure, though. Border patrol officials say a historic decline in total apprehensions nationwide — from a peak of 1.6 million in 2006 to 356,873 in 2012 — is a sign of success. As further proof that the border is under
control, the agency touts its record of intercepting a massive amount of smuggled drugs, and offers FBI statistics showing that crime is lower in border areas than in some parts of the U.S. interior. “The high-speed chases, the rollovers, the chaos that comes with a border out of control, that is no longer the norm,” said Manuel Padilla, acting chief of the border patrol’s Tucson sector, at a recent meeting. “That is no longer there.” The soft U.S. economy has been a significant contributor to the drop in illegal entries — fewer jobs attract fewer immigrants. But other experts agree that the security surge has played a role in bringing apprehensions down to levels last seen in the early 1970s. The buildup also has changed how migrants cross the border. As the agency has made the trek north more difficult, more people have started crossing through remote regions of the desert and mountainous terrain. In Arizona alone, more than 2,400 people have died since 2000, according to human rights groups. The district of U.S. Rep. Ron Barber, DAriz., is, in many ways, at the center of the immigration debate. It is in the Tucson sector, which for years has been the most popular gateway for illegal immigration. In the rolling hills and high desert grasslands, where agents say rough terrain makes access difficult, veterinarian Gary Thrasher carries a gun when he travels to ranches near the border. “The ranchers on the border have to put up with a huge amount of (illegal) traffic,” says Thrasher, who wants more agents. Barber sounds a similar note. In 2010, Congress approved $600 million for border security and sent 500 National Guard troops to Arizona, but too many border crossers and drugs are still getting through, he says. In his view, the border patrol needs to get better at using its resources effectively. “We’ve got a long, long fence or wall across most of the border in my district, but it’s not patrolled,” Barber says. “Most of the time there’s nobody on it in terms of personnel. So is it effective? Not really because people go over it and cut through it.”
InsideTucsonBusiness.com
MARCH 15, 2013
7
SALES SALES JUDO
Professional selling can now be a college major or minor As you snap open and read this morning’s issue of Inside Tucson Business, a team of two seniors from the University of Arizona Eller College, Chase McLaughlin and Yeenkie Situ, and their coach, Jim McLean, a marketing and management lecturer, will be in the air en route to Atlanta to compete in the 15th National Collegiate Sales Competition (NCSC) held just an hour north of Hartsfield–Jackson International Airport in Kennesaw. Roughly 120 seniors and 20 graduate students from 70 colleges and universities in the U.S., Canada and Europe will joust their way through four rounds of simulated consultative selling to determine the winners. Corporate sponsors representing 25 firms will provide judges and talent scouts whose task it will be to recruit outstanding new sales executives for their own companies. A few of the companies there to recruit include ADP, AT&T, Bausch+Lomb, Cintas, Cisco, Cox Media, DHL, EMC2, FedEx, Johnson & Johnson, McAfee, NetSuite, Oracle, 3M, Reynolds & Reynolds, Samsung, Verizon and Xerox. Most of the college students hired by recruiting firms can expect to receive extensive sales training from their new employers. Those who graduate (and most do) often earning six-figure incomes in as few as three years after starting with these firms. The focus of this competition will be solely on business-to-business consultative selling — sorry Mary Kay and Amway — which is what all of the contestants have been studying at their colleges either in their business school’s marketing programs or in the growing numbers of Centers for Professional Selling. The salient point here is that Consultative Sales is rapidly becoming a recognized
profession, one which we as parents should be proud to have our college grads enter into. The stated mission of the NCSC is also uplifting: SAM WILLIAMS • To promote the sales profession as an honourable and viable career option for college graduates; • To provide an occasion for highly talented and qualified students to exhibit and enhance their selling skills on a national stage; • To provide a venue for students, professors and sales executives to share sales philosophy techniques, education methods and networking opportunities. Well over half of the contestants study at their universities’ Centers for Professional Selling, of which there are now 33. Just five years ago there were only 12, and about four are being added to the ranks each year. Member organizations include Indiana University, Baylor University, DePaul University, Ball State, Kansas State, Kennesaw State, Florida State, Weber State, Illinois State and Florida State. While there are no members from the Ivy League — and may never be — this trend is a part of an evolving discussion about the philosophy and objectives of post secondary education, liberal arts versus fields with more immediate employment potential, like engineering, accounting, information technology and now consultative sales. A case in point is Katie Marvinney, who attended the University of Ohio at Athens.
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Both of her parents are professionals. Her dad is an attorney and her mom, an accountant. She was majoring in communications and minoring in business when her parents suggested she might land a better job upon graduation if she were able to add further value to herself for potential employers and to differentiate herself from the 1.8 million college seniors graduating that year. Marvinney reflected on this and thought, “I’m passionate about helping people, and relationship selling does just that.” This led her to enrol in the Ralph and Lucy Schey Sales Center at the university and to earn a Sales Certificate. Doing so required her to complete 28 credit hours by taking courses such as Advanced Selling Techniques, Advanced Sales Effectiveness, Entrepreneurial Sales, Social Media in Sales, Achieving Customer Satisfaction and Service Excellence and Sales Management. The best parts, she noted, were the 300-hour summer internship program and the sales learning events where outside speakers came to campus to share their real world sales experiences with students. The next best part was the sheer number and quality of employers who came to campus to recruit from the program’s 130 participants. She was recruited to be a sales associate for EMC2, a publicly traded Fortune 500 data storage firm with 53,000 employees and revenues of $20 billion. She rapidly advanced to positions of Inside Sales Account Manager and then on to University Relations Campus Manager of the Sales Associate Program, where, among other duties, she develops “a pipeline of ‘A’ candidates to ensure Inside Sales headcount requirements are being satisfied.”
“Sales isn’t easy,” she confirms. “What keeps sales managers up at night is the concern that new recruits will say something like ‘I didn’t know that this would be so tough’ and, after months of training have been invested in them, they quit.” “But,” she added, “Sales Centers are actually gold mines for recruiters, because they have a pool of candidates who already know what they are getting into and who are far more likely to succeed and to stay.” As a result, recruiting companies often provide Universities the financial assistance they need to establish and to operate Sales Centers like hers. An organization called the University Sales Center Alliance (USCA) plays a vital role in the expansion and development of Centers. Founded in 2002, the USCA has the mission of advancing the sales profession through academic leadership, education, research and outreach. More importantly it provides the framework and guidance that universities need to start their own Sales Centers and to and to stay on track. Most Sales Centers grow out of the marketing departments of their business colleges and become associate members of the USCA. The requirements for this are that the college formally establish a Sales Center, sufficient funds (donations) be earmarked for its operation and a formal foundation account be established for it. Over time as additional mile posts are reached, Full membership is awarded.
Contact Sam Williams, president of the business-to-business sales consultancy firm New View Group, at swilliams@ newviewgroup.net or (520) 390-0568. Sales Judo appears monthly.
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8 MARCH 15, 2013
INSIDE TUCSON BUSINESS
OUT OF THE OFFICE ON THE MENU
ARTS & CULTURE
Food authenticity heats up in Tucson restaurant ovens
Friday Night Live music at Main Gate Square is back
time is about 90 seconds,” he says. Authenticity is a word used by chefs to While an authentic Neapolitan oven promote their preservation of culinary focuses on heat, the Peruvian oven lays claim traditions of a certain region or culture. We’ve to health. all been to restaurants that boast of authenFatima Campos of Inca’s ticity of everything from salsas to Peruvian Cuisine, 6878 E. sushi, and I may very well be the Sunrise Drive in Ventana Village, first foodie to have personally says her restaurant’s authenticity tasted virtually every authentic is manifest in everything from margarita under the Tucson sun. the artwork on the wall, to the While the pledge of authenlive music, to the specific pisco ticity may be used merely as a she uses for her pisco sours, the marketing tool by some, others national cocktail of Peru. But it’s have built their entire businessher oven, imported directly from es around it, and in two Tucson Lima, that she says brings out the restaurants what tells the story authentic flavors of Peru. The best is what their kitchens are MATT RUSSELL kitchen is anchored by what built around — their ovens. Campos calls “an ecological When Aric Mussman and oven” that reportedly delivers as much Josh Mussman opened their first Vero Amore restaurant they claimed to be the first health as it does flavor. An example of this claim is Inca’s pollo a authentic Neopolitan pizzeria in Arizona. la brasa, a traditional roasted chicken The brothers Mussman tell me their restaurants — now two locations, at 2990 N. seasoned with Peruvian herbs and spices. Because “vegetable charcoal” is used in this Swan Road in Plaza Palomino and 12130 N. special oven, Campos says neither oil nor Dove Mountain Blvd., Marana — have butter is necessary to lube up the chicks earned the coveted certification from the prior to cooking to get the sought-after Associazione Verace Pizza Napoletana sheen. “The glaze on the chicken when it’s (VPN), an organization with authority from done cooking is really an outcome of a the Italian government to confer the natural process, not from using oils or fats,” designation on pizzerias which “meet strict she says. requirements that respect the tradition of Two very different affirmations of the art of Neapolitan pizza making.” authenticity originating from two very While the criteria address everything different ovens. Get it while it’s hot. from ingredients to the cooking process itself, it’s the Vero Amore oven that stands at the center of the authenticity claim. Contact Matt Russell, whose day job is The oven was sourced from volcanic stone CEO of Russell Public Communications, at from Mount Vesuvius and manufactured mrussell@russellpublic.com. Russell is also near Naples. The volcanic stone allows the the host of “On the Menu Live” that airs 4-5 oven to withstand the high heat VPN p.m. Saturdays on KNST 790-AM and does certification requires, which routinely the Weekend Watch segment of the “Buckapproaches 1,000 degrees. “To earn certificamaster Show” from noon-1 p.m. Fridays on tion, you have to be able to cook a pizza in KVOI 1030-AM. less than three minutes, and our usual pizza
tickets are priced from $26 to $79. Buy The Friday Night Live music series them through the Tucson Symphony’s is back at Main Gate Square. The series features live, local entertainment starting at website www.tucsonsymphony.org/ . 7 p.m. Fridays in Geronimo Plaza Square, 820 E. University Blvd. Tonight (March 15) acoustic guitar The annual Fresh Paint band Reno Del Mar is on stage fundraiser for the University of with its dynamic renditions of Arizona Museum of Art, 1031 latin, jazz, adult contemporary, N. Olive Road at the southeast flamenco, bebop and blues. corner of East Speedway and Coming up in future weeks Park Avenue on the UA campus, singer-songwriter Amber takes place today and SaturNorgaard performs March day featuring new, or “fresh,” 29, and then two bands the artwork that has been donated play R&B, blues and funk, by more than 160 artists. The Shaky Bones on April 12 HERB STRATFORD works are being sold to benefit and Railbirdz on April 26. the museum, which is one of The free concert series is a Tucson’s best-kept secrets and collaboration of the Southern Arizona Arts and Cultural Alliance and the more than 20 a repository for one of the finest permanent collections in the Southwest. retailers and 30 restaurants that make up A preview of the works will be held from Main Gate Square on University Boulevard 9 a.m. to 5 p.m. today and then the Art Aucwest of the University of Arizona campus. tion and Soiree takes place from 6 to 9 p.m. Free parking with validation is available Saturday with live music by the Gabriel from 5 p.m. to midnight weekdays and Ayala Trio. Tickets are are $75 each. To get on weekends in the UA’s Tyndall Garage, them, contact Christine Aguilar at vca@ at Euclid Avenue and Fourth Street. email.arizona.edu or call (520) 621-5676. Meanwhile, the eighth annual Encaustic Invitational exhibition is on display at the Conrad Wilde Gallery. The show features The Tucson Symphony this weekpaintings by 18 artists in the encaustic end hosts guest pianist Markus Groh medium, which combines wax, paint and performing Béla Bartók‘s Piano conlots of patience to create rich, layered certo No. 3 in a program that also includes works. The Conrad Wilde Gallery, 439 N. Ludwig van Beethoven’s Symphony Sixth Ave. at Sixth Street. is open from 11 No. 6 in F major, “Pastorale,” and Gioaca.m. to 5 p.m. Tuesdays through Saturdays. chino Rossini’s overture to “The Thieving Magpie.” The concerts also feature guest conductor Danail Rachev, conductor Contact Herb Stratford at herb@ of the Eugene Symphony in Oregon. ArtsandCultureGuy.com. Stratford teaches Performances are at 8 tonight and Arts Management at the University of Arizona. His 2 p.m. Sunday in the Music Hall of the column appears weekly in Inside Tucson Business. Tucson Convention Center complex, 260 S. Church Ave. Individual show
Art
More music
InsideTucsonBusiness.com
MARCH 15, 2013
MEDIA
BRIEFS GET ON THE LIST
PROFESSIONAL SERVICES
Next up: Banks and Credit unions
BBB sees 95% increase in tax preparer inquiries
Research is underway gathering data for Inside Tucson Business’ 2014 Book of Lists. Upcoming lists are: • March 22: Investment capital and lending, Venture capitalists • March 29: 501(c)3 organizations, United Way allocations, Charitable trusts • April 5: Banks, Credit unions • April 12: Residential real estate firms, Real estate brokers, Appraisers • April 19: Architectural firms, Interior design firms, Engineering firms If your business has been on a previous list in one of these categories, look for an email from Jeanne Bennett, List researcher for Inside Tucson Business, with details on how to update your profile. If you would like to add your business to one of these lists, go to www.InsideTucsonBusiness.com and click the Book of Lists tab at the top of the page to create a profile.
Since the start of the year, the Better Business Bureau of Southern Arizona has received more than 500 inquiries from consumers into tax preparation services, which represents a 95-percent increase over the same period last year. During tax season BBB advises taxpayers to take the proper steps to avoid making mistakes when selecting tax preparation help to avoid costly mistakes on their returns. It notes the IRS holds filers, not tax preparers, responsible for any mistakes on tax forms. BBB tips for selecting a tax preparer: • Ask around. Get referrals from friends and family on who they use, and check the BBB Reliability Report on tax preparation services free-of-charge at www.tucson.bbb. org. • Look for credentials. Tax preparers should either be a certified public accountant, a tax attorney or an enrolled agent. All three can represent taxpayers before the IRS in all matters, including an audit. Also, find out if the preparer is affiliated with a professional organization that holds its members to a code of ethics. • Don’t fall for the promise of a big refund. Be wary of any tax preparation service that promises larger refunds than the competition, and avoid any tax preparers who base their fee on a percentage of the amount of the refund.
GOVERNMENT
State House OKs bill on business property tax A bill that would lower the tax rate assessed on new construction, fixtures and other property owned by businesses that use them for expansion to add jobs has been approved by the state House of Representatives. As part of the bill (HB 2264), self-employed people in Arizona would bet a 2 percent tax deduction on their first $113,700 of annual earnings, which will cost the state an estimated $58 million a year in revenue. The bill’s sponsor Rep. Tom Forese, RChandler, said the self-employment tax deduction is intended to offset the federal 2 percent increase in withholding for Social Security that took effect Jan. 1. The bill is now in the state Senate.
MILITARY
Sequestration won’t cut orders for F-35 fighter As questions over the federal budget cuts called sequestration continue, one item that will mostly evade them is the $400 billion F-35 fighter jet program, according to the Washington Post. Although the Joint Strike Fighter, designed and built by Lockheed Martin Corp., is years behind schedule and 70 percent over its initial price tag, the Pentagon’s overall purchase of 2,443 jets remains unchanged. The work of the F-35 is spread across 45 states, which has generated broad bipartisan support on Capitol Hill.
CIVIC
Seven So. Ariz. groups get humanities grants The Arizona Humanities Council has awarded $58,398 in grants to support projects that engage the general public with the humanities through public programming. Among the grant recipients were seven organizations in the Tucson region: • $5,000 to the Arizona Historical Society for its National History Day in Arizona. • $1,000 to the Culture of Peace Alliance for its 2013 Youth and Peace Conference: Making Peace Now Through Art, Education, Engagement. • $5,000 to the University of Arizona’s Center for Middle Eastern Studies for its Balkans and the Middle East: A Workshop for Secondary/Post-Secondary Educators. • $10,000 to Empire Ranch Foundation, Sonoita, for Cowboy Life at Empire Ranch. • $2,953 to the UA’s Department of History for Showdown on the Border: Civil Discourse for Uncivil Times. • $4,845 to the UA’s Arizona State Museum for its course Continuity and Change in Traditions. • $6,100 to the Vail Preservation Society, Vail, for Steam and Steel Rails.
9
KGUN news director Carr to take a break from TV news By David Hatfield Inside Tucson Business Forrest Carr has decided to “take a break” from the rigors of being a TV station news director, staffers in the newsroom at KGUN 9 were told this week. By all accounts, Carr’s decision was entirely his. In fact, Carr said Journal Broadcast Group management had been
hold the station accountable for them. While the brand is strong, competitiveness among Tucson stations has stymied KGUN’s efforts to move beyond being a competitive No. 2 from time to time in the local Nielsen TV ratings. In addition to newscasts on KGUN, the news department produces a 9 p.m. weekday newscast for KWBA and provides news and weather reports for the company’s Tucson radio stations. A decision has not been made as to when will be Carr’s last day on the job.
Randy Garsee dies Former KOLD News 13 anchorman Randy Garsee died in his sleep last weekend. He was 50. Garsee was living in Virginia near where he was a communications and public affairs advisor for the Center for Naval Analyses and Institute for Public Research, based in Washington, D.C., since April 2010.
Forrest Carr
extremely supportive of not only this decision, but during his entire time at the station. He said that included Jim Arnold, who took over in December as vice president and general manager for Journal’s Tucson operations, made up of TV stations KGUN, an ABC affiliate, and KWBA 58, a CW affiliate, and radio stations Mix-FM KMXZ 94.9-FM, the Truth KQTH 104.1-FM, the Groove KTGV 106.3-FM and ESPN Radio the Fan KFFN 1490-AM/104.9-FM. “You can love television news but it’s never going to love you back,” Carr said, noting that being a news director is a 24/7 job. He said his immediate goals are to “take a long road trip and finish two novels” he has started. As for future work, Carr said he doesn’t know what that might be but he would like to give up the “vagabond lifestyle” that’s common with a career in TV and stay in Tucson. This was Carr’s second tour of duty as KGUN’s news director. He had been news director at the station previously from 1997 to 2001 and then returned in September 2009. In the intervening years, Carr was a news director at stations in Tampa and Fort Myers, Fla. and in Albuquerque. Before coming to Tucson the first time, he worked in news departments at stations in San Antonio, Texas, and Memphis, Tenn., where he graduated from the University of Memphis in 1980. In Tucson, Carr has been a champion of KGUN’s “On Your Side” brand and the news department’s Viewer Bill of Rights, which lays out standards and responsibilities viewers can expect from KGUN and to
Randy Garsee
Garsee, who had started at KOLD in March 1997, was paired with Kris Pickel as the top-rated station’s main news anchors on the weekday 5 p.m., 6 p.m. and 10 p.m. newscasts until he said he was fired in October 2006 after sending out an email in which he was critical of news director Michelle Germano. Pickel, who had left KOLD three months earlier for a station in California, is now a news anchor in Cleveland. Germano is still the news director at KOLD. After leaving Tucson, Garsee went to work for a TV station in Ada, Okla., near the Texas state line where he worked until January 2009. After that, he went to work as a civilian public affairs specialist and journalist working for the U.S. military in Iraq before going to Washington, D.C. Garsee’s ex-wife, Amy Blankenship, and their two daughters still live in the Tucson area.
Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237. Inside Tucson Media appears weekly.
10 MARCH 15, 2013
INSIDE TUCSON BUSINESS
NEXT GENERATION
Instant BioScan sees big potential in water-purity testing By Patrick McNamara scans water as samples flow through the deInside Tucson Business vice from the source. The viewer essentially Even in the arid deserts of Southern Ari- sees particulates in the water and differentizona, water is the source of life. ates between inert material and those with One Tucson startup has staked its future potential to multiply and contaminate. on water, more specifically, water quality. Results of the tests are viewed on a series “Water is one of the hardest media to of scrolling graphs on a device-mounted keep bacteria from growing in,” said Dew- monitor and from remote locations. ard Manzer, chairman The Instant BioScan of Instant BioScan. ssystem can be set up The west-side comffor in-line continuous BIZ FACTS pany developed and ssampling or testing inbuilds an optical scandividual samples in a d ning machine that llaboratory setting. monitors water quality 2102 N. Forbes Blvd., Suite 105 The idea was born for medical, industrial, out of a previous veno municipal and numer- (520) 261-2464 tture Manzer was inous other uses. vvolved in that used www.ibioscan.com “What we have is ssimilar technology for a technology that dettesting air quality. tects the presence of bacteria in water in “What we found out when we showed up real time,” Manzer said. with an air product, people said, ‘don’t you Unlike traditional water-quality monitor- have this for water?’” he said. ing, which involves taking of samples and After some research, Manzer said he waiting days for definitive results, Manzer learned that more than $6 billion are spent said the Instant BioScan devise continuously each year on testing water for microbial samples and tests water for microbial pres- contamination. ence. And the results come in an instant. A potential major customer for the InAs Manzer explained, an optical viewer stant BioScan product would be municipal
Instant BioScan
BECAUSE WE NEED EACH OTHER Strong Kids Campaign
The Instant BioScan water monitoring system. Courtesy of Instant BioScan
water companies. To ensure for safety, water providers harvest and test water samples regularly. While municipal water supplies have traditionally been safe, Manzer said the ability to continually test for water quality would increase safety of water supplies. Food and beverage manufacturers also have been targeted as possible customers. One of the biggest potential customers would be the pharmaceutical industry. The Instant BioScan system would help to maintain the purity of water, a major ingredient in many pharmaceutical products, especially for injectable drugs. Other customers could be managers of recreational water sites, like swimming pools, rivers, ponds and manmade reservoirs. “It’s been more than positive,” Manzer said of the reception the systems have received from some of the industries that have seen demonstrations.
tucsonYMCA.org YMT 13-119
Next Generation is a monthly feature of Inside Tucson Business profiling Southern Arizonans on the cutting edge of developing their ideas. If you’ve got an idea or someone you think should be profiled, contact reporter Patrick McNamara at pmcnamara@azbiz. com or (520) 295-4259.
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Manzer said he hopes for the company to have somewhere between $50 million and $100 million worth of sales within five years. To get there, the company has sought angel and other investor funding. “We’re still at the point where we have to have investors to keep the company going,” he said. System costs start at about $40,000 with annual service contracts for $5,000. Instant BioScan, 2102 N. Forbes Blvd., Suite 105, has 10 full-time employees and three consultants. The company was started in January 2012.
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InsideTucsonBusiness.com
MARCH 15,, 2013
HEALTH CARE
Answers to FAQs you need to know about Affordable Care law Inside Tucson Business In spite of the wrangling over the sequester, officials in Washington, D.C., say only a small fraction of the $1.6 trillion in planned spending to expand coverage for the uninsured over the next decade under the Affordable Care Act fell in the proposed
areas of cuts. On the other hand, there could be some modifications to the law as part of a broader deficit deal to reduce federal spending. Regardless, what is clear at this point is that the law will have sweeping ramifications for consumers, state officials, employers and health care providers, including
hospitals and doctors. While some of the key features don’t kick in until next year, the law has already altered the health care industry and established a number of consumer benefits. Here are some frequently asked questions on parts of the law already up and CONTINUED ON NEXT PAGE
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12 MARCH 15, 2013
HEALTH CARE
INSIDE TUCSON BUSINESS
FAQS CONTINUED FROM PAGE 11
running, what’s to come and ways that provisions could still be altered. Q. I DON’T HAVE HEALTH INSURANCE. UNDER THE LAW, WILL I HAVE TO BUY IT AND WHAT HAPPENS IF I DON’T? A. Today, you are not required to have health insurance. But beginning in 2014, most people will have to have it or pay a fine. For individuals, the penalty would start at $95 a year, or up to 1 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. For families the penalty would be $2,085 or 2.5 percent of household income, whichever is greater. The requirement to have coverage can be waived for several reasons, including financial hardship or religious beliefs. Millions of additional people will qualify for Medicaid or federal subsidies to buy insurance under the law. Q. I GET MY HEALTH COVERAGE AT WORK AND WANT TO KEEP MY CUR RENT PLAN. WILL I BE ABLE TO DO THAT? HOW WILL MY PLAN BE AFFECT ED BY THE HEALTH LAW? A. If you get insurance through your job, it is likely to stay that way. But, just as before the law was passed, your employer is not obligated to keep the current plan and may change premiums, deductibles, co-pays and network coverage. You may have seen some law-related changes already. For example, most plans now ban lifetime coverage limits and include a guarantee that an adult child up to age 26 who can’t get health insurance at a job can stay on her parents’ health plan. Q. WHAT OTHER PARTS OF THE LAW ARE NOW IN PLACE? A. You are likely to be eligible for preventive services with no out-of-pocket costs, such as breast cancer screenings and cholesterol tests. Health plans cannot cancel your coverage once you get sick – a practice known as “rescission” — unless you committed fraud when you applied for coverage. Children with pre-existing conditions cannot be denied coverage. This will apply to adults in 2014. Insurers will have to provide rebates to consumers if they spend less than 80 to 85 percent of premium dollars on medical care. Some existing plans, if they haven’t changed significantly since passage of the law, do not have to abide by certain parts of the law. For example, these “grandfathered” plans can still charge beneficiaries part of the cost of preventive services. If you’re currently in one of these plans, and your employer makes significant changes, such as raising your out-of-pocket costs, the plan would then have to abide by all aspects of the health law.
Q. I WANT HEALTH INSURANCE BUT I CAN’T AFFORD IT. WHAT WILL I DO? A. Depending on your income, you might be eligible for Medicaid, the Arizona Health Care Cost Containment System (AHCCCS). Currently, non-elderly adults without minor children don’t qualify for AHCCCS. But beginning in 2014, the federal government is offering to pay the cost of an expansion in the programs and Gov. Jan Brewer has proposed expanding AHCCCS to take advantage of that so anyone with an income at or lower than 133 percent of the federal poverty level, (which based on current guidelines would be $14,856 for an individual or $30,656 for a family of four) will be eligible. Q. WHAT IF I MAKE TOO MUCH MONEY FOR AHCCCS BUT STILL CAN’T AFFORD TO BUY INSURANCE? A. You might be eligible for government subsidies to help pay for private insurance sold in the insurance marketplaces, called exchanges, slated to begin operation in 2014. Exchanges, which will be set up stateby-state — Arizona has opted to have the federal government set up its exchange — will sell insurance plans to individuals and small businesses. These premium subsidies will be available for individuals and families with incomes between 133 percent and 400 percent of the poverty level, or $14,856 to $44,680 for individuals and $30,656 to $92,200 for a family of four (based on current guidelines). Q. WILL IT BE EASIER FOR ME TO GET COVERAGE EVEN IF I HAVE HEALTH PROBLEMS? A. Insurers will be barred from rejecting applicants based on health status once the exchanges are operating in 2014. Q. I OWN A SMALL BUSINESS. WILL I HAVE TO BUY HEALTH INSURANCE FOR MY WORKERS? A. No employer is required to provide insurance. But starting in 2014, businesses with 50 or more employees that don’t provide health care coverage and have at least one full-time worker who receives subsidized coverage in the health insurance exchange will have to pay a fee of $2,000 per full-time employee. The firm’s first 30 workers would be excluded from the fee. However, firms with 50 or fewer people won’t face any penalties. In addition, if you own a small business, the health law offers a tax credit to help cover the cost. Employers with 25 or fewer full-time workers who earn an average yearly salary of $50,000 or less today can get tax credits of up 35 percent of the cost of premiums. The credit increases to 50 percent in 2014. Q. I’M OVER 65. HOW DOES THE LEGIS LATION AFFECT SENIORS? A. The law is narrowing a gap in the Medicare Part D prescription drug plan known
as the “doughnut hole.” That’s when h seniors who have paid a certain initial amount in prescription costs have to pay for all of their drug costs until they spend a total of $4,700 for the year. Then the plan coverage begins again. That coverage gap will be closed entirely by 2020. Seniors will still be responsible for 25 percent of their prescription drug costs. So far, 5.6 million seniors have saved $4.8 billion on prescription drugs, according to the U.S. Department of Health and Human Services (HHS). The law also expanded Medicare’s coverage of preventive services, such as screenings for colon, prostate and breast cancer, which are now free to beneficiaries. Medicare will also pay for an annual wellness visit to the doctor. HHS reports that during the first nine months of 2012, more than 20.7 million Medicare beneficiaries have received preventive services at no cost. The health law reduced the federal government’s payments to Medicare Advantage plans, run by private insurers as an alternative to the traditional Medicare. Medicare Advantage costs more per beneficiary than traditional Medicare. Critics of those payment cuts say that could mean the private plans may not offer many extra benefits, such as free eyeglasses, hearing aids and gym memberships, that they now provide. Q. WILL I HAVE TO PAY MORE FOR MY HEALTH CARE BECAUSE OF THE LAW? A. No one knows for sure. Even supporters of the law acknowledge its steps to control health costs, such as incentives to coordinate care better, may take a while to show significant savings. Opponents say the law’s additional coverage requirements will make health insurance more expensive for individuals and for the government. That said, there are some new taxes and fees. For example, as of this year, individuals with earnings above $200,000 and married couples making more than $250,000 are paying a Medicare payroll tax of 2.35 percent, up from 1.45 percent in 2012, on income over those thresholds. In addition, people with higher incomes now have a 3.8 percent tax on unearned income, such as dividends and interest. Starting in 2018, the law also will impose a 40 percent excise tax on the portion of most employer-sponsored health coverage (excluding dental and vision) that exceeds $10,200 a year and $27,500 for families. The tax has been dubbed a “Cadillac” tax because it hits the most generous plans. Additionally, the law imposes taxes and fees on several major health industries. As of this year, medical device manufacturers and importers must pay a 2.3 percent tax on the sale of any taxable medical device to raise $29 billion over 10 years. An annual fee for health insurers is expected to raise more than $100 billion over 10 years, while a fee for brand name drugs will bring in another $34 billion.
Those fees are likely to be passed onto consumers in the form of higher premiums. Q. HAS THE LAW HIT SOME BUMPS IN THE ROAD? A. Yes. For example, the law created highrisk insurance pools to help people purchase health insurance that were established in 35 states, not including Arizona. Although enrollment was far less than anticipated, it was suspended in February amid projections that the $5 billion could run out of money sooner than expected. HHS officials say they expect the state health exchanges to be able to better handle these cases. Another provision of the law for longterm care is dead for now. The Community Living Assistance Services and Supports program (CLASS Act) was designed for people to buy federally guaranteed insurance that would have helped consumers eventually cover some long-term-care costs. But last fall, federal officials effectively suspended the program even before it was to begin, saying they could not find a way to make it work financially. Q. ARE THERE MORE CHANGES AHEAD FOR THE LAW? A. Some think there could be pressure in Congress to make changes to the law as a larger package to reduce the deficit. Among those options is scaling back the subsidies that help low-income Americans buy health insurance coverage. The amount of the subsidies, and possibly the Medicaid expansion as well, could be reduced. It’s also possible that some of the taxes on the health care industry, which help pay for the new benefits in the law, could be rolled back. For example, legislation to repeal the tax on medical device manufacturers was approved by the U.S. House of Representatives, though it was never considered by the Senate. Meanwhile, the Independent Payment Advisory Board (IPAB), one of the most contentious provisions of the health law, is also under continued attack by lawmakers. IPAB is a 15-member panel charged with making recommendations to reduce Medicare spending if the amount the government spends grows beyond a target rate. If Congress chooses not to accept the recommendations, lawmakers must pass alternative cuts of the same size. Some Republicans argue that the board amounts to health care rationing and some Democrats have said they think the panel would transfer power that belongs on Capitol Hill to the executive branch.
This report was compiled from a variety of sources including the U.S. Department of Health and Human Services, Kaiser Health News and National Conference of State Legislatures.
MARCH 15, 2013
HEALTH CARE
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Has Obamacare already slowed the rise of U.S. health care costs? By Mark Trumbull The Christian Science Monitor In his State of the Union message in February, President Obama said, “Already, the Affordable Care Act is helping to slow the growth of health-care costs.” He didn’t dwell on the point. Members of his own party applauded, and he moved on to talk about the need for further steps to tame health-care costs. But it’s worth a pause, because the claim is controversial. Is it true? First, it is true that the pace of medical cost increases has slowed. The real question is why things have changed and whether the trend will last. Beyond that, it’s worth noting the slowing of medical inflation doesn’t mean the problem has gone away, as Obama himself allowed during the speech. Whereas private-employer insurance had often seen double-digit annual increases, that hasn’t happened since 2004, according to the Kaiser Family Foundation, which tracks the issue. Health insurance premiums offered as an employer benefit, the foundation says, rose a cumulative 51 percent during the five years before the recession. By contrast, the five years from 2007 through 2012 saw a 30 percent cumulative increase — including a rise of just 4 percent last year. Government data find a similar pattern. Kathleen Sebelius, secretary of Health and Human Services, wrote in a January blog post that in 2011 “the overall growth in health spending was at a historic low (of roughly 4 percent) for the third year in a row.” That tally wraps private-sector spending in with government programs like Medicare and Medicaid. So … why? Sebelius, like Obama, asserted “the statistics show how the Affordable Care Act is already making a difference.” A little problem: The Affordable Care Act, also known as Obamacare, wasn’t passed until 2010, and the key portions of the law don’t take effect until 2014. Some of the provisions that had taken effect by 2011 may have added to health-care spending by making coverage more generous. For her part, Sebelius elaborated by saying the “net cost ratio” for individual health polices “declined, thanks in part to the new 80/20 rule, which requires insurers to spend at least 80 percent of premiums on health care or provide rebates to their customers.” She also said the law has a rate review provision that “prevents insurance companies in all states from raising rates with no accountability or transparency.” The rate
review policy didn’t start until 2011. The Wall Street Journal, in an editorial on the subject, quoted government actuaries calling the law’s impact on health costs through 2011 “minimal.” Drew Altman, president of the Kaiser Family Foundation, joins other health-care analysts in saying that a weak economy is one big reason for slower-growing costs. “No one has yet been able to disentangle the causes of the slowdown persuasively,” he wrote in September. “Health care use and the economy have always been closely tied, and my sense is that the recession and slow recovery are responsible for much of the recent health spending and premium trends.” Increases in cost-sharing are probably important, too, he said. “In tough times, when wages are flat, people avoid using the health care system if they can. We also know that higher out-of-pocket costs deter utilization.” Altman noted some other possible factors: • The rise of “wellness” programs. • Tighter forms of managed care by insurance providers. • Grass-roots efforts to modify how private-sector care is delivered and paid for. “Employers, insurers, and providers have been organizing a range of efforts to reduce costs and improve quality,” Altman wrote. Some good news, in a way, may be how little change in health costs so far is attributable to federal reforms, not how much. That may mean there’s ample room for new policies, such as payment reforms in Medicare (to make fees based more on outcomes and less on how many procedures or tests are done) to achieve further gains, if Obama and Congress push down that road. But health policy experts generally see the Affordable Care Act as, at best, a start down the road toward meaningful cost controls. And as for the recent slowdown in health costs, Altman concluded there’s no guarantee that the recent trend will prove lasting.
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14 MARCH 15, 2013
INSIDE TUCSON BUSINESS
HEALTH CARE
Arizona’s AHCCCS could be Medicaid model for U.S. By Sarah Varney Kaiser Health News In a low-slung building in the vast desert expanse east of Phoenix, a small school of tropical fish peer out, improbably, from a circular tank into the waiting lounge of the Apache Junction Health Center. The hallways of the nursing home are still. Only half of the rooms are filled, and the men and women who live there seem surely in life’s final season. “These are folks that have chronic cognitive and physical disabilities that are not going to improve,” said George Jacobson, administrator of the nursing home. That this nursing home is sparsely filled with residents too disabled in mind or body to return home is a stunning achievement for Arizona’s public health insurance agency. A decade ago, 60 percent of Arizonans covered by Medicare and Medicaid, and deemed sick, frail or disabled enough to live in a nursing home, resided in a skilled nursing facility. Today, only 27 percent of them do, and the rest — nearly three out of four — live in assisted living facilities or at home with the help of nurses, attendants and case managers provided by government-paid health plans. As Congress debates an ambitious and far-reaching effort by the Obama administration to streamline medical care and rein in spending for the nation’s sickest and most expensive patients, Arizona — with its finger-wagging Republican governor and Tea Party enthusiasts — is occupying an unusual place in the national landscape: as a model for how a generously funded, tightly regulated government program can aid vulnerable, low-income patients. The 9 million people nationwide who
are eligible for both Medicare and Medicaid are by far the sickest and most expensive patients in the country. Known in policy circles as “dual eligibles,” their care costs federal and state governments some $300 billion a year. And yet, although they suffer from physical disabilities, dementia or pressing frailty, they are often caught in the bureaucratic eddies that have plagued the two public health insurance programs since their debut in 1965. These patients receive medical and hospital services from Medicare and nursing home and at-home care from Medicaid. Largely left out of previous trends that swept patients into managed health care with a single insurance company overseeing their needs, “dual eligibles” are often subjected to duplicated tests and unnecessary medical care, and must divine for themselves which services are paid by which program. That’s not the case in Arizona where state health officials have aggressively applied managed care strictures for more than two decades. While Arizona was the last state to join Medicaid in 1982, it was an early adopter of paying private health plans to manage care for public beneficiaries. That was in part because Arizona’s system of providing basic medical service to its most impoverished residents was in disarray. Arizona had long required county governments to provide basic health care to impoverished residents – the first territorial legislature addressed the issue during the Civil War. But each county “had different eligibility, different packages and no Medicaid money,” said Dr. Len Kirschner, a former state Medicaid director. Still, in order to overcome Republican hostility to the federal insurance program
for the poor — and the federal dollars that would flow for the first time into the state — lawmakers “didn’t want anything that sounded like Medicaid,” said Kirschner. “So they came up with this name.” The Arizona Health Care Cost Containment System (AHCCCS), is such a pervasive brand in the state, some beneficiaries and even lawmakers don’t realize it is Medicaid. And since its beginning, a long line of the state’s conservative lawmakers and governors have lent strong support to Arizona’s novel public-private model in which health plans are paid a set monthly fee and are expected to care for all of a patient’s needs. Critics of managed care say the incentives for companies to keep the cash and withhold care are too great, the potential profits too tempting. They point to the scandal-filled 1990s when some HMOs in the private insurance market nationally kept costs down by denying treatment. But today in Arizona, advocates for the elderly and disabled and the patients themselves say the case managers from their health plans are less like Grim Reapers and more like guardian angels. The program gets praise from patients who are healthier, too. This generosity toward the poor can seem at odds with Arizona’s cultivated reputation for self-reliance, until that is, the actuaries get involved: an Arizonan in a nursing home costs the state $5,400 a month for custodial care alone. If a patient can live at home, the cost is only $1,400. This cold arithmetic has led to noble gains, advocates say, in keeping people out of nursing homes and a reasonable profit for insurance companies, who say they typically make two to four-percent profit in Arizona. The state’s fervent belief that private companies are best suited to deliver public services doesn’t mean Arizona is the Wild West. Health plan executives, hospital and provider groups, and case managers said in interviews that state regulators are strict, vigilant and quick to rebuke health plans that don’t meet their standards. “We have 75 staff whose job it is to oversee the health plans and make sure they are meeting all of our requirements,” said Tom Betlach, director of Arizona’s Medicaid agency, AHCCCS. “We sit down on a quarterly basis. We bring the plans in. We look at their performance.” Those requirements include quarterly reports on access to medical care, quality measures and proof that patients are getting needed services, like attendant care.
“If there is some speculation that the health plans can’t be trusted,” said James Stover, head of the University of Arizona Health Plan in Tucson, “I think in Arizona, we’ve demonstrated the health plans have been… models for improved health.” Betlach testified before a Senate committee last December about the results of Arizona’s system: those Arizonans eligible for both Medicaid and Medicare who were enrolled under one managed care plan had a 31 percent lower rate of hospitalization than those in traditional fee-for-service. They used the emergency department less frequently, and when they did end up in the hospital, they spent far fewer days and were readmitted less often. There’s widespread consensus within the state that Arizona’s model works because the state is what’s known as a “good payer:” physicians and health plans are paid much higher rates than nearly every other state. Even with a recent rate reduction, most Arizona physicians and hospitals accept AHCCCS patients, a mark of access not found in many states. Still, Stover cautions other states that might want to replicate the Arizona model that the system is fragile: managed care companies can provide rich services and wide access, he said, so long as state budget makers keep rates healthy. For now though, health plans continue to see a business opportunity in fine-tuning Arizona’s model even more, by stamping out more wasteful and unnecessary medical care.
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization. Its website is www.kaiserhealthnews.org .
MARCH 15, 2013
HEALTH CARE
Cause for celebration in South Tucson home of Luz Sepada Kaiser Health News It’s a day for celebration at the South Tucson home of Luz Sepada. Her husband picks at his guitar, marking 60 days Sepada has stayed out of a hospital. Her case manager from the University of Arizona Health Plan, Martha Rodriguez, a trained nurse, sits across from her, under a painting of the Virgin Mary. Rodriguez was first dispatched to Sepada’s hospital room to figure out why the 59-year old with diabetes and congestive heart failure who relied on a feeding tube kept ending up in the emergency department – 10 hospitalizations in one year alone. “When I first met Mrs. Sepada, I knew she was very sick,” said Rodriguez. “I was looking to see: Who was at home? Who was helping her?” Rodriquez went to her medical director with a list of services she believed would stabilize Sepada and spare her the trauma
of so many hospital trips. “Usually our medical directors are very good at listening to us,” said Rodriguez. “We have to show them, ‘this is the pros and the cons.’” Sepada said she was relieved to have Rodriguez’s help: “I trust her because they’ve really been working close with me.” Building that trust can take time, Rodriquez said: “A lot of our members are very suspicious of people coming to see them in their home or going to visit them in the hospital. Why are they here? Is it my insurance? Am I in trouble?” Health plan nurses are quick to point out their role in patient care: to find out what the patient needs to be safe and healthy in their home and prevent unnecessary calls to 9-1-1. For her part, Sepada says the nurses give her comfort. “They’re right there with me,” she said. “They’re always with me.”
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16 MARCH 15, 2013
INSIDE TUCSON BUSINESS
HEALTH CARE
COMMENTARY
Governor’s plan to restore, expand AHCCCS will benefit all of S. Ariz. Gov. Jan Brewer’s plan to restore and expand Arizona Health Care Cost Containment System (AHCCCS) coverage has been endorsed by Tucson Medical Center and other hospitals across the state. This is the right time to restore AHCCCS to childless adults and to expand it to other low-income, uninsured Arizonans. The past two years have been difficult for hospitals like Tucson Medical Center as uncompensated care has skyrocketed; the number of low-income, uninsured Arizonans has soared; and more and more people are going without care or delaying care and ultimately seeking help in hospital emergency departments. And while the impact to hospitals is unmistakable, the toll it has taken on individuals in terms of their ability to access life-saving care is incalculable. Time and again the caregivers on the frontline see people faced with impossible decisions about how to pay for health care they can’t afford but desperately need. Governor Brewer’s plan — announced during her Jan. 14 State of the State address — restores AHCCCS coverage for approximately 240,000 adults and expands eligibility up to 133 percent of the federal pov-
erty level (FPL). Combined, these actions would extend AHCCCS coverage to an additional 300,000 low-income Arizonans through 2016. The proposal would be paid JUDY RICH for through an assessment on hospitals and would enable Arizona to receive a 10-to-1 matching rate on the provider assessment and bring an additional $7.9 billion into Arizona’s economy and health care system over the next four years. Grappling with a state economy in steep decline in 2011, lawmakers reduced funding for AHCCCS by about $2.6 billion per year. This was accomplished by freezing new enrollments for childless adults. As a result, more than 140,000 low-income, uninsured Arizonans are no longer covered by AHCCCS. From July 2011 to July 2012, following the AHCCCS freeze, hospitals’
uncompensated care costs doubled increasing by $269 million, according to the Arizona Hospital and Healthcare Association (AzHHA). Uncompensated care at Tucson Medical Center nearly doubled during the same time period. We appreciate the difficult decisions lawmakers were forced to make during the Great Recession. With the Governor’s plan, we have an opportunity to reverse the tide, strengthen Arizona’s hospitals, invest in our economy and help more people live healthier more productive lives. A strong health care system is vital as Southern Arizona strives to be competitive in attracting new businesses and top talent to live and work here. Medicaid expansion will allow hospitals throughout the state to survive and continue to provide care to those in need. More importantly, expansion of Medicaid will give more of our citizens access to critical health care services that will allow them to continue to be productive in their workplace and in our communities.
Governor Brewer’s plan — announced during her Jan. 14 State of the State address — restores AHCCCS coverage for approximately 240,000 adults and expands eligibility up to 133 percent of the federal poverty level (FPL)
Judy Rich is president and CEO of Tucson Medical Center.
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MARCH 15, 2013
17
Hospital innovations, new facilities make for economic drivers By Christy Krueger Inside Tucson Business In an era of health care reform and aging baby boomers, acute-care hospitals in the Tucson region are growing in all aspects — with new facilities, additional personnel and implementation of high-tech equipment. The common theme with each is newer, better and more innovative.
Tucson Medical Center On May 6, Tucson Medical Center, 5301 E. Grant Road, will open its four-story West Pavilion, part of a $109 million, multi-year construction plan. The building will house TMC’s orthopedic unit and will be the new home for the Tucson Orthopaedic Institute, which is one of the Southwest’s largest fullservice orthopedic practices. A 632-space parking garage, loop road improvements and a founders’ park are also part of the hospital’s project. Physician offices and clinics will be located on the first floor, and the second and third floors will be dedicated to operating rooms. The fourth floor will contain 40 private patient rooms. One of the goals of partnering TMC with the Tucson Orthopaedic Institute is to improve efficiency. The hospital’s executives believe that bringing all aspects of orthopedic care together will allow surgeons to save time and, therefore, costs. They can perform surgeries, see patients in their offices and visit post-surgical patients all within one building. Information technology is another area of health care efficiency for which TMC has been recognized. The hospital was one of the first in the U.S. to convert to electronic medical records and last year was named one of America’s “Most Wired” hospitals by the American Hospital Association. TMC is currently part of a pilot group of accountable care organizations (ACOs). Working under Centers for Medicare and Medicare Services, the idea behind ACOs is to improving patient care while lowering costs.
UA Medical Centers A couple of high level appoints at the University of Arizona: Dr. G. Michael Lemole is the new chief of staff at the University of Arizona Medical Center University Campus, 1501 N. Campbell Ave., and Dr. Michael R. Waldrum as president and chief executive officer of University of Arizona Health Network (UAHN). Lemole, who became widely known as the neurosurgeon for former U.S. Rep. Gabrielle Giffords after she was shot through the head on Jan. 8, 2011, specializes in skullbased diseases and surgeries. He came to the UA in 2009 and is a professor of surgery and chief of the Division of Neurosurgery at the UA Department of Surgery. In his new position, succeeding Dr. Paul Gordon as
chief of staff, Lemole oversees 800 physicians at the hospital’s University Campus. Waldrum came to Tucson from Birmingham, Ala., where he was CEO of University of Alabama Hospital and vice president of University of Alabama Birmingham Health System. While in Alabama, Waldrum was actively involved in teaching and clinical practice and hopes to continue doing so here. He’s a board-certified specialist in internal medicine, critical-care medicine and pulmonary health. In his new position with UAHN, Waldrum leads two hospitals — the University Campus and the South Campus, 2800 E. Ajo (formerly University Physicians Hospital) and University Campus — plus numerous clinics, health plans and physician practices that are members of the group. “As a physician executive, Dr. Waldrum has a unique perspective and proven record of leading a highly complex academic medical system. His experience will be critical to the success of the health network’s mission of providing excellent medical education, patient care and cutting-edge research,” noted Dr. Steve Goldschmid, dean of UA College of Medicine-Tucson.
Carondelet Health Network Carondelet Health Network leaders have been busy with new facilities and departments, including the Breast Center and the Heart and Vascular Institute at St. Mary’s Hospital, 1601 W. St. Mary’s Road, and the planning of a health and wellness pavilion in Sahuarita, now in the pre-construction stages. The Breast Center, which opened in 2012, takes a team approach to the diagnosis and treatment of breast cancer. “Our Breast Center is different in that we’re not just a center for imaging or a single physician office. We encompass the whole scope of breast disease,” explained Dr. Gerlinde Tynan, medical director of the program. Patients not only benefit from having all their physicians in one location, they’re also offered the latest technology in diagnostic imaging software and in treatments. Last year the Carondelet Heart and Vascular Institute relocated to the campus of St. Mary’s Hospital from the former Tucson Heart Hospital, 4888 N. Stone Ave., and is undergoing a $17 million renovation. The nationally recognized cardiovascular care center is also taking on an educational component, in which the institute’s surgeons teach other experienced physicians the latest procedures and treatments in the field. “In 1959, St. Mary’s was the first hospital in Arizona to perform open-heart surgery and the first in Southern Arizona to use a heart-lung machine. Today our surgeons are modern-day pioneers, offering the most technologically advanced and minimally invasive options available,” said James K. Beckmann, president and CEO of Caronde-
let Health Network. The first of two construction phases for Carondelet’s Sahuarita health and wellness pavilion is set to begin within a few months and completion is expected by summer of 2014. The new facility will be built on 21 acres along Desert Gem Lane, just south of Sahuarita Road. Carondelet leadership considers Sahuarita’s reputation for innovative growth an ideal fit for such a partnership. When the first phase opens, residents will have access to a variety of outpatient medical services and see a doubling of the number of primary care physicians covering the area. It will also be a satellite location for specialists from the Carondelet Heart and Vascular Institute and Carondelet Neurological Institute, which is housed on the campus of St. Joseph’s Hospital, 350 N. Wilmot Road. The second phase of the Sahuarita project, starting construction in 2014, will likely include a lab, imaging equipment, urgent or emergency care, a pharmacy and technologies for outpatient procedures.
Northwest Medical Center Northwest Medical Center, 6200 N. La Cholla Blvd., broke ground in January on a $50 million operating room expansion that will include the addition of four minimally invasive operating room suites designed to accommodate the da Vinci Surgery Robot. New hybrid suites for cardiac and vascular procedures will also be a part of the expansion. Hybrid rooms combine the function of an operating room with interventional imaging equipment, allowing patients to stay in one place and for physicians with different specialties to work together. “I’m excited Northwest is looking to the future with this expansion,” said Dr. Richard Chua, department of surgery chairman and chief of staff. “It really demonstrates Northwest’s commitment to both its patients, physicians and staff to stay on the cutting edge of health care in the Tucson community.”
Oro Valley Hospital Last summer medical staff at Oro Valley Hospital, 1551 E. Tangerine Road, Oro Valley, performed the first surgeon-controlled robotic-assisted partial knee resurfacing surgery in the Tucson region. The minimally invasive treatment is recommended for patients who are experiencing decreased mobility but don’t necessarily require total knee replacement. Advantages include a shorter hospital stay, quicker recovery time and preserving more of the patient’s natural knee. Dr. Kevin Bowers performed the procedure. “The robotic-assisted knee resurfacing allows us to treat patients with knee osteoarthritis at earlier stages with greater precision,” he said, because the system creates three-dimensional views of the patient’s bone surface and correlates the image to a pre-programmed surgical plan. Growth in the health care sector seems to be here for the long haul. This trend should be embraced not only for its obvious patient-care benefits, but also for its contributions to the entire community. The creation of construction, medical and IT jobs, as well as the indirect financial impacts the industry generates, are a great boost to our local economy.
18 MARCH 15, 2013
INSIDE TUCSON BUSINESS
HEALTH CARE
Carondelet adds state-of-the-art care at St. Mary’s Hospital Carondelet Heart and Vascular Institute is now located on the campus of Carondelet St. Mary’s Hospital and offers nationally recognized, award-winning care for the treatment of cardiac and vascular conditions. The former Tucson Heart Hospital, 4888 N. Stone Ave., was moved by the Carondelet Health Network to a new state-of-the-art facility at St. Mary’s, 1601 W. St. Mary’s Road, in November. In its new home, Carondelet Heart and Vascular Institute, offers patients superior multi-disciplinary care under one roof. The $17 million renovation to St. Mary’s Hospital to accommodate the Carondelet Heart and Vascular Institute added three key areas: • A dedicated Cardiac Intensive Care Unit. • A specialized cardiovascular Patient Care Unit on the hospital’s third floor. • Dedicated cardiovascular surgery facilities. In total, Carondelet Heart and Vascular Institute has 92,000 square feet in the hospital. The bulk of the year-long renovation has been completed and the first cardiovascular surgery occurred in the new facility Nov. 6. Additional construction will continue through July and includes a hybrid operating room for minimally invasive cardiovascular procedures, a noninvasive testing area, a catheterization lab for electrophysiology procedures, a dedicated waiting room and lobby for patients’ families and additional improvements to the third floor impatient wing. The contractor is Tucsonbased Diversified Design and Construction Inc. Relocating to St. Mary’s, Carondelet Heart and Vascular Institute offers patients several advantages, according to Dr. Amy Bieter, CEO at St. Mary’s Hospital. “Patients now have easy access from both Interstates 10 and 19 and via two helicopter pads for emergencies. Most importantly, being a part of a tertiary medical center provides its patients other care, especially those who may face health issues beyond cardiac and vascular ailments.” About 120 staff members moved from the old facility to the new one, adding to the existing 1,000 associated medical staff at St. Mary’s. Lives have already been bettered. “Recently, one of our patients suffered a stroke while being treated for a heart attack and developed paralysis on his left side,” Bieter said. “Within minutes St. Mary’s stroke team administered a clot-busting drug, and the patient was later able to walk out the door.” Carondelet Heart and Vascular Institute
Tom Spitz
By Lisa K. Harris Inside Tucson Business
Patient care at Carondelet Heart & Vascular Instititute.
focuses on minimally-invasive surgery for both heart and vascular procedures. For example, it’s a leader in treating thoracic aneurysms, a life-threatening disease, with endovascular stent grafts. “There is nothing more satisfying than seeing a patient walking, eating a regular diet and being discharged home on the first day after an one of these procedures,” said Dr. Scott Berman, chief of cardiovascular surgery at St. Mary’s. “This is in stark contrast to traditional open surgery that would require days in the intensive care unit, a week in the hospital and months for full recovery.” With the Carondelet Heart and Vascular
Institute, St. Mary’s continues its tradition of performing pioneering cardiovascular surgery. The hospital was the first to perform open-heart surgery in Southern Arizona back in 1959, according to James Beckmann, president and CEO of Carondelet Health Network. Just last month, Carondelet Heart and Vascular Institute was the first facility in Arizona to offer a new endovascular aneurysm repair system for patients who were excluded from typical treatment by their kidney artery anatomy. “The new facility expands CHVI’s ability to treat and care for patients,” Berman
added. Renovation of portions of St. Mary’s Hospital for the Heart and Vascular Institute is a significant investment by Carondelet Health Network, both for the community and itself. The hospital, like many other area hospitals, has been affected by the regional and national economic downturn. With cutbacks in Medicaid coverage and Medicaid reimbursements, hospitals, including St. Mary’s, have witnessed increased uncompensated care. “Our mission includes providing the highest quality and safest care to everyone, with special attention to those who are poor and vulnerable,” said Lisa Contreras, director of external communications for Carondelet Health Network. “When business and families in our region struggle financially, we certainly feel the effects. Our mission, however, will not change and our commitment will not waver.” Carondelet is part of Ascension Health, based in St. Louis, Mo. It is a non-profit organization and the largest Catholic healthcare system in the U.S., providing care at more than 1,400 locations. In its 2011 annual report, Ascension Health listed income from operations at $424 million. The level of investment in Southern Arizona, and Tucson in particular, continues Carondelet’s history in the region. St. Mary’s is the longest operating hospital in Arizona. Built in 1880 with funds raised by J. B. Salpointe, the first Bishop of Arizona, the hospital has been operating continuously since. With the expansion of the hospital to include the Carondelet Heart and Vascular Institute, St Mary’s will attract patients from throughout the southwest seeking superior health care, according to Dr. Derek Von Haag, medical director of Cardiothoracic Surgery for the institute. “We’ve already had patients from Phoenix, northern Arizona, New Mexico, and as far away as El Paso, Texas,” Von Haag said. The new, still under construction, hybrid operating room will further boost Carondelet Heart and Vascular Institute’s reputation. The hybrid operating room with ambient technology empowers patients in their own care and decreases their anxiety. “Increased patient satisfaction translates into patients recovering faster,” Von Haag said. Carondelet Heart and Vascular Institute’s hybrid operating room, opening at the end of July, lets patients choose their own lighting, music, and surrounding colors so that they create a customized atmosphere. “Our hybrid OR with ambient technology will be the first in North America.” Carondelet Heart and Vascular Institute’s move to St. Mary’s campus “is a fantastic one,” Bieter said. “Both in terms of patient care as well for the greater Tucson economy by serving as a referral center for state of the art cardiovascular treatment.”
InsideTucsonBusiness.com
MARCH 15, 2013
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21
22 MARCH 15, 2013
HEALTH CARE
INSIDE TUCSON BUSINESS
PROFILE
Samantha Sais
Walgreens undergoes ‘Well Experience’ concept makeover at stores
An old layout for a Walgreens pharmacy, left, and the new one, right.
By Christy Krueger Inside Tucson Business The next time you have a question on a medical condition, need a tetanus vaccine or want to sit and chat with a pharmacist about medications, you might want to stop by a recently transformed Walgreens store, where you can also pick up a fresh, healthy salad or a carton of milk. So far three stores in the Tucson region are operating under the new format, called the Well Experience concept, but 16 more are on their way this year, according to Chris Elliott, district manager of Walgreens Tucson East. Two stores that have been reformatted, at 4685 E. Grant Road, on the northwest corner of Swan Road, and 1880 E. Irvington Road, at the southwest corner of Campbell Avenue. The third store is a new one that opened Feb. 28, at 4655 E. Sunrise Drive, at the northwest corner of Swan. The focal point of the new format is moving the pharmacy toward the front of the store and bringing the pharmacist out from behind the counter. Seated at a desk, the pharmacist is more approachable and better able to interact with customers, offering advice and answering questions. “Up front we do what we were trained to do — counsel in a one-on-one role,” said Elliott, who is a licensed pharmacist.
He believes that Walgreens’ Well Experience format is not necessarily a different direction for the company but an enhancement with additional services and products. “Our business model has always been convenience and our new model is to also be a destination for health and daily living choices,” he said. Providing grocery items is another spoke in Walgreens’ wheel of health. “It started in other states three or four years ago with food deserts. There are a lot of areas in cities where customers don’t have access to basic groceries. Walgreens made a commitment to the federal government to put in healthy food products,” Elliott said. Fresh foods available in the Well Experience stores in Tucson include produce, prepared salads, sandwiches, soups and vegetable plates. Select foods, as well as prescription refills, can be ordered online and picked up at the store. In some cases, staff will even carry items to your car. Eight Tucson area Walgreens now have Take Care Clinics — acute-care settings with a nurse practitioner who can treat minor illnesses, perform blood pressure screenings and offer health exams and vaccines. “There’s a potential for a shortage of hospitals and doctors in the future, and I think having retail clinics fills a niche,” Elliott said. The eight stores with clinics are at 2180 W.
BIZ FACTS
Walgreens Well Experience stores 4685 E. Grant Road (520) 326-4341
1880 E. Irvington Road (520) 294-1975
4655 E. Sunrise Drive (520) 917-0556
Grant Road, 3910 E. 22nd St., 4685 E. Grant Road, 6767 E. Broadway, 10315 E. Broadway and 2150 W. Orange Grove Road, Tucson; 10405 La Canada Drive, Oro Valley; and 7800 N. Cortaro Road, Marana. Some stores also have a health guide representative who, equipped with an iPad, answers product and service questions and helps customers navigate the store. Female shoppers make up a large portion of Walgreens’ clientele, Elliott said, and many of the stores’ physical changes have been made with this in mind. “We took out the front wall and put in windows and lowered shelving so aisles are brighter. The whole store is designed to flow better,” he said. The cosmetics department has been expanded and moved up front. Light
blue and white are the stores’ new colors. Walgreens began transitioning a portion of its stores to the Well Experience concept three years ago in Illinois, where the company began in 1901. It then continued with stores in Florida, Minnesota and, now, Arizona. The company is sinking substantial funds into the project, in both physical renovations and in personnel. Elliott noted that remodeling costs and payroll increases vary by store, but the Grant-Swan location added six employees to handle the additional services being offered. Many of Walgreens’ innovations, including the idea of moving pharmacists in front of the counter, came about through customer surveys and focus groups. “We will continue to do follow-up,” Elliott said. “Well Experience stores from two years ago are different than today because we’re adjusting as per what works.” Increased competition has also directed the company to stay fresh with its strategies. But the greatest impetus for the recent changes, Elliott said, comes from the health care industry. “A lot of reform is happening that now allows the pharmacist to take on expanded responsibilities. Our concept is making health care more convenient and affordable. We will benefit from health care changes by making services more accessible to the public.”
InsideTucsonBusiness.com
MARCH 15, 2013
23
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GOOD BUSINESS TECHNICALLY SPEAKING
Directory assistance listing mistakes could hurt your business Heavy traffic makes a business woman think she’s going to be late to her appointment at a popular downtown restaurant. She calls 411 Directory Assistance to get the restaurant’s phone number to leave a message, “On the way, running a bit late.” The directory assistance operator says, “I show no listings under that name.” A supervisor confirms the “no-listing” results and adds, “Maybe the restaurant went out of business.” A business man heads off in his car to a meeting but needs to call an out-of-state law firm on the way. He dials directory assitance to get the number. When the operator connects him, a fax machine answers and screams in his ear. What do these two businesses have in common? The same city and state? No. The same type of business? No. The same phone companies or carriers? No. The restaurateur is perplexed because, when he calls directory assistance from his restaurant, he’s given the correct phone number. But some customers have told him his restaurant is not listed with directory assistance. The law firm gets its phone service through an information technology (IT) consulting firm. The IT company tells the law firm that getting it listed in directory assistance will cost an additional $1,500 and might not work anyway. The IT company sold the firm its Voice over Internet Protocol (VoIP) phone system. VoIP gives the firm a wide range of handy features without requiring a big, up-front cash expense. The firm has heard a few comments about it not having a directory assistance listing. An accurate directory assistance listing is still important these days. In 2008, one source states people used directory assistance 6 billion times in the U.S. As recently as 2010, more than one report makes a reference to “billions” of directory assistance calls. In the two cases I described, the carrier, or “phone company,” dopped the ball on the businesses’ “phone book” listing. For the restaurant, Cox Communications (the cable company) made the mistake. For the law firm, the provider of the VoIP service failed to get the listing completed correctly. Today, the range of carriers and re-sellers is so wide and deep it’s no surprise mistakes get made. We have dozens, perhaps hundreds, of carriers. Every city has an “incumbent” local exchange carrier (in Tucson its CenturyLink, the current company that was Qwest, US West and go back far enough, Mountain Bell). It has competitors, which in Tucson include TW Telecom and cable companies such as Cox and Comcast. Additionally, there are wireless carriers, including Verizon, AT&T, Sprint and T-Mobile that must all provide directory
DAVE TEDLOCK
assistance service. As simple as it might seem to get a listing right, mistakes get made. Some carriers have re-sellers, so the mistake may be made by the re-seller. Other carriers have people on staff who simply may not enter a
listing exactly correct. For a business to have its customers get the desired directory assistance experience, carriers complete two steps correctly: 1. They must manage their own directory listings and keep them complete and current. 2. They must correctly share that database with all other carriers. The repercussions of a bad database being shared extend past directory assistance issues. Websites such as MapQuest and other online directories such as DexPates, YellowBook and WhitePages.com amalgamate data from various sources. These sites then provide phone numbers in their listings. In the law firm’s case, that meant providing the fax number as the voice number. The solution to the problem begins with double-checking the listing by calling amalgamate from more than one carrier – for example, from both a land line and a mobile phone. Next, the organization can just ask its carrier to provide it with a copy of its directory assistance listing, from the database. A screenshot will do. Then make sure the listing is correct, especially the business name and city and state fields. When data goes missing or is incorrect, bad things happen. A woman on the way to lunch may have to listen to a directory assistance supervisor suggest the popular restaurant she’s headed to has gone out of business. Or a man may think he’s being connected to a law firm only to have a fax machine answer the phone. Take a wide variety of carriers, mix in a new technology (VoIP), throw in hundreds of re-sellers, require carriers to share data with each other in specific ways, and the system has just written a recipe that guarantees some bad outcomes. Happily, the restauranteur is so gifted his restaurant continues to fill up with happy customers, even if directory assistance does say he may have gone out of business.
Contact Dave Tedlock, president of the website development and marketing company NetOutcomes, at dave.tedlock@netoutcomes. com or (520) 325-6900, ext. 157. His Technically Speaking column appears regularly the third week of each month in Inside Tucson Business.
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Whatever you’ve told us drives our every move. Therefore, what you want is what we pursue. What you need is what we get. We never forget that we work for you. CORPORATE REAL ESTATE SERVICES 3709 N. Campbell Ave, Suite 201 | Tucson, AZ 85719 | 520.881.8180 | FAX 520.881.5844 Contact us at 1.800.831.4090 or at www.cotlow.com | Dean P. Cotlow Cotlow@cotlow.com
24 MARCH 15, 2013
INSIDE TUCSON BUSINESS
CALENDAR SPECIAL EVENTS
Tucson eBay Sellers Conference Saturday (March 23) Viscount Hotel 4855 E. Broadway Contact: Sally Milo info@TESConference.com (520) 270-6456 Cost: $45 http://tesconference.com Learn to grow your business at the TESConference, where employees and experts will present classes on best practices and more. SAHBA Spring Home and Patio Show Friday through Sunday (April 5-7) 10 am. To 7 p.m. Tucson Convention Center 260 S. Church Ave. Contact: Amy McReynolds amy@sahba.org (520)795-3025 Cost: $8 www.sahbahomeshow.com UA College of Public Health presents Dr. Dean Ornish, M.D. Thursday (April 4) 5:30 to 6:30 p.m. University of Arizona DuVal Auditorium 1501 N. Campbell Avenue Contact: Donna Knight dknight@email.arizona.edu, (520) 626-6459 publichealth.arizona.edu Free Dr. Dean Ornish is the author of six best-selling books and founder and president of the non-profit Preventive Medicine Research Institute. IONS Tucson Presents: A Workshop with Gregg Braden Saturday (April 6) 9:30 a.m. to 4 p.m. Westward Look Resort 245 E. Ina Road Contact: Clara Kramer chirising@gmail.com (520) 399-8285 www.ionstucson.org IONS Tucson presents an all day workshop with Gregg Braden, “The Turning Point: Thriving in the World’s Perfect Storm.” REGULAR MEETINGS
SCORE Southern Arizona free business counseling Every Tuesday, Wednesday and Thursday 9 a.m. to 1 p.m. SCORE Main Office 330 N. Commerce Park Loop Info: (520) 670-5008 SCORE Southern Arizona free business counseling Every Wednesday 9 a.m. to noon Oro Valley Library 1305 W. Naranja Drive Call Oro Valley Library at (520) 229-5300 to schedule Roadrunner Civitan Club of Civitan International SCORE Southern Arizona free business counseling Every Monday 10 a.m. to 1 p.m. Nanini Branch Library 7300 N. Shannon Road Info: (520) 791-4626 SCORE Southern Arizona free business counseling First and third Tuesday 9 a.m. to 1 p.m. ASBA 4811 E. Grant Road, Suite 261 Call ASBA at (520) 327-0222 to schedule
SCORE Southern Arizona free business counseling Every Tuesday 9 a.m. to noon Marana Urgent Care Center (South Classroom) 8333 Silverbell Road Info: (520) 682-4314 SIDT Thursday Breakfasts Soroptimist International of Desert Tucson Every Thursday through Sept. 06 7:15 am The Good Egg 4775 E. Grant Road Contact: Carol Cloutier carolcloutier@cox.net (520) 882-4873 sideserttucson.com Small Business Commission Meeting Fourth Thursday 3 to 5 p.m. Mayor and Council chambers 255 W. Alameda First floor Info: Ellen Hitchings, (520) 791-4343 ext. 245 or small.business@tucsonaz.gov The S.M.A.R.T. Group Every Friday 12 to 1:30 p.m. Nova Home Loans Multi-Media Conference Room 6245 E Broadway Blvd., 5th Floor $25 Members $45 nonmembers Contact: Dale Dillon Lips (520) 429-6000 or dillonadvisory@gmail.com Society for Human Resource Management - Greater Tucson Chapter Second Tuesday 11 a.m. to 1 p.m. DoubleTree, 445 S. Alvernon Way Membership:Garrett Kowalewski, (520) 6479100 garrettk@staffmattersinc.com RSVP by Thursday prior to meeting: www.shrmgt.org Solutions Forum Fourth Monday Noon to 4 p.m. Clements Insurance 6245 E. Broadway, Suite 310 Information: 1-800-716-9626 or (480) 200-5678 RSVP required Open only to business owners and divisional heads Southern Arizona Chapter of Enrolled Agents Third Tuesday 11:30 a.m. Knights of Columbus Hall 601 S. Tucson Boulevard Info: (520) 751-8986, www.aztaxpros.org/sacea Southern Arizona Chapter of the Society for Design Administration Fourth Tuesday Noon to 1:30 p.m. Viscount Suites Hotel
{YOUR EVENT HERE} Submissions: Deadline for calendar submissions is 10 days prior to publication. Post your event online at www. insidetucsonbusiness.com/calendar. Email any questions to pmcnamara@azbiz.com.
A complete calendar listing is at
InsideTucsonBusiness.com
4855 E. Broadway Information: www.sacsda.com or tamara.g@wt-us.com RSVP: mormsby@hmwstructural.com Cost: $20 members, $25 nonmembers Southern Arizona Logistics Education Organization (SALEO) Third Wednesday Location and times vary Information: al@saleo, (520) 977-3626 or www.saleo.org Cost: $25 members and 1st-timers; $30 nonmembers Superior Business Networking First and third Tuesday 11:30 a.m. to 1 p.m. Info: (520) 631-7398, vthompson@az-health.com The Annuity Doctor — Curt Zacharias Every Tuesday 3:30 p.m. Bookmans 6230 E. Speedway, Community Room Information: Curt Zacharias (520) 990-0009 Cost: Free Tucson Association of Executives Every Wednesday 6:30 to 8 a.m. Tucson Country Club 2950 Camino Principal RSVP: (520) 321-0879, taeoffice@aol.com Tucson Christian Business Connections First and third Thursdays 7 a.m. 3516 E. Grant Road Information: Robert E. Hinske, (520) 795-7195 or (520) 990-5374 Tucson Computer Society Third Monday 6 p.m. (pre-session) 7 p.m. (meeting) Pima County Medical Society Auditorium 5199 E. Farness Drive Information: (520) 625-4419 or www.aztcs.org Cost: Free *No meeting in September Tucson Downtown Sertoma Club First and third Wednesday 11:30 am to 1 p.m. Viscount Suites 4855 E. Broadway Information: www.tucsonsertoma.org RSVP: tdsertoma@yahoo.com Tucson Goal Getters Every other Sunday 1 p.m. Spill the Beans 2920 N. Swan Road Information: www.meetup.com/The-TucsonGoal-Getters or (520) 370-6961 Cost: $20 Tucson GLBT Chamber of Commerce Monthly breakfast meeting Third Thursday 7:30 to 9:30 a.m. Hotel Tucson City Center 475 N. Granada Ave. RSVP: (520) 615-6436 or info@tucsonglbtchamber.org Cost: $15 members, $20 guests
InsideTucsonBusiness.com
MARCH 15, 2013
25
CALENDAR Breakfast & Wealth Discussions Village Inn 6251 N. Oracle Road Information: Jay McCall (520) 909-9375 Tucson Presidio Rotary Club Monday Mixer First Monday of each month 5 to 7 p.m. Conversation & Connections Redline Sports Bar 445 E. Wetmore Road Information: Jay McCall (520) 909-9375
Tucson Hispanic Chamber of Commerce Monthly Networking Luncheon Third Thursday 11:30 a.m. The Manning House 450 W. Paseo Redondo RSVP: www.tucsonhispanicchamber.org. Cost: $25 members, $30 nonmembers Tucson Hispanic Chamber of Commerce Monthly Fiesta Mixer First Thursday 5:30 p.m. Locations vary Information: www.tucsonhispanicchamber.org. Cost: $10 members, $15 nonmembers Tucson-Mexico Sister Cities Monthly Board Meeting Second Thursday 5:30 p.m. Ward VI offices, 3202 E. 1st Street Information: (520)250-3901 or http://tucsonmexicosistercities.org Tucson Presidio Rotary Club Every Wednesday Noon to 1 p.m. Hotel Tucson City Center 475 N. Granada Information: Jay McCall, (520) 909-9375 Cost: $15, lunch provided
Tucson Presidio Rotary Club Real Estate Wealth Plan Third Thursday of each month 6 to 7 p.m. Investing Workshop Keller Williams Realty 1745 E. River Road Information: Jay McCall (520) 909-9375 Tucson Presidio Rotary Club No Place Like Home Second Thursday of each month 6 to 7 p.m. Home Ownership Workshop Keller Williams Realty 1745 E. River Road Information: Jay McCall (520) 909-9375 Tucson Utility Contractors Association Second Wednesday 7 to 8 a.m. Locations vary RSVP: (520) 623-0444
Tucson Presidio Rotary Club REIN First Friday of each month 7to 8 a.m.
Tuesday Morning Business Club Leads and networking Every Tuesday 7 to 8 a.m. The Hungry Fox 4637 E. Broadway RSVP: Mike Ebert (520) 320-9311 www.tucson-networking.com Varsity Clubs of America Midtown Mixer First Tuesday 5 to 7:30 p.m. 3855 E. Speedway RSVP: midtownmixer@excite.com Information: (520) 918-3131 Cost: free, cash bar, menu available Alliance of Construction Trades Third Wednesday 5 to 7 p.m. Hotel Tucson City Center 475 N. Granada Ave. Information: www.actaz.net RSVP: By noon on Monday prior to meeting, (520) 624-3002 Cost: $20 American Society of Training and Development Third Friday (excluding August) 7:30 to 10:30 a.m. Breakfast and professional development meeting Viscount Suite Hotel 4855 E. Broadway Information: www.ASTD-Tucson.org
PEOPLE IN ACTION
BILL DAVIES
NEW HIRES Bill Davies joined Silverado as a network technician. Davies has 11 years of computer services experience, having worked as a computer analyst and field technician for Advantage Micro Corp and, most recently was with Intellitech. Davies is a graduate of Mohawk College in Hamilton, Ontario, with a diploma in network systems, and has multiple certifications in computer technology. Teresa Nolan has joined Silverado
Technologies as a network technician. Nolan specializes in Windows, Exchange and IT Security implementation. Nolan worked most recently as a network operations center technician at Intellitech, providing server support, virus removal, and desktop support. Nolan is an adjunct instructor at ITT Technical Institute, and has a BS and MBA from ITT. Zain Khalpey, MD, Ph.D., MRCS (UK), has joined the University of Arizona Department of surgery as associate professor in the Division of Cardiothoracic Surgery.
TERESA NOLAN
He has been appointed surgical director of the Heart Transplant and Mechanical Circulatory Support Program at The University of Arizona Medical Center – University Campus. Khalpey comes to the UA from Columbia University in New York City, where he also has a tenure track appointment in cardiothoracic surgery. His surgical interests include adult and pediatric heart transplant, mechanical circulatory support (ventricularassist devices and total artificial heart), ex vivo lung perfusion, minimally invasive treatments for
ZAIN KHALPEY
SALLY CRUM
{YOUR NAME HERE} To announce a professional promotion, appointment, election, new hire or other company personnel actions. Attention: People; or email submissions to pmcnamara@azbiz.com. Include an attached photo at 300 dpi. valve disease, arrhythmia surgery and robotic mitral valve surgery. Khalpey has published more than 100 manuscripts, abstracts and book chapters in heart and lung transplantation in basic science and clinical outcome studies. He is an American Heart Association reviewer and Early Career
Reviewer for the National Institutes of Health (NIH). ELECTIONS The Southern Arizona Logistics Education Organization (SALEO) recently elected the following people to its board of directors: Miguel A.
HECTOR VALENZUELA
NILS URMAN
Valencia, with Commodity Merchants Exchange, has been elected as president; Sally Crum, of Raytheon Missile Systems, has been elected as executive vice president of logistics and transportation; Hector Valenzuela, of Mode Transportation, has been elected senior vice president of business development; Evelyn Wright, of Pima County OneStop and Goodwill Industries of Tucson, has been elected secretary; and Nils Urman, of Pima County OneStop and Upsilon Consulting International, has been elected treasurer. SALEO
is a nonprofit that offers a forum for logistics providers and users to share information about the latest issues affecting transportation and logistics. AWARDS Lewis and Roca has announced that Tucson attorney Matthew Sweger will be highlighted in the upcoming March/ April issue of AZ Business Magazine within the publication’s 2013 Top Lawyer List. Sweger was named in the publication’s Top Lawyer List in the area of securities/sorporate
finance. As a partner in the firm’s corporate and securities, tax and health care groups, Sweger has a diverse corporate practice that includes mergers and acquisitions, joint ventures, corporate governance, finance, securities and healthcare-related matters. Drew Blease, RFC, CFS, an independent financial advisor at Blease Financial , was recognized as a top financial advisor and named to the LPL Financial Patriot’s Club. This distinction is based on a ranking of all registered advisors supported by LPL Financial LLC.
26 MARCH 15, 2013
INSIDE TUCSON BUSINESS
FINANCE YOUR MONEY
Setting up college fund sends a message to your child Most parents look at the price of a college degree as an expense, like an electric bill or a cable TV bill, but what if you looked at it as an investment in your child’s future? According to the U.S. Census Bureau, in 2009 the average male college graduate, aged 25-34, earned 85 percent more than the average male who completed only high school or had a General Education Development (GED) certificate. Among women the same age, college graduates earned 111 percent more than non-college graduates. Over a lifetime, the additional earnings resulting from this “investment” in education could easily exceed $1 million. There are many savings vehicles specifically designed to help fund a child’s future college tuition. These include 529 plans, Coverdell Education Savings accounts, Roth IRAs, and custodial accounts under the Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act. These plans vary in risk, liquidity, tax advantages and ability to qualify for student grants and/or loans so check with a financial professional. OK, a college degree may help a child earn more money in his or her lifetime, but you may be asking yourself, why you should pay for their college education? The answer could send a message that may be a lesson in itself. Amy Dickinson, in her “Ask Amy” advice column for the Chicago Tribune, published a letter Sept. 27, 2012, from a mother who said her daughter was dissapointed that the family couldn’t afford to send her to a dream college. Instead, she was attending a state college at half the price. Even that was costing more than $26,000 a year. The mother was feeling sad because she had been saving since her daughter’s birth to avoid being crushed under a mountain of debt at college time. Dickinson’s response: “Your daughter needs to learn a lesson tougher than any course she will take in college; that she is responsible for her own success and happiness, now and beyond.” Wall Street Journal columnist Sue Shellenbarger raised questions in May 2006 when she wrote: “Do student loans teach responsibility or foster a lifelong over-reliance on debt? Are parents who pay their kid’s way through college modeling self-sufficiency or martyrdom? Does requiring a student to get a job during the academic year instill work ethic or workaholism?” Eileen Gallo, a psychotherapist, who along with her husband Jon Gallo, co-authored two books on childhood and money tell of an attendee at one of their workshops. He noted that students graduating
from college or graduate school can owe thousands of dollars in loans and asked whether they would advise parents to pay for their children’s college education or tell them to get a student loan. DREW BLEASE Eileen Gallo’s response: “In a vacuum, the issues surrounding how parents choose to finance their children’s education would seem to be entirely financial in nature. In reality, the choices are modeling values, and sending important messages to college-age children.” As parents of three adult children, the Gallos have strong feelings in this area. “We originally believed that parents should pay 100 percent of their children’s undergraduate college expenses. Over time, we reached the conclusion the problem isn’t giving children money for college, it’s failing to involve them in the money process. College-age children who are involved in the economics of their education and pay part, even a small percentage of their expenses, are less likely to develop a sense of entitlement, and (more likely to) learn valuable life lessons that help them cope with adult life,” she says. Many families have no alternative but to rely on student loans, part-time college jobs, and student and parental savings. But what about those who can afford to pay for college? Does paying the bill produce entitled children? Eileen Gallo’s advice is to meet periodically with your adult child to establish a clear understanding – preferably in writing – of the economic arrangement. A couple of issues that should be covered are: • Will the parents require a minimum grade point average? • What is the student’s financial contribution to his/her education and how will the student earn money? The Gallos strongly recommend the student work part-time, but no more than 15 hours per week. Alternatively, the student could work full-time during the summer. It’s important for parents to be aware of the messages and values their decisions send to a college-age child. What message are you sending?
Contact Drew Blease, president and founder of Blease Financial Services, 7358 N. La Cholla Blvd., Suite 100, at drewblease@ bleasefinancial.com or (520) 299-7172.
TUCSON STOCK EXCHANGE Stock market quotations of some publicly traded companies doing business in Southern Arizona
Company Name
Symbol
Mar. 13
Mar. 6 Change
52-Week 52-Week Low High
Tucson companies Applied Energetics Inc CDEX Inc Providence Service Corp UniSource Energy Corp (Tucson Electric Power)
AERG.OB CEXIQ.OB PRSC UNS
0.03 0.08 16.47 46.79
0.03 0.06 17.51 47.67
-0.01 0.02 -1.04 -0.88
0.02 0.01 9.56 35.20
0.10 0.51 19.67 48.01
8.54 3.93 2.60 12.06 62.43 9.91 103.65 20.96 60.98 4.24 25.36 46.97 40.59 43.23 49.39 16.99 103.42 34.72 52.90 16.36 80.21 73.70 24.02 33.08 31.21 70.76 73.95 212.06 36.40 66.25 6.30 50.16 35.15 20.28 48.82 31.31 1.29 41.18 39.40 43.97 61.99 42.11 40.18 43.35 54.85 67.18 15.65 19.87 57.18 55.90 24.00 49.07 51.01 15.52 12.45 46.80 42.07 67.43 20.33 35.29 56.63 30.84 139.56 16.92 15.91 34.22 73.65 42.78 36.77 13.91 25.58
8.57 2.92 2.62 11.92 62.02 9.66 103.24 18.75 60.00 4.06 24.48 44.58 40.84 41.98 49.35 16.71 102.56 35.60 52.22 15.67 80.30 73.28 23.71 32.84 30.80 70.48 71.27 208.38 34.81 67.99 5.75 50.03 34.99 19.55 46.27 29.36 1.21 41.25 38.83 43.12 61.86 41.08 39.38 43.16 54.05 64.96 14.43 20.08 55.36 57.70 23.94 48.29 46.28 14.85 12.05 46.68 41.42 66.12 19.58 35.14 55.46 29.30 138.96 16.61 14.57 33.74 73.38 39.96 36.06 13.80 25.09
-0.03 1.01 -0.02 0.14 0.41 0.25 0.41 2.21 0.98 0.18 0.88 2.39 -0.25 1.25 0.04 0.28 0.86 -0.88 0.68 0.69 -0.09 0.42 0.31 0.24 0.41 0.28 2.68 3.68 1.59 -1.74 0.55 0.13 0.16 0.73 2.55 1.95 0.08 -0.07 0.57 0.85 0.13 1.03 0.80 0.19 0.80 2.22 1.22 -0.21 1.82 -1.80 0.06 0.78 4.73 0.67 0.40 0.12 0.65 1.31 0.75 0.15 1.17 1.54 0.60 0.31 1.34 0.48 0.27 2.82 0.71 0.11 0.49
7.97 0.36 1.48 6.72 50.95 5.30 78.21 11.20 50.89 2.97 14.97 24.61 28.09 20.71 22.19 12.38 81.98 32.05 43.08 8.42 60.76 50.27 13.80 30.54 21.38 46.37 52.21 181.85 27.10 53.38 3.94 30.83 27.96 6.46 41.35 20.98 1.07 23.48 24.76 38.14 54.32 32.31 33.93 24.31 41.11 56.59 14.20 7.63 49.03 38.63 14.73 33.03 38.40 6.25 7.76 39.01 25.77 54.68 14.04 26.06 33.62 17.45 104.08 16.80 6.78 28.26 57.18 28.53 29.80 8.00 17.45
10.75 4.16 3.13 12.44 64.79 10.57 104.19 27.95 61.26 4.93 25.38 47.92 42.00 43.81 50.14 17.05 105.97 43.43 52.93 16.42 89.98 73.99 24.66 43.65 37.74 71.45 74.02 212.36 37.70 68.41 6.53 50.86 38.62 20.76 55.25 31.41 1.81 43.22 39.98 44.25 62.83 42.47 41.84 44.93 55.11 71.25 37.52 21.97 59.34 58.34 25.14 49.70 85.90 15.53 12.53 47.29 42.55 67.56 20.42 35.72 57.85 31.64 140.84 43.80 16.20 35.46 77.60 42.91 37.18 14.20 25.70
Southern Arizona presence Alcoa Inc (Huck Fasteners) AA AMR Corp (American Airlines) AAMRQ Augusta Resource Corp (Rosemont Mine) AZC Bank Of America Corp BAC Bank of Montreal (M&I Bank) BMO BBVA Compass BBVA Berkshire Hathaway (Geico, Long Cos) BRK-B* Best Buy Co Inc BBY BOK Financial Corp (Bank of Arizona) BOKF Bombardier Inc* (Bombardier Aerospace) BBDB CB Richard Ellis Group CBG Citigroup Inc C Comcast Corp CMCSA Community Health Sys (Northwest Med Cntrs) CYH Computer Sciences Corp CSC Convergys Corp CVG Costco Wholesale Corp COST CenturyLink (Qwest Communications) CTL Cvs/Caremark (CVS pharmacy) CVS Delta Air Lines DAL Dillard Department Stores DDS Dover Corp (Sargent Controls & Aerospace) DOV DR Horton Inc DHI Freeport-McMoRan (Phelps Dodge) FCX Granite Construction Inc GVA Home Depot Inc HD Honeywell Intl Inc HON IBM IBM Iron Mountain IRM Intuit Inc INTU Journal Communications (KGUN 9, KMXZ) JRN JP Morgan Chase & Co JPM Kaman Corp (Electro-Optics Develpmnt Cntr) KAMN KB Home KBH Kohls Corp KSS Kroger Co (Fry's Food Stores) KR Lee Enterprises (Arizona Daily Star) LEE Lennar Corporation LEN Lowe's Cos (Lowe's Home Improvement) LOW Loews Corp (Ventana Canyon Resort) L Macerich Co (Westcor, La Encantada) MAC Macy's Inc M Marriott Intl Inc MAR Meritage Homes Corp MTH Northern Trust Corp NTRS Northrop Grumman Corp NOC Penney, J.C. JCP Pulte Homes Inc (Pulte, Del Webb) PHM Raytheon Co (Raytheon Missile Systems) RTN Roche Holdings AG (Ventana Medical Systems) RHHBY Safeway Inc SWY Sanofi-Aventis SA SNY Sears Holdings (Sears, Kmart, Customer Care) SHLD SkyWest Inc SKYW Southwest Airlines Co LUV Southwest Gas Corp SWX Stantec Inc STN Target Corp TGT TeleTech Holdings Inc TTEC Texas Instruments Inc TXN Time Warner Inc (AOL) TWX Ual Corp (United Airlines) UAL Union Pacific Corp UNP Apollo Group Inc (University of Phoenix) APOL US Airways Group Inc LCC US Bancorp (US Bank) USB Wal-Mart Stores Inc (Wal-Mart, Sam's Club) WMT Walgreen Co WAG Wells Fargo & Co WFC Western Alliance Bancorp (Alliance Bank) WAL Zions Bancorp (National Bank of Arizona) ZION Data Source: Dow Jones Market Watch *Quotes in U.S. dollars, except Bombardier is Canadian dollars.
InsideTucsonBusiness.com
MARCH 15, 2013
27
INSIDE REAL ESTATE & CONSTRUCTION
Small gains in home prices adding up By Roger Yohem Inside Tucson Business Over time, small gains can add up to something significant. An improvement here and there creates optimism for the future. For real estate agents and home sellers, an emerging trend signals better times are ahead. In the Southern Arizona residential market during February, median and average sales prices continued to increase, albeit incrementally. The significance is that the sales levels have consistently held onto their small gains dating back to mid-2012. For 10 consecutive months, median selling prices have been at $140,000 or above. Average selling prices have stayed above $180,000 in seven of the last eight months. The new data is from the Tucson Association of Realtors Multiple Listing Service (TAR MLS). The median selling price in February was $149,000, the highest it has been since August 2010 when it was $150,750. Since May 2012 when the metric was at $140,000, median sales prices have been at or above that value. The average selling price in February was $186,482, the highest average since December 2010 when it was $186,399. With the exception of October 2012, this category has been higher than $180,000 every month since July 2012. From January to February, both measurements gained about $4,000. “The real estate market is very active now. It looks like 2013 is definitely our breakthrough year,” said Sue Cartun, TAR MLS president. Last month, 951 homes sold across the region. The best-selling units were in the $200,000 to $249,999 price range with 103
THE PULSE: Median Price Active Listings New Listings Pending Sales Homes Closed
TUCSON REAL ESTATE
3/4/2013
2/25/2013
$150,000 4,980 411 478 214
$150,000 5,041 404 459 357
Source: Long Realty Research Center
Sales and leases
Residential median sales prices have held above $140,000 for 10 straight months.
closings. Next-best were 102 sales of homes in the $120,000 to $139,999 range. Seven units sold for $1 million or more. As for listings, the most inventory was in the $200,000 to $399,999 price range where there were 1,390 units for sale. There were 179 homes priced at $1 million or more on the market. Overall listings are down 5 percent from a year ago, falling from 4,560 in February 2012 to 4,325 currently.
Price per square foot In addition to stronger median and average sales prices, the vital metric of selling price per square foot also gained momentum. Over the past year, the biggest increase was in the red-hot Marana submarket where square-foot values jumped 34 percent. Since February 2012, the sales price per square foot in Marana has surged to $119 from $89. Oro Valley recorded the next-highest increase, 20 percent, going to $142 from $118. Inside the Tucson city limits, the square-
WEEKLY MORTGAGE RATES Program 30 YEAR 15 YEAR 5/1 ARM
Current
Last Week
3/12/2013
One 12 Month 12 Month Year Ago High Low
3.63% 3.75%APR 3.50% 3.625%APR 4.95% 4.95% 3.38% 3.00% 3.25%APR 3.00% 3.25% APR 4.22% 4.22% 2.75% 2.63% 2.875%APR 2.63% 2.875% APR 2.87% 2.87% 2.70%
The above rates have a 1% origination fee and 0 discount . FNMA/FHLMC maximum conforming loan amount is $417,000 Conventional Jumbo loans are loans above $417,000 Information provided by Randy Hotchkiss, National Certified Mortgage Consultant (CMC) Hotchkiss Financial, Inc. P.O. Box 43712 Tucson, Arizona 85733 • 520-324-0000 MB #0905432. Rates are subject to change without notice based upon market conditions.
foot selling price rose 15.5 percent year-overyear, growing to $97 from $84. In Sahuarita, the increase was 8 percent, going to $80 from $74. Coldwell Banker Residential Brokerage asserts the square-foot selling price is the best indicator of housing value trends. The company’s monthly analysis normalizes the mix of luxury and low-end properties sold, according to Malcolm MacEwen, president of the firm’s Arizona division. As for closings in February, they occurred fastest inside the city limits where homes were on the market an average of 87 days. In other municipalities, the pace was 92 days on the market in Sahuarita, 103 days in Marana; and 109 days in Oro Valley.
Short sales tips Fannie Mae’s efforts to process short sales faster should help the region’s foreclosure-torn real estate market. To capitalize on the changes, the Southern Arizona Mortgage Lenders Association (SAMLA) will present a forum March 28 titled, “Mock Trial on Short Sales.” Attorney Dax Watson, a founding partner of the Phoenix-based firm Mack Drucker & Watson, will lead the session. His expertise is in commercial law with an emphasis in real estate. The forum is offered as a three-hour continuing education credit. It is free to SAMLA and Tucson Association of Realtors members; prices vary for non-members. It will be held from 1-4 p.m. at the Tucson Association of Realtors, 2445 N. Tucson Blvd. Registration and lunch starts at 12:30 p.m. To make reservations send an email to Lisa. Burns@FNF.com or call (520) 609-4999.
• Purcell Properties purchased 4.4 acres at 1551 E. Ajo Way in Interstate Business Park for $850,000 from Interstate Ajo Investors LLC, represented by Gary Emerson and Randy Emerson, GRE Partners LLC. • University City Church leased 34,163 square feet at 604 N. Sixth Ave. from First Baptist Church of Tucson/Crosslife Ministries. The transaction was handled by Paul Hooker and Rob Tomlinson, Picor Commercial Real Estate Services. • Tres Amigos World Imports Holding Company leased 22,115 square feet at 7375 W. Bell Road, Peoria, from Arrowhead Palms LLC, represented by Donna Reece, Zell Commercial Real Estate, Phoenix. The tenant was represented by Rick Borane, Volk Company Commercial Real Estate. • Strongpoint LLC leased 4,000 square feet at 616 N. Country Club Road from Siegmund Properties, represented by Tari Auletta, Newmark Grubb Knight Frank. The tenant was represented by Bruce Suppes and John Ash, CBRE. • Oro Valley Hospital leased 3,844 square feet at 10370 N. La Canada Drive, Oro Valley, from Americanada LLC, represented by Jayme Fabe, CBRE. • Rafael Furniture leased 3,025 square feet at 750 E. 46th St. from Rich Rodgers Investment Inc. The transaction was handled by Brandon Rodgers, Picor Commercial Real Estate Services. • Health Information Network of Arizona leased 3,004 square feet at 5055 E. Broadway from Pacific International Income Properties, represented by David Montijo, CBRE. The tenant was represented by Jeff Casper, CBRE. • DLS Properties leased 2,750 square feet at 2018 E. 14th St. from Michael and Jeannie Williams. The transaction was handled by Brandon Rodgers, Picor. • Lawless Creation LLC leased 2,080 square feet at 2044 E. 14th St. from Rich Rodgers Investment. The transaction was handled by Brandon Rodgers, Picor. • Austin Electric Services leased 2,000 square feet at 2112 N. Dragoon St., Suites 1 and 2, from Rich Rodgers Investment. The transaction was handled by Brandon Rodgers, Picor Commercial Real Estate Services. • Academy of Math and Science South leased 1,941 square feet at 6810 E. Broadway, Suites 201, 202 and 205, from Lackey Pat II. Rick Kleiner, Picor Commercial Real Estate Services, handled the transaction. • Curves for Women leased 1,792 square feet at 2752 N. Campbell Ave. from Gee Properties-3 LLC, represented by Greg Furrier, Picor Commercial Real Estate Services.
Email sales and leases and other real estate news items to ryohem@azbiz.com. Inside Real Estate & Construction appears weekly.
28 MARCH 15, 2013
INSIDE TUCSON BUSINESS
EDITORIAL BIZ BUZZ
Obamacare, good or bad? Yes, maybe At a breakfast the other morning, a couple of business leaders I know were talking about the ramifications of the Patient Protection and Affordable Care Act, a.k.a the Affordable Care Act, a.k.a. Obamacare. One man was working with a Tucson business said he does about $700,000 in annual sales but doesn’t offer a healthcare plan to any of its employees. In exploring the costs of a health plan with minimally acceptable DAVID HATFIELD coverage, managers of the business determined the less-costly alternative would be to pay the $2,000 per-employee penalty, which was still going to cost $100,000 per year. The man, a friend, wouldn’t name the business but obviously it’s one that must have about 80 full-time employees. The penalty doesn’t apply to the first 30 employees. Anyway, it seemed to me to be a significant employer. The law also won’t apply to businesses that have fewer than 50 employees working 30 or more hours per week. Getting below that threshold wasn’t a practical option for this particular business. Or was it? According to my friend, management at the business was giving more than passing consideration to what would happen if enough employees were limited to working 29 hours per week. There have been reports of businesses — especially retail and restaurants — looking to go that route. And the deadlines are looming. The law requires these decisions be based on employee schedules for at least three months or more before the law kicks in on Jan. 1, 2014. The other businessman in this conversation has fewer employees and probably will fall under the law’s exclusion for providing coverage. But he wasn’t shying away from it. When he started the business 41 years ago, he offered a health-coverage plan to employees. “I think you get a better employee and when you factor in the costs of employee turnover, it doesn’t cost you any more,” he said. “Lots of employees have been with us for many years, including a couple who’ve been with us since the beginning.” The Affordable Care Act is raising questions. It changes the paradigm under which some business plans were developed. And if there’s one thing we all know, change creates anxiety and fear. This week’s issue of Inside Tucson Business includes our annual look at the State of Healthcare in Southern Arizona. Typically, this section looks at issues regarding the delivery of healthcare. A couple of years ago, for instance, it was the first general media report on Tucson Medical Center’s test of becoming an accountable care organization. This year’s special includes an update on what’s happening at acute-care hospitals in the region. It includes a longer report on Carondelet Health Network’s move of its Heart and Vascular Institute; a report on the Arizona Health Care Cost Containment System (AHCCCS) and how it could be a model for Medicaid; and a profile of the reformatting of Walgreens’ stores, moving the pharmacist almost front and center. As time draws near to comply with the Affordable Care Act, that’s what is on people’s minds now when it comes to health care. Please let me know if there are other healthcare issues specific to our region you would like to see us cover.
Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237.
EDITORIAL
TUSD is making progress, but slowly Pop quiz: Name the one large school district in Arizona that actually increased the amount of money it spent per pupil in the classroom from fiscal 2011 to 2012. Time is up. The answer is Tucson Unified School District (TUSD). According to an Arizona Auditor General’s report to the Legislature this month, classroom spending increased by 7.4 percent to $4,429 per pupil in 2012 from $4,124 in 2011. Remember this is money that goes directly to such things as teacher and aide salaries and benefits, textbooks, software and supplies for students. Yes, there are still issues with other expenses in TUSD. But before dealing with those, here’s a bonus question: Name another large unified school district in Arizona that spent more money per pupil than TUSD did in 2012. None, according to the Auditor General. That puts TUSD, with 48,969 students, with other large urban districts. But we’ll allow three by stretching the definition: Phoenix Union, a high school-only district that serves 25,499 students, spent $5,162 per pupil; Flagstaff Unified, which has 9,009 students, spent $4,695 per pupil, and Chinle Unified in Apache County, which has 3,537 students, spent $6,014 per pupil. Chinle was the only district among them, besides TUSD, to increase classroom spending in 2012. The point is TUSD has been making progress in how it spends money and in student achievement. But as we noted, there are still matters that need to be fixed. The old ways of doing business in TUSD are hard to break as was evidenced at Tuesday’s meeting of the school board which once again dismissed the idea of even exploring the idea of outsourcing certain services. Take student transportation. According to the Auditor General, TUSD’s cost per rider in 2012 was $2,454. That’s far more than any other large district and 1.8 times more than the $1,372 average of other large districts. It’s not uncommon for local school districts to outsource things such as student transportation, food
services, custodial services and landscaping. Exploring the possibilities was an opportunity for TUSD’s board. Again, using the Auditor General’s report, when it comes to spending outside the classroom, TUSD is overspending its peer school districts’ per-pupil average by 63 percent for salaries, benefits and support for jobs as curriculum and special education directors, teacher trainers and librarians; 52 percent for salaries, benefits and support for people including attendance clerks, counselors and nurses; 37.7 percent for administration; 37.1 percent for plant operations; and 15.6 percent for food service. Also troubling is that each category of spending was up in 2012 over 2011. In fact as a percentage, TUSD spends 49.4 percent of each dollar it receives outside of the classroom — more than any other large district in the state, which average 43.1 percent. TUSD has been struggling to find ways to cut $17 million from its budget for next year. New school board member Cam Juárez, who in January had voted as part of 3-2 majority to explore the possibility of outsourcing before having a change of heart at subsequent meeting voting to stop the exploration, saying he wanted to show his support for the district’s long-time employees. In so many words, he admitted a low bid from a private contractor would be impossible to turn down, putting district wages and jobs on the line. If the goal is to keep TUSD running just as it has in the past, then it was a good idea not to go ahead with the charade of exploring outsourcing. But we believe all five TUSD board members have a genuine desire to improve student achievement, which is what education is all about. As the Auditor General’s report shows, TUSD is beginning to make progress, but it’s also continuing to squander too much money outside the classroom. We’ve said several times that improving K-12 education is the single most crucial concern for economic development. And when it comes to K-12 education in Tucson, the elephant in the room is TUSD.
InsideTucsonBusiness.com
MARCH 15, 2013
29
OPINION BUSINESS INK
Rra wee. Rrrra weeee. Rrrraa weeeeeeeeeeeeeeeeeeeeeeeee They’re baaack. Outside the office window. In the parking lot. The landscape maintenance crew. With their hand-held leaf blowers. No, check that. They’re not leaf blowers, they’re dirt and trash blasters. This crew doesn’t mess around with those wimpy, cheapo electric blowers that puff at debris with a lame 35 miles-perhour air flow. They are equipped with powerful, heavy-duty backpack blowers that look like something the U.S. Marines would use. Rrra weeee. They’re on the move, blowing away the dead plant parts, lizards, pebbles and rubble with air blasts up to 100 mph. At quitting time, there can be enough dust covering cars in the lot to scribble “wash me” with your fingers on co-workers’ windshields. That prank however, is only funny if the blower’s shock waves didn’t trip their car alarm. Rrraa weeeeeeeee. Despite the noise, flying grit and whirlwind of activity, is the job being done right? At any office complex, plaza, apartment building or commercial property, manicured shrubs and parking lot maintenance is important. A quality job can boost the
image and “green” reputation of the building’s owners and tenants. Cosmetically neat grounds create the impression the owners take care of their investment and tenants. It’s all ROGER YOHEM about drive-by curb appeal. And in this hyper-competitive market, great-looking properties can be a subliminal leverage for getting higher rents. Yet I’m not convinced dirt blasters are the right tool for the job. Exactly what is a worker with a leaf blower supposed to do? Obviously, the main task is to blow leaves around. Yet the job also requires crews to blast every piece of dog poop, top soil, fertilizer, sticks, beer cans, bags, cigarette butts, plastic straws, palm fronds and dead birds that are in the way. Leaf blowers excel at that, blasting all the filth from the Pizza Hut parking lot into the Chevon gas station. Then tomorrow, Chevron’s groundskeepers report for duty and blast it all back. As a result, the debris simply migrates circuitously between parcels. And no one notices that Chloe’s Starbucks cup that was
lying on the sidewalk is back again after a two-day absence. What’s most maddening are landscape laborers who just blow it all into the city streets, gutters and right-of-way, then pack up and drive off. Aren’t they paid to PICK IT UP? Perhaps not, low-bid contractors have to cut corners somewhere. Or maybe they think that’s what taxes and government workers are for: let them use their Zamboni-sized street sweepers to pick up the mess, akin to a lazy teenager who leaves dirty laundry askew on the bathroom floor. In just one generation, these blowers symbolize how far workplace standards have fallen. Traditionally, untidy grounds and parking lots were cleaned with a simple rake, broom, shovel and physical effort. The entire mess was piled up, picked up, put into a trash can and hauled away, i.e., a job well done. But the weak economy was a gamechanger. To survive and stay profitable, landscape companies have had to adjust to the times. Maintenance crews have been cut. Wages are lower. There’s more turnover and less pride in their work. The focus is on productivity, that’s business-speak for doing more with less. Plus, struggling commercial building
owners with high vacancies and cash-flow problems have trimmed routine maintenance costs such as landscaping. Most random independent workers are hired by the hour, so they don’t care if they rake up the clutter or blow it away. They’re mostly clock-watchers. Maintenance companies are under contract and paid a flat fee for the job. Gone are the days when they could afford extra workers to use rakes and shovels to pick it all up and take it away. A leaf blower is more efficient, cutting hours off the time needed to clean a site. With hurry-up labor, time is money. The faster they finish one job, the faster they can move on to the next. Having once owned a business, I get it. When you sign the front of the checks, the money must be there when your employees and suppliers sign the back of the checks. But pride in workmanship still has an important role; it should not yield to profitability. We live in an era of green environmentalism. Maintenance crews should be responsible and do the job right: man up and pick up.
Contact Roger Yohem at ryohem@ azbiz.com or (520) 295-4254. His Business Ink appears biweekly and weighs in on local political, social and business issues.
SPEAKING OUT
A tax break on equipment would help Arizona businesses A 2011 poll conducted by the non-profit, non-partisan National Federation of Independent Business/Arizona (NFIB) found an overwhelming 93 percent of Arizona business owners favor “spurring job creation by lowering the property tax burden on new equipment and machinery.” In a news release NFIB said “lowering the cost for small businesses to create jobs through meaningful property tax relief and further lifting the regulatory burden would help restore Arizona’s economy and put our citizens back to work.” That’s why so many people were caught off guard when voters in November failed to pass Proposition 116 that sought to increase the annual property tax exemption businesses can take when they invest in new equipment and machinery. The Legislature had voted unanmiously to put the proposition on the ballot. In 2003, a Citizens Finance Review Commission developed recommendations for a broad-based low tax system. Their only recommendation receiving significant attention was the tax exemption on business equipment. But, since the exemption is in the state constitution, any substantive change needs voter approval.
Prior to 2012, businesses could exempt the first $50,000 in property taxes on equipment. Due to inflation, that now has risen to $65,000. Perhaps voters CAROL WEST last year were concerned their own residential property taxes would go up if Proposition 116 were passed. But that would not have been the case. Legislative budget researchers estimated that while adjustments would “depend upon each individual taxing- jurisdiction, the maximum tax shift would be about $3, or 0.3 percent, a negligible amount.” There might also have been concerns the tax exemption would have taken funds away from public education. Legislative researchers pointed out the state pays for the costs of K-12 education not generated with local property taxes. Under the Basic State Aid formula, the state share of K-12 funding would increase to cover the amount that might be lessened by the exemption.
“Personal property taxes are paid by businesses and not homeowners,” noted Farrell Quinlan, Arizona director of NFIB. A restauranteur who buys a $50,000 refrigerator pays sales taxes on the transaction plus annual property taxes on the restaurant’s equipment. A homeowner would pay the sales tax but not property taxes on a refrigerator for home use. County assessors include business equipment in the total assessed valuations of a business plus the valuation of their land and structures. The equipment’s value is adjusted annually through depreciation. If the business owner bought used equipment rather than new, the valuation for tax purposes is less, but the acquisition is also subject to the highest tax exemption, just as if it were new from a factory. Proposition 116 provided a nexus to acquire this “new” equipment in order to expand and employ more people. This is important because “Small businesses have historically led our state and nation out of recessions through creating new jobs and investing in the future….job creation is the top issue, and lowering small business costs is a great place to start,” according to NFIB’s Quinlan.
Small business owners who’ve been elected as state lawmakers are interested in resurrecting another measure like Proposition 116 and putting it on the Nov. 4, 2014, Arizona ballot. “Confusion coupled with voters’ healthy skepticism about amending the constitution doomed Proposition 116 in 2012,” said Quinlan. “Why should we think voters will be more likely to pass it in 2014?” Quinlan believes the business community must do a better job of educating voters about the benefits of relieving the tax burden on equipment and machinery. That means raising the money to finance a vigorous campaign that was absent in 2012. NFIB and other small business advocates are working now to develop such a campaign plan to ensure the next time the measure is on the ballot, voters will have all the information they need to pass the proposition. Quinlan is recruiting help for the effort and has more information. Contact him at Farrell.Quinlan@NFIB.org .
Contact Carol West at cwwtucson@ comcast.net. West served on the Tucson City Council from 1999-2007 and was a council aide from 1987-1995.
30 MARCH 15, 2013
INSIDE TUCSON BUSINESS
OPINION COLLABORATION CORNER
With incoporation, region is stronger together than apart To annex or not? How has a simple question become such a major focal point in our political sphere? Like his predecessors, Tucson Mayor Jonathan Rothschild recently announced annexation as a major agenda item. The premise is simple: some state-shared revenue formulas are based on the percentage of residents in an incorporated municipality. Specifically, Rothschild stated we could gain up to $70 million if closer to 100 percent of our region’s residents lived in an incorporated municipality, as opposed to the current 65 percent. However…. County Administrator Chuck Huckelberry countered the revenue loss is closer to $32 million. The discrepancy between the two estimates? In Arizona revenues from the state transaction privilege tax (sales tax), Highway User Revenue Fund, vehicle license tax and Local Transportation Assistance Fund are all shared with municipalities and counties. The only state-shared revenue exclusive to cities and towns is the income tax. Therefore, if Pima County was 100 percent incorporated, we essentially end up shifting dollars. The county receives less and incorporated areas more. The only new revenue to the region is a larger portion of the income tax, making the net gain not nearly as profound. For example, p , while the cityy of Tucson may
have more residents and state-shared revenues, it has higher costs of services now extended to the new residents. In the end, the city may not have any additional funds AMBER SMITH then it has now unless it can provide services at a lower per capita cost than it receives in state-shared revenues. Now let’s put the dollars aside and address the most important issue. Why have so many annexation attempts in this region failed? In a long list of reasons, I argue our biggest weakness is a lack of community and regionalism. Per Arizona State Statute regarding incorporations, “community” is a locality where residents have common interests in public services (police, fire, water) that “bind” them together. While unincorporated Pima County is a “community,” there is no sense of community and we continue to have turf wars. There is little incentive to annex as long as the county government continues to do a good job providing urban services. With the aide of multiple supporting fire departments, an effective sheriff ’s depart-
ment and a Development Services Department that proactively works to streamline review processes, it is understandable why residents and businesses in unincorporated Pima County do not want to be annexed or incorporate with the possibility of higher fees and property taxes. Pima County’s strict environmental regulations help create a competitive environment for the municipalities and remain one of the few disadvantages to remain unincorporated. Unable to entice residents to become part of Tucson, Mayor and Council have resorted to withholding Tucson Water service as an annexation carrot. Other negative policies include the anti-big box ordinance on revenue-producing retailers. While it may be commendable to try to preserve small businesses and the grocery workers union, the city starts the conversation with an immediate “no” that pushes these retailers to jurisdictions where the initial response is “yes.” Tucson is reviewing its Infill Incentive District that has been widely successful in encouraging development of vacant areas inside the city limits. In spite of its success and the enormous amount of collaboration that went into creating the district, the council is contemplating restrictions. Despite the many signs of positive changes within the city of Tucson, as long as there is an atmosphere of “us” versus
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So far, has the “sequester” affected your personal life or business? Yes 0% No 100% Next weeks poll: Does the landscape crew that maintains your business’ property actually pick up the debris or blow it all away?
“them,” progress will be stunted. There is still too much political infighting in the Tucson region. Annexation cannot work as long as there are battle lines of land use versus environmentalists, Tucson versus Pima County, Pima County versus Marana, growth versus no-growth, neighborhoods versus developers, and the list goes on. From the federal government to state government to county government and municipalities, each includes a level of bureaucracy and representation. This structure was created for a reason. As it exists now, residents of unincorporated Pima County must rely on their county supervisor to represent them on all issues, including those usually done by municipalities, when the Board of Supervisors should be focused on county-wide, regional issues. While debates remain on which government entity is better, the entire Tucson region must work to try to right the ship. We are stronger together than apart. If we want to actually compete with other areas for dollars, events and jobs, we must have a united front willing to support each other instead of continuously knocking each other down. Once we succeed at that, we can be successful in our annexation and incorporation efforts. Contact Amber Smith, executive director of the Metropolitan Pima Alliance, at Amber@mpaaz.org or (520) 878-8811.
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