MARKETING ACE D&H Air’s creative partnership with Ace Hardware is hot concept PAGE 4
Your Weekly Business Journal for the Tucson Metro Area
County sets incentives for utility scale solar plants Page 3
Lunching with legislators ASBA’s update was a steady diet of proposed laws Page 6
Dicey date
Otis Blank photo
Coldwell Banker’s cut at housing stats show uneven improvement Page 19
philanthropy
Sunrise for solar
a gift for
WWW.INSIDETUCSONBUSINESS.COM • MARCH 30, 2012 • VOL. 21, NO. 44 • $1
Community Foundation for Southern Arizona, led by Clint Mabie, delivers its image as a onestop shop for philanthropy.
New study tests Tucson mobile phone carriers Inside Tucson Business A new independent study done this month of mobile phone performance in the Tucson region from the consumer’s perspective shows that providers are improving reliability and speed but Verizon Wireless is, in many cases, the best performing service in the market. RootMetrics, a company headquartered in Bellevue, Wash., said it conducted almost 10,000 tests in the market then sorted the data to determine which carrier provided the fastest and most reliable data network, the fewest dropped and blocked calls and the fastest text service. The company also gave an overall RootScore Award winner to the carrier that
achieved the best combined score. Verizon was at the top with an overall combined score of 92.1, followed by AT&T at 73.5; Sprint at 49.9, Cricket at 46.0 and T-Mobile at 43.6. RootMetrics says its overall scores are accurate to varying degrees within 2.9 to 5.9 points, depending on the number tests that were conducted. In specific areas: • Data: Verizon scored an 88.9, far outdistancing second-place AT&T’s score of 47.0. RootMetrics said Verizon’s network download speed was 1.9 times faster and uploads speeds were more than 3 times as fast as its closest competitor. For reliability, AT&T’s extremely low failure rate of just 0.9 percent made it the best. At the other end of the spectrum, T-Mobile’s
failure rate of 27.7 percent was one of the highest RootMetrics said it found in any of its tests in any market. • Call performance: There was no clear-cut winner with all five carriers delivering statistically equal performances on tests of either dropped calls or outgoing calls that couldn’t be placed. • Text: Fewer than four points separated the top three but Verizon at 98.5 edged out AT&T at 96.8 and T-Mobile at 94.8. In its tests, RootMetrics said at 4.6 seconds, Verizon had the fastest median receive time for texts, followed by 5.6 seconds for T-Mobile, 6.0 seconds for AT&T, 27.7 seconds for Cricket and 68.3 seconds for Sprint. As part of its ongoing research,
RootMetrics invites mobile phone customers to download a free app from its website — www.rootmetrics. com — that will allow it to continue developing data on mobile phone coverage. Tucson is one of 49 markets the company has conducted its research. RootMetrics previously conducted research in Tucson in November. In the intervening four months, tests show both Verizon and AT&T have increased their speeds, T-Mobile’s reliability and speed have declined and this time, Cricket was added. Julia McGavran, a spokeswoman for RootMetrics, says she anticipates the company will return for another month of tests before the end of 2012.
2 MARCH 30, 2012
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InsideTucsonBusiness.com
MARCH 30, 2012
3
NEWS
County creates solar power incentive district
Solar energy lags in U.S., interest among Americans falls By Jessica Testa Cronkite Newes Service
By Patrick McNamara Inside Tucson Business Continuing on efforts to promote alternative energy production, Pima County has created a solar-power incentives district. Called the Renewable Energy Incentive District (REID), the Pima County Board of Supervisors approved the plan March 20, identifying specific regions of the county suitable for utility scale solar arrays and of-
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fers inducements to encourage their use. “It’s important that these were areas that we’ve made as shovel-ready as possible,” said Arlan Colton, planning director with Pima County Development Services. Colton said sites had to meet certain criteria for inclusion in the REID, which include being at least five acres in size, not lying within existing conservation areas, sit outside of operating mine areas, not
SEE COUNTY | PAGE 6
PHOENIX — The U.S. market for solar energy has grown substantially but still has a long way to go, according to Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission. While Arizona is a natural place for solar development, the state ranks third behind both California and New Jersey. Further, on a global scale, Germany produces more solar power in a month than the United States does in a year, Wellinghoff said. “We should be ashamed of ourselves if we don’t develop it the way that we should,” Wellinghoff said at the Arizona Solar Summit, which attracted industry leaders and policy makers to the Arizona Biltmore this week. He said the federal government and emerging technologies will play key roles in helping solar compete against coal, oil and gas for customers. Once it becomes a more equal player in the market, solar power can be integrated into the U.S. electric grid — an essential step for utilities to start taking solar seriously, Wellinghoff said. He pointed to efforts to bring the price of solar energy down, such as
SEE INTEREST | PAGE 6
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Davis-Monthan wins award as best in the Air Force Davis-Monthan Air Force Base is the winner of the 2012 Commander in Chief’s Installation Excellence Award. The award, announced Monday by Secretary of Defense Leon Panetta, goes to the best installation of each branch of the service and brings with it a $1 million prize to be used for quality of life improvements. D-M beat out Barksdale Air Force Base near Bossier City, La., in the final competition that included a visit by judges Jan. 1114. As for what will happen to the $1 million, Col. John Cherrey, commander of the 355th Fighter Wing which operates D-M, will solicit ideas using a three-step process: • Each of the base’s 71 private organizations registered with the 355th Force Support Squadron, will be given a chance to nominate one quality of life enhancement. • Each submission will be rated using an objective “bang-for-the-buck” scale that will determine how many people will be able to take advantage of the project for the amount of money spent. (For example, if the same 10 people would use it each day for a year, the “bang” would be a 10 rating but if 492 people were to use it over the course of a year, the bang would be a 492, according to Lt. Col. Kjall Gopaul, 355th Mission Support Group deputy commander.) • The entire base will vote online. The results of the process will be used by a team of senior base leaders to formulate recommendations from which Cherrey will make the final determination by May 30. “I’m extremely proud of the 355th Fighter Wing and the entire Desert Lightning Team for earning this great honor,” Cherrey said in a statement. “This award is a resounding confirmation of our ongoing commitment to the care and development of airmen and their families as a top priority at D-M.” The CINC IE award, as it is known, was created by President Ronald Reagan in 1984 to help promote innovative and creative ways of enhancing base-level services, facilities and quality-of-life.
EDITION INDEX Public Notices 6 Arts and Culture 7 Briefs 8 Inside Media 11 People in Action 12 Profile 13 Lists 14-17 Finance 18
Real Estate & Construction Biz Buzz Editorial Classifieds
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4 MARCH 30, 2012
A new security alarm fee inside the Tucson city limits is supposed to take effect Sunday (April 1) but if you’re a business owner or resident who hasn’t paid up, not to worry — city officials are still putting together the details. Under the new fees approved by the City Council, alarm owners will be charged a $20 annual fee to register their security alarms. The city also is assessing a false alarm fee. There is no charge for the first false alarm, provided the alarm is properly registered, but after that there is a $100 per incident charge up to seven false alarms. Under the new plan, Tucson Police can refuse to respond to non-registered alarms or alarms that have exceeded the seven false alarms limit. It’s estimated there are 50,000 security alarms in the city and the fees could bring in $1 million per year. Tucson Police say they receive more than 18,000 security alarm calls per year and respond with an officer to more than half of them. The council voted 5-2 to establish the fees. Councilmen Paul Cunningham and Steve Kozachik voted against them.
Tucson Realty’s Eagle Peak noticed for foreclosure A planned custom home development on the far northeast side near Reddington Pass, owned by affiliates of Tucson Realty & Trust Company, has been noticed for a foreclosure auction in June as the result of defaulting on a $3.1 million note. Eagle Peak LLC owns the 141-acre site located north of East Reddington Road along North Camino Cascabel. The Eagle Peak ownership group is comprised of Tucson Realty & Trust, Amos Group LLC, and Eagle Peak of Wisconsin Inc., according to public records. George “Hank” Amos III, as president/ CEO of Tucson Realty & Trust and a principal in the Amos Group, is well-known in the local real estate and business community. The development, also known as the Estates at El Sereno, features 42 platted and engineered lots. Tucson Realty had tried to sell the property that once was listed for sale at $4.6 million. The community was marketed as a “rare” custom home neighborhood in the Tanque Verde School District with “spectacular” mountain and city views. The beneficiary is Hedberg Revocable Trust, Lake Geneva, Wis. The trustee’s sale is being handled by the law firm of Lewis and Roca and is scheduled for 1:30 p.m., June 20 in the firm’s office, 1 S. Church Ave, Suite 700.
Non-traditional marketing heats up for D&H Air, Ace Hardware By Roger Yohem Inside Tucson Business About three years ago, Brett Wright started tinkering around with the idea of doing something unconventional to grow his air conditioning business. He dreamed of having an innovative business-to-business program to compliment his traditional “old school” marketing. As the idea bounced around, employees and friends tossed in their suggestions. Wright’s company, D&H Air Conditioning & Heating, 3629 N. Oracle Road, has a 53-year legacy as a local company, so there was pressure to partner up locally to benefit the local economy. Wright also was told to make it fun. As he pondered the possibilities, he began to brainstorm about connecting with Ace Hardware. Although Ace is a national company, each store is owned locally. There are 24 stores in the Tucson region, owned by six people who work together as an ownership group to promote the Ace brand. In October 2009, Wright put together a formal presentation and made his pitch to the Ace owners. “Basically, the pitch was this: We’re a long-established company in Tucson that provides great customer service and high-quality products. You too, Ace, is well established with quality customer service and products. To compete with the big box stores, let’s set up a formal partnership to offer local heating and cooling to Ace customers so they will not have to go anywhere else,” Wright recalled. Under the offer, D&H would provide in-store displays for each Ace outlet. Lennox products would be featured to capitalize on their high, brand name recognition. Since so many variables go into selecting the right product, Ace employees would not have to “make the sale.” Instead, interested customers would simply fill out a form and have Ace fax it to D&H or customers could call themselves. D&H would then go to the customer’s home for a free evaluation. Ace customers would receive special discounts. D&H would participate in Ace Hardware’s marketing and ad mailers. “Customers get a sense of double confidence, to get air conditioning products backed up by D&H and also by Ace. In effect, guaranteed satisfaction at two different levels,” Wright said. That December, the ownership group accepted the proposal. As news of the deal worked its way up the corporate ladder at Lennox, the reac-
Otis Blank photo
Alarm fees start Sunday but city isn’t ready
INSIDE TUCSON BUSINESS
D&H A/C and Ace Hardware have a successful, non-traditional marketing partnership. Shown are Ace salesman Dan Nichols (left) and D&H owner Brett Wright.
tion was mixed. The partnership was widely celebrated but the displays were an unexpected challenge. The unique exhibits had to be designed and custom-built specifically for Ace Hardware. Each display had to be lightweight and moveable, fit on an end cap at each store, and be attractive. Wright wanted a stripped-down display using only the outer hull of a condensing unit and furnace, with no heavy mechanical parts inside. Once on the sales floor, the shells would look like actual equipment. “Lennox didn’t know how to do it, no one had ever done this before,” said Wright. Yet the merchandising idea was so strong, Lennox executives had their factory engineers figure out a way to get it done. The pieces were shipped to D&H where employees assembled the final displays. In March 2010, D&H began placing the exhibits that often included a life-sized, cardboard cut-out of celebrity spokesman Dave Lennox.
Wright said the non-traditional marketing program has been successful. Ace Hardware customers have a dedicated fax and phone hotline to D&H that “is just like the Batphone. It rings, we scramble,” he joked. On the serious side, the joint venture has generated new business. Although no financial or trade secrets were disclosed, the Ace arrangement has enabled Wright to add eight part- and full-time jobs. Overall, Wright has 35 employees and the partnership “has given them added job security and a great sense of community.” D&H was founded in 1959 by Arthur DuHamel, Wright’s grandfather. Wright grew up in the business, “digging ditches and working in the shop before studying business at the U of A,” he said. Wright bought the business in 1987 and believes D&H may be Tucson’s oldest family owned air conditioning business.
Contact reporter Roger Yohem at ryohem@azbiz.com or (520) 295-4254.
InsideTucsonBusiness.com
MARCH 30, 2012
5
NEWS
ASBA legislative update lunch turns into an unscheduled and heated debate
This Week’s
Good News Doubly good for D-M Double good news for and about DavisMonthan Air Force Base. First, it won the award as the best base in the entire U.S. Air Force. Secondly, a new economic impact analysis of the base shows its being here put $1.6 billion into the Tucson region’s economy for the fiscal year ending Sept. 30, 2011. That figure includes the amount contributed by military retirees but even if those were taken out, the impact would still be $1.1 billion. The analysis also showed the base employed 3,194 civilians and created about 4,538 jobs in the Tucson region.
By Hank Stephenson Inside Tucson Business
The Tucson
INSIDER Insights and trends on developing and ongoing Tucson regional business news
By any other name Rep. Steve Farley, D-Tucson, above, and Senate President Steve Pierce, R-Prescott, below, were among the speakers at a recent Arizona Small Business Association luncheon.
Gabe Salcido, ASBA photo
What was billed as a mid-session legislative update took a turn toward being an on-stage impromptu political debate. But that was fine by Rick Murrya, the new CEO of the Arizona Small Business Association (ASBA), which put on the event at the Westin La Paloma Resort and Spa, the first of what he hopes will be an annual event. The idea is to give members of ASBA a chance to hear lawmakers report on what’s happening in the fast-paced session. Murray said the fact that it turned into a debate with Senate President Steve Pierce, RPrescott; Sen. Al Melvin, R-Tucson; and Rep. Steve Farley, D-Tucson, all on stage at the same time answering questions gave the audience insight to what goes on at the state Capitol. “It was a great discourse in regards to the different opinions on how small business should be treated in Arizona,” Murray said. “Our members want to hear what those legislators in Southern Arizona want for the businesses in Southern Arizona, and I think we got to hear that on several different levels.” The event began with time to mingle and then a formal lunch. After the plates of chicken and asparagus on a bed of mashed sweet potato were cleared from the table, Farley, the House Assistant Democratic Leader, took the stage. Farley, an artist who owns his own business, spent his time at the mic blasting the GOP majority for not hearing businessfriendly bills that were introduced by Democrats including one he had introduced, in favor of measures introduced by Republicans. He also took shots at the lack of cooperation between members of the two political parties in the Legislature. “The conservative Arizona Republic columnist Bob Robb recently praised (the House Democrats’) budget as the best one out there and urged Republican leadership to work with us to pass a bipartisan budget,” Farley said. “So how about it, Senator Pierce?” Pierce chuckeled at his seat. Later, during his turn at the mic, he responded to some of Farley’s accusations. “There are 90 members in the Legislature, you have to realize, and any one of them can introduce any bill that they want — even if it’s wanting to change the color of the sky,” Pierce said. “And we don’t have any bill killed.” Pierce went on to talk about the importance local control in government and the troubles faced by rural Arizonans. He then
opened a question and answer session with the audience – inviting Melvin on stage to help field the questions. Farley, seizing his opportunity, hopped up on stage with the two Republicans provoking a debate with the senators on subjects including the benefits of prison labor and funding for the University of Arizona. After about 10 minutes, Pierce excused himself from the stage, saying he had an appointment to keep in Phoenix. On the way out, within earshot of a reporter, Pierce said to his traveling entourage, “That Farley is a piece of s--- for getting up on the stage like that.” Afterward, Farley said he was surprised at Pierce’s reaction – the two had always worked well together in the past, and Far-
ley didn’t think he said anything offensive. Though he admitted he was goading Pierce. “Maybe he’s angry that I listed some of the worst bills that he says are just coming from factions, but in fact are some of the central tenets of some of his most powerful members,” Farley said. Murray hadn’t heard Pierce’s comment but said he thought the senate leader had a good time. He said he hoped there were no hard feelings between the lawmakers, and that the debate made the event a success for ASBA members. “It was fun, it made for a nice, open exchange and really gave us an idea as kind of a microcosm of what happens at the legislature,” he said.
Nobody should sneeze at the creation of 400 new jobs but just in case you were wondering, in most any other industry the new OptumRx pharmacy service center announced March 22 would be categorized as a call center. The pharmacy industry doesn’t use the term “call center.” The reason is the people answering phones are called “technicians” and bona fide pharmacists must be on duty in case a customer has a question. Beyond that, the Food and Drug Administration requires pharmacy service centers be located in the U.S. It comes down to the bottom line. The Tucson region is one of the most efficient places to locate a pharmacy service center. There is a large, service-oriented, multilingual workforce and given the parameters costs here are some of the lowest in the nation. OptumRx officials say the average minimum salary of the new jobs is $37,000 a year. That’s good pay in Tucson.
No ‘pink slime’ In the debate over the ground beef additive called “pink slime” — a product produced from trimmed remnants of other beef products often treated with ammonia — several supermarket chains, including Safeway and Kroger, announced they would no longer carry meat containing it. But what’s a chain like Bashas’ to do? “We didn’t make any formal announcements about removing additives from our ground beef because they were never there in the first place,” said Kristy Jozwiak, director of communications and public affairs for the Chandler-based chain, in an email. She added, she hoped news media outlets wouldn’t imply “our absence from your news reports” meant their stores would continue to carry the product.
6 MARCH 30, 2012
INSIDE TUCSON BUSINESS
COUNTY | CONTINUED FROM PAGE 3
PUBLIC NOTICES Public notices of business bankruptcies, foreclosures and liens filed in Tucson or Pima County and selected filings in Phoenix. Addresses are Tucson unless otherwise noted.
BANKRUPTCIES Chapter 7 - Liquidation Ideal Steel Detailing LLC, 6194 E, Mining Camp St., Apache Junction. Principal: Francisco R. Rodriguez. Assets: $1,855.99. Liabilities: $199,539.33. Largest creditor(s): Internal Revenue Service, $94,966.44, and Wells Fargo, Los Angeles, $92,079.52. Case No. 12-05874 filed March 22. Law firm: Davis Miles McGuire Gardner, Tempe
Chapter 11 - Business reorganization DI Safford LLC, 450 Entertainment Ave., Safford. Principal: Mary Louise Krieg, manager/member. Estimated assets: More than $1 million to $10 million. Estimated liabilities: More than $1 million to $10 million. Largest creditor(s): Not filed. Case No. 12-05951 filed March 23. Law firm: Mesch Clark & Rothschild DGMLK LLC, 415 Highway 70, Safford. Principal: Mary Louise Krieg, manager/member. To be jointly administered with DI Safford LLC (Case No. 12-05951). Estimated assets: More than $1 million to $10 million. Estimated liabilities: More than $1 million to $10 million. Largest creditor(s): Not filed. Case No. 12-05952 filed March 23. Law firm: Mesch Clark & Rothschild
LIENS Federal tax liens Susan C. Sehn MD, 11400 W. Rudasill Road, Picture Rocks. Amount owed: $44,661.56. Cowboy’s Sweetheart LLC and Ellen Stateler, 4729 E. Sunrise Drive, Suite 267. Amount owed: $6,421.02. St. Jude Plumbing Inc., 2226 N. Camino Emiliano. Amount owed: $1,147.49. Farwest Development & Construction of the Southwest LLC FDC, 2231 W. Ina Road. Amount owed: $19,494.07. Sonoita Fuel Stop and Bradley Haber, 3270 Highway 82, Sonoita. Amount owed: $1,560.00. Ferriset Construction & Development LLC and James C. Summerset, 8987 E. Tanque Verde Road 390-375. Amount owed: $13,687.98. Strategic Marketing & Communications Services Inc., 10700 N. La Reserve Drive 1206, Oro Valley. Amount owed: $22,807.00. Ground Effects Landscaping Inc., 107 W. Sahuaro St. Amount owed: $6,654.85. Independent Nursing Service and Rebecca Rendon, 2641 W. Calle Paraiso. Amount owed: $14,901.73.
State liens (Liens of $1,000 or more filed by the Arizona Department of Revenue or Arizona Department of Economic Security.) Jacks LLC, 8195 N. Oracle Road, Suite 105, Oro Valley. Amount owed: $34,181.02. Meyer’s Creative Concepts Paint & Body LLC, 2550 E. Grant Road. Amount owed: $16,381.26.
Release of federal liens Select Development & Construction Inc., 5401 S. Arcadia Ave. Caring Hands Corner Luxury Adult Care Home Inc., 4644 E. San Carlos Place S El Dorado Restaurant Inc., 1949 S. Fourth Ave., South Tucson Academy Del Sol and Academy Del Sol Inc., 8379 W. Avecenna St. Tucson Frame Service Inc., 3565 N. Romero Road GTL Properties LLC and Charles W. Testino Jr., 6650 N. Oracle Road, Suite 100 Pro-Tech Fire Systems LLC and David A. Francis, 9558 E. Calle Cascada Neet Cleaning Services and Neet LLC, 21 W. James L. Sullivan St., Vail Day Star Service Co. Inc., PO Box 12441, 85732 Ron’s Maintenance and Darlene Jones, 2059 W. Noreen St. Motto Productions Inc., 135 W. Council St. Linex of Tucson LLC, 275 E. Fort Lowell Road, Suite 1 Taqueria Porfis, 3553 S. 12th Ave. Jade Concrete Inc., 512 E. 28th St., South Tucson Skin Care By Design LLC and Michael W. Bailey, 8921 N. Shadow Rock Drive, Marana
area does not require them to be used as solar farms. Instead, it simply adds them to a list of locations suitable for such uses, Colton said. Property owners and neighbors were notified of the intended designation while county officials worked to create the ordinance. “We’re certainly supportive,” said Joe Salkowski, Tucson Electric Power spokesman. Salkowski said the power company worked with the county on writing some of the rules for the ordinance. Energy generated by the solar farms would be distributed back into the TEP power grid, aiding in the company’s state government mandate to have at least 15 percent of its power generation originate for renewable sources by 2025. Salkowski said the company would pay the solar-farm operators for the energy through “power purchase agreements” established on an individual basis. TEP usually puts out a call for such agreements with requests for proposals through the Arizona Corporation Commission, Salkowski said. “It’s generally more expensive than fossil fuel based energy,” he added. While the individual power purchase agreement details are not public, Salkowski said the average cost to generate solar-
within park lands and are at least 300 feet from residential structures, among other standards. “We wanted to make sure we were incentivizing sites that we weren’t going to have issues with,” Colton said. The incentives that the county plans to offer, once the ordinance takes effect in late April, mostly include streamlining the permitting process for applicants. The county would also waive the $15,000 fee charged for accelerated plan processing and not charging roadway development impact fees. Incentives would be open only to those interested in developing photovoltaic solar farms or other technologies that can demonstrate that they don’t require excessive water usage. All told, the county has identified more than 100 parcels that it’s determined would be suitable for solar power generation systems. Each is at least five acres but many are much larger. The identified properties lie throughout the county, with several large parcels north of Duval Mine Road west of Interstate 19 near Green Valley. Other sites are located north of Valencia Road and Interstate 10, south of the Arizona State Prison on Wilmot Road and on the northwest side off of Twin Peaks Road east of Sandario Road. Inclusion of the properties in the REID
based power per kilowatt hour was about 10 cents. Traditional coal or natural gas power costs about four cents per kilowatt hour. TEP makes up the cost difference in costs for solar-power generation through surcharges to customers, Salkowski said. The power company serves about 305,000 residential customers. By 2014, TEP plans to produce or purchase more than 200 megawatts of solar-generated power, the equivalent annual usage for 32,000 homes. It already buys solar power from several solar generating facilities with plans to purchase from others. A recently approved 25-megawatt plant on Tucson’s far southwest side that can provide enough power to meet the annual needs of about 4,000 homes will rank among TEP’s suppliers along with similar facility in Avra Valley on the far west side. “There’s been some interest,” Colton said of the newly passed ordinance. And not just in the solar-power world, but among other area municipalities. Colton said the incentive district was likely the first of its kind in the state.
Contact reporter Patrick McNamara at pmcnamara@azbiz.com or (520) 295-4259.
INTEREST | CONTINUED FROM PAGE 3 silicon cell research at the Massachusetts Institute of Technology. “We have a tremendous opportunity here in the distributed area to move ahead,” he said. Wellinghoff also praised innovation in such projects as Arizona Public Service’s federally funded solar neighborhood in Flagstaff, as well as efforts from the U.S. Army to reach net zero power use at base housing. Meanwhile, he said, the U.S. market for solar energy grew 67 percent from 2009 to 2010. “The growth is unparalleled in any other energy resource that I’ve had an experience with over the last 35 years that I’ve been involved in the energy field,” Wellinghoff said. Consumers have generally supported solar development, but Wellinghoff said there are some concerning signs of waning public interest. A recent Pew Research Center study asked 1,503 people what was more important to them: developing renewable energy or expanding traditional energy sources, like oil and gas. In March 2011, 63 percent responded in favor of renew-
ables. That number dropped to 52 percent in March 2012. “To do the kinds of things I’m talking about, we’re going to need public support,” Wellinghoff said. In a panel after Wellinghoff ’s address, Arno Harris, CEO of Recurrent Energy, said it’s important for solar development companies to look, walk and talk like conventional energy companies in order to raise public and industry awareness. “The more we make solar energy look mainstream, the more mainstream it becomes,” he said.
HOW AMERICANS SEE SOLAR Support for alternative energy varies according to Pew Research Center study done this month. • 49 percent of men and 54 percent of women support alternative energy over oil, coal and gas. That’s down 63 percent of men and 62 perecent of women who said the same in 2011. • 15 percent fewer people between the ages 50 and 64 support alternative energy this year versus in 2011, the biggest decline of any age group. The smallest decline was in people between the ages of 18 and 29, which was down 7 percent. • 53 percent of people living in the West support alternative energy, which is down from 73 percent a year ago.
Correction A proposal in the state Senate (SCR 1031) that would require voter reauthorization of taxing measures was approved in the Senate by a vote of 21-9. Due to an editing error the vote total was wrong in a story taht appeared in the March 23 issue.
InsideTucsonBusiness.com
MARCH 30, 2012
ARTS & ENTERTAINMENT
Your company specializes… Shouldn’t your staffing provider?
ARTS & CULTURE
Tucson Museum of Art’s Crush fundraiser is this weekend The Tucson Museum of Art’s annual Crush Wine and Food and Art Festival takes place this weekend. At 6 p.m. tonight, more than 150 wines will be available for sampling along with food from some of Tucson best restaurants at the Crush party in the courtyard of the museum, 140 N. Main Ave. There will also be a silent auction. The party moves to Loews Ventana Canyon, 7000 N. Resort Drive, on Saturday night for a special dinner along with a live auction of artwork and one-of-a-kind experiences. Tickets are $90 for tonight’s event and $225 each for the dinner. Buy them online at www. TucsonMuseumOfArt.org .
with their photography. The work, largely created in the 1960s and 1970s in Southern California is iconic and groundbreaking. The show will be up through June HERB STRATFORD 17 and is free. At the Tucson Jewish Community Center, 3800 E. River road, an exhibit of mixed media works by Carol Ann and Shirley Wagner is on display through April 12.
Theater
Film
“Radium Girls” continues through April 8 at Beowulf Alley Theatre, 11 S. Sixth Ave. The play tells the true story of radium factory workers who fell ill after painting watch dials. Performances are at 7:30 p.m. Fridays and Saturdays and 2:30 p.m. matinees on Sundays. Buy tickets online at www.BeowulfAlley.org.
Films opening this weekend include the Snow White-ish comedy and Julia Roberts film “Mirror, Mirror,” “Salmon Fishing in the Yemen” with Ewan McGregor and Emily Blunt, and the big budget 3D Greek mythology sequel “Wrath of the Titans,” starring Liam Neeson and Sam Worthington. At the Loft Cinema, 3233 E. Speedway, the film “In Darkness” begins this week. This is a tale of Jews hiding in the sewers of Poland during World War II. The film was Poland’s entry at this year’s Academy Awards for best foreign film, and this is the first time it is being shown in Tucson.
Art The Center for Creative Photography, 1030 N. Olive Road on the University of Arizona campus, is hosting an exhibit titled “Speaking in Tongues: Wallace Berman and Robert Heinecken.” The exhibit marks the first major exhibition of Heinecken’s work, from his archive, which is housed at the center. The show examines how the two artists bridged modernist and post-modernist trends
Contact Herb Stratford at herb@ ArtsandCultureGuy.com. Stratford teaches Arts Management at the University of Arizona. He appears weekly in Inside Tucson Business.
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8 MARCH 30, 2012
INSIDE TUCSON BUSINESS
BRIEFS GET ON THE LIST
Next up: Banks, Credit unions Inside Tucson Business is in the process of getting data for the 2013 edition of the Book of Lists. Categories that will be published in upcoming weekly issues of Inside Tucson Business are: • April 6: Landscape architects, Swimming pool builders • April 13: Banks, Credit unions • April 20: Largest employers in Southern Arizona • April 27: Architectural firms, Interior design firms, Engineering firms • May 4: Defense contractors If your business fits one of these categories, now is the time to update your profile. Go to www.InsideTucsonBusiness.com and click the Book of Lists tab at the top of the page. New and unlisted businesses can create a profile by following the directions. The Book of Lists is a year-round reference for thousands of businesses and individuals. To advertise your business, call (520) 2941200.
ECONOMIC DEVELOPMENT
6 Tucson firms are named Innovation semifinalists Six Tucson firms are among 25 semifinalist companies that stand to receive thousands of dollars in state grants as part of the Arizona Commerce Authority’s Innovation Challenge. The semifinalists, which represent a range of types of companies, were chosen by judges from across the state who looked at factors including their technology potential, management and the ability to create jobs. The 25 firms will be pared to a list of finalists this month and the winners will be announced in May. The winning companies will receive between $100,000 and $250,000, out of $1.5 million the ACA has allocated to the challenge. The plan is to offer a second Innovation Challenge in the fall. The Tucson semifinalist firms are: • Acudora Inc., 4380 N. Campbell Ave., Suite 204
• Discern Science, 6918 Gleneagles Drive • DMetrix, 9030 S. Rita Road, Suite 389, in the University of Arizona Science Technology Park • Earth Knowledge, 500 N. Tucson Blvd., Suite 150 • HJ3 Composite Technologies, 2440 W. Majestic Park Way • MD24 House Call, 3444 N Country Club Road, Suite 200 The other firms from across the state that are also in the running are: • Agave Semiconductor, Phoenix • BCR Diagnostics, Chandler • Care H2 Energy Systems, Scottsdale • Cummings Engineering, Chandler • Desert Dog Marketing, Phoenix • ECOmplete, Chandler • IPO Solutions, Phoenix • Kutta Radios Inc., Phoenix • MaxQ Technology LLC, Tempe • MedApps Inc., Scottsdale • Pathogene LLC, Flagstaff • Phocus LLC, Scottsdale • PureTech Systems Inc., Phoenix • Securecomm Inc., Gilbert • Serious Integrated, Chandler • Solar Pool Technologies Inc., Phoenix • Sycara Inc., Scottsdale • WholesaleFund, Phoenix
TELESERVICES
Afni call center seeks to hire 150 employees Afni will hold a job fair Tuesday (April 3) looking hire more than 150 call center employees. The company said the “customer care consultants” will answer inbound phone calls from customers of Afni clients to help with product and service questions, billing issues and selling additional services. The job fair will be from 3 to 7 p.m. at Afni’s call center at 5320 N. La Cholla Blvd. Applications can also be submitted online at www.afnicareers.com/tucson. Afni has four call centers in the Tucson region.
RETAIL
Royal moving Kia dealership in April Royal Kia, which since 2002 has been at 4635 E. 22nd St., is moving in April to 4333 E. Speedway into the facility that once housed Tucson’s original Buick dealership. Royal officials said they intend to keep a dealership on 22nd Street but haven’t come to a final determination on what it will be. The Speedway location had been known as Royal Buick until 2009 when, as part of a reorganization of its car lines and dealerships, General Motors dropped Pontiac and Saturn and consolidated Buick and GMC at nearby Quebedeaux, 3566 E. Speedway. Since then Royal has been selling used cars out of the Speedway location. Meanwhile, it subsequently received a Buick, GMC and Cadilllac franchise on Tucson’s westside, 815 W. Auto Mall Drive.
TRANSPORTATION
Enjoy gas at less than $4 a gallon while you can Pump prices for gas continued inching upward this week, according to AAA Arizona’s weekly Fuel Gauge report, with signs prices are headed to record high prices. The auto club says the average in Tucson this week was $3.73½ per gallon for regular, less than 12 cents a gallon short of the region’s record high of $3.85 per gallon set June 20, 2008. Last week’s average was $3.72 per gallon and a month ago, it was $3.52 per gallon. Tucson still enjoys the lowest average price in Arizona but so far the highest price, $3.99½ per gallon, hasn’t topped $4. Nationally, AAA says customers in 10 states and the District of Columbia are paying more than $4 per gallon, topped by Hawaii at $4.55 per gallon and Alaska and California at $4.32 per gallon. The other states where gas is more than $4 per gallon are Connecticut, Illinois, Indiana, Michigan, New York, Oregon and Washington. IHS Global Insight this week warned that gas prices could double if Iran acts to close the Strait of Hormuz, through which passes
about 17 million barrels of oil, or roughly 20 percent of the world supply.
HEALTH CARE
UA medical center gets goggles for child MRIs The University of Arizona Medical Center, 1501 N. Campbell Ave., is the first hospital in Southern Arizona to have special MRI goggles for pediatric patients to wear during MRI exams. The goggles, called “Cinemavision,” provide an alternative to sedation. They are intended to set young children at ease while undergoing MRI procedures. The time required for the MRI procedure can last as long as 90 minutes. For the scan to be accurate, the patient must lie still, relax and breathe normally. Children often cannot tolerate the loud clicks an enclosed MRI setting. The specially designed goggles and earphones allow patients to enjoy movies, television programs and music. Private donations provided for the Cinemavision goggles.
COMMERCIAL REAL ESTATE
Grubb & Ellis sale gets bankruptcy approval BGC Partners Inc. says it anticipates closing soon to acquire the commercial real estate firm Grubb & Ellis after receiving bankruptcy court approval for the acquisition. Grubb & Ellis filed for Chapter 11 bankruptcy protection in February. Once the sale is completed, both Grubb & Ellis and Newmark Knight Frank will be owned by BGC Partners. The Tucson office of Grubb & Ellis was established in 2008. Separate from the bankruptcy issues, the Tucson office is in the process of moving to 3709 N. Campbell Ave., Suite 135, from its current location at 3333 E. Speedway. There are 15 people in the Tucson office.
InsideTucsonBusiness.com
MARCH 30, 2012
NEWS FOCUS ON NONPROFITS
Community Foundation for Southern Arizona has ‘gift’ for philanthropy
I.T. Genius
By Roger Yohem Inside Tucson Business
The
best employees
Otis Blank photo
Outside Arizona, Tucson has a reputation for its weather and being a retirement city with a major university. To insiders who live here, the Old Pueblo has a more meaningful reputation. Among its citizenry, Tucson is known as a caring, giving community. This philanthropic legacy dates back to a time when five local business leaders wanted to expand the pool of charitable givers. By growing the base of donors, they knew there would be more money available to better the community. Buddy Amos, Jim Burns, Jim Click, Ed Moore and Granger Weil formed the Greater Tucson Area Foundation in 1980. To better reflect its regional reach, it became the Community Foundation for Southern Arizona (CFSA) in 1997. “Since they were running businesses, they were getting all these solicitations. They saw the need to start a community foundation so there would be somewhere else to go, to promote greater philanthropy,” said Clinton Mabie, president and CEO of CFSA. Today, the foundation has grown into a charitable clearinghouse that typically awards between $6 million and $8 million a year. On behalf of individuals, families, estate planners, financial advisors, organizations and businesses, CFSA is part advisor, educator, tax consultant, conduit and administrator to those who “gift.” Mabie characterizes CFSA as a “onestop shop for managing philanthropy.” The mission of his 10-person staff is to inspire and support donors making a difference. “This is a complicated business, with a lot of partnering and education. Because we are a public charity, donors get the highest tax deduction possible by law,” Mabie said. “For a professional advisor, we are here to help. For individuals, we are donor-centric, turning their passion, no matter what that is, into investments in the community. That’s our role, to make that happen.” CFSA makes it happen primarily through a network of affiliates and supporting organizations that are part of the foundation. The Santa Cruz Community Foundation, Oro Valley Community Foundation and Stone Canyon Community Foundation are affiliates. Supporting organizations maintain their own identity, such as the Thomas R. Brown
As CEO, Clinton Mabie runs the foundation as “a one-stop shop” for managing philanthropy.
BIZ FACTS
Community Foundation for Southern Arizona 2250 E. Broadway (520) 770-0800 http://cfsoaz.org/cfsa/
Family Foundation. They do their own grant-making and receive all the tax benefits. CFSA handles all the administrative services. Other supporting organizations include the Zuckerman Community Outreach Foundation, Melody S. Robidoux Foundation, Knisely Family Foundation and the Howard V. Moore Foundation. For donors seeking advice on how to gift or what programs to support, CFSA provides free, confidential counsel through its Center for Planned Giving. The center’s professionals are impartial and will guide and refer “to whatever is best for them. It’s up to the donor, totally customized,” said Mabie. For example, CFSA is exploring options for a client who wants to help young people in the juvenile justice system. As they “age out” of the system, there are no services to help them transition back into the commu-
nity. “This donor wants a program for those people. We convened the community players to see if we can come up with a plan for the donor to get that done,” said Mabie. Regardless of the cause, a donor’s desires are never judged. At his prior post in Chicago, Mabie had a large endowment “to support the bettering of relationships between cats and dogs.” Another was to support public participation in the sport of curling. “Those are someone’s passions. Our business is to honor their intent,” he said. Typically, most foundations oversee funds for more obvious needs like education and basic human services. Over the years, CFSA has helped manage the distribution of some $100 million in charitable donations. It currently administers about 500 funds, some over $1 million with numerous at the $10,000 minimum.
Contact reporter Roger Yohem at ryohem@azbiz.com or (520) 295-4254. Focus on Nonprofits is a regular quarterly feature of Inside Tucson Business. Email suggestions for future articles to editor@azbiz.com. The next Focus on Nonprofits column is scheduled to appear in the June 29 issue.
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10 MARCH 30, 2012
INSIDE TUCSON BUSINESS
GETTING FIT
Saving kids lives with free swim lessons this summer
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rector McFarlin at (520) 229-9001 ext. 111. According to the Arizona Department When in and around water, the of Health Services, drowning is the second Y recommends these safety precaumost common cause of injury in Arizona. tions for children and adults: Parents can combat this deadly trend by • Only swim when and where there is ensuring their children learn to swim by lifeguard on duty; never swim alone. the age eight. In response to this startling • Adults should constantly watch statistic, the YMCA of Southern Arizona children in and near the is offering “All Kids Swim,” a water. If multiple adults are program that will teach an in the vicinity, designate a estimated 1,200 children how “water watcher” so everyone to swim, and will provide knows who is “on duty.” valuable water safety lessons. • Inexperienced swimmers All Kids Swim gives the should take precaution and wear Y an opportunity to make a a U.S. Coast Guard-approved “splash” and meet its mispersonal floatation device (PFD) sion by providing free or low when in, on or around the water. cost swim lessons in partner• Children who are beginship with the City of Tucson, DANE WOLL ners should stay within arm’s Pima County and Marana. reach of an adult in the water. Summertime means pool Teaching children to swim is part of time for many kids, as they venture to their our commitment to Social Responsibilfavorite spots to swim, play and create ity. All Kids Swim participants will benlasting memories. Whether it’s the pool, efit from a strong sense of achievement beach, water park or lakefront, YMCA of from meeting their goals and develop Southern Arizona reminds the community positive relationships with others in to keep safety first when in or around the the process. Let’s all work together to water. With this in mind, the Y offers swim strengthen our community to ensure programs that teach water safety skills and that no child drowns this summer! give kids and adults the chance to explore the many health benefits of swimming. “It’s important to make sure children Contact Dane Woll, president and are confident in the water to ensure they CEO of the YMCA of Southern Arizona, at have a fun and safe experience,” said Barb DaneW@tucsonymca.org. His Getting Fit McFarlin, aquatics director at the Northcolumn appears quarterly and is next west YMCA. “The Y encourages all kids scheduled to appear in the and adults to learn how to swim.. It’s never June 29 issue. too late. Basic swimming skills and nd water safety practices save lives every day.” Swimming is a fun and enjoyable able activity for children, and it has many health benefits, as it’s a fun and easy way ay to stay physically active and improve strength, rength, flexibility and stamina. Once children ildren know how to swim, they are positioned itioned to continue this life enhancing physical activity for the rest of their lives. Knowing how to swim is the best measuree to ensure water safety and prevent future drowning. Thanks to our generous sponsors, sors, Tucson Medical Center for Children, n, Safe Kids Coalition and Wells Fargo, this program will be provided free, subject to a $10 registration fee. Each child will receive eive a free swim cap with registration. The Y is partnering with the City of Tucson, Pima County and Marana to offer the All Kids ds Swim program at three pool locations; in Jesse Owens Park, 400 S. Sarnoff Drivee at Broadway; Ora Mae Harn District Park, k, 13250 N. Lon Adams Road, Marana; and Mulcahy YMCA at Kino Community Center, er, 2805 E. Ajo Way. For details, check our ur website — www.TucsonYMCA.org/social/secal/secondGradeSwim.cfm — or call aquatics quatics di-
InsideTucsonBusiness.com
MARCH 30, 2012
11
MEDIA
Tucson group buying Azteca America TV affiliate for $810,000 By David Hatfield Inside Tucson Business Tucson’s Azteca America TV station, KUDF 14, is being sold for $810,000 by Dallas-based Una Vez Mas Holdings LLC. The buyer is listed as LM Media Group, a Tucsonbased company whose president is Rodolfo Martin Velez Gonzalez. Attempts to reach the company this week were unsuccessful. It’s unclear what LM Media Group has in store for the station. As part of its application with the Federal Communications Commission to transfer ownership, the sellers and buyers have signed an agreement to temporarily continue with Azteca America programming and that could be extended. Under various call letters, channel 14 has been on the air as a low power station in Tucson since 1989. In its history it has been an affiliate of Telemundo, an English-language station showing mostly religious programs and an outlet rebroadcasting programming from a station in Hermosillo, Sonora. Una Vez Mas has operated it as an Azteca America affiliate since November 2005. In addition to its over-the-air broadcasts, KUDF’s programming is currently being carried on Cox cable channel 61, Comcast channel 13, and Dish Network channel 14. Establish in 2001 and based in the Los Angeles area, Azteca America is a subsidiary of TV Azteca, Mexico’s second largest media conglomerate after Televisa.
Names in news KGUN 9 has found its replacement for sports anchor Dave Silver. His name is Jason Barr. Last year he earned his MBA from the University of North Carolina and before that he spent five
months as a reporter and news anchor for the NBC affiliate in Myrtle Beach, S.C., and 2½ years as a weekend sports anchor and reporter for the CBS affiliate in Norfolk, Va. His career also has included stops in Albany, N.Y.; Burlington, Vt.; and Wilmington, N.C. His first day on the job at KGUN will be April 5. Silver left in January after 29 years at KGUN and is now associate director of regional development at the University of Arizona Foundation. Some staff changes took effect this week on KVOA 4’s early morning “Tucson Today.” Samantha Ptashkin is assigned to the “breaking news” desk where she is responsible for keeping viewers updated on developments of PTASHKIN high-profile news stories. Ptashkin joined the KVOA news staff in February from KMSB 11 when owner Belo Corp. shut down its news operation and turned it over to KOLD 13 under a shared services agreement. Ptashkin had been KMSB’s weekend news anchor. Before coming to Tucson, she had been a reporter at the NBC affiliate in Rockford, Ill., and is a journalism graduate from Northwestern University. Another change has Nichole Szemerei now doing in-studio traffic reports. She had been a field reporter. SZEMEREI Szemerei is a journalism graduate from Arizona State University and worked in Billings, Mont., and Rockford, Ill., before coming to Tucson. The one other change at KVOA had former traffic reporter Larissa Wohl moving to field reporter.
exactly how it will work because the company’s newspapers are studying several pay models. The decision to start charging for content was announced at parent company Lee Enterprises’ annual meeting this month. A test last year at six Lee Enterprises newspapers in Montana and Wyoming used what’s called a metered paywall in which online readers could view a certain number of articles at no charge before being asked to pay. As part of the test the number of free views varied between 15 or 20 page views and pricing varied at the six newspapers. One thing they had in common is that even subscribers to the print newspapers were charged, though at a discount rate. Mary Junck, CEO of Lee Enterprises, said at the shareholders meeting that digital revenue was not impacted by the decision to charge for online content. Officials at the Star have acknowledged the it will start charging for digital content but a decision hasn’t been announced as to how it will work or a timetable set for launching it. Lee Enterprises said some of its 52 newspapers will start charging within three months.
Tucson connections Peak Broadcasting, the company run by Todd Lawley who ran Citadel Broadcasting
Group’s Tucson stations and worked for Clear Channel radio here, is out of bankruptcy, less than three months after filing for Chapter 11. Basically, the former lenders are now in control of the company and are keeping Lawley in charge of the group which runs stations in Fresno, Calif., and Boise, Idaho. Another transaction in the works is a radio station in Wickenburg and it involves Mike Barna, who for almost three years after the late Phyllis Ehlinger died in 2006 ran her radio station KSAZ 580-AM and was part of a group that made an unsuccessful attempt to buy it. Since leaving the Tucson market Barna has been running KSWG, which broadcasts on 96.3-FM in Wickenburg with a signal that reaches into portions of the Phoenix area and now he is in the process of acquiring the station. The purchase price is listed as $480,000 of which $300,000 will be used to settle with an investment firm. Interestingly, the station’s format is classic country which it promotes as “Real Country,” the same format Barna was using at KSAZ before leaving in early 2009 and the station subsequently flipping to its current Spanish Christian format.
Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237. Inside Tucson Media appears weekly.
Pay to read online Star BARR
The Arizona Daily Star will begin charging for digital content but it remains to be seen
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12 MARCH 30, 2012
INSIDE TUCSON BUSINESS
PEOPLE IN ACTION ELECTIONS
LLLP, was named chairman of the board.
Critical Path Institute (C-Path) has announced the election of four board members to serve three-year terms. Joining the board are D. Craig Brater, MD, dean Indiana University School of Medicine; Samuel Broder, MD, executive vice president and chief medical officer of Celera Genomics; James C. Greenwood, president and CEO of the Biotechnology Industry Organization; and Richard T. Myers, Jr., regent with the Arizona Board of Regents. Current board member, Peter B. Corr Ph.D., of Celtic Therapeutics,
Kate Sheppard, Ph.D., RN, FNP, PMHNPBC, a clinical assistant professor at the University of Arizona College of Nursing, has been elected a fellow in the American Academy of Nurse Practitioners (AANP). The AANP fellowship program was established in 2000 to recognize nurse practitioner leaders who have made outstanding contributions to health care through nurse practitioner clinical practice, research, education or policy. To be considered a nurse practitioner must first be
KATE SHEPPARD
invited and demonstrate exceptional contributions and professional achievements in two of the four prior areas. PROMOTIONS Steve Dean has been named executive vice
STEVE DEAN
RICK VAUGHAN
{TELL US ONLINE} Now your business can tell Inside Tucson Business about new hires, promotions and special awards online. Go to www.insidetucsonbusiness.com and click the “People in Action� button. From there you can submit your announcement and we’ll publish it online and in print.
president and Chief Credit Officer of Western Alliance Bank, the largest locallyowned bank in Arizona. The bank operates in Arizona as Alliance Bank of Arizona. Dean was formerly senior vice president and commercial real estate manager of Alliance Bank
of Arizona. Dean has more than 15 years of financial experience with a strong background in commercial real estate lending and development as well as business and commercial banking. He graduated from the University of Arizona with a B.A. in economics and received a masters in economics from the University of Washington. NEW HIRES Rick Vaughan has joined simpleview as vice president of sales and marketing. Vaughan brings more than 34 years of experience in the tourism
industry to simpleview. He has held executive positions with global hotel brands such as Westin Hotels and Resorts, Sheraton Hotels and Resorts and Marriott International. Most recently, Vaughan served as the senior vice president of the Metropolitan Tucson Convention and Visitors Bureau (MTCVB), an independent, non-for-profit organization dedicated to promoting Southern Arizona as a convention, visitor and film production destination.
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MARCH 30, 2012
13
PROFILE
Children’s Museum is a giant playhouse for Tucson Read By Christy Krueger Inside Tucson Business
BIZ FACTS
Children’s Museum Tucson 200 S. Sixth Ave. www.childrensmuseumtucson.org (520) 792-9985 Children’s Museum Tucson photo
Imagine going to work each day in a giant playhouse, where kids laugh and enjoy learning about everything from gardening to biology and technology. This playhouse is the Children’s Museum Tucson, housed in the former Carnegie Library. Its head funmaster is Executive Director Michael Luria, who formerly ran the popular foothills restaurant Terra Cotta. Luria believes his change from restaurateur to running a nonprofit wasn’t such a big leap. “There are similarities,” he said. “It’s about guest services. You succeed or fail on your merit.” He joined the Children’s Museum board of directors in 2003 and became president in 2006. When the previous executive director left in late 2008, Luria stepped into the position on an interim basis. As it turned out, Terra Cotta closed at the end of January 2009. “After some soul searching, I put my name in the hat for the position,” Luria recalled. “The museum was my philanthropic passion. In April 2009 I started full-time as executive director.” Created by Cele Peterson, Dorothy Finley and Evelyn Carswell-Bing, the Children’s Museum has come quite a distance since opening in 1986 in a one-room building at Fort Lowell Park. In 1991, after the downtown library moved out of the historic Carnegie Library building, Children’s Museum Tucson took over the space and has remained ever since. The organization had been going through some tough times when Luria joined the board of directors. But he helped get things on the right foot again and now says the facility is hardly recognizable from its old form. “In the last three years we’ve completely transformed the museum,” starting with the exterior, Luria said. On the wish list for years was the plan to tear down a large masonry wall blocking the beautiful façade of the 1901 building. “In 1997 a bond package was passed to remove the wall. In 2008 it happened. It only took 11 years,” he said. The grounds have a more spruced up appearance now, as well, with the City of Tucson maintaining the lawn and flowerbeds. Perhaps the greatest transformation has come in the way of the hands-on exhibits, which are central to CMT’s mission of providing fun learning experiences for children and families. These exhibits are possible thanks to numerous partners and grants. “This past November we opened Bodyology with a $170,000 investment. It’s a holistic approach to health and wellness, with a playhouse, orchard, juice bar and grocery store. TMC (Tucson Medical Center) is the primary funder for that
The Children’s Museum Tucson opened in 1986 at Fort Lowell Park. It has been downtown since 1991.
exhibit,” Luria explained. Blue Cross and Dairy Council of Arizona are among other Bodyology sponsors. “In May we’re opening the largest exhibit ever — Investigation Station, a STEM (science, technology, engineering and math) exhibit using a $236,000 grant from Angel Charity.” Tucson Electric Power has been the biggest supporter since 1986, Luria added. “They fund school tours, and they gave us a grant to improve the Electri-City exhibit,” which teaches the uses of electricity and how to conserve resources. Cox, another corporate partner, is the exclusive sponsor of Techtopia, a digital trip through bugs, shadow mosaics and reading. “Corporate partners engage with us because of philanthropic desires,” Luria emphasized. “From the business side, we have 130,000 kids and their families, and the businesses have an opportunity to connect with them.” In addition to having their names on the walls of rooms they sponsor, partners have a chance to personally interact with visitors. For example, during Science Sundays in the summer, partners are sometimes on hand to distribute information, such as coloring books, appropriate to the week’s topic. Children’s Museum Tucson’s Kevin Mills designs, builds and maintains many of the exhibits, but it’s too big a job for one person, according to Luria, so they also contract out-of-town companies for much of the work. Museum staff members organize dozens of programs and events for the kids, often
inviting downtown businesses to collaborate. Janos Wilder, owner of Downtown Kitchen + Cocktails, helped the children build their vegetable garden, and for a recent Science in the City he made liquid nitrogen ice cream to the kids’ delight. Short-term goals for the museum, Luria said, include more renovations and increasing the emphasis on science and technology programs. “Next year we have ambitious plans. One section of the museum not touched in awhile — the art studio and music room — we’ll improve.
We’ll expand the education program to move more into STEM. We’ll do a school tour around it next year.” Luria also plans to continue developing relationships with the business community. Personally, he feels the museum is a wonderful backdrop to carry out one’s work. “The best part,” he said, “is if you’re having a bad day, you walk into the museum and interact with the kids. It’s a great time; it’s very rewarding. Everyone on the staff has a passion and commitment to who we serve.”
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14 MARCH 30, 2012
INSIDE TUCSON BUSINESS
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17
18 MARCH 30, 2012
INSIDE TUCSON BUSINESS
FINANCE YOUR MONEY
Communicating with bank is key commercial loan modifications While the market remains soft and some businesses continue to struggle, recognizing the value of a trustworthy alliance with your bank is crucial. Consider a banker to be a member of one’s business management team and utilize their expertise to help address a downturn in business operations as soon as the trend emerges. Your bank may be willing to modify existing commercial loans to restructure debt and improve cash flow. Early recognition of financial trouble and communication between the borrower and the bank is the first step in navigating the process. A bank’s preferred solution on a problem loan is to negotiate a plan of action to try to protect both parties from possible loss. This partnership is vital to reach a favorable solution. Loan personnel are responsible for continuously monitoring business loans to discover and manage potential complications. Loan review is important in early discovery of troubled loans however, lenders also rely on their personal relationship with the borrower to predetermine hardship. When communication with a borrower deteriorates, so often does the performance of the loan. Loan personnel are trained to detect any unexplained change in the borrower’s attitude and decreased communications, which are often interpreted as an indicator of financial difficulties and potential loss. Additional signals that reveal problems to a banker include late or missed loan payments, overdrafts on deposit accounts, cancellation of insurance on collateral, management turnover and reluctance to provide timely financial statements. Other, more obvious, signs include deteriorating trends in financial condition, worsening accounts receivable or accounts payable timelines and tax levies. Larger banks typically assign problem loans to a separate department to manage — often in a different state — but community banks place a higher value on their relationships with their customers and generally allow the banker who originated and maintained the loan to spearhead modification recommendations. Therefore it benefits a business to build a partnership with their banker before problems arise by maintaining frequent and frank contact in good and bad times. A loan restructure plan must be approved by the bank and legally documented as a modification or forbearance agreement. This sets forth a new repayment program with loan covenants and establishes requirements for the borrower to provide frequent financial reports for the bank to review. A written business turnaround plan may be required, along with
updated collateral appraisals. It is important to note that providing timely and accurate financial statements to the bank is essential to any modification request, as banks TERESA NOWAK have regulatory guidelines to obtain consistent updated financials on modified loans. Without current financials the bank could be required by regulators to downgrade a loan relationship to a “substandard” classification — even when the borrower can pay on time — which may hamper negotiations. The best practice is to provide the bank full financial disclosure, along with all requested information, although a borrower’s instinct may be to avoid providing unfavorable financial data to the bank. This could be a costly mistake. Problems with secured loans may arise from inadequate collateral. When the market value of certain types of collateral declines it may create an inadequate loan-to-value ratio. Banks may require a new appraisal or collateral evaluation, and may also require additional security if it is deemed the value of the primary collateral has declined since the inception of the loan. Another remedy may be to provide the addition of personal guarantees to improve the bank’s exposure to loss. The earlier the bank is aware of a problem loan, the more likely a modification agreement can be reached. Communication with the bank is key. Loan modifications focus on the borrower’s ability and willingness to repay, and analyze their economic incentive and use of other assets to provide ongoing support in the relationship. If a borrower is reluctant to communicate with their banker, the problem can be unnecessarily escalated as the bank may deem itself insecure and a modification program may not be an option. Get to know your banker and keep them apprised of your business. Above all, treat your commercial banking relationship as a valued partner in your business life and turn to your banker for advice and guidance when difficulties arise.
Contact Teresa M. Nowak, senior vice president for Commerce Bank of Arizona, at tnowak@commercebankaz.com or (520) 325-5200. Commerce Bank is a locally-owned community bank specializing in serving small- to mid-size businesses in Arizona.
TUCSON STOCK EXCHANGE Stock market quotations of some publicly traded companies doing business in Southern Arizona
Company Name
Symbol
Mar. 28 Mar. 21 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 CEXI.OB PRSC UNS
0.08 0.02 15.90 36.50
0.07 0.01 15.55 36.18
0.01 0.01 0.35 0.32
0.04 0.01 8.35 32.96
0.89 0.10 15.94 39.25
9.83 4.88 2.88 9.75 59.70 7.86 81.78 26.62 56.63 4.18 19.99 37.06 29.92 22.16 30.52 13.37 90.62 38.65 44.60 10.00 62.84 61.57 15.91 37.36 29.09 49.91 60.75 207.29 28.60 59.51 5.47 46.27 34.26 9.29 48.97 24.19 1.23 27.67 31.22 39.63 56.98 40.04 38.05 28.79 47.53 0.71 36.17 9.48 52.52 43.98 20.17 38.79 68.99 11.29 8.36 42.59 31.85 58.16 16.01 33.33 36.29 21.89 107.91 38.54 7.79 31.82 61.19 34.75 34.47 8.71 21.80
10.27 0.48 2.82 9.82 59.16 8.53 81.21 27.14 57.09 4.18 20.75 37.80 29.71 23.04 30.86 12.71 90.64 39.52 44.91 9.74 63.14 62.62 15.74 39.80 29.11 49.79 59.47 204.69 29.15 60.12 5.52 45.12 34.66 11.31 48.74 24.28 1.15 26.62 30.86 39.34 56.57 40.47 37.88 27.72 47.40 60.83 36.86 9.39 51.50 43.92 21.04 38.68 76.69 11.18 8.32 42.40 31.88 57.57 16.09 33.61 35.76 20.56 112.31 43.23 7.63 31.54 60.56 33.54 34.02 8.83 22.07
-0.44 4.40 0.06 -0.07 0.54 -0.67 0.57 -0.52 -0.46 0.00 -0.76 -0.74 0.21 -0.88 -0.34 0.66 -0.02 -0.87 -0.31 0.26 -0.30 -1.05 0.17 -2.44 -0.02 0.12 1.28 2.60 -0.55 -0.61 -0.05 1.15 -0.40 -2.02 0.23 -0.09 0.08 1.05 0.36 0.29 0.41 -0.43 0.17 1.07 0.13 -60.12 -0.69 0.09 1.02 0.06 -0.87 0.11 -7.70 0.11 0.04 0.19 -0.03 0.59 -0.08 -0.28 0.53 1.33 -4.40 -4.69 0.16 0.28 0.63 1.21 0.45 -0.12 -0.27
8.45 0.20 2.65 4.92 51.83 7.02 65.35 21.79 43.77 3.30 12.30 21.40 19.19 14.61 22.80 8.49 70.22 31.16 31.30 6.41 37.87 43.64 8.03 28.85 16.92 28.13 41.22 157.13 27.68 39.87 2.69 27.85 25.73 5.02 42.14 21.14 0.49 12.14 18.07 32.90 38.64 22.50 25.49 13.68 33.20 49.20 23.44 3.29 38.35 34.02 15.93 30.98 28.89 10.47 7.15 32.12 20.96 45.28 14.10 24.34 27.62 15.51 77.73 37.08 3.96 20.10 48.31 30.34 22.58 4.44 13.18
18.47 6.96 5.58 13.88 66.64 13.01 86.91 32.85 59.59 7.29 29.88 46.90 30.41 41.09 51.43 14.63 91.78 43.49 45.88 11.60 64.50 70.15 16.45 58.75 30.49 50.35 62.28 208.69 35.79 62.33 6.07 47.80 38.40 13.12 57.39 25.85 3.47 28.28 31.49 44.46 57.29 40.74 38.83 29.32 52.57 70.61 43.18 9.69 53.00 45.65 25.43 40.75 87.66 17.15 12.87 43.64 32.79 58.95 22.39 35.98 39.24 26.84 117.40 58.29 10.35 32.23 62.63 45.34 34.59 9.20 24.92
Southern Arizona presence Alcoa Inc (Huck Fasteners) AA AMR Corp (American Airlines) AMR Augusta Resource Corp (Rosemont Mine) AZC Bank Of America Corp BAC Bank of Montreal (M&I Bank) BMO BBVA Compass BBV 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) UAUA 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 30, 2012
19
INSIDE REAL ESTATE & CONSTRUCTION
Sliced, diced data show mixed improvement By Roger Yohem Inside Tucson Business Coldwell Banker Residential Brokerage breaks down monthly housing data to get as detailed as any examination but February’s numbers are yet to find solid evidence of a trend, though it appears the markets are starting to regain their footings. By jurisdiction, the highest inventory of homes during February was in the city of Tucson with 3,595 listings. That is down 16 percent from January’s 4,277 homes and a 40 percent decrease from 6,022 units in February 2011. February home sales totaled 764, up 9.1 percent from 700 sales in January and 14 percent higher than the 669 sales in February 2011. And in a sign the market is stabilizing, homes sold faster. Inside the city, the average number of days on market was 98, down from 105 days in January. In February 2011, the time was 104 days. The February median sales price was $118,875, down 8.6 percent from $130,000 in February 2011. In January, the median was $120,000. Average sales prices inside the city were $153,727 for January; $166,357 in February; and $178,322 for February 2011. In Marana, February inventory totaled 245 units, down 34 from January and 97 fewer than a year ago. There were 35 homes sold, 12 more than in January but four fewer than in February 2011. On average, homes in Marana sold after 133 days on the market, significantly longer than the 94 days in January. One year ago, the marketing time was 139 days. Selling prices in Marana were mixed, according to Coldwell Banker. The February median was $200,000, up 11.7 percent from
Median Price Active Listings New Listings Pending Sales Homes Closed
3/19/2012
3/12/2012
CBRE Group Inc. (CBRE) has been named the Top Global Brand in commercial real estate by the Lipsey Company, an industry provider of professional development services. The honor is based on over 50,000 surveys of commercial real estate professionals who scored various companies on their brand recognition and reputation. CBRE’s Tucson office is at 3719 N. Campbell Ave. and has 125 employees.
Lundeen top agent Laurie Lundeen, with Coldwell Banker Residential Brokerage’s Green Valley office, has been honored with two top sales awards. She was the company’s 2011 Top Producer in Southern Arizona and the 2011 Top Agent for the Green Valley/Sahuarita Association of Realtors. Since joining the Green Valley office in 2002, Lundeen has been one of Coldwell
Sales and leases • Ricisaar Investments III LLC purchased a 2,553 square-foot restaurant building on 25,500 square feet of land at 4105 N. Oracle Road for $420,000. The seller was R.R. and A.Y. Long Family Trust, represented by Tony Reed of Long Realty. The vacant building previously housed a Long John Silver’s restaurant. The buyer was represented by David Hammack and Rick Borane, Volk Company Commercial Real Estate. • Stewart Title purchased a 5,800 squarefoot office building at 7042 E. Broadway for $240,000 from the Frank and Betty Dunlap Trust, represented by Rick Kleiner, Picor Commercial Real Estate Services. Harvey Morkda, Harvey Morkda Realty, represented the buyer.
Email news items for this column to ryohem@azbiz.com. Inside Real Estate & Construction appears weekly.
$127,500 5,977 363 477 224
$135,175 6,000 388 495 266
HSL buys more apartments HSL Properties has acquired the 238unit Bear Canyon Apartments, 9055 E. Catalina Highway, for $23.2 million. The Class A, 19-building complex is on 13.5 acres. The seller was Arbor Bear Canyon Holdings LLC, Uniondale, N.Y. The complex was built in 1996 and features two swimming pools, garages and a fitness facility. The acquisition brings Tucson-based HSL
WEEKLY MORTGAGE RATES 30 YEAR 15 YEAR 3/1 ARM
CBRE top brand
Banker’s top producers. She is a member of the Green Valley Association of Realtors and the multiple listing services of both Green Valley and Tucson.
TUCSON REAL ESTATE
Source: Long Realty Research Center
Program
Properties’ holdings to 40 apartment communities in Arizona, making it the largest owner of apartment properties in the state. The firm headed by Humberto Lopez, also owns and operates four hotels in Arizona. The purchase was structured through HSL Bear Canyon Apartments LLC.
Current
Last Week
3/25/2012
One 12 Month 12 Month Year Ago High Low
4.13% 4.375%APR 4.13% 4.375%APR 4.95% 3.63% 3.875%APR 3.63% 3.875% APR 4.22% 3.00% 3.375%APR 3.00% 3.75% APR
4.95% 4.22%
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 Peoples Mortgage Company, 3131 N. Country Club Suite-107 Tucson, AZ 85716. (520) 327-7600. MB #0115327. Rates are subject to change without notice based upon market conditions.
3.88% 3.16%
Roger Yohem Photo
THE PULSE:
$179,000 in January and 22.7 percent higher than $162,979 a year ago. In contrast, the average sales price decreased. For February, the average was $196,981, significantly lower than $216,423 in January. In February 2011, the level was $241,674. To normalize the mix of high-end and low-end sales, such as the range of houses that sold last month in Marana, Coldwell Banker calculates the selling price per square foot. President Malcolm MacEwen describes this analysis as “a better indication of true property values.” In Marana in January, the selling price per square foot was $95 and dropped to $90 in February. It was $102 per square foot in February 2011. In Sahuarita, the region’s third-largest submarket, February inventory totaled 149 homes, down from 168 units in January. Compared to February 2011, the inventory plunged 44 percent from 264 listings. There were 33 sales in February, 36 sales in January and 37 in February 2011. On average, homes sold in Sahuarita in 127 days in February, 95 days in January and 101 days in February 2011. Regarding prices, the February median was $145,000, down 4.9 percent from the January level of $152,500. Compared to February 2011, the value was up 14 percent from $127,000. The average sales price was $154,306. That value in January was $162,475 and a year ago, was 6.9 percent higher at $144,368. The consensus among housing experts is that prices will likely drift down and up until the fourth quarter when the last of the fiveyear adjustable rate mortgages are due to reset. Many of these mortgages were blamed for the housing market meltdown in the first place.
Coldwell Banker’s in-depth reviews indicate that the housing market is seeing uneven improvement.
20 MARCH 30, 2012
INSIDE TUCSON BUSINESS
EDITORIAL BIZ BUZZ
We can’t forget, but it’s not history The other morning at a breakfast a friend was commenting on the talk by Grady Gammage Jr. at the Tucson Metro Chamber’s March 15 Outlooks event. “Phoenix can’t remember anything,” Gammage was quoted as saying. “Tucson seems to have the opposite problem, you don’t forget anything.” That’s when my friend say “we still have people grumbling over some DAVID HATFIELD houses that were torn down for the Tucson Convention Center” and that was 40 years ago. I realized that I’m one of those people still grumbling. But it’s not about the houses. Those houses, mostly in barrios, were torn down as part of urban renewal in the 1960s to make way for the TCC, which opened in 1971. In the 1960s I was just a kid and didn’t even live in Tucson full time, so my recollections are a combination of how my aunts and uncles and other relatives who lived here felt and what I’ve come to know as an adult. One of my aunt’s favorite restaurants was El Charro Café and she was upset when its location on Broadway fell victim to urban renewal though she loved to go to the Court Avenue location until the day she died. So people — even Tucsonans — do get over these things. What they aren’t getting over is the monstrosity that replaced the houses, the Tucson Convention Center, which has been a white elephant from the day it opened. It’s not just the lifeless gray concrete architecture denoting that it was designed in the 1960s; it’s that the facility is not functional. The arena gets used only about 50 days a year and 15 to 20 of those days are for games of the University of Arizona hockey team. Outside of that, the Jehovah’s Witness convention uses it for two weeks each summer, the Tucson Gem and Mineral Show occupies for a couple of weeks in February and, most years, the Ringling Bros. and Barnum & Bailey Circus stops in for a few days in July. That’s it. And the city subsidizes the TCC to the tune of about $5 million a year. We taxpayers would be better off if the city would stop throwing good money after bad on the thing, try to squeeze every last drop out of it for a few years, then blow it up and get rid of it. In the meantime, plans could be developed for something that would really work to either spur on convention business, if that’s what Tucson can get, or to satisfy a realistic goal for what can happen downtown. There’s hardly anything about the TCC worth salvaging, save maybe the interior space of the Music Hall, which is at least acoustically sound. The argument isn’t so much the barrio that was destroyed. Most of us weren’t around to have a good idea of what it was like before it was torn down so we don’t miss it. Gammage is right that Tucsonans can get stuck trying to save the past to the detriment of looking to the future, but it’s not hard to forget the waste that is the TCC. It’s not like we’re talking history.
Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237.
EDITORIAL
Don’t mess with RTA money Steve Kozachik has been a refreshing breath of fresh air in the two years and four months he has been a Tucson city councilman. He has been right to raise questions and, in so doing, been a driving force changing some of the ways of City Hall for the benefit of taxpayers. But he couldn’t be more wrong with his latest challenge. Kozachik wants to tap some of the $2.1 billion in money voters approved in May 2006 as a half-cent sales tax hike for the 20-year Regional Transportation Authority and divert it to fixing potholes and repairing transportation infrastructure. According to an article in the March 23 issue of Inside Tucson Business, one of his first targets is the Regional Transportation Authority’s plan to widen Broadway from Euclid Avenue to Country Club Road. He says traffic flow data from studies done 24 years ago haven’t panned out and the widening is no longer justified. Kozachik wants voters to be able to rethink and stop some of the new projects and then be able to use the saved money for such things as fixing existing roads. Such a notion has so many things wrong with it that it’s difficult to list them all. • For starters, the regional transportation plan was an extraordinary coming together of interests. Over the past 40 years there have been countless plans that never came to fruition and at least three that were rejected by voters. The combination of projects for roads, public transportation and bikes and pedestrians was approved by 58 percent who said yes to the half-cent sales tax. • The Tucson City Council voted unanimously in 2005 on the city projects to be included in the plan. If there were issues with any of the projects that was the time to raise questions. That’s precisely why the Pima County Board of Supervisors didn’t include building a
bridge across Sabino Creek on Snyder Road, much to the chagrin of residents leaving east of the creek. There was even an unsuccessful campaign to have all voters reject the regional plan because the bridge wasn’t included. No other project in the plan came close to being scuttled then, nor should it now. • There are items each of us as individuals might dispute in the transportation plan but none of use should be entitled to remove any of them — even if the modern streetcar is looking more to be a dangerous and expensive boondoggle. • The regional transportation plan was about expanding capacity. Maintenance and operations are the responsibilities of municipalities and other jurisdictions. Just because those entities may not have spent their money wisely is no cause to change the plan. • The Regional Transportation Authority, which is charged with implementing the transportation plan, has done a remarkable job of staying on task and delivering projects as promised. Perhaps City Hall is so unaccustomed to keeping promises the bureaucrats never expected it could be done. • Failing to maintain roads isn’t something new for the city and allowing it to divert money from other sources would only enable it to continue to the subterfuge. • Keeping a promise to voters. Local governments haven’t always kept their promises to deliver on bond issues approved by voters. Granted, local officials have made a concerted effort to change that in the last few years but now is no time to go back to the days when the vote of the majority could be changed on a politician’s whim. For all the light Kozachik has been able to shine into the crevices of decision-making at City Hall, this latest idea would be a step back to the ways of the old days.
InsideTucsonBusiness.com
MARCH 30, 2012
21
THE DEBATE: HEALTH CARE IN THE SUPREME COURT GUEST OPINION: CON
‘Obamacare’ gives Congress license to micromanage every facet of our lives The U.S. Supreme Court this week heard arguments on what may be the most important constitutional case in a generation. Some of the nation’s top attorneys are debating the Patient Protection and Affordable Care Act, often called “Obamacare.” The eventual ruling could chart the boundaries of federal power for generations to come — not only for health care, but across the policy spectrum. A major focus of the Supreme Court hearings is the individual mandate — the law’s requirement that almost all Americans who aren’t covered by employers must purchase a health-care plan, whether they want to or not. The plaintiffs — including 26 states as well as individuals and businesses — argue that Congress has no authority to force people to buy insurance. Most Americans agree: A recent Gallup poll found that 72 percent — including 56 percent of Democrats — consider the mandate unconstitutional. Obama administration attorneys counter that Article I, Section 8 of the Constitution, known as “the commerce clause” — giving Congress power to “regulate commerce among the several states” — is more than expansive enough to validate the mandate. They rely on a list of Supreme Court precedents that stretch the definition of “interstate commerce” pretty far. In the 1940s, the court allowed Congress to
punish a farmer for growing wheat on his own land for his own use, on the theory that wheat prices would be affected if everyone did that. In the 1960s, the court classified civil rights laws as “regulations TIMOTHY SANDEFUR of commerce” even when they involved businesses that did practically no interstate business. And in 2005, the court ruled that Congress could prohibit someone from growing marijuana in her yard for her personal medical use, because federal laws against drugs are a kind of economic regulation. Still, the court has never held that the federal government may compel people to participate in commerce. And this is what makes the individual mandate unprecedented: Never before has Congress presumed to order average Americans to purchase a good or a service in the marketplace. Simply from the standpoint of semantics, the law’s defenders face a challenge. As ordinarily understood, the word, “regulate,” implies rules for activity that people have freely chosen to engage in (running a business, for instance). The word doesn’t imply forcing people, say, to start a business in the first place. Likewise, “commerce” implies economic
activity — but someone who fails to buy health insurance is not engaged in economic activity. Beyond these disputes over definitions lies a fundamental question about the extent of federal power: If Congress can force us to buy health insurance, what can’t it order us to buy? Practically any individual decision to buy something, or not to do so, has some theoretical effect on the economy as a whole. And if that’s all that’s needed to justify federal intrusion, limitless dictates could be imagined. For example, what’s to stop Congress from forcing us to buy spa memberships — or electric cars — in the name of making us healthier or more fuel-efficient, consumers? As Federal District Court Judge Henry Hudson, who ruled in favor of Virginia’s challenge to the individual mandate in December 2012, put it: The argument for the mandate’s constitutionality “lacks logical limitation.” Remarkably, the Obama administration has never offered a principled explanation of how to square the mandate with constitutional principles of limited federal government. Instead, Americans are offered more semantic games. We’re told the mandate only moves forward a purchase that would have happened in any case. People will now pay up-front for health care that they would have eventually paid for, on their own, when they received it. But again, this is a rationale without “logical limitation.” Some version of this argument could
be offered for practically any kind of forced purchase. If Congress commands you to buy something because lawmakers deem it “good for you,” then almost by definition, it’s something you might have bought on your own, eventually — so, voila, the mandate isn’t really a mandate at all! Bottom line: Upholding the individual mandate would set a treacherous precedent by licensing Congress to start micromanaging every facet of our lives. Striking down the mandate, on the other hand, could pressure Congress to finally get creative about reforming America’s ailing health care delivery system. With the mandate off the table, Congress could be forced to de-emphasize rigid bureaucratic prescriptions in favor of market-based reforms to expand competition and consumer choice. So this case is not just a pulse check for constitutional principles of limited government. The health of health care could also be on the line.
Timothy Sandefur is a principal attorney with Pacific Legal Foundation which, along with the Cato Institute and other limited government advocates, submitted a brief urging the Supreme Court to hold the individual mandate unconstitutional. Sandefur is also the author of “The Right to Earn a Living: Economic Freedom and the Law” (Cato Institute, 2010).
GUEST OPINION: PRO
Individual mandate in health care law: good for freedom, bad for free-riders By John E. Schwarz At the heart of this week’s U.S. Supreme Court hearings on the constitutionality of President Obama’s health-care law, is the “individual mandate” requiring every American to purchase health insurance. Its critics say the mandate violates basic constitutional principles of individual freedom and limited government. Opponents ask: If the federal government has the power to compel all Americans to purchase private health insurance, why couldn’t it require every American to purchase broccoli and other foods it deems healthy to reduce health care costs? They claim that if government has the authority under the interstate commerce clause to penalize even inaction — in this case, the decision not to buy insurance — there is effectively no limit on what government could require. As Judge Stanley Marcus of the 11th Circuit Federal Court of Appeals asked: “If they (the federal government) could compel this, what purchase could they not compel?” This idea has great currency in opponents’ circles, but its rationale is utterly flawed. Why? Because of “free-riders.” A free-rider is a person who benefits from something without paying for it, meaning somebody else
must shoulder the cost. A primary aim of the insurance mandate is to prevent free-riders who receive health-care services but do not pay for them because they lack adequate insurance coverage. In the health-care market, the only recourse that free-riders leave providers is to withhold their services in what are typically emergency circumstances — the very instances in which we all agree services should not be denied. It is often impossible, in any case, to determine whether individuals who are in severe pain or delirious can pay or not. Current law in fact, does not permit providers to deny medical services in these circumstances. And beyond these logistical and legal obstacles, most providers are also reluctant to deny care for humanitarian reasons. Free-riding, in turn, shoves the free-riders’ costs onto others through higher prices. This problem is so substantial that in 2009, Newt Gingrich castigated individuals who didn’t purchase health insurance yet could afford it, calling them free-riders and saying that they ought to be required by law at least to post a bond. An insurance mandate aimed at stopping free-riders is in complete harmony with a free market. Indeed, the mandate is essential for a free market to be able to operate properly,
which is why the Heritage Foundation, a fierce advocate of the free market, was among the first to propose mandating the purchase of health insurance as a solution to both the free-rider problem and rising health care costs. Other markets — like the ones for broccoli or spinach, or the vast majority of markets for other products and services — don’t normally face free-ridership issues at the point of service. Nor does free-ridership result from “inactivity” in these other markets the way it does in the health care market. These distinctions provide clear grounds for differentiating the mandated purchase of health insurance from the myriad other purchase options individuals have within other markets. Thus critics need not worry that the health care mandate represents a “potentially unbounded assertion of congressional authority” as articulated by the 11th Circuit Federal Court, which ruled the mandate unconstitutional in August 2011. Should the Supreme Court rule the insurance mandate to be unconstitutional, the mandate’s opponents will hail its decision as a victory for both freedom and limited government. The opposite will be so. The court instead, will have ruled for the one-sided autonomy of free-riders and rejected the freedom of providers, taxpayers
and consumers, subjecting them all to what is essentially a form of stealing. Providers will be legally required, not to mention under the influence of professional obligations going back to the Hippocratic Oath, to deliver services to the free-riders without knowing or often even being able to determine whether they will be compensated. To have to work without compensation is a core characteristic of forced labor. The providers then will be forced to finagle third-party consumers and their insurers — innocent bystanders — to pay for the freeriders’ costs by charging them higher prices. If this is a victory for freedom, it will be for a fraudulent anything-goes notion of freedom that is amoral. And if this is a victory for limited government, it will be so only in the false sense of a government rendered so impotent as to be incapable of protecting its own citizens from free-riders.
John E. Schwarz is distinguished senior fellow at Demos, a public policy organization in New York, and professor emeritus of government and public policy at the University of Arizona. He is writing “Common Credo: How Both the Left and the Right Have Led America Astray,” to be published in March 2013 by W.W. Norton.
22 MARCH 30, 2012
INSIDE TUCSON BUSINESS
OPINION BUSINESS INK
Are you tired of how Tucson is being Portland-ized? Here’s an issue Imagine Greater Tucson will never ask about: How satisfied are you with the Portland-ization of Tucson? Are you tired of Portland, Ore., being idolized as the city that Tucson aspires to become? The ideology connection is pretty clear: both cities are islands of liberalism in otherwise fairly conservative states. Many of Portland’s traits infatuate Tucson’s bureaucrat copycats. To start with the obvious, Portland has a modern streetcar system that serves downtown. The real cost of Portland’s trolleys, infrastructure and tracks can be hard to gauge since much of it was taxpayer subsidized through government grants and tax gimmicks. But based on various public records, the consensus puts the initial cost at $25 million per mile. For $200 million, Tucson’s streetcar system will cost $50 million per mile. When subsidized by taxpayers, perhaps every city is entitled to pricey public transit. We have family in Portland and they have quit riding the streetcar for one simple reason: public safety. With groups of friends, they used to take it downtown as patrons of the performing arts and to other civic events. Although they personally have not been victims, they know of people who have been robbed and assaulted on the streetcar on their way home by roaming gangs, meth-
heads and the homeless who come out after dark. Vandalism, shoplifting, theft and other crimes increased along the Portland route, so Tucson can expect that, too. It’s a scenario ROGER YOHEM for trouble. Instead of stealing an old Ford F-250 from a parking lot by the Rialto Theatre downtown, car thieves can hop on the streetcar to the University of Arizona Medical Center where the parking lot choices include a new Lexus, Mercedes or BMW. Tucson also is obsessed with Portland’s urban planning process. That’s how Imagine Greater Tucson came to town. Don’t be fooled by the sophisticated marketing about community visioning and regional planning. The real goal is to put urban growth boundaries in place. Under Oregon law, every metro area has a growth boundary. Public policy is jammed with restrictive water and land use regulations. Pima County already has its Sonoran Desert Conservation Plan in place but that doesn’t go far enough to satisfy the no-growth lobby. So Tucson wants to copy what Portland did.
Imagine Greater Tucson hired Fregonese Associates of Portland whose president once was that city’s planning director. With a heavy emphasis on compact development and buffers, he wrote most of the region’s growth plan. What else can Tucson copy from Portland? Portland is bike-friendly and building bike lanes everywhere. Tucson, too. Portland’s city council is perceived as progressives, mostly because there are so many political extremists there who elect them to office. Tucson, too. Both cities have large environmental activist groups, social activists and younger alternative-culture folks. Unfortunately, their weak job skills leave them unemployed, un-employable or under-employed. They compete for crummy jobs that reward them with a “livable” minimum wage. Oregon’s minimum wage is the second highest in the nation, at $8.80 an hour. Statistical economic research has concluded the net impact has been lost jobs. Business owners simply do more with less: they get by with four baristas instead of six. As of January, Portland had a relatively high unemployment rate of 8.2 percent. Tucson’s was too, at 7.9 percent. In Arizona, the $7.65 minimum wage is 40 cents more than the federal mandate. And since Tucson glorifies Portland,
InsideTucsonBusiness.com
Who will win the CD 8 Republican primary? Jesse Kelly Frank Antenori Martha McSally Dave Sitton
72% 12% 9% 7%
Next week’s poll: Should RTA and/or modern streetcar funding be re-directed to fix potholes and do street maintenance?
that city’s drug reputation can’t be ignored. Portland is known as the heroin capital of the Northwest. It scored national fame with 111 heroin overdose deaths in 1999. And although deaths have dropped since, Portland still had the nation’s highest per capita rate of heroin deaths in 2009. Portland also has a meth problem. Tucson, too. That’s why copper theft is so epidemic. To pay for more Portland-like intervention programs, free needles and drug rehab services, Tucson city council would probably have to take money away from its $40 million subsidy to SunTran. Had enough? Three years ago, BusinessWeek ranked Portland as the “most unhappy” city in America. That honor was based on high rates of crime, unemployment, depression, suicide, divorce, and gloomy weather. Portland sounds pretty messed up and miserable, which makes all this copycat scat pretty misguided and unappealing. A more admirable goal would be to uphold Tucson’s unique high standards instead of importing Portland’s inferiorities.
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.
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MARCH 30, 2012
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Cash $$$ on the spot Arizona Wide Call 928-237-8544 or Toll Free 855-601-0411
Closes 3/30/12 - Call 928-759-4004
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PUBLIC NOTICE
Macular Degeneration?
Notice is hereby given that the City of Benson, Arizona will receive sealed proposals for Municipal Legal Services until 3:00 P.M., local time, Monday, April 16, 2012, when they will be opened by the City Manager’s office and City Clerk’s office. All proposals must be directed to the following address: City Clerk, City of Benson, 120 W. 6th Street, Benson, Arizona 85602, or hand delivered to the City Clerk’s Office at the same address. All proposals shall be clearly marked “SEALED PROPOSAL FOR MUNICIPAL LEGAL SERVICES” on the lower left hand of the sealed envelope. The City is not responsible for the pre-opening of, post opening of or the failure to open a proposal not properly addressed, submitted or identified. Scope of work may be obtained from the City Manager’s Office, at the address named above, Monday through Friday, 8:00 A.M. through 4:30 P.M.; phone # (520) 720-6324, fax # (520) 586-3375, or email mquiroz@cityofbenson.com. The City Manager of the City of Benson reserves the right to reject any and/or all proposals or accept the proposals which they deem are in the best interests of the City. Proposals received after the time specified shall be returned unopened.
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