Inside Tucson Business 04/27/12 by Territorial Newspapers

LOOKING BACK AT WESTWARD LOOK Formal home and guest ranch has 100-year history PAGE 9

Your Weekly Business Journal for the Tucson Metro Area WWW.INSIDETUCSONBUSINESS.COM • APRIL 27, 2012 • VOL. 21, NO. 48 • $1

Long-term solutions kicked down the road Page 4

Tucson wants more flights Chamber pilots effort to attract more airlines Page 10

Kudos to Kittle and Kaiserman Kaiserman honored; Kittle to lead ABA Page 19

Inn

Trouble

Inside Tucson Business

Despite closure of Hotel Arizona, owner still seeks city deal PAGE 3

Keith C Hickman-Perfetti

City’s streets get Band-Aid fix

American closes reservations center, not ‘cutting’ jobs The “for sale” sign should go up sometime next month on American Airlines’ 83,000 square-foot building at 3350 E. Valencia Road that is its Southwest Regional Reservations center but contrary to reports elsewhere, the airline isn’t “eliminating more than 700 jobs” when the facility closes Aug. 24. American spokesman Tim Smith says that based on experience and seniority close to two-thirds of the 680 employees are being offered a choice of either transferring to another location with the or staying in Tucson and working from home. The remaining less experienced employees won’t have a choice but will be given the opportunity to continue working from home. American says it has about 150 home-based reservation workers in the Tucson region. For employees, either option could mean going to a different wage scale. And while it’s theoretically possible American could keep every employee currently working at the reservations center, the likelihood is that some will chose not to stay with the company. In announcing the change, American officials said their overall goal is to cut employee expenses by 20 percent. To that end Smith said selling the reservations center building will eliminate some overhead. Also, if it happens fast, a sale could bring in some extra cash as American’s parent AMR Corp. makes its way through Chapter 11 bankruptcy reorganization. Smith said the decision to close the Tucson reservations center was a matter of maximizing resources and shouldn’t be construed as a reflection on the employees working here. The Tucson office was the smallest of three reservations centers. One at American’s corporate headquarters in Fort Worth, Texas, has 1,900 employees and the other Cary near Raleigh, N.C., currently has 1,027. Smith said all of American’s domestic reservations are handled by centers in the U.S. American opened the Tucson reservations center in 1991 replacing one it closed in Los Angeles. At one point, the airline had numerous such offices across the country. In addition to closing to the reservations center, some job cuts were announced by American, including outsourcing jobs at nine North American airports where the airline has a limited number of flights — Calgary, Alberta; Columbus, Ohio; Hartford, Conn.; Memphis, Tenn.; Ontario, Calif.; Portland, Ore.; Reno, Nev.; Sacramento, Calif.; and Vancouver, B.C. — and closing two Admirals Clubs, at Washington Dulles and Kansas City airports.

2 APRIL 27, 2012

INSIDE TUCSON BUSINESS

InsideTucsonBusiness.com

APRIL 27, 2012

NEWS

Closing Hotel Arizona is no ploy by Humberto Lopez to get leverage on city

Carondelet’s Heart Institute to move to St. Mary’s campus Carondelet Health Network on Monday (April 23) announced its Heart and Vascular Institute, currently at 4888 N. Stone Ave., will relocate to the westside campus of Carondelet St. Mary’s Hospital, 1601 W. St. Mary’s Road, over the next six to nine months. Carondelet said the relocation will allow the St. Mary’s campus to become a state-ofthe-art premier cardiac and vascular care facility just as the eastside St. Joseph’s Hospital campus is home to Carondelet Neurological Institute. During the transition the Heart and Vascular Institute at Stone Avenue and River Road will continue to operate at full-strength.

Keith C Hickman-Perfetti

SB 1070 provisions might get OK’d by Supreme court

Employees and guests discovered Monday that the hotel would close for an indefinite time.

By Patrick McNamara Inside Tucson Business Word spread quickly Monday (April 23) that Humberto Lopez had closed the downtown Hotel Arizona and almost immediately, speculation began that Lopez had shuttered the 1970s-era hotel as a ploy to gain leverage over the City of Tucson. That’s simply not the case, according to Lopez’s lawyer. “In fact, this owner has talked about closing the hotel for three years because of the economy,” said attorney Ted Hinderaker. Hinderaker, of the law firm Hinderaker Rauh & Weisman, said Lopez has poured hundreds of thousands of dollars into the hotel each year for years to keep it afloat. Clsoing it this week was purely a business decision, he said. But the closure doesn’t mean Lopez plans to

Phone: (520) 295-4201 Fax: (520) 295-4071 3280 E. Hemisphere Loop, #180 Tucson, AZ 85706-5027 insidetucsonbusiness.com

quit pushing the city help for the hotel adjacent to the Tucson Convention Center (TCC). The latest proposal Lopez has sent the city includes allowing him to keep sales and bed taxes generated by the hotel to be used to repay a renovation loan. Under the proposal, Lopez agrees to partner with a national brand chain to run the hotel, spend as much as $35,000 to build a connection with the TCC, fully renovate the 308-room hotel within 24 months of approval of a deal with the city, provide preferential rates for TCC events and deed the property to the city until a complete reimbursement of sales tax and other abatements is made. “There really is no downside,” Hinderaker said, adding that all the financial obligations would be born by Lopez’s company. “If the business community and people of Tucson believe in convention business and a downtown hotel

is important to economic development, this is a proposal they should support.” He also said the sales and bed tax abatements would not go into effect until after Lopez completes the hotel renovations, secures funding and becomes part of a national brand. The estimated cost to refurbish the hotel would be between $25 million and $35 million, Hinderaker said. The nature of the renovations would be determined based upon what a national hotel chain wants to do with the property. Hinderaker said he thinks that such an agreement would not run afoul of the state constitution’s gift clause provisions that restrict governments from making special deals with private entities because all the tax

see HOTEL Page 5

PUBLISHER THOMAS P. LEE tlee@azbiz.com

STAFF WRITER PATRICK MCNAMARA pmcnamara@azbiz.com

LIST COORDINATOR JEANNE BENNETT list@azbiz.com

INSIDE SALES MANAGER MONICA AKYOL makyol@azbiz.com

EDITORIAL DESIGNER DUANE HOLLIS dhollis@azbiz.com

EDITOR DAVID HATFIELD dhatfield@azbiz.com

STAFF RESEARCHER CELINDA ARGUE cargue@azbiz.com

ART DIRECTOR ANDREW ARTHUR aarthur@azbiz.com

CARTOONIST WES HARGIS

STAFF WRITER ROGER YOHEM ryohem@azbiz.com

WEB PRODUCER DAN GIBSON dgibson@azbiz.com

ADVERTISING DIRECTOR JILL A’HEARN jahearn@azbiz.com

CIRCULATION MANAGER LAURA HORVATH lhorvath@azbiz.com

Inside Tucson Business (ISSN: 1069-5184) is published weekly, 53 times a year, every Monday, for $1 per copy, $50 one year, $85 two years in Pima County; $6 per copy, $52.50 one year, $87.50 two years outside Pima County, by Territorial Newspapers, located at 3280 E. Hemisphere Loop, Suite 180, Tucson, Arizona 85706-5027. (Mailing address: P.O. Box 27087, Tucson, Arizona 85726-7087, telephone: (520) 294-1200.) ©2009 Territorial Newspapers Reproduction or use, without written permission of publisher or editor, for editorial or graphic content prohibited. POSTMASTER: Send address changes to: Inside Tucson Business, P.O. Box 27087, Tucson, AZ 85726-7087.

Aggressive, skeptical questioning of Solicitor General Donald Verrilli from U.S. Supreme Court justices on Wednesday (April 25) suggest the Obama administration could face defeat on at least some of the provisions in Arizona’s anti-illegal immigration law SB 1070. At one point, Justice Sonia Sotomayor advised Verrilli, who represents the Obama administration at the high court, that his argument was “not selling very well.” She added: “Why don’t you try to come up with something else?” At another point Verrilli said the law amounted to an attempt by a state to enforce federal law, which is the federal government’s responsibility. “It’s not an effort to enforce federal law,” Chief Justice John Roberts replied. “It is an effort to let you know about violations of federal law. Whether or not to enforce them is still entirely up to you.” Roberts later commented, “It seems to me that the federal government just doesn’t want to know who is here illegally or not.” The federal government’s case centers on federal preemption, a legal doctrine that recognizes federal law as the supreme law of the land. When a federal law and a state law clash, generally the federal law trumps the state provision. The case is being heard by eight justices, following the recusal of Justice Elena Kagan, who worked on the Arizona case as solicitor general in the Obama administration prior to joining the high court. A decision in the case is expected by late June.

EDITION INDEX Public Notices Lists Profile Inside Media Meals and Entertainment Arts and Culture People in Action

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Briefs Finance Real Estate & Construction Biz Buzz Editorial Classifieds

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4 APRIL 27, 2012

INSIDE TUCSON BUSINESS

NEWS Acclaimed chef Janos Wilder has decided to close his namesake Janos and J-Bar restaurants, 3770 E. Sunrise Drive on the grounds of the Westin La Paloma Resort and Spa. The lease on the restaurants’ space was due to end this fall and by mutual agreement with the new owners of the resort, both sides decided it was time to go their separate ways. In an interview with Inside Tucson Business columnist Michael Luria, Wilder was complimentary about his dealings with the new owners. From now through May 26, which will be the restaurants’ last day, the nightly menus will consist of guest favorites over the years along with classic dishes Wilder has served since the original Janos opened downtown in 1983. The closures do not affect Wilder’s Downtown Kitchen + Cocktails, 135 S. Sixth Ave., that was opened last year. He moved Janos to the Westin La Paloma in 1998 and a year later added the more casual J-Bar concept. Among his honors, in 2000 Wilder was named Best Chef in the Southwest by the prestigious James Beard Foundation. “I’m both honored and proud to have spent the last 30 years contributing to the culinary community in Tucson and I am so appreciative of the support from my wonderful guests as well as the collective efforts of thousands of staff members who have worked with me over the years,” Wilder said.

Construction, hospitality lead Tucson job gains Even though 4,900 more people in the Tucson region were unemployed last month compared to March 2011, 6,900 fewer people had jobs and the total available workforce was down 1,900 so the unemployment rate dropped to 7.6 percent, from 8.5 percent a year ago, according to the state’s Office of Employment and Population Statistics. The unemployment rate for February was 7.8 percent but the state does not seasonally adjust the rate so year-over-year comparisons are better than month-to-month. The rate statewide, which is seasonally adjusted, edged down to 8.6 percent from 8.7 percent. The national unemployment rate for March also dropped, to 8.2 percent from 8.3 percent. Statewide, 18,900 jobs were added during the month, which was a gain exceeding the historic average and the largest overthe-month gain in March since 2006. Of those jobs, 18,300 were in the private sector and 600 were in the government sector. The leisure and hospitality sector led statewide gains, followed by construction. In the Tucson region those were reversed with the construction industry adding 2,300 jobs, a 15.5 percent jump from a year ago. The leisure and hospitality sector added 1,700 jobs for a 4.3 percent.

City could increase street repair fund, but longterm solutions remain miles down the road

Tim W. Glass

Janos to close Foothills restaurants next month

This patch of road near the intersection of Park Avenue and Drachman Street is an example of some of the worst roads in the city.

By Patrick McNamara Inside Tucson Business Conclusion of two parts. As roadway conditions continue to deteriorate, Tucson city officials have started to scramble to find money to fix crumbling streets. Tucson City Manager Richard Miranda presented the Tucson City Council with a 2012-2013 fiscal year budget proposal on Tuesday (April 24) that included an additional $2.9 million for streets maintenance. That figure represents more than 54 times the amount of general fund support for streets maintenance than the city has allocated in this fiscal year’s budget. The general fund is the budget area used to pay for most city core services like police, fire and other departments that don’t have independent revenue sources. In the past, the city has relied almost exclusively on statewide gas tax funding to pay for roads maintenance. The state’s Highway User Revenue Fund (HURF), an 18-cent pergallon tax on gasoline makes up the bulk of the fund, which the state distributes to local governments on a formula basis. In the current fiscal year, the city is using HURF money for 97 percent of it streets and roads maintenance budget. The fiscal 2013 proposal would lessen that reliance to 86 percent. “HURF funds are not enough,” Tucson City Councilman Steve Kozachik said at a recent constituent meeting at his midtown Ward 6 council office. Kozachik has requested city finance officials consider numerous options to make more money available for road repair work. One idea would be to refinance some of the city’s past transportation department debt, which would make available an esti-

mated $12 million that could be spent for repairs. Kozachik also has asked that the city lobby Pima County for additional help. While facing similar problems with faltering road conditions, Pima County Administrator Chuck Huckelberry recently proposed to the county board of supervisors that as much as $9 million be released from the general funds of fiscal 2012 and 2013 to begin needed roadway repairs. Huckelberry said the county could provide from $2 million to $3 million to the city for repair work. The money would come from cuts to the juvenile court system and other areas. Kozachik has said since Tucson represents about 40 percent of the county’s property tax base, an equal amount of the funding should be given to the city. County officials have not responded to the proposal. The councilman also has proposed allowing voters to approve reallocations of Regional Transportation Authority (RTA) funding to fix area roads. Voters approved the RTA plan in 2006, which imposed a 1-cent sales tax in the county to fund transportation and transit infrastructure expansions over the a 20-year span. Kozachik said some of the projects approved under the RTA have become obsolete or might need reductions of scale, in which case he would like voters to have the choice to redirect the already approved funding to roadway repair work. Other Tucson City Council members have not yet provided their own ideas for roadway repair funding options, although Councilman Richard Fimbres asked for details on how much of the proposed repair work in the city manager’s budget would oc-

cur in each council ward. Although the options presented for roadway repair at the council meeting and those proposed by Kozachik seek to tackle the ongoing problem of city streets in disrepair, none of the ideas address how the city intends to pay for repairs in the long term beyond one-time infusions of cash. Since the Legislature established the HURF system in 1974, it’s become common for Arizona municipalities to rely almost exclusively on the funding to pay for the majority of local street maintenance. But some cities have sought ways to lessen their reliance on HURF funding and supplement street maintenance budgets through local sources. The City of Mesa, as an example, dedicates a portion of local sales taxes to road repair. In the current budget year, the city has a $33.4 million budget for streets maintenance, nearly half of that total coming from local sales tax collections. Mesa has more than 3,200 lane miles of roadways, and has projected to have 94 percent of its collector streets and 89 percent of arterial roadways at or above acceptable condition, according to Mesa’s 2011-2012 fiscal year budget. The City of Phoenix also has diversified its revenue sources used to fund streets maintenance. In the current budget year, 42 percent of its maintenance funds comes from HURF. The remainder of the budget stems from various sources including state and federal grants and a two-percent local tax on telecommunication services. In fact, of the state’s three largest cities — Phoenix, Tucson and Mesa, respectively — Tucson relies most heavily on HURF money to maintain roads. The City of Tucson has more than 5,400 lane miles of roadway and in the current budget year has an estimated budget of $21.4 million. Transportation Department officials estimate that more than half of Tucson’s residential streets and more than a quarter of major roadways and intersections are in poor or failing condition. The city briefly sought to address road conditions through a certificate of participation program beginning in 2004. About $20 million was allocated for surfacing and reconstruction of streets in 2005 and 2006. City officials have estimated that it would cost as much as $850 million over the next ten years to repair roads and bring them into and maintain excellent condition. How or even if that would occur has not been determined.

Contact reporter Patrick McNamara at pmcnamara@azbiz.com or (520) 295-4259.

InsideTucsonBusiness.com

APRIL 27, 2012

NEWS

Picor’s ‘no-agenda’ roundtable is remarkably insightful event By Roger Yohem Inside Tucson Business For a get-together with no set program, Mike Hammond runs a terrific business “roundtable.” Once a year “or whenever,” the president and CEO of Picor Commercial Real Estate Services hosts about 25 business-related guests for lunch. Picor’s principals and brokers are required to attend and bring a guest. Hammond emcees the luncheon, telling everyone, “We are here to have an open dialogue on business. There is no specific agenda.” On Tuesday (April 24), a diverse mix of executives and managers gathered at the Arizona Inn. Among the organizations represented were Raytheon Missile Systems, Solon Corp., Merrill Lynch, Chase Bank, Arizona Commerce Authority, Metropolitan Pima Alliance, Diamond Ventures, University of Arizona, United Way of Tucson and Southern Arizona, Holualoa Companies, Miramonte Homes, Microbusiness Advancement Center, Tucson Mayor Jonathan Rothschild’s office, and Inside Tucson Business. With a firm grasp of time, topics, and the talent in the room, Hammond led the group through a lively discussion across many subjects. Among the notable comments:

• Jay Meridew, vice president of finance for Solon, said China has over-produced solar modules to the point that “no one can make money manufacturing them.” That has forced several foreign firms and Solon out of the production business. Basically, the Chinese government is subsidizing solar’s global growth and “eating the losses,” he said. The over-supply has driven down panel costs from about $1.70 to 90-cents per watt. In Tucson, that means it is now possible to get a six- or seven-year payback on residential solar without any electric company incentives or tax credits. • Ken Chapa, business attraction manager for the Arizona Commerce Authority, talked about economic development. Due to rising fuel costs, “land and buildings near rail lines or spurs are popular. Most inquiries are coming from California and Texas,” he said. Typically, clients who contact him provide a list of specific needs, which are then distributed to applicable economic development groups for their review. The Arizona Commerce Authority does not try to steer businesses to any specific part of Arizona. Locally, Tucson Regional Economic Opportunities “is an important partner. This is

their back yard,” he said. • Chris Kemmerly, owner of Miramonte Homes, is feeling more positive about real estate. Coming out of the housing crash, three home closings a month was a volume that became a sales norm. “This month, we will sell 10 homes. I am ecstatic,” he said. “Our housing market’s supply-demand balance point is six months. Tucson is down to four months of inventory. Officially, that puts us in a seller’s market.” But rising materials prices and a chokehold on available land tempered his enthusiasm a bit. With material costs projected to increase 20 percent this year, “new home prices will spike.” • Very carefully, public policy vice president Priscilla Storm of Diamond Ventures explained a sensitive political issue. With local governments facing ongoing budget issues, several elected officials have called for more public-private partnerships to help fix some community problems. “There are issues with public-private partnerships,” she said. “Business has a major concern; will their private dollar investments be well-cared-for by government?” Contact reporter Roger Yohem at ryohem@ azbiz.com or (520) 295-4254.

show attendees. By 2011, the number of attendees had fallen to 768,000. Sanders said Chicago provides a good example of the volatility of the convention business. It’s not just Chicago either, which has one of the largest convention spaces in the country in McCormick. Phoenix tripled the size of its convention center while attendance has remained flat. “The fundamental reality is the convention business is not a very reliable filler of hotel rooms,” Sanders said. The problem is compounded in Tucson where the aged TCC sits empty most of the year and requires nearly $40 million in improvements. In addition, smaller markets like Tucson trying to emulate what large markets like Chicago and Phoenix have done with their convention business have resulted in a glut of convention space. Lopez has been criticized for his efforts to get city help to refurbish his Hotel Arizona while at the same time finding private investors to purchase separate hotels and apartment complexes. In recent months, Lopez has assumed ownership of the Embassy Suites Tucson Williams Center, 5335 E. Broadway. He also owns

the Randolph Park Hotel, 102 N. Alvernon Way. Hinderaker said Lopez has been able to attract private investment for these and other projects because he has a record of successes. But he said the other hotel projects differ from what is planned for the Hotel Arizona because he purchased the other properties when they had fallen to the brink of insolvency, which made the investments a particularly good deal because purchase prices and interest rates were low. “If Bert hadn’t raised the money, those properties likely would have closed,” he said. When Lopez pulled the plug on Hotel Arizona this week, about 20 people were working at the hotel. Hinderaker said employees were provided severance pay and many will be placed in jobs in Lopez’s other hotels or apartment properties. The hotel originally opened in 1973 as Braniff Place and over the years has also been a Marriott and Holiday Inn. The hotel includes a 311-space parking garage and nearly 25,000 square feet of meeting space. Contact reporter Patrick McNamara at pmcnamara@azbiz.com or (520) 295-4259.

HOTEL continued from page 3 money provided would be paid back. Such an agreement with the city would not be unprecedented, according to Hinderaker who described hotel convention center projects as a chicken-and-egg scenario. In other words, he said, convention centers need a hotel nearby to ensure success as much as the hotel needs the convention center. “No city has developed a downtown hotel without a public-private partnership,” Hinderaker said. That depends on where you look, according to University of Texas-San Antonio professor Heywood Sanders, who last year argued against Tucson’s plan to build a new convention hotel downtown. “It has often been the case that hotels adjacent to and designed to service convention centers usually have involved some sort of subsidy,” Sanders said. “But there is no industry standard.” Las Vegas, for example, has been almost exclusively privately developed. Other cities, like Chicago and San Antonio, have publicly funded convention center hotel projects, and have seen mixed results. Convention attendance at Chicago’s McCormick Place has dropped significantly over several years. In 2006, McCormick had 1.1 million trade

This Week’s

Good News Sprucing up the medians The City of Tucson is nearly one month into a four-month project cleaning up medians and roadsides removing weeds, debris and dead plans from major roadways. According to city officials this week, crews have made it through almost 20 miles worth of roads, including: • Broadway, from Camino Seco to Country Club Road • Miracle Mile, from Oracle Road to Interstate 10 • Golf Links Road, from Wilmot Road to Swan Road • Speedway, from Campbell Avenue to I-10 • Silverbell Road, from Grant Road to St. Mary’s Road

Next up: • Speedway, from Wilmot Road to Camino Seco • Mission Road, from 22nd Street to Ajo Way • Campbell Avenue, from Grant Road to 22nd Street • Golf Links Road, from Wilmot Road to Houghton Road and Swan Road to Ajo Way • Oracle Road, from Drachman Street to Genematas Drive • Kino Parkway, from 22nd Street to Benson Highway • 22nd Street, from Camino Seco to Kino Parkway

The Tucson

INSIDER Insights and trends on developing and ongoing Tucson regional business news

What we’re up against Tucson Mayor Jonathan Rothschild told a group of folks gathered recently at the midtown Ward 6 council office, that he and other city leaders had been hard at work trying to attract a major employer to come to Tucson. Officials at the unnamed company were responsive, particularly when the mayor informed them the Arizona Commerce Authority had agreed to sweeten the deal with $2 million in tax breaks and other incentives. In the end, the deal fell apart when company representatives told Rothschild the state of Louisiana was willing to cough up $7 million in incentives to consummate the deal.

Starr Pass hang up The twice postponed foreclosure auction of the JW Marriott Starr Pass Resort and Spa is in limbo due to some extenuating circumstances that could arise regarding land ownership needed for access and utilities to the resort development. Without those, apparently bidders are unwilling to come anywhere close to the $145 million loan that developer Christopher Ansley has defaulted on. The 575-room resort in the Tucson Mountains, which opened in 2005, has continued to operate normally through the receivership process.

6 APRIL 27, 2012

INSIDE TUCSON BUSINESS

NEWS PUBLIC NOTICES Selected public records of Southern Arizona bankruptcies and liens.

BANKRUPTCIES Chapter 11 Business reorganization Nimbus Brewing Company LLC, 3850 E. 44th St. Principal: Jim Counts, member. Assets: $906,540.00. Liabilities: $161,840.08. Largest creditor(s): DAL Inc., Clifton Heights, Pa., $45,727.80, and Arizona Department of Revenue, $40,000.00. Case No. 1208122 filed April 17. Law firm: Eric Slocum Sparks Mark T. Kahlich and Marilyn M. Kahlich, 585 S. Cherry Ave. #151. Principal: Mark T. Kahlich and Marilyn M. Kahlich, joint debtors. Assets: $1,619,823.00. Liabilities: $3,380,747.00. Largest creditor(s): Citimortgage Inc., Gaithersburg, Md., $494,000.00; US Home Bank Mortgage, Owensboro, Ky., $395,939.00; and Henry L. Beken, Tucson, $365,000.00. Case No. 1208500 filed April 20. Law firm: Eric Slocum Sparks

FORECLOSURE NOTICES Sierra Industrial Park Delaware LLC and 26 Palms Delaware LLC 7125 and 7245 E. Golf Links Road and 2511 S. Kolb Road 85710 Tax parcel: 135-10-150H, 135-10-150J, 135-10-150L and 135 10 150R Original Principal: $7,260,000.00 Beneﬁciary: US Bank NA, as trustee, successor in interest to Bank of America NA, as trustee, as successor by merger to LaSalle Bank NA, as trustee for Bear Stearns Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certiﬁcates, Series 2006-TOP 22, care of C-III Asset Management LLC, Irving, Texas Auction time and date: 11:30 a.m., July 6, 2012 Trustee: Michelle Ghidotti, Assured Lender Services Inc., 2552 Walnut Ave., Suite 110, Tustin, Calif.

LIENS Federal tax liens Luxor Cafe LLC and Fayez M. Swailem, 3699 N. Campbell Ave. Amount owed: $8,806.10. Diamond Jade Concrete Cutting LLC, 512 E. 28th St., South Tucson. Amount owed: $2,788.57. Worley Engineering LLC and Roger Worley, 9191 N. Alabaster Place. Amount owed: $19,877.81. Nelson Works Inc., 4140 W. Camino Del Yucca, Sahuarita. Amount owed: $5,138.09. Dominguez Earthmovers Inc., 3750 W. Calle Dos, Green Valley. Amount owed: $20,850.30. TICICO LLC and Cindy Cox, PO Box 90244, 85752 (2640 E. Ganley Road #100). Amount owed: $160,208.05. Crystal Auto Glass Enterprises LLC and Shane Johnson, PO Box 41814, 85717 (2414 N. Forgeus Ave.). Amount owed: $57,736.20. Appliance Installations Inc. and Appliance Installations of CA, 7932 E. Shimmery Way. Amount owed: $155,889.52. Subs By Serendipity LLC and Lana Attar, 5401 N. Ventana Vista Road. Amount owed: $1,560.00. Fred J. White DDS PC, 3822 E. Fifth St. Amount owed: $4,115.56. Corpuz Holdings LLC, 1211 W. Calle Del Ensayador, Sahuarita. Amount owed: $4,639.49. Meridian Design & Construction Inc., 10651 E. Calle Nopalito. Amount owed: $1,243,66. Lloyd’s of Benson Auto Repair & Towing Inc., 1650 W. Sunset Road. Amount owed: $8,212.15. Rusty’s Equine Service Inc., PO Box 196, Arivaca 85601. Amount owed: $5,197.48. AAA Pool Service of Tucson Inc., 4039 S. Escalante Place. Amount owed: $1,395.82. Day-Night Deli-Mart and JT Whiteside Enterprises Inc., 2759 W. Camino Llano, Oro Valley. Amount owed: $21,437.83. Southern Arizona Medical Specialists Ltd., 4733 N. First Ave. Amount owed: $32,090.27. Frankie’s South Philly Cheesesteaks and Frank Santos, 2547 N. Campbell Ave. Amount owed: $12,253.19. Autoworld of Tucson Inc., 2411 W. Wetmore Road. Amount owed: $3,843,13. Bloom’s Heating & Cooling and Ron J. Bloom, 802 S. Catalina Ave. Amount owed: $10,705.30. Sonoita Fuel Stop LLC and Bradley Haber, 3270 Highway 82, Sonoita. Amount owed: $2,272.02.

Tech firms push, win change in state’s public records law By Hank Stephenson Inside Tucson Business PHOENIX — Tucson is already seeing some benefits from a tweak to public records laws designed to spur job growth and high-tech investment by fostering public-private partnerships between state universities and big research companies. When Sanofi-Aventis, the international pharmaceutical company with a research facility in Oro Valley, wanted to contract with the University of Arizona for some projects, it looked into state laws governing public records and became concerned their research would be subject to university open records laws, which could expose trade secrets. The company contacted state Rep. Vic Williams, R-Tucson, who drafted a bill (HB 2272) that sailed through the Legislature and was signed into law this month by Gov. Jan Brewer. It included an emergency clause, which means it became effective immediately. “What we were trying to ensure is private investment is protected,” Williams said. “Before this they were not protected and they were not doing business in Ari-

zona because of that.” The law exempts information or intellectual property from prepublication research developed in public-private partnerships from public records, and clarifies that private businesses working with state universities can outline in their contract what will be published. Williams said that although in practice, contracts between the two are already exempt this type of information from public record, putting it into state law protects businesses and encourages high-tech companies to invest in Arizona, partner with the universities and create jobs. “The net effect is this is going to bring jobs to universities,” he said. “The whole state will benefit from this but Southern Arizona is in a much better position to reap from this than other area of the state.” Sanofi representative Jack Cox said the company is already moving forward on one clinical research project contract with the UA that would not have been possible without the change to public records law, he said. Under the new law, the company would also be comfortable conducting clinical research trials for new drugs with the University of Arizona.

Though Cox couldn’t talk specifics of the contract because of ongoing negotiations, he said the decision to work with the UA hinged on the change in the law. “The bottom line is these possibilities now exist for Sanofi and for other researchbased high-tech companies because of these change in the public records law,” Cox said. Steven Zylstra, president of the Arizona Technology Council, said the change brings Arizona into line with many other states that already exempt this type of information from public records, and gives Arizona a competitive edge when research companies are looking to contract with universities. But Leslie Tolbert, senior vice president for research at the UA, said she doesn’t expect a flood of contracts now that the new law has been enacted, because the university handles many contracts with private companies, and she has never heard of any concerns about the public records laws before. She said the contracts the UA writes already protect their business partners, but making it clearer doesn’t hurt.

Despite what lawmakers pass, Brewer is using her veto stamp By Hank Stephenson Inside Tucson Business PHOENIX — State lawmakers have so far heeded Gov. Jan Brewer’s warning against sending her any more bills until they have agreed on a budget. She threatened to veto any bills until she receives a budget she deems acceptable. But even before that, of more than 300 bills legislators passed this year, Brewer vetoed 18 bill, including: • HB 2647 that would have made several changes to Tucson’s downtown revitalization Rio Nuevo district. Sponsor Rep. Ted Vogt, R-Tucson, said it would have allowed Rio Nuevo to evolve to meet current needs downtown, including working more closely with businesses. There is still hope the measure could be revived and signed once the budget issue is resolved. • HB 2729 that would have allowed guns

into public buildings including libraries, city halls and courts, except where signs, metal detectors, public safety personnel and secured gun lockers were provided. Brewer said she was concerned about security costs and the fact that legal precedence has recognized the legitimary of laws prohibiting firearms in “sensitive places such as schools and government buildings.” • HB 2362 that would have put state parks funds off-limits from fund sweeps that have been used to balance the state budget in recent years. Brewer said the issue involves certain specific fund accounts but the measure included all funds at the State Parks Department. • SB 1310 that would have doubled the amount of money to $5,000 for small claims cases in justice courts. Sponsor Sen. Frank Antenori, R-Tucson, said the bill was intended to address changes due to inflation. Brewer sided with the William E.

Morris Institute for Justice, which opposed the increase saying the small claims division doesn’t have the time or expertise to take on more complicated cases. • SB 1323 that would have allowed the volunteer Arizona Rangers to equip their vehicles with flashing red and blue lights. Brewer said it would be “dangerous to confuse the public by using red and blue lights on civilian vehicles” and suggested they use amber colored lights instead. • HB 2757 that would have allowed for electronically-lit commercial advertising billboards on highways. Astronomers opposed the measure saying it would created light pollution that could endanger their future research. Brewer said the industry that employs more than 3,000 people and and puts more than $250 million annually into the state’s economy was too important.

InsideTucsonBusiness.com

APRIL 27, 2012

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InsideTucsonBusiness.com

APRIL 27, 2012

PROFILE Westward Look Resort celebrates its own 100th birthday

I.T. Genius

Courtesy Westward Look Wyndham Grand Resort & Spa

By Christy Krueger Inside Tucson Business While nearly all of us, in some way, observed the 100th birthday of our state in February, Westward Look Wyndham Grand Resort & Spa is the only resort in Tucson celebrating its own centennial this year. Commemorative events are being held throughout the year, and the public is welcome to join in. Back in August 1912, William and Maria Watson built their rustic home on 172 acres at the base of the Santa Catalina Mountains. They soon added cottages to make room for all the guests who wanted to visit the new state and see the “wild West.” The property changed hands several times and the accommodations grew. “It became a dude ranch in the 30s and the horse component started then,” said Jerry Jensen, director of sales and marketing for the resort. In the 1940s, Bob and Beverly Nason bought the property and named it Westward Look, drawn from a 19th century poem by Arthur Hugh Clough. Chicago artist Haddon Sundblom, known for creating modern-day images of Santa Claus for the Coca-Cola Company, became a regular visitor and close friend of the owners. Sundblom often painted at the ranch, and in the 1950s he portrayed the Nason children with Santa Claus in his famous Christmastime Coca-Cola advertising art. Other milestones of the decade included the installation of air conditioning at Westward Look and the arrival of Walt Disney Studios to film its nature documentary “The Living Desert.” The evolution continued as more rooms were added, half the acreage was sold, tennis courts were built in the 1960s and the Gold Room restaurant opened in 1972. “RKO (film studio) owned the resort in the 80s and into the 90s. We saw more celebrity visitors then,” Jensen said. “What is now the gift shop was once the Dean Martin suite.” Fortunately, the resort’s many owners retained archives of its history. In recognition of its centennial, Jensen and new general manager David Yamada are expanding the collection through a “Call for Treasures” contest going through this year and a commemorative book that’s to be released in June. For the contest, former guests are asked to submit photos and souvenirs from their stays at the resort. The top three submissions, as judged by Yamada, will earn the entrant a resort gift certificate. The 64-page keepsake book, “History of Westward Look: 100 Years in the Making,” will include a selection of items submitted during the early part of the contest. Jensen said the book, which will be unveiled at a public event along with an exhibit of the contest items, will be sold in the gift shop and

The

Clockwise: Bob and Beverly Nason and their daughters, Lani and Sancy, circa 1950s; Westward Look today; Front entrance Westward Look, 1968.

online. Memorabilia collected to-date include photographs from guests’ visits, old brochures and postcards, a room registration receipt for $5, a 40-year-old T-shirt and a 1970s-era base plate from the Gold Room. The plate’s owner said she bought it on eBay. Another page in the history of Westward Look opened on Feb. 1 when the resort became affiliated with the Wyndham brand, the first in Arizona to be a part of its premiere Wyndham Grand Collection. Properties in the collection represent what Wyndham sees as unique and refined guest experiences in key locales. “The brand affiliation allows a greater awareness of the property. It’ll open doors to those who hadn’t heard of us before. Jerry has already seen an influx of activity,” Yamada said. “We have a national sales force we didn’t have before and national clout, as well as central reservations,” Jensen added. “There’s only so much an independent can do. A certain segment feels strongly toward brands. This is an assurance of the level of service and product.” In 2010, Westward Look was designated a Certified Green Hotel by Arizona Hotel & Lodging Association (AzHLA) for its environmentally friendly initiatives. Practices followed by the resort to minimize its carbon footprint include recycling, water

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Westward Look Wyndham Grand Resort & Spa 245 E. Ina Road www.westwardlook.com (520) 297-1151

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preservation, xeriscaping and the use of low-energy light bulbs. Wyndham brought an additional aspect to the property with its emphasis on going paperless. “We have our own garden to make our produce and we cut back a lot on the amount of grass we had. AzHLA has pre-selected criteria that must be maintained. It was a great start for us, but it’s not enough. Our next goal is to be LEED certified,” Jensen said. Even with his eye on the global market, Jensen doesn’t forget the locals. He brought music back to the resort’s Lookout Bar & Grille on weekends, and a Centennial Summer Special, starting in late May, will offer guest rooms for $100 per night. “We’re still formulating plans for the 100th anniversary party,” he said. “As a culmination of the year, we want to have a really special Christmas season. It will allow us to put the icing on the gingerbread house.”

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10 APRIL 27, 2012

INSIDE TUCSON BUSINESS

MEDIA

Clear Channel radio once again goes without top Tucson exec

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By David Hatfield Inside Tucson Business For the second time in less than two years, the operator of the largest group of radio stations in Tucson is without a top local executive and, due to a vacancy at the No. 2 spot, the highest ranking executive is the local sales manager. Shanna McCoy departed April 19 as market manager of Clear Channel Media and Entertainment’s seven-stations group, just 14½ months after taking over the job. There was no official explanation and Clear Channel didn’t immediately name a replacement except, according to advertising clients, local sales manager Rodney Shepherd, who has been in the job for eight months, is now overseeing the operation on an interim basis. Steve Clement, who had been in the No. 2 position as director of sales, transferred last month to Clear Channel’s Phoenix operations, after 21 years in Tucson. Although McCoy had worked for Clear Channel and other broadcast companies for several years, Tucson was her first market manager assignment. The year before her arrival, she was director of sales for Clear Channel in Albuquerque and had made other career stops in Fayetteville, Ark., and Phoenix. While some trade publications have suggested recently that Clear Channel might eliminate the position of market manager at its stations outside the 50 largest markets — Tucson is ranked No. 62 — the departure of McCoy doesn’t apppear to be part of a larger number of managers who are exiting their jobs. McCoy’s tenure in Tucson was marked by what insiders described as micromanagement and condesencion in dealing with employees and a bunker mentality to the outside world. Last fall, she had her office moved to the center of Clear Channel’s building at 3202 N. Oracle Road, apparently so she could keep closer tabs on employees. (As far as talking to the outside world, I can say from first-hand experience, McCoy never returned a phone call or email to me in the time she was here, which wasn’t the case with her predecessors.) Competitors suggest a factor that might have contributed to McCoy’s departure is that the Clear Channel stations haven’t kept pace with the market in advertising revenues. Miller Kaplan Arase & Co., a Los Angeles-based accounting firm that issues confidential monthly revenue reports in markets across the country, has been showing that Tucson market radio revenues are up by double-digit percentages this year but Clear Channel has fallen behind Cumulus Broadcasting in billing,

despite the fact that Clear Channel has two more radio signals than Cumulus. Last November, three Clear Channel stations flipped formats as My 92.9 KMIY replaced the Mountain KWMT on 92.9-FM, the conservative news-talk format of KNST replaced Spanish hit music on 97.1-FM and Spanish oldies replaced an all-comedy format on 1450-AM. Before McCoy’s arrival in February 2011, Clear Channel went without a Tucson market manager for five months after Tom Zlaket Jr. was let go. Zlaket, who previously was director of sales, was named market manager, first as interim and then permanently, immediately after the departure of Debbie Wagner in December 2008. Wagner had spent most of her 24-year career in Tucson media and had been Clear Channel’s top local executive all but 14 months since the company acquired its Tucson stations in 1999. Since leaving Tucson, Wagner has been Clear Channel’s market manager in San Diego. The Clear Channel cluster of Tucson radio stations is made up of KRQ 93.7-FM, Hot KOHT 98.3-FM, KMIY, KNST 97.1-FM/790-AM, La Preciosa KTZR 1450-AM and Tejano KXEW 1600-AM.

New at KLPX Beth Simmons is the new 2-7 p.m. personality on KLPX 96.1-FM. She comes to the rock station from American Forces Network in Italy where she worked while her husband served tours of duty in Afghanistan and Iraq. She has also worked for stations in the El Paso, Las Vegas and San Francisco markets. Simmons replaces Scott Barnett who left in March. Barnett previously had been part of the station’s morning show but was moved to the afternoons in the summer of 2010 when parent company Arizona Lotus Corp. moved “The Frank Show,” hosted by Frank Brinsley, to KLPX from KFMA 92.1-FM/101.3-FM.

Padres en espanol The Tucson Padres this week announced they’re now broadcasting their games in Spanish on Radio Vida KEVT 1210-AM. Jaime Cardenas and Jose Luis Olmos will call the games in Spanish with Francisco Gamez, director of Hispanic marketing for the Padres, also providing analysis. These are not to be confused with the English broadcasts called by Tim Hagerty airing on Tejano KXEW 1600-AM.

Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237. Inside Tucson Media appears weekly.

InsideTucsonBusiness.com

APRIL 27, 2012

SOCIAL MEDIA SOCIAL MEDIA IN THE WORKPLACE

Asking job applicants for passwords is legally risky Should employers ask job applicants for their user names and passwords to access the applicant’s personal social media accounts? The idea of logging in to someone’s social media account as part of a job interview seems intrusive, but the practice has become increasingly popular among employers. One high-profile example of this practice surfaced when the Associated Press reported in April that the Maryland Department of Public Safety and Correctional Services asked an employee at a reinstatement interview for his Facebook log in information to ensure that the employee was not JOHN BALITIS affiliated with a gang. Shortly after the report, the American Civil Liberties Union commented on how this interview tactic was a gross invasion of privacy, akin to reading someone’s snail mail. Facebook’s chief privacy officer released a similar statement, cautioning employers that extracting user names and passwords from job applicants “undermines privacy expectations and the security of both the user and the user’s friends.” Moreover, according to Facebook, the practice “exposes the employer who seeks this access to unanticipated legal liability.” Legislators are joining in the debate. In response to the Maryland state agency’s asking for Facebook passwords from prospective employees, the Maryland legislature passed a bill making it unlawful for employers to ask employees for social media passwords. At least four other states are considering similar measures. Two U.S. senators, Richard Blumenthal, D-Conn., and Charles Schumer, D-N.Y., have asked the Equal Employment Opportunity Commission and the Department of Justice to investigate the recent surge in employer practices for violations of federal law. Setting aside the potential violations of federal and state laws aimed at protecting privacy, employers who engage in this practice also are exposing themselves to liability for job discrimination. When logging into someone’s social media account, an employer may inadvertently learn about a person’s protected characteristic — a characteristic protected by federal law, such as anyone over the age of 40 — which would not have been otherwise apparent. If the employer then subsequently declines to hire the individual, it is possible the prospective employee would allege a failure to hire on the basis of that protected characteristic. As a best practice, employers are well-advised to not ask applicants for social

media account log in information. At most, employers should only view the information publicly available through social media. Even then, however, the employer should use a neutral third party, or, at the very least, appoint one person who is not directly responsible for hiring to review the social media accounts. Then, the neutral

third party, who is aware that protected characteristics should not be considered in hiring decisions, can screen the information provided to the decision-maker. Such a practice allows the employer to gain information about prospective employees through social media while also minimizing the extent to which improper

information will be passed on to the individuals responsible for hiring.

Contact John Balitis, an attorney with Fennemore Craig practicing in the labor and employment area representing employers in arbitration, litigation and administrative proceedings, at jbalitis@fclaw.com.

12 APRIL 27, 2012

INSIDE TUCSON BUSINESS

OUT OF THE OFFICE MEALS & ENTERTAINMENT

ARTS & CULTURE

With Cinco De Mayor coming, Wrapping up and looking let’s talk about eating tacos ahead to 2012-13 seasons will be celebrating with two-for-one Dos The organizers who created the AriEquis XX drafts and $5 Patron tequila. zona Taco Festival in Scottsdale are bring• El Charro Café — www.elcharrocafe. ing the event to Tucson. From 11 a.m. com — locations: 311 N. Court Ave. (520) – 7 p.m. Saturday (April 28), the infield at 622-1922; 6310 E. Broadway Rillito Downs, 4502 N. First in El Mercado (520) 745-1922; Ave., will be transformed for 7725 N. Oracle Road in Oracle the Tucson Taco Festival. Crossings, Oro Valley, (520) 229A $10 ticket gets you into the 1922; 6910 E. Sunrise Drive in festival and then you can sample Ventana Village (520) 514-1922; as many tacos as you desire for and 15920 S. Rancho Sahuarita, $2 each. Beyond taco tasting, Sahuarita, (520) 325-1922 there will be a boutique tequila • Sir Veza’s Taco Garage — tent, a lucha libre wrestling ring, www.sirvezas.com/ — 4699 E. a hot chili pepper and taco Speedway (520) 323-8226 and 220 eating contest, a bartender W. Wetmore Road (520) 888-8226 margarita challenge and a kids MICHAEL LURIA zone. There will also be live music throughout the day. • Tucson Taco Festival — www. For a more tranquil celebration of Cinco tucsontacofestival.com/ de Mayo, the JW Marriott Starr Pass Resort and Spa is offering a tequila tasting. From 5-8 p.m. May 5, the resort’s Salud Lobby Lounge will have samples from 21 anejo, reposado Cinco de Mayo is next weekend and and blanco tequilas and representatives if there’s one Tucson restaurant that has from seven different brands to answer quesa lot of experience celebrating the holitions. Live entertainment will be provided by day, it’s El Charro Café. This year marks resident guitarist Gabriel Francisco Romo. the restaurant’s 90th celebration of the The event is an expanded version of the holiday that is rooted in the victory of resort’s complimentary nightly tequila toast. Mexico’s army over the French in 1862. • Salud Lobby Lounge at JW MarSo for El Charro, the number “90” will riott Starr Pass Resort and Spa, 3800 W. play a significant role is celebrations, with Starr Pass Blvd. — www.jwmarriotts90-cent seven-ounce Corona and Pacifico tarrpass.com/ — (520) 791-6015 cervezitas or Sauza tequila margaritas. There will also be 90-cent food specials. In addition to five El Charro Cafés, Contact Michael Luria at mjluria@ the Flores family now also operates two gmail.com. Meals & Entertainment appears Sir Veza’s Taco Garage restaurants which weekly in Inside Tucson Business.

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March 9 and celebrity chef, TV host and The Rogue Theatre, 300 E. University author Anthony Bourdain on April 21. Blvd. in the Historic Y, wraps up its There will also be three performances of 2011-2012 season with a presentation of the Broadway musical “Fela!” April 12 William Shakespeare’s “The Winter’s and 13. Tale” at 7:30 p.m. Thursdays through Besides the aforementioned Saturdays and 2 p.m. Sundays co-presentation of Carol through May 13. Burnett, Broadway In Tucson’s First published in 1623, the 2012-2013 season at the Music play is both a drama and a Hall in the Tucson Convention comedy and each perforCenter complex features five mance is followed by a stage productions: the Cole discussion with director Porter classic comedy “AnyCynthia Meier and the cast. thing Goes” Nov. 20-25; the Tickets are $30 each with the musical “Memphis” Feb. May 3 and 10 performances 26-March 3; the return of half-price. Buy them online at HERB STRATFORD “Wicked” March 20-April 7; www.theroguetheatre.org/. Blue Man Group April 23-28; The Rogue Theatre goes and “Million Dollar Quartet,” a musical into its eighth season in September with these plays: “Journey to the West,” a 16th inspired by the true story of record executive Sam Phillips bringing together century Chinese epic about a monk’s Elvis Presley, Johnny Cash, Jerry Lee 17-year journey to India; “The Night Lewis and Carl Perkins for an impromptu Heron,” a black comedy about two jam session the night of Dec. 4, 1956, will middle-aged men recently unemployed and being blackmailed who are struggling wrap up the season May 7-12, 2013. to survive; “Mother Courage and Her Children,” a play written by German playwright Bertold Brecht in 1939 after the invasion of Poland about the effects of There are three student artwork shows anyone trying to profit from war; “Kafka’s I suggest you check out. First let me Monkey” and “Metamorphosis,” billed as commend to you a pair of student exhibits two parables about the modern world, the with the annual Master of Fine Arts first shows how a chimpanzee reveals Thesis exhibit at the University of what it is to be human and the second is Arizona Museum of Art and the Joseph about a young man who awakens to Gross Gallery, 1031 N. Olive Road on the discover he has become an enormous UA campus, features the work of 15 insect; and wrapping up the season with graduating students. Up though May 13, another Shakespeare play, “Richard III.” the annual showcase of graduating artists New next season, the Rogue Theatre is always thought provoking. will have Saturday matinees. As encourMeanwhile in the Louis Carlos Bernal agement to buy early, season ticket Gallery at Pima Community College’s packages purchased by May 13 will west campus, 2202 W. Anklam Road, has include one free ticket per package. the annual juried student art exhibit up

Art

through May 4.

Planning ahead And, as long as we’re looking ahead, both UApresents and Broadway In Tucson have announced their 2012-2013 seasons. UApresents has scheduled 32 events starting with the season opener Sept. 26 featuring nine-time Grammy Award-winner Bonnie Raitt. Other marque performers on stage at Centennial Hall on the UA campus include a road show titled “Indecision 2012” featuring some of the comedians from Comedy Central’s “The Daily Show” on Oct. 1; Celtic Woman’s Christmas show Dec. 16; Carol Burnett (co-presented with Broadway In Tucson) Jan. 26, dancer-illusionists MOMIX Feb. 24, jazz musician Wynton Marsalis

Film At the multiplexes, the Edgar Allen Poe drama “The Raven” starring John Cusak, opens this week. There’s also a new comedy, “The Five Year Engagement,” starring Jason Segel and Emily Blunt and their long road to the altar despite their best intentions.

Contact Herb Stratford at herb@ ArtsandCultureGuy.com. Stratford teaches Arts Management at the University of Arizona. He appears weekly in Inside Tucson Business.

InsideTucsonBusiness.com

APRIL 27, 2012

GOOD BUSINESS WOMEN IN BUSINESS

Tips on how to bring dream of retirement back within reach For most people these days, the idea of retiring early is just a dream â&#x20AC;&#x201D; itâ&#x20AC;&#x2122;s not very realistic. This is due, in part, to the costs associated with obtaining health insurance before age 65, when Medicare eligibility kicks in. And, even with Medicare, a retireeâ&#x20AC;&#x2122;s younger spouse or dependents often arenâ&#x20AC;&#x2122;t covered. Fortunately, the 2010 Patient Protection and Affordable Care Act (PPACA) has changed the playing field somewhat, opening up new avenues for the early retiree; however, its provisions will take several years to be fully effective. So what can you do to find affordable care in the interim? Here are some tips for bridging the gap: â&#x20AC;˘ Enroll in a working spouseâ&#x20AC;&#x2122;s group plan. This is probably the most common and least expensive way for a retired spouse to obtain health insurance. Some companies offer family coverage for domestic partners. Be aware, however, that the working spouse usually has a limited time in which to enroll the retired spouse after the retiree has lost health insurance coverage. â&#x20AC;˘ Qualify for retiree health insurance with your current employer. Although employers seldom subsidize the cost of retiree health insurance, such coverage still tends to be much less expensive than an individual insurance policy. Few employers offer this option, however, and you should not assume you, or your spouse, are eligible. Aslo, if it is available, be aware that premiums can increase, benefits can change and/or employers can discontinue coverage. Be sure to determine whether retiree coverage will replace or supplement Medicare. Missing the enrollment date for Medicare could be an expensive oversight. â&#x20AC;˘ Continue group health insurance under the federal Early Retiree Reinsurance Program (ERRP). The new ERRP reimburses employers up to 80 percent of the premiums for group insurance for retirees age 55 or older, their spouses, and their dependents. While this may prove to be an

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affordable option, be aware that the federal subsidies for the employer do not automatically reduce the retireeâ&#x20AC;&#x2122;s premium cost. â&#x20AC;˘ Elect COBRA benefits. Retirees and their dependents may be eligible for continued employer benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA mandates that employers with 20 or more employees must continue group health insurance for terminating employees for a period of time. The number of months someone can retain group insurance coverage depends on the state. In Arizona, the extension period is 18 months, though some people with special qualifying events may be eligible for a longer extension. The extension of coverage is not subsidized, which can cause sticker shock. Today, most states, including Arizona, require group plans to offer a conversion privilege after COBRA is exhausted. Again, be aware that the benefits are generally limited and the rates expensive. â&#x20AC;˘ Buy a state-sponsored guaranteed health insurance plan. These are plans eligible under Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Under PPACA, states must offer insurance coverage for qualified residents, regardless of preexisting conditions. By 2014, uninsured retirees who make too much to qualify for subsidized health plans will be able to buy coverage, regardless of health, through private insurers via a state-sponsored insurance exchange. The cost for state-sponsored guaranteed health insurance will be higher than insurance purchased through private insurers, but you cannot be turned down. â&#x20AC;˘ Start a small business or work parttime. Some states require insurers to offer group plans to the self-employed. Small group plans are usually more cost-effective and offer better benefits than most individual health insurance contracts. If starting a business is unrealistic, retirees may get health insurance through part-time work. While it is rare for employers to cover part-time employees, some businesses â&#x20AC;&#x201D; such as

Starbucks, Nordstrom, and Barnes & Noble â&#x20AC;&#x201D; provide benefits for employees working 20 hours or more. â&#x20AC;˘ Buy an individual insurance plan. Because premiums frequently increase along with age and health complications, insurance purchased from a private insurer is the retireeâ&#x20AC;&#x2122;s most expensive option, if he or she can qualify at all. (Though after 2013, insurance companies cannot deny applicants due to pre-existing conditions.) Individual plans often do not provide the comprehensive coverage the retiree is accustomed to. High-deductible plans combined with a Health Savings Account are becoming an increasingly popular solution. These plans usually have a $5,000 to $10,000 deductible with a limit on out-of-pocket costs. Read the fine print and understand what expenses meet the deductible. Some plans consider only â&#x20AC;&#x153;normal and customaryâ&#x20AC;? expenses. Any excess out-of-pocket expense will not be credited toward the deductible. Estimating your future medical costs is challenging. Not only are medical and drug costs growing at a rate higher than inflation, but long-term costs due to an individualâ&#x20AC;&#x2122;s medical conditions and longevity are hard to predict. With proper planning, the ability to retire early may be more than just a dream.

Contact Gigi Schneppat, a financial advisor representative of Commonwealth Financial Network at Professional Wealth Strategies, at gigi@pwsaz.com or (520) 529-3644. Schneppat is a member of the Greater Tucson chapter of the National Association of Women Business Owners (NAWBO), whose members contribute this monthly column.

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14 APRIL 27, 2012

INSIDE TUCSON BUSINESS

INSIDE TRAVEL

Metro Chamber looks at paying to add Tucson airline service By David Hatfield Inside Tucson Business Call it putting their money where their mouth is when it comes to improving airline service at Tucson International Airport, the Tucson Metro Chamber is organizing a task force to develop an air service incentive program. Bill Holmes, chief operating officer of the chamber, is leading the effort after a meeting he had with Tucson Airport Authority executives. “The problem is the airport is restricted in some of the things it can do,” Holmes said. “But let’s say we could get 100 businesses to put in $5,000 each that be a $500,000 incentive that could make an attractive presentation to an airline. And it’s not just because of the dollars but it shows a commitment to wanting improved air service in Tucson.” Holmes said he anticipates a third meeting before the end of May and he welcomes business leaders who want to become involved. (Holmes’ email is bholmes@tucsonchamber.org or call him at (520) 792-2250, ext. 134.) Participants so far have included representatives from the major resorts and other major businesses including Raytheon Missile Systems, Tucson Electric Power, University of Arizona Medical Center, Larsen Baker Commercial Real Estate and a growing list of Tucson Metro Chamber members. The incentives to airlines would be separate from an incentive program the Tucson Airport Authority initiated in October that includes up to $75,000 in marketing co-op money and waived landing fees for a year to any airline that starts a new route to a targeted destination and maintains it for a year. Holmes said the kind of incentives his group is talking about have been successfully used elsewhere, including: • Pittsburgh International Airport, which is being looked at by a new airline named PeoplExpress. • Cleveland-Hopkins International, which was considered vulnerable to cuts when its main airline, Continental merged into United. The airport has largely been spared from cuts. Holmes says he hopes the discussion about the incentives is part of a larger conversation the Tucson region needs to have in regards to using Tucson International Airport. From data derived about airline tickets, it’s estimated that as many as 1.3 million people a year living in Tucson region zip codes are going to Phoenix Sky Harbor Airport. If just half those people last year chose to fly out of Tucson instead, the airport would have set a record of more than 4.3 million passengers. The people going to Phoenix aren’t properly valuing their time, not to mention the added expenses of getting to and from the airport, Holmes said, admitting that he had been a victim of that mindset, too. Further, surveys have shown that in most

cases, airfare savings from Phoenix are marginal at best. A survey done last November by Inside Tucson Business found that for the first time in five years, the average airfare to the 10 most heavily traveled destinations from both Tucson and Phoenix were actually slightly cheaper from Tucson.

March passenger traffic through Tucson International Airport was up 5.2 percent over March 2011 making it the busiest month in two years, since March 2010 when there were 367,434 passengers. This chart shows each airlines’ passenger totals and market share for March 2012 compared with March 2011 and the totals for the first three months of both years.

Tourism recession over?

Airline

Passenger traffic going through Tucson International Airport topped 350,000 in March, only the second month that has happened since the effects of the economic recession hit the tourism industry in 2008. This year’s March total was 358,670 passengers, up 17,714, or 5.2 percent, from March 2011. Since July 2008, there has been only one other month that had a higher total. It was March 2010 when there were 367,434 passengers. Despite a 0.8 percent decline passengers in January, a 3 percent jump in February coupled with the March total means airport passenger traffic is up 2.6 percent for 2012. Another promising sign — at least from the airlines’ point of view — is that they filled 83.6 percent of available seats going out of the Tucson airport in March, which tops the 83.0 percent average that month for the industry as a whole. Phoenix Sky Harbor International Airport this month reported its passenger traffic for February was up 5.6 percent from a year ago to 3.15 million. Sky Harbor traffic was down

see AIRLINE next page

TUCSON INTERNATIONAL AIRPORT MARCH 2012 PASSENGER STATISTICS

March 2012 March 2011 Change Passengers Market Passengers Market Passengers % Share

Nonstop destinations

Southwest

116,641

32.5%

117,950 34.6%

-1,309

-1.1%

Albuquerque, Baltimore (seasonal service ended April 9), Chicago Midway, Denver, Las Vegas, Los Angeles, San Diego

American

87,500

24.4%

76,559 22.5%

+10,941

+14.2%

47,630 14.0%

+10,396

+21.8%

9.9%

+2,787

+8.2%

Chicago O’Hare, Dallas-Fort Worth, Los Angeles

United (Continental)

58,026

16.2%

Denver, Houston Intercontinental, Los Angeles, San Francisco

Delta

36,645

10.2%

33,858

Atlanta, Minneapolis-St. Paul, Salt Lake City

US Airways

33,148

9.2%

39,011 11.4%

-5,863

-15.0%

15,121

4.2%

16,295

4.8%

-1,174

-7.2%

11,589

3.2%

9,653

2.8%

+1,936

+20.0%

+17,714

+5.2%

Phoenix

Frontier Denver (service ends May 17)

Alaska Seattle

Monthly Total

358,670

340,956

Year-to-date 958,674

934,409

+24,265 +2.6%

Source: Tucson Airport Authority Airline totals include passengers on branded flights operated by contracted carriers: American (American Eagle), Delta Connection (SkyWest), United Express (ExpressJet and SkyWest) and US Airways Express (Mesa and SkyWest).

Tucson International Airport worth $3.2 billion

Inside Tucson Business What’s an airport worth to a region? In the case of Tucson International Airport and the region it serves, the figure totals more than $3.2 billion — or, if you want to get more precise it’s $3,249,540,746. The economic impact study was completed this semester by MBA students at the University of Arizona’s Eller College of Management through its Experiential Learning project, which works with firms such as Raytheon Missile Systems, Intuit and others consulting on specific endeavors. Economics professor Price Fishback, who worked with the students on the project said this was the first economic impact study done on Tucson’s airport since before the significant negative impacts to the travel industries from both the 2001 the terrorist attacks and the 2008 start of the economic recession. Fishback said information used in the study was derived from data gathered from the airport, airlines, businesses and tenants on the airport and more than 250 interwiews with departing passen-

gers. He said the data was then compiled using standard and conservative formulas for calculating economic impacts. “They didn’t use some of those outrageous multipliers you sometimes see,” he said. Among the numbers in the report: • 12,999 employees directly work for the airport and its tenants, which if counted as one employer, would make it the largest employer in the region, topping the more than 11,000 who work at either Raytheon Missile Systems or the UA. • 21,574 jobs are a result of businesses that are either associated with the airport or are located in the region due to the airport and its tenants. • $1.73 billion of economic activity comes from direct spending by the airport and its tenants. • $971 million of economic activity comes from additional spending induced by businesses related to the airport. • $406 million came from direct spending of visitors who used the airport.

InsideTucsonBusiness.com

APRIL 27, 2012

AIRLINE continued from page 14 1.5 percent but the gain in February puts the Phoenix airport up 1.1 percent compared with the first two months of 2011.

American Airlines’ future Lawyers, labor leaders, and airline experts and executives spent this week testifying in U.S. Bankruptcy Court in American Airlines’ bid to terminate its union labor agreements as part of its goal to cut costs. The hearings follow US Airways’ end-run announcement April 20 that it had reached non-binding collective bargaining agreements with three unions representing American employees that are supporting its bid to acquire the airline. While some Wall Street analysts are suggesting US Airways may have gained the advantage with the announcement, other airline executives, politicians and even some of US Airways existing labor leaders are publicly saying it would be better if American were allowed to exit bankruptcy as a stand-alone airline. Among the revelations about a potential US Airways-American tie-up, Dave Bates, president of American’s Allied Pilots Association, revealed that the company’s headquarters would not be Tempe, where US Airways is headquartered, but Fort Worth, Texas, where American is headquartered. Further, the name of the airline would be American. Whether Phoenix Sky Harbor would remain a hub, when American has hubs at Dallas-Fort Worth and Los Angles International, wasn’t addressed. Meanwhile, some officials with the International Association of Machinists and Aerospace Workers that currently represents US Airways mechanics and other related employees, aren’t happy. Rich Delaney, president of IAM’s District 141, issued a statement using the words “insulting,” “disrespectful” and “unbelievable” that US Airways “secretly negotiate with labor groups outside of their own airline, and reach contractual

terms for the future, when the state of labor relations within US Airways is so uncertain.” For his part, US Airways CEO Doug Parker has acknowledged a merger is still far from a done deal. American’s president and CEO Tom Horton insists his company will continue to pursue its plans to exit bankruptcy as a separate airline and, in a letter to employees, said “these tactics are not surprising” and “It’s easy to understand US Airways’ sense of urgency to find a way to address the challenges it has faced for a long time. That story is well known.”

Service note Under the heading it all counts, effective June 3, Alaska Airlines is switching to slightly larger aircraft on the route between Tucson and Seattle that will add a dozen seats on its single daily nonstop flight. The airline is switching to a “900” model of Boeing 737s with 172 seats from an “800” model with 160 seats.

On time flights File this away as a trivia factoid: Tucson International Airport, which almost never has issues with airline delays, dropped to No. 68 on the U.S. Department of Transportation’s list for on-time arrivals in February. The data showed 85.2 percent of flights on time at the airport. More unusual was the fact that New York’s Kennedy International Airport was ranked No. 19, with 89.0 percent of flights on time. All-in-all, February was an extraordinary month for on-time arrivals. Of the nation’s 100 busiest airports, 97 of them had at least 80 percent of flights arrive on time. Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237. Inside Business Travel appears the fourth week of each month in Inside Tucson Business.

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16 APRIL 27, 2012

INSIDE TUCSON BUSINESS

PEOPLE IN ACTION NEW HIRES University of Arizona Department of Surgery Division of Cardiothoracic Surgery has hired Samuel Kim, MD as an assistant professor. Kim specializes in video-assisted thoracic surgery (VATS) and robotassisted surgery, using the da Vinci surgical robot, which allows doctors to perform minimally invasive surgical procedures. Kim also specializes in minimally invasive and robot-assisted procedures for benign and cancerous diseases of the esophagus, including complex esophageal reconstruction surgery, robot-assisted thymectomy

(removal of the thymus) and tracheal resection and reconstruction. Kim received his undergraduate degree in biophysics from Johns Hopkins University and his medical degree from Tufts University School of Medicine. He completed residency training in general surgery at the University of

Pennsylvania Hospital and in cardiothoracic surgery at Massachusetts General Hospital. In addition, he completed a minimally invassive esophageal surgery fellowship at the University of Pittsburg and advanced thoracic surgery training at the Mayo Clinic. JOHN LAI

CRAIG WEISSMAN

Pinnacle Plan Design, LLC has hired Tammy Shinohara as a retirement plan administration. Shinohara will manage a wide range of qualified retirement plans. She is a graduate of the University of Arizona with more than 15 years of retirement plan

administration experience. PROMOTIONS Mister Car Wash has named John Lai as president and COO. He will be responsible for helping Mister Car Wash scale its operations and expand its national presence. Lai joined Mister Carwash in 2002

{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.

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as vice president of market development. Lai received a bachelor’s degree from the University of Arizona. Pepsico Americas Beverages’ Craig Weissman has been named territory sales manager. He will be responsible for managing Pepsi’s chain grocery store sales and service on Tucson’s east side. Weissman graduated from Arizona State University with a bachelor degree in marketing.

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InsideTucsonBusiness.com

APRIL 27, 2012

BRIEFS GET ON THE LIST

Next up: Defense contractors, Investment capital and lending, Venture capitalists Inside Tucson Business is gathering data for the 2013 edition of the Book of Lists. Categories that will be published in upcoming weekly issues of Inside Tucson Business are: • May 4: Defense contractors • May 11: Investment capital and lending, Venture capitalists • May 18: Residential real estate firms, Real estate brokers, Appraisers • May 25: Electrical contractors, Mechanical contractors, Plumbing contractors • June 1: Law firms 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.

POLITICS

New legislator to be sworn in on Monday Tucson defense attorney Nick Fontana is set to become the newest member of the state House of Representatives Monday (April 30) when he is sworn to fill the vacancy left when Daniel Patterson quit amid allegations of wide-ranging ethics violations. A native Tucsonan, Fontana is the sole partner of his own law office and judge pro tem for the Tohono O’odham Tribal Court. He has worked as the chief public defender for the Pascua Yaqui Tribe and as a public de- NICK FONTANA

fender for the City of Tucson and for Pima County. By a 3-2 vote, the Pima County Board of Supervisors appointed Fontana to fill the vacancy. This is Fontana’s first-time holding public office and he says he won’t run for the Legislature in this year’s elections. So his time in the Legislature will be short, with the session now already running beyond the body’s self-imposed 100-day time limit.

EDUCATION/RESEARCH

Pima College names possible vice chancellor Pima Community College has named longtime Spanish instructor Dolores DuránCerda, as a candidate for acting assistant vice chancellor. Durán-Cerda has taught at the college for 15 years. Her duties will include coordinating research projects, responding to constituent concerns and working closely with the provost, interim chancellor and board of governors on college curriculum, policies and initiatives. Durán-Cerda has an undergraduate degree in Spanish, French and secondary education from the University of Iowa, and master’s and doctoral degrees from the University of Arizona. She replaces Deborah Yoklic, who was named Acting Vice President of Instruction at East Campus earlier this month. Interim Chancellor Suzanne L. Miles announced the planned appointment late Friday in an email to faculty and staff. Durán-Cerda’s appointment requires approval by the PCC Governing Board, which is scheduled to meet May 16.

Paniola Ranch, a private gated luxury estate at 6515 W. Ina Road, west of Interstate 10. Tickets are $45 each and can be purchased online at ICF’s website — www.childfound. org — click on the “about” tab. Refugios de Dios Para Ninos provides care, education, and psychological services in a safe and cheerful environment. “The girls at Refugios are the children most vulnerable to exploitation – the children who need to be protected and served,” said Jackie Semar, executive director of ICF. La Fiesta is being organized by Tiffany Ragels and Jacques Mauger, along with Bobby Astengo, president of Refugios, and Ricardo Gallego, director and founder of the shelter.

KUDOS

BBB honors McCaleb Const., Golden Eagle and Temp-Con McCaleb Construction Inc. was honored Thursday (April 25) as the recipient of this year’s Ethics Award from Better Business Bureau of Southern Arizona. It was one of three awards handed out as part of the BBB’s second annual Torch

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La Fiesta fundraiser for Nogales shelter The International Child Foundation (ICF) will hold a fundraiser May 12 to benefit Refugios de Dios Para Ninos, a shelter in Nogales, Sonora, for abused and exploited children. La Fiesta will be an evening of music, food and a silent auction from 6-10 p.m. at

Awards luncheon event at the JW Marriott Starr Pass Resort and Spa. Golden Eagle Distributors Inc. was given the Good Neighbor Award, which honors busineses that demonstrate a commitment to making Southern Arizona a better place through community service. Founded in 1974, Golden Eagle is a third-generation family-owned distributor of AnheuserBusch and other products. Temperature-Control Inc. was honored with the Customer Excellence Award that goes to a business that demonstrates a commitment and history to outstanding customer service. Temperature-Control, which is better known through its trade name Temp-Con, is a full-service HVAC company that was founded in 1982. The Ethics Award honors businesses for their management policies and practices in all aspects of business including dealing with customers, vendors, suppliers. Winner McCaleb Construction was founded in 1981 by John and Judy McCaleb on the idea that they could focus on customer satisfaction in the remodeling business. Kim States, president and CEO of BBB of Southern Arizona, said there were 78 nominations submitted for this year’s awards.

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18 APRIL 27, 2012

INSIDE TUCSON BUSINESS

FINANCE YOUR MONEY

Even with low interest rates, you can invest for income Not long ago, the Federal Reserve — aka the Fed — announced that it plans to keep short-term interest rates near zero until late 2014. The Fed initially pushed rates to that level in 2008, in an effort to stimulate economic growth. Clearly, low interest rates have a wide-ranging impact — but what effect will they have on you, as an individual investor? If you need income from your investments, then the continuation of ultra-low interest rates may be a matter of some concern, particularly if you own certain types of fixed-income investments, such as certificates of deposit. While CDs are insured, offer return of principal at maturity and provide regular interest payments, they are not risk-free. With low interest rates, you risk losing purchasing power. Still, fixed-rate vehicles may well have a place in your portfolio. If you’re even somewhat dependent on your investments for income, you may need to broaden your search. Here are a few ideas to consider:

Build a bond ladder Long-term bonds, by their nature, are more subject to interest rate risk than shorter-term vehicles. In other words, interest rates are more likely to rise during the life span of a longer-term bond — and when rates go up, the prices of existing bonds will fall. To help lower this risk, you may want to build a “ladder” of bonds of varying maturities. Then, if market interest rates are low, you’ll still have your longterm bonds earning higher rates, but if rates rise, you can take advantage of them by reinvesting the proceeds of your maturing short-term bonds. But remember to work with your financial advisor to evaluate whether a bond ladder and the securities held within it are consistent with your investment objectives, risk tolerance and financial circumstances.

Dividend-paying stocks You can find companies that have paid dividends for many consecutive years — and in some cases, increased their divi-

dend payout each year. In 2012, companies listed in the S&P 500 are on track to pay out more than $252 billion in dividends, a record amount, according to data compiled from Standard & Poor’s. TIM BEITHON (The S&P 500 is an unmanaged index and is not available for direct investment.) Of course, stock prices will fluctuate in value, and you may receive more or less than your original investment when you sell. Historically, dividend-paying stocks have been less volatile than non-dividendpaying stocks. Be aware, though, that companies can lower or discontinue dividend payments at any time without notice. Past performance is not a guarantee of future results.

Refinance your mortgage Today’s low rates are good news for borrowers. With tougher standards in place, it may not be as easy to refinance a mortgage as it once was, but if you qualify, you may want to think about refinancing. You may be able to save quite a bit of money on your monthly payments — and lower payments can translate into a greater cash flow. Plus, if you don’t need all the savings, you can put some of the money into an Individual Retirement Account (IRA) or another retirement savings vehicles. Ultimately, an extended period of low interest rates is just one more factor to consider in creating and adjusting your investment strategy. Work with your financial advisor to help ensure low rates won’t affect your income needs.

Contact Tim Beithon, a financial advisor with Edward Jones, at Tim.Beithon@ edwardjones.com or (520) 546-1839. Beithon’s office is at 9525 E. Old Spanish Trail, Suite 111.

TUCSON STOCK EXCHANGE Stock market quotations of some publicly traded companies doing business in Southern Arizona

Company Name

Symbol April. 25 April. 18 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

0.06 0.02 14.54 36.30

0.06 0.02 14.79 35.76

0.00 0.00 -0.25 0.54

0.04 0.01 8.35 32.96

0.89 0.10 15.94 39.25

9.82 0.58 2.52 8.26 60.02 6.93 79.94 22.08 56.36 4.04 18.67 33.68 29.65 23.38 27.77 13.19 87.28 38.03 43.80 10.48 63.88 61.51 15.71 37.32 27.45 51.91 60.48 203.57 30.17 57.40 4.27 43.16 34.52 8.22 49.76 23.19 1.13 25.90 31.73 40.64 61.80 39.94 39.02 28.20 46.91 63.01 35.66 8.70 52.91 46.00 21.60 37.55 52.25 9.48 7.98 41.80 31.20 56.83 15.08 31.97 37.18 22.97 113.49 34.93 9.60 31.68 57.36 35.30 33.35 8.97 20.19

9.95 0.48 2.59 8.92 59.69 6.80 79.74 22.06 54.20 4.10 18.34 35.08 29.86 24.03 27.85 13.33 88.07 38.40 43.60 10.53 64.29 61.04 14.87 38.29 27.77 51.81 58.73 200.13 29.22 61.43 4.68 43.29 33.67 7.72 51.01 23.49 1.15 25.55 31.96 39.65 58.62 40.13 37.83 25.96 46.55 61.92 33.87 8.37 52.93 44.47 21.92 36.98 56.01 9.68 7.89 41.36 30.94 57.38 15.77 32.72 36.22 22.70 109.65 35.92 8.20 31.30 62.06 35.51 33.57 8.51 21.17

-0.13 0.10 -0.07 -0.66 0.33 0.13 0.20 0.02 2.16 -0.06 0.33 -1.40 -0.21 -0.65 -0.08 -0.14 -0.79 -0.37 0.20 -0.05 -0.41 0.47 0.84 -0.97 -0.32 0.10 1.75 3.44 0.95 -4.03 -0.41 -0.13 0.85 0.50 -1.25 -0.30 -0.02 0.35 -0.23 0.99 3.18 -0.19 1.19 2.24 0.36 1.09 1.79 0.33 -0.02 1.53 -0.32 0.57 -3.76 -0.20 0.09 0.44 0.26 -0.55 -0.69 -0.75 0.96 0.27 3.84 -0.99 1.40 0.38 -4.70 -0.21 -0.22 0.46 -0.98

8.45 0.20 2.10 4.92 51.83 6.43 65.35 21.13 43.77 3.30 12.30 21.40 19.19 14.61 22.80 8.49 70.22 31.16 31.30 6.41 38.99 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 22.66 25.49 13.68 33.20 49.20 23.44 3.29 38.35 34.02 15.93 30.98 28.89 9.63 7.15 32.12 20.96 45.28 14.10 24.34 27.62 15.51 77.73 33.71 3.96 20.10 48.31 30.34 22.58 4.44 13.18

17.96 6.96 5.55 12.71 66.64 13.01 86.91 32.85 59.59 7.29 28.03 46.00 30.41 32.24 51.43 14.55 92.10 43.49 45.88 11.60 64.84 70.15 16.45 56.78 30.49 52.15 62.28 210.69 35.79 62.33 5.72 46.49 38.40 13.12 57.39 25.85 1.92 28.28 32.29 44.46 61.83 41.27 39.89 29.32 50.20 70.61 43.18 9.69 53.55 45.65 25.43 40.75 87.66 16.92 12.44 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 24.71

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

APRIL 27, 2012

INSIDE REAL ESTATE & CONSTRUCTION

Builders’ Alliance taps Kittle; Long honors Kaiserman By Roger Yohem Inside Tucson Business Tom Kittle, owner of Kittle Design & Construction, has been named 2012-13 chairman of the board of the Southern Division of the Arizona Builders’ Alliance (ABA). Kittle is a third-generation Tucsonan who established his company in 2000. Kittle succeeds Nelson Brown, chairman of J.B. Steel who completed his one-year term. Also taking office was Mark Riggi, owner of Millwork by Design, who will serve as vice-chairman for 2012-13 and chairman for 2013-14. The organization’s 2012 Volunteer Day recipient is Esperanza en Escalante, a transition center for homeless veterans. The make-over event that focuses on property improvements for non-profits is Dec. 1. In ceremonies held April 20, Tucson Mayor Jonathan Rothschild swore in Kittle and Riggi. Randy Bond, project manager for Epstein Construction, received the group’s 2011 Volunteer of the Year award. The builders’ alliance is a trade association that represents about 150 local businesses affiliated with commercial construction.

Long honors Kaiserman Real estate veteran Robin Sue Kaiserman of Long Realty has received her company’s highest award that honors a lifetime of career achievement. Kaiserman, with over 25 years of experience as a real estate agent, has received the Barrington L. Long Lifetime Achievement Award. The annual award is presented to a Long Realty sales associate whose professional experience and accomplishments have made a significant and lasting impact in the

THE PULSE: Median Price Active Listings New Listings Pending Sales Homes Closed

TUCSON REAL ESTATE

4/16/2012

4/9/2012

$123,000 5,818 334 478 251

$140,500 5,899 329 477 192

Source: Long Realty Research Center

Tom Kittle

Robin Sue Kaiserman

industry. It also considers the employee’s character, respect from their peers, and reputation in the community. “Robin’s real estate career is an exceptional example of hard work, innovation and self-sufficiency,” said Rosey Koberlein, CEO of Long Companies. “Her commitments to the profession and this community are a testament to her dedication and we are honored to recognize her.” Company officials said Kaiserman was the first real estate agent in Tucson to reach $10 million and $60 million in sales, along with every $10 million increment in between. The award is named after Barrington Long, president and owner of Long Realty from 1952 to 1980, and son of company founder Roy H. Long.

2 zips sell out Here’s a first: During March, every home listed in zip codes 85706 and 85757 was sold. Officials at the Tucson Association of Realtors, who did the data analysis, couldn’t recall ever seeing a 100 percent sales ratio, let alone two in one month.

WEEKLY MORTGAGE RATES Program 30 YEAR 15 YEAR 3/1 ARM

Current

Last Week

Most inventory in city 4/24/2012

One 12 Month 12 Month Year Ago High Low

3.88% 4.125%APR 3.88% 4.125%APR 4.95% 3.38% 3.50%APR 3.38% 3.50% APR 4.22% 3.00% 3.375%APR 3.00% 3.375% 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, National Certified Mortgage Consultant (CMC) Peoples Mortgage Company, 1610 E. River Road, Suite-118 Tucson, Arizona 85718 • 520-324-000 MB #0115327. Rates are subject to change without notice based upon market conditions.

In zip code 85706, on the city’s southeast side near Tucson International Airport around Drexel Road and Alvernon Way, all 52 available homes were purchased. In zip code 85757, the far west side near Ryan Airfield south of Ajo Way, all 21 units sold. And due to a timing quirk, two more homes sold in each area that were not officially categorized as active listings. Northwest side zip code 85741 had a more normal month, where 48 of 56 homes sold for an 86 percent ratio. The area is generally from Interstate 10 east to La Cholla Boulevard between Cortaro Farms and River roads. Clearly, low prices drove sales. In each area, the majority of sales were in the $120,000 range or less, with several around $100,000. For the entire market, the March median price was $132,900, according to the Realtors’ report. During March the most listings were in Vail where there were 279; followed by 250 listings in the northeast side zip code 85750 near Sabino Canyon. Catalina Foothills zip code 85718 was third-highest at 240.

3.88% 3.16%

By jurisdiction within the region, the highest inventory of homes during March was in the city of Tucson where there were 3,410 listings, according to new data from Coldwell Banker Residential Brokerage. That is down 19.6 percent from February’s 4,239 homes and a 42 percent drop from 5,874 units in March 2011. Home sales totaled 1,002, up 26 percent from 793 sales in February and 12 percent more than the 894 sales in March 2011. The average selling time was 92 days compared

to 98 days in February. The March median sales price was $127,500, up 7 percent from $119,250 in February. The March 2011 mark was $119,000. Average sales prices were $167,225 for March; $166,545 for February; and $159,139 for March 2011. In Marana, the March inventory was 218 units, down 54 from February and 125 fewer than one year ago. Sales were 51 homes, 14 more than in February, closing after an average 147 days on the market. Selling prices in Marana were mixed with the March median at $190,000 compared to $195,000 in February. In contrast, average sales price increased. For March, the average was $272,311, significantly higher than $195,185 in February. On a price-per-square-foot basis, values jumped from $89 in February to $115 in March. In Sahuarita, the third-largest submarket, March inventory totaled 150 homes compared to 179 in February. Since March 2011, the inventory has plunged 44 percent from 269 listings. There were 47 sales in March; 34 in February; and 52 in March 2011. On average, homes sold in 101 days in March. Regarding prices, the March median was $145,000 compared to $147,550 in February. In March 2011, the mark was $128,750. The average sales price was $146,152, down 7 percent from $156,758 in February.

Sales and leases • TV Grant PAD LLC purchased a 5,023 square-foot building that was formerly a Village Inn restaurant on a 1.4-acre parcel at 6635 E. Grant Road for $1.05 million. The seller was Hazelwood Properties Inc., represented by Pete Villaescusa and Jesse Peron, CBRE. The buyer was self-represented. • Regina and Thomas Graham purchased a 16,000 square-foot vacant commercial lot at 16624 N. Oracle Road, Catalina, and a 66-unit self-storage complex at 16625 N. Avenida del Oro, also Catalina, from Neier Family Revocable Trust for $290,000. The transaction was handled by Andrew Sternberg, Oxford Realty Advisors. • Chuze Fitness leased 16,040 square feet at 4329 N. Oracle Road, from Larsen Baker, self-represented by Andy Seleznov. Chad Iafrate, Cassidy Turley BRE Commercial, represented the tenant. • Eye Associates Ltd. leased 4,683 square feet at 6130 N. La Cholla Blvd., Suite 245, from HCP/Utah LLC, represented by Rick Kleiner and Tom Knox with Picor Commercial Real Estate Services. • Varitech Commercial Services leased 3,946 square feet of warehouse and office space at 1646 S Research Loop, from Eastside Center LLC. The transaction was handled by Dave Gallaher, Tucson Industrial Realty.

Contact reporter Roger Yohem at ryohem@azbiz.com or (520) 295-4254.

20 APRIL 27, 2012

INSIDE TUCSON BUSINESS

EDITORIAL BIZ BUZZ

Closing for summer, is this progress? One of the few pleasures left to the those of us who stick out the summer days in Tucson, is that we can enjoy the sights and amenities of our region without the long waits in line. That wasn’t always the case. Back in the days BC — before condensers, as in air conditioning condensers — Tucsonans holed up wherever they could find a shady spot or a burst of swamp cooler air. DAVID HATFIELD What resorts we had, a lot of them were dude ranches, usually closed for the entire summer. It also was common for restaurants to shut down for weeks for vacation. Anyone who could get away left town, for at least part of the time. You think San Diegans have only recently begun complaining about us Zonies? Schools got out in late May or early June but because administrators didn’t have to build in snow days, they could get off until Labor Day to start back up again. Since then, air conditioning has changed the way we live in the Arizona desert. The Central Arizona Project has given us a more assured supply of water. We didn’t quite make it to 1 million in October 2006 like some had but statisticians are nevertheless confident we will get there, probably by this time of year in 2014. This summer, it looks like we’re reverting back to some of our old BC habits. The revitalized Old Tucson has announced that it’s going to be closed after Memorial Day until the end of September. Similarly, the Science Downtown exhibit Mars and Beyond in the Rialto Building, 300 E. Congress St., is planning to close after Sunday (April 29). In their case, officials are saying it has to do with construction of the streetcar line through downtown. The exhibit will remain closed while Congress is closed for construction. When the street closed this month, foot traffic at the exhibit “came to a standstill,” according to a statement by board member Don Martin. He also made a point of saying his organization supports the streetcar’s construction 100 percent. “We realize that the construction of Sun Link is an important part of downtown revitalization and the long-term health of the downtown area. At the same time, businesses have to take appropriate actions and this is a necessary step in the process,” Martin said. This week, Janos Wilder told his staff he is closing his Foothills Janos and J-Bar restaurants after May 26 because his lease was due to expire this fall and without a new one from the new owners of the Westin La Paloma Resort and Spa, he didn’t want to slug it out through the slow summer season. Time marches on and things change. I guess this is progress but it sure doesn’t seem like it.

Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237.

EDITORIAL

Government should have seen potholes coming Imagine if your business could have had the luxury of a year or two warning of the economic recession. You could have prepared for it. You would have budgeted differently. Well, governments did have that luxury. The lag created in collecting sales, property and income taxes means entities that derive revenues from these sources could and should have been able to plan for the downturn. What’s worse is that for all of us who rode out the rough times of 2009, 2010 and 2011 and are now just beginning to see the first glimmers of a recovery, government entities are still deep in the throes of the down revenues. Sales taxes may be starting to pick up, but there’s still a long way to go for property and income taxes to rebound. In the meantime though, when it comes to the pothole-riddled streets we’re riding on in the Tucson region, we’re hearing local government officials try to pin the blame on state lawmakers who swept away gas tax money, called the Highway User Revenue Funds (HURF), to help balance the state’s budget shortfall. But as reporter Patrick McNamara showed in last week’s Inside Tucson Business, that’s not necessarily the case. While it is true the City of Tucson saw its HURF income fall by $6.6 million to $18.2 million in the 20092010 fiscal year, from $24.8 million three years earlier, those are the extremes over the past dozen years. In fact HURF money coming into the city over the past 12 years has averaged $21.51 million. This year’s amount of $20.66 million is within 5 percent of that. Further, HURF has been higher the last two fiscal years. What has changed is how much money the city adds to HURF revenues for the total transportation program. In 2005 under former City Manager James Keene, Tucson set out on an aggressive road upgrade and main-

tenance program adding $23.8 million through citysold certificates of participation. That was followed by a stretch of four years when the city continued to boost the Transportation Department’s streets maintenance budget contributing from 12 to 23 percent of the total. The past three years, no more than 2 percent of the city’s streets maintenance budget comes from sources other than HURF money. This fiscal year, just $154,260 of the $21.24 million streets maintenance budget came from the general fund. At least some of the blame for that goes to the failed two-year administration of City Manager Mike Letcher, who was fired last September. And it’s not just Tucson either. Pima County received $38.97 million in HURF money last year, which is within about $1.5 million of the $40.5 million average over the past 12 years. And while driving on some roadways in the city of Tucson and unincorporated Pima County is getting to be a test of drivers’ four-wheeling capabilities, other municipalities in Arizona, including some in Pima County, are maintaining their roads. As Tucson transportation officials told McNamara in his report, the city hasn’t adequately kept up with the maintenance of roads. Another way of saying that is a lack of commitment on the part of leadership. So let’s not hear any more whining from elected officials about the lack of HURF money as the reason Tucson’s potholes are so bad. Revenues are down commensurate with what they should be, considering the economy. But then again, governments have the luxury of knowing that in advance.

InsideTucsonBusiness.com

APRIL 27, 2012

OPINION BUSINESS INK

In first year, Chamber CEO Varney often drew a line in the sand On May 9, Tucson Metro Chamber CEO Mike Varney marks his one-year anniversary on the job. He hit the ground running, tearing into anti-business roadblocks that drag down Southern Arizona’s economy. Pun intended, it’s been an uphill sprint. The word is out about our little old pueblo. It is not a good city for business. Forbes magazine ranks Tucson No. 165 in the nation for best business conditions and careers. Resolute, Varney has faced the challenges in stride. With a laser focus, he has advanced his four-legged agenda: pro-business advocacy, community affairs, education, and to “super serve” small business. To the credit of the chamber board, they hired two executives to replace CEO Jack Camper who retired a year ago. They ran with an idea pushed by director Colleen Edwards, TWS Premium Appliance Center, to go for outside new blood and local community roots. Varney was recruited from the North Las Vegas Chamber of Commerce where he was CEO and a director with the Western Association of Chamber Executives. He clearly understood the nuances of running a chamber. As his wingman, Tucson community relations guru Bill Holmes was brought in from Wells Fargo where he was a vice president, to fill the new post of chief operations officer.

Together, they restructured staff. As a “back to basics” guy, Varney changed the internal operations so they could function “from a solid platform of efficiency.” Among key ROGER YOHEM additions was Lori Banzhaf as vice president of business development. Banzhaf is a hyper-positive, former marketing maven who could build a bonfire in a monsoon with no matches. The communications baton was passed to Gina Babunovic, former top executive with Youth on Their Own. For continuity, someone who knew “the Varney way,” Jackie Chambers-Bond was named member relations manager. She and Varney were chamber collegues in the Las Vegas area. It didn’t take long for Tucson’s business community and politicos to feel the chamber’s revival. As then-board chairman Wendell Long, CEO of Pascua Yaqui Gaming Enterprises, put it: “The vibe is back.” For Varney, it didn’t take long to discover Tucson’s quirky political dynam-

ics. Specifically, Tucson has a large number of very small special-interest groups with very narrow self interests. To fix that, he has a straightforward, big picture solution: “We need leaders who will do what is right for the greatest number of citizens instead of listening to who can scream the loudest.” He feels they have political swag because the region lacks a master plan for business growth. Until a plan is in place, “the little fiefdoms will continue to play a game we call ‘I’m the tallest pygmy.’ Until we get past our need to wage petty turf battles, it will be tough to make the changes that will yield a better community for all citizens.” At the chamber, a better community starts with better jobs. The chamber’s crusade started with an endorsement of the Rosemont Copper mine southeast of Tucson, contingent on it meeting federal standards. The financial benefits are impressive: 400 jobs at the mine, another 1,100 off-site support jobs, and $9 billion in economic benefits in Pima County over the mine’s lifecycle. City and county government and economic development officials love to promote the region as a solar city and solar technology hub. Yet, many of those same public officials oppose the mine. Those bureaucratic quirks have challenged the chamber’s efforts to tear down

the political roadblocks delaying the mine. And in step with his pro-business advocacy, Varney has drawn a line in the sand. At a February forum before some 225 business people, Varney critiqued the region’s inability to create significant job growth. The local economy can’t prosper as a national nexus for call centers. From the audience, Varney was asked about the Rosemont Mine. In his reply, he shared some insight from a meeting with Pima County Administrator Chuck Huckelberry. Varney said he asked Huckelberry for a straight yes or no answer to: Are you against the Rosemont Mine? Yes. Huckelberry’s resistance, said Varney, was based on two main reasons. When the mine ceases operations, Huckelberry wants Rosemont to fill in the pit. Varney said this condition is government over-reach, not required, far exceeding any federal, state or local environmental law. But “what really ticks him off ” is that the county will get little revenue compared to Rosemont’s profits. He wants a bigger share.

Contact Roger Yohem at ryohem@ azbiz.com or (520) 295-4254. His Business Ink appears biweekly and weighs in on local political, social and business issues.

SPEAKING OUT

If I could be queen for a day, election processes would be different I hereby appoint myself queen of election processes. I don’t expect these to “catch on.” But I can dream! Those of us who live in Congressional District 8 have “survived” a special primary to nominate candidates to run in the June 12 general election. The winner in June will represent us for the last eight months of former Rep. Gabrielle Giffords’ term. Primary turn-out was 27.9 percent. A majority of the electorate stayed home. Some favor penalizing those who don’t vote. However, I would suggest serving coffee and doughnuts at polling places because food always attracts people. After receiving several robo calls on election day, I would appreciate 24 hours of absolute silence — no calls, no ads on election day! About a third of us vote early, so a lot of these last-minute calls and ads are a waste of effort. Many of us have made our decisions about the candidates to support long before the actual election day. Some might want to ban the robo calls altogether, but there is that delicate matter of free speech. The candidates themselves should be required to make calls to voters. We like to be asked for our votes.

And speaking of money, the U.S. Supreme Court, ruling in the Federal Elections Commission (FEC) versus Citizens United case, decided that “corporations are allowed to spend CAROL WEST money on political speech.” Prior to that, corporations were banned from political activity. Most shareholders are probably unaware of what their companies are doing in this regard. (Some might even want the corporation to support a different candidate.) In 1975, Congress established the FEC to administer and enforce the Federal Election Campaign Act. I demand the FEC commissioners actively urge Congress to pass a Constitutional amendment ratified by the states to “clarify that money isn’t free speech and corporations aren’t persons under the U.S. Constitution.” People who run negative campaigns do so because they don’t want to reveal their

own shortcomings. Rather than tearing apart their opponents, those running for office should be required to give us some clear ideas on what their qualifications are and what they stand for. Yes Virginia, the Golden Rule still exists! “Do unto others as you would have them do unto you.” As queen, I would ban pollsters. Some of us may not respond truthfully, and the results are usually based on how the questions are phrased. The best way to conduct a local poll is for the candidate to go door-to door and listen to the citizens! They will say exactly where they stand on issues; the only cost is shoe leather! One vexing problem with polls is that East Coast election results are often announced before West Coast folks have even voted. Common courtesy is needed here. All Arizona counties should adopt the same voter registration form. Most voters are unaware that each county has its own form. I learned about this when I registered voters at a state-wide meeting. Thank goodness our Pima County election officials were good natured and willing to forward registrations to other counties! Early voting is readily available nowa-

days, but there are still many people who like to vote at their polling places; they like to greet their neighbors on election day. There are complaints that early voting takes away the secret ballot. We have to write our signatures on the inner envelope enclosing the ballot for our votes to be counted. For the sake of validity, it is important that each voter’s signature be compared to that on file with county elections. Tucson’s hybrid election procedures were just upheld by the state Supreme Court. A charter city has the right to conduct its elections as prescribed in its charter, the Court unanimously agreed. Now it is time for Tucson voters to take another look at their election process and vote to conduct non-partisan elections. They could go a step farther and prescribe ward-only elections and give the mayor the same rights that the council members have — mayoral parity. If I were “queen,” that would be happening this fall!

Contact Carol West at cwwfoster@aol. com. West served on the Tucson City Council from 1999-2007 and was a council aide from 1987-1995.

22 APRIL 27, 2012

INSIDE TUCSON BUSINESS

OPINION GUEST OPINION

Why President Obama can’t control gas prices President Obama is being lambasted by Republicans for not doing enough to lower gas prices. And that can hurt him politically because according to a recent Reuters/ Ipsos online poll, 68 percent of Americans disapprove of how he’s handling gas prices. Republicans argue that Mr. Obama should do things like “drill, drill, drill,” build the Keystone pipeline and exploit America’s natural gas. John Boehner, Speaker of the U.S. House of Representatives, has accused Obama of leaving the national gas tank on “E,” and the gas-price issue has sparked a TV ad war between Republicans and Democrats. Meanwhile, Newt Gingrich promised $2.50 per gallon gas. And so the president responded by asking Congress to give regulators more power to curb speculation in the oil market. Such curbs might work but only if Congress agrees, the curbs are extensive, foreign oil markets follow suit with similar curbs and traders see them as serious and lasting. Even then, Obama will only be one of many actors involved. Many of us fail to understand a near-maxim of gas prices: No one can really control them and certainly not an American president. And we should know why that is the case since gas prices impact us all and the global economy. Let me tell you a little story.

I visited the headquarters of the Organization of Petroleum Exporting Countries (OPEC) in May 2003. OPEC leaders were happy to tell me they had created a price STEVE YETIV range aimed at keeping oil prices roughly between $28 to $35 dollars per barrel (in New York Mercantile Exchange oil prices). They showed me that they had kept oil prices in that price band for 95 percent of the days between May 2001 and May 2003. They increased oil production when oil prices rose toward $35 dollars per barrel and decreased production as it approached $28 per barrel. This way they could make good money without having prices rise so high that others would have an incentive to develop alternatives to OPEC oil. Fast forward a few years. Oil prices rocketed from $50 per barrel in February 2007 to over $147 per barrel in July 2008. So much for OPEC’s price band. If OPEC failed miserably to control prices over time, what can an American president do — or any actor for that matter?

It’s vital to understand why oil prices are so hard to control, if we are ever to going to get a grip on this issue. First, since 1983, oil has been traded on futures markets. The combined action of traders who buy and sell oil futures decides the price of oil at any time. If you think Obama or any actor can control these prices, that means you think they can control markets. Markets are unpredictable, impacted by greed, speculation, fear, global events, and economics — almost none of which Obama can easily impact, even if he tries to nudge actors to put curbs on speculation. Second, even if Obama could impact some of these factors, all of them combine to shape the actions of oil traders in ways that nobody can easily guess. In fact, some studies show that professional money managers are no better than monkeys in predicting such markets. Third, Obama could affect longer-term oil prices by spearheading a serious comprehensive energy policy, and working with China and India to do the same. But traders probably won’t sell oil futures now for a policy that will take effect in three, five or 10 years, unless perhaps it is constructed and marketed exceedingly well. Fourth, short-term measures like the ones

Republicans are stressing won’t be enough to alter prices. For example, greater drilling in Alaska represents a drop in the global oil bucket. Moving America’s truck fleet to natural gas — a smart move — could impact oil prices, if that move were truly comprehensive and went into effect sooner rather than later. But those things are doubtful. Fifth, American presidents are not all powerful as they are sometimes viewed or portrayed to be. Obama, like any president, has to work with others and faces many obstacles, which check his influence. For instance, agreeing on a comprehensive energy policy is no easy task, much less getting China, India, and others to join. America should certainly launch a major energy policy that includes moving to hybrid and electric vehicles, as well as exploiting domestic natural gas as a bridge to a cleaner future. But let’s not be deluded into thinking that any one actor, much less the president, can do much about shortrun oil prices. It’s a near maxim of modern energy that he can’t do so.

Steve Yetiv is a professor of political science at Old Dominion University in Norfolk, Va. He is the author of “The Petroleum Triangle” and “The Absence of Grand Strategy.”

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Do you believe the controversial “sweep” of HURF money is what caused local roads to fall into disrepair?

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Yes 25% No 75% Next week’s poll: Should the City of Tucson partner with HSL Properties to renovate The Hotel Arizona?

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APRIL 27, 2012

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24 APRIL 27, 2012

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