Inside Tucson Business 05/04/12 by Territorial Newspapers

BACK IN BUSINESS City of Tucson re-doubles economic development, business-friendly efforts PAGE 7

Your Weekly Business Journal for the Tucson Metro Area WWW.INSIDETUCSONBUSINESS.COM • MAY 4, 2012 • VOL. 21, NO. 49 • $1

Aerospace on the offensive Strong defense industry concerned about weak education system Page 4

A capital infusion Entrepreneurs need to attract cash Page 5

Real estate grinds on

Otis Blank

Sluggish first quarter for commercial market Page 19

Changing RTA road plan won’t be easy, attorney says Inside Tucson Business Those who would like to see the Regional Transportation Authority (RTA) skip its plan to widen Broadway from Campbell Avenue to downtown and use the money for other priorities, might have a difficult go of it. At least that’s what RTA attorneys said in a memo to Executive Director Gary Hayes and the RTA board. “As a creature of statute, the RTA may exercise only those powers

granted to it by the State Legislature,” wrote attorney Thomas Benavidez of the Benavidez Law Group. The memo was written in response to Tucson City Councilman Steve Kozachik’s efforts to gain public support for his proposal to revisit parts of the RTA plan that was approved by voters in May 2006. Specifically, Kozachik wants the Broadway widening scaled back or scrapped and the money put toward roadway maintenance work to address the city’s crumbling streets.

Kozachik and some neighbors oppose the widening because of the loss of numerous buildings to make way for roadway, a lack of recent traffic studies to gauge need for added travel lanes and that the planned expansion would feed into a downtown bottleneck. Opposition aside, Benavidez writes that despite the 2006 vote, amending the RTA plan would not be as simple as gathering signatures locally and calling a referendum. “The RTA Plan is not a state law,

nor is it a legislative measure of Pima County; rather, it is a state-mandated referendum that was approved by the RTA Board and the voters of Pima County,” he wrote. Benavidez writes that changing the plan would require a statewide initiative to amend the state law that created the RTA special taxing district. That, he wrote, would require gathering signatures that represent at least 10 percent the number of people who voted in the last gubernatorial election.

2 MAY 4, 2012

INSIDE TUCSON BUSINESS

UP & COMERS 2012

Photos by Tim W. Glass

Christina Huyett, Steven Eddy, Jeff Ell, Nathan McCann, Brandon Rodgers, Joseph Kroeger, Frederick Petersen, Ryan Field and Nikia Gray.

STEVEN EDDY, center, with presenters Gina Trunzo and Mark Stine.

JEFF ELL, center, with presenters Gina Trunzo and Mark Stine.

RYAN FIELD, center, with presenters Gina Trunzo and Mark Stine.

NIKIA GRAY, center, with presenters Gina Trunzo and Mark Stine.

CHRISTINIA HUYETT, center, with presenters Mark Stine and Gina Trunzo.

JOSEPH KROEGER, center, with presenters Mark Stine and Gina Trunzo.

NATHAN McCANN, center, with presenters Mark Stine and Gina Trunzo.

FREDERICK PETERSEN, center, with presenters Mark Stine and Gina Trunzo.

BRANDON RODGERS center, with presenters Mark Stine and Gina Trunzo.

InsideTucsonBusiness.com

MAY 4, 2012

NEWS

Early planning may promote infill, benefits streetcar By Patrick McNamara Inside Tucson Business With workers busy laying tracks for the newly christened Sun Link modern streetcar project, some of the efforts to promote development along the line have begun to pan out. At least five sizeable student housing developments are in the planning or construction stages at various locations along the 3.9-mile streetcar line. “It’s a good start to see some of these announcements,” Carlos de Leon said, transit services director with the Regional Transportation Authority (RTA). A student housing project on Fifth Street near Sixth Street and Fourth Avenue is the furthest along. That project, Campus Apartment’s 750-bed project called The District on Fifth, is expected to wrap up by the time the fall semester at the University of Arizona starts. Another project planned for the corner of Congress Street and Herbert Avenue, at 350 E. Congress St. downtown is well into the planning and approval stages. That development, by Oasis Tucson Inc., would bring nearly 300 students downtown. The developer there also has planned to build a second student housing project across Congress above and adjacent to the city’s new parking garage at the northeast corner of Fourth Avenue and Congress. That project would house another 169 students. The other project is a planned 16-story high-rise at 1020 N. Tyndall Avenue near Speedway and Euclid Avenue that would be home to 586 students. The same company, Campus Acquisitions, also has begun planning for a second housing project on Park Avenue adjacent to Tyndall. All together, the projects could bring more than 2,000 students within walking distance of the SunLink streetcar, an

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

important factor for the success the city and RTA transit system. “This is part of what a rail system can do, as opposed to a bus system,” de Leon said, explaining that residential and commercial development often will grow in conjunction with fixed publictransit infrastructure like the streetcar. In the years leading up to the streetcar groundbreaking, city officials staked out areas near the streetcar route likely to attract infill and transit-oriented development like the student housing projects. Transit-oriented development refers to a mixed commercial and residential type of development adjacent to transit systems. Transit-oriented development seeks to promote denser, urban growth and encourage ridership on transit systems like the streetcar. Encouraging growth near a transit system is largely seen as key to its success. De Leon said analysis the RTA has done shows that the willingness of people to use a transit system like the streetcar drops precipitously if they have to walk more than a half-mile to gain access. In the case of SunLink, about 100,000 people live within a half-mile of the route. One of the ways Tucson has worked to promote more development nearby has been through the creation of overlay districts. The 16-story Campus Acquisitions plan falls within an area the city had long anticipated would see increased density. The Optional Urban Overlay District covers the area west of the University of Arizona from Sixth Street north to Speedway and from Park Avenue west to Euclid Avenue. The overlay district would allow for numerous high-rise buildings, including the student-housing apartment. Because the project falls within the

overlay zone, it has only a fraction of the normal parking requirements. That, city and RTA officials said, also would promote ridership to the streetcar. The planned Congress Street housing project actually has no required parking, because it falls within the city’s infill incentive district and the downtown core district. “We’re trying to encourage a more urban and compact form,” de Leon said. The need for such student housing projects is expected to increase in the future as university enrollment rises. University officials anticipate local enrollment to increase from about 37,000 today to 42,000 or more by 2020. Fewer than 7,000 UA students live on campus. RTA officials estimate that as much as half of the projected riders of the streetcar will be students commuting to and from class and to downtown and Fourth Avenue area bars and clubs. Even with the number of likely student riders of the streetcar expected to grow, the proposed transit system faces some potential problems. Total funding for the project is $197 million. The RTA plans to fund $88 million and the federal government has kicked in $69 million in grants. The remainder will come from city-issued certificates of participation and a $3.2 million contribution from Gadsen Company, which is building the west Congress developments that the streetcar will serve. Tucson City Councilman Steve Kozachik has questioned the economics of the project, noting that with ridership expected at nearly 4,000 people daily, the system would run a $4,000 daily deficit even when fully operational.

Contact reporter Patrick McNamara at pmcnamara@azbiz.com or (520) 2954259.

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.

Tribal gaming brings in $24.3M to state funds Tribal contributions to the state last quarter were $24.3 million, up 7.4 percent from a year ago, according to the Arizona Department of Gaming. It was the seventh consecutive quarterly increase. “Tribal gaming is largely dependent on discretionary income of Arizona residents and visitors,” said Mark Brnovich, director of Arizona Department of Gaming. “The increase in revenue suggests that people are feeling more optimistic about Arizona’s economic recovery.” The revenue will be distributed to various programs with $12.2 million going to the instructional improvement fund for education, $6.1 million for the trauma and emergency services fund, $1.7 million to the Arizona Wildlife Conservation Fund, $1.7 million to the state Tourism Fund, $485,845 for problem-gambling education, treatment and prevent, and $2 million to cover operating costs of the Arizona Department of Gaming.

ACC rules Rosemont directors in compliance The Arizona Corporation Commission (ACC) Wednesday ruled Rosemont Copper is in full compliance with statutory provisions and dismissed a complaint filed by an anti-mining group claiming the company was not in compliance with state statutes in filing its letters of incorporation. Patricia Barfield, director of ACC’s Corporations Division, issued a statement saying, “we have determined that the original and subsequent certificates of disclosure for Rosemont Copper Company are in compliance with applicable statutory provisions.” Rod Pace, president and CEO of Rosemont Copper, said, “We hope that this decision will end these unfounded attacks upon Rosemont and our leadership.” Rosemont Copper is proposing to open its mine in the Santa Rita Mountains southeast of Tucson. “Rosemont Copper will be a model environmental mine and a major economic driver for Southern Arizona,” Pace said.

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

6 8 12 12 13 15 16

Briefs Lists Finance Real Estate & Construction Biz Buzz Editorial Classifieds

17 17 18 19 20 20 23

4 MAY 4, 2012

INSIDE TUCSON BUSINESS

NEWS The University of Arizona Medical Center — South Campus has been given a provisional Level III trauma center designation by the Arizona Department of Health Services, Bureau of Emergency Medical Services and Trauma System. The hospital, formerly known as Kino Hospital, 2800 E. Ajo Way, is a 245bed teaching hospital managed by the University of Arizona Health Network. A Level III trauma center has resources for emergency resuscitation, surgery and intensive care for most trauma patients. The state agency awarded the hospital the Level III status for the next 16 months. During that time the American College of Surgeons will survey the facility to reevaluate and accredit them as Level III trauma centers. The hospital’s sister, University of Arizona Medical Center — University Campus, 1501 N. Campbell Ave., operates the only Level 1 trauma center in Southern Arizona.

Solon sells solar plant near Kingman A 10-megawatt photovoltaic solar project near Kingman owned by Tucson-based Solon Corp. has been sold to Duke Energy Renewables, based in Charlotte, N.C. The Black Mountain Solar Project, which is still under construction, is expected to begin commercial operation in October. UniSource Energy Services has a 20-year agreement to purchase power from the operation. Financial terms of the sale were not disclosed. Solon, which shut down its panel making business last year and is now focusing on project development, will operate and maintain the Black Mountain project once it becomes operational.

Struggling P.F. Chang’s chain sold for $1.1 billion After struggling to modernize and attract new customers, P.F. Chang’s China Bistro Inc. on Tuesday announced it has reached a $1.1 billion deal to be sold to private equity firm Centerbridge Partners. For the time being, the chain’s headquarters are expected to remain in Scottsdale. In addition to its namesake restaurants, P.F. Chang’s operates Pei Wei Asian Diner and recently acquired True Food Kitchen, a concept developed in the Phoenix area by Fox Restaurant Concepts and Dr. Andrew Weil, the Tucson physician known for his development of integrative medicine. In its annual financial report filed with the U.S. Securities and Exchange Commission, the company in 2011 reported a lower profit of $301 million on revenue of $1.23 billion, with both numbers down slightly from 2010.

Industry, government leaders talk of ways to grow aerospace and defense sector By Patrick McNamara Inside Tucson Business Southern Arizona’s defense and aerospace industry was the focus of attention of academics, politicians and captains of industry at an April 26 event which included discussion on what the region needs to do to grow the industry as well as to evaluate the impact of potential Defense Department cuts. How Tucson’s educational system serves the industry was also a topic. The event at the Hilton El Conquistador Golf and Tennis Resort in Oro Valley was sponsored by Tucson Regional Economic Opportunities (TREO). Panelists included Mitzi Montoya, professor and dean at Arizona State University’s College of Technology and Innovation; Jeff Goldberg, dean of the University of Arizona College of Engineering; Jim Wolf, vice president of business development at Raytheon Missile Systems; Scott Still, president and CEO of Sargent Aerospace and Defense; Bill Harris, president and CEO of Science Foundation Arizona; Mesa Mayor Scott Smith; and retired Air Force Brig. Gen. Tom Browning, Science Foundation Arizona. Montoya said cooperation within and among the state’s universities has been a key asset that has helped feed the aerospace and defense sectos. “The willingness to collaborate is really what it takes,” she said. Smith agreed that a spirit of collaboration would aid Southern Arizona and the rest of the state in growing the aerospace sector, but noted that cooperation was a relatively new phenomenon among the state’s universities. Smith also said the state needs to recognize that additional assets must be located and leveraged if it hopes to compete for a larger share of the aerospace and defense industry. “The thought that companies will just be sick and tired of working in southern California and come here simply isn’t going to happen,” Smith said. Harris said the state, and particularly Southern Arizona, was well positioned to take advantage of a burgeoning defense

Chance Agrella, TREO

Southside UA hospital gets trauma designation

Jeff Goldberg, Mitzi Montoya and Scott Still, from left, were among the panelists at TREO’s aerospace and defense forum.

investment in unmanned aerial vehicles. “This investment the federal government is about to make has the potential to be transformative,” Harris said, comparing it in magnitude to the federal spending on space exploration that fueled industries in Houston, Texas and parts of Florida. The global market for unmanned aerial vehicles stands at $6 billion, by some counts, and is expected to nearly double as the U.S. Department of Defense increases its UAV budget. In addition, some state and local governments have invested in the unmanned aerial vehicle and growing civilian market exists. With two major Air Forece bases and an Army post in the state — Luke and DavisMonthan Air Force Bases and Fort Huachuca — Arizona could capitalize on that expected market expansion. Even with the Department of Defense and the Obama administration parsing the details of an expected $487 billion defense budget reduction, Raytheon’s Wolf said the outlook was strong. “I think when you look where Raytheon is positioned in the industry, we’re actually excited about where we’re going,” Wolf said. The company has a diversified base of customers, he said, with at least a quarter of clients spread throughout 55 countries other than the U.S. He noted that much of Southern Arizona’s aerospace industry as well has an interna-

tional customer base. All of the panelists spoke of concerns with the state of education in Arizona. Smith said the state has not invested enough in workforce preparedness programs such as career and technical education. “We’ve never made the connection as to why this is important,” he said. Still said his company has had trouble finding qualified employees locally to fill jobs as machinists and other skilled labor positions. “For machinists, a lot of times we’re paying them as much as an engineer,” Still said. Montoya said part of the blame for the lack of vocational training can be placed on a nationwide trend of pushing all high school students toward four-year university educations. “It’s interesting to me that we don’t have a focus on career and technical education,” she said. The aerospace and defense industries make up a sizable portion of the regional and statewide economies. In Southern Arizona, there are more than 200 aerospace and defense companies and one in five jobs are tied to those industries. TREO estimates that the twin industries have an $8 billion impact on the overall economy of Arizona.

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

CorrectioOT • The editing process created errors the past two weeks in Michael Luria’s Meals & Entertainment column. Nino Aidi is leasing the building at 3500 E. Sunrise Drive that will be home to his Five Palms Steak Seafood restaurant. The April 20 column said he had acquired it. The headline on the April 27 column misspelled Mayo, the Spanish word for May. • A story in the April 27 issue titled “City could increase street repair fund, but long-term solutions remain miles down the road,” had the Regional Transportation Authority sales tax wrong. The tax rate is a half-cent.

InsideTucsonBusiness.com

MAY 4, 2012

NEWS ‘Energize Your Enterprise’

This Week’s

Region needs capital infusion to stoke entrepreneurs for success

Good News Making the ﬁnalist cut Two Tucson firms, Acudora Inc. and HJ3 Composite Technologies, made the cut to be among 10 finalist firms to receive up to $250,000 in state grants from the Arizona Commerce Authority’s Innovation Challenge. The finalist firms will make a final pitch to a panel of expert judges in hopes of winning the money to commercialize their innovative technology ideas. Winners will be announced on May 15. This is the first of two Innovation Challenges being planned for this year.

By David Hatfield Inside Tucson Business

The Tucson

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

Bobby Soltero

Some of the biggest names in Tucson business — Jim Click, Bruce Beach and Don Diamond — all agree that if this region is to gain traction and grow economically, it needs to attract the kind of capital that will help entrepreneurs turn their dreams into commercially viable businesses. That was the thrust of an invitationonly kick-off workshop attended by about 175 people April 26 at the Tucson Marriott University Park Hotel. It’s the kind of event organizers Bank of Tucson, BeachFleischman and Jim Click Automotive Group would like to see continue so leaders of growthoriented business can share their challenges, explore opportunities and build relationships. That’s not unlike what has happened in other places, like Austin, Texas. “I know what they’ve got in Austin and at the University of Texas and you know what? I like where we are right now,” said Len Jessup dean of the University of Arizona’s Eller College of Management. Noting that places like Austin took a generation and longer to get where they are, Jessup says Tucson and the UA are putting the tools in place to make it happen here. Tech Launch Arizona, a technology commercialization center to coordinate community resources, businesses and UA inventors to create businesses, is getting close to naming a director, according to Jessup, who was charged with overseeing the venture when it was launched in November. He acknowldged the UA has lagged behind when it comes to technology transfer to commercial viability, but says that is changing. The challenges are still there. The University of Utah and Salt Lake City, which was in circumstances similar to Tucson’s, is already about seven years ahead of the UA and Tucson. One speaker who has seen his share of recessionary times in Tucson is developer Don Diamond, who said he has lived through four recessions in his nearly 50 years here. The difference this time, though, is that growth won’t lead Tucson to recovery. At one time, climate and beautiful scenery were enough to attract people to

A panel featuring, from left, David Cohen, executive vice president of BeachFleischman; Marc Sandroff and Ken Abrahams, both principals in Cadre Partners; and Len Jessup, dean of the University of Arizona’s Eller College of Management, answer questions at the Energize Your Enterprise workshop April 27.

the region. That’s not the case anymore. “There won’t be a boom in the next decade,” said Diamond, chairman of Diamond Ventures Inc. The trouble is “we don’t work together here. Phoenix does. ASU has their act together but the walls of the UA are just now beginning to open up and they’re sharing their ideas,” Diamond said. He encouraged investors to overlook the political climate here to “work with the entrepreneurial spirit that will lead us out” of the recession. Due to a family emergency away from Tucson, Click didn’t attend the workshop and Lisa Lovallo, vice president and system manager for Cox Communications Southern Arizona, said she felt as if she was “called up from the minors” to talk about customer service. Coming from a background in consumer products, Lovallo admitted she hadn’t been schooled in some of the details of the technological services offered by Cox. In her zeal to make every customer happy, one of her earliest requests of the head of Cox operations was to hookup a customer who complained of trying in vain for months to get cable service. When the new hook-up came online, her bosses in Phoenix noticed it too, because it cost Cox more than $37,000 to install. “It’s going to take a lot of time to get a return on investment on that one,” she

admitted. Not all customers are worth fighting for, Lovallo told the audience. In Cox’s case, customers who are merely attracted to low prices are not necessarily long-term customers because they’ll flee at the first opportunity for a low price. “We sell technology and more often what our customers tell us they want is for that technology to work,” she said. “That’s more important to businesses.” Other speakers at the event included Marc Sandroff, a principal and founder of management services and private equity firm Cadre Partners, and David Cohen, executive vice president and a co-founder of BeachFleischman. Sandroff told attendees what it takes to make an entrepreneur business attractive to investors or for eventual sale. Cohen outlined state and federal programs that encourage investment through tax credits. Organizers of the event say they’ll evaluate the reaction from attendees to decide what direction future sessions should take.

Contact reporter David Hatfield at dhatfield@azbiz.com or (520) 294-4237.

Which way to go? Meetings. Sometimes they seem to be the bain of business. But when they’re about growing, building and honoring the best in business, how many is too many? April 26 was a test of that. The Better Business Bureau of Southern Arizona honored some of the best with their second annual Torch Awards luncheon that day at the JW Marriott Starr Pass Resort and Spa. Then there were at least three others that, if nothing else point to the dichotomy facing the business community in the Tucson region. First up, some big names including BeachFleischman, Jim Click, and Bank of Tucson were behind a kick-off workshop that involved Don Diamond, investors and other business leaders aimed at trying to see if there might be ways to get more capital investment into Tucson-based startups. An underlying theme of the meeting was that government hasn’t been helpful and that this would have to be an effort undertaken by the business community on its own. Then there was Tucson Regional Economic Opportunities meeting on the state of the aerospace industry in the region that gathered experts in the industry and education to talk about what needs to be done to keep this vital sector. Meanwhile, City Councilwoman Karin Uhlich had her own “invitation” event in which businesses were invited to learn how to jump through the hoops of City Hall.

6 MAY 4, 2012

INSIDE TUCSON BUSINESS

NEWS PUBLIC NOTICES Business bankruptcies, foreclosures and liens recorded in Tucson or Pima County and selected ﬁlings in Phoenix. Addresses are Tucson unless otherwise noted.

BANKRUPTCIES Chapter 11 Business reorganization Healthcare of Florence LLC, 450 W. Adamsville Road, Florence. Principal: Edward McEachern, CEO of Initiatives Healthcare LLC, manager of debtor. Estimated assets: More than $10 million to $50 million. Estimated liabilities: More than $10 million to $50 million. Largest creditor(s): Not filed. Case No. 12-08547 filed April 23. Law firm: James F. Kahn, Phoenix

FORECLOSURE NOTICES Lookout Properties LLC 913 E. Hedrick Drive 85719 Tax parcel: 113-08-274A Original Principal: $100,000.00 Beneficiary: Washington Federal, Phoenix Auction time and date: 11:30 a.m., July 18, 2012 Trustee: Larry O. Folks, 1850 N. Central Ave., Suite 1140, Phoenix Abbash LLC 15445 N. Oracle Road, Catalina 85719 Tax parcel: 222-25-0410 Original Principal: $80,000.00 Beneficiary: Kenneth S. Schachter and Carol A. Schachter, as trustee of the Kenneth S. Schachter and Carol A. Schachter Revocable Living Trust Auction time and date: 10 a.m., July 19, 2012 Trustee: Charles H. Whitehill, 110 S. Church Ave., Suite 4398 WA Wilmot Acquisitions LLC, c/o Western America Equities LLC 6268, 6270, 6274, 6284, 6286, 6288, 6290, 6292 and 6296 E. Grant Road and 2275 N. Wilmot Road 85712 Tax parcel: 121-01-103E and 121-01-103J Original Principal: $7,605,000.00 Beneficiary: US Bank NA, as trustee for the registered holders of Merrill Lynch Mortgage Trust 2007-C1 commercial mortgage pass-through certificates, Series 2007-C1, c/o C-III Asset Management LLC, Irving, Texas Auction time and date: 11:30 a.m., July 17, 2012 Trustee: Michelle Ghidotti, Assured Lender Services Inc., 2552 Walnut Ave., Suite 110, Tustin, Calif.

LIENS Federal tax liens Strategic Space Development Inc., 9121 E. Tanque Verde Road, Suite 105. Amount owed: $2,925.00. Truquest Inc., 3561 E. Sunrise Drive, Suite 105. Amounts owed: $316,391.94 and $63,131.20. Venture-N Inc., 1239 N. Sixth Ave. Amount owed: $95,166.28. Lesco Optical and Ashdan Enterprises Inc., 225 E. Valencia Road. Amount owed: $2,679.36. Add A Web and Pro Click Media Inc., 12601 N. Como Drive, Oro Valley. Amount owed: $2,947.46. Southwest Seafood Shoppes LLC, 4321 N. Bear Claw Way. Amount owed: $73,407.47. American Towing & Recovery, 1610 S. Pebble Beach Ave. Amount owed: $1,934.93. All Communications Inc., PO Box 817, Vail. Amount owed: $1,617.42. Take It For Granted Fundraising Counsel Inc., 12103 N. Portico Place, Oro Valley. Amount owed: $8,114.17. McCook Boiler and Pump Company, PO Box 26643, 85726. Amount owed: $580,124.55. Crystal Auto Glass Enterprises LLC and Shane J. Johnson, 9642 E. Colette St. Amount owed: $594,211.60. Latrikunda Transport Services and Amelia Y. Nance, 3704 E. Ellington Place. Amount owed: $2,550.47.

State liens (Liens of $1,000 or more ﬁled by the Arizona Department of Revenue or Arizona Department of Economic Security.) Alta Vista Plastering LLC, 2512 E. 21st St. Amount owed: $2,371.55. JCS Construction LLC, 4356 E. Mine Shaft Road, Queen Creek. Amount owed: $9,054.63. Arizona’s Best Glaziers Inc., PO Box 50305, 85703. Amount owed: $2,915.69.

Foreclosures touch 1 of 150 homes in Tucson region By Roger Yohem Inside Tucson Business During the first quarter of this year, one out of 150 Tucson-area homes were in some stage of repossession or foreclosure. That ranked Tucson No. 42 in foreclosure activity rate, according to new data from RealtyTrac, a national online firm that tracks foreclosures. Foreclosure activity was taken against 2,945 Tucson homes during the quarter, 4.3 percent higher than the previous quarter but down 36 percent from the 2011 first quarter. RealtyTrac reported 1,665 auctions and 1,280 real-estate owned (REO) actions locally. Year-over-year, the volume of auctions and REOs declined about 35 percent in each category. In the Phoenix market, 20,787 properties had a foreclosure filing in the first quarter. That was a 5 percent decrease from the 2011 fourth quarter and a 43 percent drop from the 2011 first quarter. Phoenix had the ninth-highest rate of

foreclosure activity for 2012’s first three months. In this market, foreclosure filings hit one in every 87 housing units, RealtyTrac reported. Nationally, first quarter foreclosure activity increased in 114 of the 212 metropolitan areas. In the 50 largest cities, activity was up in 26 locations. Pittsburgh recorded the largest increase, followed by Indianapolis, Philadelphia, New York and Raleigh, N.C. The biggest quarterly declines in foreclosures were in Portland, Ore.; Las Vegas; Providence, R.I.; Salt Lake City and Boston. Stockton, Calif., posted the nation’s highest rate where one in 60 housing units had a foreclosure filing. California also was home to the next six high-activity markets, in order: Modesto, Riverside, Vallejo, Merced, Sacramento and Bakersfield. At No. 8 was Las Vegas, followed by Phoenix and Visalia, Calif. “While the majority of metro areas show foreclosure activity down from a year ago, more than half reported increasing foreclosure activity from the previous quarter — an

early sign that long-dormant foreclosures are coming out of hibernation in many local markets,” said RealtyTrac CEO Brandon Moore. Through most of 2012, many analysts expect foreclosure filings to increase due to two main factors. Many banks had stopped processing foreclosures during the “robo-signing” investigation. That issue ended with a $25 billion settlement between banks and the federal government. Foreclosures that were delayed are now expected to be accelerated. The other key factor is, in about September, the timeline ends to reset the last wave of five-year adjustable rate mortgages that caused many of housing market’s defaults. In the short term, another wave of foreclosures most likely will weaken prices. The long-term upside is that those bargain prices will help clear out the glut of inventory.

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

State budget spends a little, saves more By Hank Stephenson Inside Tucson Business PHOENIX — Gov. Jan Brewer and Republican lawmakers this week agreed on an $8.57 billion state budget deal that will add some money for education, public safety and mental health while repaying money to the state’s “rainy day” reserve fund and should end the 2012-2013 fiscal year with a surplus. The budget, which goes into effect July 1, passed through the House and Senate Tuesday, despite Democrats opposition. Nevertheless, the compromise budget included enough items sought by Brewer that she was expected to sign it. The budget is a 0.5 percent, or $46 million, increase over this year’s budget. “This is a safe budget, and that’s the key word. The people want safety,” said state Rep. John Kavanagh, R-Fountain Hills, the House Appropriations Committee chairman. “We’re coming out of one of the worst downturns in our economy since the Great Depression, people still have their financial houses disrupted, they’re still fearful. They want to be safe in their finances and they want the state to be safe in its finances, and that’s what this does.” The compromise between Brewer’s requests to restore funding for social services and Republican leadership in the Legislature to save more money was hashed out in closed-door meetings.

The plan would end with a $243 million surplus and another $450 million to put back into the rainy day fund. On the other hand, it acknowledges there would be a projected budget deficit of about $160 million in two years. Rep. Ted Vogt, R-Tucson, said that while “there are still some very significant concerns that face us as a state,” the budget takes a long-term approach. “We’ve been down that road before. We spent money before we had it. We spent the rainy day fund before there was even a cloud in the sky, and that left us with a $3 billion deficit that we have all had to make very difficult decisions to close.” Democrats, who were excluded from the budget negotiations, proposed a batch of last-minute amendments to increase spending for items including adult education, state parks and KidsCare, but all were defeated. They argued that the $450 million going to the state’s rainy day fund should be put to use now. Among budget items: • K-12 education gets $40 million to fund Move on When Reading, which requires third-graders to read at or above grade level before being promoted to fourth grade. Brewer had initially asked for $50 million. Schools also would get another $15 million for such things as textbooks, desks and computers. And $12 million would go toward helping to fix up school buildings, though new school funding continues to be sus-

pended until 2016. • Universities will receive $15 million that will go to bringing Arizona State University and Northern Arizona University up to funding parity with the University of Arizona, though the UA hit will come in future years. Another $6 million goes to the UA medical school in Phoenix. • Social services will receive $42 million to backfill lost federal funds for the Department of Economic Security that will go to paying for emergency family services such as domestic violence prevention, child support enforcement, daycare subsidies and fighting homelessness. Another $39 million goes to the state’s program for the seriously mentally ill. • Corrections is set to receive $66 million in future years to build a new 500-bed maximum security prison and another 1,000 beds in private prisons. The Department of Corrections also would receive a nearly $4 million bump to pay for new corrections officers. • Public safety will receive $9 million to pay for Department of Public Safety officer retirements and almost $2 million for new vehicles. • Tourism will get the $7 million Brewer had sought for the Department of Tourism. Included as part of the balancing act, the budget includes $90 million in revenues from fund sweeps, including $50 million from a multi-state mortgage lawsuit settlement against banks.

InsideTucsonBusiness.com

MAY 4, 2012

NEWS

City hall tries for paradigm shift toward business By Roger Yohem Inside Tucson Business

dler and Solis. “The city has all kinds of economic development opportunities for both small and large companies. Debbie will help triage, get support across departments for business,” Ewing Gavin added. Both emphasized that job creation is a top priority. While continuing to work with TREO, the city will explore opportunities in trade with Mexico, sports and tourism, and

high-quality manufacturing jobs. For economic development, Chandler “is the point person, although there is no wrong door to come through,” said Ewing Gavin. “Businesses need to know” that she, Chandler, Solis and Rothschild will take lead roles to grow the economy.

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

Otis Blank

Now that Tucson city government has formalized its economic development function, the next big step is to try to change the attitude of city employees. To grow the economy, which in turn generates money for the city, will require a culture change across departments. “The change will take a paradigm shift in customer service and business attitude. We are working to educate employees, they need to understand their role in business growth and economic development. There is a lot of room for improvement,” said Maricela Solis, business advocate in Mayor Jonathan Rothschild’s office. A key driver in this effort to become better business stewards is Debbie Chandler, who started Tuesday (May 1) as economic development Debbie Chandler m a n a g e r. Chandler comes from the private sector and was on the city’s Small Business Commission. Since 2006, she had been executive director of the Microbusiness Advancement Center. Chandler also has a 29-year career in banking in various commercial and executive positions. She is a University of Arizona graduate in Agricultural Economics. The city’s last economic development officer was Kendall Bert in 2005. After 19 years in that post, he moved to Tucson Regional Economic Opportunities (TREO) as senior vice president and retired from there in May 2009. Part of the city’s paradigm shift is a new package of 21 incentives for business. “We have to do a better job explaining and marketing the incentives,” said Solis. “Businesses don’t know what’s available.” The education process has started internally, where Solis has the mayor’s support to install “a solid process of economic development. We are meeting with department heads, talking to them about opportunities and barriers,” she said. Chandler reports to City Manager Richard Miranda. Beginning with the new fiscal year July 1, the city will keep $120,000 that

it was sending to TREO to pay for the re-instated post. Chandler’s annual base salary is $87,500. “One important thing we’ll be working on is to better define the city’s role in economic development. We know we have to make it easier for businesses to work with the city, to streamline processes and regulations,” said Nicole Ewing Gavin, assistant to the city manager, who will work with Chan-

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8 MAY 4, 2012

INSIDE TUCSON BUSINESS

INSIDE MEDIA While eyes focused on format changes, listeners tune out conservative talk By David Hatfield Inside Tucson Business Like a Whac-A-Mole game, while attention was focused on the impact of several recent radio station format changes, the latest Arbitron ratings came up with a surprise showing that Tucson listeners are tuning out conservative political talk. A year ago, the market’s two top-rated conservative news-talk stations, KNST and the Truth KQTH 104.1-FM, garnered a combined 9.4 percent of the overall radio market. That’s down 41 percent to 5.5 percent of the market in these latest ratings taken Jan. 5 to March 28 and released over the past week. What should be even more disconcerting is that Clear Channel Media and Entertainment’s KNST, home to the marque hosts of Rush Limbaugh and Sean Hannity, started broadcasting on 97.1-FM last November in addition to its 790-AM frequency. As a separate station, a year ago 97.1-FM attracted another 2.7 percent of listeners when it was known as Mia and played Spanish hit music, a format that no longer exists in the local radio market. Often times, swings in ratings can be explained by circumstances related to sampling in the survey and, in this case, disruption among listeners from the format changes. Which is why experienced advertising buyers make their decisions based on multiple consecutive ratings periods. As for the other stations that have undergone format changes recently, the jury is mostly still out, though Journal Broadcast Group’s new the Groove KTGV 106.3-FM had a solid outing in its first full three-months ratings test. Its audience share was up slightly from the period when it was in transition but up significantly from a year ago. Clear Channel’s new adult contemporary station My 92.9 KMIY 92.9-FM was also up, both compared to last ratings when it was transitioning from The Mountain and a year ago.

Among other winners: • Cumulus Broadcasting’s country station KIIM 99.5-FM remains the market’s No. 1-rated station attracting more than 10 percent of the overall market and the company’s classic hits station K-Hit KHYT 107.5-FM is up 38 percent in market share from a year ago. • Arizona Lotus Corp.’s rock station KLPX 96.1-FM is the dominant market leader in attracting men 25-54 years-old. • Journal’s Mix-FM KMXZ 94.9-FM held on to it’s overall No. 2 ranking in the market, with an ever so slight increase in market share, despite being targeted by new competitors. • Clear Channel’s hits and hip-hop formated Hot KOHT

continued on next page

TOP 10RATED MORNING RADIO SHOWS Rank This

Show

Last

Average audience 6-10 a.m. weekdays

1 Max, Shannon and Porkchop

KIIM 99.5-FM

17,100

2 Johnjay and Rich

KRQ 93.7-FM

15,300

3 Bobby Rich Morning Mix

Mix-FM KMXZ 94.9-FM

13,100

4 Los Hijos de La Manaña

La Caliente KCMT 102.1-FM

9,800

9 Tim Tyler

K-Hit KHYT 107.5-FM

9,400

6 The Frank Show

KLPX 96.1-FM

7,400

Hot KOHT 98.3-FM

6,600

KNST 97.1-FM/790-AM

5,900

10* Valentine in the Morning

My 92.9 KMIT 92.9-FM

4,300

14* Music, no on-air personality

The Groove KTGV 106.3-FM

4,300

7 8 9 tie

12 Mojo in the Morning

5 Garret Lewis Morning Ritual

Source: Arbitron Inc. * Sean Valentine debuted Feb. 6, 2012, on KMIY; Jennie & Chris were morning hosts until Oct. 27, 2011 when station was KWMT. The Groove was launched Oct. 17, 2011; Ken Carr was previous host when station was KGMG.

TOP STATIONS: MEN 1834 Rank

Station

TOP STATIONS: WOMEN 1834 Average audience

1 Hot KOHT 98.3-FM

1,700

2 KFMA 92.1-FM/101.3-FM

1,600

Rank

Station

Average audience

1 tie KIIM 99.5-FM

2,500

KRQ 93.7-FM

2,500

3 tie KIIM 99.5-FM

1,300

3 Hot 98.3 KOHT 98.3-FM

1,400

KRQ 93.7-FM

1,300

4 tie La Caliente KCMT 102.1-FM

1,100

5 La Caliente KCMT 102.1-FM

1,200

Mix-FM KMXZ 94.9-FM

TOP STATIONS: MEN 2554

1,100

TOP STATIONS: WOMEN 2554

1 KLPX 96.1-FM

2,800

1 KIIM 99.5-FM

4,200

2 KIIM 99.5-FM

1,900

2 Mix-FM KMXZ 94.9-FM

3,500

3 tie La Caliente KCMT 102.1-FM

1,800

3 KRQ 93.7-FM

2,100

K-Hit KHYT 107.5-FM

1,800

4 The Groove KTGV 106.3-FM

1,700

Mix-FM KMXZ 94.9-FM

2,100

5 La Caliente KCMT 102.1-FM

1,600

Source: Arbitron, average audience Men ages 18-34 and 25-54 Monday through Sunday, 6 a.m.-midnight.

Source: Arbitron Inc.,average audience Women ages 18-34 and 25-54 Monday through Sunday, 6 a.m. to midnight. `

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InsideTucsonBusiness.com

MAY 4, 2012

MEDIA continued from Page 8 98.3-FM saw its audience share increase about 4 percent but more significantly were its gains in younger listeners. Besides the two conservative talk stations, the only other station that saw a significant slide in ratings from a year ago was Clear Channel’s KRQ 93.7-FM, which lost about 18 percent of its market share, though it still is the No. 3-rated station overall. Not included in this latest report are ratings for non-commercial stations. Those ratings, which were due to be released by the end of the day April 27, were still not available as of the end of the day Wednesday. Attempts to reach Arbitron for an explanation were unsuccessful.

Star circulation falls Reversing a trend across the U.S., total daily paid circulation for the nation’s 618 newspapers audited by the Audit Bureau of Circulations (ABC) was up 0.7 percent over a year ago for the six months ended March 31. Among the newspapers not contributing to that average gain was the Arizona Daily Star, which saw its circulation drop by 8.8 percent to 96,682, according to ABC estimates issued Tuesday. Changes instituted 18 months ago by ABC now include digital subscribers to PDF versions of the newspaper as well as paid subscribers to other electronic platforms, including tablets and smartphones, as part of total paid circulation. Of total paid circulation, the Star had an average circulation of 86,254 to the MondayFriday print newspaper. That figure is down 8 percent from a year ago. Average circulation to the Sunday Star is also down, but not as much. Total paid Sunday circulation was down 6.9 percent to 139,752. Of that, the print edition had average circulation of 129,328, down 6.2 percent. As a sidenote, Saturday circulation, which isn’t otherwise accounted for in the averages, remains the Star’s second biggest day of the week, after Sundays. ABC reports average total paid Saturday circulation is 116,010, with 105,580 of those receiving the print newspaper. ABC releases newspaper circulation data semiannually. Typically, the report issued for the six months ended March 31 shows higher average daily circulation for the Star due to the region’s larger winter population. For the Star it’s a huge swing. Compared with the averages issued six months ago that included the summer months, the newspaper’s total average Monday-Friday paid circulation is 43.9 percent higher in the winter months and Sunday circulation is 6.5 percent higher. Up the road in Phoenix, average total paid circulation to the Arizona Republic is down 4.6 percent Monday-Friday but up 0.5 percent to 514,355 Sundays from a year ago. Newspaper publishers trying to better monetize their digital plaforms most likely won’t miss the fact that the New York Times was credited with a 73 percent increase in total average paid Monday-Friday circulation to nearly 1.6 million. While circulation of the

TUCSON RADIO RATINGS Average percentage of listening audience 12 years old and older, Monday-Sunday 6 a.m. - midnight

Rank

Station

Format

Owner

Cumulus Journal

10.3 8.4

9.6 8.3

9.5 8.1

Clear Channel Arizona Public Media Cumulus Lotus

7.8

7.7

9.6

n/a

4.6

5.5

5.3

4.5 4.4

3.9 5.5

5.3

4.2

5.1

5.2 3.7

3.7 3.6

4.8 5.7

3.5

3.3

2.5

3.3

3.1

2.8

3.9 3.0

3.9 2.6

4.1 1.5

2.0 1.8

2.5 2.8 2.7

2.5 3.7 2.5

1.5 1.2

1.6 1.4

1.5 0.9

1.1

0.6

0.9

1.3

0.8

0.7

0.5

0.7 0.6

0.9 0.6

0.8 0.4

0.6

0.8

0.9

0.3 n/a

0.7 4.6

< 5.5

n/a

2.7

2.5

n/a

0.5

n/a

Wouldn’t you love to

n/a

0.5

0.3

have a top IT team,

n/a

0.2

n/a

1 2

KIIM 99.5-FM Mix-FM KMXZ 94.9-FM

KRQ 93.7-FM

Country Adult contemporary Hit music

KUAZ 89.1-FM/1550-AM

NPR/jazz

4 5

5 6

K-Hit KHYT 107.5-FM La Caliente KCMT 102.1-FM

Hot 98.3 KOHT 98.3-FM

7 9

9 10

KLPX 96.1-FM KNST 97.1-FM/790-AM *

Classic hits Regional Mexican Hits and hip-hop Rock News-talk

The Groove KTGV 106.3FM * My 92.9 KMIY 92.9-FM *

12 13

8 12

KFMA 92.1-FM/101.3-FM La Poderosa KZLZ 105.3-FM

14 15

17 14 15

KTUC 1400-AM The Truth KQTH 104.1-FM KUAT-FM 90.5-FM/89.7-FM

Adult contemporary New rock Regional Mexican Pop standards News-talk Classical music

16 17

18 19

i97-5 KSZR 97.5-FM * KCEE 690-AM

Hit music Pop standards

25T

Tejano KXEW 1600-AM

Tejano

Sports-talk

23T

21 22

21 25T

ESPN Radio KFFN 1490-AM/104.9-FM * La Preciosa KTZR 1450AM * The Source KCUB 1290-AM KGVY 1080-AM/100.7-FM *

The Voice KVOI 1030-AM

News-talk

24 -

23T 5

KEVT 1210-AM KUAZ 89.1-FM/1550-AM

Spanish variety NPR/jazz

KUAT-FM 90.5-FM/89.7-FM

Classical music

27T

KFLT 830-AM

Christian

27T

KJZZ 98.9-FM

NPR/jazz

KFLT-FM 88.5-FM

Inspirational music

Rhythmic oldies

Spanish oldies Sports-talk Oldies/ pop standards

Jan-Mar 2012

Clear Channel Lotus Clear Channel Journal Clear Channel Lotus KZLZ LLC Cumulus Journal Arizona Public Media Cumulus Good News Clear Channel Journal Clear Channel Cumulus KGVY LLC

Good News One Mart Arizona Public Media Arizona Public Media Family Life Maricopa College Family Life

Sept-Dec 2011

Jan-Mar 2011

Source: Arbitron Inc. Laterst ratings survey conducted Jan. 5-March 28. Previous survey was Sept. 15-Dec. 7, 2011. Year ago survey dates were Jan. 6-March 30, 2011. < - Indicates ratings below minimum caculatable number. n/a - Noncommercial station ratings unavailable. * Notes: KFFN began broadcasting on its FM frequency March 14, 2011. KGVY began broadcasting on its FM frequency April 1, 2011. KMIY was formerly The Mountain KWMT with modern music format until Nov. 18, 2011. KNST began broadcasting on its FM effective Nov. 28, 2011. KSZR was formerly branded as Bob-FM with adult contemporary music format until Feb. 3, 2012.

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KTGV was formerly Mega KGMG with R&B and oldies format until Oct. 17, 2011. KTZR was formerly Funny KWFM with all-comedy format from Jan. 26-Nov. 21, 2011, and before that was Cool KWFM with oldies format.

busting your budget.

KWFM was formerly branded The Jolt KJLL, but with same format, until Jan. 21, 2012.

print edition of the Times dropped 4.5 percent to 779,731, online paid circulation jumped to 776,697 from 47,078 a year ago. The Times started started charging for online subscriptions in March 2011. The Wall Street Journal continues to have the largest daily circulation in the U.S. with more than 2.1 million subscribers, up 0.02 percent from a year ago. USA Today is the

nation’s second largest newspaper, with a circulation of more than 1.8 million, which was up 0.6 percent. The New York Times is third.

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

Call us at 520.519.6301 or visit nextrio.com

10 MAY 4, 2012

INSIDE TUCSON BUSINESS

SALES SALES JUDO

Agreements with employed and independent sales reps Just what should you expect to find in the contracts of employed and independent sales reps? What’s fair and what’s not? To answer these and other questions I asked Tom Pace, an experienced Tucson attorney who specializes in business transaction law, to weigh in. Tom received a bachelor’s degree in 1973 from Stanford University, where he and I are pretty sure we were in the same constitutional law course together. Sam Williams: So, Tom, what can you tell us about non-compete and non-solicitation provisions of agreements between companies and their sales reps? Tom Pace: Generally, there will be a noncompete provision while employed. For lower-level employed sales reps, there should not be one after termination of employment. For higher level sales executives, sales managers and VPs, for example, there will probably be some period of non-compete after termination of employment. There are two types of non-solicitation. One applies to the hiring away or “raiding” of employees after termination and the other applies to clients and prospective clients who were contacted on behalf of the employer. These are generally enforceable, if limited to a reasonable time. Williams: How about the payment of commissions and/or bonuses after termination? Pace: Generally, if the sale is complete and there is not substantial client “hand holding” which must be assumed by another sales person, commissions should be payable after termination of employment. But, if someone else must do substantial “hand holding,” there should be a split of the commission or perhaps no commission at all. For example, in a software sales situation where the salesman has to have substantial dealings with the client during installation and training, it will be necessary for another employee to assume this duty and he/she would probably receive the commission.

Williams: How about confidentiality provisions? Pace: Yes, it’s normal to have a confidentiality section keeping employer’s secrets and sales methods, price lists, and SAM WILLIAMS other information confidential. Williams: How similar are contracts for independent/contract (1099) sales representatives with employed reps? Pace: Non-compete and non-solicitations agreements will generally be similar. However, if the non-compete limits the salesperson too severely, the IRS may argue that, by exercising this much control, the salesperson is an employee and not an independent contractor. Williams: Regarding non-compete provisions, what should sales reps be most concerned about? Pace: The non-compete agreement should be limited to a geographical area and a specific time period. For example a 90-day non-compete provision might make sense to prevent an employee or independent contractor from using leads generated on behalf of the employer. A non-compete provision that lasts for a year or more could prevent the employee or independent contractor from working. Sales reps need to make sure that they won’t be precluded from working in their area of expertise. Williams: What is enforceable and what isn’t? For example, can prior employers prevent an employee from working in a particular field because doing so would compete with the employer? Pace: The general rule in Arizona is that such provisions are enforceable, if limited to a reasonable area and time.

In evaluating the reasonableness of the scope and time the courts look at the interests of the employer that need to be protected and consider factors such as time to train a new employee, how often confidential price lists are changed and the level of the employee’s responsibilities. Non-competes for lower level sales reps without access to confidential information are rarely found to reasonable. A low-level sales employee generally has no information other than perhaps price lists and leads which are confidential to the employer. A high-level sales executive may be privy to the company’s pricing and marketing plans, future price lists, etc..., and here the non-compete agreement would be more reasonable. Note that the courts are reluctant to prevent someone from working. Williams: Do providers of professional services, such as MDs and attorneys, have non-competes? Pace: Yes and no. Non-competes are more often enforced in the case of the sale of a business where the non-compete was part of the bargained for goodwill that was purchased. Also, the courts will look at the customer or client rights. In one Arizona case which involved a doctor, the court refused to enforce a noncompete after considering the rights of the patients. Similarly, attorneys in private practice are generally restricted from entering into non-compete agreements because it would limit the rights of clients to choose their own attorney. Williams: If the company has its headquarters in California or New York and the agreement says that the laws of those states apply, how does this affect enforceability of certain provisions, most notably non-compete clauses? Pace: In California non-competes in employment agreements are generally not enforceable in the State of Arizona. The

courts are more likely to enforce non-competes from states such as Massachusetts and New York. Arizona will generally apply the choice of law provision however, unless the chosen jurisdiction has no substantial relationship to the parties or the transaction or the application of the chosen law is contrary to a fundamental public policy of Arizona. If all of the employee’s or contractor’s ties and duties are in the state, there will be a strong argument that the laws of the local jurisdiction should apply. However, if the employer is headquartered out of state and the employee is a high-level employee, this may be more questionable. Williams: Is a contract really a negotiated agreement, or is it a one-sided and coercive (i.e., take it or leave it) arrangement? Pace: Agreements for executives or very high-level salespersons are usually subject to negotiation whereas lower-level employees generally don’t have the leverage to negotiate. Williams: Should sales reps have an attorney review these types of agreements before they sign them? Pace: If it is a large employment agreement, the employee should have it reviewed by an attorney, especially if it is being negotiated. In cases of a lower-level employee signing the employer’s standard employment agreement, there may be little leverage to negotiate, though. Williams: Is this an expensive or time consuming process? Pace: Usually not. Typically a review takes about an hour or so and may run $300. If you have questions about your agreements, please email them to Sam Williams at swilliams@newviewgroup.net and they will be forwarded to Tom Pace. Williams’ Sales Judo appears the first and third weeks of each month in Inside Tucson Business.

InsideTucsonBusiness.com

MAY 4, 2012

GOOD BUSINESS ON GUARD

7 ways a business can deal with an unhappy customer It’s difficult to find a single business that won’t tell you that customer service isn’t central to its philosophy — and for good reason. It’s common knowledge that customers are less likely to bring their business back to a company if they feel they’ve had a less than adequate customer service experience. It’s easy for a company to claim to practice excellent customer service, and delivering adequate customer service to a majority of your customers can seem simple. However, there are always customers who are seemingly impossible to please. Whether it’s unrealistic expectations or just plain confused, these customers can be encountered by any business. Every day at Better Business Bureau (BBB) we receive complaints that boil down to a lack of communication on the part of both the business and the consumer. A customer may have misunderstood a piece of marketing, or didn’t understood why their bill was so high and in some cases thought they were buying something other than what they ended purchasing. Before a consumer files a complaint with us we tell them they should first bring their issue directly to the business, if they haven’t already. So many of the complaints we process are a result of businesses and consumers being unable to settle their disagreement on their own, either because the consumer didn’t communicate their problem or because emotion overran the communication. What we’ve discovered in these cases is that once we facilitate better communication between both parties through our complaint process, we’re able to settle the vast majority of these complaints amicably – in fact we settled 72 percent last year. Ideally BBB would never receive complaints like these. Although most are settled to the satisfaction of both the business and the consumer, it’s still a time consuming process for both parties, and the consumer will always be happier if they’re able to settle their disagreement with business without the help of a third-party. To be sure, there are instances when consumers make unreasonable demands of a

business, and there may not be a way the business can make the customer happy. Even in these cases there are proper ways to go about dealing with the customer’s KIM STATES grievances, if for no other reason than to be sure you’ve exhausted every customer service technique available in an effort to make the customer happy. Carol Tice, a writer for Entrepreneur Magazine, recently came up with seven customer service tips businesses can use when dealing with unhappy customers. The tips are simple, but they can be very powerful when attempting to communicate with a disgruntled customer. • Listen. Sometimes, customers just need to know someone at a company is interested in their problem, notes John Tschohl, co-author of “Achieving Excellence Through

Customer Service.” • Apologize. Don’t engage in fault-finding or laying blame, but do let the customer know you are sorry they had a problem, says Tschohl. • Take them seriously. Customers’ questions may seem ridiculous, but they’re important to that customer. Try not to laugh. • Stay calm. Customers may be irate, frustrated, or just irritating. But don’t get down to that level, ever. Just staying calm can make customers feel you care and have the ability to help them. • Suggest solutions. Help-desk workers should have the power to resolve more than 95 percent of customer issues without having to pass the customer on to another person. Allow line workers to give out free coupons, accept returns, give refunds, and take other needed remedies without having to consult someone else. They can offer customers a range of options for resolving their problem, and get the job done, Tschohl says. • Be available. These days, smart customer service means setting up a help desk on Facebook, Twitter, or wherever else

your customers hang out online. • Acknowledge your limits. If you’re asked a crazy question or given an unrealistic demand, simply say you’re sorry the request isn’t within the scope of what your company provides. You can’t be everything to everyone. Sometimes it’s impossible for a business to avoid a complaint, but too often the complaints we receive could be avoided with better initial communication between the business and the consumer. Customer service isn’t an exact science, but if you stress communication and patience in each interaction with your customers you’ll find that your customer service policy increasingly leads to customer satisfaction.

Contact Kim States, CEO of the Better Business Bureau of Southern Arizona, at kstates@tucson.bbb.org or (520) 888-6161. The BBB website is www.tucson.bbb.org. On Guard appears the first week of each month in Inside Tucson Business.

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12 MAY 4, 2012

INSIDE TUCSON BUSINESS

OUT OF THE OFFICE MEALS & ENTERTAINMENT

ARTS & CULTURE

Time is right to enjoy dining outdoors, before heat sets in

Summer concerts series to entice Friday visits at Main Gate Square

dining outdoors on your own very private There’s a fine line — and about 20 patio – all hidden in the shadow of downdegrees — separating the few spring days town’s buildings. Not only is great for from the hot summer nights of Tucson. nighttime dining, it’s a great way to enjoy a Now is the time to take advantage of dining lazy Saturday morning brunch and Bloody outdoors. And that has me thinking about Mary. Open for lunch from 11 a.m.-2 p.m. some of my favorite restaurant patios. weekdays, brunch from 10 a.m.-4 p.m. • Tohono Chul Tea Room, 7366 N. Paseo del Norte in Tohono Chul Park. There Saturdays and dinner from 4-10 p.m. Mondays through Thursdays may not be a more perfect and 4-11 p.m. Fridays and combination that allows diners Saturdays. Contact them at (520) to simultaneously enjoy 624-4747. breakfast, lunch or weekday • The Flying V Bar & Grill, afternoon tea and at the same 7000 N. Resort Drive at Loews time savor nature. Open from 8 Ventana Canyon. This is the way a.m.-5 p.m. weekdays and 8 to take a mini escape and a.m.-4 p.m. weekends daily pretend you’re enjoying a resort through June after which hours stay. Dine on the deck at the shift an hour earlier. For base of the Santa Catalinas and reservations, call (520) 797-1222. you can even hear the waterfall • Vivace, 4310 N. Campbell MICHAEL LURIA while enjoying food southwestAve. in St. Philip’s Plaza. This ern-style cuisine. It’s an espepatio has embraced diners for cially great place to enjoy a sunset, not to over 25 years. The shaded courtyard setting mention its signature guacamole made and the consistently delicious Northern table-side. Generally open nightly from Italian fare created by chef/owner Daniel 5:30-10 p.m. but that can change dependScordato are a hard combination to beat. ing on how busy the resort is. Make Open for lunch and dinner 11:30 a.m. - 9 reservations online at www.loewshotels. p.m. Mondays through Thursdays and com/restaurants/flying-v-bar-grill or (520) 11:30 a.m.-10 p.m. Fridays and Saturdays. 615-5496. Make reservations online at www.vivacetucson.com/ or call (520) 795-7221. • 47 Scott, 47 S. Scott Ave. This small Contact Michael Luria at mjluria@ urban eatery in the heart of downtown Tucgmail.com. Meals & Entertainment appears son has quite the intimate patio, well-hidweekly in Inside Tucson Business. den at the back of the restaurant. It’s like

A new summer jazz concert series called Centennial Hall, 1020 E. University Blvd. on the UA campus. Buy tickets through UApreFriday Night Live debuts at 7 p.m. tonight (May 4) at Main Gate Square on University sents. Boulevard west of the University of Arizona campus. The series will take place twice a month At Tohono Chul Park, 7366 N. Paseo del on Friday nights through August, courtesy Norte, an exhibit titled “Mesquite” is on of the Marshall Foundation display through July 22 which and the Southern Arizona Arts highlights items both functional and Culture Alliance (SAACA). and artistic as rendered in this The series kicks off with the beautiful wood. Furniture and Tryst tonight with perforother items will be on display, mances lined up for Domingo along with paintings of the tree. De Grazia on May 18; Sylvan Opening this weekend at the Street featuring UA Director of Drawing Studio, 33 S. Sixth Ave., Bands Jay Rees on June 1; is an exhibit titled “Hoopleville” pianist and vocalist Lisa Otey by artist David Kish, a fine artist on June 15; Cool Breeze led who has decamped to many by Homero Ceron, recipient HERB STRATFORD different artforms, is perhaps best of the 1999 Arizona Arts known for his political commenAward, on July 6; saxophonist tary comic strip Hoopleville which Kelland Thomas on July 20; pop and R&B appears in the Tucson Weekly. The show inspirational vocalist Crystal Stark on Aug. has a diverse mix of fine art, cartoons and 3; and Sonoran Soul featuring Carlos 3D works that both inspire a head scratch Solorzano on Aug. 17. There are 30 retailers and 20 restaurants and a laugh.

Art

in Main Gate Square and with Spring semester ending next week and students about to leave, Tucsonans can take advantage of the less hurried atmosphere. Parking is free with a merchant validation after 5 p.m. weeknights in the Tyndall Garage, Fourth Street and Euclid Avenue, and free all day Saturdays and Sundays (except on football Saturdays) in the Tyndall Garage and Main Gate Garage, Second Street and Euclid Avenue.

Dance Ballet Tucson finishes up its 2011-2012 season with a presentation of “Cinderella” at 7:30 p.m. Saturday and 2:30 p.m. Sunday in

Film It’s all about “The Avengers” this week, with no other major studio releases expecting an audience against the first summer blockbuster this year. Already racking up record box office numbers in overseas markets, the film stars Robert Downey Jr., Chris Evans, Samuel L. Jackson and Scarlett Johansson, as the super-hero super team.

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

MAY 4, 2012

CALENDAR SPECIAL EVENTS

Tucson Dowsers May Presentation Saturday (May 5) 1 to 3 p.m. Unity of Tucson 3617 N. Camino Blanco Wrap-up gathering for the season includes a panel of experienced dowsers. Contact: Terry Klunk TucsonDowsers@gmail. com or (520) 531-8039 $5 suggested donation www.TucsonDowsers.org Market Like a Pro...The Secrets You Don’t Know Tuesday (May 8) 10:30 a.m. to 1:30 p.m. Historic Manning House

450 W. Paseo Redondo RSVP Morella Bierwag info@nawbotucson. org (520) 326-2926 $40 members, $45 non-members. www.nawbotucson.org Franchise Opportunities with Togo’s Eateries Thursday (May 10) 1 to 2 p.m. Doubletree by Hilton Tucson - Reid Park 445 S. Alvernon Way Complimentary franchise seminar Contact: Todd Peterson (818) 597-9605 todd.peterson@togos.com

Focused Networking Workshop Tuesday (May 15) 11:30 a.m. to 1 p.m. Tucson Metro Chamber 465 W. St. Mary’s Road RSVP: Arlene Chiovetti achiovet@tucsonchamber. org 792-2250 x135 $10/members; $20/ non-members www.tucsonchamber.org ADOT Transportation Projects in Southern Arizona S. AZ Logistics Education Org. (SALEO) Wednesday (May 16) 5:30 to 8 p.m. Viscount Suite Hotel, 4855 E. Broadway RSVP: al@saleo.org or 977-3626

Cost: $30 ($25 members & 1st-timers, $10 students) Southern Arizona Women Lawyers Association Monday (May 21) 11:45 a.m. to 1 p.m. Manning House 450 W. Paseo Redondo RSVP: Shannon Giles Shannon. Giles@me.com 520-798-5282 Cost: $25 nonmembers, $20 members www.awla-state.org

Rosemont Project Update & Logistics Issues S. AZ Logistics Education Org. (SALEO) Wednesday (June 20) 5:30 to 8:00 p.m. Viscount Suite Hotel, 4855 E. Broadway RSVP: al@saleo.org or 977-3626 Cost: $30 ($25 members & 1st-timers, $10 students)

REGULAR MEETINGS

Roadrunner Civitan Club of Civitan International SCORE Southern Arizona free business counseling Every Monday 10 a.m. to 1 p.m. Nanini Branch Library 7300 N. Shannon Road Info: (520) 791-4626

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14 MAY 4, 2012

INSIDE TUCSON BUSINESS

LOOKING BACK REMEMBERING TUCSON

David Windsor, the registrar who oversaw UA’s growth 35,000 students Registrar of the University of Arizona for 38 years, David L. Windsor is a man who opened doors for students and, in some cases, unknowingly guided their life careers. In the early 1960s, Windsor was not restricted to the black-and-white admission rules of today. If a student might not have scored well enough on tests or had a high enough grade-point average to meet University of Arizona admittance criteria, he could “go out on a limb” if he felt an applicant had potential. As one who spent most of my time at Tucson High School focusing on extra curricular activities and cruising down Speedway to Johnnie’s Drive-in restaurant, I can speak from experience. I had graduated from Tulane University with a major in “Bourbon Street” in spite of a diploma reading Sociology. I decided I wanted to attend the University of Arizona for graduate school and I can still remember Windsor looking at my “C” average and telling me, “You will be conditionally admitted to the college of Business and Public Administration. If you ever get less than an A, you will be out.” I put my nose to the grindstone and didn’t get a “B” until my last semester. Windsor’s instincts had been right and his mentoring focused me on my studies. If I thought Windsor was the all-time University of Arizona registrar, so did the school. He served five presidents — Alfred Atkinson, Bryon McCormick, Richard Harvill, John Schaefer and retiring under Henry Koffler in 1983. The UA made honored him as an Honorary Bobcat in 1996, as well as the senior honorary organization’s most prestigious A. L. Slonaker award. In 1968, he received the Faculty Recognition award. “I am very proud to have been made a member of the University of Arizona Hall of Fame in 1980. And, this year, at my ripe old age of 90 I was presented the Bear Down award,” he said. Windsor has also been active in various associations for registrars. He is now an honorary member of the American Association of Collegiate Registrars and Admissions Officers. He’s also been active in Tucson community groups, including the Red Cross and being the 2001 Kiwanian of the Year. Windsor is a native Arizonan, born on the Fourth of July, 1921, in Casa Grande to Merrill and Martha Windsor. Both of his parents were grammar school educators, his dad as principal and his mom as a teacher. When he was 6 years old, the family, which included a brother Merrill Jr. and a sister Margaret, siblings all separated by three years, moved to Prescott. David Windsor attended the UA from 1939 to 1943 graduating with a degree in

David Windsor

David Windsor in Egypt 1992

English. He belonged to the Enlisted Reserved Corp. along with Tucson journalist and professor Abe Chanin and lawyer Bill Lindamood. Called to duty in MARY LEVY PEACHIN the spring of his senior year, Windsor was allowed to complete his courses and exams. The night of his graduation, he was serving in the infantry in a swamp in Arkansas. Brother Merrill also went to the UA — one year running Morris Udall’s campaign for student body president — but he wasn’t able to graduate before World War II. He eventually completed his degree and went on to become editor of Sunset Magazine, then moving on to National Geographic. When Bruce Babbitt became governor of Arizona he hired Merrill as editor of Arizona Highways. Following basic training, David Windsor was stationed in Texas before being assigned rifleman duties in Oran, Algeria. The Allies in World War II had captured North Africa and Windsor was sent as a replacement to I Company in the Third Division. After being transferred to Italy’s Anzio Beach he was shot in the arm by a machine rifle, suffering both artery and nerve damage. At the U.S. Army hospital in Oran,

doctors spent eight hours operating on Windsor’s arm. For his hospitalization he was put on a hospital ship for Boston and from there he and four other servicemen were put on a train with a nurse and sent to Bruns Army Hospital in Santa Fe, N.M. They were greeted with some consternation since Bruns was a hospital for tuberculosis patients. Nevertheless, Windsor was closer to home and could be visited by family. “I thought I would come home as a hero, but the Army wouldn’t let me go,” Windsor recalled. At that time, the Air Corp. was part of the Army and Windsor was sent to Illinois to cryptographic technician school, to decipher enemy code. After that Windsor was sent to Davis-Monthan Army Air Field. While stationed at Davis-Monthan, Windsor talked frequently to his friends at the UA. One day he got a message from Don Phillips, head of the UA News Bureau. Windsor had worked for him as a student. Phillips told him that after the war, the UA wanted to hire an assistant in the registrar’s office. Years later Windsor learned the road was being paved for him when UA President Alfred Atkinson’s secretary showed him a letter written by Sen. Carl Hayden who had asked Windsor’s early release from the military. Windsor became the Veterans Coordinator Registrar under Registrar C. Zaner “Zip” Lescher. When Lescher retired in 1958, Windsor became Registrar.

About the same time Windsor married Charlotte Hancock. Raised in Tempe, she lived next door to Windsor’s Aunt Delia and Uncle Albert Gillett. “She was the grandest little girl. As time we met as young teenagers: I didn’t realize that I loved her. After she graduated from Tempe Normal (now Arizona State University), she had plans on becoming a flight attendant. Instead we were married in February 1946,” Windsor recalls. The Windsors had one daughter Andrea Gayle, who they nicknamed Randi. For 26 years, she has worked with Tucsonan Amy Masseo’s Pleasure Bent tours. Randi was married to Bob Miranda and they have a son Tony who is in his 20s. Windsor remembers the “God awful” tragedy that struck in 1990 when, after a year of suffering from systemic lupus, Charlotte died. Windsor has found support from his friends. He continues to enjoy Tucson’s culture and Trinity Presbyterian Church. He lives at Atria Campana Del Rio retirement community. “A lot of folks want to be matchmakers, but I could never replace Charlotte,” Windsor says. “I am a survivor. Since the night I was shot, and most of my company died, I have lived through that hospitalization and its long recovery, had triple bypass and double bypass eight years later, plus back surgery. I am on a cane, but I feel great. At the age of 62, I retired, deciding I had other things that I wanted to do. I saw the University of Arizona grow from 2,300 to 35,000 students, and I loved every day of my 38-year career.”

Do you have a historical Tucson story to share? Contact Mary Levy Peachin at mary@peachin.com. Her historical columns appear the first week of each month in Inside

InsideTucsonBusiness.com

MAY 4, 2012

PROFILE

Of birds and bees: Nature inspires micro aircraft In the back corner of an engineering building at the University of Arizona, professor Sergey Shkarayev and his students study the mechanics of flight. At 9 p.m. on a Thursday, students are still gathered there, surrounded by circuit boards, batteries, disembodied wings. The lab even looks like a small airplane hangar — vast but windowless. This lab has earned a national reputation for constructing and flying remote control planes. Increasingly, military and civilian customers are looking closely at remote control aircraft as alternatives to traditional surveillance methods. Predator drones already roam the skies over the Arizona-Mexico border. Although it is unmanned, the Predator is still a large and expensive aircraft, with a wingspan of nearly 50 feet and a unit cost of around $4.5 million, according to U.S. Department of Homeland Security (DHS) estimates. Operating costs for the Predator are more than $3,000 per hour. Smaller, toy-sized planes — or micro air vehicles (MAVs) — might be cheap and versatile replacements for some of the tasks currently performed by the Predator. None of the planes in the Shkarayev MAV lab would cost more than $2,000 to manufacture. Naturally, then, Shkarayev’s work has attracted the attention — and funding — of DHS and the Air Force Office of Scientific Research. One of the latter’s projects involves installing gas sensors on MAVs, which can detect hazardous fumes from the air before they threaten troops on the ground. Many of their projects reflect the difficulty of doing surveillance in rugged terrain. In a current DHS collaboration with Intelesense Technologies, based in Milpitas, Calif., the Shkarayev lab is developing a plane that can relay data between ground units and radio towers. This could be a crucial communication tool in places where mountains and canyons obscure line-ofsight communications, such as Afghanistan or the Arizona borderland. In a March 2011 field test of this project, a Shkarayev plane was launched over the desert outside Tucson with a payload of radio transmitters. Soldiers on the ground wore monitors that transmitted their heart rates to the MAVs flying overhead. The MAVs successfully relayed data from the heart rate monitors on the ground to a radio tower on top of Tanque Verde Peak in Saguaro National Park East, eight miles away. “If we’re in a canyon, for example, it can be very hard to get a signal out, even with a satellite phone,” Shkarayev said. “We showed that the unmanned aerial vehicle, flying at 1,000 feet, could pick up that signal and transmit it to the very powerful antenna on top of (a mountain).” “We achieved up to 75 percent signal

Intelesense Technologies

By Sarah Dasher Inside Tucson Business

MAV in flight over the Tucson desert.

quality at six miles, meaning that we could have gone much, much farther … 40-plus miles?” said Kevin Montgomery, president of Intelesense. A subsequent test in Utah’s canyonlands in fall 2011 confirmed the MAVs’ viability as a data relay. “They can be used to transmit video, high-bandwidth stuff, anything,” Shkarayev said. And even, with biometric monitors, to locate downed soldiers from 1,000 feet in the air. The aircraft that Shkarayev’s colleagues chose for the most recent field test is not even very specialized. It’s an off-the-shelf plane from a hobby shop, about five feet across and made completely of Styrofoam. Shkarayev’s lab retrofitted the plane with special sensors and batteries, and ensured that it was aerodynamically balanced — which is where much of the expertise comes in. Still, the resulting plane looks no different than something you could find under the Christmas tree. The whole outfit weighs only about 4 pounds. Innovation in the MAV world extends beyond just the cameras and sensors the planes carry. What distinguishes the Shkarayev lab is its experiments in aircraft maneuverability. “Our mission is fundamental research in unsteady aerodynamics,” Shkarayev said. “By unsteady, we mean aircraft that take off and land vertically, hover and make sharp corners.” In the never-ending pursuit of agility, the Shkarayev lab is willing to sacrifice basic design conventions — like a fuselage or wings — yielding planes that don’t look much like planes at all. On every shelf and counter is another attempted mode of flight, flayed

open to reveal the circuitry inside. The lab is a Burgess Shale of aviation. One of its most celebrated aircraft looks like a warped steno pad with a propeller on one end. The idea is that this aircraft combines the advantages of a helicopter and a fixed-wing aircraft. It can stand on end, propeller pointed skyward, in order to take off and land vertically—and hover. But it can also lie down and fly propeller forward like a traditional plane. Fixed-wing planes can stay up a lot longer, but they require a runway to take off and land, and they don’t maneuver as well as a helicopter can. Helicopters are great for maneuverability, but in the words of at least one engineer, “they don’t want to stay in the air.” The Shkarayev competition design combines the advantages of both rotary and fixed-wing flight, creating a very small and maneuverable aircraft that can stay aloft for up to 30 minutes. It can fly in an urban environment or even indoors. “Imagine a military application,” said Ryan Randall, a research assistant in the Micro Air Vehicle lab. “If you mounted a camera on it, a soldier could pull one of these out of his backpack, and it could fly around inside a building ahead of him to see if there’s, you know, someone with a bat inside. They’re essentially disposable, so if it goes inside and gets batted out of the air, well, that tells you something.” Brandon Pitts, a senior aerospace engineering major, is excited about this aircraft’s potential to save lives. “With a UAV, there’s no danger to the user. You can stick it in whatever situation you want, and the operator can know exactly what’s going on from

an entirely safe location. Like that Japanese power plant. They had to send people in there, but…” he picks up a newer, smaller version of the steno pad,” you could have sent in this instead. The Border Patrol is interested in this design.” Another specialty of the Micro Air Vehicle lab is tiny aircraft: really tiny aircraft. The smallest plane in this lab is only 1 inch long — a flapping-wing ornithopter modeled after insect flight. Nature’s best fliers are tiny. The lab raises locusts to inspire their designs. A postdoctoral position in the lab is filled by a researcher who studies insect flight with a high-speed camera. But as of yet, human ingenuity is stymied by the humble insect. No aircraft can match it in agility and speed. “People look at these things and think they’re toys, but the aerodynamics of planes this size are very challenging—even harder, I think, than a full-sized aircraft,” Randall said. For one thing, small, lightweight planes are much more susceptible to turbulence. “If we look at something like turbulence over the wing tip — on a big plane, that’s not so noticeable, but on one of these little guys, that could be the size of the whole wing,” Randall said. “Our professor keeps pushing us on every design we come up with. ‘Can’t you make it smaller? Can’t you make it smaller?’” said Aaron Petras, one of the undergraduates who works in the lab. Small planes are also more weight-sensitive. “Right now, it’s really the batteries and the size of the electronics that limits us,” said Jeff Olmstead, a technician whom Shkarayev hired to be the test pilot for the lab’s many designs. While a full-size plane can carry its own weight or more in payload, small planes are limited to a fraction of their weight, sometimes only about one-tenth. At that level, the weight of batteries and the size of electronics become major limitations in the design. “In the future, longer battery life will make an incredible difference,” Pitts said. “But right now, we’re essentially designing our projects around battery size, because they’re the heaviest component and the most vital component.” Once the batteries get smaller, the aircraft will get smaller too. For the Shkarayev lab group, that’s the next frontier. Randall walks over to a counter that overlooks, skybox-style, an indoor wind tunnel. From a bank of cabinets, he pulls out a drawer and removes a plastic terrarium housing two live locusts and a head of lettuce. “For now, they feast on salad,” Randall says, flicking the plastic. “But eventually, eventually we will harvest them for their wings.”

Sarah Dasher is a science intern for Wick Communications, owner of Inside Tucson Business.

16 MAY 4, 2012

INSIDE TUCSON BUSINESS

PEOPLE IN ACTION NEW HIRES

University. He completed general surgery residency training at the University of California, Los Angeles, and Davis Medical Centers and cardiothoracic residency training at the University of Pittsburgh Medical Center.

Monica Kern has been named manager of integrated business services at R&A CPAs. She will be responsible for leading the division providing small businesses with a one-stop source for all their accounting needs including bookkeeping, payroll, sales tax reporting, income tax preparation and financial statement compilation. She is a University of Arizona graduate.

Oro Valley Office, 10445 N. Oracle Road. She has more than six years of real estate experience.

Long Realty Company is pleased to announce Dawn â&#x20AC;&#x153;Tucson Dawnâ&#x20AC;? Heinemann has joined the sales team at the

John Z. Carter, MD, a board-certified family practitioner and geriatrician, has been hired as medical director for the

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Southern Arizona division of Watermark at Home. Watermark at Home is a Medicare-certified home health care agency offering home health and private duty care by certified and registered professionals. Deanna Schilling has

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been hired as a receptionist at InTegriLogic Corporation.

{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 â&#x20AC;&#x153;People in Actionâ&#x20AC;? button. From there you can submit your announcement and weâ&#x20AC;&#x2122;ll publish it online and in print.

Heart surgeon Dale Payne, MD, Ph.D., has joined the University of Arizona Department of Surgery, Division of Cardiothoracic Surgery, as surgical director of the

cardiothoracic intensive care unit at The University of Arizona Medical Center. Payne has expertise in many areas of cardiothoracic and vascular surgery, including heart transplant and artificial heart devices. Payne received doctorate and medical degrees from The Ohio State

Long Insurance Group has hired Gary May as an insurance account manager. May has an extensive background in all types of insurance products and has been licensed in property and casualty insurance since 1987. He has been in Tucson since 1979 and holds a bachelor of science in business administration from the University of Arizona.

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InsideTucsonBusiness.com

MAY 4, 2012

BRIEFS GET ON THE LIST

NEW IN TOWN

national basis. Each year, the award is presented to a business that has increased employment opportunities for family members and nonfamily members, demonstrated long-term business success and economic growth measured by sales and profits, helped to strengthen family-owned businesses within the community.

Next up: Residential real estate Perry Engineering opens civil engineering office firms, Real estate brokers, Ken Perry, PE, LEED AP, has opened a Appraisers civil engineering consulting firm named 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: â&#x20AC;˘ May 11: Investment capital and lending, Venture capitalists â&#x20AC;˘ May 18: Residential real estate firms, Real estate brokers, Appraisers â&#x20AC;˘ May 25: Electrical contractors, Mechanical contractors, Plumbing contractors â&#x20AC;˘ June 1: Law firms â&#x20AC;˘ June 8: Internet service providers, Website designers, Computer hardware retailers, Software companies 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) 294-1200.

Perry Engineering. Perry has worked for nearly two decades in the design of commercial and industrial sites, education and health care related facilities, residential subdivisions and studies regarding the feasibility and infrastructure requirements of masterplanned communities. A major focus of Perry Engineering is to serve as the civil engineering consultant on the design teams of both local and national architecture firms. The company is located at 100 E. Sixth St. and can be reached at (520) 820-4355.

COMMERCIAL REAL ESTATE

Wilmot medical plaza noticed for foreclosure

SMALL BUSINESS

AGM Container Controls is honored by SBA Tucson manufacturer AGM Container Controls has been recognized by the Arizona division of the Small Business Administration (SBA) as the Jeffrey Butland Family-Owned Business of the Year for 2012. State award recipients go on to compete for similar awards on a regional and

Wilmot Professional Plaza, a two-building medical office complex at 6268-6296 E. Grant Road and 2275 N. Wilmot Road, has fallen into default and is scheduled to be sold at a trusteeâ&#x20AC;&#x2122;s sale. According to public records, WA Wilmot Acquisitions LLC, an affiliate of Western America Equities LLC, Bellevue, Wash., has defaulted on an original $7.6 million loan. The plaza was bought in 2007 from a group of Tucson investors for $10.14 million. Western America Equities is a privately owned commercial real estate investment management company. The complex features two 21,000 square-foot buildings. It was initially built as a retail center and redeveloped into a medical plaza in 2002. Among its tenants are Arizona Community Physicians,

Eastside Imaging and Canyon Internal Medicine. The trusteeâ&#x20AC;&#x2122;s sale is being handled by Assured Lender Service of Tustin, Calif. The beneficiary is U.S. Bank National Association. The public auction is scheduled for 11:30 a.m. July 17 at the Pima County Courts Building, 110 W. Congress St.

EVENTS

Centurionsâ&#x20AC;&#x2122; Mardi-Gras party downtown May 19 As only the Centurions could pull off, this yearâ&#x20AC;&#x2122;s big party fundraiser Carondelet St. Maryâ&#x20AC;&#x2122;s Hospital is called â&#x20AC;&#x153;The Great Masquerade Escapade: The ball to End All.â&#x20AC;? The Mardi Gras-style indoor-outdoor party will be from 6 p.m. to midnight May 19 centered near Congress Street and Fifth Avenue downtown. Tickets are $85, $50 of which is tax deductible, and includes great music, food, gambling games along with a Carnivale Parade. There will also be a Come as You Arenâ&#x20AC;&#x2122;t costume contest. All attendees must be at least 21. Cash taxicabs will be available as well as free shared rides and free rides back the next morning. Buy tickets from Centurion members, online at www.thecenturions.com or (520) 873-5032.

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18 MAY 4, 2012

INSIDE TUCSON BUSINESS

FINANCE YOUR MONEY

TUCSON STOCK EXCHANGE

Heartburn from paying taxes? Then how about the Fair Tax?

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

Having just paid more in income taxes than I’ve ever paid in my life — including the dreaded alternative minimum tax — I decided to look into some alternative tax reform measures currently being considered. The U.S. Tax Code is more than 71,600 pages of rules and regulations administered by the Internal Revenue Service (IRS). It is cumbersome and exploited. As a substitute, the idea of the Fair Tax was introduced in 1999. The reform measure introduced in both the U.S. House of Representatives and Senate is 133 pages and would eliminate: • Personal and corporate income taxes • Capital gains taxes • Self-employment taxes • Estate and gift taxes • Alternative minimum tax • Payroll taxes, including Social Security and Medicare After three years, the IRS would be eliminated and replaced by an Excise Tax Bureau and Sales Tax Bureau in the U.S. Department of Treasury. Replacing the current tax system, there would be a consumption tax of 23 percent levied just on new products and services. Instead of paying taxes on what we earn, we would pay taxes on what we spend. Americans would take home their entire paycheck for the first time since World War II when Congress introduced payroll withholding and quarterly tax payments. The roots of the IRS go back to the Civil War, when in 1862, President Abraham Lincoln and Congress enacted an income tax to pay war expenses. It was repealed 10 years later. Congress revived it in 1894, but the U.S. Supreme Court ruled it unconstitutional the following year. In 1913, the 16th Amendment was ratified, giving Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal income above $3,000 with a 6 percent surtax on incomes of more than $500,000. Since then, tax rates have risen and dropped. As it exists today, the tax code is obscure, complex and exploited. It is overdue for major reform. The Fair Tax proposal features a dollar-for-dollar revenue replacement and a prebate to all U.S. citizens to ensure no American below the poverty level pays federal taxes. This, along with several other features, is how the Fair Tax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive. It is based on lifestyle spending choices rather than simply punishing taxpayers who work for a paycheck.

Southern Arizona presence

The Fair Tax would repeal the 16th Amendment, which is the only amendment that takes away liberty rather than granting it. There would be no tax on used goods. The amount SUSAN MOORE paid to government would be transparent and your choice. With the Fair Tax, you are only taxed once on a good or service. If you choose to buy used goods — a used car, resale home or used appliances — you pay no consumption tax. If as a business owner or farmer, you buy something strictly for business purposes and not personal consumption, you would pay no consumption tax. Under the current system, retail prices hide corporate taxes and compliance expenses which drive up costs for those who can least afford to pay. Income taxes and the cost of complying with them currently make up 20 percent or more of retail prices. According to Harvard University economics professor Dale Jorgenson, hidden income taxes are passed on to the consumer in the form of higher prices for everything you buy. The Fair Tax brings jobs home. It does not burden U.S. exports the way the current system does. The Fair Tax removes the cost of corporate taxes and compliance costs from the cost of U.S. exports, putting them on a level playing field with foreign competitors. Lower prices would increase demand for U.S. exports thereby increasing job creation in manufacturing. At home, imports are subject to the same Fair Tax rate as domestically produced goods. The Fair Tax is revenue neutral. It would pay for all current federal government operations including Social Security and Medicare. The Fair Tax abolishes the entire complicated federal tax system and replaces it with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities. It is a fair, efficient, transparent and intelligent solution to the frustration and inequity of our current tax system. Read about it for yourself at www. fairtax.org.

Contact Susan L. Moore Vault, president of Moore Financial Strategies, at susan@ moorefs.com or (520) 296-4464. She also hosts “Safe Money Strategies” from 6-6:30 a.m. Saturdays on KNST 97.1-FM/790-AM.

Company Name

Symbol

May. 2 April. 25 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

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.

0.06 0.02 13.67 36.00

0.06 0.02 14.54 36.30

0.00 0.00 -0.87 -0.30

0.04 0.01 8.35 32.96

0.89 0.10 15.94 39.25

9.73 0.58 2.53 8.16 58.77 6.50 81.13 22.10 57.44 4.15 19.18 32.70 30.42 24.73 28.20 13.27 86.64 38.84 45.92 10.87 66.00 62.17 17.22 38.12 27.99 52.71 60.64 208.06 31.10 58.64 4.14 43.20 31.08 8.73 50.69 23.34 1.19 29.02 32.10 41.27 62.29 41.27 39.99 28.00 47.12 63.35 35.27 10.27 54.02 45.42 20.00 38.49 62.07 8.96 8.17 41.97 32.12 57.98 15.04 32.09 37.29 21.66 115.04 34.82 10.26 32.04 59.01 34.15 33.57 8.72 20.40

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

-0.09 0.00 0.01 -0.10 -1.25 -0.43 1.19 0.02 1.08 0.11 0.51 -0.98 0.77 1.35 0.43 0.08 -0.64 0.81 2.12 0.39 2.12 0.66 1.51 0.80 0.54 0.80 0.16 4.49 0.93 1.24 -0.13 0.04 -3.44 0.51 0.93 0.15 0.06 3.12 0.37 0.63 0.49 1.33 0.97 -0.20 0.21 0.34 -0.39 1.57 1.11 -0.58 -1.60 0.94 9.82 -0.52 0.19 0.17 0.92 1.15 -0.04 0.12 0.11 -1.31 1.55 -0.11 0.66 0.36 1.65 -1.15 0.22 -0.25 0.21

8.45 0.20 2.10 4.92 51.83 6.38 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 8.52 7.15 32.12 20.96 45.28 14.04 24.34 27.62 15.51 77.73 33.71 3.96 20.10 48.31 30.34 22.58 4.44 13.18

17.77 6.96 5.55 12.68 65.79 12.96 86.91 32.85 59.59 7.29 27.96 45.80 30.88 31.55 45.14 14.23 92.10 43.49 43.49 11.60 66.19 70.15 17.91 56.78 30.49 52.85 62.01 210.69 35.79 62.33 5.72 46.49 38.40 13.12 57.39 25.85 1.73 30.08 32.29 42.64 62.83 42.17 40.32 29.54 49.75 70.61 43.18 10.82 54.69 45.65 25.43 40.75 85.90 16.92 12.44 43.64 32.79 58.95 22.39 35.63 39.24 26.84 117.40 58.29 10.50 32.98 62.63 45.34 34.59 9.20 24.71

InsideTucsonBusiness.com

MAY 4, 2012

INSIDE REAL ESTATE & CONSTRUCTION

Commercial real estate grinds out small first quarter gains Short sales help

Where are the jobs? The substantive, significant jobs? New first quarter 2012 data show that despite growing optimism, the hard numbers depict an uneven, grinding improvement in the Tucson region. In the industrial sector, “the Tucson real estate market is taking its time catching up with the national economic recovery. While activity ebbs and flows, it has not yet translated into meaningful job growth,” said Paul Hooker, industrial property specialist with Picor Commercial Real Estate Services. Tim Healy, vice president at CBRE, described the sector’s activity as moderate. CBRE tracks private sector, owner and nonowner occupied buildings of 10,000 square feet or larger. For the first quarter, net positive absorption of about 50,000 square feet nudged the vacancy rate down to 11.2 percent from 11.4 percent at the end of 2011. Most notably, industrial occupants continued to abandon the city’s southeast and southwest submarkets, where 34,000 square feet has been vacated since January. Meanwhile, preference for northwest sites continued, with the region’s largest positive absorption at 29,300 square feet. For the industrial sector as a whole, CBRE reported the average asking lease rate increased 13 cents per square foot from the end of 2011 to $6.48 in the first quarter. The retail sector posted its fourth consecutive quarter of modest growth, ending with positive absorption of about 100,000 square feet. The move to better quality locations, again mostly in the northwest submarket, continued.

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

TUCSON REAL ESTATE

4/23/2012

4/16/2012

$135,000 5,744 341 433 295

$123,000 5,818 334 478 251

Source: Long Realty Research Center

Roger Yohem

By Roger Yohem Inside Tucson Business

Business Park of the Desert, 6970 S. Palo Verde Blvd., houses the U.S. General Services Administration, one of the region’s few new industrial sector buildings. It was built by Chestnut Construction, 2127 E. Speedway.

“Slow but steady progress is the most accurate way to characterize Tucson’s retail market. Migration from unanchored retail to grocery-anchored is a clear flight to quality as landlords compete for too few tenants,” said Greg Furrier, a principal with Picor. The quarter ended with an overall vacancy rate of 11 percent, compared to 11.6 percent in the 2011 fourth quarter, said Alan Tanner, first vice president at CBRE. The average asking lease rate declined to $18.12 per square foot in the first quarter from $18.45 at the end of 2011. “Reductions in the asking rate are likely to persist until vacancy drops even lower, especially among mid-block and non-anchored centers,” Tanner said. The biggest increase in absorption occurred in the northwest submarket that gained about 50,000 square feet. The only area to lose space during the quarter was the southwest submarket, losing about 5,000 square feet of occupancy, according to CBRE. Both Picor and CBRE reported that national retailers, including large big box operators, are actively searching for space in prime locations. In the office sector, steady improvement is expected to hold until 2013. Quarter-overquarter, vacancy rates improved to 11.7 percent from 11.8 percent, giving the market “a sense of stability for the first time since 2008,” said Picor principal Rick Kleiner.

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

Current

Last Week

5/1/2012

One 12 Month 12 Month Year Ago High Low

3.75% 4.00%APR 3.88% 4.125%APR 4.95% 3.25% 3.375%APR 3.38% 3.50% APR 4.22% 2.88% 3.25%APR 3.00% 3.375% APR

4.95% 4.22%

3.75% 3.16%

The above rates have a 1% origination fee and 0 discount . FNMA/FHLMC maximum conforming loan amount is $417,000 Conventional Jumbo loans are loans above $417,000 Information provided by Randy Hotchkiss National Certified Mortgage Consultant (CMC), Hotchkiss Financial Inc. P.O. Box 43712 Tucson, AZ 85733. (520) 324-0000. MB #0905432. Rates are subject to change without notice based upon market conditions.

“Medical uses represent the strongest demand and will remain a primary growth industry for the region.” Although no submarket posted a drastic change in office vacancy, the northwest area again saw the strongest growth, absorbing just over 39,000 square feet of space. The entire market posted positive 33,500 square feet of absorption for the quarter, according to CBRE. The average asking rental rate for multitenant office space decreased for the third consecutive quarter, falling to $18.65 per square foot form $19.19 at the end of 2011. “The office market is one piece of evidence depicting modest progress. Yet the continued decrease in lease rates indicate it has yet to show significant signs of improvement. Because of its dependence on employment, it is unlikely substantial improvement will occur until hiring activity increases at a higher rate,” said Dave Montijo, first vice president at CBRE.

Higher foreclosures In April, trustee’s sales notices continued at double the rate of foreclosure sales, according to data from the Pima County Recorder’s Office. For the month, 431 foreclosed homes were sold compared with 910 new default notices issued. April was the third consecutive month in which notices were at least twice the volume of distressed sales. Year-to-date, 1,773 distressed homes have been sold and 3,427 trustee’s sales filed. The notice is the first legal step in the foreclosure process, notifying owners their property is scheduled to be sold at public auction. The notices and sales, key indicators of the market’s performance, are trending in opposite directions. Year-to-date, notices are up 9 percent per month, averaging 859 compared to 786 in 2011. Actual foreclosures sales, are down almost 24 percent to 443 per month this year from 580 per month in 2011.

Integra Group Real Estate, working with Fairway Independent Mortgage Corporation, is reaching out to help financially distressed homeowners who are thinking about doing a short sale as an alternative to foreclosure. Eric Lichtenheld, president of Integra, said his firm offers consultation services to help homeowners understand the foreclosure process. The consultations provide legal and accounting support to those “who are struggling to understand their options. This partnership brings all necessary specialists together in one counseling session to inform and assist the homeowner.” Integra Group, 501 W. Grant Road, specializes in the marketing and sale of real-estate owned (REO) and distressed properties. Fairway Independent Mortgage is national title company. Homeowners who work with Integra are reimbursed if they decide to sell short. Details are online at www.IntegraTucson.com

Sales and leases • BBV Investment LLLP purchased 29 vacant lots on 28 acres in the Rancho del Lago development in Vail for $150,000 from BBVA Compass, represented by Terry Lavery, Tucson Realty & Trust. Known as the McCloskey Property Lots 1-29, the land was acquired by an independent investment limited partnership affiliated with Tucson home builder Bill Viner. The buyer was represented by Jim Marian, Chapman Lindsey Commercial Real Estate. • Southwest Barricades leased 12,000 square feet at 2601 W. Verbena Ave. from Interwest Investments LLC, represented by Rob Glaser and Paul Hooker, Picor Commercial Real Estate Services. Pat Welchert, also with Picor, represented the tenant. • Brown Group Retail Inc., doing business as Famous Footwear, leased 7,041 square feet at 6228-6230 E. Broadway in the Broadway Wilmot Shopping Center from KGAM Broadway Wilmot LLC, represented by Nancy McClure, CBRE. The tenant was represented by Tom Woods, Colliers International Phoenix. • Absolute Turning and Machine leased 6,171 square feet at 860 E. 46th St. from K+L Ruppert Family Trust, which was self-represented. The tenant was represented by Rob Glaser, Picor Commercial Real Estate Services. • Mesquite Pediatrics leased 3,657 square feet at 2350 N. Kibler Drive from TMC Holdings Inc., represented by Rick Kleiner and Tom Knox, Picor Commercial Real Estate Services.

Email news items for this column to ryohem@azbiz.com. Inside Real Estate & Construction appears weekly.

20 MAY 4, 2012

INSIDE TUCSON BUSINESS

EDITORIAL BIZ BUZZ

There is promise for the future of Tucson There’s plenty that can get a body down these days — the economy, not having enough time to spend with friends and family and conversely, working too much, driving over horrible roads and coming to the realization that next month is June, which I would argue is the worst month of the year to be in Tucson. People leave town, it’s hot and the only thing that brightens the picture for DAVID HATFIELD those of us here is that the summer monsoon storms are about to arrive. But just when I was about to let the circumstances get the better of me, this week Inside Tucson Business held its 10th annual Up & Comers event. The positive mood was set right from the start with a gorgeous setting outdoors at the Lodge on the Desert. This was our second year holding the event there and I’ve got to say they’ve done a magnificent job restoring that place to its oasis-like setting and adding new rooms. If you haven’t been there lately, you owe it to yourself to give it a try. But I digress. Our emcees for the evening were Gina Trunzo and Mark Stine, co-hosts of the “Fox 11 Daybreak” show that airs from 7-9 a.m. weekdays on KMSB 11. They’re every bit as warm, genuine and professional as they apppear to be on TV. I think they helped make the evening. They introduced our nine Up & Comer honorees. Each honoree spoke briefly but in that time we learned why each was honored. There was family man Steven Eddy who seems so centered in his life and work, Tucson Young Professionals president Jeff Ell and his supportive family entourage, restaranteur Ryan Field and his vision for what can happen in Tucson, Nikia Gray telling of working late hours but still stopping to pick up a stray dog on the way home, my contact lenses nearly floated off my eyes over Christina Huyett’s passion for March of Dimes, the down-toearth and funny attorney Joesph Kroeger, Altar Valley School District Superintendent Nathan McCann and how he is changing education for the better, the blue-collar background of attorney Frederick Petersen (whose name I’m embarrassed to say was misspelled in headlines in our special section last month), and the self-deprecating humor of commercial real estate broker Brandon Rodgers. Each year, I find myself overwhelmed by the incredible accomplishments of our honorees. Thanks also to our readers who submitted such high-caliber people to be honored, not to mention the previous Up & Comers who helped us select this year’s honorees. And there are all of the people within our organization who put this event together. There’s a glow after an event like Up & Comers. Long-term, you know that these are the people who will continue to make a difference in what happens to our region. Short-term, bring on what may come in June. With people like these, Tucson is ready for what may come.

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

EDITORIAL

Hotel Arizona deal would help TCC Tucson’s politicians don’t have a good track record when it comes to real estate deals. And yet they continue to try to do them. Now we have City of Tucson officials shocked and surprised that Humberto Lopez wants to work out a deal with them that would allow for the rehabilitation of the Hotel Arizona? The 1970s-era hotel adjacent to the Tucson Convention Center had fallen into such a sad state of disrepair that many of the 308-rooms weren’t even habitable when Lopez shut it down on April 29. And yet they were some of the few hotel rooms available in downtown Tucson. There are 43 rooms in the Hotel Congress but outside of that there’s nothing — zip, zero, nada — hotel rooms in the downtown core. Is there any other metropolitan area verging on 1 million population in the U.S. with such a dearth of hotel rooms in its downtown core? Obviously, we’re not counting the establishments along Interstate 10 or bed-and-breakfasts. We’re talking hotel rooms that would provide the synergistic critical mass that could contribute to a vibrant downtown. In the case of the Hotel Arizona, unlike any other property in the region, it’s intrinsically tied to the Tucson Convention Center (TCC). The failure of the hotel and its predecessor brands, including Marriott, Holiday Inn and Braniff Place, are a direct result of 40 years of the city’s failures at operating the TCC. So now Lopez proposes what would be a no-lose situation for city taxpayers — we say that, considering the albatross that already exists as the TCC. Lopez wants to deed the hotel over to the city and within two years, partner with a national hotel brand and spend up to $35 million to fully renovate it to the standards of the new brand. To secure a loan, Lopez needs the city to hold on to sales and bed taxes generated by the improvements to the hotel and give them

back to him at the end of the two years. At that point, the city would deed the hotel back to Lopez. Some have argued that this deal is unfair. Whatever Lopez gets for the Hotel Arizona should be available to any other lodging establishment. For those who think that, remember this hotel alone is directly tied to the failure of the TCC. That isn’t the case with any other hotel. Further, there have been plenty of similar precedents set by successful downtown renovations. It’s common to subsidize a supermarket in a downtown area as an inducement to get people to live there. Granted, Tucson has never done it, but then again that explains why there is no supermarket downtown nor a significant residential population there. The upside is that downtown Tucson finally gets a hotel associated with the TCC. And from there, who knows where it can go? The downside is that the TCC is such a hopeless cause that this won’t revive it. That’s the decision city officials face. A little over a year ago, the Tucson City Council seemed poised to spend $192 million building a new 525-room downtown hotel plus another $40 million on other improvements associated with the TCC. That hotel was scuttled for good reason. It’s almost as if city officials have become fearful of public entities’ track records in this arena. It’s almost as if they believe Lopez is going to out-maneuver them so instead of evaluating the deal on its merits, they’re preoccupied with trying to figure out how he’s going to snooker them. When politicians stop worrying about such nonsense and start focusing on making decisions by evaluating them based on their merits, they might find themselves putting an end to their track records of poor decisions. Downtown Tucson and the TCC could use that.

InsideTucsonBusiness.com

MAY 4, 2012

OPINION WAKE UP, TUCSON

The hypocrisy of those who call for political civility Political civility for those of us in Southern Arizona took on a whole new meaning after the shooting tragedy of Jan. 8, 2011. As passionate political debate continues for ethnic studies and SB 1070 to women’s reproductive rights and Bibles in schools, Tucson is also home to the University of Arizona-based National Institute for Civil Discourse. There are those who would like to tout Tucson as a center for civility in politics and yet some of those who cloak themselves in “civility” blow the wickedest horns of hypocrisy. Take an online column written by David Fitzsimmons, editorial cartoonist for the Arizona Daily Star. The column, titled “Kelly Wins,” appeared the day after the April 17 special primary election to fill the Congressional seat vacated by Gabrielle Giffords. From right-wing nut jobs to Christian bashing and use of Christian doctrine to try to either be funny or paint some dark picture of what the Republican victor stands for, Fitz took on Jesse Kelly and the 134,124 people who voted for him in 2010 — only about 4,000 fewer than voted for Giffords — and lumped us all in as “unwashed, the rural, the illiterate, the scared goobers willing to cheerfully vote

against their own interests, whipping up the groundlings and the believers with rhetorical red meat so rotten with the stench of untruths that honorable flies will choose to lay their JOE HIGGINS eggs elsewhere.” An indication of the reaction to that column came from Jim Kolbe, the retired Republican who represented the district before Giffords, in his own letter to the Star writing, “Disagreement — even strong disagreement — is CHRIS DeSIMONE one thing. But the words of Fitzsimmons, while fully protected by the First Amendment, have no legitimate place in our political discourse. I once knew a Fitz who was irreverent but had a wonderful sense of

humor. He must have left the Star and gone elsewhere.” Perhaps we aren’t enlightened or educated enough to get the point of Fitz’ column. After all, according to the cartoonist, we are talk-radio freaks. Maybe we’d understand if we were keynote speakers at civility forums. Continuing on with the civility theme, Jeff Rogers, chair of the Pima County Democratic Party, offered up this gem after the Tucson Unified School District school board voted to eliminate Mexican American studies: “We Democrats cannot rest until we have defeated (Mark) Stegeman, (Miguel) Cuevas and (Alexandre) Sugiyama in this 2012 TUSD Board elections. There is no turning back, no compromise and no mercy….After their defeat, they need to be tarred, feathered and rode out of town on a rail. Frankly, they are just unfit to live in a multiculture community like Tucson. Sorry to be so direct, but you can’t pussyfoot around such evil.” As if that kind of language weren’t enough, on a recent installment of KUAT-TV 6’s “Arizona Illustrated,” Rogers called the Rio Nuevo Multipurpose Facilities board members “cockroaches” for their firm negotiations with Tucson city government To be clear, politics in the U.S. is about

debate and fighting for your ideas. At times it takes more to get a message heard. The United States of America works because our democratic process is designed to focus conflicts into campaigns and elections, instead of violent fights or coups. Given the apathy of American voters we should welcome a fired-up electorate. Just don’t throw stones at glass houses. As President Obama ventures out on his re-election campaign trail, it’s worth reflecting on his words at the McKale Center memorial four days after the Jan. 8 shootings: “The problem is that this kind of vilification and over-the-top rhetoric closes the door to the possibility of compromise. It undermines democratic deliberation. It prevents learning — since after all, why should we listen to a “fascist” or a “socialist” or a “right wing nut” or a “left wing nut”? It makes it nearly impossible for people who have legitimate but bridgeable differences to sit down at the same table and hash things out.”

Contact Joe Higgins and Chris DeSimone at wakeuptucson@gmail.com. They host “Wake Up Tucson,” 6-8 a.m. weekdays on The Voice KVOI 1030-AM. Their blog is at www.TucsonChoices.com.

SPEAKING OUT

Help is on the way for the jungles on our medians A prominent Tucson businessman wrote a letter to the newspaper deploring the “total lack of landscape maintenance” on street medians. He believes that visitors will look at Tucson as “a city in decline, and not a place to relocate a business.” Wild grasses are growing high in medians on our major streets. Trees have begun sprouting in the concrete cracks—they will eventually destroy the curbing, creating safety issues. When existing trees and shrubs are not trimmed appropriately, visibility becomes a problem for motor vehicles as well as pedestrians. Curbsides are also the site of volunteer plantings. The city has always expected property owners to maintain the areas between the curbs and the sidewalks. This is not being done. Paper, drink cups, plastic bags, dead trees and clumps of weeds “greet” visitors coming into our city on Kolb Road, something the letter writer noted too. The lack of median maintenance brings concerns about fire hazards from dry grass, safety issues from overgrown plantings and air quality issues from the pollens in the air. Funds for these projects ordinarily come from state monies which have been drastically cut. Tucson, along with other Arizona

municipalities, has lost considerable funding from the gas tax, the Highway User Revenue Funds (HURF). The state government has diverted these monies to balance CAROL WEST the state budget. The state gasoline tax has not increased from the current eighteen cents per gallon since 1993. With the high prices of gasoline, some motorists are driving less, which has had some effect on the tax as well. The city budget is heavily dependent upon the sales tax, so during this time of recession when people are not shopping as much to generate the tax, funds for things like clean up of medians has had to be delayed for the past few years. Also, many street maintenance staffers have retired, and the city’s Transportation Department has not been able to hire replacements due to lack of funds. Actual streets staffing has gone from 171 people in 2008 to 97 street maintenance workers in fiscal year 2012.

Recently, I met with city staff about the medians. City transportation administrators have developed an efficiency plan to reorganize the limited staff that they have for better coverage of street issues, including the 350 miles of median islands. They have also received permission to use state Department of Corrections inmates on the median projects. An action plan has been developed and is underway. According to a department memo, the Streets and Traffic Maintenance Division is implementing a city-wide clean up of arterial medians plus roadsides. The work will be done by a private contractor. It is expected the task will be completed by the end of June. The additional funding for this project will come via savings from decreased personnel costs and because of lower costs this past year for watering plants in the medians. The department has programmed median island maintenance to continue in fiscal year 2013 by using contracted services and implementing irrigation techniques designed to further lower watering costs. City forces will be used to clean up medians not included in the private contract. In addition, Department of Corrections

crews will work with city staff to provide a comprehensive median island maintenance program. This will allow for monthly median maintenance services as well as pre-emergent treatment twice a year. Those working and living near Valencia Road from Alvernon Way to Country Club Road; Broadway from Alvernon to Wilmot Road; Alvernon from 22nd to Fifth streets; Miracle Mile from Oracle to Interstate 10; Speedway from Campbell Avenue to I-10; and Golf Links from Swan to Wilmot roads can already see an amazing difference and cleaner medians. The transportation administrators must be commended for working with their staff to solve a critical community issue. The streets department reorganization will make the staff more efficient and effective. The tangible results will serve as a morale booster for both the workers and the community. The city has set a good example. Now it is up to us to clean up our properties so our community is appealing to newcomers who might want to start a business here. 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 MAY 4, 2012

INSIDE TUCSON BUSINESS

OPINION

LETTERS

GUEST OPINION

Summer closure is sad commentary on Old Tucson

Time to rethink Take Our Daughters to Work Day

TO: The Editor FROM: Matt Welch, travel consultant RE: Closing Old Tucson for the summer

Last month on April 26, was the 20th anniversary of Take Our Daughters to Work Day. The event, which now includes our sons too, is still a valuable chance to help children understand the workplace. But the problems that face girls and women have changed in the past two decades, and it’s time for the day’s emphasis to change, too. What we need is Take Our Daughters to the C-Suite Day — the offices occupied by corporate “chiefs.” The Ms. Foundation launched the program to demystify the workplace for girls and inspire them to embrace a wide range of careers. Now that women represent half the U.S. workforce, we can fairly say that mission has been accomplished. Girls no longer need help picturing themselves in a job; what they do need is encouragement to become leaders. In Fortune 500 companies, women make up just 3.6 percent of CEOs, 14 percent of executive officers, and 16 percent of board directors. Companies need to do more to inspire women to lead, rather than blaming the lack of women leaders on what Facebook Chief Operating Officer Sheryl Sandberg calls an “ambition gap.” Companies that are already committing time and resources to Take Our Children to Work Day can help close that gap by shifting their focus in three ways: introducing girls to female role models; more clearly explaining what leaders of both genders actually do; and supporting programs throughout the year that actively identify and groom female talent.

Introducing girls to a company’s highest ranking women is an easy step any organization can add to their career day programs — and it’s one that can make a huge JENNIFER ALLYN difference. Marie Wilson, founder of Take Our Daughters to Work Day, often quotes child-rights advocate Marian Wright Edelman on this topic: “You can’t be what you can’t see.” Girls want to see role models: A recent study by the Girl Scouts found that 80 percent of girls want to interact with successful women, but 60 percent had not been offered the opportunity to see these women in action at the workplace. Boys, in contrast, see a variety of male leaders in all aspects of their lives. Companies can help girls by using the day to introduce their employees’ daughters to women at the highest level of the company. And highlighting these leaders’ accomplishments will give the women themselves more visibility. Girls also need to understand what leadership is like on a day-to-day basis. The more they understand the specific requirements and rewards of leadership, the better choices they can make about their own careers. How do executives motivate teams, solve complex financial problems, and develop new products? Making the responsibilities, roles, and

payoffs of leadership clear from the time girls are in grade-school would help make leadership more tangible. It also would help resolve another issue the Girl Scouts identified: More than a third of girls said they wouldn’t feel comfortable trying to lead, and nearly 40 percent didn’t think they were cut out for leadership. Hearing directly from both male and female leaders about what they actually do could help close that gap. Finally, these efforts need to reach beyond a single day. Companies and schools need proactive efforts to move women into leadership roles. In corporate environments, that kind of support appears as sponsorship. In contrast to mentors, sponsors spend their political capital on behalf of their protégés. They provide opportunities instead of merely advice. A professor who pushes a student to apply for the Rhodes — and offers to write a letter of recommendation — is providing sponsorship. The best companies for diversity have formal sponsorship initiatives to achieve similar results. Simply showing our daughters what an office looks like is no longer enough. Real breakthroughs will come when we bring girls inside the halls of power. We need to take our daughters into the C-Suite now so they can lead in the future.

Jennifer Allyn is a managing director at PricewaterhouseCoopers LLP responsible for retaining and advancing women.

I InsideTucsonBusiness.com

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While I don’t think the closure of the downtown Science Museum due to road construction and the closure of Janos aren’t important, including them with the closure of Old Tucson for the summer months is not a fair comparison (Biz Buzz column, April 27 issue) The closure of Old Tucson is wrong in so many ways. When they compare themselves to theme parks back East that close “seasonally,” one needs to understand the reason they close is because of snow and freezing temperatures. This is not a problem in Tucson where we have sun 360 days a year. Tucson does not close up for the summer. Just ask the resorts and hotels that run specials and promotions during the summer months about their occupancy rates. Other area attractions don’t close but adjust with either early-morning hours or lateevening hours. Where is Pima County on this? The county issued a concession contract for a theme park that would be open yearround, not closed for four months. Won’t the county miss the tax revenue generated by the visitors to the park who spend their money in the shops and restaurants? I know there are plenty of other concessioners who would welcome the opportunity to run the attraction and be open for 12 months a year. Where is the Southern Arizona Attractions Alliance? Are they not upset that one of its members would shut down for one-third of the year? Is Old Tucson even a member? Should it be kicked out of the group? Lastly, Old Tucson’s CEO says that when the park re-opens, it will have an emphasis on more “education” and less “Hollywood.” Excuse me? Old Tucson is about movies and Hollywood. People go there to experience that. They do not go to be “educated.” There is the Arizona Historical Society, Arizona State Museum and Tombstone itself for visitors who want to be “educated” about the Old West. The problem with Old Tucson is the management and CEO. Old Tucson says it is busiest as a Halloween haunted house. What a sad commentary for this iconic park. You are right. The closure of Old Tucson is NOT progress in any sense.

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MAY 4, 2012

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