Iside Tucson Business 09/21/2012 by Territorial Newspapers

DIRT ALERT PART 1 How the housing crash changed the business of land development PAGE 4

Your Weekly Business Journal for the Tucson Metro Area WWW.INSIDETUCSONBUSINESS.COM • SEPTEMBER 21, 2012 • VOL. 22, NO. 16 • $1

Time to develop film-related jobs Tax incentives viewed for film industry Page 6

Fill it: Going to and coming back Post.Bid.Ship plays matchmaker for freight shippers Page 15

Samantha Sais photo | Illustration by Andrew Arthur

New home permits to pass 2011 pace All municipalities up at least 9 percent Page 23

Already powerful Hispanic consumer, gets stronger in Tucson Inside Tucson Business If there were any doubts of the power of Hispanics in this region’s marketplace, the annual Datos Tucson presentation Thursday contained more than enough statistics to overwhelm them. Consider these from the report: • Pima County’s Hispanic population grew at about 12 times the rate of the non-Hispanic population between 2010 and 2011. • More than half of children in the region under the age of 5 are Hispanic. • Hispanics accounted for 48 percent of births in Pima County in 2011. • The number of Hispanic students in Pima County grew by 22,000 from 2000 to 2011 while the number of white, non-Hispanic students dropped by more than 8,500. The report, authored by Loui Oli-

vas, professor emeritus at the W.P. Carey School of Business at Arizona State University with assistance from Univision Research, included some specifics for business leaders in attendance.

• Nearly two-thirds of new homeowners in Tucson between now and 2017 will be Hispanic. • Hispanics are spending more than $1 billion a year on food. • Hispanics in Tucson spent $251 million on health care in 2010. Even more specifically, • 33 percent of all Hispanics do their banking with Bank of America. It and Pima Federal Credit Union were the only two major financial institutions that had a percentage of Hispanic household customers versus percentage of overall market customers. • 60.4 percent of Hispanic adults have shopped at Tucson Mall in the past three months, compared with the general population percentage of 47.2 Other centers frequented by Hispanic shoppers are Park Place Mall, 44.1 percent; El Con, 36.8 percent; and Foothills Malls, 30.3 percent.

• 54 percent of Hispanics say they regularly shop for groceries at Fry’s Food Stores. Food City was second at 49 percent and Walmart Supercenter was third at 43 percent. A higher percentage of Hispanics than the general population say they regularly shop at Food City, Walmart and El Super. Even areas where Hispanics underperform the general poulation, the report said those should be considered opportunities. For instance, just 59 percent of Hispanics in Tucson have a debit card, compared with 72 percent of the overall population. About 82 percent of Hispanics have mobile phones, compared to 88 percent of the general population, but Hispanics are twice as likely to switch wireless carriers in the next year. The Datos report is presented annually by the Tucson Hispanic Chamber of Commerce.

2 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

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InsideTucsonBusiness.com

SEPTEMBER 21, 2012

NEWS

Long delayed Curacao mega-store finally set to open next week

St. Mary’s and Oro Valley hospitals ranked among best

BIZ FACTS

Curacao

3390 S. Sixth Ave.

in Southgate Shopping Center

www.lacuracao.com

After years of delay, California-based retailer Curacao plans to open its Tucson store Sept. 28. The store, at 3390 S. Sixth Ave. in Southgate Shopping Center, is the Los Angeles-based electronics and appliance retailer’s 11th store and second in Arizona. “We’ve always planned to come to Arizona,” said Rick Hutton, president of Curacao. “I think it’s a natural progression.” The other Arizona store is in Phoenix. Tucson’s store was originally supposed to open in 2008, then that was rescheduled to 2009 but then placed on hold again. “A business decision was made in 2009 and 2010 to delay the opening,” Hutton said. The faltering economy amidst the housing crisis played heavily into that decision. Instead of the originaal plan for leasing the store, which was built to Curacao’s specifications, the company decided early this year, to buy the property and 85,000-square foot store for $9 million and press forward with the opening. Curacao, which recently changed its name from La Curacao, began in Southern California more than 30 years ago. Jerry and Ron Azarkman, originally from Iran and later Israel, opened their first store in 1981. Curacao has since made its mark in the consumer electronics retail world as a store that early on recognized the purchasing power of the growing Latino community. As that reputation grew, Curacao began to capitalize on the Hispanic demographic, which had been largely ignored by many retailers. The company began offering in-store credit cards to customers, a model many retailers use and has been a success for Curacao, which sells many big-ticket items like televisions, comput-

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

Samantha Sais

By Patrick McNamara Inside Tucson Business

Employees at Curacao work to get the store ready for a planned ribbon cutting on Friday (Sept. 28).

ers and home appliances. “Over 90 percent of our sales are done on our proprietary credit cards,” Hutton said. Today, the company has more than 2 million card holders. Curacao also can ship items to almost any place in the world. Customers can purchase items at a store location and have the item shipped from one of the company’s many worldwide warehouses to family in their home country, often to locations in Latin America. Retailers across the country have begun to take notice of the Hispanic market in the United States, which has as estimated purchasing power of nearly $1 trillion. Many retailers have issued TV, radio and print advertising in Spanish in an effort to win a share of that market, which according to the 2010 U.S. Census topped more than 50 million people. “It’s a rapidly growing population,” said Marshall Vest director of the Economic and Business Research Center (EBR) at the University of Arizona’s Eller College of Management. He notes that of Pima County’s total population of 980,000 people, 345,000, or 35 percent, are of a Hispanic origin. In addition, nearly half of Arizona’s overall growth in recent years has been among the Hispanic community.

Vest noted that the median household income in Pima County stands at about $42,000 per year. The average household in Pima County spends about $1,100 on consumer electronics items per year. “For many years, we were considered a Hispanic retailer,” Hutton said. And it’s true that the company has catered much of its business toward a Hispanic clientele, with a fully bilingual staff among other amenities, but Hutton said Curacao serves the larger community. “It’s not about being a Hispanic retailer,” he said. “It’s about being a great retailer in the market we serve.” Curacao plans to hold a ribbon cutting and grand opening event on Friday (Sept. 28). Hutton said he anticipates the event to be slightly lower key than the grand opening of its Phoenix store at Desert Sky Mall, which attracted 50,000 attendees. “It certainly was an opening to remember,” Hutton said. The store has already hired more 100 employees and has plans to hire 100 more.

Contact reporter PatrickMcNamara 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

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EDITOR DAVID HATFIELD dhatfield@azbiz.com

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ART DIRECTOR ANDREW ARTHUR aarthur@azbiz.com

CARTOONIST WES HARGIS

STAFF WRITER ROGER YOHEM ryohem@azbiz.com

WEB PRODUCER DAVID MENDEZ dmendez@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.

Two hospitals in the Tucson region — Carondelet St. Mary’s and Oro Valley Hospital — were ranked among the best in the nation by the Joint Commission, a national evaluator and accreditor of health-care organizations. No Tucson area hospitals were on the list a year ago. The list represented the top 18 percent of Joint Commission-accredited hospitals. According to the report, another 17 percent of the nation’s hospitals are only one measure short of making the top performer list. Of the 620 on the list, 244 achieved the distinction for a second year in a row. The Washington-based Joint Commission recognizes accredited hospitals that attain excellence on accountability measure performance. The program is based on data reported about evidence-based clinical processes that are shown to be the best treatments for conditions, including heart attack, heart failure, pneumonia, surgical care, children’s asthma, inpatient psychiatric services, stroke and venous thromboembolism.

Foreclosure notice filed on Hilton El Conquistador Could there be a MetLife El Conquistador Resort in the region’s future? After a year-long effort by a subsidiary of Ashford Hospitality Trust to sell or restructure the debt at the Oro Valley resort, the complex has been noticed for a December foreclosure auction on a $19.74 million note. The notice of trustee’s sale includes the hotel, tennis and golf course facilities at the resort’s main site at 10000 N. Oracle Road and the affiliated Canada Hills Golf Course, 10555 N. La Cañada Drive. Together, the resort’s total of 45 holes comprise the largest golf resort in Southern Arizona. Ashford Hospitality Trust, a Dallas-based real estate investment firm, purchased the resort in 2007. The acquisition was part of a $2.4 billion, 51-property purchase. Ashford refinanced the $19.7 million loan on the El Conquistador in 2010 but said it would continue to try to seek a buyer. Earlier this year, Dave Kimichik, chief financial officer and treasurer for Ashford, acknowledged in a report to investors that the El Conquistador continued to have “negative net operating income.” Within the bundle of properties, Metropolitan Life Insurance Company (MetLife) was the key lender on the El Conquistador Resort.

EDITION INDEX Public Notices 6 Lists 7-9 Profile 10 Inside Media 12 Meals and Entertainment 13 Arts and Culture 13 Briefs 16-19

People in Action Calendar Finance Real Estate & Construction Biz Buzz Editorial Classifieds

20 20 22 23 24 24 27

4 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

NEWS DIRT ALERT PART 1

Grand jury indicts two Tucson city workers

For land deals, the way things were will never be again

Enforcement of SB 1070’s ‘papers please’ ruled OK The question over enforcement of what’s considered the most controversial portion of Arizona’s anti-illegal immigration law, known as SB 1070, was resolved Monday when U.S. District Judge Susan Bolton ruled law enforcement agencies can require people thought to be in the state illegally to show proof that they are here legally. The provision requiring suspects show their paperwork has been criticized because it could lead to racial profiling. SB 1070 was passed and signed into law in 2010, but enforcement had been held up by legally challenges. On a 5-3 vote, the U.S. Supreme Court in June struck down three other provisions that would have made it illegal not to carrying documentation, allowed police to arrest without a warrant under certain circumstances and made it unlawful to apply for work without federal work authorization.

Gas prices hit, stick at 3-month high Tucson’s average gas price remained relatively flat this week, at $3.62½ per gallon, according to AAA Arizona after rising to that price — the highest in three months — a week earlier. Over the past month, the average is up 26 cents a gallon.

Roger Yohem

A grand jury in Pima County Superior Court Monday (Sept. 17) indicted two former Tucson Department of Transportation employees in connection with allegations for a city investigation that found they stole city materials and did side jobs. Kurt Hough and Robert Palomarez were indicted on felony charges including fraud, theft and criminal enterprises. The two were among several employees that were the subject of a nearly year-long investigation into the Department of Transportation. The investigation found that employees had improperly used city material and equipment to conduct side work, essentially operating a private enterprise out of the department. In several instances, employees did the side jobs while on the clock for the city. Following the investigation, Hough and Palomarez resigned in lieu of being fired. City employee Fred Gradillas, also named in the investigation, retired instead of facing termination. Employees Dan Carpenter and Fernando Martinez were fired as result of the investigation. City officials have estimated the alleged private enterprise goes back to at least 2004 and may have cost the city hundreds of thousands of dollars in equipment, material and wages. Arraignment for Hough and Palomarez is scheduled for Tuesday (Sept. 25).

The influence of “hard cash” owners has brought stability to the land market.

By Roger Yohem Inside Tucson Business First of two parts As Southern Arizona’s economy slowly climbs out of a horrific recession, hard cash is the new king that reigns over the land empire business. Borrowing money to buy dirt is a non-starter. For investors, speculators, developers and home builders, the way things were will never be again. Debt is dead as a financing tool. Following the 2007-2008 collapse of the real estate market, the entire industry has struggled to clean out, stabilize and rebuild balance sheets. Along the way, the industry has invested in cutting-edge technology, comprehensive training and specialty personnel who evaluate vacant land differently than those in the business just five years ago. “That is the difference now. The big national builders have made the move to invest in younger professionals who are info and tech experts,” said Pete Herder,

CEO of the Herder Companies, 7440 N. Oracle Road. He has been a builder and land and lot developer for more than 40 years. Today, those core changes have returned investors and developers to strong financial positions. “There is so much big money now, these big Wall Street-like and private equity funds are involved. They’re the next business generation, so sophisticated in technology. The maverick, 30-year history of speculative land development around here is over,” said Will White, Tucson manager of Land Advisors Organization, 3561 E. Sunrise Drive. “This time around there’s fewer meetings. With Web access, they want to be out of a phone call in 30 minutes,” he added. “It’s not hey good buddy, let’s do lunch and a deal. Now, it’s get that information to me as fast as you can.” Land Advisors, based in Scottsdale, is the nation’s largest brokerage that focuses exclusively on land. It operates in Arizona, California, Colorado, Nevada, Florida, Utah and Texas.

Uncertain ‘gray’ market Once the housing bubble burst in 2007, the industry entered a “gray market” of uncertainty. Many speculated and hoped the federal government would step in with a rescue program like the Resolution Trust Corporation (RTC) of the early 1990s. The RTC was formed by the federal government to liquidate troubled real estate assets from failed savings and loan institutions. “A lot of people in town figured that was going to happen again. Some thought the banks would take back the land assets and just dump them. But no market cycle is the same. Last time, the RTC was where everyone did their land deals. In this cycle, the banks and lenders weren’t the main source of deals like everybody thought they would be. Mainly, the home builders owned the finished lots,” said White. Absent the pressure of an RTC-like mandate, some land experts believe the current down cycle has lasted longer than it should have. “Last time, many people thought the RTC

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

NEWS

ABOVE: Since 2009, D.R. Horton Homes has been one of the region’s most active land buyers. BELOW: Will White runs the Tucson office of Land Advisors.

The influx of cash owners has brought greater stability to the land market. Going forward, their patience and influence will shake the confusion and uncertainty out of the market. “Cash buys made the market healthier,” Marian said. “Access to capital is the dominant factor that’s now changing development,” added Herder. During the downturn, two national builders exited the Tucson market: Standard Pacific Homes and K. Hovnanian Homes. Hovnanian had held a large financial position in Rancho del Lago in Vail, about 500 lots and a clubhouse, that PulteGroup acquired in 2009 for $8 million. Most of the national companies that kept a local presence, however, withdrew to Phoenix and operated in Southern Arizona without a division president and a minimal staff. “It was slow enough all the nationals could have left,” said White. Those that stayed are encouraged by the market’s growing stability and have begun implementing their new, more sophisticated long-term business plans for Southern Arizona. “Each has a different plan and the bigger companies are looking out two years. They have a strategy to keep their market share up. Land is the foundation to all their business

plans,” White said. “With the builders, it’s about who controls the land because if you control the land, you have the ability to do as many homes as you want.”

This Week’s

Signs of recovery

UA hospital brings home prestigious award

Expecting a recovery in 2011, builders acquired about 1,900 lots from mid-2009 through 2010. However, the renewed demand for housing didn’t materialize as hoped and just over 1,425 new home permits were issued in 2011. That was the lowest volume since 1,307 permits in 1967. “2011 was so rough on everyone in land trading because so much land had been bought in anticipation of the market recovering. It didn’t happen so they just stopped buying. That’s why transactions just fell off the cliff in July of last year,” White said. For all of 2011, national builders purchased just 390 lots in the Tucson region. By the end of the year, however, interest in dirt was starting to turn again. Through most of 2012, Tucson’s economy and real estate market have made slow and steady gains. Incremental improvements, however slight, are holding in the complex economic web of job creation, mortgage rates, new and existing home sales, foreclosures, bankruptcies, and other related financial performa. “At some point, everyone is going to have to understand that we are recovering. There are too many signals,” White said. “More and bigger land deals have been done. People don’t walk around and spend eight figures for dirt if they’re not confident about the recovery.” Through August, developers and builders have purchased about 875 lots. Since 2009, two of the most active acquirers have been D.R. Horton Homes and Meritage Homes. “It’s not like the old days when builders would just buy land because it was pretty. Today, it has to fit the business plan they are after. They’re either after a set amount of lots or a set amount of homes to deliver,” White said. “We’re seeing multiple bids again for finished lots from builders.” Both Marian and White believe it is possible that total lot sales in 2012 could nearly triple last year’s volume of 390. Going forward, land availability and prices “will get a little dicey,” said White. As the new home market strengthens, the supply of land “will drain out. By 2014, we may not be able to deliver enough finished lots to meet consumer demand for housing.”

The second part of this report will appear in the Sept. 28 issue and look at how the supply and demand dynamics have changed for developable land and finished lots. Otis Blank

Otis Blank

was destroying the market. Dumping assets was killing prices. This time, some felt that an RTC-type program would have healed, reset the market quicker. But that’s something we’ll never know now,” said Jim Marian, a principal at Chapman Lindsey Commercial Real Estate. Over the last few years, much of the foreclosed land was picked up by capital companies and private investors. Most of these new “hard money” owners paid cash, a move that provided many future options. “No debt on land gives them incredible flexibility. They can sell it back to builders. Or do finished lots and sell those. Others will just hold, knowing upward pressure for land is building,” Marian said. “Everyone is more optimistic.”

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

Good News Karen Mlawsky, co-CEO of the University of Arizona Health Network, Dr. Andreas Theodorou, the hospital’s chief medical officer, and others are back in Tucson after traveling to the University HealthSystem Consortium’s conference in Orlando, Fla., to pick up the organization’s prestigious Quality Leadership Award, which we’re told is sort of like the Nobel prize among academic hospitals. Ten hospitals were honored as the top 10 performers in the consortium’s Quality and Accountability Study, which ranked the UA’s Medical Center ninth overall in performance in the areas of mortality, effectiveness, safety, equity, patient centeredness and efficiency. Just over 100 academic medical centers were ranked this year.

The Tucson

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

Privatizing city golf The City of Tucson has started to flirt with the idea of privatizing operations at its municipal golf courses. Golf continues to lose a million dollars annually for the city and it doesn’t appear as if that’s about to turn around. Now more than $6 million in arrears to the city’s general fund, the City Council has asked staffers to investigate the options for a possible contract with a management company that would run golf for the city. There’s no official request for proposals out yet, but a change in management could help to resuscitate the troubled golf enterprise and relieve the city of the financial burden. There’s also the potential for involvement with the University of Arizona that could make Randolph Golf Course in Reid Park its home course, moving away from Arizona National.

How we voted About 60 percent of ballots cast in the Aug. 28 primary election were by mail and 40 percent of those were returned within the first 10 days of early balloting. But not everybody votes early. About 9 percent of mail ballots were returned to polling places on Election Day. By the way, if you want to put a stop to robo calls and other annoyances from candidates, mail in your ballot as soon as you can. The county regularly issues reports to those who care about voters who’ve returned their ballots and once you’ve voted, there’s nothing they can do to change your mind.

6 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

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

BANKRUPTCIES Chapter 11 Business reorganization Kris S. Basel, 2893 E. Sierra Vista Road. Principal: Kris S. Basel, debtor. Assets: $320,419.00. Liabilities: $774,055.69. Largest creditor(s): Seterus Inc., Beaverton, Ore., $354,832.00. Case No. 12-20212 filed Sept. 11. Law firm: Eric Slocum Sparks Val-Mid Associates LLC, 1600 W. Valencia Road. Principal: James F. Alderson, manager/member. Estimated assets: More than $1 million to $10 million. Estimated liabilities: More than $1 million to $10 million. Largest creditor(s): Canyon Community Bank, $275,000.00, and James F. Alderson, La Quinta, Calif., $236,000.00. Case No. 12-20519 filed Sept. 14. Law firm: Gallagher & Kennedy, Phoenix

FORECLOSURE NOTICES Beau’s Star LLC 2621 N. Estrella Ave., and 133, 151, 163, 185 and 193 E. Glenn St. 85705 Tax parcel: 107-13-189A9, 107-12-35001, 107-12-35102 and 107-12-35203 Original Principal: $2,792,300.00 Beneﬁciary: Fannie Mae, c/o Centerline Mortgage Capital Inc., Irving, Texas Auction time and date: 1:30 p.m. Dec. 4, 2012 Trustee: Craig K. Williams, Snell & Wilmer, One Arizona Center, 400 E. Van Buren St., Phoenix CHH Tucson Partnership LP and EC Tenant Corp. 10000 N. Oracle Road, Oro Valley 85704 Tax parcel: 220-13-0040, 220-13-0050, 220-13-006B, 220-13-0090, 220-13-0110, 220-13-013A, 220-13-0140, 220-13-0150, 220-13-0880, 224-10-1190, 224-10-1200, 224-24-160G, 224-24-2620 through 224-24-2670, 224-265630 through 224-26-5650, 224-31-001C and 224-31-008B Original Principal: $19,740,000.00 Beneﬁciary: Metropolitan Life Insurance Co., Los Angeles Auction time and date: 11:30 a.m. Dec. 6, 2012 Trustee: Chicago Title Co., Foreclosure Department, 560 E. Hospitality Lane, San Bernardino, Calif.

LIENS Federal tax liens Tucson Rehabilitation Medicine Associates PC, 1921 W. Hospital Drive. Amount owed: $7,758.91. Carson Concrete & Decking Inc., 3475 N. Dodge Blvd. Amount owed: $1,118.82. Desert Pines Eldercare LLC and Ronald G. Cavelero, 17420 S. La Canada Drive, Sahuarita. Amount owed: $2,136.00. O’Bryan Electric LLC and Bryan Olson, 5750 N. Mountain Lion Lane, Picture Rocks. Amount owed: $3,511.02. Law Ofﬁces Timothy A. Pupach and Timothy A. Pupach, 95 S. Market St., Suite 260, San Jose, Calif. Amount owed: $15,028.99. Lou’s Mobile Home Movers, 1737 S. Avenida Plantea. Amount owed: $44,184.19. A&L Auto Care and Arturo P. Estrada, 4325 S. Sixth Ave. Amount owed: $9,519.73.

Mechanic’s liens (Security interest liens of $1,000 or more ﬁled by those who have supplied labor or materials for property improvements.)

Bear Creek Electrical Corp., PO Box 18876, 85731, against Barclay Creswin Tucson Spectrum LP, 2390 Camelback Road, Suite 200, Phoenix; Wells Fargo Bank, 8601 N. Scottsdale Road, Suite 200, Phoenix; and Frank Fuel, 5373 S. Calle Santa Cruz #101. Amount owed: $12,666.75. Red Mountain Machinery Co., 197 E. Warner Road, Chandler, against Granite Construction Company, 4115 E. Illinois St. Amount owed: $21,939.41.

Release of state liens Chinese Box Restaurant LLC, 4299 W. Ina Road, Marana. Amount owed: $25,423.78. Mandarin Restaurant and Peter Fung and Michele Fung, 8033 N. Thornydale Road, Suite 120. Amount owed: $9,239.37. MW2 Development Corp., 3326 N. Winstel Blvd. Amount owed: $27,512.84. Rancho Grande LLC, 270 N. Grand Court Plaza, Nogales. Amount owed: $22,415.93.

Business community gets behind Arizona film incentive proposal By Patrick McNamara Inside Tucson Business Leaders of the Tucson region’s business community are getting behind a proposal to adopt a multi-media production industry incentive plan for Arizona. Noting that most states across the country have incentives in place for the film and television industries, supporters say Arizona misses out on a potential economic boost. “Arizona is surrounded by states that offer incentives — and it’s hurting us,” said Mike Varney, president and CEO of the Tucson Metro Chamber. Varney said the state has to act on creating an incentive program if it wants to compete for its piece of the business. “The whole idea is to attract out-of-state money,” Varney said. Varney, along with Brent DeRaad, president and CEO of the Metropolitan Tucson Convention and Visitors Bureau (MTCVB), Tucson Mayor Jonathan Rothschild, Tucson City Councilman Steve Kozachik, Shelli Hall of the Tucson Film Office, Pete Mangelsdorf from Old Tucson Studios and Roy Zarow from the Arizona Film and Media Coalition were on hand at City Hall on Wednesday (Sept. 19) to urge the Legislature to reconsider a film industry incentives bill. DeRaad said increased film and television production activity in the region and the state as whole would benefit its members in the lodging and hospitality industry as it did in the past when Arizona was a popular destination for movie productions. “It’s really helped us create a brand and image for Tucson,” DeRaad said. He said film industry has helped to create an image in people’s minds about Southern Arizona that benefits the tourism economy. He said the MTCVB has begun to calculate the potential benefits of the different types of film and television production to better quantify economic impact to the region. Mangelsdorf said Old Tucson Studios was an example of how film can spur tourism. “Old Tucson was at one time the No. 2 tourist destination in the state, behind the

Grand Canyon,” Mangelsdorf said. He said the major film studios still have an interest in filming at Old Tucson, as evidenced by recent scouting visits from the producers of the forthcoming Johnny Depp movie “The Lone Ranger” and Quentin Tarantino who considered the location for his soon-to-be-released film “Django Unchained.” “If those had been filmed here, I can guarantee our attendance figures would double next year,” he said. Film industry veteran Gene Rudolf has a different take on incentives. A longtime art director and production designer on films such as “Raging Bull,” “Trading Places” and “Young Guns II,” Rudolf said last year’s failed effort to create a raft of film industry incentives and the one taking shape this year likely have too many benchmarks and qualifications to effectively attract the industry. “The more open and more flexible the incentives are the better it would be for the state and the better for the industry,” Rudolf said. The film incentive proposal that state lawmakers rejected last year included requirements that film companies spend at least $250,000 on in-state productions to become eligible for a tax credit of up to 30 percent of the Arizona production costs. The state likely would cap the dollar amount of credits awarded each year. Another requirement under last legislative session’s proposal was a mandate for film and television productions to have Arizona residents make up at least half of the full-time workers while in production in the state. Productions also would be required to acknowledge in the end credits that filming was done in Arizona. With the exception of the last item, Rudolf said he thinks the requirements could be too restrictive to merit the film industry’s consideration. “Why make it so stringent?” Rudolf said. “That will chase the business to other places.” He suggests letting all film and television production qualify for tax breaks or other incentives regardless of what they spend. Rudolf also said breaks on some of the state and local sales taxes on rental cars

and hotel rooms, which the film industry spends huge sums of money on, could go far to attract more productions to the state. That might not be possible, Rothschild said, because state law likely would preclude the city from rebating sales taxes to a specific business or industry. Kozachik agreed, saying the idea behind an incentive program would be to benefit the state as whole and not just the City of Tucson. “There aren’t a whole lot of ways to spin this, it’s a jobs bill,” Kozachik said, channelling the jobs-promotion rhetoric that many in the state Legislature tout. Of course, not everyone has climbed aboard the film-incentive train. In 2010, the Tax Foundation released a study that called for an end to the practice of states awarding major film studios with tax breaks for bringing productions inside their borders. “Based on fanciful estimates of economic activity and tax revenue, states are investing in movie production projects with small returns and taking unnecessary risks with taxpayer dollars,” according to the Tax Foundation report titled “Movie Production Incentives: Blockbuster Support for Lackluster Policy.” The report says that many states that offer film industry incentives don’t recoup the lost tax revenue when the balance sheets are tallied. Even states that offer incentives — and at least 44 states do — have begun to reign in the programs. New Mexico, lauded among supporters of incentives, capped the amount it would provide in incentives each year to $50 million at the urging of Gov. Susana Martinez. In fiscal 2011 the state gave out more than $77 million in film incentives. Varney agreed that an incentive suite would have to make economic sense for the government as well. “It should have a payback to the community,” he said. “It’s not a giveaway, not a candy store.”

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

Correction Due to a production error, the List of minority-owned businesses in the Sept. 14 issue was cut short. A longer version of the List appears on page 9 in today’s edition.

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

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8 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

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10 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

PROFILE

Restaurant architect Anderson does Umi Star for himself By Adam Borowitz Inside Tucson Business

XXXXXXXXXXXXXX XXXXXXXXXXXXXX XXXXXXXXXXXXXX

Adam Borowitz

A small restaurant in a strip center on North Campbell Avenue is introducing Tucson to a brand of Asian-fusion food unlike anything the city has seen previously. Umi Star, in the former Cartel Coffee Lab spot at the south end of a center at 2502 N. Campbell Ave., is owned and operated by architect Jason Anderson, who has already left a mark on Tucson through several other recently completed restaurant projects. Anderson helped design Union Public House, which opened late last year in St. Philip’s Plaza at the southeast corner of Campell Avenue and River Road. The new Cartel Coffee Lab, an open space with clean lines and hip furnishings located in the same strip center as Umi Star, also came off his drawing board. This is Anderson’s first restaurant of his own, and the food he has decided to serve defies categorization. Sushi and other Asian creations certainly dominate the menu, but the use of ingredients spans numerous cuisines, creating a culinary kaleidoscope of flavors, colors and textures. Executive Chef Todd Hammerslag, a long-time sushi chef who honed his skills at various restaurants in southern California, says traditional sashimi and nigiri are available, but what defines Umi Star are modern recreations of Asian foods made with fresh vegetables, fruits and herbs. “I’m trying to change what people BIZ FACTS think about sushi,” said Hammerslag. “If Umi Star you’re going to use 2502 N. Campbell Ave. really good fish and www.umistar.com (under construcreally quality tion) ingredients, there’s no reason to hide it aapple-cider-fish(520) 777-4465 with soy sauce. We’ll flake jelly and a bevy Open 11 a.m.-about 10 p.m. Tuesdays have soy sauce for of other fresh o through Thursdays and Sundays and 11 people who want it, vvegetables, fruits and a.m.-midnight Fridays and Saturdays but what we make ssauces. doesn’t really need it. There are several You’re meant to taste Asian-style hot dogs as well – one is topped it the way we present it.” with pickled carrots, daikon radish, basil Consider the sushi bruschetta, an aioli and cucumber-cilantro relish – and Italian-herb-and-blue-cheese crostini two kinds of Asian tacos made with topped with ginger-and-sesame marinated tortillas, which are locally made at La Mesa big-eye tuna and cilantro-jalapeno-lime Tortillas. aioli. Or the Japanese ceviche, a blend of Anderson also brought in a consultant scallops, citrus, herbs and red snapper that from Craft and Commerce, a cocktail spot comes with mixed vegetables and taro in San Diego’s Little Italy, to handle Umi chips. Star’s cocktails. There is also a small The restaurant’s signature sushi selection of beer and sake. creations are equally unique. There’s But it’s not just about food and drink to Scottish salmon wrapped around rice and Anderson, a Tucson native who returned served with cucumbers, a Meyer lemon two years ago after spending time in wedge, heirloom tomato, fried capers and a Phoenix, California and Denmark. For him garlic-lemon-dill sauce. Other items this is an opportunity to put his University include ingredients like seared goat cheese, of Arizona architecture degree to work by

After designing several local restaurants, Tucson architect Jason Anderson decided to open his own eater, the Asian-inspired Umi Star.

enriching what he calls Tucson’s “urban fabric.” “Smaller commercial projects that are local and independently owned are important. They give Tucson an identity,” said Anderson. “It’s about the brand, the design, the food, the service. All of that has to work symbiotically. It’s a difficult balance to achieve, but that’s what we’re trying to accomplish.” Anderson says he has major respect for longtime Tucson restaurants as well as newcomers who have found success with smaller restaurant projects across the city. But he has no intention of attempting to replicate any of that, which is readily apparent when you walk through the glass doors of Umi Star. It’s a small space – only 1,400 square feet – but somehow Anderson has made it appear large and airy. A white-marble sushi bar extends through the center and robust tables made from big chunks of pine

from northern Arizona fill out the periphery. Movies are projected on a wall over the open kitchen area and one long concrete wall has been stained a bluish-gray and decorated with what appear to be metallic sea urchins. All in all, the space is clean and open and looks like it seats far more than its 50-person capacity. Quirky details and signage throughout also give it a casual and humorous vibe, without being garish or distracting. All that’s left now is for Anderson to navigate his first weeks in business. He knows the restaurant business is a highstakes, high-stress game, and he’s hoping all of the work he’s put in will pay off. “What we’ve created is what we think Tucson wants and what’s going to make Tucson better,” said Anderson. “We’re trying to make food that is fun, simple and healthy, but, in the end, all you can do is let the market tell you if you’re good or not.”

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

GOOD BUSINESS TECHNICALLY SPEAKING

Mobile marketing: what’s over, what’s now, what’s tomorrow? The new iPhone 5 is 18 percent thinner, 20 percent lighter, has a bigger display, a faster chip, longer battery life, new Siri features and offers huge improvements in download times (it’s 4G LTE). Projected sales could top 58 million this year and in the process drop prices on previous iPhone models; to $99 for the iPhone 4S or free for the iPhone 4, with two-year service provider agreements. Meanwhile, Samsung’s Galaxy S3 is already extremely popular and powerful, Motorola has come out with new Droids, and other competitors are desperately racing to catch up or get ahead. Smartphones are getting better, cheaper, and faster at a mind-boggling pace, quickly shrinking the market share of dumb phones. Already, smartphones account for more than 50 percent of the U.S. mobile phone market. As a result, mobile marketing will grow faster than we can imagine and have a huge impact on consumers and businesses. This unprecedented speed to market makes it hard to sort out which mobile marketing trends are worth pursuing. What is already “over” in mobile marketing? What must we consider right “now?” What’s coming tomorrow?

Over, toast, history, yesterday Once the focus of so much attention, QR Codes may already be “over.” Fundamentally, QR Codes fail to offer an adequate value proposition. Consumers are asked to download an app to their phone, use its camera, get focused on a QR code, get a decent photo and then what? Get product information? Not worth it. Get a coupon? Why not just deliver the coupon in a simpler, faster way?

Now No brainers on the “now” list are smartphone-friendly websites — Facebook, LinkedIn, Etc. check-ins — smartphone apps in general, smartphone-friendly email campaigns and mobile coupons. Smartphone-friendly websites, simply put, re-create sites to accommodate the size of the smartphone screen, provide easy navigation, attend to details and offer features such as touch-to-call functionality. Research shows smartphones account for more than 20 percent of all website traffic and that number is going up sharply as are e-commerce sales. When it comes to building a full smartphone app, again the value proposition is the key. Bed Bath & Beyond’s app was not well received because it failed to deliver what consumers expected and wanted: coupons. Michaels, an arts and crafts retailer, got its app right, delivering coupons right to the smartphone, a real value. No fiddling with paper. Two other “now” options that merit consideration are email marketing and

Google Places/ Google Plus. More people these days are reading emails on their smartphones, so email campaigns should also be smartphone friendly. Another smart step would DAVE TEDLOCK be to use Google Plus to claim a listing in Google Maps so customers on the go can more easily find your office or store.

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Now or tomorrow? Short Message Service (SMS) or “text messaging” is popular, but not commonly used by businesses for marketing. There are many reasons. For starters, incoming text messaging campaigns must be permission-based. People don’t want to get text messages unless they’ve asked for them. On the “receiving” end, nonprofits such as the Red Cross have had success offering SMS as an instant and easy way to make a donation. Local nonprofits could use SMS during a major event by making a special appeal, during that event, to make a quick and easy donation.

Tomorrow Because smartphones are changing fast, it’s impossible to name everything in the “tomorrow” category. The Mobile Marketing Association has established standard sizes for ads on smartphones, but most businesses aren’t ready to advertise there – yet. Plus, the Location Based Marketing Association is ready to serve retailers, ad agencies, advertisers, media buyers and Internet service providers. As an example of location-based marketing, say you’re headed into Staples when Famous Footwear sends you a message that your favorite Nike’s are on sale in their store, just two doors away. Consumers are increasingly using all kinds of location-based services, from Foursquare and Neer to Facebook Places. Bottom line, customers want you to accommodate their smartphones and offer genuine value for using smartphones to engage in your business. You don’t have to own an iPhone 5 or a Samsung Galaxy S3 to be smart enough to see the trends. To ignore them would be dumb.

Contact Dave Tedlock, president of the website development and marketing company NetOutcomes, at dave.tedlock@netoutcomes. com or (520) 325-6900, ext. 157. His Technically Speaking column appears the third week of each month in Inside Tucson Business.

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INSIDE TUCSON BUSINESS

MEDIA

Pac-12, DirecTV impasse will hit Wildcats fans Oct. 6 By David Hatfield Inside Tucson Business

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Unless a last-minute deal comes together before this weekend’s football games, the full impact of the impasse between the Pac12 Networks and DirecTV probably won’t hit Arizona Wildcats fans until Oct. 6, when the University of Arizona plays at Stanford. Depending on what happens this weekend, the Arizona-Stanford could be the first time most Tucsonans will have to watch the game on the new Pac-12 Networks. Up until now, the first three the Wildcats’ football games have been home games. Saturday’s game against Oregon in Eugene will be shown live at 7:30 p.m. on ESPN. And Sept. 29’s game against Oregon State will be on the Pac-12 Networks but again, it’s a home game so Tucson fans will be in Arizona Stadium. So far, the only game coverage tentatively set for Oct. 6 is that Fox (KMSB 11) is tentatively planning to show the California at UCLA game in the afternoon. The rest of the schedule should start to come together after this weekend’s games are played and it’s possible a network besides the Pac-12 Networks could pick up the Arizona-Stanford game. With its exclusive NFL Sunday Ticket package, DirecTV has been popular with sports fans. But without a deal with the Pac12 Networks, those fans are faced with a TV dilemma: the NFL or the Pac-12? Or do fans fork over the money for cable or Dish Network and DirecTV to get both? It’s hard to tell how long the impasse will last. Pac-12 Commissioner Larry Scott told reporters last weekend “we’re not close” to a deal. It appears the two sides have left the negotiating table with the Pac-12 telling DirecTV, essentially, “you’ve got our number, call us if you want to talk.” Just days before the kick-off of the Pac-12 football season last month, DirecTV sent out a note to its customers saying it was hopeful of getting a deal done with the new network. With DirecTV breaking off negotiations days later, it now looks like that letter was a marketing ploy to stem customer defections. While the Pac-12 Networks may be new to the game, conference officials know the value live sports brings to TV. They also have a good idea of what the Big Ten Network got from DirecTV. And if the Oct. 6 football game doesn’t rile up Wildcats fans, then consider this: Pac-12 Networks has announced a schedule of 142 regular season basketball games and

eight conference tournament games. That includes 11 games of what promises to be a big season for Coach Sean Miller’s Wildcats.

Names in news Arizona Daily Star columnist Josh Brodesky is leaving the newspaper to take a job at the Arizona Republic in Phoenix. Despite a company-wide hiring freeze imposed by Lee Enterprises, the Star got an exemption to replace Brodesky. Chris Patyk, Chris of the morning duo “Jennie and Chris” on the Mountain KWMT before it turned into KMIY 92.9-FM last November, is now the program director at KEGY 103.7-FM in San Diego, a top 40 station that brands itself as “Energy 103.7” Patyk had been the interim program director at the CBS-owned station since it signed on in March.

Award nominations Tucson TV stations received a total of 25 Rocky Mountain regional Emmy Award nominations this year. Among them, both KGUN 9’s Erin Christiansen and KOLD 13’s Aaron Pickering are nominated for best weather anchor, KOLD’s Dave Cooney is nominated for best sports anchor and KVOA 4’s Ryan Recker is nominated for best sports reporter. One Emmy Award that appears to be a lock is KOLD News 13’s 4 p.m. weekday newscast as best daytime or evening newscast in a medium-sized market. It was the only newscast nominated. All totaled, KUAT-TV 6 received 10 Emmy nominations, KOLD received seven, KGUN received four, KVOA received three and the city’s Tucson 12 received one. The awards will be handed out Oct. 6 in ceremonies at University of Phoenix Stadium in Glendale. The Rocky Mountain Southwest Chapter of the National Academy of Television Arts and Sciences covers Arizona, New Mexico, Utah, and Wyoming. Buzz Jackson, who is on the air from 3-7 p.m. weekdays on KIIM 99.5-FM is up for the Country Music Association’s broadcast personality of the year in a medium-sized market. This is the second time Jackson has been nominated. He is in the running with five other programs. The CMA says the winner will be notified in mid-October in advance of the national ABC awards telecast Nov. 1.

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

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

OUT OF THE OFFICE MEALS & ENTERTAINMENT

ARTS & CULTURE

A new frozen yogurt shop a hot trend or a cool fad?

Curtains go up on region’s season opening performances

One of the hotter trends — or fads — are frozen yogurt shops, usually with some twist on. There’s BTO (By The Ounce) Yogurt, which sells its yogurt and toppings based on how much they weigh. It’s basically self-serve so it’s up to you how much you’ll pay. It started with a store at 6860 E. Sunrise Road in Ventana Village and has grown with three other Tucson locations, at 2721 E. Speedway, 8650 E. Speedway and 9725 N. Thornydale Road. They’ve even branched out with stores now in Flagstaff, one in Colorado and a couple in Virginia. Pinkberry, an upscale Los Angelesbased chain that serves a tart frozen yogurt, arrived with its first Arizona location at the University of Arizona in the Student Union, 1303 E. University Blvd. on campus. And now comes Red Mango, a Dallasbased chain that promotes its frozen yogurts and smoothies are all-natural. It’s first Tucson store is at 4758 E. Sunrise Drive in Sunrise Village, at the southeast corner of Sunrise Drive and Swan Road. The concept is self-serve from among a dozen flavors with prices determined by weight. Interesting that Red Mango would pick that particular location, right across the street from a long-standing local frozen yogurt shop, Sundaze, which has been dishing up its concoctions at 4777 E. Sunrise Drive in the Bel Air Center since 2001. So maybe the trend isn’t so new. And they don’t always work. Another chain, Orange Leaf arrived in summer 2010 with a store in Oro Valley that closed earlier this year.

Weekend tip Check out the Pinot Harvest Festival from 4-7 p.m. Sunday (Sept. 23) at Hacienda del Sol Guest Ranch. If you enjoy pinot noir wines, then the festival is the MICHAEL LURIA perfect opportunity to sip and sample a variety of more than 50 pinots from all over the world, along with live music and lots of food. You might even get to sample some of the work of the new executive chef at the Grill at Hacienda Del Sol. His name is Bruce Yim and comes from Downtown Kitchen + Cocktails, where he was the opening chef for the Janos Wilder restaurant. The Pinot Harvest Festival costs $55 a person. • Hacienda del Sol, 5501 N. Hacienda del Sol Road — www.haciendadelsol.com/ — (520) 529-3500

Contact Michael Luria at mjluria@ gmail.com. Meals & Entertainment appears weekly in Inside Tucson Business.

After five preview performances, Arizona Theatre Company’s first show of the season, “Next To Normal,” has its official opening tonight at the Temple of Music and Art, 330 S. Scott Ave. The production is a southwest premiere of a three-time 2010 Tony Award-winning play, including one for best musical score. The story follows a suburban family coming to terms with its past, while bravely facing its future. The show continues with nightly performances Wednesdays through Sundays through Oct. 5 and matinee performances Sunday (Sept. 23), Wednesday, and Oct. 3, 4 and 6. Also at 7 tonight, comedy legend Jerry Seinfeld is on stage at Centennial Hall, 1020 E. University Blvd. on the University of Arizona campus. At last report some tickets, priced from $50 to $80, were still available through Centennial Hall box office but you can expect a sell-out by the time the “master of his domain” takes the stage. And finally, the special run of Broadway favorite “Stomp” is in town for three performances this weekend. The Broadway in Tucson presentations take place at 8 tonight and at 2 p.m. and 8 p.m. Saturday in the Music Hall at the Tucson Convention Center, 260 S. Church Ave.

Music UApresents’ season opener is a performance by multiple Grammy award-winning singer-songwriter Bonnie Raitt who is on her first full-blown tour in seven years. She’ll be on stage at 7:30 p.m. Wednesday (Sept. 26) at Centennial Hall. Tickets are $45 to $95. Buy them through UApresents.org.

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Film festival The fifth annual Arizona Underground Film Festival opens tonight with a mix of 26 eclectic films in a variety of genres. All but two showings are at the HERB STRATFORD Screening Room, 127 E. Congress St. A couple of films will be screened at Crossroads Cinema, 4811 E. Grant Road. Tickets are $7.50 for each film. The schedule is online at http://azuff.org/ .

More film There are a lot of new films opening, including some potential award winners. Among them, the acclaimed film “The Master,” which depicts a post-World War II Scientology-like movement and features a strong cast with Joaquin Phoenix and Phillip Seymour Hoffman. Also out this week, the Clint Eastwood baseball drama “The Trouble with the Curve,” the documentary “Samsara,” the science-fiction flick “Dredd 3D,” the horror remake “House at the End of the Street” with Jennifer Lawrence and Elizabeth Shue, “End of Watch” with Jake Gylenhall as a Los Angeles cop struggling to combat drug cartels, and the intriguing documentary “Searching for Sugarman” tracking a South African fan’s quest to locate a 1970s musician who was rumored to be dead and the impact his music had on their country.

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

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14 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

SALES SALES JUDO

Recruiters not main reason students drop out I.T. Genius

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Editor’s note: In this third and final column on a Congressional committee’s indictment of recruiting practices at for-profit colleges, Sam Williams strays from his usual advice for those in the sales industry. As you know by now if you’ve read my previous two columns, I’m convinced the problem of high dropout rates in for-profit or non-profit colleges is far more complex than can be explained by alleged deceitful recruiting (sales) practices and focusing on that one aspect blinds us to more significant factors. Who cares? Well, to begin with the majority of us with children care because we want our children to grow up, to succeed in life and, of course, to leave our homes. Many of us have come to believe their graduating from college is an essential element of a successful transition to independence and their ticket to future success. We also care because we know college has become more expensive and that we and our children are going to have to pay for it. And, finally, every single one of us cares because we are paying for the interest and defaulted student loans of other people’s kids through our federal taxes and the federal budget deficit. So what, besides manipulative sales practices, excessive student partying, cutting classes and not studying, are the major causes of high college dropout rates? There’s poor preparation of students in high schools, poor study skills, insufficient self discipline and motivation, the pressures of having to simultaneously generate an income and to complete courses, a lack of a family culture that encourages (or insists upon) completion, and instructional methods that favor a subset of students who have the patience and compliance to endure traditional methods of classroom instruction. Another significant contributing factor is the dawning realization that in many cases the costs of college may not be worth it. In an article titled “Is College a Lousy Investment?” in the Sept. 9 issue of Newsweek, author Megan McArdle notes the rapid run-up in costs, quoting Richard Vedder, an economist at Ohio University and director of the Center for College Affordability and Productivity, saying, “I see costs rising faster than inflation up to the mid-1980s by 1 percent per year. Now I see them rising 3 to 4 percent a year over inflation. What has happened? The federal government has started dropping money out of airplanes.” McArdle continues, “In a normal market, prices (for colleges) would be constrained by the disposable income available to pay them. But we’ve bypassed those constraints by making subsidized

student loans widely available.” These conditions can lead to a perfect storm, colleges striving to meet that demand, some by possibly dropping their admissions SAM WILLIAMS criteria, while the federal government continues to provide bottomless funding. But is the main cause of high dropout rates lowered admissions criteria and poorly prepared freshmen? Emily Hanford, a documentary reporter with American Public Media, believes that a major cause may be the absence of sufficient determination or “grit.” In her report, “Grit, Luck and Money – Preparing Kids for College and Getting them Through” — http://americanradioworks.publicradio.org/features/tomorrows-college/grit/ — Hanford introduces us to psychologist Angela Duckworth and her research into the intestinal fortitude required for students to successfully overcome adversity and setbacks. Duckworth constructed a “grit” test she administered to some West Point plebes in basic training. Not surprisingly, more plebes with higher levels of “grit” survived the training than those with lower levels. You can take the “grit” test online — https://sasupenn.qualtrics.com/ SE/?SID=SV_06f6QSOS2pZW9qR — by answering how much these eight statements are like you: • New ideas and projects sometimes distract me from previous ones. • Setbacks don’t discourage me. • I’ve been obsessed with a certain idea or project for a short time but later lost interest. • I am a hard worker. • I often set a goal but later choose to pursue a different one. • I have difficulty maintaining my focus on projects that take more than a few months to complete. • I finish whatever I begin. • I am diligent. If you don’t game the test, your “grit” score will correlate closely with those of students who tend either to stick it out through college or who don’t. Duckworth found that levels of “grit” were not positively correlated with IQ when she studied National Spelling Bee kids. She found that those who were among the best spellers tended to have the highest “grit” scores. On the other hand the highest verbal IQ scores were inversely correlated with performance and “grit” scores. The spellers who performed best didn’t have

the highest IQ scores. They spent the most time studying and deliberately practiced with increasing more difficult words. What about those students who have attended college preparatory schools and have good grades, study skills and SAT scores but still drop out of college? In another report, Hanford found Yes Prep charter schools in Houston, which serves low-income Hispanic and African American students. “If you give kids from low-income backgrounds access to the same opportunities and resources that kids get in great private schools and in great suburban schools, (they) can achieve at the exact same level.” Yes Prep’s 5,000 students are selected by lottery, not by aptitude, so they represent a broad sample of students who come from low income minority families. The expectation was that, with strong teachers, an excellent curriculum, a rich offering of Advanced Placement courses and SAT scores that were high enough to gain admission for all graduates, between 80 and 90 percent would graduate from college within four years. Yet only 40 percent did. Another 28 percent dropped out without getting a degree. And the remaining 32 percent are still in school. Why? The support system at Yes Prep is superb. The absence of such support in college is a part of the answer. Anecdotal evidence shows that when Yes Prep’s students run into setbacks, such as failing a test or a course, their other support system, family members, few of whom completed college themselves, offered an easy way out: “It’s OK. Come home. College is too expensive. After all, we’re not college grads and we’re still doing OK.” So maybe the “grit” required to overcome academic adversity and to persevere isn’t just an individual quality. Maybe it’s a culture that begins as a seed at home is cultivated by dedicated families, teachers, coaches and teammates. We don’t yet know all of the reasons behind high dropout rates or their solutions with any certainty, and there don’t seem to be any quick fixes. If this country continues to work on identifying the multiple and complex causes and developing good solutions, we’re sure to make progress. But if, instead, we place most of the blame on the recruiting and marketing practices of college recruiters, as U.S. Sen. Tom Harkin, D-Iowa, did in his report, we won’t.

Contact Sam Williams, president of the business-to-business sales consultancy firm New View Group, at swilliams@newviewgroup. net or (520) 390-0568. Sales Judo appears the first and third weeks of each month in Inside Tucson Business.

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

NEXT GENERATION NEXT GENERATION

Tucson startup is ‘matchmaker’ for shippers By Patrick McNamara Inside Tucson Business Each year in the United States, nearly 20 billion tons of freight moves across the country on rail, through pipelines, across waterways, by air and over roads. Trucks carry the overwhelming majority of that freight, nearly 12 billion tons of it. And yet, with millions of trucks coursing through the nation’s highways and byways, many travel empty en route to home bases or between loads. A Tucson startup is looking to end that inefficiency and with some luck, make a profit in the process. “We describe ourselves as a matchmaker,” said Jarret Hamstreet, chief operations officer for Post.Bid.Ship. Jarret Hamstreet, left, and Micky Thompson devised Post.Bid.Ship. as a school project while atAs matchmaker, Hamstreet said the com- tending the University of Arizona Eller College of Management. pany brings together shippers with empty Tucson and try to give their idea a go. rants. Trucks get filled, deliveries are made trucks and people with freight that needs “I want to see Tucson do well,” Portney and then return — empty — to warehouses. hauling. Hamstreet said Shamrock, and others, said. “For that to happen, we have to do a Shippers create accounts on the Post. better job at capitalizing on the bright peo- see the time driving empty trucks as ineffiBid.Ship. website where they post their ple who come here to study.” cient, particularly at a time when all companeeds to have a freight load hauled. Carriers Tucson has suffered from brain drain. In nies are looking for new revenue sources, also create accounts where they can review other words, students come to the UA, earn not to mention the cost of fuel these days. the posted freight loads and bid on those degrees and then leave after graduation, they can haul. taking with them the knowledge and skills Once the company selects the shipper, they’ve acquired. usually based on the most competitive bid, Portney said he saw the opposite phethe two parties agree to a contract. nomenon occur when he taught at the Uni“Right now we have versity of California, 2,000 users,” HamBerkeley, where B BIZ FACTS street said of the Post. many of the most m Bid.Ship. subscripqualifi ed students q Post.Bid.Ship. tion-based service. would turn down opw www.postbidship.com Hamstreet and portunities because p business partner Micky they preferred to stay t 1-800-530-2846 Thompson started the in i the San Francisco company in 2010 after Bay B Area. both graduated from the University of Arizo“It would be great for Tucson to have two na’s McGuire Center for Entrepreneurship, guys like Jarret and Mickey stick around where they were graduate students. here,” Portney said. Portney was so eager to It was at the University of Arizona where get them to stay, he invested the first $30,000 they refined the concept that became Post. to get the company started. Bid.Ship. Other investors have followed, including Hamstreet grew up in a family that owned the Desert Angels group of venture capitala trucking company in Oregon. ists; David Smallhouse, managing partner Thompson had been something of a se- in Miramar Ventures; and Harry George, rial entrepreneur, having started and sold managing general partner of Solstice Capinumerous tech-based startups. tal, who even offered to provide office space Not only did their idea Post.Bid.Ship. win for Post.Bid.Ship. in his office suite. them the Maguire Center’s “best new ven“We were definitely open to staying in ture” award for 2010, it attracted interest Tucson,” Hamstreet said. among some influential people. After more than nine months developing “We both had job offers from out of state,” the software and website and also travelling Hamstreet said. to trucking industry trade shows across the They both intended to accept the offers, he U.S., Post.Bid.Ship got its first subscribers in said, until they had an interesting request. early 2011. Paul Portney, a UA economist who at the One of them was Shamrock Foods, a time was dean of the Eller College of Busi- Phoenix-based company that is the nation’s ness Administration, called Thompson and seventh-largest food distributor delivering Hamstreet into his office. He asked them to customers in 10 states. Its primary objecwhat it would take to get them to stay in tive is delivering food products to restau-

Now Shamrock has signed on to Post.Bid. Ship. as a way to pick up loads for return trips. “It’s a huge market,” Hamstreet said. “There’s over 1.2 million trucking companies in the U.S. alone.” Nearly all of those, Thompson notes, are small, mom-and-pop operations with just a few trucks. “Basically, this is helping to drive efficiency,” Thompson said. Today, Post.Bid.Ship. has 12 full-time employees in Tucson and Portland, Ore. The company has a network of trucks totalling nearly 200,000 and serves most of North America, including Canada. “There’s a huge market in front of us,” Thompson said. “We don’t want to revolutionize the industry, we want to evolutionize the industry.”

Next Generation is a monthly feature of Inside Tucson Business profiling Southern Arizonans on the cutting edge of developing their ideas. If you’ve got an idea or someone you think should be profiled, contact reporter Patrick McNamara at pmcnamara@azbiz. com or (520) 295-4259.

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Carpet Cleaner

Window Dealer Landscaper Plumber Attorney Real Estate Painter HVAC Business Consultant Auto Repair Auto Dealer-Used Home Remodeler Swimming Pool Contractor Electrician Jewelry Designer Auto Dealer-New

16 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

BRIEFS GET ON THE LIST

Next up: Home builders, Custom home builders, Largest apartment complexes 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: • Sept. 28: Commercial printers, Copying/Duplicating firms, Mailing ser-

vice firms, Promotional product suppliers • Oct. 5: Home builders, Custom home builders, Largest apartment complexes • Oct. 12: Franchises, Employment agencies • Oct. 19: Alarm system companies, Security firms, Insurance agencies and brokers, Property casualty insurance • Oct. 26: Women-owned businesses 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 cre-

ate 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.

TECHNOLOGY

Tech Launch Arizona teams with Arizona Furnace The University of Arizona has announced that Tech Launch Arizona plans to partner with Arizona Furnace as a university re-

search partner. The UA’s Office of Technology Transfer, under the Tech Launch Arizona umbrella, will present selected technologies and intellectual property for licensing to entrepreneurs, with the intent that these technologies will form the basis for new high-potential startups. Arizona Furnace, which calls itself a “startup accelerator,” offers startup ventures a package worth more than $50,000 in cash and services. The package includes a $25,000 seed funding grant and six months of incubation space in the ASU SkySong facility, the UA’s BIO5 Oro Valley Accelerator or the UA’s partner incubator, the Arizona Center for Innovation. Companies that are accepted into Arizona Furnace must be based in Arizona as a stimulant to regional economic development and job creation. Tech Launch Arizona has been created to integrate various UA technology commercialization programs. This unique program will involve a nationwide competition to select and fund new ventures that are based on one or more patents or technologies developed at research institutions in Arizona. In addition to the UA, Northern Arizona University, Dignity Health Systems are also participants in AZ Furnace. The UA’s participation will augment the number of cutting edge innovations available for entrepreneurs who are looking to capitalize on research discoveries to create viable businesses. The competition officially started in the third quarter of 2012. The participants invited into Furnace must incubate their new companies in the co-working space available to them at ASU SkySong, the Northern Arizona Center for Entrepreneurship and Technology, the BIO5 Accelerator and the Arizona Center for Innovation. For more visit www.azfurnace.org or www.ott.arizona.edu.

RETAIL

Foothills Mall offers free Wi-Fi service Foothills Mall now offers free Wi-Fi service for shoppers. A password is not needed to sign on to the wireless service. Foothills Mall provides the service in partnership with a local Tucson company, Simply Bits, Southern Arizona’s largest wireless provider of network services. The mall allows for up to four hours connection time per visit. It follows Park Place Mall in providing free Wi-Fi service.

TRANSPORTATION

Tucson airport board OKs $68.3M budget for 2013 The Tucson Airport Authority board of directors Tuesday approved a combined operating and capital budget of $68.3 million for its fiscal year that starts Oct. 1. The total is a

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

BRIEFS 57 percent increase over the current year’s budget of $43.5 million, with much of it due to capital improvement projects, which will largely be funded through grants. Dick Gruentzel, chief financial officer and vice presient of administration and finance for the airport authority, said that $34.4 million of the total capital improvement program budget of $36.5 million will come from federal and state grants. The airport authority operates both Tucson International Airport and Ryan Airfield. Overall, Gruentzel had a bleak outlook for the coming year noting that declining numbers of passengers was resulting in 10 percent lower revenues from rental cars, parking and concessions. Despite the anticipated revenue reductions, Tucson International will slightly reduced landing fees for airlines to $1.31 per thousand pounds of landed weight, from $1.32, which represents a 0.8 percent drop. The amount is budgeted to bring in just over $2.6 million next fiscal year. Gruentzel said he anticipates the landing fee will keep the airport in about the middle among airports for what airlines pay in their cost per enplaned passenger. The budget approval, though, didn’t come unamimously. Board member Mike Hannley said he was concerned over a lastminute change in the cost of a solar installation project that could raise the cost to the airport by more than $900,000.

PUBLIC SAFETY

Sheriff ’s department to hold shred-a-thons The Pima County Sheriff ’s Department plans to hold free document shredding events Saturday (Sept 22) at Kino Sports Complex, 2500 E. Ajo Way, and Oct. 20 at Empire High School, 10701 E. Mary Ann Cleveland Way. The events are scheduled from 8 - 11 a.m. both days. Documents from businesses and personal videos, cassettes, CDs, DVDs, photographs, photo slides and credit cards will not be accepted. Call (520) 351-4615 during regular business hours for more information.

Long-time NW fire chief takes job in California Northwest Fire Chief Jeff Piechura has announced that he has accepted an offer in California to lead the Stockton Fire Department. His resignation from Northwest is effective Oct. 6. Piechura has been with Northwest for 28 years. Today the district has grown to 10 fire stations with 192 firefighters and covers 140-square mile area. In 2008, Piechura briefly had accepted a position as fire chief for the city of Chula Vista, Calif., but decided against the move. Chief Piechura notes that beyond the bricks and mortar building of Northwest Fire,

The district’s governing board plans to establish the procedure to determine Piechura’s successor and plans to meet to discuss the issue next week.

HEALTH CARE

UA gets $1.3M to expand Telemedicine program The University of Arizona’s Telemedicine Program has received a $1.3 million federal grant to expand its services. Funding, through the Health Resources

Services Administration’s Office for Advancement of Telehealth, is part of a nationwide effort to support the implementation of telehealth services and the transition to electronic health records. The program falls under the U.S. Department of Health and Human Services. The funding will be used to expand UA’s Southwest Telehealth Resource Center, which provides national and international training in telehealth to providers in Arizona, Colorado, Nevada, New Mexico and Utah. Founded in 2009, the resource center is part of a national network of 13 regional

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UAMC to offer new Alzheimer’s scan The University of Arizona Medical Center has begun to use a new brain-imaging drug that could lead to more accurate diagnoses of Alzheimer’s disease. The hospital has begun to offer positron

BRIEFS | CONTINUED ON PAGE 19

18 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

BRIEFS

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Tucson now has a third fueling station selling compressed natural gas (CNG) after Tuesdayâ&#x20AC;&#x2122;s opening of a station at the headquarters of Golden Eagle Distributors, 705 E. Ajo Way. The station, which is open to the public, was built in cooperation between Golden Eagle and TrilliumCNG. Last year, beer distributor Golden Eagle heavily invested in a fleet of CNG-powered heavy-duty trucks. The company now has 23 CNG trucks in its fleet. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve made the commitment to use CNG in our local operations and to support sustainability in this community by opening a public CNG station,â&#x20AC;? said Christopher Clements, CEO of Golden Eagle. â&#x20AC;&#x153;Through our partnerships with Ryder and Trillium, we are able to take advantage of both the cost savings and environmental savings of converting our heavy duty fleet to CNG. By opening this public station, we will provide more of the needed infrastructure for other local business and individuals to choose CNG.â&#x20AC;? The company is expanding its heavy duty truck fleet of CNG to include its distribution facility in Casa Grande where another CNG fueling station is to be built, Clements said. CNG is billed as one of the cleanest fuels currently available for use in heavyduty trucks. In addition to the station at Golden Eagle, Tucsonâ&#x20AC;&#x2122;s other two CNG stations are at 3034 E. Corona Road, near Tucson International Airport, and 1144 E. Winsett St., just east of South Kino Boulevard near a Tucson Unified School District bus facility.

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InsideTucsonBusiness.com

SEPTEMBER 21, 2012

BRIEFS BRIEFS | CONTINUED FROM PAGE 17 emission tomography (PET) scans using Amyvid, an injectable radioactive dye approved by the U.S. Food and Drug Administration in April. Amyvid scans allow doctors, for the first time, to visually detect plaques of beta amyloid found in the brains of Alzheimer’s patients, without needing to resort to invasive spinal fluid tests or brain biopsy. The scan is safe, easy and takes about one hour. During the outpatient procedure, the drug is injected into a vein and travels through the bloodstream to the brain, where it binds to any tell-tale amyloid plaques. A PET scanner picks up the radioactive signal and creates an image of the brain showing the location, density and extent of any amyloid plaques. A radiologist or nuclear medicine specialist with specific training interprets the scan. Combined with memory tests and other findings, the scans help physicians diagnose or rule out Alzheimer’s disease, or distinguish it from other types of dementia. The drug is not yet reimbursed by Medicare. UAMC is charging a reduced rate of $2,500.

MILITARY

DOD to spend $25.3M at D-M and Fort Huachuca

CONSTRUCTION/TRADES

A pair of contracts worth $23.5 million will bring new facilities and technology improvements to Southern Arizona military installations. A $14.3 million contract will fund construction of a new building for the 55th Electronic Combat Group at Davis-Monthan Air Force Base. The new 50,478-squarefoot structure will house simulators and training operations for the unit. “The military and defense industry are major drivers of the economy in Southern Arizona,” Representative Ron Barber, a member of the House Armed Services Committee, said in a release. “The military installations in this part of the state are critical to the security of our nation and contracts such as these help keep them strong.” A $9.1 million contract awarded to Science Applications International Corp. will fund works on Joint Personnel Identification Systems at the Army’s Fort Huachuca near Sierra Vista. The contract is for hardware and software the system uses to collect, match and store fingerprints, photographs and iris patterns in potential suspects.

Contractors award three $1,000 scholarships

Airport authority resolves to support Air Guard unit

Three University of Arizona students each have received $1,000 scholarships from The Alliance of Construction Trades (ACT), 465 W. Saint Mary’s Road. ACT president Jim Kuliesh said the scholarships were awarded based on academic performance and extracurricular activities. The winners are: Joseph A. Felix, an architect major in his fourth year of college with a 3.4 GPA. He is an employee of W.G. Valenzuela Drywall and has worked in construction-related trades since his junior year at Mountain View High School. McKenzie E. Grenfell, is an incoming freshman who plans to study business administration. She graduated from Ironwood Ridge High School with a 3.7 GPA and was a member of the Ironwood Ridge Scholar Program. She had 530 hours of community service with organizations such as St. Mark’s Catholic Church, the American Red Cross and Kiwanis. Jacqueline Mullins, also an incoming freshman, plans to study engineering management. The Flowing Wells High School graduate had a 3.4 GPA and was a member of the Engineering Club, Orchestra Club and Link Crew, a group of upperclassmen who helped freshman make the transition into high school. Mullins also was a volunteer with the Tucson Indian Center and an assistance coach in Little League baseball and softball.

The Tucson Airport Authority’s board of directors Tuesday (Sept. 18) went on record in support for the Arizona Air National Guard’s 162nd Fighter Wing and its future missions Board chairman Tom Zlaket said the board was asked to approve a resolution in support of the guard unit which has been based at Tucson International Airport since 1956. While the 162nd Fighter Wing currently flies F-16 jet fighters, the U.S. Department of Defense has determined those aircraft will at some point be replaced and has considered putting an F-35 training at the airport. The Air Guard unit has flown six different aircraft in the 56 years it has operated at the airport. Noting the 162nd Fighter Wing currently has 74 aircraft and 1,450 personnel at Tucson International Airport, the airport authority’s resolution said it “will continue to provide and make available the best possible airport facilities to support the current and future aeronautical needs of the 162nd Fight Wing.” The resolution of support was approved unanimously by the board.

EDUCATION/RESEARCH

PCC named among top schools for veterans Pima Community College services for veterans, members of the military and their spouses have been ranked in the top 15 percent in higher education, making the college a Military Friendly School for 2013. Pima is one of 1,739 colleges, universities

and trade schools to earn the Military Friendly School designation from GIJobs. com, which examined more than 12,000 institutions nationwide for the programs, discounts, scholarships, clubs, networking and staff resources they provide to improve the recruitment and retention of students with military experience. PCC has been a Military Friendly School every year since the designation was created in 2009. In Nov. 2011, the college dedicated a new Veterans Center at its Downtown Campus, which is home to one of several thriving student veterans clubs. PCC has a counselor devoted to veterans’ issues, and 50 staffers across the College trained in U.S. Department of Veterans Affairs issues.

UA gets $8.3M grant to environment and health The University of Arizona’s Southwest Environmental Health Sciences Center has received an $8.3 million grant from the National Institute of Environmental Health Sciences to study the effects of certain environmental factors on human health. The grant will fund ongoing studies looking at the effects of arsenic, air particulates, sunlight and other environmental factors that effect people. The grant runs through March 2017.

20 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

PEOPLE IN ACTION NEW HIRES Tucson Airport Authority has hired Mike Smejkal as director of engineering. Smejkal manages all civil engineering activities related to airfield and landside development for Tucson International Airport and Ryan Airfield. A former project manager for Crawford, Murphy and Tilly, Inc., Smejkal has 13 years of experience with airport engineering projects. Smejkal has bachelor’s and master’s degrees in civil engineering from the University of Illinois and is a registered civil engineer in Arizona and additional states. Our Family Services has hired Laurie Mazerbo as director of homeless services division – now

MIKE SMEJKAL

called New Beginnings. Mazerbo has worked with at-risk youth in Tucson for more than a decade. She has a BA in psychology, a master’s in social work, is a licensed clinical social worker and is certified as a career development facilitator through Rutgers University.

LAURIE MAZERBO

for the district’s public relations and marketing communications program. Motto has more than 14 years experience in marketing strategy and communications, some of which was international, and was a firefighter for more than four years. APPOINTMENTS

Northwest Fire/ Rescue District has hired Trina Motto as manager of community affairs. Motto will be responsible

Marianne Freitas and Tom Strasburg have been named co-chairs of the sixth

TRINA MOTTO

DOUG MANCE

{YOUR NAME HERE} To announce a professional promotion, appointment, election, new hire or other company personnel actions, fax press releases to (520) 295-4071, Attention: People; or email submissions to pmcnamara@azbiz.com. Include an attached photo at 300 dpi. annual Tucson Classics Car Show sponsored by the 225 member Rotary Club of Tucson. Freitas is an 18-year member and Strasburg a 12-year member of the club. They will oversee the October

13 event at St. Gregory Preparatory School, that will benefit Reading Seed, the Pima Council on Aging and the YWCA.

MATTHEW GALLEK

AWARDS Doug Mance, vice president of RBC Wealth Management, has earned the firm’s internal, professional designation of Accredited Wealth Manager (AWM). By earning the designation, Mance demonstrated extensive knowledge of the firm’s wealth management process, including concentration in the areas of estate and trust planning,

insurance solutions and advanced investment strategies. In partnership with the Academy of Multidisciplinary Practice, Inc., the AWM program offered by RBC Wealth Management is structured to provide curriculum that will enhance Financial Advisors’ wealth management expertise and improve their ability to deliver superior wealth management services to affluent clients and prospects.

Matthew J. Gallek, PhD, RN, CNRN, an assistant professor at the University of Arizona College of Nursing, is one of 12 outstanding nursing educators to win a competitive grant from the Robert Wood Johnson Foundation (RWJF) Nurse Faculty Scholars program this year. Gallek will receive a three-year, $350,000 award to promote his academic career and support his research. The Nurse Faculty Scholar award is given to junior faculty who show outstanding promise as future leaders in academic nursing. Gallek’s research focuses on aneurysmal subarachnoid hemorrhage (aSAH), a devastating type of stroke.

CALENDAR SPECIAL EVENTS

Employment Law Breakfast Brieﬁng Tuesday (Oct. 2) 7:30 to 9:30 a.m. Westward Look Resort 2450 E. Ina Rd. Contact: Shirley Wilka swilka@tucsonchamber. org or (520)792-2250 www.tucsonchamber.org Presented by Fennemore Craig, learn how to protect yourself from costly NLRB charges and ADA complaints SAHBA Fall Home and Garden Show Friday (Oct. 5) through Sunday (Oct. 7) 10 a.m. to 7 p.m. Friday and Saturday and 10 a.m. to 5 p.m. Sunday Tucson Convention Center 260 S. Church Avenue Contact: Amy McReynolds, amy@sahba.org or (520) 795-3025 $8 for adults www.sahbahomeshow.com Candidate forum Tuesday (Oct. 9) 6 to 8:30 p.m. Pima Community College West Campus--Proscenium Theater 2202 W. Anklam Road Contact: Shirley G. Muney, smuney2k@yahoo.com or (520) 327-7652 Candidate forum for Congressional District 3

organized by The League of Women Voters of Greater Tucson, Pima Community College and the Hispanic Chamber of Commerce. Tucson Meet Yourself Folklife Festival Friday (Oct. 12) through Sunday (Oct. 14) 11 a.m. to 10 p.m. Friday and Saturday 11 a.m. to 6 p.m. Sunday Downtown Tucson 7 sites spanning 60 acres off Church Avenue Contact: Echo Surina echo@tucsonmeetyourself. org or (602) 332-9445 www.tucsonmeetyourself.org 8th Annual Tucson Record Show Sunday (Nov. 11) 9 a.m. to 3 p.m. Las Cazuelitas Event Center 1365 W. Grant Road Contact: Bruce Smith cassidycollectibles@earthlink. net or (520) 622-0104 Cost: $4 Dealers from all over the Southwest will be selling vinyl, tapes, CDs and music memoribilia. Dealer tables are $35. PRSA of Southern Arizona Ethics Luncheon Tuesday (Sept. 250 11:45 a.m. to 1 p.m. Arizona Inn 2200 E. Elm Street

Info: Lisa Wilkinson, lisagentilini@gmail.com or (770) 617-9044 $25 to $35 www.PRSATucson.org RSVP required REGULAR MEETINGS

Tucson Presidio Rotary Club Every Wednesday Noon to 1 p.m. Providence Service Corp. 64 E. Broadway Information: Jay McCall, (520) 909-9375 Cost: free, lunch provided Tucson Utility Contractors Association Second Wednesday 7 to 8 a.m. Locations vary RSVP: (520) 623-0444 Tuesday Morning Business Club Leads and networking Every Tuesday 7 to 8 a.m. The Hungry Fox 4637 E. Broadway RSVP: Mike Ebert (520) 320-9311 www.tucson-networking.com Varsity Clubs of America Midtown Mixer First Tuesday 5 to 7:30 p.m. 3855 E. Speedway RSVP: midtownmixer@

excite.com Information: (520) 918-3131 Cost: free, cash bar, menu available Alliance of Construction Trades Third Wednesday 5 to 7 p.m. Hotel Tucson City Center 475 N. Granada Ave. Information: www.actaz.net RSVP: By noon on Monday prior to meeting, (520) 624-3002 Cost: $20 American Society of Training and Development Third Friday (excluding August) 7:30 to 10:30 a.m. Breakfast and professional development meeting Viscount Suite Hotel 4855 E. Broadway Information: www. ASTD-Tucson.org Annuity Investment Seminars Common mistakes of annuity owners Every Tuesday 3:30 p.m. Bookmans 6230 E. Speedway Information: (520) 990-0009 Arizona Business Leads of Tucson North Every Wednesday except the ﬁrst Wednesday of the month 7:30 to 9:00 a.m. Mimi’s Café 4420 N. Oracle Road

Info and RSVP: jill@ ronstadtinsurance.com Arizona Real Estate Investors Association Second Tuesday, 5:30 to 8:30 p.m. Windmill Suites 4250 N. Campbell Road Information: (480) 9907092 or www.azreia.org Cost: Free, members, $15 nonmembers preregistered ($20 door) Arizona Small Business Association SO/HO (Small Ofﬁce/ Home Ofﬁce Community) First and Third Wednesdays 8:15 to 9:30 a.m. ASBA conference center, 4811 E. Grant Road, Suite 262 Information: www.asba.com Cost: Free to ASBA members Avra Valley Community Council Monthly meetings Fourth Tuesday of every month, 6 p.m. Halberg Center 15790 W. Silverbell Road Contact: Carlie Page at (520) 682-5139 or Luis Castaneda at (520) 682-6619 BNI Executive Partners Chapter Business Network International Every Wednesday, 1 to 2:30 p.m.

Tucson Osteopathic Medical Foundation 3182 N. Swan Road RSVP: Phyllis Daugherty (520) 405-5659 BNI Leading Edge Chapter Business Network International Every Tuesday, 7 to 8:30 a.m. Viscount Hotel 4855 E Broadway RSVP: Earl Yousey (520) 229-7718 BNI Givers Gain Chapter Business Network International Every Friday 11:30 a.m. to 1 p.m. El Parador, 2744 E. Broadway RSVP: Chuck Zaepfel (520) 740-0911 BNI Northwest Chapter Business Network International Every Thursday 7 to 8:30 a.m. Home Town Buffet, 5101 N. Oracle Road RSVP: Audrey Sharpe (520) 405-1405 Tucson Night Out First Tuesday Mixer First Tuesday of the month 5 to 7 p.m. McMahon’s Prime Steakhouse, 2959 N. Swan Road Information: www. tucsonnightout.com

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

22 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

FINANCE YOUR MONEY

Well-rounded financial portfolio might include investing in REITs “Buy land, they’re not making it anymore,” is a quote from Mark Twain. That may still be good advice, even though a most popular way to invest in the finite commodity – via a real estate investment trust (REIT) – was shortchanged by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). A REIT uses pooled capital from many investors to manage income property and/ or mortgage loans, and is traded on a major exchange just like a stock. So here is an explanation of the tax rules affecting REITS and some ideas about how to make them work to your advantage. If you invest in REITs, dividends are a big part of the equation. REITs normally pay out 100 percent of their taxable income to shareholders, and even in the low rate environment of 2012 many have yields of 4 to 5 percent. But don’t expect to pay JGTRRA’s bargain 15 percent tax rate on these dividends. They usually don’t qualify due to special tax treatment of REITs. One reason why Congress lowered the dividend rate for individuals was that dividends were being taxed two times at high rates – once when a corporation paid its income tax and again when inviduals paid theirs on dividend distributions. JGTRRA provided a remedy to that. But REITs, even prior to JGTRRA, received a deduction for the dividends they paid and thus did not owe corporate income taxes. So REITS were not included in JGTRRA’s dividend tax cut. Still, the government has to collect from somebody on that income, and guess what? It’s you the individual, and at regular income tax rates of up to 35 percent. Portfolio Manager Michael Winer of Third Avenue Real Estate Value Fund has about 25 to 30 percent of the portfolio invested in REITs and the balance in real estate operating companies. “They’re in the same business, but real estate operating companies are not forced to pay out dividends, so they can keep that cash flow, recycle it and reinvest,” says Winer. But there are exceptions. In at least two scenarios, REIT dividends are eligible for the 15 percent rate, according to the National Association of Real Estate Investment Trusts. If a REIT receives dividends from non-REIT subsidiaries or from outside investments – and then passes along that income to you – the 15 percent rate would apply. Although REITs are required to generate at least 75 percent of their income from

commercial real estate holdings, many do make other types of investments as well. In the second case, a REIT may decide to retain its earnings (after paying out dividends) DREW BLEASE and pay corporate tax on its income. In that case, which is permitted by the tax code, any dividends paid out would be subject to the 15 percent rate. JGTRRA also gave investors a break on capital gains taxes, cutting the top rate from 20 percent to 15 percent. Here, too, REITs can be at a disadvantage. If you sell a REIT stock at a gain after holding it for at least a year, you qualify for the 15 percent rate. That’s also true in most cases in which a REIT makes a capital gains distribution. But if the gain is attributable to the recapture of real estate depreciation, the 25 percent tax rate applies. So where do these special rules on REITS leave you? Since REIT dividends and capital gains may not be taxed as favorably as other investment income, it may make sense to place REITS in a 401(k) plan, IRA or other tax-deferred retirement vehicle. You must examine your total portfolio to see if placing REIT holdings in your retirement plan makes sense. REITs also have special risks, such as illiquidity and other risks associated with investing in real estate. They are not suitable for all investors. There is also no guarantee a REIT will obtain its objective. Wherever you hold them, REITs can be effective hedges. Their prices tend not to fluctuate in lockstep with stock prices. While past performance does not guarantee future results, and tax considerations are an issue, REITs may add an important component to many portfolios. Be sure to seek the advice of a professional.

Contact Drew Blease, president and founder of Blease Financial Services, 7358 N. La Cholla Blvd., Suite 100, at drewblease@ bleasefinancial.com or (520) 299-7172.

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

Company Name

Symbol Sept. 19 Sept. 12 Change

52-Week 52-Week Low High

Tucson companies Applied Energetics Inc CDEX Inc Providence Service Corp UniSource Energy Corp (Tucson Electric Power)

AERG.OB CEXIQ.OB PRSC UNS

0.04 0.02 13.02 40.80

0.04 0.02 13.05 41.28

0.00 0.00 -0.03 -0.48

0.03 0.01 8.41 34.28

0.40 0.10 15.94 42.10

9.47 0.41 2.76 9.29 59.77 8.43 88.95 17.94 59.03 3.64 19.50 34.18 35.38 29.37 33.54 16.06 101.88 42.18 47.71 9.37 78.76 60.58 22.22 41.54 29.57 59.47 61.28 206.43 33.65 58.63 5.59 41.34 36.44 13.16 53.46 23.99 1.50 36.26 29.59 41.72 60.25 39.04 40.90 39.73 47.83 66.90 29.09 16.43 58.15 48.08 16.46 44.22 61.60 10.75 9.06 43.92 35.17 65.01 17.17 28.69 45.51 20.69 125.05 29.62 10.97 34.34 74.37 35.81 35.25 9.99 21.15

9.35 0.45 2.75 8.97 59.35 8.51 86.73 18.58 58.15 3.70 18.35 33.05 34.59 27.44 33.06 16.08 100.89 42.60 46.47 9.50 78.21 58.71 20.57 40.10 29.72 57.05 60.10 203.77 33.08 59.92 5.54 39.92 35.69 12.77 53.77 23.92 1.50 34.52 28.22 41.38 60.55 39.22 39.52 39.42 47.94 67.93 29.05 15.55 57.88 46.53 16.45 43.26 60.90 9.85 9.18 43.32 34.70 64.38 17.54 28.59 43.07 20.31 124.94 28.84 11.82 33.94 74.07 35.36 34.33 9.45 20.44

0.12 -0.04 0.01 0.32 0.42 -0.08 2.22 -0.64 0.88 -0.06 1.15 1.13 0.79 1.93 0.48 -0.02 0.99 -0.42 1.24 -0.13 0.55 1.87 1.65 1.44 -0.15 2.42 1.18 2.66 0.57 -1.29 0.05 1.42 0.75 0.39 -0.31 0.07 0.00 1.74 1.37 0.34 -0.30 -0.18 1.38 0.31 -0.11 -1.03 0.04 0.88 0.27 1.55 0.01 0.96 0.70 0.90 -0.12 0.60 0.47 0.63 -0.37 0.10 2.44 0.38 0.11 0.78 -0.85 0.40 0.30 0.45 0.92 0.54 0.71

7.97 0.20 1.48 4.92 50.95 5.30 65.35 16.25 43.82 3.30 12.30 21.40 19.72 14.61 22.19 8.49 78.41 31.16 32.28 6.64 40.01 43.64 8.03 28.85 17.50 31.03 41.22 165.76 27.10 44.82 2.69 27.85 25.73 5.02 42.72 20.98 0.49 12.14 18.53 32.90 38.64 24.38 25.56 13.68 33.20 50.13 19.06 3.29 38.35 36.50 14.73 31.00 28.89 6.25 7.15 34.55 20.96 47.25 14.04 25.78 28.26 15.51 77.73 25.77 3.96 21.84 49.94 28.53 22.61 4.44 13.18

11.66 3.56 4.06 10.10 61.40 9.94 89.24 28.53 60.00 4.93 21.16 38.40 35.45 29.59 34.74 16.30 102.89 43.43 48.69 12.25 79.23 67.20 22.48 48.96 30.88 60.00 62.00 210.69 33.81 62.33 5.85 46.49 36.99 13.65 56.66 24.83 1.81 36.75 32.29 42.86 62.83 42.17 41.84 41.29 49.68 70.20 43.18 16.90 58.68 48.17 23.16 44.52 85.90 14.32 10.05 46.08 36.28 65.38 18.66 34.24 45.72 25.84 129.27 58.29 14.51 35.15 75.24 37.61 36.60 10.00 22.81

Southern Arizona presence Alcoa Inc (Huck Fasteners) AA AMR Corp (American Airlines) AAMRQ Augusta Resource Corp (Rosemont Mine) AZC Bank Of America Corp BAC Bank of Montreal (M&I Bank) BMO BBVA Compass BBVA Berkshire Hathaway (Geico, Long Cos) BRK-B* Best Buy Co Inc BBY BOK Financial Corp (Bank of Arizona) BOKF Bombardier Inc* (Bombardier Aerospace) BBDB CB Richard Ellis Group CBG Citigroup Inc C Comcast Corp CMCSA Community Health Sys (Northwest Med Cntrs) CYH Computer Sciences Corp CSC Convergys Corp CVG Costco Wholesale Corp COST CenturyLink (Qwest Communications) CTL Cvs/Caremark (CVS pharmacy) CVS Delta Air Lines DAL Dillard Department Stores DDS Dover Corp (Sargent Controls & Aerospace) DOV DR Horton Inc DHI Freeport-McMoRan (Phelps Dodge) FCX Granite Construction Inc GVA Home Depot Inc HD Honeywell Intl Inc HON IBM IBM Iron Mountain IRM Intuit Inc INTU Journal Communications (KGUN 9, KMXZ) JRN JP Morgan Chase & Co JPM Kaman Corp (Electro-Optics Develpmnt Cntr) KAMN KB Home KBH Kohls Corp KSS Kroger Co (Fry's Food Stores) KR Lee Enterprises (Arizona Daily Star) LEE Lennar Corporation LEN Lowe's Cos (Lowe's Home Improvement) LOW Loews Corp (Ventana Canyon Resort) L Macerich Co (Westcor, La Encantada) MAC Macy's Inc M Marriott Intl Inc MAR Meritage Homes Corp MTH Northern Trust Corp NTRS Northrop Grumman Corp NOC Penney, J.C. JCP Pulte Homes Inc (Pulte, Del Webb) PHM Raytheon Co (Raytheon Missile Systems) RTN Roche Holdings AG (Ventana Medical Systems) RHHBY Safeway Inc SWY Sanofi-Aventis SA SNY Sears Holdings (Sears, Kmart, Customer Care) SHLD SkyWest Inc SKYW Southwest Airlines Co LUV Southwest Gas Corp SWX Stantec Inc STN Target Corp TGT TeleTech Holdings Inc TTEC Texas Instruments Inc TXN Time Warner Inc (AOL) TWX Ual Corp (United Airlines) UAL Union Pacific Corp UNP Apollo Group Inc (University of Phoenix) APOL US Airways Group Inc LCC US Bancorp (US Bank) USB Wal-Mart Stores Inc (Wal-Mart, Sam's Club) WMT Walgreen Co WAG Wells Fargo & Co WFC Western Alliance Bancorp (Alliance Bank) WAL Zions Bancorp (National Bank of Arizona) ZION Data Source: Dow Jones Market Watch *Quotes in U.S. dollars, except Bombardier is Canadian dollars.

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

INSIDE REAL ESTATE & CONSTRUCTION

New home permits on fast pace to surpass 2011 total THE PULSE: Median Price Active Listings New Listings Pending Sales Homes Closed

By Roger Yohem Inside Tucson Business

TUCSON REAL ESTATE

9/10/2012

9/3/2012

$145,000 4,202 399 351 183

$167,000 4,046 329 321 98

Source: Long Realty Research Center

Every month, new home building permits data is published from Bright Future Real Estate Research, exclusively in Inside Tucson Business.

MONTHLY BUILDING PERMITS: AUG. 2012 2012

2011

2010

2009

Pima County

Marana

Sahuarita

Tucson

So. Pinal

Oro Valley

162

141

173

235

Total Source: Bright Future Real Estate Research

YEARTODATE BUILDING PERMITS: AUG. 2012 2012

2011

2010

2009

Pima County

405

371

536

481

Marana

356

210

271

127

Sahuarita

202

134

256

379

Tucson

212

165

259

249

So. Pinal

133

118

131

117

1,378

1,033

1,489

1,407

Oro Valley Total Source: Bright Future Real Estate Research

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

Current

Last Week

9/18/2012

One 12 Month 12 Month Year Ago High Low

3.63% 3.875%APR 3.63% 3.875%APR 4.95% 3.00% 3.25%APR 2.88% 3.125% APR 4.22% 2.88% 3.125%APR 2.75% 3.00% APR

4.95% 4.22%

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

Positive momentum in the new home construction industry continued to build last month, putting the region on track to have its best year since 2009. Year-over-year, every local jurisdiction has authorized at least 9 percent more new home permits through August for a combined total of 1,378 permits (see chart). With four more months of activity remaining, permits are now within 60 of 2011’s total of 1,438, according to Ginger Kneup, owner of Bright Future Real Estate Research. Builders are 487 permits behind 2010’s volume of 1,865 permits. To top 2009’s total of 2,077 permits, builders would have to average 175 permits each month for the rest of the year. “While this is a possibility, it is more likely that builders will average closer to 150 permits each month through the end of the year,” Kneup said. “Permitting activity in May and July was very strong as builders push for completions by year-end. The pace of permitting historically slows during the last half of the year and that would make it difficult to hit that annualized number.” After peaking at 263 permits in July, volume fell “to a better than expected” 162 permits in August. Overall, permits are pacing about one-third ahead of 2011, which Kneup expects will hold through December. “Homebuilders report good demand from buyers coming out of the resale market where inventories are tight, competition is fierce and sales are prolonged,” she said. “There are some very positive market forces that will support good permitting numbers. I anticipate closings will approach but not surpass 2,000 for 2012, exceeding volumes in both 2010 and 2011.” Although limited by a small base of available land, the Town of Oro Valley has doubled its year-over-year permit volume to 70 from 35. Marana is issuing permits at the second fastest pace, going to 356, from 210 last year, a 70 percent jump. Pima County has issued the most permits for new homes, 405. The top builders in August were Richmond America Homes with 35 permits; D.R. Horton Homes with 25 permits; and Robson Communities with 18 permits.

3.50% 2.88%

Resale homes steady For the first time this year, the average sales price of existing homes has held above $180,000 for two consecutive months. And following three consecutive months at $140,000, the median sales price bumped up $5,000 in August to $145,000. As real estate continues to stabilize, the market’s highlights are pushing aside years of lowlights, according to August data from the Tucson Association of Realtors Multiple

Listing Service. The August average sales price for resale homes was $180,193, a slight dip from $181,978 in July. The last time the average price was higher was in February 2011, when it was $182,388. Home sales totaled 1,179 units, which also showed stability as 42 more houses sold in August than July. Compared to August 2011, sales were up by 73. Active listings, however, were also up by 87 to 3,564 from July to August. In August 2011, there were 5,167 active listings, 31 percent higher than the current inventory. The best-selling homes in August sold in the $100,000 to $139,999 price range with 353 closings. The next-best selling homes were in the $200,000 to $249,999 range, accounting for 124 sales, according to the Realtors. Five homes valued at over $1 million sold last month.

Washburn Piano site sold An investment group has purchased the vacant Dorson Furniture and Washburn Pianos multi-tenant retail building at 5725-5755 E. Broadway for $655,000. The 1.44-acre parcel is in a prime location across the street from Park Place Mall and the new owners plan to redevelop it for commercial use. Heights Properties LLP, 6179 E. Broadway, bought the site from Murray Associates Broadway LLC, New York. The 24,085-squarefoot building was constructed in 1965. Heights Properties was represented by Paul Schloss and Alan Tanner, CBRE.

Coronado Heights default Coronado Heights, a midtown, six-building multi-family complex has fallen into default and will be sold at public auction in December. The 1.6-acre property at the southwest corner of East Glenn Street and North Estrella Avenue has an original principal balance of $2.7 million. The notice of trustee’s sale lists the owner as Beau’s Star LLC, Tucson and Woodland Hills, Calif. The property’s six addresses are 2621 N. Estrella Ave., and five addresses from 133 to 193 E. Glenn St. The local members are Elizabeth Devenis and Michael Devenis, according to public records. The beneficiary is Fannie Mae through Centerline Mortgage Capital Inc., Irving, Texas. The auction, which is scheduled for 1:30 p.m. Dec. 4, will be held at the law offices Snell & Wilmer, 1 S. Church Ave., Suite 1500.

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

24 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

EDITORIAL BIZ BUZZ

Outrageous what passes as corruption You’ve heard the stories about the City of Tucson’s Streets and Traffic Maintenance Division and you’re outraged. • An administrator had a concrete motorcycle pad built at the city’s transportation facility at South Park Avenue and Ajo Way so he and his “motorcycle buddies” wouldn’t have to park on asphalt. Trouble was the concrete set up too fast so they had to do it a second time. Cost to taxpayers: DAVID HATFIELD $7,883. • An administrator and a supervisor directed that dirt be delivered to a private residence in Vail, outside the city limits, to help the resident build a BMX bicycle track. Cost to taxpayers: $600. • Employees graded and paved a church parking lot at 4307 S. Seventh Ave. Cost to taxpayers: $1,004. • Employees removed dirt and debris from a private lot at 3626 E. 47th St., which is outside the city limits. Cost to taxpayers: $440. • Employees hauled away debris, graded and paved a private parking lot at 4802 S. Sixth Ave. Cost to taxpayers: $1,712.38 • Employees worked on a small parking lot off an alley behind a pizza place at 1838 E. Sixth St. Cost to taxpayers: $757. • Employees fixed potholes on a street near Valencia and Midvale Park roads that was clearly marked “not” a city-maintained street. Cost to taxpayers: $700. • On two occasions an employee filled trucks, one a dump truck with 39.3 gallons of diesel and the other a water truck with 49.3 gallons of diesel, on days when the employee wasn’t working for the city. Cost to taxpayers: $118 and $148, respectively. What jumps out at me is that these are all penny-ante deals. The biggest ticket item was the $7,883 it cost to build the concrete motorcycle parking pad and you’ve got to figure a lot of that had to do with the fact that they botched the job the first time around. Doesn’t that just fit into the stereotype of city workers? Mind you, these are only the instances where the investigation by the Tucson Police Department put a dollar figure on what was used. The investigation also found instances where city workers paved part of the Mount Lemmon Highway and resealed a road near Casino Del Sol (both county roads outside the city limits), built a retaining wall and graded and paved a parking lot at a private business, chip-sealed roads outside the city limits in the Starr Pass area and in a privately owned cemetery and delivered sand to the baseball field at Sunnyside High School, not to mention some private side-jobs for friends or city tools that have gone missing. In the overall scheme of things, the fact that there is graft and corruption in city government isn’t in itself so surprising. Take Chicago. A city that’s got a reputation as being notorious for corruption. At the same time, Chicago is “The City that Works.” That’s what’s got me outraged, when it comes to graft and corruption, the nickel-and-dime version practiced here is shamefully embarrassing. Worst of all, Tucson doesn’t work. That’s what is outrageous.

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

EDITORIAL

It’s about trust, not streets One day last month, Tucson Mayor Jonathan Rothschild in response to a question on Chris DeSimone’s and Joe Higgins’ morning radio show, said he didn’t think it would take much to convince voters that the city needs to spend $100 million to fix up streets. The bigger task would be the “trust issue,” as Rothschild put it. To his credit, Rothschild and City Manager Richard Miranda are tackling that topic of trust head-on. They started with a couple of investigations in the city’s Transportation Department, the very department that is supposed to have been responsible for the conditions of the streets. Two city Department of Transportation employees have been fired, two others resigned to avoid being terminated and a fifth chose retirement after a Tucson Police Department investigation turned up instances of workers mis-using city equipment and supplies to do side jobs for friends and relatives, sometimes outside the city limits but frequently while they were supposed to be on the job for the city. After another investigation, a supervisor in the Department of Transportation quit and four others were disciplined for using their computers to watch pornography on city time and to misrepresent hours worked. There’s also an investigation going at the Tucson Convention Center (TCC) where former acting director and deputy director Tommy Obermaier has been placed on “imposed leave.” That investigation is being done by the Pima County Sheriff ’s Office to avoid a potential conflict after City Manager Miranda, a former Tucson police chief, named former Tucson Police captain Mark Timpf as head of the TCC in March, replacing Obermaier. And there are still loose ends in a 10-month investigation being done by the Arizona Attorney General’s Office over missing money, fraud and missing parking meter keys from the city’s downtown ParkWise operations. What all these have in common is that they didn’t

just start yesterday. The documented wrong-doing in the Transportation Department dates back 2004 and could go back further. Using a city computer to watch pornography or falsify work documents is the result of a culture that allows such things to happen. Questions over Obermaier’s dealings with suppliers at the TCC go back to 2001. And we know ParkWise had been giving away free utilities to Cafe Poca Cosa since 2006. So yes Mayor Rothschild, you are correct. We can probably all agree — no matter how good the suspension is on our vehicle — the city’s pothole-ridden streets are in desperate need of repair. The bigger question for voters is whether they believe Rothschild and Miranda, who have been on the job for a less than year, have discovered the mindset that appears to have infested many corners of city government for years. Discovering wrong-doing is only the beginning of the process. Will Rothschild and Miranda have the fortitude to continue cleaning up the mess? Or, as seems to happen too often, will the firestorm die down when it’s convenient? As a sidenote, it is gratifying to see Miranda, a native Tucsonan and long-time city employee, standing up for honesty and doing what is right. As a former law enforcement officer, clearly that side of his brain won out. In the meantime, DeSimone on the KVOI 1030-AM morning radio show, asked Rothschild, why this year for the $100 million in bonds? Why not wait until next year? Two reasons, according to the mayor. One, Pima County is talking about going for a bond issue, perhaps as soon as 2013. That would have meant voters would be faced with two such ballot questions that might lead both to defeat. Second, it takes about 18 months once approved by voters to sell bonds and get the money going on projects. Waiting would only delay that process. But as we all know, the question isn’t about the roads. It’s about trust in City Hall.

InsideTucsonBusiness.com

SEPTEMBER 21, 2012

OPINION WAKE UP, TUCSON

TREO does what it takes to avoid specifics about job creation Is it coincidental that our region’s job creation organization, Tucson Regional Economic Opportunities (TREO), ceremonially announces Sept. 10 it is no longer taking support dollars from Tucson, Oro Valley, Sahuarita and other municipalities the week after the Tucson City Council asked for more accountability? We think not. The City of Tucson has been moving away from TREO since Mayor Jonathan Rothschild was sworn into office in December. City Councilman Steve Kozachik was the first to sound the alarm bells and began beating the drum for more accountability and fewer “pie in the sky” presentations about what the future holds. TREO initially came to the council this month with another one of its song-anddance presentations and was sent away with instructions to bring back specifics. They were specifics TREO didn’t have. We know that because we contacted TREO and asked about it ourselves and were directed to the media page on its website. We printed every press release going back to when TREO was launched in 2005. We counted the “jobs created” and did the math. It turns out the numbers don’t match with what TREO now claims.

16,000 jobs or 3,166? According to its press releases, since 2005 the number of new jobs from new companies has totaled 719. JOE HIGGINS TREO takes credit for 2,447 additional jobs from companies that were already in the region and expanded. Was TREO responsible for their hiring efforts? Who knows, but we’ll give them credit for the jobs anyway. CHRIS DeSIMONE A number of press releases talked about a company bringing in “x” number of new jobs with the potential for “xxx” number more jobs in the future. That happened just last month when the biotech firm Accelr8 announced it is relocating from Denver to Tucson with plans to create

65 jobs within three years and up to “300 in subsequent years.” To meet its first year incentive benchmark, it has to create 15 jobs. In our book, potential doesn’t pay the bills, reality does. Real numbers are needed to justify $13.7 million local governments have put into TREO over the years. (TREO’s total budget has been $16.3 million.) We give TREO credit for 3,166 actual jobs in the key areas it has identified for itself — bioscience, logistics, solar, aerospace, and manufacturing. Not call center or mining jobs. We found that as funding pressures mounted, TREO took credit for more and more jobs. In fact after the news media scrutiny following its May junket to San Diego and a booze cruise around the bay, the number of jobs created by TREO jumped to 16,000, from 10,550 just a year ago. Did TREO actually help create 5,450 industry-targeted jobs in the last year? To get an idea, let’s bring in data from noted University of Arizona economist Marshall Vest, who in his annual mid-year forecast in June said that since August 2010, there have been 800 jobs created in the Tucson region. That’s 800 jobs total, across all industries. TREO claims 7,598 new jobs during that same period.

Pima County doubles down Now the only government entity still funding TREO is Pima County. Supervisor Sharon Bronson has been a co-chair of TREO’s board since the inception of the organization. She has seen millions of dollars go to the agency. By most accounts, jobs is the No. 1 issue, both nationally and locally. Statewide, Arizona ranks No. 4 in job creation according to data from the U.S. Department of Labor. AOL ranks the state No. 2 for future job growth. But most of that is happening in Maricopa County, where Vest says 69,000 jobs have been created since 2010, compared to Pima County’s 800 jobs. You’d think Pima County government might recognize that whatever they’ve been doing hasn’t worked. The Town of Marana recognized that three years ago when it stopped funding TREO. This year, the City of Tucson began asking the tough questions and magically the “funding formula” changed.

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.

GUEST OPINION

Instead of slogans, here are some facts and context In their Sept. 7 opinion column in Inside Tucson Busines, Joe Higgins and Chris DeSimone encouraged voters to pay attention to the Pima County races on the ballot. While it would be inappropriate to discuss the individual races they referenced, there were some mischaracterizations made about the operation of Pima County that should not go unchallenged. The piece indicates the Pima County region is short on jobs, has broken roads and is bogged down in costly legal fights with anyone “who dares step out of line.” Some facts are in order.

Jobs One would be hard pressed to find a community that has been spared challenges in this economic downturn, but make no mistake: Pima County is weathering the storm. The county’s unemployment rate in July 2012 was lower, at 7.4 percent, than the statewide average of 8.3 percent. It was just incrementally higher than the Phoenix metro region’s 7.3 percent. And while it is clear manufacturing and construction have seen declines in the

C.H. HUCKELBERRY

double digits, those are starting to recover. The decline in new home building and commercial permits has stopped, and the numbers are holding steady. We also are seeing emerging

opportunities. There has been good news on the bioscience front, with expansions for Roche and Sanofi. An innovative new firm, Accelr8, also announced recently it will be moving into the county’s public health building, which could lead to as many as 200 to 300 new jobs in the coming decade. The transportation and logistics sector has seen growth of 8 percent since 2001 – four times higher than overall employment growth over that time period. Pima County is not just waiting for the jobs to come; we are actively taking steps to build on our existing strengths. Pima County, for example, has helped

create workforce training used by existing employers to address their needs, with a focus on sectors that have potential for high growth and high wages. Our program helped create training for solar installation and green automotive technology, for example, and assisted in the creation of a formal logistics degree program that will ensure businesses are able to take advantage of our border with Mexico as well as our proximity to deep water ports, an international airport, rail and trucking routes. In all, we worked with 869 employers last year to identify needs and trained roughly 2,750 workers to meet these needs.

Broken roads Efficient transportation corridors are vital to a healthy community, which is why Pima County is investing $20 million in pavement repair and preservation. The county will consider another $20 million investment in 2013 and will look at long-term regional solutions to the problem. Pima County has had to dip into its General Fund for the first time in recent memory to pay for roads, partly because

the way the state Legislature has been balancing its budget essentially entails taking other jurisdictions’ money. In large part because of those choices, Pima County receives less road money today than we did a decade ago. Some of the gas tax money that previously came to counties and cities instead has been used to help fund state obligations, including the state Department of Public Safety and the state Motor Vehicle Division. A recent estimate indicates $38 million has been diverted over the last 12 years. In adopting the current year’s budget, the Legislature discontinued the shift to the Motor Vehicle Division, which is helpful. It would be more helpful if it would eliminate the shift to Public Safety as well. And it would be even better if it would repay the diverted revenues so local jurisdictions could put them to work preserving their roads.

Legal fights Those who criticize Pima County as being too litigious tend to point to two legal

SEE HUCKELBERRYPAGE 27

26 SEPTEMBER 21, 2012

INSIDE TUCSON BUSINESS

OPINION GUEST OPINION

The facts that don’t back up five whoppers of a fish story Given the time, I quite enjoy reading fiction. But I was unprepared to read the creative liberties submitted by my election opponent, Tanner Bell, in an Inside Tucson Business Guest Opinion (July 20 issue). I would like to address a few points in that tall tale: • Whopper No. 1: Mr. Bell said Pima County is an example of poor regional planning because of an over-reliance on government and the service sector. Fact-check: Roughly 31 percent of Pima County’s employment base relies on government, according to statistics from Tucson Regional Economic Opportunities (TREO). That’s significantly lower than San Diego’s 43 percent. It’s lower still than Huntsville, Ala., where Raytheon Missile Systems is building a new plant and where government makes up nearly 56 percent of the employment base. From the private sector view, Pima County comes out on top, with large private employers making up nearly 38 percent of our county’s employment based, compared to 20 percent for San Diego and 24 percent for Huntsville. • Whopper No. 2: Continuing to cherry-pick points from a TREO memo, Mr. Bell cites growth in service-related jobs, while showing lost ground in other sectors. Fact-check: Putting aside the fact that the same TREO memo also indicates “Southern Arizona is becoming known as one of the nation’s most innovative

bioscience centers” and identified several other notable successes, we want to see job growth in all sectors but it’s not wise to summarily dismiss an industry that is SHARON BRONSON an important component in our modern economy. In actuality, these jobs are often related to our cleanest industry and one that draws $2 billion a year to our economy: tourism. • Whopper No. 3: Mr. Bell insinuates Pima County lost the Raytheon Missile assembly plant because of some failure of long-term vision. Fact-check: We lost that contract because this region did not have the space, safety buffers and infrastructure to support that additional line of business. Pima County has since resolved that problem. In fact, the county was the only local jurisdiction to use local revenues to purchase a buffer that will allow Raytheon to escape those constraints, enabling us to be better poised to capitalize on future opportunities for growth. • Whopper No. 4: Mr. Bell says the Board of Supervisors “keeps increasing your property taxes.” Fact-check: The board has steadily

decreased property taxes for three consecutive years. We were forced to increase the primary property tax rate in 2011-2012 to compensate for state-imposed cuts to revenues we rely upon to provide needed services. Even then, however, the overall levy we collected from taxpayers went down. Indeed, our revenue from tax collections has gone down $30 million over the last two years. We have reduced our workforce by 12 percent over the past five years. Our budget is smaller by 17 percent than it was in 2007. We’ve made smart decisions about divesting those parts of our services the private sector does better, including direct delivery of healthcare. • Whopper No. 5: Mr. Bell indicates Pima County’s property tax rate is more than four times higher than our neighbors in Maricopa County. Fact-check: Pima County’s primary property rate is $3.41 per $100 of assessed value and Maricopa’s is $1.24. While it makes a great bludgeoning tool in a political season, comparing the two counties is like comparing apples and coconuts. Both counties pay for jails but Maricopa County has a separate sales tax to support jails. If Pima County paid for jails the same way, we could lop 80 cents off our property tax rate. Both counties pay for healthcare but Maricopa County does it through a secondary property tax. If Pima County did it the same way, we could take another 19

cents off our property tax rate. There are other big differences. Thanks in part to being the state Capitol and having a nuclear power plant, Maricopa Copunty has higher per capita assessed valuation. Pima County has a disproportionately high urban service demand, with 36 percent of residents in unincorporated areas, compared to just 6 percent in Maricopa County. When all of those factors are taken into account, the total rate individual property taxpayers see is nearly equivalent. Despite our differences of opinion, I was heartened to find one area of agreement with my election opponent: Strong leaders do make a difference. This is a critical time in our region’s recovery. We cannot afford to have rookies learning through on-thejob training. I’m not the one who just moved into District 3 in April to run for office. I have lived in this district for four decades. I also know my facts cold. Mr. Bell could put his talents to good use. Submissions are open through the end of October for the respected PEN/Faulkner Award for Fiction. I’ll even suggest a title: “A Fish Story in Pima County.”

Sharon Bronson, a Democrat, is vice chair of the Pima County Board of Supervisors and seeking re-election to her fifth term. Her campaign website is www.sharonbronson.com .

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InsideTucsonBusiness.com

SEPTEMBER 21, 2012

Opposition to F-35 was misrepresented TO: The Editor FROM: Jennifer Aviles RE: The F-35 and Tucson Forward I was surprised and disappointed in the Editorial as well as the Guest Opinion by Hank Peck (Sept. 14 issue) about the F-35 and the alleged underpinnings of the work done by the group known as Tucson Forward. As with many groups that come together for a purpose, Tucson Forward includes people with varying philosophies. As one who supported the investigation and subsequent dissemination of the facts about military aircraft overflights years ago and more recently about the F-35 in order to reveal the aircraftâ&#x20AC;&#x2122;s continuing shortcomings and its effect/potential disastrous effect on the population of Tucson over which it will fly, I strongly resent the implication that all of

the members of Tucson Forward are also in favor of the larger goal of closing down Davis-Monthan Air Force Base. Speaking for myself and presumably echoing at least one other notable Tucson community member who has written publicly about his stand, I am not in favor of closing down Davis-Monthan Air Force Base for many of the reasons listed in the Editorial. However, individuals like Hank Peck and more importantly the Inside Tucson Business editorial board obscure the purposes of a valid investigation of the facts and characteristics of the still troubled history of the F-35. To combine inflammatory and disruptive comments about a position not held by many of those who work to increase physical safety affected by flight patterns here, divides our wonderful community rather than unites it. How better it would be to acknowledge and support the concerns of those who live beneath the flight patterns and to work to improve the physical and economic situation for all.

HUCKELBERRYCONTINUED FROM PAGE 25 disputes. We continue to have a disagreement with the Town of Marana about ownership of a wastewater facility on the northwest side. And we continue to press for more clarity on the long-term environmental and ecological impacts of Rosemont Mine to ensure the taxpayers are protected. Marana initiated the litigation on the wastewater facility. The ensuing legal challenges grew out of Maranaâ&#x20AC;&#x2122;s attempt to take the county facility without paying for it. The county is merely insisting the town follow applicable legal requirements with respect to its attempted takeover of the treatment plant. Maranaâ&#x20AC;&#x2122;s unwillingness to do so is what has led to the litigation. We have been successful so far, having prevailed in the trial court on most issues and in the Court of Appeals on virtually all of them. The trial court awarded the county attorneysâ&#x20AC;&#x2122; fees in the amount of $170,000, and this award was upheld by the Court of Appeals. Rosemont, meanwhile, filed suit against Pima County in an attempt to hasten the air quality permitting process, regardless of the

fact any delays were directly attributable to incomplete information submitted by Rosemont. In fact, staff was diligently working on processing the permit when the company filed suit to compel a permitting decision by the county. After the permit was denied, Rosemont withdrew that lawsuit and appealed the denial to the Air Quality Hearing Board. After that denial was upheld, Rosemont again filed suit. The resulting court opinion again was a win for Pima County, since the judge only ordered that Rosemont be allowed to amend its application to address the incomplete information. Context and facts often wreck snazzy slogans and declarative sentences. But they are necessary for a more robust exploration of the issues. I certainly hope Inside Tucson Business readers prefer factual content and real analysis over empty rhetoric and sound bites.

C.H. â&#x20AC;&#x153;Chuckâ&#x20AC;? Huckelberry is Pima County Administrator.

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