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May 2013
www.inbusinessmag.com In Business Magazine is a collaboration of many business organizations and entities throughout the metropolitan Phoenix area and Arizona. Our mission is to inform and energize business in this community by communicating content that will build business and enrich the economic picture for all of us vested in commerce. Partner Organizations
Rick Murray, CEO Arizona Small Business Association Central Office (602) 306-4000 Southern Arizona (520) 327-0222 www.asba.com
Steven G. Zylstra, President & CEO Arizona Technology Council One Renaissance Square (602) 343-8324 • www.aztechcouncil.org
Located at The Phoenician 6000 E. Camelback Road, Scottsdale, AZ 85251 (480) 214-8000
Lynda Bishop, President NAWBO Phoenix Metro Chapter (602) 772-4985 • www.nawbophx.org
www.jgsteakhousescottsdale.com Rick Kidder, President & CEO Scottsdale Area Chamber of Commerce (480) 355-2700 • www.scottsdalechamber.com
Mary Ann Miller, President & CEO Tempe Chamber of Commerce (480) 967-7891 • www.tempechamber.org Our Partner Organizations are vested business organizations focused on building and improving business in the Valley or throughout Arizona. As Partners, each will receive three insert publications each year to showcase all that they are doing for business and businesspeople within our community. We encourage you to join these and other organizations to better your business opportunities. The members of these and other Associate Partner Organizations receive a subscription to In Business Magazine each month. For more information on becoming an Associate Partner, please contact our publisher at info@inbusinessmag.com.
Associate Partners Ahwatukee Foothills Chamber of Commerce www. ahwatukeechamber.com Arizona Chamber of Commerce & Industry www.azchamber.com Arizona Hispanic Chamber of Commerce www.azhcc.com Chandler Chamber of Commerce www.chandlerchamber.com Economic Club of Phoenix www.econclubphx.org Glendale Chamber of Commerce www.glendaleazchamber.org Greater Phoenix Black Chamber of Commerce www.phoenixblackchamber.com Greater Phoenix Gay & Lesbian Chamber of Commerce www.gpglcc.org Mesa Chamber of Commerce www.mesachamber.org North Phoenix Chamber of Commerce www.northphoenixchamber.com North Scottsdale Chamber of Commerce www.northscottsdalechamber.org Peoria Chamber of Commerce www.peoriachamber.com Westmarc www.westmarc.org
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inbusine ssmag.com
MAY 2013
IN BuSINESS MAGAZINE
Contents
Special Section: Commercial Real Estate Players Profiled
May 2013
REAL ESTATE
The Changing
Bankscape
AZ
Leadership Forum HB 2657: MAY 2013 • inbusinessmag.com
22
Focuses Strengths
Evolving Sales Tax Changes
Power Lunch By the Numbers Business Calendar $4.95 INBUSINESSMAG.COM
This Issue Scottsdale Area Chamber of Commerce Arizona Small Business Association
Phoenix Rising: Is Our Housing Market Heating Up? Metro Phoenix appears to be slowly and steadily emerging from the ashes of the real estate collapse of five years ago — or is this a re-bubbling of the boom that preceded it? Amy R. Handler seeks out key players in the metropolitan Phoenix real estate industry to find answers. Departments
11 Guest Editor
Features
Elliott D. Pollack, CEO of Elliott D. Pollack and Company, introduces the “Real Estate” issue.
20 Taking the Lead
As the Arizona Leadership Forum launches an effort for the state’s best and brightest to achieve common goals, Don Rodriguez examines its impact.
14 Briefs
Business Education
34 Adventures in Contract Negotiations:
Common Pitfalls to Avoid
In this final of a three-part legal series, Lewis and Roca attorney Matthew Engle discusses how “minor details” could have major consequences. Special Sections
We take the pulse of the housing market. Plus: Key economic indicators provide a sense of the health of the local economy.
Prese
nts
A spotlight on the industry and leading players empowering the market
57 Arizona Small
Business Association Partner section
Commerci
al Real Es
A spe cial the indu Commer cial empowe stry “players Real Esta te r our ” commer who are wor Section spo tlighting cial real king hard estate market to
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“Counterfeit Software Hurts, “Get IT $avvy,” “Evernote Does Everything,” “Data Center in Tucson Offers Offsite Security for Valley Businesses,” “Business Advice in All Industries,” “Healthcare Operation in Growth Mode Thanks to PPACA,” “Investment Call Center Expands in Chandler” and “Forego ‘Gut Instinct’ to Build Business in China”
18 By the Numbers
37 Commercial Real Estate
Partner section
35
Noted business leaders Walt Danley, Mary Lou Paulk and Andy Warren respond to IBM’s burning business question of the month.
Eric Jay Toll explores the significant changes in the business of banking, and how that affects the Valley’s small business bankscape.
Chamber of Commerce
Community impact of the Arizona Community Foundation and the Virginia G. Piper Charitable Trust
12 Feedback
28 The Business of Banking Is Banking on Small Business
49 Scottsdale Area
30 Nonprofit
Switc h?
recen es Arizon nce marke where of health tly that a. the federa tplace implem plans. that entati l gover Howe on of ver, citing would One of nmen that part t plans the major “opera of the to run to give reaso ACA health ns the more would care option Afford be excha to emplo s to small able Care SCOTT nges, yees SDALE which busine Act under Progr (ACA) @WOR sses contro am, or passe K-1 and help l. Under d was The delay SHOP excha them the bill, becau keep nge, to se the will push each the cost will be give emplo state bill was back of provid must limited design implem yers a offer ing health to a single ed entati a Small way to on of insura comp health Busin are plan nce ess Health plan option that plan until option 2015; Option . s for their in the s mean emplo time, yees. small busine sses Even those who Care widely Act were suppo prolon rted taken the Afford g and by surpri exace able crippli se. The rbate ng 29 health delay million care will small costs busine that are sses Many nation busine wide. ss group Act due s oppos to conce ed the and rns that Afford worke able Care it would rs, partic harm harm ularly would emplo small come yers one-s busine by ize-fits sses. -all cover mandating This dollar more s in age expen and new sive, impos reform taxes ing billion s to withou contro t provid s fear l health was ing effecti of care that costs. busine ve health sses One plan would specif under choice ic s for the ACA. be reduced rather small busine So this than sses expan to only decisi surpri ded on to a single se. limit option small come s as Some no believ e this those has been of us who took the plan bait and a wait-a all along switch nd-se . For we hoped e attitud would e, it is n’t happe the n.
19 Trickle Up
View from the top looks at how Ian Wist led the family’s retail officesupply business to battle against the big-box stores.
29 Books
New releases provide a lifeline into the volatile world of money.
35 Assets
The Porsche Cayman S Plus: Devices to monitor a healthy exercise regimen
36 Power Lunch
Distrito Plus: Wine bars that invite the lunch crowd
66 Roundtable
HB 2657 seeks a sales-tax change that’s good for cities and good for business. On The Agenda
31 Spotlight
ASBA: Small Business Conference & Enterprise Business Awards Tempe Chamber of Commerce: Women in Business Conference
32 Calendar
Business events throughout the Valley
01
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inbusine ssmag.com
THE
May 2013 • Vol. 4, No. 5
passionate about your profitability Publisher Rick McCartney
At Holmes Murphy, we think providing you with innovative answers
Editor RaeAnne Marsh
to the ever-increasing challenge of rising healthcare costs is one
of the most important things we can do to affect your company. That’s why we take the time to get to know your company’s
challenges and consult with you to provide the highest-quality, lowest-cost solutions — tailored especially for your business. If you are looking for an advisor who understands the complexities of Employee Benefits and a partner who helps you develop the right financial solutions, call Holmes Murphy — the nation’s 26th-largest* broker.
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Learn more about how Holmes Murphy will be a trusted advocate for you — visit holmesmurphy.com. * Business Insurance, July 2012
Cash flow solutions to help your business grow. “My business runs better now that I’m not chasing invoices.” Jay, Hallmark Global Tech.
Visit www.bibbyusa.com or call 877-88-BIBBY
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Contributing Writers Stanley Chao Matthew Engle Amy Handler Mike Hunter Don Rodriguez Kristian Seemeyer Eric Jay Toll
Photographer-at-large Dan Vermillion
©2013 Holmes Murphy & Associates
Art Director Benjamin Little
Operations Louise Ferrari
lferrari@inmediacompany.com
Senior L ouise Ferrari Account Executives lferrari@inmediacompany.com
Cami Shore
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Greg Stiles
gstiles@inmediacompany.com
More: Visit your one-stop resource for everything business at www.inbusinessmag.com. For a full monthly calendar of business-related events, please visit our website. Inform Us: Send press releases and your editorial ideas to editor@inbusinessmag.com.
President & CEO Rick McCartney Editorial Director RaeAnne Marsh Senior Art Director Benjamin Little Financial Manager Donna C. Mitchell, CPA
Corporate Offices 6360 E. Thomas Road, Suite 210 Scottsdale, AZ 85251 T: (480) 588-9505 F: (480) 584-3751 info@inmediacompany.com www.inmediacompany.com
Vol. 4, No. 5. In Business Magazine is published 12 times per year by InMedia Company. POSTMASTER: Send address changes to InMedia Company, 6360 E. Thomas Road, Suite 210, Scottsdale, AZ 85251. To subscribe to In Business Magazine, please send check or money order for one-year subscription of $24.95 to InMedia Company, 6360 E. Thomas Road, Suite 210, Scottsdale, AZ 85251 or visit inbusinessmag.com. We appreciate your editorial submissions, news and photos for review by our editorial staff. You may send to editor@inbusinessmag.com or mail to the address above. All letters sent to In Business Magazine will be treated as unconditionally assigned for publication, copyright purposes and use in any publication, website or brochure. InMedia accepts no responsibility for unsolicited manuscripts, photographs or other artwork. Submissions will not be returned unless accompanied by a self-addressed, stamped envelope. InMedia Company, LLC reserves the right to refuse certain advertising and is not liable for advertisers’ claims and/or errors. The opinions expressed herein are exclusively those of the writers and do not necessarily reflect the position of InMedia. InMedia Company considers its sources reliable and verifies as much data as possible, although reporting inaccuracies can occur; consequently, readers using this information do so at their own risk. Each business opportunity and/or investment inherently contains certain risks, and it is suggested that the prospective investors consult their attorney and/or financial professional. © 2013 InMedia Company, LLC. All rights reserved. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission by the publisher.
inbusine ssmag.com
Elliott D. Pollack, CEO, Elliott D. Pollack and Company
Guest Editor
Real Estate: Back in the Cycle Again?
Elliott D. Pollack is CEO of Elliott D. Pollack and Company, an economic and real estate consulting firm in Scottsdale, Ariz., established in 1987. The firm serves a broad range of clients in the public and private sectors, ranging from law firms, utilities, banks, retailers, major service firms and real estate-related companies to states, counties, Native American communities, cities and universities, for both business and policy issues. The firm maintains the most comprehensive economic database in Arizona. A widely sought-after consultant and speaker, Pollack is respected by local, state and national news media as an expert source for economic and real estate matters.
The Valley’s real estate market can be as hot as its summer temperatures, and has been an integral part of Metro Phoenix’s growth in the last 15 years to twelfth-largest metropolitan area in the country. When the real estate market slows, the region’s entire economy feels it, which is why a healthy real estate market is of such concern to those who study the economy. What is currently going on in single family housing is similar to what happens to any retailer or manufacturer that finds itself with an excess of a product in the face of slow demand. It cuts production and reduces prices in order to get the excess off the shelf. In other words, it puts the product on sale. And prices are reduced until the excess supply is gone. Once that happens, the sale is over and, in the face of increasing demand, prices begin to rise. Then, production increases. That describes the housing market. Prices for existing homes declined far below production costs. The inventory moved. As the (slow) economic recovery continued, demand picked up and the excess supply was absorbed. With a brief look at how this process played out in the last few decades’ boom and bust cycles, Amy Handler delves into the present real estate market in her cover story “Phoenix Rising: Is Our Housing Market Heating Up?” Experts that include real estate professionals, real estate and tax attorneys and other economists provide insights on market growth, the impact of new federal regulations, and how to recognize and avoid fraud so that there are no false positives and negatives in market trends. Also in this issue, Eric Jay Toll takes the pulse of the banking sector, a popular scapegoat in the struggling economy but one that has its own challenges in today’s marketplace. Don Rodriguez explores the initiative of the Arizona Leadership Forum. Attorneys at Lewis and Roca wrap up their three-part business education series with a feature on key aspects of contract law for small and medium-sized businesses. A special section profiling leaders in commercial real estate opens with an article that explores changing dynamics in the business community from a foundation of financial, insurance and real estate companies to businesses in the realms of intellectual capital, energy and education, and how that impacts the commercial real estate office market. With relevant information on a broad range of topics, In Business Magazine is a valuable resource for those vested in business, from entrepreneurs in start-ups to corporate executives. I hope you enjoy this month’s issue; I’m pleased to be part of it. Sincerely,
Elliott D. Pollack Chief Executive Officer Elliott D. Pollack and Company
Connect with us:
Stable, Not Bubble Bubble or not, the real estate market is changing. It is not like it was and many suggest it will never go back to the days of inflated prices and rampant mortgage approvals. This is a good thing. Metropolitan Phoenix is stabilizing in the residential real estate sector, as are many other markets. Jobs are beginning to come back slowly and the push for industry creation here is starting to get through the thick skulls of many of our politicians.
inbusine ssmag.com
Elliott Pollack is the go-to guy on the subject of this issue’s cover story and we were honored that he’d take the time to work with us on shaping this issue. His insights are not just solid and reliable, his closeness to this business community makes his contribution that much more relevant for us as business owners. —Rick McCartney, Publisher
Story Ideas/PR: editorial@inbusinessmag.com Business Events/Connections: businessevents@inbusinessmag.com Marketing/Exposure: advertise@inbusinessmag.com Or visit us online at www.inbusinessmag.com
M ay 2013
11
Feedback Executives Answer Valley Leaders Sound Off
Our real estate market has gone through several cycles of highs and lows in the last few decades. The most recent high proved to be a bubble from whose bursting we are still recovering. What steps can we take to avoid building another bubble in the real estate market?
Walt Danley
Mary Lou Paulk
President Walt Danley Realty Sector: Real Estate As the real estate recovery continues, it is expected that we have learned from the mistakes of previous years and are trying to avoid another bubble — only so that we don’t have to suffer when the bubble pops! Although my firm specializes primarily in Arizona’s luxury market, the health of the entire market is vital for the success of luxury and we keep a watchful eye on market-wide trends. While the luxury market has seen only moderate gains, the lower-priced home segment has seen incredible growth over the past year. This bubble, if there is one, is being driven by investors paying cash who feel prices for income properties can’t get any lower. Also note that tougher loan requirements mean relatively fewer people are borrowing than in our last bubble. Cash buyers and tougher loan rules forced a lot more equity into housing, so the value in real estate is real — not just on paper. Continuing to make “good” loans and keeping equity in housing will prevent another bubble from popping. Walt Danley Realty waltdanley.com
Walt Danley has been one of the most productive and respected Realtors in the Valley of the Sun’s dynamic luxury home market for more than 35 years. Danley consistently ranks in the Wall Street Journal’s lists of top agents, and he has been selected as “Broker/Agent of the Year” by his peers on multiple occasions. He is a dedicated supporter of the Humane Society and American Heart Association, among others.
Andy Warren President Maracay Homes Sector: Homebuilding While the homebuilding industry has the opportunity to once again participate in an expanding and thriving economy, we must first recognize we’re no longer the primary driver of the local economy. It is incumbent upon homebuilders to support a diverse economy that weathers all market cycles and to responsibly embrace Arizona’s economic recovery. As we move forward, homebuilding can play a new role in Arizona’s economic success. To promote and sustain a healthy economy,
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President and County Manager Fidelity National Title Agency of Arizona Sector: Title Insurance Prevention of another housing bubble is directly reliant upon those factors which caused the event: over-appreciation, appraisals and requirements for mortgage applications to fund home purchases. Since the downturn in our market, the appraisal process and lending requirements have undergone strict scrutiny and those requirements necessary to obtain financing and establish property values have been re-evaluated and re-set. Although we have seen a steady increase in home prices, they are not rising aggressively, primarily due to the old-fashioned concept of supply and demand. In 2012, more than 30 percent of our inventory was purchased by investors with “buy and hold” strategies of 15+ years. The Arizona market has experienced one of the quickest recoveries in the nation, largely attributable to the joint efforts of the real estate community, lenders and the support network of title companies, appraisal services, home warranty companies and others. The necessary steps required to prevent a bubble are established and will be the cornerstones of the future success and continued growth of a healthy and vibrant real estate market in Arizona. Fidelity National Title Agency of Arizona fntarizona.com
Mary Lou Paulk is president and county manager of Fidelity National Title Agency of Arizona. A native of Phoenix, she has been in the title industry since 1976. Fidelity National Title is a member of the Fidelity National Financial, Inc. family of title companies, which collectively represent the largest title insurance and escrow services company in the world.
homebuilding today can strike a responsible tone — one that places an emphasis on smart design, energy efficiency and supporting local subcontractors and vendors. For example, building 100 average singlefamily homes creates 305 jobs and generates more than $23 million in wage and business income, as well as $8.9 million in taxes and revenue for state, local and federal governments. As one of the state’s leading homebuilders over the past 20 years, Maracay Homes is responding to market conditions by demonstrating confidence in the Arizona marketplace. It’s why we plan to open 13 new communities throughout Phoenix and Tucson in 2013. Maracay Homes
maracayhomes.com
Andy Warren has served as president of Maracay Homes, the Arizona subsidiary of the Weyerhaeuser Real Estate Company, since the spring of 2009. He currently serves on the boards of directors with the Homebuilder’s Association of Central Arizona and Greater Phoenix Leadership and as an executive committee board member with the Greater Phoenix Economic Council.
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“ They
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SEDAN SUV EXECUTIVE VAN LIMOUSINE SPRINTER MINI BUS MOTORCOACH
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13
Briefs
Quick and to the Point
Bytes Counterfeit Software Hurts A survey by Microsoft and IDC looked at the effects of malware and counterfeit software that infect computers. The study finds that time and costs are significant. Visit the site to see the results and learn more as one in three consumer PCs will be infected by malware in 2013, and consumers will waste $22 billion and 1.5 billion hours dealing with security issues from counterfeit software in 2013. play-it-safe.net
Get IT $avvy Baseline is a website that helps tech managers and business executives work together to understand and find the ROI in IT. Baselinemag. com provides valuable information on all areas of IT through articles, latest technologies and reports to help build business. With content organized for easy, intuitive search, this site is known for truly bringing an understanding of IT and IT-related needs to the C-suites. baselinemag.com
Evernote Does Everything An app, Evernote claims it can help you remember everything. In business, that is a real plus. With Evernote, all of a user’s notes, Web clips, files and images are made available on all of his or her computers and devices. Reference to all that one does, stores awnd schedules is right at one’s fingertips. evernote.com
Go online for more!
Data Center in Tucson Offers Off-site Security for Valley Businesses
“As the data center market grows in Phoenix, it’s a great opportunity to have a second site two hours away,” says Bruce Lehrman, CEO of Involta, a full-service data center company that opened a 38,000-square-foot facility in Tucson last month. Just as Phoenix has become a popular location for off-site data centers because of the state’s lack of natural disasters, Valley companies looking for the advantage of having their data backed up in a location geographically away from their business and in a colocation facility rather than incurring costs to operate and maintain their own may find Involta’s Tucson center a solution. “Our business [model] is to build in the secondary market,” Lehrman says. “Tucson fits solidly in our core focus.” In addition to being served by Tucson Electric Power — and therefore reliant on a different power supplier than what serves Phoenix — Involta built the facility and owns it. “Customers don’t have to worry about what a landlord may do,” Lehrman notes. The company’s other locations are in Idaho, Iowa, Minnesota and Ohio. “We came to Arizona because one of our customers needed a location in Tucson — and another asked us to consider Tucson,” Lehrman explains, noting that Tucson is one of the largest metropolitan service areas in the country that did not have access to a world-class secured data facility. What it does have, Lehrman has found, is a talented work force. And, because a data center offers an IT professional more variety than would a single company, “we’re able to attract high-caliber individuals.” —RaeAnne Marsh Involta involta.com
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business advice online for free. GuruOnline, a “video network” of clips on advice for every business situation from regions around the world. Members can access for fast and relevant answers to their business questions.
Visit our “Briefs” link online.
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You take care of your employees’ health... Why leave your (legal) health to chance?
Buchalter Nemer Your Arizona Health Care Attorneys
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Quick and to the Point
Healthcare Operation in Investment Call Center Growth Mode Thanks to PPACA Expands in Chandler
Theirs is a field of healthcare whose present growth “directly relates to the Patient Protection and Affordable Care Act,” says Jennifer Rayl, who, with husband Steve, owns a BrightStar Care franchise in Scottsdale. The business provides home care in a full continuum from non-medical to skilled, and the BrightStar Care franchise developed its Clinical Pathways Program specifically to address the Affordable Care Act’s outcomebased focus. “When [patients] are discharged from the hospital, we meet with discharge planners and put together a comprehensive plan to avoid readmission,” she says, explaining that readmission is one of the indicators for penalties against hospitals and other healthcare providers under the Affordable Care Act. “We make a positive impact on [hospitals’] outcome.” BrightStar Care developed its Clinical Pathways Program on a national level, after studying key indicators for readmission and strategies to prevent that occurrence, and developed the training program. The Rayls, who operated a non-medical care service in Wisconsin for 10 years, bought the Scottsdale franchise in January. The response to its service has been positive, according to Jennifer Rayl, but she says they are trying to get involved with the patients earlier in the process, when they are first admitted to the hospital. “Nobody has enough time to talk through everything when [the patient is] discharged,” she says. BrightStar Care “can work with the whole Metro area,” says Steve Rayl, noting there are five BrightStar Care offices throughout the Valley. —RaeAnne Marsh BrightStar Care brightstarcare.com
The Chandler call center of Bank of America’s Merrill Edge investment service will be expanding the number of its investment advisors by about 50 percent over the course of 2013. The office, open since 2010 to serve the “mass affluent” segment (who invest $50,000 – $250,000), currently employs 197 investment professionals. According to Mike Nannini, the division sales executive responsible for sales operations at the call centers, the availability of prospective employees for the Chandler office is very good because of the nearby colleges and universities that allow for active recruiting and because of the good-sized local financial services industry and its pool of investment professionals with a securities license and experience. It is from the latter group that Merrill Edge is looking to hire at the present time. This expansion is part of Merrill Edge’s growth strategy in what it sees as the future of the brokerage industry — allowing people to be self-directed through its online and mobile platforms and also have access to advice by working with one of its financial solutions advisors in select BofA branches or over the phone. Phone service is “the primary destination for new hires,” Nannini says. The primary reason to bolster staff at the Chandler office is to help cover the national operation’s extended hours (7:30 a.m. – 1 a.m. Eastern Time), allowing “more time to interact with people on the West Coast,” says Nannini. The Chandler call center operates from 9 a.m. to 10 p.m. when the rest of the country is on Daylight Time and till 11 p.m. everyone is back on Standard Time. —RaeAnne Marsh Merrill Edge merrilledge.com
Global Business
Forego ‘Gut Instinct’ to Build Business in China You Don’t Know What You Don’t Know. Issues not even bothered with when doing business in the States are life-and-death issues for China because contracts there are basically worthless, state-owned companies are notorious for stealing intellectual property and Chinese businesspeople will lie on just about anything. Sweat the Details. Many Western entrepreneurs prefer to take action first and ask questions later. This approach in China has led to severe losses in software code and intellectual property. Take the Trust Factor Out. China is still a developing country and its people, particularly the older generation that grew up during the Communism era, have little or no moral and ethical values. Never Do Joint Ventures. For the most part, doing JVs in China is a thing of the past and a big hassle. Going to China is a full commitment, not a halfhearted side bet. Adapt and Move Quickly. Laws and regulations involving import duties, foreign company registrations, worker labor rates and corporate tax structures are almost guaranteed to change every six months or so. Never Compete with Locals. Foreign players can never match a local competitor’s cost, speed to market, flexibility, and all-around customer and market intelligence.
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Use Multiple Partners. Each partner will keep a watchful eye on the others, lessening the possibility of cheating or pirating. Pricing will be kept in check, preventing excessive profits and maximizing unit sales. Relative performance can be tracked and measured, helping weed out any bad ones. And different sales and marketing tactics can be tested with different partners in different regions. Think Long-term but React Short-term. Seize opportunities when they arise, look beyond the obvious, don’t underestimate who can get things done, and don’t take local competitors lightly. Listen to Experts. Use consultants or hire experienced Chinese business professionals, and, most importantly, listen to what they have to say. Don’t Rely on Contracts. For the Chinese, the contract is more of a symbolic gesture, the start of good things to come, and they are also not entirely enforceable due to China’s current laws. When in Doubt, Ask Questions. Ask the same question again — and yet again — if it still wasn’t answered or if it was misinterpreted. Better to be rude than leave China with inconclusive data and wrong assumptions. —Stanley Chao, a Chinese American business consultant and author of recent release Selling To China: A Guide to Doing Business in China for Small- and Medium-Sized Companies.
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Photo courtesy of Xxxxx
Westerners don’t have as much in common with the Chinese as they do with their fellow Westerners. So don’t expect to see through them or make instinctive and accurate judgments about Chinese businesspeople or situations.
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By the numbers
Taking the Pulse of the Housing Market Prices are up while foreclosures are down and investors are losing interest Along with dropping foreclosures and waning interest from investors looking at Maricopa and Pinal counties, as of February, Phoenix-area home prices have risen sharply since hitting a low point in September 2011, according to the latest housing report from ASU’s W. P. Carey School of Business. The median single-family home price went up 4.3 percent from January to February, 36.5 percent from the previous February. At the same time, the median townhouse/ condo price increased 39.4 percent. According to the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice, the market is still dealing with a chronic shortage of homes available for sale. The number of active single-family-home listings (without an existing contract) in the greater Phoenix area fell about 5 percent just from February 1 to March 1. Also, 79 percent of the available supply is priced above $150,000, creating a real problem in the lower range. Noting “distressed” bargain supply is down more than 30 percent since February 2012 due to few foreclosures and short sales, Orr says, “First-time home buyers face tough competition from investors and other bidders for the relatively small number of properties available in their target price range.” While high-end, luxury-home resales are picking up some steam, many frustrated home buyers in the lower price range have been turning to new-home construction. New-
by Mike Hunter
Metrics & Measurements
Key Indicators Key indicators for our state economy are provided in each issue to identify those key numbers that give readers a sense of the health of our local economy. Economic Indicators (Arizona)
home sales have almost doubled their market share from 6 percent to 11 percent over the last 12 months. Still, Orr says new-home sales have a long way to go to recover their normal percentage of the market. “New homes are not being built in sufficient quantity to match the population growth in the Phoenix area. The construction industry remembers overbuilding from 2003 to 2007, contributing to the disaster in 2008 that resulted in layoffs and bankruptcies for some developers. For now, it looks like they will probably build fewer than half the homes needed to keep pace with current population trends.” Investor interest also continues to wane in the Phoenix area. The percentage of homes bought by investors from 2011 to mid-2012 was way up, but it declined in Maricopa County from 37 percent last February to 29.7 percent this February. Many investors are looking at other areas of the nation where prices haven’t recovered as much and more bargains are available. Orr labels it a “significant down trend” here. Foreclosures and foreclosure starts are both back on a downward trend, too, after a short post-holiday bump. Completed foreclosures on single-family homes and townhome/ condos fell 25 percent from January to February alone. Orr predicts foreclosurenotice rates may be down to “below longterm averages” by the end of 2014. Meantime, the lack of cheap foreclosed homes continues to help push prices up.
Number
Unemployment (Mar. 2013)
YOY % Change
7.9
-0.13
2,511.1
0.03
No. of Housing Permits (Mar. 2013)
1,832
33.33
Consumer Confidence (Q3 2012)
71.3
32.04
Average Hourly Earnings (Mar. 2013)
$22.55
1.0
Job Growth (in thousands) (Mar. 2013)
Eller Business Research
Retail Sales (Arizona) Feb. 2013
Retail Sales (in thousands)
Feb. 2012
Total Sales
6,753,385
NA
6.63%
NA
Retail
$4,044,640
$4,199,515
Food
$1,045,934
$1,041,567
Restaurants & Bars
$904,544
$911,036
Gasoline
$758,267
$728,898
Contracting
$700,947
$738,554
Change Y0Y
Eller Business Research
Real Estate Commercial: Office*
Q4 2011
Vacancy Rate
27.9%
25.7%
Net Absorption (in SF)
92,786
1,256,546
Rental Rates (Class A)
$23.45
Commercial: Indust.*
Q4 2011
Vacancy Rate Net Absorption (in SF) Rental Rates (General Industrial)
Housing Inventory Snapshot
Q4 2012
Residential:
$23.27
Q4 2012
12.3%
11.2%
2,853,602
1,776,184
$0.51†
$0.46†
Mar. 2012
Mar. 2013
Supply of active listings (not including homes already under contract): Down 3% January to February 2013 compared to being down 10% in same period 2012
Total Sales Volume
Distressed supply: Down 32% from February 2012 to February 2013
New Build Sales Volume
669
894
Foreclosure starts: Down 24% from January 2013 to February 2013, Down 61% from the previous February
New Median Sale Price
$226,690
$274,762
Investor flips: Down 38% from February 2012 to February 2013
Resale Median Sale Price
Single-family home sales, non-distressed vs. distressed: Non-distressed New homes: Up 67% Normal resales: Up 62% HUD sales: Up 8% Distressed Short sales and pre-foreclosures: Down 48% Bank-owned homes: Down 59%
Total Median Sale Price
Resale Sales Volume
8,944
8,658
$139,000
$179,900
8,275
7,764
$131,000
$170,000
* Cassidy Turley Arizona †
Industrial rents are expressed as triple net. Latest data at time of press
W. P. Carey School of Business (March 2013)
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A View from the Top
Trickle Up
Ian Wist Battles the Big-box Stores He takes the family business from “Uh-oh” to “Ah-ha”
Photo courtesy of Wist Office Products
by Kristian Seemeyer As Ian Wist describes what he calls his “uhoh” moment, the tension in his voice mounts. “You live with that moment,” he explains. He’s speaking of a crossroads during a tough period in the family business, Wist Office Products. “Those were some tough, scary times. And tough on us as a family,” Wist says. “It was during the Reagan recessions. We had bad cash flow, reps were leaving; there were not a lot of good things happening at the company.” Ian Wist is the general manager and his grandfather, Martin Wist, founded the company in 1955. Brother Robert Wist serves as president. As such, Wist Office Products is one of 12 percent of family businesses in America to survive to the third generation. And during those troublesome times, when the third generation of Wists was enmeshed with running the company, things became a lot trickier. Because along with the day-to-day challenges of running the company, 1991 saw big-box office supply chains begin popping up in seemingly every new retail center in town. “There was a lot of cachet at first with these big-box stores,” Wist says. “People liked to get out and go shopping for their home offices and buy candy at the checkout. And there was tremendous funding from Wall Street for the branding of it all. It was like, ‘What are we going to do here?’” Before the influx of the big-box chains, there were more than 12,000 independent office supply stores across the United States, according to Wist. Now there are fewer than 2,000. “And what this means for the local economy,” he says, “is profits siphoned off to headquarters in Florida, Illinois and Massachusetts. It generally means lower wages for the workers and it means less money in the local economy.” Next came perhaps Wist’s most significant “uh-oh” moment: how to compete with the ubiquitous monsters and survive amidst a barrage of advertising and uber competitive pricing. “We already knew what we did better than the big-boxes, so at this point it was all about the local angle and, most importantly, it was about perception.” The “ah-ha” moment. inbusine ssmag.com
It was about making a paradigm shift and conveying that shift. And that became the company’s focus: serving local clients, and concentrating on larger businesses and corporate accounts. “There has been a cultural shift, and for the past 10 years we’ve been committed to this,” says Wist. “People now understand that buying local is a good thing.” From farmers markets to record shops to clothing boutiques to second-hand stores and artwork, Wist explains that, in buying local, consumers are helping businesses have longer life spans and offer higher wages to employees, along with benefits. The dollars stay in the community. So by this model, Wist Office Products sought large contracts from local business and does about 90 percent of that business online. Meanwhile, the cachet of big chain stores is wearing off. “People now are tired of going out to buy their office supplies. They are shopping online, and the big-box stores are getting their teeth kicked in by Amazon,” Wist says. Indeed, in late 2012, Staples announced plans to reduce store square footage by 15 percent by 2015. “It hasn’t been easy,” says Wist. In fact, his induction into the family business is what he calls “full of stress and heartburn.” “I went from being a college kid at ASU to working the graveyard shifts in the business in downtown Phoenix … That was a shock for me and it was a tough first seven years. Being in a family business can really take a toll on you and on
your family. But I know if we stick to our core, we’ll come through.” Wist says the institution is only as good as its people. And he conveys this emphatically: “I am proud of every single one of our employees. We have the best talent in this market and Tucson.” That, according to Wist, along with the local business paradigm, is how to go from “uh-oh” to “ah-ha” and stay one step ahead of the bigbox stores. Wist Office Products wist.com
Champion for Independence ■■ As a charter member of Local First Arizona, Wist Office Products has since 2003 helped to promote, strengthen and support local business. ■■ Wist Office Products is a member of Trimega Purchasing Association, a nonprofit buying ■■ ■■ ■■
group with nearly 600 members. The association allows independent supply houses to remain competitive with the big-box chains by utilizing collective purchasing power. The Wist family has owned and operated Wist Office Products for 58 years. The average life span of a family-owned business is 24 years. Ian Wist’s grandfather, Martin Wist, entered the office supply industry in 1921 with PBSW Supply and Equipment. Wist Office Products has been a yearly Alfred P. Sloan Award winner for workplace flexibility since 2008.
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Leadership
A Path to Follow
Lattie Coor (left), chairman and CEO of the Center for the Future of Arizona, moderates the “Leading Change for a Greater Arizona” panel discussion with panelists Gonzalo de la Melena, president and CEO of the Arizona Hispanic Chamber of Commerce; Juanita Francis, president of The F2 Family Foundation; Rufus Glasper, chancellor of Maricopa Community Colleges; Courtney Klein Johnson, co-founder of the SEED SPOT; Tony Penn, president and CEO of United Way of Tucson and Southern Arizona; and Doug Pruitt, board chair of Greater Phoenix Leadership
Taking the Lead
Forum launches effort to have state’s best and brightest achieve common goals Leadership. Vision. As president and CEO of National Bank of Arizona, Keith Maio knows strength in both areas is a desired combination for success in any business. But when it comes to making a state successful, those traits are critical. It’s about “developing that common vision almost like you would for a business and engaging leaders to move toward that vision.” He’s using his experience in a new initiative to identify and support Arizona’s leaders and, more importantly, help get them on the same page when it comes to guiding the state’s future. This effort was launched recently when Maio served as a key organizer of the Arizona Leadership Forum, a gathering of more than 700 top executives from around the state. They represented Arizona’s corporate, philanthropic, nonprofit, tribal and government sectors. The Feb. 8 event “allowed us to start a higher level of conversation about how we can work together to improve our environment,” Maio says. The keynote speaker was author Jim Collins, whose books such as Good to Great reflect his research into successful companies and organizations. “He was actually very intrigued that we were convening this for-profit/not-for-profit group across the state,” says Maio, “and to his knowledge this is the first time he has seen that from any state
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— in other words, putting that kind of attention and action toward a collective movement.” The day ended with the panel “Leading Change for a Greater Arizona,” led by Lattie Coor, Ph.D., president emeritus of Arizona State University, that also featured J. Doug Pruitt, board chair of Greater Phoenix Leadership and retired chairman of The Sundt Companies, and community volunteer Juanita Francis. For Maio, one of the key takeaways from the forum was a noteworthy finding in a pre-event survey of registrants: Arizona doesn’t seem to have a lack of leaders, just a lack of leaders working together. “We can’t fix this with our Leadership Forum but what we can do is start the conversations, start trying to move the ball,” he says. “It’s that leadership group working together toward a common vision.” His bank’s work with Arizona leaders actually began before this year. In September 2011, National Bank of Arizona was joined by FreeportMcMoRan Copper & Gold Foundation and The Phoenix Philanthropy Group to sponsor the Arizona Nonprofit Leadership Forum, an invitation-only event for more than 250 key decision makers from nonprofit organizations statewide. Maio says the decision was made to eliminate the divide between nonprofit and for-profit businesses by expanding the forum this year to include top executives from both inbusine ssmag.com
Photo courtesy of Ben Arnold Photography
by Don Rodriguez
sectors. “We just wanted to take a leadership position in convening those groups together, and not define that by tax status but just by leadership,” he says of the focus shift.
What Comes Next? Insights collected at the forum will be leveraged throughout the year to produce a white paper based on pre- and post-survey results, a Web portal with forum content will be created, and an economic vitality study will be conducted, says Maio. In addition, town halls will be staged to continue the dialogue about promoting learning and communication across a variety of sectors and geographies. “By working together as unified leaders, non- and for-profit companies can make the biggest impact on the future of our state,” he says Pruitt would like to see what he calls the forum’s “missing link” — political leaders — become part of the action. “They need to be at the table and they need to become part of the solution,” he says, and the leaders must hold accountable those who let ideology get in the way of finding and creating real, positive solutions as well as find and support others who will. We need to “keep the pressure on to address the real issues in front of us and work to get the collaborative spirit that was in that room [at the forum] alive.” To keep the momentum, Francis says the state’s best leaders should be identified and supported. “Coalesce around one or two specific initiatives and support our best leaders to make those things happen successfully,” she says. Even those who didn’t attend the forum can play a part. Laurel Kimball, founding principal of The Phoenix Philanthropy Group, urges individuals to select an actionable item they are passionate about, such as retaining young talent in Arizona or protecting the state’s natural environment, then share metrics about the results of their involvement on the forum’s and Arizona Nonprofit Leadership Initiative’s shared website. She also encourages residents to become well-informed on facts about our state at such websites as the Morrison Institute for Public Policy’s Arizona Indicators. “We hope that individuals and organizations will seek to be part of the dialogue about Arizona’s pressing issues as we reach out to leaders from the nonprofit, business and governmental sectors in all parts of Arizona, of all ages and backgrounds,” says Kimball.
Pruitt is encouraged about what lies ahead, saying the time is right for Arizona to begin to address the issues that are in front of us and become a very different state in the next few years. Most people he knows are willing to work to make Arizona better if they know goals have meaning and can be fruitful. “I think first, you have to ask, and secondly, you have to show that what you are doing is about adding value, making Arizona better for future generations and that what you are doing is sustainable.” Arizona Indicators arizonaindicators.org Arizona Leadership Forum phoenixphilanthropy.com/forum Greater Phoenix Leadership gplinc.org National Bank of Arizona nbarizona.com The Phoenix Philanthropy Group phoenixphilanthropy.com
The Road from Here to There Before the 2013 Arizona Leadership Forum, all registrants were invited to participate in an online survey to gauge the state’s strengths, weaknesses and the choices it would need to make in the future. The 271 survey participants’ responses revealed: Arizona is at a crossroads, suggesting we are ready for a call to action to move into a new direction and that leadership will play a critical role. Participants recognize and value a broad base of nonprofit, corporate and government leaders and organizations. We don’t seem to have a lack of leaders, just a lack of leaders working together. Participants agreed there is no clear vision for the state and all of the right leaders are not in place. However, they felt the ability to create a compelling future will require a broad base of leaders, including those from nonprofits, working together.
Photo courtesy of Ben Arnold Photography
■■ ■■ ■■
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America’s business coach and author Jim Collins
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Luxury Home Price: $5,775,000 Walt Danley Walt Danley Realty
Phoenix Rising Is Our Housing Market Heating Up? How does today’s housing market look against the boom of 10 years ago and the bust of five years back? by Amy R. Handler
Metro Phoenix appears to be slowly and steadily emerging from the ashes of the real estate collapse of five years ago, but is the city headed toward a re-bubbling of the market and repetition of all the sordid problems of that historical time? While some critics believe history is destined to repeat itself, key players in the metropolitan Phoenix real estate industry believe such gloom-and-doom soothsaying is bogus and completely without merit.
‘Growth’ or ‘Bubble’? Michael Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business at Arizona State University, believes the Metro Phoenix real estate market is healing and stabilizing. “The idea that there is another bubble in the real estate market is absurd. We are just seeing a normal reaction to lack of supply. Prices are still below the longterm trend line and none of the conditions that define a bubble are currently in existence.” While noting that bubbles rarely occur in the same market where they just burst, he observes
that “it is fallible human nature to be oversensitized to them.” But his view is the Phoenix market has not plateaued and will continue to rise until more sellers are tempted to sell. What we’re seeing is a response to years of constraint, not the beginning of a bubble, according to Mark Stapp, Fred E. Taylor Professor in Real Estate and director of the Master of Real Estate Development program at W. P. Carey. “I think lending and the slow addition of supply will keep this moderated.” Stapp believes that lenders will bear the present state of the economy and people’s ability to pay. Pricing, he says, is driven by tight supply, and once supply is adjusted accordingly, percentage increases should slow down. Economist Elliott D. Pollack, CEO of Elliott D. Pollack and Company and guest editor of this issue of In Business Magazine, also dismisses the idea of another real estate bubble brewing in Phoenix. If anything, Pollack sees a modest housing recovery. “In 2005, if you could breathe, you could probably qualify for a loan. Today, it’s very difficult to qualify,” he says. He goes on to explain that what was investment in 2005 is now a place to actually
reside, and he notes that even those who are investors are renting homes and therefore not adding to the overextended supply pool. Attorney John T. Lotardo, who covers the industry nationally as “Ask the Titleman” in addition to being senior vice president and general counsel for Stewart Title & Trust of Phoenix, Inc. and state underwriting and claims counsel for Stewart Title Guaranty Company, doesn’t speak of a housing bubble at all. He calls it a housing bounce — and a market correction — that’s definitely moving in the right direction. There seems to be an increase in employment that enables people to re-enter the housing market, observes Greg Bielli, western regional president of master plan developers Newland Communities and board chairman of Urban Land Institute Arizona. He sees normal growth process returning. “We just don’t have the unbridled development going on because of the last four years. We went from 62,000 permits at the real estate peak to 7,000 permits, for singlefamily homes,” Bielli says. Acknowledging that some believe the cost of inventory is too high in certain submarkets,
Short Sale Price: $1,490,000 Greg Markov Phoenix Heritage Real Estate Group / HomeSmart
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Bielli says scarcity in inventory is nothing to panic about. “It’s just a little bit of a scarcity, because there really isn’t development behind in the pipeline that says there’s more inventory coming online.”
Foreclosures’ Mark on the Market Helping the comeback is the decline in foreclosures. So what’s behind that decline? Bielli believes the banks worked through all the foreclosures and returned homes to the market. With additional capital in Phoenix, investors purchased the homes and created business models, which included rentals. “Property management companies that are built near the foreclosed homes put renters in those homes. In Phoenix there’s been a definite correction of earlier problems,” Bielli explains. And capital groups setting up shop in Phoenix is not a bad thing, Bielli says. “These groups bought a lot of inventory that had no buyers at the time, worked through returning capital to the banks, and I think it was a progression that actually helped to stabilize the Phoenix market.” It’s just a matter of time before these investor groups are led back into the market, but, in the meantime, they have a business model of rental homes and multifamily projects that provide housing stock for the community. “We’re gradually coming out, and a lot of us in the industry feel that’s the appropriate way,” Bielli says. There will always be foreclosures, Stapp observes, but lenders have learned a lot from mistakes of the past. “Simply moving to foreclosure because they can isn’t the best solution, especially in a falling market.” He notes that lenders probably lost more through the foreclosure process than if they had allowed owners to remain in their homes. “Part of the issue is that the mortgages were bundled and sold into very big pools, and investors bought interest in these pools,” Stapp says. When loans fail, resolution is managed by servicers in other states, which creates a marked disconnection from the homeowner and his or her particular situation. Other options that lenders can avail themselves of, which are less stressful to the market than mass foreclosures, are short sales, legitimate homeowner workouts and loan modifications. Stapp explains that foreclosures often damage neighborhoods whereas with the other choices, homes are not abandoned. inbusine ssmag.com
Foreclosure Price: $291,900 James Kearns HomeSmart
Scarcity of New Homes
Opportunity for Fraud
According to Michael Orr, real estate hasn’t really changed much in Arizona. “Our biggest problem is not having enough homes for the population that is growing fast again,” he says. Prices have escalated more than 5 percent since January and, unless there is additional supply, prices will continue to elevate over the next few months. But bubbles, he says, form when people have no real use for a traded asset other than profit — which is not the case here. “People actually want to use Phoenix houses for accommodation right now, and we are currently unable to build enough new homes for the incoming population.” Orr contends that part of the reason building is slow is a shortage of construction contractors, most of which were undocumented immigrants in 2005. As a viable alternative, he suggests a guest worker program for the building trades.
Historically, throughout the United States, real estate markets boomed, bubbled and burned due to a variety of factors. Phoenix was no exception to the problems that arose from endless foreclosures, short sales and the fraudulent conveyances that left so many people destitute and homeless. To the suggestion that this situation is continuing, however, Michael Orr is impatiently dismissive. “Foreclosures and short sales are so last year here in Phoenix. They have dropped to low levels that do not have much significant impact on the market.” Characterizing trustees as “generally a wellbehaved bunch,” Orr argues that unethical behavior in 2009-2010 was relegated to bidders at auctions. In the preceding halfdecade, most of the unethical behavior was committed by mortgage brokers pushing fraudulent loans, and sellers using straws M ay 2013
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Perfect Seasonal Home in McCormick Ranch Price: $425,000 Gayle Henderson RE/MAX Excalibur Realty “to obtain loans for more than their homes [were] worth,” he says. Stapp notes that, because it’s fairly easy to break into the real estate business and much money can be made, it’s an arena for possible fraud. “The way the process works, collusion among participants is easy, and the underwriting process was not effective in catching this.” Could it happen again? Possibly, says Lotardo, “but not like it was, because there’s now such a protocol of regulations in place.”
Foreign Investment Some believe that foreign investors have hurt the Greater Phoenix real estate market by driving up prices of homes. Stapp disagrees. “First, this was not a cashconstrained recession. There was — and still is — a lot of cash looking for good returns,” he says. All types of investors, be they local, national or foreign, have contributed to the recovery of the Phoenix market, he explains. He stresses that the Phoenix metropolitan area is a long-term growth market, and this factor, in addition to strong rental demand, creates good investments. “Foreign investment in our real estate market is certainly not new. A number of foreign investors saw opportunities, and capitalized on them. That’s one of the reasons for the short supply right now,” Lotardo says. “Although some people are looking at this as a problem, I see this as an opportunity for
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the market to move in the correct direction.” The big issue is finding a happy compromise between prospective buyers and foreign investors in this self-correcting trend. According to Lotardo, investors are just one segment of the market between buyers and sellers, and Phoenix is making adjustments at this time. “As prices increase, that allows sellers to consider selling their homes that were previously underwater — allowing them to be buyers as well.”
RESPA Protections 2011 saw the passage of the federal Real Estate Settlement Procedures Act, intended to protect consumers from the unnecessarily high settlement charges stemming from certain abusive lending practices. “The idea was full disclosure and prohibition against kickbacks,” explains Stapp. While he doesn’t see it altogether eliminating dishonesty, because “moral hazard and principal-agent problems” are frequent in the real estate business, he does expect it to help reduce the incidence. The down side is, because of increased verification and paperwork requirements, RESPA “slows the process, requires considerable work, and leaves little margin for discretion, making it harder to qualify and actually close,” he says. This further irritates borrowers, lenders, sellers and pretty much everyone involved, who are hoping for financial gain. “Failed or delayed closing causes frustration for all,
and frustrations cause complaints. There is no perfect fix,” he says. In addition, Stapp says the system tends to favor cash buyers and investors. An additional proposal coming this year would reduce the involvement of the title and closing agents. Lotardo believes this would be disadvantageous to the consumer and lenders, noting, “Title escrow agents play a big role in the process, and removing that part of the process creates loss of efficiency, talent, [and the overall positives associated with the consumer experience].” According to Lotardo, reactions over the past few years have created “over-corrections” in foreclosure and tax laws, and people are now hoping to moderate some of those modifications so that they are actually efficient and progressive.
Forecast for the Future Stapp believes the Phoenix real estate market is on a steady path to recovery. His forecast is cautiously optimistic, and he admits that permanent health is primarily based upon employment. “The outlook for the next several months is more of the same, but likely to include a moderation in the rate of price increases. Gains will be based on specific locations, but the Phoenix area is definitely the most desirable sub-market,” he says. But job growth is critical, and the price of homes must be tied to what is affordable; prices cannot continue to escalate without higher-wage inbusine ssmag.com
jobs being added to the market. New home construction will add necessary new inventory, and will create a healthier supply and demand system. “But we can’t yet build enough homes to create an absolute balance. We need new homes built to help create a fluid market again, but the cost of building a finished lot and a house has to be aligned with what buyers can afford,” he reiterates. As to whether the appraisal process will work under the present employment and other conditions, Stapp admits matters are complex. “Another factor is healing personal balance sheets and [that] relates to lenders’ comfort in lending. This is still underway and will take a few years to fully resolve,” he explains. “The scarcity of supply is also a controller on what is now in the market place,” says Bielli. “Now, you have a situation of contraction. There hasn’t been a lot of new development in the last five years. There’s also a market stabilization put in place with regard to foreclosures — homes on the resale market — and you’re starting to see price increases. … People are starting to see a gain, and are coming back into the market,” he says. Phoenix is two years shy of a full recovery, says Stapp — presuming the economy at large remains stable, as do federal regulations, and there are no major global catastrophes. “What is done with mortgage lending, mortgage interest deduction and the secondary mortgage market is still somewhat unclear, and the resolution over the next two years will have a big impact. We still have a broken system, and it’s not being fixed rapidly, or at all in some cases,” he says. Still, Stapp believes Phoenix is headed in the right direction, and that, in itself, is hopeful. Pollack is also cautiously optimistic about the future, and agrees that job growth and higher employment will help, as will credit availability. “The outlook for single-family housing, in relative terms, is quite bright. Commercial markets will continue to slowly improve. Both have a long, long way to go before they are near ‘B’-word territory. No bubble here, just a recovery,” Pollack says.
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Elliott D. Pollack and Company edpco.com Newland Communities , LLC newlandcommunities.com Stewart Title and Trust of Phoenix stewartaz.com Urban Land Institute Arizona arizona.uli.org W. P. Carey School of Business wpcarey.asu.edu
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SE C TOR
Industry at Its Best
The Business of Banking Is Banking on Small Business
Even as the number of banks declines, pursuit of small-business clients intensifies by Eric Jay Toll “In just four years, we’ve seen 15 banks exit the market,” says Paul Hickman, president and CEO of the Arizona Bankers Association. “Between the economy and Dodd-Frank [post-recession federal legislation regulating banks], many banks have reached a tipping point.” The business of banking is changing significantly. New federal laws and fewer banks — particularly mid-size banks — shift the Metro Phoenix small business bankscape. Valley bankers are cautiously optimistic about Arizona’s economic forecast, but glowing adjectives and over-optimistic predictions are not forthcoming. There’s money to lend “to credit-worthy businesses,” adds Hickman. “All banks are chasing good borrowers.”
Small Businesses Are Bank Targets The magic words for Phoenix-area banks: small business. “Net business households are up,” explains Dean Rennell, division manager for Wells Fargo business banking. “We want our bank to be accessible in business hubs and close to business owners’ homes.” Opportunities for individuals to turn job loss into new business grew out of the recession. The shift from employee to self-employed business owner creates a new caste of businesses for surviving banks to court. “We’ve learned it’s important for a bank to have a relationship that helps our business clients as their business growth helps us,” says Bo Hughes, executive vice president, chief operating and financial officer for Pinnacle Bank. “We see ourselves as a small-business partner. They’re the ones creating jobs and we’re a small business ourself.”
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A common perception is that community banks are closest to Main Street businesses and more responsive to ever-changing needs as a business grows. Big banks are fully aware of that slant. “We function just like a community bank, but with greater overall resources,” says Dean Rennell. “This is a very competitive market, and we are out there working close to clients. Our business bankers are on the streets. Wells Fargo decisions are made locally. That’s an important distinction when it comes to small business and more crucial than five years ago.”
Dodd-Frank Changes Decision-Making Local decision-making may be the biggest change since 2008. No matter what decision the bank makes, federal regulators are peering closely over the shoulders. “Dodd-Frank is only a 145-page law,” explains Hickman. “However, Congress delegated a lot of discretion to the various bank regulatory agencies. Last I heard, there are more than five thousand pages of regulations, and they are only half finished. It’s expensive for a bank to implement.” Hughes also says it’s expensive. “The regulations add a lot of cost for banks in both technology and compliance. The law is not having its intended effect; the big banks are bigger, not smaller.” “One factor of Dodd-Frank,” Rennell believes, “is that it is not as significant in how it affects small-business banking.” This is a reason banks changed models to increase competition and deliver financial services needed by those new small businesses. inbusine ssmag.com
Books Banking Expands Business Services The law deals a great advantage to community banks, according to Hughes. Being nimble and responsive, she explains, “means the decision-making is closer to the way banking relationships used to be — very personal. We are looking at our clients’ business operations, their strategic plans, and getting to know who runs the business. It works really well for both bank and client.” Banks are shifting the way business is conducted in the Phoenix area. “Consumers are generally focused on electronic banking,” Rennell says. “We see more businesspeople in our retail stores than consumer customers. This means we need to bring our business clients a broader range of services. Because of Wells Fargo’s overall size, we are able to customize banking to meet a small business’s needs.” Serving small business is a consistent target, say industry professionals. Uniformly, the banks see small business as the way to secure their own profitability. The range of financial services from the institutions is broadening for business clients. “We try to offer a compelling value with bundled services,” says Rennell. In the same vein, Hughes says, “Some businesses like to diversify their finances. We strive to be their single source of related services.” It’s challenging for banks exiting the gloom of the past four years. According to Hickman, “Our members lend on a thin margin. They all need to get money in circulation to build their banks. It results in everyone chasing the ‘good borrowers.’” “Banks are reinventing the way they do business,” Hughes says. “We’re going to see some more mergers and acquisitions this year. At least a couple more banks will close. The good news is that there are a handful of survivors who are stronger today than during the lending races five years ago.”
More Mergers and Bank Closures This Year Hickman didn’t want to comment on where mergers and acquisitions might occur in Phoenix, but he believes that a few more banks are going to disappear in the near future. “Banks are cautious today,” he says, “but they have to lend to be profitable.” “There are some banks out there that do not have the capital to lend their way back to strength,” suggests Hughes. “Some community banks are facing ‘board fatigue’; they just want to get out of the way of the new regulations.” “There is a lot more face-to-face banking now,” Rennell says. “It’s not a one-size-fits-all program anymore.” Addressing the same issue, Hughes says, “This is the new norm. Bankers are a lot closer to business customers. It’s not just a numbers game. We want to know the person we’re doing business with.” For small business in Phoenix, this personal approach means owners feel wanted by banks. Despite cautious projections, there seems to be some hidden optimism from banks about their future with small business. Arizona Bankers Association azbankers.org Pinnacle Bank pinnaclebankaz.com Wells Fargo NA wellsfargo.com
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money
$10,000 Gold: Why Gold’s Inevitable Rise Is the Investor’s Safe Haven $10,000 Gold is far more than a financial book. It is a tool of survival and prosperity. It leads the reader to a deeper understanding by showing the global economic and demographic trends that support a rational prediction for gold’s future value. $10,000 Gold advocates ownership of physical, uncompromised bullion and explains the benefits of a safe haven that has preserved wealth for more than 5,000 years. Nick Barisheff $39.95 John Wiley & Sons, Inc. On shelves and online
The Alternative Answer: The Nontraditional Investments That Drive the World’s Best-Performing Portfolios Bob Rice, Bloomberg TV’s alternative investment editor, leads an entertaining and easyto-understand tour of this world and suggests specific alternative investments for all four key “jobs” of a portfolio: safely generating more current income, decreasing risks of economic shocks, significantly increasing long-term profits and protecting purchasing power over time. A rainbow of investment options such as timber, startups, MLPs, hedged strategies, managed futures, infrastructure, catastrophe bonds, peer-to-peer lending, farmland and dozens of other non-traditional strategies can provide dramatically better gains, with less total risk, than the standard choices. Bob Rice $27.99 HarperCollins Publishers May 2013
Happy Money: The Science of Smarter Spending Anyone who thinks money can’t buy happiness is not spending it right. Two rising stars in behavioral science explain how money can buy happiness. Happy Money offers a tour of new research on the science of spending. Most people recognize that they need professional advice on how to earn, save and invest their money. When it comes to spending that money, most people just follow their intuition. But scientific research shows that those intuitions are often wrong. Happy Money explains why one can get more happiness for one’s money by following five principles, from choosing experiences over stuff to spending money on others. And the five principles can be used not only by individuals but by companies seeking to create happier employees and provide “happier products” to their customers. Elizabeth Dunn and Michael Norton $25.00 Simon & Schuster May 2013
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NonProfit
by RaeAnne Marsh
Actions to build Community
Arizona Community Foundation: Helping Families Create a Legacy
Arizona Community Foundation President and CEO Steven Seleznow credits “the generosity of the people of this community and their thoughtfulness about what they want to give.” Empowering its donors’ philanthropic legacies, the foundation has more than $550 million in charitable assets under its management and expects to give $42 million in grants this year. Many grants are donor-directed — as this 35-year-old foundation has a preponderance of first-generation donors — and the foundation plays an important role in providing due diligence on the stability of the intended recipient organizations. “It’s hard for the average donor to know that,” Seleznow notes. Discretionary grants are approved by the foundation’s board of directors, who come from every area of the community and have “built their strategy on the leadership of our donors over our 35 years in business,” according to Seleznow. Because so many people move here as retirees or live here only seasonally, Seleznow says, “What we try to do through our programs is help them see that there are needs here in their part-time or adopted home in the community that they can help as well.” With staff and board members who live and work here and know the community, it is able to show donors theirs can be a really personal experience. —RaeAnne Marsh Arizona Community Foundation azfoundation.org
Snapshot
■■ Among the 30 largest
■■ ■■
in the U.S., the Arizona Community Foundation is comprised of 13 affiliate community foundations, providing back-office, financial, investment and marketing support that would be expensive on a small scale, enabling Arizona’s unique communities to engage in community philanthropy. “We provide support systems [people] need to direct funds to the community they care about,” says Steve Seleznow, noting that while “most of what we do stays in Arizona,” they do send checks all over the world. In addition to grant-making, the foundation provides programs and services to the community that include workshops and helping create joint, collaborative “giving circles” to encourage philanthropy in specific circles — such as the Black Philanthropy Initiative and the Latina Giving Circle.
Piper Trust: Community Benefit Continues Legacy of Founder The impact of the Virginia G. Piper Charitable Trust on Maricopa County nonprofits goes beyond the $21–$22 million it grants every year. “We have tried not only to recognize the importance of the financial awards, but be partners [to nonprofits in the community],” says Judy Mohraz, president and CEO of the Trust. The Trust was established in 1995, when Virginia Galvin Piper, widow of Motorola founder Paul Galvin, died and left $600 million
to fund its foundation. “The challenge is how to focus [the grants] strategically,” Mohraz says. “How can we make a bigger difference, rather than spreading it across many fields?” The answer is to concentrate on the six areas Virginia G. Piper identified and gave to during her lifetime. “Grants are important, but we try to support and strengthen the community in other ways as well,” Mohraz says. These efforts include bringing in national experts in areas that
nonprofits care about and need to improve, such as strengthening their own boards; making investments in leadership, awarding sabbaticals for up to five nonprofits leaders each year; introducing best practices; and introducing new models such as helping them learn new approaches to fundraising. —RaeAnne Marsh Virginia G. Piper Charitable Trust pipertrust.org
■■ The six areas in which the foundation awards ■■ All of the Virginia G. Piper Charitable Trust grants are arts & culture, children, education, grants are awarded within Maricopa County. healthcare & medical research, older adults ■■ The Virginia G. Piper Charitable Trust Board of and religious organizations. Trustees is comprised of individuals who have T o achieve its goal of making its grant-making a deep sense of stewardship; understand our ■■ as clear as possible, the foundation presents a once-a-month orientation — “Piper 101” — to explain how it makes decisions, who is eligible, and what is involved in making a strong proposal.
community; have been involved in nonprofits, serving on their boards, and so understand the pressures and work of nonprofits; and bring diverse expertise, such as banking, law, real estate development and healthcare.
In business to do good for the community, nonprofits enrich the lives of those who contribute as well as those who receive. In Business Magazine showcases two nonprofits in each issue, focusing on their business organization and spotlighting an upcoming fundraising event.
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Photos courtesy of Arizona Community Foundation (top), Virginia G. Piper Charitable Trust (bottom)
Snapshot
www.inbusinessmag.com
May 2013
O n t h e Ag e n D a
A listing of Greater Phoenix business organizations and their events. Visit www.inbusinessmag.com for an expanded monthly calendar of educational, networking and special business events.
Arizona Small Business Association
Tempe Chamber of Commerce
Arizona Small Business Conference and Enterprise Business Awards Luncheon
Women in Business Conference
Thurs., May 16 — 7:30a – 6:00p Celebrating its 40th anniversary, the Arizona Small Business Association presents its first annual Arizona Small Business Conference at The Phoenician. The all-day event kicks off with the State of Small Business Breakfast, presented by Todd McCracken, president of the National Small Business Association, and Rick Murray, CEO of the Arizona Small Business Association. McCracken and Murray will discuss the state of the small business community statewide and how it compares to small business nationally, and what steps ASBA is taking to lead the charge on behalf of small-business owners. The day also includes the 20th Annual Enterprise Business Awards Luncheon, preceded by a VIP reception. Conference attendees can gain timely information on a variety of relevant topics at the day’s breakout sessions (two in the morning and three in the afternoon). Another highlight of the day will be the announcement of the winner of the amazing Small Business Video Contest, and videos of the top three to five finalists will be shown. A business-to-business expo will be open all day. Registration is available for all or part of the program. For ASBA members, breakfast is $35, lunch is $55, admittance to all breakout sessions is $40, and a full-day pass is $149 ($195 at the door). For non-members, breakfast is $55, lunch is $75, breakout sessions is $60, and a fullday pass is $169 ($215 at the door). Admittance to the expo is free. —RaeAnne Marsh
Photo courtesy of Jay Mark
Arizona Small Business Association asba.com
Wed., May 22 — 8:00a – 1:30p Tempe Chamber of Commerce’s Women in Business Conference will bring together hundreds of business leaders for a trade show and luncheon at the Fiesta Resort Conference Center in Tempe. Built around the theme “Reach, Achieve, Celebrate,” the annual event will culminate in the presentation of the prestigious Business Woman of the Year Award. Celebrating success, presentations during the halfday event will focus on the three elements cited in the theme. “Reach” salutes the chamber’s Last year’s Business Woman of the Year Award recipient Robin Women in Business mentoring Trick, owner of House of Tricks Restaurant in Tempe program, which will kick off the day’s program with a graduation ceremony and set the tone for the presentations to follow. Linda Kalaf, who founded the program two years ago, will moderate, and some of the mentoring program’s participants will share their stories. Morning keynote speaker Carrie Severson will carry the “Achieve” element. Severson is president and CEO of Severson Sisters, a nonprofit organization for girls she founded to help address bullying and other self-esteem issues and help the girls develop and strengthen healthy relationships with their peers. Jan McInnis, keynote speaker for the luncheon, will deliver the “Celebrate” piece. McInnis, who has been a professional speaker, comedian and comedy writer for 17 years, has been featured in The Wall Street Journal and the Washington Post and has addressed such organizations as the Federal Reserve Bank and the Mayo Clinic. —RaeAnne Marsh Tempe Chamber of Commerce tempechamber.org
Notable Dates This Month Sun., May 12 Mother’s Day Sat., May 18
Armed Forces Day
Mon., May 27
Memorial Day
Agenda events are submitted by the organizations and are subject to change. Please check with the organization to ensure accuracy. See more events online at www.inbusinessmag.com.
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O n t h e Ag e n d a ARIZONA CHAMBER OF COMMERCE AND INDUSTRY AMC 2013 Manufacturer of the Year Summit & Awards Luncheon Fri., May 31 9:00a – noon (summit); noon – 1:30p (luncheon)
Members: $45 (summit), $65 (luncheon), $95 (all-inclusive); non-members: $60 (summit), $80 (luncheon), $120 (all-inclusive) Hyatt Regency Downtown Phoenix 122 N. 2nd St., Phoenix Taylor McArthur, (602) 248-9172 x123
ARIZONA INTERNATIONAL GROWTH GROUP Cross Cultural Magic: Overcoming International Blunders, Boo-Boos and Crises Mon., May 6 7:30a – 9:00a
Expert panel on growing across cultures, featuring Gary Covert of CQ Coach, Melissa Lamson of Lamson Consulting, Elizabeth MacDonald of Thunderbird, and a Phoenix Metro executive who currently deals with cross cultural issues. $20 SkySong 1475 N. Scottsdale Rd., Scottsdale growthnation.com/azigg
ARIZONA SMALL BUSINESS ASSOCIATION Creating Your Effective Networking Commercial Tues., May 14 1:45p – 3:00p
Craft a unique and attention-grabbing commercial for networking events and when meeting prospective customers for the first time at this hands-on workshop. Put your commercial to the test right away by staying for the Fast & Curious Speed Networking™ immediately following the workshop. Members: free; non-members: $10 ASBA’s Business Education Center 4600 E. Washington St., Phoenix asba.com/event
Arizona Small Business Conference Thurs., May 16 7:00a – 6:00p
Join small-business owners and professionals from across Arizona during Small Business Month for a power-packed day of timely discussions, relevant education and meaningful interactions. Multiple ticket options available The Phoenician 6000 E. Camelback Rd., Scottsdale azsmallbizcon.com (See article on page 31.)
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ARIZONA TECHNOLOGY COUNCIL Lunch and Learn: Grow Your Business with Email and Social Media Tues., May 14 11:30a – 1:00p
Start to build a growth plan by eliciting the responses you want from your customers and supporters. Presented by Leap Innovation. Lunch is provided. Members: free; non-members: $15. Eller College of Management 16425 N. Pima Road, Scottsdale aztechcouncil.org
26th Annual Awards Dinner Thurs., May 30 Begins at 5:30p
We recognize outstanding businesses of all sizes, as well as educators and administrators who have demonstrated leadership and exemplified commitment. Members: $50; guests: $60 Hilton Phoenix Chandler 2929 W. Frye Rd., Chandler chandlerchamber.com
GREATER PHOENIX CHAMBER OF COMMERCE
Increasing Lead Generation with Inbound Marketing
Impact Awards
Thur., May 16 3:00p – 5:00p
Tues., May 14 11:30a – 1:30p
In partnership with the American Marketing Association – Phoenix Chapter, learn how website traffic translates into sales leads. Presented by eSocial Strategies. AZTC/AMA members: $20 (AZTC members use registration code AZTC051613); non-members: $35 Fleming’s Prime Steakhouse and Wine Bar 6333 N. Scottsdale Rd., Scottsdale amaphoenix.org
This annual event recognizes enterprising business owners in the large and small categories who have made an impact through community champion, economic driver, entrepreneurial excellence and response to adversity. Members: $65; non-members: $75 Arizona Biltmore Resort & Spa 2400 E. Missouri Ave. (602) 495-2182
CENTRAL PHOENIX WOMEN
MESA CHAMBER OF COMMERCE
Monthly Meeting & 7th Anniversary Tea
Mesa Morning Live – Dr. Michael Crow, president, Arizona State University
Wed., May 22 4:00p – 6:00p
Speaker: Jeff Stein, AIA, president of Cosanti Foundation. $75 The Ritz-Carlton, Phoenix 2401 E. Camelback Rd., Phoenix centralphoenixwomen.org
Fri., May 10 6:45a – 8:30a
CHANDLER CHAMBER OF COMMERCE
Grow Your Business – Facing Reality and Taking Control of Your Business
Small Business Development Center Start Up Lab
Strategic Selling: Learn a simple process to dramatically improve the selling effectiveness of you and your company. Members: $15; non-members: $25; prepay and register online Waxie Sanitary Supply 4136 E. McDowell Rd., Mesa mesachamber.org
Tuesdays, May 7, 14 & 21 2:00p – 4:00p
Hands-on sessions use real-life examples of business problems and show how using technology can help solve those problems. Free; register online, as space is limited Chandler Chamber of Commerce, Conference Room 25 S. Arizona Pl., Chandler maricopa-sbdc.com/AZSBDC/ workshops_and_seminars.html
Small Business Development Center Academy Business Goals Tues., May 7 4:00p – 6:00p
This event will recognize our most recent Academy graduates. We will be reviewing the key learning points from the SBDC Academy courses and discussing attendees’ implementation plans. Free Chandler Chamber of Commerce, Conference Room 25 S. Arizona Pl., Chandler info@chandlerchamber.com
$20 pre-registered, $30 pay at the door Crescent Crown Distributing 1640 W. Broadway Rd., Mesa mesachamber.org
Tues., May 14 11:30a – 1:00p
NATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS NAWBO Luncheon Wed., May 8 11:00a – 1:00p
“Domestic Abuse — Exposing the Truth one Snapshot at a Time” presented by Stephanie Angelo. Members: $38; non-members: $48; after May 3, add $15 Phoenix Country Club 2901 N. 7th St., Phoenix nawbophx.org
NAWBO University Wed., May 8 9:30a – 11:00a
Jodi Low presents “What’s Your Communication Language?” — on identifying your communication language and the style of others, and how to build rapport and trust in your organization. Members: free; non-members: $30 Phoenix Country Club 2901 N. 7th St., Phoenix nawbophx.org
NORTH PHOENIX CHAMBER OF COMMERCE Kona Grill Fundraiser for Phoenix Squaw Peak Rotary Club Tues., May 7 11:00a – 11:00p
Simply download the flyer (http://bit.ly/ YGQLka), present it to your server on the day of the fundraiser and 25% of your tab will go to support Future Stars Global Foundation! And please share the download link with your friends and colleagues! Kona Grill at CityNorth 5310 E. High St., Phoenix bit.ly/Z4OYXc
Business Resource and Networking Luncheon Tues., May 14 11:30a – 1:00p
Dr. Sandra Miller Holst of Paradise Valley Community College will speak on “Readying the Workforce.” Sponsored by C & R Tire and Automotive, and Paradise Valley Community College. Online prepay. Members: $15; guests: $20; after May 10, all: $25. At the door: cash only. Stone Creek Golf Club 4435 E. Paradise Village Pkwy. S., Phoenix R.S.V.P. online at bit.ly/XTk1JH
PEORIA CHAMBER OF COMMERCE Small Business Seminar Thurs., May 16 9:00a – 1:00a
Topic: Small Business Rebates. A representative from SRP will share information about any rebates that are available to small businesses. Free City of Peoria, Point of View Room 9875 N. 85th Ave., Peoria Debbie Pearson, (623) 979-3601
SCOTTSDALE AREA CHAMBER OF COMMERCE P.M. Connect: Los Tres Amigos Thurs., May 9 5:00p – 7:00p
Join Scottsdale Area Chamber, Greater Phoenix Chamber and Tempe Chamber for one of the biggest and best joint chamber mixers in the Valley! Free Salt River Fields at Talking Stick 7555 N. Pima Rd., Scottsdale scottsdalechamber.com
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Please confirm, as dates & times are subject to change.
TEMPE CHAMBER OF COMMERCE
Business Volunteer Awards Tues., May 21 7:30a – 9:00a
Recognizing those volunteers who have gone above and beyond for Scottsdale, and the Scottsdale Chamber. This year the BVA Breakfast will also feature the Scottsdale Area Chamber’s annual meeting, the first in many years. Members: $20; guests: $25 The Venue Scottsdale 7117 E. Third Ave., Scottsdale scottsdalechamber.com
SURPRISE REGIONAL CHAMBER OF COMMERCE Business Education Seminar
Los Tres Amigos – Business After Hours with Phoenix and Scottsdale chambers Thurs., May 9 5:00p – 7:00p
Held just once a year, the evening features complimentary cuisine, a cash bar and live entertainment as more than 1,000 expected guests mingle in a relaxing setting. Free Salt River Fields 7555 N. Pima Rd., Scottsdale tempechamber.org
Women in Business Conference
Fri., May 24 8:30a – 10:00a
Come join us as we continue our Business Education Seminar Series in partnership with Greater Phoenix SCORE. As always, in addition to great training, there will be a continental breakfast, prizes given away and great networking before and after the presentation. Free; advance registration required Communiversity @ Surprise 15950 N. Civic Center Plaza, Surprise Mary Orta, (623) 583-0692
Wed., May 22 8:00a – 1:30p
Each year, this powerful event brings together more than 300 business leaders in a setting that celebrates success, facilitates networking and offers incredible opportunities for personal and business growth. Members: $65; non-members: $99 Fiesta Resort Conference Center 2100 S. Priest Dr., Tempe tempechamber.org (See article on page 31.)
WEST VALLEY WOMEN
WOMEN OF SCOTTSDALE
Monthly Meeting
Monthly Luncheon
$35 Arizona Broadway Theatre 7701 W. Paradise Ln., Peoria westvalleywomen.org
$34 The Westin Kierland Resort & Spa 6902 E. Greenway Pkwy., Scottsdale womenofscottsdale.org
Tues., May 7 11:30a – 1:00p
Fri., May 17 11:30a – 1:00p
WESTMARC
OTHER BUSINESS
Innovations in Healthcare: The Continuum of Care
The Western Pension & Benefits Conference
Healthcare in Arizona and the West Valley: Where We Are and Where We Are Going; Importance of Healthcare in the West Valley: Assets and Economic Drivers; Arizona Preparations for Implementations of the Affordable Healthcare Act; Innovations in Care and Cost: Physicians, Hospitals, and Insurance. Free; registration required Banner Thunderbird Medical Center 5555 W. Thunderbird Rd., Glendale westmarc.org
This conference offers one general session and 12 breakout sessions covering diverse topics ranging from pension basics and current developments to more advanced planning, design and administration issues. Members: $200; non-members: $225 Biltmore Hotel & Spa 2400 E. Missouri Ave., Phoenix wpbcphoenix.org
Fri., May 31 7:30a – 10:30a
Thurs., May 9 7:45a – 5:15p
If your event is directed to helping build business in Metro Phoenix, please send us information to include it in the In Business Magazine events calendar. Email the information to: events@inbusinessmag.com.
Cross-training for your business
Special Sections
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Your company deserves to be fit. Performance Marketing: Print. Online. Email. Social Media. Events. (480) 588-9505 inbusine ssmag.com
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Education
Education series on legal matters
Adventures in Contract Negotiations: Common Pitfalls to Avoid “Minor details” could have major consequences by Matthew Engle Congratulations. Your business is up and running. Your hard work is paying off and you now find yourself on the verge of signing your first big contract. That’s great news. But slow down and take a deep breath. Don’t let your excitement blind you to some important considerations, including some all-too-common contracting pitfalls. Let’s take a hypothetical businessman named Rob …
Substance First The first questions Rob must ask are: What is the subject of the contract? Are the payment terms clear and the duties welldefined? What would justify non-payment?” Despite Rob’s excitement of signing his first major contract, he should not agree to terms that are ambiguous or incomplete. It’s far better to broach uncomfortable discussion points up front than to avoid the situation and hope nothing will go wrong — only to find that a costly and preventable dispute awaits down the road.
Duration Rob must take care when deciding upon the contract’s term. Circumstances change, and what was once a favorable contract might later turn into a burden. Conversely, Rob may be unable to obtain terms as favorable in the future, so a longer contract duration might be beneficial. An option granting Rob the
Legal
the Education Series
q March: Strategic Business Structuring Can Save Assets q April: Intellectual Property: Protecting a Core Business Asset q May: Adventures in Contract Negotiations: Common Pitfalls to Avoid To reference published segments, please access the archived “How-to” articles on the In Business Magazine website, www.inbusinessmag.com..
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right to extend the term upon the contract’s expiration, or automatic extensions unless either party gives prior notice otherwise, are possible solutions.
“Best Efforts” Clauses If Rob is asked to agree to use his “best efforts” to do something, he should consider softening this obligation by including “reasonable” or “commercially reasonable” qualifiers. Otherwise, Rob may be required to make expenditures or go to extraordinary lengths that ultimately negate the benefit of the contract.
Indemnification Indemnification provisions require that a party defend or reimburse another party against claims made against the other party or losses incurred by the other party resulting from a breach, pre-existing condition or negligence. Rob should ensure that any indemnification provisions are not overly broad or he might be responsible for losses that, in fairness, should be borne by the other party.
Force Majeure Rob should hope for the best but prepare for the worst by including a clause excusing performance when “acts of God” or other circumstances outside his control make performance difficult or impossible. Otherwise, Rob could find himself liable for breach of contract despite unforeseen and unavoidable emergencies.
Dispute Resolution Rob’s optimism about the agreement should not cause him to overlook the dispute resolution provisions. He must carefully consider how disputes will be handled. Is he waiving rights to sue in court and instead committing to arbitration? Is he limiting recoverable damages? Which state’s laws govern the contract? A “choice of law” clause could subject Rob to the laws of a state with which he is unfamiliar. Rob must also consider
the venue selection to avoid committing to bring or defend a lawsuit or submit to arbitration in a location that is inconvenient or potentially hostile.
Proper Parties It may sound obvious, but Rob must take care that the appropriate parties sign the agreement. For example, Rob should ensure that the other party actually owns all relevant aspects of the business Rob is dealing with and represents that the individuals signing the contract are properly authorized to do so. Likewise, Rob should not sign in his individual capacity when it is really his business that is the party (even if Rob signs on behalf of the business). He should also remember to properly authorize the signing by checking his company’s bylaws or operating agreement to see if any specific approvals are required and, if so, comply with those provisions — particularly if he makes a representation regarding due authorization. With foresight, you can avoid some common pitfalls. It is far better to get an agreement right the first time than to try to fix problems later — if they are fixable at all. Don’t be afraid to take a step back and carefully consider all the issues. Once you have the proper agreement in place, you can get back to the fun part: growing your business! Lewis and Roca, L.L.P. lrlaw.com
Matthew Engle is an attorney in Lewis and Roca’s Phoenix office. He practices corporate, commercial transactional and franchise law.
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by Mike Hunter
Scheduled Fitness to Move You Spending a good part of the day sitting in an office chair is not part of any executive’s fitness regimen, so get up and out. Here are some of the latest devices that will encourage movement in a businessperson’s life, even when busy at work:
Fitbit
Track steps, distance and calories with the Zip or One wireless movement trackers, the Flex wristband tracker or the all-new Aria Wi-Fi smart scale. Users can choose the tracker that fits their day the best and sync to the app to retain active record goals and more. $99.99 (the One) fitbit.com
Nike+ FuelBand
This electronic bracelet uses a sports-tested accelerometer and measures movement — and connects to an app on the user’s smartphone, helping to set goals, make reminders and get him or her moving. $149 nike.com
We Value What We Own
Assets
The New Porsche: Cayman S All new for 2014 and termed the “third generation Boxter” or “rival to the 911,” this powerful and sporty edition by Porsche is getting noticed. Despite its obvious lower price and less powerful engine from that of the 911, the Cayman S is a standout for 2014 and may be a brilliant alternative to Porsche’s top-of-the-line machines. With new chassis technologies, more power and lighter weight, performance is impressive. Named a top 10 pick by Car & Driver, it’s making even Porsche all-time enthusiasts rave. Equipped with a free-revving, 3.4-liter, flat-six engine with Direct Fuel Injection (DFI) and VarioCam Plus, the vehicle reaches 325 horsepower at 7,400 rpm. The six-speed manual transmission accelerates from 0 to 60 mph in 4.7 seconds and reaches a top speed of 175 mph. With the optional Porsche Doppelkupplung (PDK), the 0 to 60 mph can be hit in 4.6 seconds and achieve a maximum track speed of 174 mph. The optional Sport Chrono Package offers a further performance boost, enabling the new Cayman to accelerate from 0 to 60 mph in just 4.4 seconds. The electromechanical steering system adds efficiencies to the performance and the fuel consumption, and eliminates the need for hydraulics and fluids that need to be serviced. The interior has been completely re-styled, adding a sportier yet enhanced comfort to the driving experience. The silver-colored details on the dashboard and center console and the leather applications on selected features — such as the steering wheel rim, gear lever/selector and door handle inlays — add to the new look. Like many of the luxury offerings today, the new Cayman offers extensive personalization options, truly individualizing this model. The Porsche Communication Management (PCM) integrates the navigation technologies, audio optional and communications well, making the experience an often-lauded benefit to owning a Porsche. Better fuel economy, more luggage space, a smoother ride, impressive styling inside and out are what is making this 2014 Cayman S a true 2014 Cayman S contender against the 911 and a great entry model at a more affordable price. City MPG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 porsche porsche.com
Hwy MPG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 0-60 MPH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 sec Transmission. . . . . . . . . . . . . . . . . . . 6-speed manual MSRP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $63,800
Photos courtesy of Porsche (left), Fitbit, Nike, Jawbone (right, top to bottom)
UP by Jawbone
UP is a system that takes a holistic approach to a healthy lifestyle. The wristband (available in multiple sizes) tracks movement and sleep in the background. The app displays the user’s data, allows things like meals and mood to be added, and delivers insights that keep the user moving forward. $129.99 jawbone.com/up
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Power Lunch
by RaeAnne Marsh
Meals that matter
Off the Whine List These wine bars give guests no reason to whine — vino selection is extensive and varied, and gowiths hit the mark whether ordered as a snack or a light lunch or a repast for later in the day. Salud!
5th and Wine
The heart of downtown Scottsdale beats red – or white or rose, depending on what seems most palate-pleasing at the time. Plenty of by-theglass choices make it easy for parties to mix and match to everyone’s taste. Food runs from appetizers to salads to sandwiches and burgers, with bruschetta a hands-down favorite. 7051 E. 5th Ave., Scottsdale (480) 699-8001 • 5thandwine.com
Whether helping direct a corporation from the C-suites or doing it all as a smallbusiness owner, every businessperson needs a respite from decision-making dawn to dusk (or longer). Well, Scottsdale is one of the premier tourist destinations in the country, and it can sometimes be refreshing and rejuvenating to get away from the responsibilities of business and enjoy a little of the ambience that draws so many visitors. Distrito, in the Saguaro Hotel in downtown Scottsdale, offers a great vantage point for this. Its patio overlooks the bustling Old Town retail district, making it perfect for people-watching. With its south wall completely opened, the dining room also affords the open-air views. The lunch menu is severely scaled back from the dinner selection, which offers a sophisticated take on Mexican cuisine. While entrée items such as pan roasted duck breast with a mole negro served with a guajillo-squash puree and mesquite-smoked young chicken with an orange-habañero glaze served with popcorn grits are available only from the dinner menu, the guacamole is a hit at any time of day. The creamy treat has some unexpected fire from jalapeños, and patrons have the option of also adding crab to it. And a cool dish in our summer weather is the yellowfin tuna Ceviche de Atún with a serrano peppercoconut sauce and lime sorbet. For a lunch main course, try the Torta Milanesa — a chicken cutlet with avocado, queso Oaxaca and watercress. Or Distrito’s version of a hamburger — served with queso fresco, roasted jalapeño, avocado and refried beans. On a lighter side is the fish taco, made with the day’s fish selection, grilled and folded into a tortilla with red cabbage and a chipotle aioli.
Cask 63 American Eatery & Wine Bar
Offering a sophisticated ambience reminiscent of a 1930s Hollywood hot spot, this North Scottsdale stand-out pairs a great wine list with a food menu of fresh and inventive dishes based on local and regional ingredients. With or without victuals, this is a perfect spot to take on a flight of wine. 8877 N. Scottsdale Rd., Scottsdale (480) 922-5666 • cask63.com
Postino Winecafé on Central
Like its sisters in Arcadia and Gilbert, Postino on Central is a wine-centric café that also welcomes guests to a light and comforting lunch or anytime meal. Atmosphere is authentic to its Central Phoenix neighborhood, with a casual and friendly vibe — and an expert staff who are more than willing to advise. 5144 N. Central Ave., Phoenix (602) 274-5144 • postinowinecafe.com
Cask 63
Distrito 4000 N. Drinkwater Blvd., Scottsdale (480) 970-4444 jdvhotels.com/restaurants/arizona/distrito
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Photos courtesy of Gary Edlund (left); Cask 63 (right)
Distrito: Contemporary Mexican
Presents
Commercial Real Estate A special Commercial Real Estate Section spotlighting the industry “players� who are working hard to empower our commercial real estate market Sponsored by
Office | Retail | Industrial | Multi-Family Dwellings
C o m m erc i a l Real Estate
Spotlight on the Best
Real Estate and the FIRE-to-ICEE Trend Shifts in economic development impact the commercial real estate market by RaeAnne Marsh “The real growth is happening in the ICEE sector,” says Bob Mulhern, managing director of Colliers International in Greater Phoenix. He is referring, in terms of economic development nationally, to the growing importance of intellectual capital, education and energy (ICEE) companies compared to those in the areas of finance, insurance and real estate (FIRE). In Arizona, “we need to reposition ourselves to appeal to ICEE businesses,” he states. Metro areas around the country that have established a reputation as being involved in the new ICEE industries now driving economic growth include Austin, Texas; Denver; and the Bay Area. This is the company Mulhern believes Metro Phoenix should try to become identified among. The market he’s been involved in for 30 years is currently, he says, “being compared to Las Vegas and Salt Lake City” — which are more heavily in the FIRE camp. Our momentum toward the new school of businesses, the ICEE companies, has begun, however. Tyler Wilson, vice president with Cassidy Turley, who has a decade of experience in the Phoenix market, says the number of high-design, Web design, software, computer-oriented, energy and education companies “has definitely grown in Phoenix.” Such growth is an important complement to what Wilson calls “the old school” — FIRE — to make our economy more diverse and sustainable. Looking at the last 50 leases of 20,000 square feet or more that his company has done in this market — most of them in 2012 — Wilson found that 29 were “old school” that included JPMorgan Chase, State Farm Insurance and Humana. IPOWER, Integration Software, Spectrum Labs and Infusionsoft are among the 21 ICEE, or “new school,” businesses, which, although they are taking up big blocks of space, do not have the “really big footprints of space” of a company like State Farm. “But back a few years, the ratio was probably far heavier on old school,” Wilson adds. “And deals that are in the pipeline are trending toward ICEE.” With this trend, Wilson expects the 60:40 FIRE to ICEE ratio to soon become 50:50 and even flip as soon as this year. And he estimates the ratio of total square footage is similar to the number of businesses. Intel, the technology giant that is one of the Valley’s leading companies, has made a mark in the real estate realm as well. Mulhern notes that its FAB 42 building in Chandler, during its construction, was the largest capital expenditure project in the world. “That drives all kinds of opportunity,” he says, pointing out that Intel’s suppliers also need a lot of manufacturing facilities and office spaces. “The Intel effect is huge,” says Colliers’s research manager Pete O’Neil, referring to its employees and its suppliers. “Chandler is a hot bed for an intellectual capital base.” And Phoenix’s winning TGEN less than a decade ago, says his colleague, Mulhern, “goes a long way in helping us reposition ourselves.” O’Neil also notes the Phoenix market is big for data centers, because of the region’s lack of natural disasters. “It’s not a lot of jobs, but it has an economic impact.” And the East Side can claim a lot of solar-related businesses. Other pockets around the Valley include Central Avenue in Phoenix, with a high concentration of law firms.
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Other single users that need a lot of space include energy companies, observes Mulhern. “Whole buildings are being taken … for energy companies.” Activity has increased again for flex office space. It’s not congregated in any single specific area, but just what a business identifies as a central location when “they find an area for the work force that feeds them,” Mulhern says. While Mulhern says the real estate industry “fulfills the demand rather than creates it,” he points to the important role of his industry in finding adaptive reuse spaces for charter schools — a part of the education system getting increased attention. “As we bring up the level of education, it helps attract ICEE businesses.” Accommodation for parking becomes a greater concern for real estate development as a result of the FIRE to ICEE trend. While parking requirements of six spaces per 1,000 feet of leased space were seen only with call centers, “now it’s just a norm with a traditional office lease,” says Wilson. The reason is ICEE tenants are more collaborative users, and they tend to have spaces filled with more cubicles and fewer private offices. “The average square foot per person is less, so the stress on parking is greater.” He sees parking demand increasing in urban areas from two-and-ahalf to four per 1,000 square feet; in suburban areas, from four to five; and for freeway buildings in the suburbs, from five to as much as eight.
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Accommodation for parking becomes a greater concern for real estate development as a result of the FIRE to ICEE trend. Observing that ICEE companies are generally startups — as opposed to established companies that can afford the more expensive build-to-suits — Wilson says that rehab of offices needs to focus on how to address parking. New office projects, he says, “are all being built with the six-per-thousand in mind.” But there are opportunities in midtown, and Central Avenue has been enjoying a resurgence because it can offer ICEE tenants less expensive office space — being on the light rail line enables employees to use mass transit so companies need less parking. “One Thomas,” located on Thomas Road at Central, is, admits Wilson, “underparked by the new standard.” But it is right on both a rail and bus stop. “One Thomas is being rebranded as a building of the future, for ICEE users specifically,” Wilson says. It will have a coffee shop and a work co-op environment; it has leased space
to venture capital incubator The Seed Spot, and has held Arizona Technology Council events. Saying he works a lot with the economic development offices of Chandler and Tempe and knows first-hand that they are making an effort to land knowledge-based companies, Wilson adds he would be surprised if other Valley cities didn’t all share the same thoughts. “Phoenix is in a unique position regarding the shift from FIRE to ICEE,” O’Neil says, noting the strength of the FIRE companies already here but also the “patterns of emergence” in ICEE. “It’s exciting for our market.” Cassidy Turley cassidyturley.com Colliers International – Greater Phoenix
colliers.com/en-us/greaterphoenix
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1 44th Street Corridor 2 Airport Area 3 Camelback Corridor 4 Chandler/Gilbert Rio Verde Dr 5 Deer Valley Airport 6 Downtown North 7 Downtown South 8 Glendale 9 Mesa Downtown 10 Mesa East 11 Midtown 12 Northwest Phoenix 13 North Phoenix/Desert Ridge 14 Scottsdale Airpark 15 Scottsdale North 16 Scottsdale South 17 Squaw Peak Corridor 18 Sun City 19 Superstition Corridor 20 Tempe 21 Tempe South/Chandler 22 West Phoenix 87 lde
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C o m m erc i a l Real Estate
Spotlight on the Best
Cassidy Turley A Leader in Commercial Real Estate Services At Cassidy Turley, we are market leaders, industry leaders and community leaders. Nationwide, we are recognized for our passionate client advocacy as well as for the discipline and precision of our service delivery. We are a trusted partner, delivering client-centric solutions to enhance business performance. In markets across the country, we are respected as a leading provider of commercial real estate services as well as for our community engagement. Our thorough understanding of local business practices and market dynamics, combined with our customer focus and service commitment, give our clients a distinct edge in commercial real estate across the globe. Cassidy Turley is a leading commercial real estate services provider with more than 3,800 professionals in more than 60 offices nationwide. The company represents a wide range of clients — from small businesses to Fortune 500 companies, from local nonprofits to major institutions. The firm completed transactions valued at $22 billion in 2012; manages 400 million square feet on behalf of institutional, corporate and private clients; and supports more than 23,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate services — including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley
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enhances its global service delivery outside of North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Local Market Leadership Cassidy Turley provides regional real estate services with local market leader Cassidy Turley Arizona. The company offers brokerage investment and advisory services in office, industrial, retail, multifamily, land and property management. The firm has completed more than $10.7 billion in transactions since 2003 and was the No. 1 ranked Commercial Real Estate Brokerage Company in the Phoenix Business Journal’s 2010 and 2012 Book of Lists. Based in Phoenix, Cassidy Turley Arizona professionals provide their clients with unparalleled market knowledge backed by the industry’s finest research, marketing, mapping and support services. They are committed to their community and continue to give back through their work with industry and charitable organizations. With every assignment, Cassidy Turley professionals focus on their clients’ real estate needs so they can focus on their business. For more information on Cassidy Turley, visit www.cassidyturley.com or call (602) 954- 9000.
Profile Company Name: Cassidy Turley Main Office Address: 2375 E. Camelback Road, Suite 300 Phoenix, AZ 85016 Phone: (602) 954-9000 Website: www.cassidyturley.com Number of Offices in Metro Phoenix: 1 Number of Commercial Agents: 70 City Nationally Headquartered: Washington D.C. CEO / Managing Director: Bryon R. Carney, President & Managing Principal, Cassidy Turley Arizona No. of Years with Firm: 28 years Year Est. Locally: 1973 Specialties: Capital Markets, Project Leasing, Project & Development Services, Tenant Representation, Property Management
FINANCIAL: Property Sold in 2012 Value: $566 million Property Leased in 2012 Value: $320 million No. of Commercial Transactions Closed in 2012: 1,229
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C o m m erc i a l Real Estate
Spotlight on the Best
Cushman & Wakefield Cushman & Wakefield’s Phoenix office has been serving clients since 1987 and has become a highly respected commercial real estate advisor. With nearly 200 employees in the metro area, the Phoenix branch supports a full range of commercial real estate services, including Agency Brokerage (office, industrial, medical, land, multifamily and investment brokerage), Corporate Occupier and Investor Services (property management and project management), Capital Markets (office, industrial, and retail investment brokerage) Valuation Advisory/ Appraisal Services and Research Services. Offering a complete array of “Global Real Estate Solutions,” C&W has earned an international reputation for excellence by working together with its clients to ensure they achieve the highest value and best use of real estate in every major market around the world. C&W, currently the world’s largest, privately held real estate services firm, has earned its prestigious position by remaining true to the core values instilled in the company by its founders — namely, a dedication to its clients combined with integrity and excellence in everything the company does. Currently, Phoenix represents one of the nation’s fastest-growing and most dynamic markets, with its expanding economy and strong work force, its resort lifestyle and amenities, not to mention its excellent location within the Southwest region. Well-positioned in the major local markets, C&W’s Phoenix office strives to serve the region’s real estate sector and its increasing needs with the full array of
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services rendered by C&W around the globe. The firm’s professionals develop integrated solutions to help clients buy, sell, finance, lease and manage their assets. The firm also provides strategic, expert advice on operational issues, risk management, facilities configuration, location and labor factors, real estate market conditions, tax considerations, capital allocation and other relevant issues. C&W’s services help clients turn fixed assets into dynamic assets that are ready to make a significant contribution to overall corporate performance, regardless of the economy or business cycle. Specific areas of service include agency/ brokerage services, optimally positioning and marketing properties and uncovering hidden opportunities for clients; asset services, including property and project management as well as construction supervision; capital markets services, providing sophisticated financial strategies and funding solutions; client solutions services, utilizing a strategic, global approach delivered through a single point of contact; consulting services, including alignment review, performance management, portfolio optimization, and sustainability advice; and specialized practice groups, bringing expert sector knowledge to meet clients’ needs in areas that include law, not-for-profit, medical, technology-mediatelecom, public sector and financial. In addition to the services detailed above, C&W knows how important research is in assessing the market. The firm’s solid, objective market intelligence represents the gold standard for property research worldwide. From award-winning publications to private market studies, C&W provides the
finest property-oriented information on which clients can base critical business decisions. C&W’s award-winning publication, MarketBeat, profiles real estate conditions in nearly 100 major global business markets. Customized studies can be prepared to meet the specific informational needs of owners, occupiers and investors. Peer group studies, forecasting and proprietary market knowledge are also core parts of C&W’s research endeavors.
Profile Company Name: Cushman & Wakefield of Arizona, Inc. Main Office Address: 2555 E. Camelback Road, Suite 300 Phoenix, Arizona 85016 Phone: (602) 253-7900 Website: www.cushmanwakefield.com Number of Offices in Metro Phoenix: 1 Number of Commercial Agents: 34 City Nationally Headquartered: New York City, NY Market Leader: Cathy Teeterw No. of Years with Firm: 26 Year Est. Locally: 1987 Specialties: Office, Industrial, Retail, Medical, Multifamily and Land. Agency Brokerage & Advisory Services, Corporate Occupier & Investor Services (Property Management & Project Management), Capital Markets, Valuation Advisory/Appraisal Services and Research Services.
FINANCIAL: Property Sold in 2012 Value: $455,409,300.76 Property Leased in 2012: $427,490,188.10
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C o m m erc i a l Real Estate
Spotlight on the Best
Healthcare Trust of America Healthcare Trust of America, Inc. (NYSE: HTA) is one of the largest dedicated owners of medical office buildings in the United States. Since its formation in 2006, the company has acquired more than 12.7 million square feet of medical real estate, located in 27 states throughout the country. More than 95 percent of our portfolio is affiliated with leading health systems, with more than 72 percent of it being located directly on or adjacent to a health system campus. These locations provide for the most efficient patient care and have the most long-term value. In June of 2012, HTA listed its shares on the NYSE in an innovative structure that enabled it to become public without raising capital. The company has an equity market value of more than $2.5 billion, an investment grade balance sheet and tremendous access to capital. As a result, HTA offers tenants and health systems a partner and landlord with sufficient resources to operate properties with stability and ongoing investment required to meet their critical demands. Its low leverage also provides the capacity and flexibility to continue to grow its portfolio. The company has its national headquarters in Scottsdale and has a longterm commitment to the area. HTA has more than 1.3 million square feet of assets in the Greater Phoenix area, making the company one of the largest owners of medical office buildings in the Valley. The Phoenix portfolio is primarily focused in the West Valley, including Sun City, northwest Phoenix and Estrella, but also includes properties in the northern Phoenix/Desert Ridge area. One of HTA’s key focus areas over the last several years has been the development of its leasing and property management
platform. As of today, it currently provides these services to more than 10 million square feet across the country, including the majority of its portfolio in Phoenix. The company believes that direct management of its properties aligns its interest with its tenants’ and results in longer-term tenant satisfaction. This platform is run through regional offices in Indianapolis, Atlanta, Charleston and Scottsdale. The Scottsdale regional property management and leasing office was opened in December of last year. The implementation of the Patient Protection and Affordable Care Act is reinforcing the trend toward healthcare being provided in the most cost-efficient setting — medical office buildings. HTA is dedicated to this sector and is excited to bring its national platform to work in the Greater Phoenix area in 2013.
Profile Company Name: Healthcare Trust of America, Inc. (NYSE: ‘HTA’) Main Office Address: 16435 N. Scottsdale Road, Suite 320 Scottsdale, AZ 85254 Phone: (480) 998-3478 Website: www.htareit.com Number of Offices in Metro Phoenix: 2 Number of Commercial Agents: 12 City Nationally Headquartered: Scottsdale, AZ CEO / Managing Director: Scott D. Peters No. of Years with Firm: 8 Year Est. Locally: 2009 Specialties: Medical office buildings
FINANCIAL: Property Sold in 2012 Value: $0 Property Leased in 2012: 12.8 million square feet (portfolio size) 1.8 million square feet (nationally leased) No. of Commercial Transactions Closed in 2012: 328, $34.4 million in annual base rent
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Healthcare Trust of America, Inc.’s Leasing Team Has Expanded And Is Stronger Than Ever! Healthcare Trust of America, Inc. (NYSE: HTA) is committed to providing our tenants and physicians with best in class service that will keep them coming back for more. Our on the ground property management, engineering, and leasing teams are focused on establishing long term relationships with each of our tenants. Headquartered in Scottsdale, HTA is proud to be the leading owner of medical office buildings in Arizona with over 1.3 million square feet of space. Webb Medical Plaza - Building B Sun City West, AZ
For leasing information or to arrange a personalized tour, please contact: Sumer Riddle
Leasing Associate 480.998.3478 ext. 115 sumerriddle@htareit.com
Chelsea Maddox
Regional Leasing Director - South/Southwest 480.998.3478 ext. 143 chelseamaddox@htareit.com
Katie Kelley
Senior Leasing Associate 480.998.3478 ext. 158 katiekelley@htareit.com
Healthcare Trust of America, Inc. | Corporate Office | NYSE: HTA 16435 North Scottsdale Road, Suite 320 | Scottsdale, AZ 85254 p: 480.998.3478 | f: 480.991.0755 | www.htareit.com
C o m m erc i a l Real Estate
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scottsdalechamber.com
MEMBER COMMUNIQUÉ Message from the CEO Oh, how the chamber world has changed in the past few decades! In the “good old days,” the first thing any new business did, practically before it was issued its business license, was join its local chamber. The local chamber was a private sector extension of local government and was the gateway to acceptance as a bona fide member of the business community. Membership in the chamber was a rite of passage, and continued membership was taken for granted by both the chamber itself and the business. Rick Kidder The chamber, for its part, was often on the local government’s payroll and rightfully took on its assumed responsibility to be a flagwaver for the city or town it served. There was one chamber per city or town and one state chamber that took on the role of helping those local chambers build their capacity to serve the city or town and its businesses. Frankly, chambers didn’t really have to worry very much about viability or demonstrating value to the business community. The “good old days” are now long past, and the chamber world has had to adjust to new realities that include new challenges and new opportunities. This is a good thing. Chambers are not entitled to members. In fact, they are and should be subject to the same market economics that govern the success or failure of any business. Successful chambers should embrace and demonstrate best practices for all businesses. Some new businesses join their local chamber right off the bat in order to become known in the community. But membership is no longer viewed as a rite of passage or a “must-do” by nearly any business. Membership is now based on perceived selfinterest, much of which is indeed enlightened self-interest, and continued membership now hinges more on that self-interest far more than community stewardship. And it seems that new chambers are springing up every day, some looking to serve very narrow constituencies. These newer chambers may confuse the marketplace, but if they succeed it will be because they were able to thrive in the marketplace. Most municipalities, particularly larger ones, no longer fund their local chamber except through membership dues. With the fetters of government funding removed, chambers have evolved into more of an advocacy role — often endorsing candidates and taking on their city or town when the actions of a city reflect policies that are deemed unfriendly to business. Chambers still wave the flag for their municipality, often while engaged in vigorous dialogue with elected officials. Chambers represent their members, and continued viability depends in part on their success in helping create a strong climate for businesses to thrive. I would ask that you choose to support your local chamber — not because it is entitled to your support but because it has earned it.
May 2013 - August 2013
Business Volunteer Awards and Annual Meeting Join your Scottsdale Area Chamber of Commerce for our first annual meeting of the membership in many years. This breakfast event combines the Business Volunteer Awards and an opportunity for Chamber members to get a sneak preview of the exciting programs and services of the Chamber in the Presented by coming year. In addition, many of the Chamber’s partners will be present to give members a chance to visit and see how those partner companies can save you money, improve the way you market your business and increase your productivity. Come cheer on your fellow members who have been selected as this year’s Rising Star, Segner Award, Legacy Award, Chairman’s Award and Dale B. Fingersh Volunteer of the Year honorees and join the excitement of the best year yet for Chamber members! The Business Volunteer Awards/Annual Meeting will be held at the Venue Scottsdale on Tuesday, May 21, at 7:30 in the morning.
Mark your calendars for September 12 for the Scottsdale Business Showcase, the largest and best-attended trade show in the city! This high-energy event always provides great face-to-face networking opportunities in a unique and fun environment. This year’s theme will be NASCAR! Exhibitors have plenty of time to plan the looks for their booths and get their costumes. Businesses, start your engines! For sponsorship or additional information on either of these great events, please contact Anna Mineer at 480-355-2708 or by email at amineer@ scottsdalechamber.com.
Rick Kidder, President/CEO
Scottsdale@WOrk - 1
The Oasis Project
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receptions and marketing materials and with the strong continued support of the congressman, the Oasis Project will soon bear fruit.
The first of many receptions was held in March at The Phoenician for more than 150 participants of the Credit Suisse Global Services conference.
Photos: Suisse Reception
Congressman David Schweikert issued a challenge to the business community about a year ago to rally behind an effort to attract financial services companies to Scottsdale and the region. From that simple challenge a unique collaboration and a first rate initiative emerged — the Oasis Project. Embraced and led by Scottsdale Chamber Board Chair Eric Larson, the Oasis Project brings together private-sector companies, elected officials, local government officials, tourism officials, economic development organizations and others who share the desire and the energy to convince financial services companies to relocate to the Valley. Long on energy but short on funding the Oasis group seeks to connect the dots between our superlative tourism industry and business attraction through direct marketing to decisionmakers who are already coming to the Valley for signature events or business conferences. Through
Profiles Leslie Nyquist — 40 years and Going Strong! Where were you at 7:00 in the morning on January 29, 1973? Chances are you don’t remember, but if you were Leslie Nyquist, you would have been getting dressed to head off to your new job at the Scottsdale Area Chamber of Commerce. The Chamber had just moved into the Little Red Schoolhouse (now the Scottsdale Historical Society) and Leslie was to be a part of the team to help the chamber serve the business community in the growing city of 67,000. Flash forward 40 years, and Leslie is still the first person anyone meets when they stop by or call the Chamber offices. A succession of CEOs have all worked for Leslie, and they were all honored to do so. In commemoration of Leslie’s 40 years of service, the staff took Leslie flying on the Desert Splash seaplane up for a lunch on an island in Roosevelt Lake, and the board in January presented Leslie with round-trip airfare and spending money to allow her to visit her sister in the Chicago area this May. Loyalty needs to be celebrated!
Anna Mineer — The Queen of Member Opportunities! From the moment Anna walked into the Chamber offices, things shifted to high energy. Armed with chamber experience and a strong desire to help companies make the most of their investment in the Chamber through sponsorship and quality events, Anna hit the ground running and has never slowed down. Anna is all about value, quality and a superlative experience! If you want to participate in any of the Chamber’s signature events, contact Anna at 480-355-2708 or by email at amineer@ scottsdalechamber.com.
In Business Magazine
The Newest Members of the Chamber Team As the Chamber returns from the doldrums of the recession, President/CEO Rick Kidder is pleased to announce the appointment of two new members of the team. Melissa Glass works at retention activities, calling every member and letting them know about the value of their membership, and is spearheading the new Leads Groups (see page 6) at the Chamber. Melissa can be reached by calling 480355-2700 or by email at melissaglass2010@yahoo.com. Cindy Diffenbaugh has joined Kelly Rich as a Membership Development Manager. Cindy is a widely recognized business industry leader who has lived in the Scottsdale area for 29 years. She is an ideal contact and consultant for companies wanting to grow their business in Scottsdale by becoming a member. Please contact Cindy for further information on how the Chamber can help drive business success by calling 480 355-2700 or emailing her at cindy.scottsdalechamber@gmail.com.
Scottsdale@WOrk - 3
Partnership Opportunities Scottsdale Area Chamber of Commerce members have access to programs and services that save money, increase productivity and impact the bottom line. Just go to the Save Money section at scottsdalechamber.com for more details on each offer!
20% discount (up to $250) for any size direct mail order for Chamber members
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An exciting, new loyalty/promotional tool, providing you with an iPad on your counter. Belly Card holders swipe their card and earn rewards points! Special discounts for employment screening, renters’ checks and criminal background checks. Know what you need to know to protect your company! Decrease your group health cost by up to 30% this year! (Average savings of about $1,000 per employee per year)
Free to the employer and the prospective intern. Get the help you need and assist a student in building his/her resume!
Chamber discounts on advertising on one of Scottsdale’s most visited websites. Tens of thousands of hits per month! Unravel the mystery of college financial aid and be certain you receive the assistance for which you qualify!
Prepay discounts of up to 25% on email marketing, online surveys and event marketing tools!
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In Business Magazine
Scottsdale Forward More than 200 community and business leaders gathered at Scottsdale Community College’s magnificent Performing Arts Center to hear educational and economic development professionals discuss “What Is Right About Arizona” and outline four key initiatives designed to improve the economy of our city, region and state. The moderator for Scottsdale Forward was Roger Downey, well-known former news anchor and the current communications manager for GlobalMed. Downey nimbly guided the morning symposium, which had been planned and executed by a talented group of volunteers led by Pete Klute of Klute Communications and Pam Kelly of ProOne Media Productions. The keynote speaker was Michael Crow, Ph.D., president of Arizona State University. Dr. Crow’s address centered on what he says as Arizona’s significant assets and the need to position the state and the region in such a way that we all are armed to trumpet our many strengths. He told the audience that Arizonans too often sell our state short in the sense that we focus on the controversies rather than the assets. Scottsdale is uniquely positioned to attract technology and biomed companies because a base already exists in the city, along with having the presence of a strong research university and quality healthcare providers like Mayo Clinic and Scottsdale Healthcare. Arizona State, for example, leads the nation in the number of Fulbright Scholars. Arizona’s infrastructure is excellent by any standard, and states like California have structural challenges that make our state highly competitive. The local news media must, however, learn to focus more on our great strengths than, for example, the latest chicken wrap from McDonalds! Eric Larson, director of acquisitions of AVB Development Partners and chairman of the Scottsdale Area Chamber Board, presented the Oasis Project (see page 2), followed by Rachel Sacco, president/CEO of the Scottsdale Convention and Visitors Bureau outlining the newly completed tourism master plan. Ms. Sacco highlighted the changing demographics of visitors to Scottsdale and the need for the city to embrace changes to the Scottsdale experience. Gordon McConnell, assistant vice president for Innovation, Entrepreneurship and Venture Acceleration for the Office of Knowledge Enterprise Development Rachel Sacco
Eric Larson
Gordon McConnell
Roger Downey
Kimber Lanning
at ASU, spoke of the innovative programs at SkySong to incubate student businesses and to accelerate ventures using the extensive patents and research owned by ASU. Kimber Lanning, president/CEO of Local First Arizona, provided the audience with a fascinating analysis of the economic strength derived from local purchasing by individuals and businesses, emphasizing that “local first” does not mean local only. Participants were invited to sign up for one of four Focus Initiative Groups (FIGS) charged with working through the summer to develop concrete action steps to help make our region and Scottsdale the finest place to have a business. These are the four Focus Initiative Group (FIG) topic areas: • G ROUP 1: Reinvesting in Scottsdale — The City’s infrastructure is starting to show its age. Private development in some sections of the city is also aging and needs revitalization and a new look and possibly new uses. Chair: David Gulino • GROUP 2: Growing New Businesses and Industries in Scottsdale — Many new, innovative businesses are being launched in Scottsdale and throughout the state. What can be done to encourage and nourish more of these entrepreneurial efforts in our city? Chair: Chris Cole • GROUP 3: Improving Access to and around Scottsdale — Tourism is a major industry for Scottsdale and yet it is not easy for visitors to get to and around our city without having to rent a car. We are also an attractive destination for winter visitors as well as seniors. Young professionals are being recruited by local firms and the city has become a regional entertainment destination. These are just some of the needs that call for vast improvements to the available transportation systems. Chair: Matthew Wright • GROUP 4: The Advantages of Using the Many Resources Available in Scottsdale — By purchasing locally, businesses support other local businesses and enhance the city’s and the region’s economy. There are many resources already available in Scottsdale that need to be identified and better utilized by local businesses and organizations as well as individuals and families. Chair: Suzanne Klapp Even if you cannot participate on a FIG, you can help shape the recommendations of the FIGs by sharing your opinions and thoughts on Scottsdale’s current status and future needs at CityPossibilities.com/Scottsdale. We encourage you to take a few minutes to take part in this initiative. If you have any questions, please contact Terry Finch at 480-355-2704, tfinch@scottsdalechamber.com.
In Business Magazine
Scottsdale@WOrk - 5
Scottsdale History Hall of Fame Janie Ellis — After an early career as a ballerina in New York City, Janie Ellis came home to Scottsdale to choreograph a wide variety of creative and performing arts ventures from her family enclave known as Cattle Track. She’s staged many historic events in Scottsdale, expanded the Cattle Track area to accommodate artists, architects, performers and other artisans. Janie recently published a book about the Costume Institute that she and her late mother Rachel operated at Cattle Track.
The Scottsdale History Hall of Fame was started twenty years ago by David Hallstrom, Richard Bowers and Don Ruff. Its mission is to honor individuals and nonprofit organizations who have contributed immeasurably to the rich heritage of Scottsdale, dating back to its founding in 1888 by Army Chaplain Winfield Scott. This year’s event was held before a group of 400 attendees at the Chaparral Suites Hotel in Scottsdale on April 23.
2013 Scottsdale History Hall of Fame Inductees John Berry — John has been active in the community since his days at Kaibab Elementary and Scottsdale High School in the 1960s and 1970s. Premier land use attorney John Berry has helped shape Scottsdale’s evolution. He’s been involved in transformative zoning cases that have enhanced Scottsdale’s economy and quality of life. He has chaired the Scottsdale Cultural Council and has served on numerous city, civic and education boards . Mark Eberle — Mark Eberle’s decades of leadership have ensured that Henry & Horne became a leading accounting firm in Arizona. He has helped countless Scottsdale-area clients grow their businesses. He has served on the Scottsdale Chamber board for 20 years — as chairman of the board and as a key advocate for businesses and entrepreneurs. He’s served on the Scottsdale/Paradise Valley YMCA Board and as an advisor to Scottsdale Leadership.
Eileen Rogers — For more than 30 years, Eileen Rogers has owned and operated Allegra Print & Imaging in downtown Scottsdale, and has made it one of the top franchises in the country. She’s used her business leadership and marketing skills to add value to her service on dozens of Scottsdale and Valley municipal, business and nonprofit boards. She chaired the Scottsdale Human Services Commission, served on the board of the Scottsdale Area Chamber, and created a Valley-wide annual Diaper Drive to benefit Homeward Bound.
Scottsdale Railroad and Mechanical Society — Founded by Guy Stillman in 1971, the Scottsdale Railroad and Mechanical Society is a nonprofit that raises funds and supports programs at Scottsdale’s McCormick-Stillman Railroad Park. Through the volunteer efforts of its board, philanthropic partners and members, the Society has provided and supported the train-themed and historic attractions at the park, as well as playground equipment, accessible facilities, a model railroad facility and annual events.
Scottsdale Chamber Announces New Leads Groups The Scottsdale Area Chamber has announced the formation of four new leads groups, designed for members looking for focused and intensive weekly networking and leads generation. Based geographically in Downtown, central Scottsdale and in the Scottsdale Airpark, these dynamic groups will work to support each other by providing direct business leads to the fellow members of the group. The cost for the Scottsdale Area Chamber Leads Program is $150 per year, with discounts for those members who enroll for more than one year. The groups are industry specific, and enrollment is subject to review through an application process. The application is available online at scottsdalechamber.com and is open only to Chamber members. For more information, please contact Melissa Glass at 480-355-2700.
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In Business Magazine
Women in Leadership The Chamber held its first Women in Leadership luncheon at Silverleaf Club on April 16. Moderated by Jodi Low, president and founder of U & Improved, the event featured two remarkable and inspiring speakers: Coleen Rossi, founder of Trinity Cross Collection for Inspired Works, a business borne from personal challenges that has flourished and now holds the distinction of its collection having the number one single selling sterling silver jewelry piece in QVC history; and Denise Resnik, founder and president of DRA Strategic Communications and co-founder of Southwest Autism Research and Resource Center. The event drew a sell-out crowd and had a substantial waiting list. The event was presented by APS and sponsored by Cox, with additional support provided by Scottsdale Community College, Sam’s Club, Women’s Council of Realtors and Merestone.
Board of Directors Executive Committee
Rick Kidder President & CEO Scottsdale Area Chamber of Commerce rkidder@scottsdalechamber.com 7501 E. McCormick Pkwy, Suite 202-N Scottsdale, AZ 85251 Ph 480.355.2700 fax 480.355.2710 www.scottsdalechamber.com
BOARD CHAIR Eric Larson, AVB Development Partners CHAIR-ELECT Bryce Lloyd, FirstBank of AZ IMMEDIATE PAST CHAIR Kurt Zitzer, Meagher & Geer, PLLP TREASURER Geoff Beer, Crescent Bay Holdings
ECONOMIC DEVELOPMENT ADVISORY COUNCIL Don Couvillion, ASU SkySong MEMBER VALUE ADVISORY COUNCIL Pam Kelly, Pro One Media AT LARGE MEMBERS Jennifer Bongiovanni Karas, The Karas Group Kurt Brueckner, Titus, Brueckner & Levine, PLC
SCOTTSDALE PARTNERSHIP Kevin Sellers, Angela Creedon, First Fidelity Bank Arizona State University EMERGING ISSUES Bill Heckman, Heckman Marketing, Inc. PUBLIC POLICY ADVISORY COUNCIL Steve Helm, Scottsdale Fashion Square
Dale Fingersh, The Right Direction Rick Kidder, Scottsdale Area Chamber of Commerce
© 2013 Scottsdale Area Chamber of Commerce. A publication of the Scottsdale Area Chamber of Commerce. For more information or to join the Scottsdale Chamber, please contact us at www.scottsdalechamber.com. Section designed by InMedia Company, LLC.
In Business Magazine
Scottsdale@WOrk - 7
Infocus: Grand Openings! 1
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1. Desert Dental Solutions, 9746 N. 90th Place, #201, Scottsdale 85258; 2. Desert Splash Adventures, 15115 N. Airport Drive, Scottsdale 85260; 3. E & J Designer Shoe Outlet, 6378 N. Scottsdale Road, Scottsdale 85253; 4. Elements Therapeutic Massage, 7908 E. Chaparral Road #105, Scottsdale 85250; 5. Gigi’s Cupcakes, 5807 N. Frank Lloyd Wright #120, Scottsdale 85260; 6. K.I.S.S. “Back East Pizza & Beef Joint,” 7117 E.. 3rd Avenue, Scottsdale 85251; 7. LaserAway – Hair Removal & Aesthetics, 15147 N. Scottsdale Road, Scottsdale 85254; 8. Pink Jeep Tours, N. Highway 89A, Sedona 86336; 9. Regus,16427 N. Scottsdale Road #410, Scottsdale 85254; 10. Sphinx Ranch, 3039 N. Scottsdale Road, Scottsdale 85251
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In Business Magazine
® Celebrating
40 YEARS
supporting small business!
Bait and Switch? by Rick Murray, Chief Executive Officer, ASBA Whether you are for or against the provisions in the Affordable Care Act (ACA),
About ASBA
the latest news seems to make an already confusing situation even more confusing.
The Arizona Small Business Association (ASBA) is the largest trade association
One of the key selling points for the Affordable Care Act—a provision that
in the state representing 11,000+
helps small businesses provide multiple health plan options for their
member businesses and over 1/2 million
employees—will be delayed until 2015.
employees in all 15 counties. ASBA members enjoy access to significant group discounts, countless opportunities to do business with each other, a wide array of insurance products, and active advocacy efforts on public policy issues to protect their businesses. Discover more at www.asba.com. Join ASBA. Be amAZed®
In January 2014, the administration was expected to launch an insurance marketplace that would give small businesses a way to offer employees a choice of health plans. However, citing “operational challenges,” it was announced recently that implementation of that part of the ACA would be delayed in the 33 states where the federal government plans to run healthcare exchanges, which includes Arizona. One of the major reasons the Affordable Care Act (ACA) passed was because the bill was designed to give more options to small businesses and help them keep the cost of providing health insurance to employees under control. Under the bill, each state must offer a Small Business Health Options Program, or SHOP exchange, to give employers a way to compare plan options for their employees.
in this issue Can Your Business Afford a $9 Minimum Wage? . . . . . . . . . . pg. 2 How to Celebrate Small Business Month . . . . . . . . . . . . . . pg. 4 Help Available for Arizona’s Small Businesses to Improve Employee Health and their Bottom Line . . . . pg. 7
4600 E. Washington Street, Suite 340 Phoenix, AZ 85034 f. 602.306.4001
Even those who widely supported the Affordable Care Act were taken by surprise. The delay will prolong and exacerbate healthcare costs that are crippling 29 million small businesses nationwide. Many business groups opposed the Affordable Care Act due to concerns that it would harm employers and workers, particularly small businesses. This harm would come by mandating more expensive, one-size-fits-all coverage and imposing billions of reforms to control healthcare costs. One specific fear was that health plan choices for small businesses would be reduced rather than expanded under the ACA.
So this decision to limit small
businesses to only a single option comes as no
Southern Arizona 4811 E. Grant Road, Suite 262 Tucson, AZ 85712 p. 520.327.0222
will be limited to a single health plan option.
dollars in new taxes without providing effective
Central Arizona
p. 602.306.4000
The delay will push back implementation of that plan until 2015; in the meantime, small businesses
f. 520.327.0440
© 2013 ASBA. A publication of the Arizona Small Business Association. For more information or to join ASBA, please contact us at www.asba.com. Section designed by the Arizona Small Business Association.
surprise. Some believe this has been the plan all along. For those of us who took a wait-and-see attitude, it is the bait and switch we hoped wouldn’t happen.
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ASBA Board of Directors
Can Your Business Afford a $9 Minimum Wage?
Roy Irwin | Chair Principal of Irwin Insurance & Investments, LLC Donna Robinson | Vice Chair VP and Director of Operations, Network Dogs, Inc.
by Jerry Bustamante, Sr. VP, Public Policy + Southern Arizona, ASBA
John Ficorilli| Secretary VP of Sales, Executive Training Solutions Jacob Gregory | Treasurer Sr. Manager, Assurance Department, CliftonLarsenAllen, LLP Tracy Carlson Sr. Transactions Counsel, Go Daddy Operating Company, LLC Bob Cody Director of Technology Consulting, Gate6, Inc. Rick Danford Vice President and Sr. Relationship Manager, Arizona Business Banking Group, Comerica Bank Glenn Hamer President and CEO, Arizona Chamber of Commerce and Industry Joe Higgins Serial Entrepreneur, Tucson Metro Area Ben J. Himmelstein Counselor & Attorney, Wong Fuji Carter, PC Karen Karr Attorney at Law, Clark Hill Jamie Low Owner, Low & Johnson Business Insurance George Maravilla Finance Director, DMB Associates Ryan McMullen Regional Manager, RSI Enterprises Lynn Paige Owner, LM Enterprises Jan Northup President, Management Training Systems, Inc. Kim Marie Branch-Pettid Owner and CEO, LeTip International Tim Robertson Owner, HealthTelligent
President Obama believes it can. In his recent State of the Union Address, President Obama
$
presented his latest proposal that he said would benefit businesses by putting more money into the pockets of consumers. The President wants to tie the minimum wage with the cost of living so that minimum wage can become a wage we can live on. The announcement was received with half the members of Congress applauding on television, while a collective dropping of jaws occurred across the country by anyone that has ever made a payroll before.
The federal minimum wage is currently set at $7.25 an hour. Arizona’s minimum wage is higher at $7.80 an hour due to Proposition 206 that Arizona voters passed in 2006 when our economy was strong and there was a high demand for workers at all skill levels. As a result, the President is proposing a 24% increase to the minimum wage, and, in Arizona, it would be over 15%. Keep in mind that this does not include the increased payroll taxes that employers would have to pay as well. Unfortunately, there are economic realities that would produce many unintended consequences to such an increase. An increase in the minimum wage hurts those who are supposed to benefit from it; the least skilled and first-time employment seekers under the age of 19. A recent study by the University of California, Irvine, demonstrates a tradeoff between an increase in minimum wage for the employed and higher rates of unemployment. Instead of paying higher wages, employers are forced to get by with fewer workers, decreasing employment opportunities for young people. My first job paid me $3.25 an hour, the minimum wage in 1985, washing dishes at Gus & Andy’s Steak House in Tucson. That is where I experienced for the first time the financial rewards of hard work and was held accountable by someone other than my parents. Overall, it was a great learning experience, and I earned enough to buy my first car. Even if your business pays more than minimum wage, what would an increase to $9 an hour do to your business? I asked a couple of our ASBA members. Rob Holmes, General Manager of Queen Creek Olive Mill located at 25062 S. Meridian Rd. in Queen Creek said that each increase in the minimum wage makes it harder for them to hire students on a part-time basis. “We have to control our labor costs, so we have no choice but to pass on the increase to our customers,” said Mr. Holmes. “If customers don’t want to pay more, we go out of business.” Lisa Khnanisho,
Jess Roman Vice President, Bank of Arizona
owner of Tryst Café located at 21050 N. Tatum Blvd. in Phoenix said that such an increase would
Linda Stanfield CEO, Benjamin Franklin Plumbing
paying that wage.” Ms. Khnanisho also mentioned that the new healthcare law is something she
Mark Staudohar President, ACCENT’ Hiring Group Victoria Trafton Consultant and Trainer, Victoria Trafton Inc. Danny Valenzuela Owner, Transition Execs, LLC Russ Yelton President and CEO, Northern Arizona Center for Emerging Technologies
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force her out of business. “Restaurants work on very tight margins and most cannot survive is concerned with and does not know how it will impact her business. I agree with the President that no one working full-time should live in poverty. However, our elected leaders must understand that the best way to alleviate poverty for working Americans is to strengthen our economic base and support small businesses that are leading the charge in job creation.
Our free market system operates at its full potential when left alone, and it will
determine what a fair minimum wage is when not influenced by policy. Such a drastic increase to our minimum wage sounds like a good idea, but the economic facts don’t support it. It is just bad public policy.
Welcome Spring with Special Savings to Help ASBA Members Grow their Businesses by Carol Mangen, Director, Member Benefits, ASBA
For travel worldwide, Best Western is extending a preferred rate to all ASBA members, with a minimum savings of 10%. Members are
The Arizona Small Business Association (ASBA) recently announced
encouraged to enroll in Best Western Business Advantage, designed
new partnerships to deliver special products and services to their
specifically for small to medium-sized businesses. In this program,
members. Go Daddy, Best Western and Localwork.com are the most
they will earn bonus points, rewards and have access to additional
recent additions to the plethora of programs ASBA now offers.
promotions. Book your stay today at asba.com/BestWestern.
It is particularly satisfying to create alliances with businesses that are
Localwork.com is a job-listing service that offers an innovative and
Arizona-based, as is the case with each of the new partners. In this
efficient way for employers to find new local talent. ASBA members
way, ASBA is able to provide benefits to members, while keeping
receive a free premium job posting on LocalWork.com. You can find
revenues and growth within Arizona. It is the best of both worlds!
that next new hire through this site, which offers a resume rating service, video resume profiles and custom alert notifications. Redeem
The Go Daddy program offers members a minimum of 20% off of the
your free job posting at asba.com/localwork.
best promotional price available when placing a new order for domain names, Web hosting and Website-builder products. Furthermore,
So, whether you are building and enhancing your Website presence,
Go Daddy will be providing educational seminars at the ASBA offices
find yourself hiring and adding to your workforce, or booking your
on topics such as creating and building a website to navigating the
business travel, let us help you at ASBA.com. Not currently an
WordPress dashboard. Get started today at asba.com/GoDaddy.
ASBA member? Give us a call at 602.306.4000.
Ken Blanchard College of Business | College of Education | College of Nursing & Health Sciences | College of Liberal Arts | College of Fine Arts & Production
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A R I Z O N A’ S P R I VAT E U N I V E R S I T Y S I N C E 1 9 4 9 Get started today! 855.287.0174 | www.gcu.edu/inbusiness
Grand Canyon University is regionally accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools. (800-621-7440; http://www.ncahlc.org/ ).
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How to Celebrate Small Business Month As small business owners and a break-neck pace trying to make things happen for our business – innovating, maneuvering through obstacles and opportunities, and just plain “getting the wash out.”
Give your goals a one-day break.
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entrepreneurs, we are traveling at
Write a press release and share it with the world. Be sure to include ASBA in the distribution list! We love to promote the successes of our Arizona small businesses.
Post a tip on the ASBA Facebook page for all to see. facebook.com/beamazed
It is sometimes difficult to take time to reflect and celebrate our successes, but that is crucial to
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Fast & Curious Speed Networking™
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keeping our momentum high and keeping us and our employees motivated to succeed.
There
couldn’t be a better time to celebrate all of your successes –
Support an ASBA member restaurant. Find one at asba.com!
Create a “wall of fame” in your office that celebrates even the small things – like remember the day when you had answered ALL the emails in your inbox?
big and small – than Small Business Month.
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Stock up on your office supplies with WIST!
3pm - 4:30pm Register at asba.com/events.
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Here, we share ways to celebrate your business every day during the month of May. Download a copy of this calendar at asba.com.
Turn off the computer, the smart phone and the tablet, and spend a day with family and friends.
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Make time to read a book, cover to cover, in one sitting.
Save & support local business. Visit asba.com/wist.
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Run a customer appreciation promotion to thank your customers for helping you reach your goals.
28 Form a relationship with a business mentor or coach who can help you recognize and achieve your accomplishments. Get started today at asba.com/FBE.
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Reflect on your recent accomplishments.
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Write a blog post about your successes and how you achieved them.
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Tweet about Small Business Month and tag @ASBA for additional exposure.
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Nominate your company for an award. You know you deserve it!
Dip into that secret stash of peanut m&m’s we know you have hidden in that bottom drawer.
a new skill.
Featuring: The 20th Annual Enterprise Business Awards Luncheon
AZsmallBIZCON.com
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Incorporate a “kudos” section into your regular staff meetings giving everyone a chance to give and receive kudos for a job well done.
Have a drink with friends (free of shop-talk!)
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Support someone else in reaching his or her goal. Volunteer as an ASBA Business Mentor at asba.com/mentoring.
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Share exciting news with your clients, partners and vendors through a printed or emailed newsletter.
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Pay it forward. Donate of your time, talent or treasures to those less fortunate.
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ZZ Celebrate the week with a potluck lunch!
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Put together a fun group outing for you and your staff – like bowling, sporting events or a picnic.
Do a little dance, make a little love, you know – get down tonight.
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SMALL BUSINESS conference
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Sleep in…and by sleep in, we mean past 6am.
Three Day Weekend
WHOOP WHOOP WHOOP
Make it a casual Friday!
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And the best way to celebrate your success? Push the ASBA amAZing® button! Don’t have one? Visit asba.com/store.
Thursday, May 16 | The Phoenician Resort SMA
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BUSI NESS APPR OVED Featuring: The 20th Annual Enterprise Business Awards Luncheon
Power-packed day of timely discussions, relevant education and meaningful interactions. Hear from local and national small business experts, including:
Janice K. Brewer Governor of the State of Arizona - Invited
Rick Murray CEO of Arizona Small Business Association
Todd McCracken President of National Small Business Association
Billy Malkovich CEO of Mountainside Fitness
Ann Siner Owner of My Sister's Closet
Rich Rector President of Realty Executives International
State of Small Business Breakfast 8:00 AM - 9:00 AM Start the day off right. Join us as we take an insider's look at the small business landscape in Arizona compared to the nation as a whole.
20th Annual Enterprise Business Awards 11:45 AM - 1:15 PM Break for lunch and help us celebrate our amAZing速 small businesses. Be inspired by our panel of impressive home-grown success stories.
This full-day conference also features a 100+ exhibitor expo and educational breakout sessions to help you grow your business.
azsmallbizcon.com 602.306.4000
Visit azsmallbizcon.com or scan now for details.
Help Available for Arizona’s Small Businesses to Improve Employee Health and their Bottom Line H e a l t h y AZworksites.org
by: Brenda Bryan, Chief Marketing Officer, Viridian Health Management Worksite wellness is a hot topic as employers face increases in healthcare costs and losses in productivity as a result of unhealthy employees, which negatively affects the bottom line. In addition, the Affordable Care Act brings new opportunities and challenges for small businesses:
Access Starting in 2014, all health insurance plans must guarantee the availability and renewal of coverage regardless of health status.
Costs Beginning in 2014, premium ratings based on health status will be prohibited for new (non-grandfathered) plans.
Rewards Small businesses with fewer than 100 employees who work 25 hours or more per week are eligible for grants to start wellness programs (applies to businesses that did not have a workplace wellness program in effect as of March 2010).
Penalties While there is no requirement for small employers to offer health insurance, in 2014, small businesses with more than 50 employees will have to pay a penalty if they do not offer affordable coverage.
Since employees spend nearly half of their waking hours at work, the workplace represents an important setting for promoting healthy behaviors. Evidencebased worksite wellness initiatives have been shown to reduce healthcare costs. While results at each organization can vary, some employers have realized up to a $6 return for every $1 invested in wellness programs. Within Arizona, the Healthy Arizona Worksites Program (HAWP) helps employers learn how to successfully implement worksite wellness initiatives to improve the health of their employees and businesses. HAWP is a partnership between the Arizona Department of Health Services (ADHS), the Maricopa County Department of Public Health (MCDPH) and the Arizona Small Business Association. To learn more, visit www.healthyazworksites.org.
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ASBA Staff Rick Murray, Chief Executive Officer Kristen Lopez, Chief Operating Officer Jerry Bustamante, Sr. VP, Public Policy + Southern Arizona Debbie Hann, VP, Finance + Administration Sandi Ahrens, Director, Business Development Rhette Baughman, Director, Marketing Carol Mangen, Director, Member Benefits Robin Duncan, Business Development Manager Gabe Salcido, Graphic & Web Design Manager Ron Janicki, Business Development, Southern Arizona Marlee Roushey, Member Services Coordinator, Southern Arizona Sarah Travis, Member Services Coordinator Raina Bibb, Receptionist
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Experience ASBA’s Fast & Curious Speed Networking ™ A fun, fast-paced format of quality networking that allows you to meet other businesses at 3-minute intervals, maximizing your time and gaining you many valuable contacts in just 90 minutes. Join us at the ASBA Central office the second Tuesday of each month from 3-4:30pm. Visit asba.com/events to RSVP for the next Fast & Curious Speed Networking™ event!
Index Index by Name
Francis, Juanita, 20
McCracken, Todd, 31
Resnik, Denise, 55
Barisheff, Nick, 29
Glass, Melissa, 51
McInnis, Jan, 31
Rice, Bob, 29
Berry, John, 54
Hallstrom, David, 54
Meyer, John, 46
Rogers, Eileen, 54
Bielli, Greg, 22
Hickman, Paul, 28
Mineer, Anna, 51
Rossi, Colleen, 55
Bowers, Richard, 54
Holmes, Rob, 58
Mohraz, Judy, 30
Ruff, Don, 54
Brewer, Jan, Gov., 66
Hughes, Bo, 28
Mulhern, Bob, 38
Sacco, Rachel, 53
Bryan, Brenda, 63
Kalaf, Linda, 31
Murray, Rick, 31, 57
Schweikert, David, Congressman, 50
Bustamante, Jerry, 58
Khnanisho, Lisa, 58
Nannini, Mike, 16
Scott, Winfield, 54
Carney, Bryan R., 40
Kidder, Rick, 49
Norton, Michael, 29
Seleznow, Steven, 30
Chao, Stanley, 16
Kimball, Laurel, 20
Nyquist, Leslie, 51
Severson, Carrie, 31
Collins, Jim, 20
Lanning, Kimber, 53
Orr, Mike, Ph.D., 18, 22
Stapp, Mark, 22
Coor, Lattie, Ph.D., 20
Larson, Eric, 50
Paulk, Mary Lou, 12
Stillman, Guy, 54
Crow, Michael, Ph.D., 53
Lehrman, Bruce, 14
Peters, Scott D., 44
Strobeck, Ken, 66
Danley, Walt, 12
Lesko, Debbie, State Rep., 66
Piper, Virginia Galvin, 30
Teeter, Cathy, 42
Diffenbaugh, Cindy, 51
Lotardo, John T., 22
Pollack, Elliott D., 11, 22
Warren, Andy, 12
Dixon, Mark, 47
Low, Jodi, 55
Pruitt, J. Doug, 20
Wilson, Tyler, 38
Downey, Roger, 53
Maio, Keith, 20
Rayl, Jennifer, 16
Wist, Ian, 19
Dunn, Elizabeth, 29
Mangen, Carol, 59
Rayl, Steve, 16
Wist, Martin, 19
Eberle, Mark, 54
McConnell, Gordon, 53
Rennell, Dean, 28
Wist, Robert, 19
Elliott D. Pollack and Company, 11, 22
National Association of Women Business Owners, 32
Solution Interface, 52
Ellis, Janie, 54
Index by Company 5th and Wine, 36
Evernote, 14
Airport Property Specialists, L.L.C., 46
Farmers Insurance Group, 52
Alerus Bank & Trust, 13
Fasturtle,52
Allegra Print & Imaging, 54
Fidelity National Title Agency of Arizona, 12
Alliance Bank of Arizona, 2, 37
Fitbit, 35
Amazing Mail, 52 Arizona Bankers Association, 28
Freeport McMoRan Copper & Gold Foundation, 20
Arizona Chamber of Commerce and Industry, 32
GlobalMed, 53 Go Daddy, 59
Arizona Commerce Authority, 4, 5
Grand Canyon University, 59
Arizona Community Foundation, 30
Greater Phoenix Chamber of Commerce, 32
Arizona Department of Health Services, 63
Greater Phoenix Leadership, 20
Arizona Diamondbacks, 9
GuruOnline, 14
Arizona International Growth Group, 32
Healthcare Trust of America, 44, 45
Arizona Small Business Association, 31, 32, 57
Henry & Horne, 54
Arizona State University, 20, 22,53 Arizona Technology Council, 32 AVB Development Partners, 53 Baseline, 14 Belly, 52 Best Western, 59 Bibby Financial Services, 10 BrightStar Care, 16 Buchalter Nemer, 15 Cask 63, 36 Cassidy Turley, 38, 40, 41 Center for Real Estate Theory and Practice, 18, 22 Central Phoenix Women, 32 Chamber Benefit Administration, 52 Chandler Chamber of Commerce, 32 College Prep Mastery, 52 Colliers International, 38, 48 Cox Business, 67 Cushman & Wakefield, 42, 43 Distrito, 36 DRA Strategic Communications, 55 Driver Provider, The, 13
inbusine ssmag.com
Holmes Murphy, 10 IDC, 14 Infiniti, 52 Infusionsoft, 63 Intel, 38 Internships.com, 52 Involta, 14 J&G Steakhouse, 6 Jawbone, 35 KioKom.com, 52 League of Arizona Cities and Towns, 66 Lewis and Roca, L.L.P., 34 Local First Arizona, 53 Localwork.com, 59 Maracay Homes, 12
National Bank of Arizona, 20, 68
Southwest Autism Research and Resource Center, 55
National Small Business Association, 31
SRP, 27
Newland Communities, 22
Staples, 52
Nike, 35
Stewart Title & Trust of Phoenix, Inc., 22
North Phoenix Chamber of Commerce, 32
Stewart Title Guaranty Company, 22
Office of Knowledge Enterprise Development, 53
Stoney-Wilson Business Consulting, 17
Peoria Chamber of Commerce, 32 Phoenix Philanthropy Group, The, 20
Surprise Regional Chamber of Commerce, 33
Pinnacle Bank, 28
Tempe Chamber of Commerce, 31, 33
Porsche, 35
Trimega Purchasing Association, 19
Postino Wine Bar, 36
Trinity Cross Collection for Inspired Works, 55
ProOne, 52
Sundt Companies, The, 20
Tryst Café, 58
ProShred, 52 Queen Creek Olive Mill, 58 Regus, 44, 47 Reliable Background Screening, 52
U & Improved, 55 Urban Land Institute Arizona, 22 Virginia G. Piper Charitable Trust, 30
SCF Arizona, 3
W. P. Carey School of Business, 18, 22
Scottsdale Area Chamber of Commerce, 32, 49
Walt Danley Realty, 12 Wells Fargo, 28
Scottsdale Convention and Visitors Bureau, 53
West Valley Women, 33
Scottsdale History Hall of Fame, 54
Wist Office Products, 19
Scottsdale Railroad and Mechanical Society, 54 Severson Sisters, 31
WESTMARC, 33 Women of Scottsdale, 33 Bold listings are advertisers supporting this issue of In Business Magazine.
Check Out the New
Maricopa County Attorney’s Office, 6 Maricopa County Department of Public Health, 63 Mastro’s, 17 Merrill Edge, 16
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@inbusinessmag
Mesa Chamber of Commerce, 32 Microsoft, 14 MSEC Arizona, 52
It's THE Hub to Building Business M ay 2013
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Roundtable
A Candid Forum
Seeking Sales Tax Change that’s Good for Business, Good for Cities Evolution of HB 2657 shows benefit of listening to the “other side” by RaeAnne Marsh Governor Brewer’s creation of the Transaction Privilege Tax Simplification Task Force last year addressed the long-simmering concern that Arizona’s sales tax system is complicated, with the individual municipalities having their own tax rates. In fact, “Arizona has the most complicated system in the nation,” says State Representative Debbie Lesko (R, Dist. 9), author of HB 2657, which seeks to simplify the sales tax system for small and large businesses alike. Her goal, she explains, is to cut down on the paperwork and number of audits businesses are subjected to. A third major part addresses the current prime contracting system. “It puts us in line with what 46 other states are doing,” says Rep. Lesko. Additionally, “it aligns our state with the requirements of the 2013 Marketplace Fairness Act,” the federal legislation for online taxation, none of whose requirements Arizona currently aligns with. If HB 2657 passes, says Lesko, “our state would be in a position to decide if we want to tax online sales.” Arizona’s cities and towns also have a big stake in the system — because “we put all our eggs in this basket,” says Ken Strobeck, executive director of the League of Arizona Cities and Towns, explaining the tax policy Arizona chose to pursue over the last 50 years was a reliance on sales tax over income or property tax as revenue source. But what was established in the 1980s as a model city tax code, with the state and cities closely aligned, changed over time as different interest groups were given exemptions by the state legislature and cities also adjusted rates on different categories of taxes (called “green sheet exceptions”), Strobeck explains. Arizona is the eighth-largest state in the nation, geographically, and its many regions have, among other differences, differing economic drivers. “So it’s hard to do one-size-fits-all,” he says. However, the League members have also been moving to help simplify the sales tax system, eliminating most of the green sheet exceptions. Tax collection, as now proposed in the bill, takes advantage of technology to program geo-coding that enables businesses to go to an
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online portal at the Department of Revenue as a single point of collection. This boon for businesses, which also cuts down on the workload the DOR would have faced under the bill as initially written that simply moved collection for all 91 Arizona cities to the DOR, was suggested by the League of Arizona Cities and Towns, and Strobeck notes the cities and towns will pay for the program, “not the state, not business.” Lesko has also been open to negotiation with the cities and towns over having the DOR take single responsibility for business audits. “Businesses complain about multiple audits, especially when they have multiple sites in multiple jurisdictions,” Strobeck admits. But the cities’ position was that they have more auditors, and those auditors know the communities. What the League suggested was a single auditing entity in the DOR, with one audit for multi-city businesses but maintaining the city auditors for those businesses that operate in only one city. All auditors would be trained to the same standards, and businesses would go through the audit once for all levels of government. Discussion on the third major part of HB 2657 — the construction sales tax — centers on whether the tax would be collected where the work is done or where the materials are purchased. The current prime contracting systems requires contractors to pay in every city in which they do work, and they pay on an estimated materials cost of 65 percent of the project. Describing this as “onerous
and burdensome” on such tradespeople as electricians and plumbers, Lesko says, “My legislation would change this, having them pay tax on materials only (which the DOR estimates is 41 percent [of the project]). And it saves the contractor from any paperwork, since they pay at the point of sale.” A pure point-of-sale approach, however, “goes away from the underlying principle of [assessing the] tax where there is impact on the community,” Strobeck says. Plus, “materials may not even be bought in the state” — so the state itself might lose revenue. “They have a legitimate concern; if they do not have a building supplier in their city, they’re afraid they’d lose revenue,” Lesko says. Her modification is to go with the planned change to collect sales tax on materials at the point of sale, but also double the revenue sharing to the cities plus allow the cities to charge a local construction tax that is capped at the current tax rate. She believes this will heavily favor Phoenix and Tucson as they probably have most of the construction supply stores, but she’s proposed to the League of Arizona Cities and Towns that members work that issue out among themselves. The point, for Rep. Lesko, “is about trying to make it more simple for the small businesses and the large businesses to spend more time on their business instead of filling out all this tax paperwork.” Arizona State Legislature azleg.gov League of Arizona Cities and Towns azleague.org
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