Category Archives: Governance
[Source: Joel Kotkin, Arizona Republic] – LOS ANGELES – Now that Phoenix’s ascendancy has been at least momentarily suspended, its residents are no doubt wondering what comes next. One tendency is to say the city needs to grow up and become more like East Coast cities or Portland, Ore., with dense urban cores and well-developed rail transit. The other ready option is always inertia – a tendency to wait for things to come back the way they were.
Neither approach will work in the long run. Over the coming decade, Phoenix has to recalibrate its economy into something based on more than being a second option for Californians and speculative real-estate investment. Instead, it needs to focus laserlike on economic diversity and creating good jobs.
The model here for Phoenix is not New York or San Francisco. Phoenix can’t rival these cities for their 19th-century charm or early 20th-century infrastructure. As we would say back in New York (my hometown): fuggedaboutit. Instead of dreaming about Gotham, Phoenix should think more about Houston. Like the Texas megacity, Phoenix is the ultimate late 20th-century town, dependent on air-conditioning, ample freeway space, and a wide-open business culture.
A century away from becoming “quaint,” Phoenix needs to follow Houston’s example of relentless economic diversification: in Phoenix’s case, away from dependence on tourism and construction. Houston has done this by focusing beyond its core energy sector to fields like international trade, manufacturing, and medical services. Phoenix’s opportunities may lie elsewhere but may include some of these same industries. The idea is that the region needs to heal its job problem. Only then can the real-estate market rebound on a solid basis.
This employment focus must replace the current obsession with changing the city’s urban form. Despite the current problems, Phoenix has performed pretty well over the past decade, creating more new jobs than most Sun Belt cities, not to mention job losers like San Francisco, Chicago, Los Angeles, and New York. Equally important, it still leads the nation over the past decade in net in-migration among the largest cities. [Note: Read the full opinion piece at Viewpoint: Phoenix, put aside dreams of Gotham.]
[Source: Andrew Johnson, Arizona Republic] — The U.S. Securities and Exchange Commission has resolved fraud accusations it brought against an investment arm of failed commercial real-estate financier Mortgages Ltd. The federal agency on Monday announced that Mortgages Ltd. Securities LLC agreed to an order revoking the company’s registration as a securities broker-dealer.
The SEC also sought $7.3 million in penalties and prejudgment interest but waived the amount because the investment firm demonstrated a lack of funds to pay. The action stems from the downfall of Phoenix-based Mortgages Ltd., once considered Arizona’s largest private commercial lender.
Mortgages Ltd. distributed more than $900 million in loans for real-estate acquisitions, development, and construction projects… Mortgages Ltd.’s failure led to the collapse of several high-profile real-estate projects, including Hotel Monroe in downtown Phoenix and the Centerpoint condo towers in Tempe. It also left the company’s thousands of investors, many of them retired, in the lurch. [Note: Read the full article at Fraud case ends for Phoenix's Mortgages Ltd.]
[Source: Ken Alltucker, Arizona Republic] – After months of review, the Arizona Biomedical Research Commission last week signed off on a new contract that ensures continued funding of [the downtown] Phoenix-based Translational Genomics Research Institute. The commission sought the new contract with TGen to protect Arizona’s interests in the wake of TGen’s alliance with Grand Rapids, Mich.-based Van Andel Institute. Under the alliance, both TGen and Van Andel retain their locations, research staffs, and boards of directors.
TGen filed amended corporate documents last month with the Arizona Corporation Commission that reflect the change. TGen is now a member-based organization instead of director-based organization, and Van Andel’s research arm, the Van Andel Research Institute, is the sole member of TGen. TGen representatives said the new structure gives Van Andel shared control of TGen. TGen receives undisclosed funding from Van Andel.
TGen President and Research Director Jeffrey Trent also holds the same position with the Van Andel Research Institute. He splits his time between the two sites. “It was of concern to all parties that the economic engine that TGen has been should continue in Arizona,” said Dawn Schroeder, executive director of the commission. “It is a substitute contract, which puts in place safeguards for the state of Arizona.” [Note: To read the full article, visit New contract ensures future state funding of downtown Phoenix's TGen.]
[Source: AZFamily.com] — City officials believe the Valley of the Sun is in a good position to host a national political convention downtown Phoenix in 2012. According to Mayor Phil Gordon the city is submitting a bid for the Republican National Convention. The city will also submit a proposal for the Democratic National Convention. Tourism officials say either convention would lure some 30,000 people to Phoenix.
[Source: Scott Wong, Arizona Republic] – The sputtering economy, spike in home foreclosures, and crackdown on undocumented immigrants could pose significant hurdles for officials working to get an accurate count of Phoenix residents for the 2010 census. At stake are hundreds of millions of dollars in federal and state funding, disbursed to cities based on official decennial population figures. “There are a lot of concerns that we have,” said Tammy Perkins, who is coordinating Phoenix’s census efforts. “Every person we miss costs the city $400 a year. If we miss a family of four, that’s $1,600 a year for 10 years.”
Census figures released this year revealed that the number of immigrants living in Arizona in 2008 had fallen by about 60,000, to 932,518, likely a result of the economic recession and construction slowdown. Meanwhile, 60 percent of Valley home sales last month involved foreclosures, making it harder to track former homeowners who are now staying with friends, in hotels or living on the streets.
Hispanic leaders have said that Maricopa County Sheriff Joe Arpaio’s raids and crime sweeps have forced some immigrants to move out of state or back to their home country, while fostering a distrust of government among those who’ve stayed. “There is a lot of fear in the Hispanic community. I think we will have a really hard time getting Hispanics to open the doors and return their census forms,” said the Rev. Eve Nunez, a community leader who is heading a Phoenix census committee focused on the faith-based community. “We are trying to dispel that fear by telling them how much this will mean to their community.“ [Note: Read the full article at Phoenix steps up efforts for accurate census count.]
[Source: Scott Wong, Arizona Republic blog] – Phoenix’s budget outlook just got a lot gloomier. In an e-mail to city employees Tuesday, City Manager David Cavazos said the budget shortfall for the current fiscal year and next fiscal year is a combined $245 million, or 22 percent of the general fund that pays for police and fire protection, libraries, and other basic services. That approaches the record $270 million that was cut last year from the budget, including a $156 million hit to city services.
Cavazos said the national recession and lagging tax revenues continue to hammer city coffers. Layoffs are almost certain. “Given the size of the shortfall, we will need to cut positions and unfortunately layoffs are anticipated,” he wrote in the e-mail. “Our people are our greatest asset and we are focused on holding positions vacant and reducing costs to minimize the impact on our employees, and in turn, the public we serve.”
All city departments have submitted proposed budget reductions of up to 30 percent. Public safety departments submitted 15 percent in proposed cuts. After reviewing those proposal, Cavazos will present his proposed budget to the City Council on Feb. 2. Community members will be able to attend public budget hearings through the month of February, with a council vote taking place in early March. [Note: Read the full blog posting at City of Phoenix's budget shortfall hits $245M.]
[Source: Amanda Lee Myers, Associated Press] – When passengers began riding new light rail trains in the Phoenix area last December, many questions were on their minds. Can light rail succeed in a city where car is king? Will the trains survive searing desert heat in the summer? Is it worth the $1.4 billion it cost to build? A year later, the system is carrying 50 percent more people than expected, the trains survived the summer and kept riders cool, and many of the kinks of introducing a new mode of transportation to the nation’s fifth largest city have been worked out.
Now the big question is: Can light rail continue to maintain its ridership and service amid the recession while moving forward with plans to expand the system from 20 to 57 miles? “It’s going to be very hard. The challenges are going to be severe,” said Rod Diridon, executive director of the San Jose, Calif.-based Mineta Transportation Institute, a nonpartisan research group that conducts transportation policy studies.
Diridon said it’s “absolutely remarkable” that Phoenix has managed to see higher ridership than expected while maintaining service this past year. “All across the nation transit systems depend on sales and property tax dollars, and because sales tax revenues are down in some places as much as 50 percent, service has been cut back and ridership is down in most places,” Diridon said. “The opposite is true in Phoenix. They’ve retained ridership and maintained service. That’s a phenomenal success given the state of the economy.”
It’s not been an easy task for light-rail operator Metro. The agency had to pay about $500,000 more than the expected $1.5 million to keep the trains cool all year long, fund an educational program for passengers who were inadvertently not paying for their rides, and lay off about 20 people. [Note: To read the full article, visit Phoenix area's light rail system marks 1st year.]
[Source: Arizona Republic; section headers organized by yours truly] – With this being Christmas week, we figured you wouldn’t want to read a traditional editorial any more than we wanted to write one. So today, we lighten things up a bit with awards for notable achievements in 2009.
- Story of the year: Phoenix did the virtually impossible this year — it cut $270 million from the general fund to balance the budget due to low sales-tax revenue. Residents are feeling the effects with reduced hours or closures of swimming pools, libraries, and senior centers. They also see more graffiti and potholes because staff is stretched so thin. Now the city is talking about cutting an additional $100 million or so. This story is getting old.
- Best cheerleader: Mayor Phil Gordon earns this award again. With frequent trips to Washington, D.C., to lobby for stimulus funds, and Janet Napolitano resigning as governor to lead Homeland Security, Gordon is the face of Arizona.
- Embarrassment: Rep. Ray Barnes’ rambling reasons for voting to cut $144 million from public education. Grab some eggnog and watch this Phoenix Republican go off.
- Hot potato: The idea to raise the sales tax temporarily to generate revenue quickly. Mayor Gordon suggested a community member take on his idea. But no one wants to touch it.
- Landmark: The city became the second in the state to offer a domestic-partner registry to gay or straight couples who share a Phoenix residence. Among other privileges, the registry grants partners visitation rights in hospitals.
- Pillar: City Manager Frank Fairbanks earns this award again. He retired this year, but not before balancing the nastiest budget deficit in city history. Thanks, Frank.
Downtown Focused/Strong Influence
- Pushin’ on: Light rail has its fans and its foes. But ridership is up and businesses have sprouted along the line. The system is approaching it first anniversary. We say light rail is on track.
- Newcomer: Janet Echelman’s “Her Secret Is Patience” at the new Civic Space Park downtown opened to much criticism. Meant to resemble a cactus bloom, the floating sculpture was called everything from a basketball hoop to a male contraceptive. Not that we mind. Some of the best artwork in the world drew heavy criticism. We’re just glad people are noticing what downtown Phoenix has to offer.
- Comeback: Phoenix Urban Market Grocery and Wine Bar at Central Avenue and Pierce Street is the first grocer to serve the area in 30 years. It only carries the basics. But milk, vegetables, bread, pasta and other staples are welcome.
- Bragging rights: President Barack Obama made three visits to the Valley this year. One of those was to the new Phoenix Convention Center, where Obama addressed the Veterans of Foreign Wars national convention.
- Feather in the cap: A budding knowledge-based economy, parks and preservation efforts, and teen spaces at public libraries make Phoenix an All-America City. Now it has the civic award to prove it. This was Phoenix’s fifth win. It would be a shame to lose these gains to budget cuts in the down economy.
Other Parts of Phoenix
- Senseless act: A photo-enforcement-van driver was shot to death while deployed near Loop 101 in north Phoenix. Thomas DeStories was indicted in connection with the shooting death of Douglas Georgianni.
- Tallest story: Despite opposition from neighbors, the City Council approved a Mormon temple whose steeple and spire will rise 86 feet above the Deer Valley area.
- Unsung hero: The Macehualli Day Labor Center in northeastern Phoenix provides a central location for day laborers and potential employers to negotiate business. The center is for sale.
[Source: Jahna Berry, Arizona Republic] – The ongoing travel recession and, to some extent, city-built Sheraton in downtown Phoenix are putting pressure on central Phoenix hotels, some hotel owners say. Tourists are traveling less and spending less, dampening the travel boom that hotel owners hoped would follow last year’s completion of the Phoenix Convention Center’s $600 million expansion. Properties are responding in a variety of ways:
- Last week, the Wyndham Phoenix Hotel asked for and received a 20-year tax discount from Phoenix that will save the hotel at 50 E. Adams St. $400,000 annually. The deal will finish the hotel’s renovation and switch to the Marriott flag from Wyndham, which, the majority owner says, will drum up business.
- The Lexington Hotel Central Phoenix, 1100 N. Central Ave., is open but is seeking Chapter 11 bankruptcy reorganization, court records show.
- The Clarendon Hotel is starting a new promotion geared toward business travelers that will give hotel guests $20 cash for each night they stay there.
In the 14 months that it has been open, the 1,000-rooom Sheraton also has changed the market. Phoenix built the hotel to accommodate larger conventions that were expected to meet there. Although several groups, including the National Rifle Association, brought tens of thousands of new tourists to Phoenix, those bookings have tapered off.
Nationally, “distressed hotels are the way of the world right now because of the debt that they are carrying and because there is no business,” said Jeff Higley, a spokesman for Smith Travel Research. “There are hotels that are struggling to meet payroll.”
The Phoenix market has been one of the hardest-hit travel markets in the nation. From January though November, city hotel occupancy fell 12.6 percent and the average room rate tumbled 15 percent, compared with the same period in 2008. A key barometer slid 26 percent in the city. Revenue available per room is the amount of money generated per room excluding extras such as food and spa visits. Only New York’s RevPar figure dropped more in that period. It declined 28.1 percent, according to Smith Travel. [Note: To read the full article, visit Fewer hotel bookings pose challenge in downtown Phoenix.]
[Source: Luci Scott, Arizona Republic] – For every $100 spent in a chain store, $13 remains in the state. For every $100 spent in a locally owned business, $45 remains in the state. That’s the message delivered at a Tempe Chamber of Commerce luncheon Thursday by Kimber Lanning, director of Local First Arizona, an advocacy group promoting local companies. Chandler officials are well aware of the benefits of local buying; the city began a Shop Chandler campaign this year. Lanning said the figures came out of an Austin-based Civic Economics Study in 2002.
Lanning, owner of Stinkweeds music store in central Phoenix, said Local First Arizona is starting a campaign to persuade people and companies to shift 10 percent of their spending toward locally owned businesses. That shift would result in 1,600 new jobs and $15 million in new local wages, she said.
Although national chains employ people too, they don’t give to local charities at the same rate, Lanning said. And local companies hire other local business people such as attorneys, CPAs, sign makers, and Web designers. Lanning commended the utility APS for recently signing a contract for supplies with Wist Office Products of Tempe rather than using a national chain.
Lanning said the idea that local is more expensive is a myth. In comparing prices, she discovered, for example, that a big bag of dog food was $4.30 less at the Noble Beast on Camelback Road than at a big box. In some cases, the big boxes are cheaper, she said, but “they’ve convinced us it doesn’t pay to shop around.” She encouraged the audience to, when they’re in the dairy section of a supermarket, to buy locally by picking up Hickmans’ eggs and Shamrock milk.
Supporting local independent businesses not only keeps more money in the area, it also promotes a sense of community and enriches the culture, she said. “People are living here and telling how great it is where they came from,” she said. “When you move to Phoenix, you shop in big boxes and eat at national chains, and never feel connected to Phoenix… They’re still from Des Moines even though they’ve lived here 20 years.” Lanning said when Arizonans go to Chicago, they return talking about the great local pizza place they found; they don’t come back raving about Applebee’s.
Buying locally and creating a sense of community would help keep young, creative people in Arizona, she said. “Of the top 10 percent of our graduates, 98 percent leave. The bottom 50 percent all stay.”
In terms of promoting local procurement, Arizona rates low nationally. Arizona is one of only three states that doesn’t give preference in purchasing to local businesses, Lanning said. The other two states are Mississippi and Michigan. Because other states are loyal to their own, Arizona contractors can be put at a disadvantage, she said. “Kitchell and Sundt can’t get contracts in California, Nevada and Utah, because those states favor the home team,” she said. Giving preference to companies in Arizona would also help lure business to the state. “They look whether they’re going to be favored,” she said. “We’re thinking like it’s 1985 in terms of economic development,” she said. “We need to shift our thinking.” [Note: To read the full article, visit Advocacy group stresses importance of local companies.]