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TO THE RESCUE Former IBM analyst has made career saving people from their computers PAGE 10

Your Weekly Business Journal for the Tucson Metro Area WWW.INSIDETUCSONBUSINESS.COM • NOVEMBER 30, 2012 • VOL. 22, NO. 26 • $1

McCusker to retire

A MIRACLE COMEBACK Miracle Mile’s comeback helped by Monterey Court rehab

Providence boss plans to stay involved in downtown issues Page 5

Dirty work Marana to ask voter permission to stay in sewer business Page 7

PAGE 4 2011 was turning point

Samantha Sais

Housing surpasses all of year’s benchmarks Page 19

Global Solar is latest hit by financial challenges, lays off employees By Patrick McNamara Inside Tucson Business Tucson-based Global Solar Energy Inc., a manufacturer of thin-film solar technologies, looks to have laid off most of its employees and ceased operations. The company notified its employees Nov. 16 of its intentions to terminate their employment and cease operations. Neither President and CEO Jeffery S. Britt nor the company’s media contacts responded to phone calls requesting comment.

The company was listed in Inside Tucson Business’ Book of Lists as having 147 employees in 2011 but it did not respond to requests to update that information this year. In a July filing with the Worker Adjustment and Retraining Notification Act, the company told state officials it would layoff as many as 39 employees but it appears the number is more than that. One employee, who asked not to be identified, said about 95 employees lost their jobs. Global Solar was founded in 1996 by UniSource Energy and ITN Energy Systems, as a sister subsidiary to Tuc-

son Electric Power. In 2006, UniSource sold its stake in Global Solar to a European holding company. In March 2008, it began production of a second generation thin-film solar product at a 100,000 square-foot facility at 8500 S. Rita Road, a 22-acre site that also includes a 750-kilowatt solar farm. In November that same year, the company’s European subsidiary, Global Solar Energy Deutschland, began production at a facility at BerlinAdlershof. In June, the German subsidiary filed for insolvency and was shut down but the company said at the time it would

not affect its Tucson operations. Global Solar is the second Tucson solar firm to shut down its manufacturing facilities. In 2011, Solon stopped manufacturing solar panels at its plant near Tucson International Airport saying it could not compete against manufacturers in other countries. Solon changed its business model to focus on large-scale commercial solar installations. Contact reporter Patrick McNamara at pmcnamara@azbiz.com or (520) 295-4259.


2 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS


InsideTucsonBusiness.com

NOVEMBER 30, 2012

3

NEWS Brewer lets Obamacare set up state health exchange

By Roger Yohem Inside Tucson Business

Gov. Jan Brewer has decided Arizona will not create a state-based health insurance exchange and will instead leave that responsibility to the federal government, as detailed in the Affordable Care Act. Brewer called the decision announced Wednesday one of the toughest during her time in office, but said the state still doesn’t know enough about how an insurance exchange would function and its ultimate cost to taxpayers. States were given the option of setting up exchanges and many governors who were opposed to “Obamacare” had held off on a decision until after the election. States have until Dec. 14 to determine whether to set up their own exchanges. Arizona joins 19 other states in defaulting to Washington, D.C., to set up and administer their insurance markets. Among the other states, 16 and the District of Columbia have decided to set up their own exchanges, five are working with the federal government on a hybrid program and nine others still had not announced a decision. Most of the states planning to set up their own exchanges are run by Democrats but that’s not always the case. New Mexico and Nevada are two states led by Republicans have chosen that route as well. The exchanges will be where individuals and small businesses can shop for private health-care insurance coverage.

A vacant 28,000 square-foot church building near the University of Arizona campus will be redeveloped as an innovative “urban storage” facility by its new owner, Peach Properties. The company, led by renovation specialist Ron Schwabe, has purchased the former Baptist Church Education Building, 222 E. Fifth St., for $1.1 million. “This infill project is a great adaptive reuse opportunity. The urban storage concept means it will be more than basic, traditional storage. It will have higher amenities that cater to the UA student market and people living downtown,” said Schwabe. One of the more creative uses of the building will be for wine storage in the basement. That makeover will be designed to maintain a constant 58-degree temperature. Some offices will be available with a focus on co-working space. Basically, this is a shared-work environment where professional office space is made available to independent workers, consultants and small business owners who otherwise would be working from home. Schwabe will apply this trendy co-working feature based on his success at Spoke6, another Peach Properties redevelopment project at 439 N. Sixth Ave. For a daily or monthly fee, Spoke6 customers have access to desk space, two conference rooms, wireless Internet and copy machines. Throughout the three-story former church building, about 430 storage spaces are being planned. Typical sizes likely will be 4-feet by 5-feet up to 10-feet by 15-feet. The building’s interior already is gutted. University students are projected to be a strong customer base, especially those from out of town. Plus, the site is directly north of the 760-bed The District on Fifth student housing complex. “For three months in summer, they need smaller storage for items like bikes and a few boxes. This caters to that new generation of users,” said Schwabe. Outside, plans are to convert the 42-space

CONTACT US

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

Roger Yohem

Innovative ‘urban storage’ site planned near UA

Peach Properties’ rehab of this old church building will feature co-working space and climate-controlled storage.

parking lot into a secure storage area for motorcycles, vehicles and other larger items. The steel-and-concrete building was constructed in 1952 by the Baptist church as a school and meeting “wing.” While in use by the church, it had 55 offices, six conference rooms, a full kitchen and lunchroom, and a 2,640 square-foot multi-use “chapel” room. In recent years, the abandoned building has become a neighborhood eyesore, marred by broken windows, trash and graffiti on the exterior walls. Currently, the site has been fenced off for security and to prevent trespassing. The solid steel-concrete construction appealed to Schwabe’s expertise in preservation and redeveloping old buildings with “good bones.” He expects renovation costs

to run about $1 million and plans to open about the second quarter of 2013. The premium location is also near the Fourth Avenue entertainment district, downtown, and Sun Link, the modern streetcar route. In July 2007, developers Chris Kemmerly and Steve Quinlan bought the building for $3 million with the announced intent to convert it into loft-style apartments. But it fell into foreclosure and Peach Properites acquired it from BOKF National Association, the parent company of Bank of Arizona. The transaction was handled by Bob Kaplan and Allan Mendelsberg with Picor Commercial Real Estate Services.

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

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Solar startup REhnu gets $1 million grant REhnu Inc., a University of Arizona-based solar energy startup, this week was awarded a $1 million grant from the U.S. Department of Energy. The company, started in 2009 by Roger Angel, founder of the Steward Observatory Mirror Lab, is working on a project to generate lower cost solar through the use of glass mirrors and smaller photovoltaic cells that can track with the movement of the earth. Money from the grant, announced by U.S. Rep. Ron Barber, D-Ariz., will be used by REhnu to develop its prototype. In addition to Angel, who serves on REhnu’s board and is its chief technology officer, the company’s other co-founder was Peter Strittmatter, another UA astronomy professor, who is secretary of REhnu’s board. Former UA president John P. Schaefer is president and chairman of REhnu, which is headquartered at 933 N. Cherry Ave.

EDITION INDEX Public Notices Lists Profile Meals and Entertainment Arts and Culture Inside Media Calendar

6 8 10 14 14 15 16

Briefs Finance Real Estate & Construction Biz Buzz Editorial Classifieds

17 18 19 20 20 23


4 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS

NEWS Former Aztec Inn to become La Quinta Inn

Monterey Court’s presence enhances historic strip

Another mid-town hotel with a historic past is going in for a makeover. As of Wednesday (Dec. 5) the Randolph Park Hotel & Suites will close for renovations that will result in a rebranding of the 156-room property as a La Quinta Inn & Suites. Owner HSL Properties said employees were notified of the closure on Monday. The company said it would try to relocate as many employees as possible at other properties and rehire them when the hotel renovations are complete. In announcing the renovations and rebranding Omar Mireles, executive vice president of HSL Properties, said the La Quinta brand is the fastest-growing select service brand in the hotel industry. Select-service hotels are a niche between limited-service properties catering to budget-conscious travelers and full-service big-name hotels with lots of amenities. The hotel originally opened as the Aztec Inn in 1966 with 90 rooms. It was built by Jack Sarver, who also built the Campbell Plaza Hotel at the southeast corner of East Speedway and Campbell Avenue that is currently being renovated and scheduled to reopen at the end of March as Aloft. In 1973 the Aztec Inn was sold. In 1992 when the owners defaulted on a $4.9 million loan owed to a savings and loan in Iowa, the property went to the Resolution Trust Corporation, a federally-owned asset management firm that oversaw the liquidation of properties of failed savings and loans at the time. Although the hotel continued to operate, it became an InnSuites in 1996 and in 2005 was rebranded as the Randolph Park Hotel & Suites.

By Christy Krueger Inside Tucson Business

First Potash is new name for Tucson-based firm Tucson-based Pan American Lithium Corp. changed its name to First Potash Corp., to reflect the company’s shift in focus toward primarily developing and commercializing potash from its Chilean brine salars. As of Nov. 26, the company’s new trading symbol on the TSX Venture Exchange in Canada is “FSP,” and on the OTC Bulletin Board in the United States will be SALTF. The company remain incorporated in British Columbia, Canada, and the headquarters will remain at 3040 N. Campbell Ave., Suite 110. The company also changed its corporate website and URL to www.firstpotashcorp.com.

BIZ FACTS

Monterey Court 505 W. Miracle Mile (520) 207-2429 www.montereycourtaz.com

Samantha Sais

The Tucson region’s urban development spotlight has been shining on downtown lately, but other areas are experiencing their own renewals, if not the same amount of attention. Miracle Mile is one example, with renovation projects completed at the former Ghost Ranch Lodge, Wayward Winds Lodge and Monterey Motel. Greg Haver and Kelly McLear purchased the run-down Monterey Motel in January 2011 and quickly reinvented it as Monterey Court Studio Galleries and Café, which is attracting a kind of customers Miracle Mile hasn’t seen in years. The partners aren’t surprised by this uptick in interest, as they consider the strip to be an extension of downtown. “There’s been a concentration on the urban core, and it’s important to talk about other parts of town. We’re almost contiguous with the UA and downtown,” McLear noted. “We think of this as an uptown destination. It makes sense to envision the corridor that way.” Haver and McLear had years of experience buying and refurbishing properties in Tucson before embarking on this project, at 505 W. Miracle Mile, a block west of Oracle Road. “I try to buy properties that I think have potential. In this case, it was such a good deal, I knew I couldn’t lose,” Haver said of Miracle Mile’s oldest motor court, which originally opened in 1938. The property included 16 cottages and manager’s quarters. “It was a total wreck. There had been a fire in two rooms. There was carpet on the walls in two other rooms. I took seven dump truck loads of garbage out just to clean it up,” Haver said. He and McLear spent six weeks creating a plan for the site and then immediately got to work transforming the eyesore into a charming village where both visual and performing artists display their talents. During renovations a brick wall was uncovered with the words Monterey Court painted on it, which for Haver was a wonderful find. He had hoped to salvage the old neon Monterey Motel sign and change the name, but sign laws prevented him from doing so without strong grounds to support such a move. Proof that the motel was once called Monterey Court was reason enough for the city to approve the permit. The restored sign now stands outside the café. Motel cottages were converted into 12 cozy artisan shops that surround the 300seat courtyard music venue. Most of the stores were completed by Christmas last year and the first event was held a month later. The café, which seats 47 inside and 42 on the patio, opened in May this year. A two-way stage allows musicians to

Guests enjoy live music and drinks on the patio of Monterey Court.

play for the larger seating area or, for a more intimate show, they can turn and face diners on the café patio. The interior courtyard areas are equipped with misters for use in the warmer months. When it’s cool, gas heaters and a large brick fireplace keep customers toasty. McLear contends the biggest challenge has been overcoming the image of the area. “You dispel it by creating as welcome an atmosphere as possible. Primarily, when people are here, it changes their mind instantly.” That’s due to the protected feel of the courtyard, the presence of security personnel and the effort the owners have made to create a safe haven for those out to enjoy a good meal, live music and unique shops. “We work with the west side police station and keep them informed about what we’re doing, we invite them,” McLear said. These chats with the local police involve other Miracle Mile businesses and neighborhood associations, as well. Both traditional and online media are included in Monterey Court’s advertising mix, but it’s three-pronged, according to McLear. The merchants promote themselves individually and they work together as a group to get the word out, sometimes hosting art showcases and inviting other vendors to join them. A holiday arts and crafts fair was held in the courtyard earlier this month. A multiple-tribe Native American art and music fair is scheduled for Dec. 22. Monterey Court has free, live entertainment six nights a week, with occasional ticketed concerts. And each segment of the business works to support the others. “The merchants do a good job of promoting what goes on in the courtyard and the wait staff encourages diners to visit the shops,” said McLear. She and Haver feel Monterey Court’s reincarnation is a great first step for an area

that has real potential for growth. This year Miracle Mile received historical designation. Previously, Ghost Ranch Lodge was the only recognized historic building on the strip. “We think Miracle Mile deserves some respect from a historical standpoint before the buildings are torn down. They’re worth saving; they need to be repurposed,” Haver stressed. And he may be the leader in this direction. “If we can get ourselves financially stable — we’re almost there — we’re interested in doing this again. We’ll buy another property nearby with a different concept.” He’s not sure what that would be, but several visitors have told them stories about the early days on Miracle Mile, and it’s easy to envision the strip returning to the popular destination it once was. “People with connections to the past have told us about how much fun and swinging and exciting it was to come to this area. Movie stars from Old Tucson — this is where they’d come at night,” McLear reported. TD’s West Showclub, a few blocks down the street, once offered a very different form of entertainment than today’s shows. “It would be nice to put TD’s back to where it was as a dinner theater - or as a cow bar with square dancing,” Haver suggested. With the historical status in place, Haver believes future redevelopment on the strip could receive government funding. “We took a pretty big risk on our own and we could use the city or state to give us a hand (on future projects),” he said. He and McLear also recognize the role local media play in Tucson’s cultural and economic growth. They feel that more focus on urban renewal projects, such as those along Miracle Mile, will benefit residents, tourists and businesses alike. And then everybody wins.


InsideTucsonBusiness.com

NOVEMBER 30, 2012

5

NEWS

Providence Service founder McCusker says his won’t be traditional retirement By Patrick McNamara Inside Tucson Business With the election over, things that could have been uncertainties for Providence Service Corp. have been settled, so founder and CEO Fletcher McCusker has decided its a good time to retire from the company he founded in 1996. But he insists it won’t be a traditional retirement. “Retirement is a misnomer,” he said, adding that he plans to remain involved in downtown Tucson, retaining his positions on the Second Saturday’s board of directors and as chairman of the Rio Nuevo Multipurpose Facilities District. “It actually makes me more able to make an impact,” McCusker said. He said the Rio Nuevo board continues to work with the City of Tucson at finding a resolution to the legal issues and lawsuits that have entangled the two entities for the past few years. “I think everyone seems to be getting over their differences and getting to work,” McCusker said. Prior to his involvement with Rio Nuevo, McCusker was chairman of the board for the Fox Theatre Foundation. The historic theater, which was rehabilitated with millions of dollars in public funds, today plays hosts to regular entertainment events. Along with the Rialto Theatre, McCusker said downtown Tucson has grown into a lively location for entertainment. “I really believe that we have a little bit of Austin, Texas, happening here,” McCusker said, referring to the Texas capital, which is renowned for its music and entertainment scene. But downtown Tucson hasn’t always been like it is now, he recalls. “I remember driving through with my wife (in 1996) and the Fox was boarded up and the Rialto was boarded and we said it was just a shame,” McCusker said. He said he could remember as a child growing up in Tucson and seeing movies at the Fox and shopping at the many stores that once filled downtown. But a long decline of downtown started sometime in the 1970s and lasted until recently. Today, however, new businesses have moved into the urban city core and a growing restaurant and bar scene has taken root in what had been many dilapidated or shuttered buildings. Providence Service Corp., too, has been part of that downtown revitalization. Under McCusker in 2010, the company moved its headquarters into a renovated building

Fletcher McCusker

McCusker, who grew up in Tucson and earned his bachelor’s degree from the University of Arizona and a master’s degree from Arizona State University, left the state in 1970s but returned in 1996 to start Providence Service Corp. He said he started the company with an investment of $50,000. The company is now worth more than $1 billion.

at 64 E. Broadway. Since then, the same stretch of Broadway has seen a revitalization boom. A new residential high-rise is under construction at the corner of Broadway and Stone Avenue, Tucson Electric Power built its headquarters building at Broadway and Sixth Avenue, a new restaurant is under construction on the same block as Providence Service and a brewery plans to open at the east of the street at Herbert Avenue. “It’s been fun to watch,” McCusker said. The soon-to-be former executive might even jump in with his own downtown company soon too. “There’s plenty of opportunities I’d be interested in,” he said. McCusker wouldn’t share any details of the plans he has for a downtown business, but did say that since he has a noncompete agreement with Providence Service Corp. it would have to be in a different industry. McCusker, 63, will officially retire as CEO of Providence Service at the end of December. He also officially stepped down as chairman of the company’s board of directors, a move that was effective Nov. 19. As for why he chose now as the time to leave? “The election was a pivotal point for Providence because we’re totally Medicaid funded,” McCusker said. “Once the election was over the company’s future was well secured.” Under the slogan “Human Services Without Walls,” Providence Service Corp. provides services to clients, most of whom are involved in government programs such as welfare, probation or parole, Medicaid or Medicare. McCusker, who grew up in Tucson and earned his bachelor’s degree from the University of Arizona and a master’s degree from Arizona State University, left the state in 1970s but returned in 1996 to start Providence Service Corp. He said he started the company with an investment of $50,000. The company is now worth more than $1 billion. Warren S. Rustand has been appointed interim CEO of Providence Service Corp. Rustand has been the company’s lead director and has been a venture capitalist. He also played basketball for the UA from 1961 to 1965 and was White House appointments secretary to President Gerald Ford. Contact reporter Patrick McNamara at pmcnamara@azbiz.com or (520) 295-4259.

This Week’s

Good News Money for minority businesses These days, when it can be difficult for any business to get access to money, it’s especially good news when a lender, in this case microlender Accion, gets honored by the only federal agency dedicated to fostering growth and competitiveness of minority businesses as a 2012 national honoree for providing minority firms access to capital. The U.S. Department of Commerce’s Minority Business Development Agency (MBDA) will feature Accion as part of its its National Minority Business of the Year Awards Program Dec. 6 in Washington, D.C., with the agency’s 2012 Access to Capital Award. Over the last five years during the recession, Accion, which operates in Arizona, New Mexico and Colorado, has provided more than $7.7 million in business loans to 872 minority borrowers whose firms supported the creation or continuance of 2,025 jobs.

The Tucson

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

Biggs no Rio Nuevo foe Despite concerns to the contrary, Rio Nuevo Multipurpose Facilities District Chairman Fletcher McCusker says he believes state Senate President-elect Andy Biggs, R-Gilbert, wants the board to keep making progress with the city. Biggs attended a Second Saturdays event and told McCusker he’s not interested in wasting time returning to the days of fighting and arguing. “He basically said stay the course,” McCusker said.

Shopping at work If your business blocked access to employees doing online shopping on Cyber Monday this week, you’re among the minority. A blind survey conducted by Robert Half Technology of 1,400 chief information officers found that just 33 percent of U.S. companies blocked employee access to shipping sites this year. The same survey done last year found 60 percent of companies blocking shopping sites. Online holiday spending is forecast to increase 12 percent from last year to an estimated $96 billion. Cyber Monday apparently helped in that effort. According to estimates from Adobe’s Digital Index, online shopping on Cyber Monday this year grew 17 percent from last year to $1.98 billion. Notably, 22 percent of that came from mobile devices so employees might not have been doing all of their shopping at ther desks.


6 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS

NEWS BANKRUPTCIES

Business lobby wants state to create program supporting venture capital investment

Chapter 11 Business reorganization

By Tian Chen Cronkite News Service

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

Conquest Santa Fe LLC, doing business as Hyatt Place Santa Fe, 7620 N. Hartman Lane, Suite 122, Marana (Principal assets: 4320 Cerrillos Road, Santa Fe, NM). Principal: Morris Eigen, member. Estimated assets: More than $10 million to $50 million. Estimated liabilities: More than $10 million to $50 million. Largest creditor(s): Graham Mechanical, Alamogordo, NM, $33,143.95. Case No. 1224937 filed Nov. 16. Law firm: Mesch Clark & Rothschild Thomas D. Laue and Karin F. Laue, 25450 S. Via Montana Vista, Green Valley. Principal: Thomas D. Laue and Karin F. Laue, joint debtors. Assets: $553,930.00. Liabilities: $1,629,715.05. Largest creditor(s): Americas Servicing Co., Des Moines, Iowa, $637,369.00, and Dream Come True Inc., c/o David M. Zinder, Esq., Northbook, Ill., $300,000.00 (disputed). Case No. 1225030 filed Nov. 19. Law firm: Eric Slocum Sparks Jalopies LLC, 4230 N. Oracle Road #100. Principal: Hal Burns. Estimated assets: More than $50,000 to $100.000. Estimated liabilities: More than $50,000 to $100,000. Largest creditor(s): Schedule not filed. Case No. 12-25324 filed Nov. 26. Law firm: Pro se

FORECLOSURE NOTICES No filings for businesses.

LIENS Federal tax liens Ratliff Aviation Inc., 6720 S. Plumer Ave. Amount owed: $16,878.66. Tucson Care Care Towing Inc., 3061 N. Alvernon Way. Amounts owed: $31,944.03 and $2,628.44. Otero Bros. Inc., PO Box 4007, Tubac 85646. Amount owed: $79,411.49. Ground Effects Landscaping Inc., 107 W. Sahuaro St. Amount owed: $8,480.86. Farwest Development & Construction of the Southwest LLC FDC, 2231 W. Ina Road. Amount owed: $5,675.47. Mary’s Residential Home Care Inc., 1500 N. Yavapai St. Amount owed: $4,290.00. David P. McGeary Enterprises Inc., 8180 N. Bayou Drive. Amount owed: $8,521.44. Tron Mechanical Inc., 2010 W. Cassim Lane. Amount owed: $48,979.94. VIP Parking Solutions LLC and Steve Kahn, 41 S. Shannon Road, Apt. 19104. Amount owed: $1,541.38. Frankie’s South Philly Cheesesteaks & Hoagies and Frank Santos, 2574 N. Campbell Ave. Amount owed: $9,399.74. Shear Performance and Foothills Metro Salon Inc., 8327 N. Rose Marie Lane. Amount owed: $1,703.69. David Lipartito PC, 177 N. Church Ave., Suite 700. Amount owed: $4,648.88. Kyosushi Chinese Combo & Vietnamese and Ung Vo, 9040 E. Valencia Road. Amount owed: $5,214.37. Anthony’s Heating & Cooling Inc., 10911 E. Limberlost Road. Amounts owed: $71,045.85 and $14,611.77. Uranium King Corporation, 2030 N. Forbes Blvd., Suite 106. Amount owed: $29,708.26. Precision Tune Up and American Avenue Automotive LLC, 6942 N. Montebella Road. Amount owed: $16,992.96. Little White Schoolhouse and Charlene Cox, PO Box 32344, 85751. Amount owed: $11,838.39.

State liens (Liens of $1,000 or more filed by the Arizona Department of Revenue or Arizona Department of Economic Security.) Hot Dogs Obregon and Luis E. Ferre, 3555 E. Ellington Place. Amount owed: $12,046.43.

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

M&B Mechanical Inc., PO Box 17118, 85731, against Capstone Development Partners, 431 Office Park Drive, Birmingham, Ala.; OT Kino LLC, 2940 N. Swan Road, Suite 212; Tucson Properties I LLC, 300 W. Clarendon Ave. #230, Phoenix; and Bank of the West, 2527 Camino Ramon, San Ramon, Calif. Property: 345 and 350 E. Congress St. Amount owed: $57,347.64.

Arizona’s economy would benefit if elected officials followed the lead of states including Utah and New Mexico that have established government-supported programs promoting venture capital investment, two business groups contend. The Arizona Technology Council, a trade association for technology and science companies, and the Arizona Growth Foundation, an online community for small businesses, are proposing an Arizona Fund of Funds to generate more venture capital investment in startups here. The fund would use the promise of state tax credits to attract money from private investors that in turn would be invested in venture capital firms interested in working with Arizona companies. The program would attract out-of-state capital and prevent local entrepreneurs from leaving for California and New York, where funding is more readily available, said John Kowalski, founder of the Arizona Growth Foundation. “If we are able to provide a funding source here, we can keep those companies and those jobs here in Arizona,” he said. According to the U.S. Department of the Treasury, at least 37 other states had state-run venture capital funds as of last May. The Arizona Fund of Funds is modeled on a Utah program, launched in 2006, that proponents say has invested $304 million in 55 firms and creating nearly 5,000 jobs. Steven Zylstra, president and CEO of the Arizona Technology Council, said Arizona business leaders have pushed unsuccessfully for a statesupported venture capital fund over the past 20 years, but he said he’s cautiously optimistic that lawmakers will embrace

the idea now. “We think we’ve done all the right things in terms of educating legislators and helping people understand that this is a failure in the marketplace that needs to be addressed,” Zylstra said. The groups’ goal for the Arizona Fund of Funds is raising $100 million from the private sector sources such as investment banks and pension funds and investing the money in venture capital funds across the country. The venture capital firms are expected but not obliged to invest back in Arizona companies. If the Fund of Funds loses money, the

state would issue contingent tax credits to the fund’s financiers to make up for the loss. This lowers the risks for the financiers and makes it easier for the Fund of Funds to raise money, said Mark Lewis, assistant director of the Arizona Growth Foundation. Private-sector money managers, rather than government officials, would make investment decisions for the Fund of Funds. Lewis said the Fund of Funds also would encourage out-of-state investment by offering mentorship to companies that receive venture capital. “We will babysit the companies and make the venture funds’ investments worth it,” he said. Jeremy Neilson, who directed the Utah Fund of Funds for its first six years, said the program has succeeded in part because a geographically diversified portfolio of underlying funds reduces the chance that the state will have to compensate investors with tax credits. “It’s one of the models that is shown to decrease the risk to the state, and the state gets the benefit upfront,” Neilson said. Since its Fund of Funds launched in 2006, Utah has yet to grant any contingent tax credits to investors, Neilson said. Lewis said the Arizona Fund of Funds might hire Neilson as one of its directors if lawmakers approve of the program. Kowalski said that although in some years the state may have to issue contingent tax credits at a cost to taxpayers, the money would be worth spending. “You have to look at the effects of the overall fund on the economy,” Kowalski said. “Even if the state has to pay out something in the year eight or 12, it’ll be dwarfed by the return in the economic gains the state has realized over those years.”

Steven Zylstra, president and CEO of the Arizona

Technology Council, said Arizona business leaders have pushed unsuccessfully for a state-supported

venture capital fund over the past 20 years, but he said he’s cautiously optimistic that lawmakers will embrace the idea now.


InsideTucsonBusiness.com

NOVEMBER 30, 2012

7

NEWS By Patrick McNamara Inside Tucson Business With the future of its newly acquired wastewater treatment facility still in the hands of the courts, Marana has begun to look for a failsafe way to stay in the sewer business. On Nov. 7, the Marana Town Council voted unanimously to put this question to its voters in March: Shall the town be authorized to acquire and operate a wastewater treatment facility? If that sounds familiar, there’s a reason. The town already has been in the wastewater treatment business since January, after battling for years with Pima County for ownership of the Marana Wastewater Reclamation Facility that serves a few thousand customers north of the town. Not only does the town own and operate the facility, for which it’s supposed to pay Pima County, but residents already voted in favor of Marana getting into the sewer business during the Reagan administration in 1988. That could change, however. “The Arizona Court of Appeals in June said the old election was not specific enough,” said Marana town attorney Frank Cassidy. That Court of Appeals ruling from June said, somewhat confusingly, that the town could operate a wastewater treatment facility but that the 1988 election did not satisfy state statutes requiring a municipality to get voter approval to operate public utilities. The appeals court ruling said the 1988 ballot question gave the town a general authority to enter the utility service business but did not specify which wastewater treatment facility it would operate. So the town has taken a two-prong approach to dealing with that ruling. It first asked the Arizona Supreme Court to reconsider the lower court’s decision. But if that doesn’t work, town officials sought the election, which names the Marana Wastewater Reclamation Facility specifically, as a backup plan. Cassidy said the voter authorization would make the issue before the court mostly irrelevant. “There are still some other arguments that could be made, but it would be a significant hurdle for us,” Cassidy said. But if voters don’t approve the ballot

Patrick McNamara

Marana puts sewer issue back to voters

The Town of Marana owns and operates the Marana Wastewater Reclamation Facility, but a court ruling has questioned the legitimacy of the town’s operations. Town leaders have decided to ask voters to give the town approval to operate the utility.

question in March, the years of legal battles against Pima County for control of the facility and the money invested in improving and the costs of operating the treatment facility could end up all for naught. “If they (voters) reject what we’re putting out there it would end our quest for and ability to operate our own utility system,” said Marana Town Manager Gilbert Davidson.

Davidson said the town council would have to decide what to do if the ballot measure gets rejected, but he said the town would respect voters’ wishes. Operating a wastewater utility has been the goal of town officials throughout the long fight, which reached the courts in 2007 but dates back to at least 2004. Town leaders couch the reasons for that

NEWS TO YOU!

in terms like “controlling our own destiny,” but there’s one simple reason for wanting a sewer system of its own: effluent. Effluent, the byproduct of sewage treatment, gives the town a steady supply of water that it can use to offset the water it pumps from the ground. In doing so, Marana can continue to expand and grow. County officials have offered to sell the town an equivalent amount of effluent from the regional treatment facilities, but town officials rejected the offer saying it would not guarantee access to a long-term supply of fresh water and it keeps Marana under the thumb of county government. Without a ready supply of fresh water, the town would be limited by state laws in its aspirations for growth. The court’s ruling from June saying the 1988 ballot didn’t specify which facility the town planned to operate, or in this case, take over from Pima County, could have larger implications across the state if allowed to stand, according to the Arizona League of Cities and Towns. “It is difficult to know how many cities and towns have previously put questions similar to Marana’s on the ballot and then acted on that authority to acquire facilities,” wrote Arizona League of Cities and Towns attorney Joni Hoffman in a friend-of-thecourt brief filled with the state Supreme Court in support of Marana. “All of those acquisitions are now clouded in uncertainty.” Hoffman argues that the appeals court’s interpretation could put up roadblocks for communities that sought to refinance bond funds to purchase a new facility. She also argues that a city or town might in the future be forced to return to the voters for approval of utility services each time it annexes new territory. If the court does not rule in the town’s favor and voters reject the ballot question in March, Marana would likely have to begin a process of returning its treatment facility to Pima County. How that would transpire, however, Davidson was unsure. The court has tentatively said it would decide whether to accept the case by Tuesday (Dec. 4). The election in Marana is scheduled for March 12.

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

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8 NOVEMBER 30, 2012

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PROFILE

Crawford in business of ‘rescuing’ people from computers Stephen F. Crawford

Lee Allen

By Lee Allen Inside Tucson Business There’s a certain irony in the fact that computer wizard Stephen Crawford never touched a keyboard until 1985 when he was in his early 30s. “I came into the industry right at the fledgling stage of the birth of the computer age,” says the owner of Crawford Computer Consulting. Now the former systems analyst for IBM has a stable of small business clients who rely on Crawford to get them organized and keep their computer systems working. “I see my job as rescuing people from their computers. I don’t want to be entangled in business bureaucracy — I just want to solve technical difficulties. I like to arrive at a problem site, figure out what the problem is, fix it and I’m gone — problem, solution, bam-bam-bam, and I move on,” he said. There’s been a learning curve from computer novice to Big Blue to independent contractor. “I worked in a pharmaceutical lab doing manual inventory control with spreadsheets until IBM announced a need for people in inventory control and by virtue of my inventory experience — even non-computer based I was hired,” he said. “When I showed up for work, I thought everybody there must be a computer genius and was prepared for that environment. Then I discovered, like anyplace else, most people didn’t know much about computer systems and how they worked.” He recalled the arrival of a PC in his department at IBM, complete with a floppy disk drive and a bit of random access memory and what he called “the killer app of its time,” the Lotus spread sheet. After researching the background of Lotus and writing about it, he got noticed by higher ups. “It’s a success story about being in the right place at the right time and knowing how to solve an existing problem,” BIZ FACTS Crawford said. “Each Crawford Computer time there was a new program and a Consulting eeducation as a certification, I went programmer analyst, p www.crawfordcomputer.com for it. It’s a lot easier aand became an entre(520) 298 1653 to build on previous preneur by placing an p knowledge than it is aad in the paper for to step in to handle a computer service,” he complex situation without background remembers. “I got enough work to start my experience.” business and 20 years later, I’m still That was the start of what is the Stephen wondering what I’ll be doing tomorrow. Crawford philosophy: Spend three months But every day something happens. I start at a specific job doing the background each morning with a mission to accomresearch and you can become an expert plish a limited number of projects.” and people will rely on you. It’s called job He said it was “a leap of faith to leave security. The plan worked until IBM IBM, the most secure job in the world, and wanted to move Crawford elsewhere and jump into the deep end of the pool, but I’m he chose not to relocate. glad I took that path.” “I took the buyout money, got my Crawford says he makes a comfortable

living doing what he enjoys. “I do the kind of work I enjoy and for the most part, it’s predictable, although each time the phone rings, the problem-solving scenario can take a 90 degree turn. That’s the fun part of it, however, not knowing what the next problem will be and having to come up with a creative solution,” he said. Crawford Computer Consulting clients range from an office with a computer or two up to businesses with 50 terminals. “I have about three dozen servers I routinely take care of as well as 400 to 500 PCs that are routinely under my supervision. I don’t want to take on more than I can handle. The biggest problem independent business people like me get into is

they try to take on too many clients and get tied up at one location, taking them out of service and unable to respond to other ‘help me’ calls,” Crawford said. Instead, he said he prefers to rely on just a briefcase and his brainpower to fix what’s wrong. “I’d be a bad employee for someone else because I enjoy showing up and taking control of a situation,” he said. In the 1970s, when people were afraid automation would put people out of work, Crawford’s father predicted the change would result in an economic boom. “Then came the Information Age, so Dad was right, and it’s kept me busy for my career,” Crawford says.


InsideTucsonBusiness.com

NOVEMBER 30, 2012

11

GOOD BUSINESS GETTING FIT

‘Y’ brand is part of YMCA evolution to meet new demands You may have heard about YMCA’s new Y brand when it was launched last year. Much of the conversation has focused on our refreshed logo and new colors. These external changes are the most obvious but more importantly, the new Y brand should help people recognize the causes the Y has always embraced. The phrases “For Youth Development, For Healthy Living and For Social Responsibility” are linked closely with our new logo. They represent the principle focus of our Y’s work in strengthening the foundation of our community. While most appreciate the positive growth the Y’s programs and services bring about, our impact is often underestimated. For nearly 100 years, we have been listening and responding to our community’s most critical needs. Our resolute efforts in childhood obesity, diabetes prevention, military outreach, senior wellness, youth summer programs, and the development of safe, affordable, accessible and high quality child care are a testament to our commitment to the health of our community and its residents. We are impacting children’s lives.

Last summer we taught nearly 5,000 children to swim at local Y pools. Through a partnership with TMC for Children and Kohl’s Cares, the Y is pleased to offer our newest swim DANE WOLL safety program: Vest It Up! This is a free program for children ages 4-17. The Y will offer swim lessons year-round to the first 550 children who enroll. TMC Desert Kids Safety Program will fit participating children with a personal flotation device and then the children will attend eight, 30-minute free swim lessons at the Y. Being healthy means more than simply being physically active. It’s about maintaining a balanced spirit, mind and body. The Y is a place where you can work toward that balance by challenging yourself to learn a new skill or hobby, foster connections with friends through our lifelong learning programs, or bringing your loved ones closer together through

our many family-centered activities. We offer families the opportunity to get healthy and spend quality time together by taking a variety of family-focused classes. These include Family Yoga, Family Zumba and family aquatics. At the Y, it’s not about the activity you choose. It is about the benefits of living a healthier lifestyle on the inside and the outside. We understand it can be challenging to fit your workouts into this hectic holiday season. We believe that you can give most to others when you are taking care of yourself. We are supporting our troops. The Y provides military families with a welcoming place to meet other families who can relate to their unique situation. We offer free memberships to families when a spouse is deployed and kids from military families enjoy free sessions of summer camp. The Y’s efforts to recognize the sacrifices of military families by Active, Guard and Reserve leaders, were joined by Blue Star Moms of Arizona Chapter 2. Within our branches, we collect care package items for deployed troops, offer a free week at the Y for military person-

nel and their families, and our staff and members sign holiday cards which are mailed to deployed troops this holiday. It’s said the more things change, the more they stay the same; this is certainly true of the Y. Throughout the last decade, social challenges have increased dramatically and our community needs to continue to change. The YMCA meets today’s challenges including maintaining healthy lifestyles, fighting the obesity crisis, addressing the constant depletion of family time, and supporting Military families coping with loved ones overseas. The challenges will change — the programs and services will continue to evolve — but our unwavering willingness and ability to support our communities will always be at the core of the Y. We’re for youth development, healthy living and social responsibility.

Contact Dane Woll, president and CEO of the YMCA of Southern Arizona, at DaneW@tucsonymca.org. His Getting Fit column appears quarterly and is next scheduled to appear in the March 29 issue.

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12 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS

FOCUS FOCUS ON NON-PROFITS

Community Foundation ‘remodels’ it’s business model By Christy Krueger Inside Tucson Business While community foundations have been around for 100 years, their business models change regularly to keep up with the times. When Clint Mabie took over in May 2010 as president and CEO of the Community Foundation for Southern Arizona (CFSA), he went to work updating operations, marketing, partnerships and the grant-making process. Mabie, who came to Tucson from Chicago, where he worked with Chicago Community Trust, pointed to CFSA’s

mission statement to describe what the organization does: “To inspire and support donors making a difference forever.” This is achieved by guiding donors in their giving decisions and matching them with charities according to their interests. Mabie refers to CFSA’s approximately 500 donors as “friends.” They may designate specific non-profits or a field of interest, “such as the arts, animals or the environment,” said Mabie. When gifts are placed in an endowment, the fund’s earnings are used to make grants. An unrestricted (non-designated) gift

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usually goes through a grant award process. and we’re glad that grants from our fund “Two-and-a-half years ago we changed holders have remained constant. Our fund our philosophy with unrestricted donaholders, however, like many donors, did tions. Instead of giving small amounts to not add to their funds, and thus we were non-profits, we formed a collaborative, a not able to increase our grant making,” he group of non-profits, with a three-year explained” commitment,” Mabie explained. In keeping with its strategy to make the The purpose is to give larger amounts to giving process easier, CFSA formed the fewer grantees so they can make more of a Southern Arizona Indicators project difference in the community. CFSA’s board (http://southern.arizonaindicators.org). Its of directors is currently reviewing this partners — University of Arizona, United practice to determine how to proceed after Way of Tucson and Southern Arizona and the end of the three-year period. Arizona State University — help area Upon his arrival in Tucson, Mabie made non-profits provide data about themselves several goals for CFSA. to potential donors. “One was to increase “Now all non-profits grant making. We’ve will have access to a w BIZ FACTS increased by 30 percent data of needs, such as d over a three-year Community Foundation oon family well-being, period,” he said. border crossing, health b for Southern Arizona Secondly, he wanted aand wellness and arts 2250 E. Broadway to increase the number aand culture,” Mabie www.cfsaz.org of professional advisors ssaid. He explained that working with CFSA ssince the average (520) 770-0800 because they help bring non-profit has only n in estate gifts. sseven staff members, “They’re our pipe most don’t have the m line. It’s grown from $25 million to $55 resources to compile these statistics on million in the last three years due to great their own. teamwork and our professional advisory CFSA also is teaming up with Helaine committee,” Mabie explained. Levy and the Diamond Foundation to Marketing has been neglected in the create a loan program for non-profits. past, said Mabie, so he’s working on “Fifty percent of non-profits have 90 increasing the organization’s brand days or less of funds,” Mabie noted. “There’s identity. no place for them to go with cash-flow “We partnered with the Advertising issues. In the next month we’re launching Federation so you see our name out there.” this in Southern Arizona.” he said. He said businesses play a part with A fourth area he is transforming is CFSA and he’d like to see their roles operations. increase. “We’re reaching out to more “We want to make sure we’re efficient businesses to facilitate their philanthropy. from an operational level to help donors This will grow as more become aware of the make a difference,” he noted. This includes brand. We manage Pizza Hut’s scholarship reworking the website to make it easier to program. Bank of Tucson has a fund with navigate. us, and other major companies are Mabie also would like to see the considering us. We’re always open to foundation reach a level where it can give helping businesses. We’d love to help them more total dollars to charity organizations, out in supporting the community.” which in 2011 was $5.3 million. Focus on Non-profits is a quarterly “We need to increase that for the feature of Inside Tucson Business. Make community,” he said. suggestions for future features by sending an During this recession, Mabie noticed e-mail to editor@azbiz.com. The next Focus changes in the donation process. “The needs of non-profit organizations on Non-profits is scheduled to appear in the have increased during the past few years March 29 issue.


InsideTucsonBusiness.com

NOVEMBER 30, 2012

13

NEWS

Report: Online sales cost AZ $708M in sales taxes By Joe Henke Cronkite News Service Booming sales on Cyber Monday might have meant savings for consumers, but they could also have meant lost revenue for the state of Arizona, a new report said. The National Conference of State Legislatures said Arizona will watch an estimated $708.6 million in sales taxes go uncollected this year in online and catalog purchases, the ninth-highest amount in the nation. Besides costing the state, online sales also put brick-and-mortar retailers at a disadvantage, said Arizona Small Business Association CEO Rick Murray. “How do we level that playing field?” Murray said. “In Arizona it can mean several hundred dollars on some purchases. It’s a huge issue for some of our small businesses.” Those complaints have led to pushes in Washington, D.C., and in state capitals to require online retailers collect sales taxes for states where they send the goods they sell. They come as Cyber Monday sales — online purchases made on the Monday after Thanksgiving — hit a new high for a second consecutive year. IBM reported that online sales Monday rose more than 30 percent over Cyber Mon-

day 2011, as shoppers not only took advantage of online deals but free shipping offers. And, in most cases, no sales tax. A federal bill introduced in 2011 would address that last advantage by letting states apply their sales taxes to online purchases — with an exemption for businesses that have less than $500,000 in remote sales a year. Under the Marketplace Fairness Act, states would first have to simplify their tax laws before being allowed to levy sales taxes on online purchases. “At a time when state budgets are under increasing pressure, Congress should give state and local governments the ability to enforce their own laws,” said the bill’s sponsor, Sen. Michael Enzi, R-Wyo., at an August hearing. In Arizona, supporters of the Marketplace Fairness Act include the Arizona Retailers Association and real-estate firms Vestar Development Co. and WDP Partners LLC, according to MarketPlaceFairness.com. “It is like the title reflects. It is all about having an opportunity to compete fairly,” said Michelle Ahlmer, executive director of the Arizona Retailers Association. “What we are focused on is the fairness more than the revenue.”

Seattle-based Amazon.com, which has distribution centers in Phoenix, is also a supporter of Enzi’s bill. Arizona last November claimed Amazon owed the state $53 million in uncollected sales taxes from March 1, 2006, through Dec. 31, 2010, according to the company’s most recent quarterly earnings report. While the report said the tax bill was “without merit,” Amazon also said it had entered into a settlement with Arizona. Amazon will begin collecting and remitting Arizona sales tax beginning Feb. 1 for physical goods and July 1 for digital products and services. “We are thrilled with the agreement that Arizona reached with Amazon,” Ahlmer said. “We think that puts them in the position of being a true Arizona business partner.” The settlement with Amazon came after state lawmakers earlier this year rejected a bill that would have achieved, at the state level, what Enzi is proposing on a federal level.

“Arizona is a state that would rather control its own destiny,” Murray said. “But some folks think there should be something done on a national level because with Internet sales there are no borders.” Ahlmer agreed. “It is something that will have to be done in Congress. We have done what we can in the state legislature,” she said. Even if the tax issue is settled, Murray said online firms still have other advantages, such as not having to pay overhead on a physical storefront. But Rick Marcum of the Yavapai College Small Business Development Center, said the gap between online and brick-and-mortar retailers may be narrowing. “I’ve had a couple of them (small businesses) complain, but that is ending with Amazon next year as they will start collecting tax,” Marcum said. “From our small businesses, we hear more complaints about places like Walmart.”

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14 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS

EXPENSE ACCOUNT ARTS & CULTURE

ON THE MENU

Ann Hampton Callaway sings Let’s journey into Tucson’s fascinating food, glorious food from the ‘Streisand Songbook’ Editor’s note: Tucson foodie Matt Russell takes over the food column effective this week. Surely you’ll remember the opening scene in the classic 1968 movie “Oliver!” that featured young children singing, somewhat dreamily, about “food, glorious food.” While slaving in a British workhouse, these tired, hungry and overworked kids collectively fantasized about “a great big steak; fried, roasted or stewed; oh food, wonderful food, marvelous food, glorious food,” while standing in line for a small serving of the tasteless and colorless meal of the day, gruel. The word “foodie” can mean different things to different people, but one thing we foodies all have in common is a passion for the possible, much like those kids in “Oliver!” and how the art of the possible may be transformed into a memorable culinary experience. Southern Arizona is home to a great many chefs, mixologists, sommeliers and restaurateurs, each bringing the art of the possible to their business and their craft. Some of these individuals have helped to usher Tucson to a place of prominence on the national food and cocktail map, others are little known beyond their own neighborhoods. But they all share a passion for how something on a plate, or in a glass, can actually start a conversation on its own. That is what this new column is about, and if it can effectively start a conversation, we have done our job. Each week I’ll be telling real stories, about real people, who are doing fascinating things — in the kitchen, behind the bar and on their menus. I’ll be on the lookout for the kinds of things that invoke a sense of culinary curiosity, and celebrating those very things that keep the tradition of wonder alive on the local food scene. This is not a restaurant review column, nor is it

MATT RUSSELL

the source for information on happy hour specials and summer discounts. Rather, it is part of the bigger story, the story that so many of us love to tell, about Tucson’s vibrant food and beverage land-

scape. From our perspective, we celebrate the fact that this landscape is wide. The story of iconic Tucson chef Janos Wilder’s foie gras bon-bons is equally as fascinating as why the ghost pepper chicken wings at Risky Business have earned a cult following. While Casino Del Sol’s mixologist Aaron DeFeo rocked the beverage world when he lovingly laid a blanket of Thai basil foam atop a gin cocktail with chai tea pineapple syrup, Tucson brewer Dennis Arnold raised some eyebrows when he aged one of his craft beers in wet bourbon barrels at Barrio Brewing Company. It’s the story that drives our discovery, and that’s where you come in. I want you to be part of this journey, and invite you to keep me informed of anything that fascinates you on the local food and beverage scene. Chances are, if it got your attention, there’s a great story behind it, and those are the stories I want to tell. Our delicious pursuit of food, glorious food, continues.

Contact Matt Russell, whose day job is CEO of Russell Public Communications, at mrussell@russellpublic.com. Russell is also the host of “On the Menu Live” that airs 4-5 p.m. Saturdays on KNST 97.1-FM/790-AM.

Barbra Streisand fans take note: This weekend’s Tucson Pops! Series concerts feature Ann Hampton Callaway performing from the multi-award-winning singer-songwriter’s catalog, from Broadway favorites to movie songs and from her hit albums. Streisand is a friend and mentor to Callaway. A songwriter herself, Callaway’s “I’ve Dreamed of You” was part of Streisand’s 1999 album, “A Love Like Ours.” Performances of “The Streisand Songbook” are at 8 p.m. Saturday (Dec. 1) and 2 p.m. in the Music Hall at the Tucson Convention Center, 260 S. Church Ave. Tickets are $26 to $53. Buy them online at www.tucsonsymphony.org.

Theater Beowulf Alley Theatre Company, 11 S. Sixth Ave., is presenting “Marie Antoinette: The Color of Flesh” Fridays through Sundays through Dec. 16. The play features an imagined love triangle among the queen, her portrait painter and another, weaving politics, passion and the French Revolution together in the bedrooms and drawing rooms of the time. This one is for adults who like their history on the friskier side. The curtain goes up at 7:30 p.m. Fridays and Saturdays and at 2:30 p.m. Sundays. Tickets are $20 each, with discounts for military and students. But them online at www.beowulfalley.org.

Art Etherton Gallery, 135 S. Sixth Ave., is hosting a show titled “Seeing In Silver” featuring the work of legendary photographers Harry Callahan, Ralph Gibson and John Loengard. Up through Jan. 5, the show is an examination of striking images by acclaimed master photographers in a format that is rapidly disappearing as the

world embraces digital photography. The gallery is open 11 a.m.-5 p.m. Tuesdays through Saturdays. At the Fine Art Gallery in the Jewish Community Center, 3800 HERB STRATFORD E. River Road, an exhibit titled “Celebrations” features paintings by Faigee Niebow depicting family holiday celebrations. It will be up through Dec. 12. The gallery is open 9 a.m.-9 p.m. Mondays through Thursdays and 9 a.m.-6 p.m. Fridays and Sundays (closed on Saturdays) and there is no admission charge.

Film Two films featuring big names and stories on a grand scale hit screens this weekend. First s “Anna Karenina” with Keira Knightley and Jude Law in the latest version of the literary masterpiece. Also debuting is the new crime thriller “Killing Them Softly” with Brad Pitt, Ray Liotta and James Gandolfini, that promises to give the U.S. a stylish new take on organized crime. The Loft Cinema, 3233 E. Speedway, opens the new documentary “Brooklyn Castle” this weekend. It’s about a Brooklyn middle school that has dominated the school chess world for over a decade. The touching film follows a group of students as they compete not only on the chess-board, but also in the real world. Contact Herb Stratford at herb@ ArtsandCultureGuy.com. Stratford teaches Arts Management at the University of Arizona. His column appears weekly in Inside Tucson Business.


InsideTucsonBusiness.com

NOVEMBER 30, 2012

15

MEDIA INSIDE MEDIA

Former Web producer tapped as new Tucson Weekly editor By David Hatfield Inside Tucson Business The editorship of the Tucson Weekly didnâ&#x20AC;&#x2122;t stay open for long. Dan Gibson has been tapped for the job by publisher Thomas P. Lee less than two weeks after Jimmy Boegle announced he was leaving at the end of the year to start his own alternative news service in Palm Springs. For two years, Gibson had been Web producer for the Weekly and Inside Tucson Business, both owned by Wick Communications, until last August when he left to be digital content director for Clear Channel Media and Entertainmentâ&#x20AC;&#x2122;s Tucson radio statiions. In his announcement, Lee said Gibson was selected for his background in alternative news weeklies and how they relate to website development and social media. In his career Gibson has worked in the music industry, served as online editor for Village Voice Media in Phoenix and co-authored, with Jordan Green and John Pattison, a book titled â&#x20AC;&#x153;Besides the Bibleâ&#x20AC;? that looks at other books that â&#x20AC;&#x153;should, will or have created Christian culture.â&#x20AC;? Gibson, who grew up in Tucson â&#x20AC;&#x201D; though he earned his degree from Oregon State University â&#x20AC;&#x201D; called the Tucson Weekly job â&#x20AC;&#x153;the opportunity of a lifetime for me.â&#x20AC;? As for what might be in store at the Weekly once he takes over in January, Gibson said heâ&#x20AC;&#x2122;s looking to possibly make some changes. He wouldnâ&#x20AC;&#x2122;t elaborate on what those might be until after he gets a better handle on what readers like and donâ&#x20AC;&#x2122;t like.

More people in news Andy Schwabe has been hired as the new manager of marketing and creative services for Journal Broadcast Groupâ&#x20AC;&#x2122;s Tucson TV stations, KGUN 9 and KWBA 58. He takes over part of the responsibilities that were under Steve Harris, who had been creative services director for Journalâ&#x20AC;&#x2122;s Tucson TV and radio operations until he left in August to work for a station in Austin, Texas. Schwabeâ&#x20AC;&#x2122;s experience includes four years at WTVR, the CBS affiliate in Richmond, Va.; four years at KOCO, the ABC affiliate in Oklahoma City; and a stint as a promotion producer at KYW, the CBS station in Philadelphia. In front of the cameras at KGUN 9, Greg GurulĂŠ joins the station Monday (Dec. 3) as co-anchor of â&#x20AC;&#x153;Good Morning Tucson.â&#x20AC;? GurulĂŠâ&#x20AC;&#x2122;s career spans more than 30 years. For the last couple of years, he has been doing freelance work in Santa Fe and northern

New Mexico. Before that, he had been an anchor and reporter at KPHO, the CBS affiliate in Phoenix; KASA and KRQE, the combined Fox and CBS affiliates in Albuquerque; KNTV, the NBC-owned station for the San Francisco Bay Area; KGO-TV, the ABC-owned station in San Francisco; KCNC, the NBC station in Denver, and KOB, the NBC affiliate in Albuquerque. GurulĂŠ replaces Steve NuĂąez who left KGUN in October. Meanwhile at KOLD 13, morning co-anchor Kayna Whitworth departed Nov. 21 for Boston where she will be a weekend morning co-anchor and reporter at the NBC affiliate, WHDH. Whitworth had been at KOLD two years, coming from Boise, Idaho. Taking Whitworthâ&#x20AC;&#x2122;s place is Emily Turner, who is coming from Jacksonville, Fla., where she has been a reporter and fill-in anchor for the past two years at a Washington Post-owned station that boldly gave up its CBS affiliation a decade ago to concentrate on expanding news. And for anyone wondering what happened to KGUN reporter Claire Doan, she left this month for Sacramento, Calif. Sheâ&#x20AC;&#x2122;s due to start Monday at KCRA-TV, the NBC affiliate. It gets her closer to San Francisco where she grew up. Shanna McCoy, who had been market manager of Clear Channelâ&#x20AC;&#x2122;s seven Tucson radio stations for 14½ months until April, is due to start Monday as director of sales for radio stations WOGK and WNDD in the Gainesville-Ocala, Fla., market.

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More Scott talk Starting Monday, radio talk show host John C. Scott will double his air time back to two hours, from 3-5 p.m. weekdays on the Voice KVOI 1030-AM. Scott, whose Tucson broadcast career dates back to when he was a newsman on KTKT in the 1960s, is now in his 24th year doing a local talkshow. His show was cut to an hour when joined KVOI in September 2011 after two years at what was then the Jolt KJLL, where he was also general manager. To make way for the additional hour of Scottâ&#x20AC;&#x2122;s show, KVOI will trim the local airtime of nationally syndicated host Michael Medved to two hours, 1-3 p.m., from three hours.

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

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16 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS

PEOPLE IN ACTION APPOINTMENTS CRC Health Group has appointed Dr. Vicki Berkus to the dual role of clinical director of eating disorder programs for CRC’s network and medical director for eating disorder treatment at its Sierra Tucson facility. In her role, Berkus will lead the integration of all five of CRC’s nationwide eating disorder treatment programs to develop a coordinated continuum of services. CRC’s eating disorder treatment network includes Carolina House in Durham, N.C., Center for Hope of the Sierras in Reno, Nev., Montecatini in Carlsbad, Calif., The Victorian in Newport Beach, Calif., and Sierra Tucson. Tiana Ronstadt has been appointed to the Woodbury Financial Services President’s Advisory Council. Membership in the organization is offered to a select group of registered

representatives who, through their influential partnership with Woodbury Financial senior leaders, play a key role in transforming the future of the industry. Ronstadt has more than 20 years in the financial planning industry. She is the founder of Power Women Investing, a comprehensive financial services firm whose mission is to empower individuals to gain financial independence. ELECTIONS The Community Food Bank of Southern Arizona has announced its officers and a new board member for 2012-2013. Gregg Johnson, campus director of University of Phoenix was elected chair of the Community Food Bank of Southern Arizona Board of Directors. Joining him as co-vice chairs are Bret Berry, director at Keegan, Linscott and Kenon; and Greg Kishi from IBM.

business administration from the University of Arizona.

GREGG JOHNSON

Stephanie Bankemper from Cox Business will be secretary and Katie Maxwell, University of Arizona Department of Accounting lecturer, will serve as Treasurer. One new member was elected to the Community Food Bank Board. Cathy Bradley, director of human resources Unisource Energy/Tucson Electric Power, was elected to a three year term. Startup Tucson has elected the following people to its board of directors: Justin Williams, Startup Tucson, chairman; Harry George, Solstice Capital,

TODD ACKERMAN

FARID GHARAGOZLOO

{YOUR NAME HERE} To announce a professional promotion, appointment, election, new hire or other company personnel actions, fax press releases to (520) 295-4071, Attention: People; or email submissions to pmcnamara@azbiz.com. Include an attached photo at 300 dpi. board member; Curtis Gunn, Desert Angels, board member; Pam Sutherland, Downtown Tucson Partnership, board member. NEW HIRES Tech Launch Arizona has hired Sherry Hoskinson as

director of commercialization networks and operations. In accepting the position, Hoskinson leaves her role as director of the University’s McGuire Center for Entrepreneurship at the Eller College of Management. The UA created Tech Launch Arizona as an overarching

structure to help more effectively develop University inventions and create intellectual property for commercial applications. In her new role, Hoskinson will cultivate resources and relationships to refine UA innovations and better align them and prepare them for market opportunities. Trust and estate administrator Todd Ackerman has joined the tax and investment advisory firm of Raskob Kambourian Financial Advisors. Ackerman earned a bachelor’s of science in business and a master’s of

Thoracic surgeon Dr. Farid Gharagozloo has joined the University of Arizona Department of Surgery as professor and chief of the Section of Thoracic Surgery. Gharagozloo is a world expert in the fields of robotic surgery, esophageal surgery and thoracic oncologic surgery. Gharagozloo leads the University of Arizona Thoracic Oncology Program, which will combine lung-cancer screening and advanced robotic surgery for early-stage disease as part of multi-modality therapy for lung cancer. Prior to coming to the UA, Dr. Gharagozloo was chief of clinical cardiothoracic surgery and a clinical professor of surgery at The George Washington University Medical Center. He also served as surgeonin-chief and director of The Washington Institute of Thoracic and Cardiovascular

Surgery in Washington, D.C. He earned a medical degree at Johns Hopkins University in Maryland. He completed his residency in general surgery and thoracic and cardiovascular surgery at the Mayo Clinic in Rochester, Minn. In addition, he pursued further training in cardiac surgery research as an extracorporeal fellow at Harvard Medical School. Goebel Interiors has hired Elena Limon as an interior designer. Limon previously worked for Goebel from early 2005 to 2008. Prior to relocating to Tucson, she worked in southern California as an architectural representative in the flooring industry. She holds a bachelor’s degree in interior design from the Southwest University of Visual Arts.

CALENDAR SPECIAL EVENTS

23rd Annual Holiday Electric Parade Every Friday and Saturday Dec. 7 through Dec. 22 7:15 through 9:15 p.m. Tanque Verde Swap Meet 4100 S. Palo Verde Road Contact: Marie DeGain supersunday@ tanqueverdeswapmeet. com (520) 822-6666 www.tanqueverdeswapmeet.com Building a Diverse and Vibrant Community Award Dinner Saturday (Feb. 9)

6:15 to 9 p.m. Westin La Paloma Resort & Spa 2800 E. Sunrise Drive Contact: Naomi Weiner director@aifltucson. org 520.322.9544 www.aifltucson.org Proceeds from this dinner event will benefit the Arizona Israel Friendship League REGULAR MEETINGS

Tucson Business Connection First Wednesday 5 to 7:30 p.m. Pearl Nightclub 445 W. Wetmore Road Information: (520) 219-0266,

WArnold@trayersinsurance.com or www.tbcnetworking.com RSVP: Not required Cost: Free to attend, free snacks, cash bar Tucson Christian Business Connections First and third Thursdays 7 a.m. 3516 E. Grant Road Information: Robert E. Hinske, (520) 795-7195 or (520) 990-5374 Tucson Computer Society Third Monday 6 p.m. (pre-session) 7

p.m. (meeting) Pima County Medical Society Auditorium 5199 E. Farness Drive Information: (520) 6254419 or www.aztcs.org Cost: Free *No meeting in September Tucson Downtown Sertoma Club First and third Wednesday 11:30 am to 1 p.m. Viscount Suites 4855 E. Broadway Information: www. tucsonsertoma.org RSVP: tdsertoma@yahoo.com

Tucson Goal Getters Every other Sunday 1 p.m. Spill the Beans 2920 N. Swan Road Information: www.meetup. com/The-Tucson-GoalGetters or (520) 370-6961 Cost: $20 Tucson GLBT Chamber of Commerce Monthly breakfast meeting Third Thursday 7:30 to 9:30 a.m. Hotel Tucson City Center 475 N. Granada Ave.

RSVP: (520) 615-6436 or info@tucsonglbtchamber.org Cost: $15 members, $20 guests

Tucson Hispanic Chamber of Commerce Monthly Networking Luncheon Third Thursday 11:30 a.m. The Manning House 450 W. Paseo Redondo RSVP: www. tucsonhispanicchamber.org. Cost: $25 members, $30 nonmembers


InsideTucsonBusiness.com

NOVEMBER 30, 2012

17

BRIEFS GET ON THE LIST

Next up: Art galleries, Sign companies The countdown is on: Inside Tucson Business is in the final weeks of gathering data for the 2013 edition of the Book of Lists. Categories to be published in upcoming issues of Inside Tucson Business are: • Dec. 7: Art galleries, Sign companies • Dec. 14: Private golf courses, Public golf courses • Dec. 21: Oldest business • Dec. 28: Health and fitness clubs, Book stores If your business is in one of these categories, update your profile now. Lists that already have been published in an earlier edition this year can be updated with changes before the Book of Lists is published Jan. 25. To make a change, go to www.InsideTucsonBusiness.com and click the Book of Lists tab at the top of the page. New and unlisted businesses can create a profile by following the directions. The Book of Lists is a year-round reference for thousands of businesses and individuals. The 2013 edition will be published in January. To advertise your business, call (520) 294-1200.

NEW IN TOWN

Mexican bus line opens Tucson terminal today A major Mexican bus line, Transportes y Autobuses Del Pacifico (TAP), officially opens its Tucson terminal at 10 a.m. today (Nov. 30) at 910 W. Irvington Road in the Placita del Rio Shopping Center northeast of Interstate 19 and Irvington Road. The grand opening ceremonies will be hosted by Sergio Barragán, CEO of TAP, and will include Tucson Mayor Jonathan Rothschild. TAP is based in Guadalajara and has routes throughout Mexico. The U.S. division, called TAP Royal, will add service to Phoenix and Las Vegas in the weeks to come. The company’s fleet consists of several hundred buses, most of them luxury buses manufactured by Mercedes-Benz and Volvo. The company says each passenger seat is wired with an electrical outlet. The busses operating in the U.S. are registered and plated jointly in Arizona and Mexico. TAP Royal’s website is www.taproyal.com

HOLIDAYS

Radio play Tucson twist on ‘Christmas Carol’ is Sunday Radio station Mix-FM KMXZ 94.9-FM will present the 2012 edition of its annual radio play based on the Charles Dicken’s classic, titled “A Christmas Carol With A Tucson Twist.” The peformance will take place at 5 p.m. Sunday (Dec. 2) at the Fox Tucson Theatre, 17 W. Congress St.

Cast members for this year’s performance include Joseph Blair, former University of Arizona and professional basketball player, as Tiny Tim; sports broadcaster Dave Sitton as Cratchit; traffic reporter Allen “Big Al” Kath playing multiple roles including Honey BooBoo; Arizona Daily Star editorial cartoonist David Fitzsimmons as Scrooge; KGUN 9 “Good Morning Tucson” co-host Corinne Hautala; and Mix-FM personalities Mrs. Grant, Greg Curtis, Marty Bishop, Adrienne Walker, Leslie Lois, Sheila K and Bruce Daniels. Music and sound effects will be performed by singer-songwriter Lisa Otey and Diane VanDuerzen, who will also open the show with a medley of their holiday hits including “Meet Me Under The Mistletoe.” The show is a fundraiser for the Diaper Bank of Southern Arizona. Adult general admission tickets are $15, military personnel are $10, children 3-13 are $5 and under 3 are free. Buy tickets through the Fox Tucson Theatre’s box office; Diaper Bank, 4500 E. Speedway, Suite 75; or online at www.foxtucson.com. A limited number of VIP cast reception tickets are also available at $50 each, which includes wine and appetizers, and reserved VIP seating and mingling with the cast. As part of the tradition, the play is broadcast by Mix-FM on Christmas Eve.

MANUFACTURING

Raytheon gets $18.4 million Air Force missile contract Raytheon Missile Systems has been awarded an $18.4 million contract from the U.S. Air Force for high-speed missiles outfitted in F-16 fighter jets. The high-speed, high-tech missiles account for 50 Raytheon jobs in Tucson, according to an announcement made by the office of U.S. Rep. Ron Barber, D-Ariz. Raytheon has 11,900 workers in Tucson.

RETAIL

Americans spend $5.5B on Small Business Saturday Increased awareness this year apparently helped propel Small Business Saturday Nov. 26 into a $5.5 billion retail revenue generator, according to the National Federation of Independent Business (NFIB). This year’s spending surpassed projections of $5.3 billion, according to the NFIB. “We are very pleased that so many Americans sought to give back by shopping small this Small Business Saturday,” NFIB CEO Dan Danner said in a statement. “We hope that support of small firms, retailers, restaurants and other independent businesses continues throughout the holiday season and all year round. Continued support of this vital sector is one important way to ensure our economy fully recovers and a healthy private sector is restored.” Originally started by American Express, Small Business Saturday has taken place the Saturday following Thanksgiving for the past

three years. According to the NFIB, more than 350 business organizations supported Small Business Saturday.

TRANSPORTATION

Flight attendants vote to strike US Airways Officials of the union representing flight attendants at US Airways announced its members voted by a 94 percent margin to authorize a strike against the airline. The vote doesn’t mean a strike is imminent. Both the airline and the union, the Association of Flight Attendants-CWA, are in mediated negotiations being overseen by the National Mediation Board. Under federal regulations governing airline labor negotiations the board would have to release both sides and there would be a 30-day “cooling off ” period before a strike could occur. “The union has told our flight attendants that the strike vote is about positioning at the bargaining table and not about striking,” US Airways said in a prepared statement. The union says its members are still working under two separate contracts dating back to before a 2005 merger combining the old America West with US Airways. The flight attendants working under the old America West contract are earning 42 percent less than those working under the old US Airways contract, despite the fact that they are both working for the same airline now. The airlines’ 6,700 flight attendants have twice this year voted to reject offers. US Airways accounts for 11 percent of passengers flying out of Tucson International Airport this year, although most of its flights are operated by regional subsidiaries, Mesa or SkyWest, neither of which are directly involved in the labor issues.

COMMERCIAL REAL ESTATE

Ventana condo conversion falls into foreclosure A significant portion of a 408-unit, luxury condo conversion project in the Ventana Canyon area of the Catalina Foothills has fallen into foreclosure and is set for public auction in February. Only about 120 residential units at Veranda at Ventana, 5751 N. Kolb Road, are included in the trustee’s sale notice along with the property’s common recreational amenities that include two pools, a clubhouse with fitness center, volleyball courts and a playground, according to public records. The condos, a mix of one-, two- and threebedroom floor plans, had been marketed as either rentals or for sale. The project was originally built in 1996 as San Ventana Apartments. In 2006, Montecito Ventana LLC acquired the complex for $16.4 million and announced plans to convert it into condominiums. Parent company Montecito Property Company LLC, Jacksonville, Fla., is a firm that specializes in converting apartments in desirable, upscale destination areas.

The beneficiary in the foreclosure is New York Credit Funding I, New York. The auction is scheduled for 10 a.m., Feb. 15, at the law offices of Quarles & Brady, 1 S. Church Ave.

GOVERNMENT

City to hold meetings on new development code The City of Tucson Planning and Development Services Department has set a series of training sessions to help builders and developers understand the newly modified Unified Development Code that takes effect Jan. 2. The sessions will include information on organization, the differences between the land use code and the Unified Development Code, and how the transition will occur. The adoption of the new code is intended to address the complexity and ambiguity of the existing land use code. Sessions are set for: • Monday (Dec. 3), 8-9:30 a.m. in the Sentinel Building, 320 N. Commerce Park Loop • Dec. 6, 6-7:30 p.m. in the Ward 6 City Council Office, 3202 E. First St. • Dec. 12, 6-7:30 p.m. in the MurphyWilmot Library, 530 N. Wilmot Road • Dec. 13, 10-11:30 a.m. in the Sentinel Building, 320 N. Commerce Park Loop The city asks that attendees RSVP their plans to Adam Smith at adam.smith@tucsonaz.gov or (520) 837-6951.

EVENTS

Register by Tuesday for UA Economic Outlook Dec. 7 The University of Arizona’s top two economists will present their annual assessment of the economy — regionally in Tucson and Southern Arizona as well as globally — and where it’s headed next year at noon Dec. 7. The deadline to register is Tuesday (Dec. 4). Tickets are $85 each or entire tables of 10 can be reserved for $850. Register online at www.eller.arizona.edu/outlook. Marshall J. Vest, director of the Economic and Business Research Center at UA’s Eller College of Management, and Gerald Swanson, economics professor in the UA’s Eller College, will give their takes on how the economy is being affected by the elections, fiscal cliff, increased regulation, and monetary policy. Globally, they are also planning to address the recession in the Eurozone and a pronounced slowdown in China that remain the main risks to the U.S. expansion. Joining Vest and Swanson again this year is Anthony Chan, chief economist for private wealth management at JP Morgan Chase, which is sponsoring the luncheon. The Economic Outlook presentation will be held at the Westin La Paloma Resort and Spa, 3800 E. Sunrise Drive.


18 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS

FINANCE YOUR MONEY

Ready to expand? Know the art of managed growth As the economy shows signs of a rebound, the desire for business owners to look into expansion is on the rise. For many entrepreneurs, the timing seems perfect. Their company has weathered the economic storm and survived. Now the urge to capitalize on low-interest rates, depressed property values and a high unemployment rate is strong for some business owners. A case could be made that it is indeed a great time for a well planned expansion, as long as the emphasis is on well planned. With careful preparation and strategic execution, expansion can be very profitable for a company. More often than not, the passion that made an original business venture successful also led to a great product that required little managerial oversight. When planning for growth, take a step back and analyze what unintended consequences are on the horizon. Once these issues are addressed, it’s time to approach a banker. It’s essential to explore these questions: • Is your business financially sound? Have you recouped your initial start-up investment? • An expansion requires a variety of resources including capital, time, attention and vision. Are you prepared to provide each of those? • Have you sufficiently serviced the original market and are you certain that it is now time to explore another location or product line? • Will your primary business suffer from this expansion? Do you have the right employees in place to maintain the standards of customer service and product integrity that made your business successful? • Do you have strategic partners and vendors lined up to aid in this expansion? People including a real estate agent to find the perfect new location, a marketing consultant to protect and promote your brand reputation, a human resources expert to ease the burden of added employee regulations, an insurance agent to make sure your company is appropriately protected and a trusted banker to guide your financial decisions. At Commerce Bank of Arizona, we

carefully examine the business plan, projections and unintended consequences of growth. We also test those assumptions before signing off any loan. We understand JOHN S. LEWIS that at times, a banker must play the role of adviser and be comfortable saying, “no” when necessary. It’s always in a customer’s best interest and we base our decisions strictly on what our customers can and can not afford. A bank is not an equity partner; it is a lender that must protect its investors and depositors. Because we are a community bank, we have a deeper level of knowledge and understanding of our customers’ needs and we strive to align ourselves as a strategic partner, but we must carefully balance the line between advisors and investors to run a successful business of our own. We cannot compromise our banking principles by lending more or restructuring a loan that is in trouble. Bankers, eager to help, often pour fuel on the fire by encouraging businesses to grow at irresponsible rates, causing the owners to take on excessive debt. When the expansion is not as successful as the company hoped, they are unable to repay the debt and everyone fails. We’re happy to see businesses expand, but we want to see them expand smartly over time and not end up in trouble like so many have over the past five years. We want to be your financial partner and succeed, but this means careful attention to managing realistic expectations. Don’t be discouraged. Well-planned business growth is a positive thing for companies, banks and other strategic partners as well. In our experience, small steps verses giant leaps are always best.

John S. Lewis is president of Commerce Bank of Arizona, a locally-owned community bank specializing in serving small- to mid-size businesses in Arizona.

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

Company Name

Symbol

Nov. 28 Nov. 19 Change

52-Week 52-Week Low High

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

AERG.OB CEXIQ.OB PRSC UNS

0.02 0.11 13.20 41.59

0.02 0.11 11.85 40.50

0.00 0.00 1.35 1.09

0.02 0.01 9.56 35.20

0.12 1.00 15.94 43.12

8.40 0.46 2.60 9.76 59.77 8.26 88.27 13.35 54.98 3.36 18.25 35.07 36.66 28.93 38.21 15.08 102.58 38.55 45.88 10.00 88.98 63.29 19.42 38.56 29.42 64.83 61.24 191.98 31.60 58.58 5.70 40.83 34.65 14.70 51.15 25.06 1.20 38.38 35.77 40.85 55.83 40.36 35.21 36.10 47.95 66.06 18.32 17.00 56.37 48.51 16.96 44.61 44.48 11.42 9.43 41.24 37.17 62.81 16.92 29.78 46.99 20.18 122.79 19.34 12.97 32.39 70.56 33.32 32.81 10.11 20.04 53.92 35.50 27.66 5.65 18.67

8.34 37.40 2.49 9.49 58.20 7.98 86.76 13.75 55.50 3.13 17.79 36.10 36.01 29.47 35.91 15.11 96.57 37.91 45.08 9.55 84.90 62.98 19.02 38.28 29.09 63.33 60.44 190.35 33.31 58.95 5.40 40.59 33.44 14.08 52.23 24.63 1.19 36.81 33.96 40.84 55.97 40.93 35.45 34.89 47.35 64.72 16.75 15.90 55.26 47.11 16.76 43.27 47.83 11.35 9.10 40.72 37.58 63.01 16.10 28.90 45.28 19.70 119.71 19.62 12.07 32.08 69.02 32.65 32.40 9.81 19.71 54.06 34.19 27.33 4.82 18.05

0.06 -36.94 0.11 0.27 1.57 0.28 1.51 -0.40 -0.52 0.23 0.46 -1.03 0.65 -0.54 2.30 -0.03 6.01 0.64 0.80 0.45 4.08 0.31 0.40 0.28 0.33 1.50 0.80 1.63 -1.71 -0.37 0.30 0.24 1.21 0.62 -1.08 0.43 0.01 1.57 1.81 0.01 -0.14 -0.57 -0.24 1.21 0.60 1.34 1.57 1.10 1.11 1.40 0.20 1.34 -3.35 0.07 0.33 0.52 -0.41 -0.20 0.82 0.88 1.71 0.48 3.08 -0.28 0.90 0.31 1.54 0.67 0.41 0.30 0.33 -0.14 1.31 0.33 0.83 0.62

7.97 0.20 1.48 4.92 50.95 5.30 72.60 13.52 51.29 2.97 14.18 23.30 20.90 15.97 22.19 11.40 78.81 34.81 36.44 7.08 42.54 50.14 10.75 31.08 21.38 36.41 48.82 177.06 27.10 48.91 3.72 28.28 26.10 6.17 42.72 20.98 0.49 16.31 22.39 35.59 45.62 29.43 27.53 18.58 34.87 52.69 15.69 5.08 42.00 36.50 14.73 31.61 28.89 6.25 7.37 37.05 23.21 47.25 14.04 26.06 32.09 15.51 95.15 18.46 3.96 23.72 56.32 28.53 23.19 5.46 14.52 47.00 21.39 7.80 2.99 5.90

10.92 1.20 3.79 10.10 60.99 9.75 90.93 28.53 60.00 4.93 21.16 38.72 37.96 32.70 38.28 17.42 104.43 43.43 49.23 12.25 89.30 67.20 22.79 48.96 30.97 64.89 63.89 211.79 37.70 62.33 5.85 46.49 37.54 17.30 55.25 25.44 1.81 39.33 35.78 43.36 62.83 42.17 41.84 42.59 49.68 71.25 43.18 18.30 58.68 50.82 23.16 45.72 85.90 14.32 10.05 46.08 38.00 65.80 18.23 34.24 47.00 25.84 129.27 58.29 14.51 35.46 77.60 37.35 36.60 10.99 22.81 55.20 40.69 31.53 9.22 20.97

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


InsideTucsonBusiness.com

NOVEMBER 30, 2012

19

INSIDE REAL ESTATE & CONSTRUCTION

If 2011 was bottom, 2012 is turning point

THE PULSE:

TUCSON REAL ESTATE

11/19/2012 11/12/2012

Median Price Active Listings New Listings Pending Sales Homes Closed

$134,000 4,799 254 233 149

Source: Long Realty Research Center

$161,500 4,859 355 354 148

CREW marks 10 years Lieutenant Colonel Jennifer M. Short, commander of the 358th Fighter Squadron at Davis-Monthan Air Force Base, will keynote a public event Thursday (Dec. 6) to mark the 10year anniversary of Tucson Commercial Real Estate Women (CREW). The “Women Soaring to New Heights” event will take place at the Pima Air and Space Museum, 6000 E. Valencia Road. Short is responsible for a 41-member squad that flies A-10C aircraft. The squad conducts formal training and provides combat-ready forces with close air support, forward air control and air interdiction. She is a senior pilot with 1,500 hours, including 430 combat hours in the A/OA-10. The event is open to the public and reservations are required. Email tucson.crew@ gmail.com for details. Tucson CREW is a non-profit organization of commercial real estate professionals with a focus on education, leadership development, networking, ethics and civic involvement.

Sales and leases Roger Yohem

By Roger Yohem Inside Tucson Business If all the stars remain in right alignment for the rest of the year, we will look upon 2012 as a year of improvement and 2011 as the definitive turning point that the housing and real estate industry bottomed out in Southern Arizona. Already, new home permits and overall selling prices have surpassed all benchmarks set last year. And now, new home closings are within 57 sales of surpassing the 2011 volume. “The strength of mid-year permitting and the typical builder push to close by year-end will support higher volumes in the next two months,” said housing analyst Ginger Kneup, owner of Bright Future Real Estate Research. “It is noteworthy that the permitting activity was well-distributed throughout the market without skewing towards a few highly performing subdivisions or hot areas,” she added. Year-to-date, 1,748 new home permits have been issued across the region. Year-todate closings stand at 1,235. “It is probable a greater percentage of these permits represent speculative permitting as builders respond to overflow demand from the tight resale market,” Kneup said. “The inventory of homes has not yet notably increased, however a reporting lag is expected since many builders do not advertise their spec homes until they are two to three months from completion rather than as soon as a permit is issued.” In the home resale market, Kneup characterized the sector as “a dance to find balance.” Although foreclosures continue to decline, “traditional” home sellers have not yet seen enough appreciation in value to put their homes on the market. The average price of a foreclosure home

Home builders control about 2,500 of the 4,500 finished lots in the market.

has increased about 32 percent this year and the median price is up about 40 percent. Yet, this price appreciation “has not yet taken hold in the traditional resale market,” she said. During October, D.R. Horton Homes pulled the most permits with 53. Kneup acquired Bright Future from John Strobeck upon his retirement this summer. She will not present an annual housing forecast event early next year as Strobeck had for 15 years.

Under 4,500 lots left As new home construction continues its slow rebound across the region, the availability of finished lots continues to decrease. In January 2009, there were about 8,900 fully improved lots in inventory. Currently, only about half that total is available, standing at less than 4,500 lots. During the third quarter, no new finished lots were added.

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

Current

Last Week

11/27/2012

One 12 Month 12 Month Year Ago High Low

3.50% 3.75%APR 3.63% 3.875%APR 4.95% 3.00% 3.25%APR 3.00% 3.25% APR 4.22% 2.75% 3.00%APR 2.75% 3.00% APR

4.95% 4.22%

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

3.50% 2.88%

“The slow absorption trend of 2010 and 2011 has ended. There have been at least 350 new single-family homes started in each quarter so far this year,” said Daniel Feig, a partner in Chapman Lindsey Commercial Real Estate Services. At the beginning of the fourth quarter, there were about 77 active single-family developments in the region. Based on absorption trends, Aaron Mendenhall, Feig’s associate at Chapman Lindsey, estimated that 25 of those communities could be built out within 12 months. By regional submarket, 15 are in the northwest, six in the southeast, three in the far south and one in the southwest sector. Feig and Mendenhall focus on tracking traditional single-family homes and only count finished lots that are ready to be permitted. They do not include custom, active adult or multi-family inventory. During the third quarter, nine communities were built-out or closed and four new developments opened. Currently, builders control about 2,500 finished lots and investors own about 2,000 finished lots. Feig and Mendenhall noted that all finished lots in Marana’s Tangerine Corridor are now controlled by builders, putting increased demand for platted lots in the area. “As the market continues to improve, it will make sense for builders to go after the available lot inventory in Sahuarita, northwest Marana and the southwest markets,” Mendenhall said.

• Gould Family Properties VII LLC purchased the 40-unit Bellevue Winstel apartments, 3737 E. Bellevue St., for $1.63 million from Bellevue Winstel Properties LLC. The apartments, built in 1975, are on 1.61 acres. The transaction was handled by Bob Kaplan and Allan Mendelsberg, Picor Commercial Real Estate Services. • JBS Business LLC purchased 2,015 square feet at 4570 N. First St., Suite 110, for $275,000 from Sowerby Family Holding LLC. Richard Kleiner, Picor Commercial Real Estate Services, handled the transaction. • Arizona Recycles purchased 47,000 square feet of industrial land and a 2,400 square-foot building 8920 S. Eisenhower Road for $274,000 from George Regrutto and Alan Marshall LLC, represented by Dave Gallaher, Tucson Industrial Realty. • Old Pueblo Stucco and Lathe purchased 54,000 square feet of industrial land at 9001 S. Eisenhower Road for $98,500 from Justin Loveless and Richard Potter Trust, represented by Dave Gallaher, Tucson Industrial Realty. • Edita Mendoza M.D. and Fred Mendoza M.D. leased 2,654 square feet at 1055 N. La Canada Drive, Green Valley, in the Green Valley Medical Mall from Healthcare Realty Services, represented by Thomas Nieman, Picor Commercial Real Estate Services. The tenant was represented by Dave Montijo, CBRE. • Presson Scottsdale LLC leased 2,400 square feet at 2480 W. Ruthrauff Road to Ramsey’s Pianos and 1,100 square feet in the same complex to Cimarron Property Managers. The transactions were handled by Rob Glaser, Picor Commercial Real Estate Services.

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


20 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS

EDITORIAL BIZ BUZZ

Inside Tucson Business delivered to your home If you subscribe to the print edition of the Wall Street Journal or maybe Bloomberg BusinessWeek, I’d like for you to think for a moment about where you receive your copy of those publications. Chances are you receive them at your home. Now think about where you receive your weekly copy of Inside Tucson Business. May I suggest that you should also be getting us at your home? Soon there will be an even better DAVID HATFIELD reason to do that. As you know, the U.S. Postal Service is going through some changes. Among them, the Tucson mail sorting facility on Cherrybell Stravenue is scheduled to close early next year. This is going to create uncertainty for routine deliveries of time-sensitive mail. As a result, we at Inside Tucson Business are going to offer readers a delivery alternative — home delivery. Every Friday morning you can receive that week’s issue of Inside Tucson Business right where you also receive the Wall Street Journal, Bloomberg BusinessWeek or, for that matter, the Arizona Daily Star, Arizona Republic, the New York Times or USA Today. That means you’ll get Inside Tucson Business a half-day earlier than you’re currently receiving it. You might even have time to peruse it over your morning coffee, then take it to work and share it with your co-workers. In talking with people at other regional business journals, we’ve found that subscribers really like the idea of home delivery. At the same time, there are those who would just as soon continue receiving their weekly business journal in the mail at the office. And that can continue but most likely it means those copies will be delivered on Mondays or later once the Postal Service institutes its changes. It also will be possible to continue receiving Inside Tucson Business at your workplace via our alternative delivery but only if your building already receives other publications there. Inside Tucson Business will be delivered in a manner exactly like other publications — in a plastic bag without an address label. Very soon subscribers will receive a letter from our circulation manager Laura Horvath inviting you to change your delivery address. But if just by reading this you’ve already made up your mind, you don’t need to put it off. Send an email to circulation@azbiz.com. Put “Change my delivery address” or “Don’t change my deliver address” in the subject and in the body of the email include your current address as shown on the label on this week’s cover, along with instructions, including the new delivery address if that’s your choice.

More changes Over the past few weeks, you might have noticed changes among our columnists. Joe Higgins and Chris DeSimone pulled the plug on their regular column. DeSimone, however, plans to continue writing a column. Amber Smith, who as director of the Metropolitan Pima Alliance knows a thing or two about collaboration, has agreed to be a regular contributor. In this week’s issue you’ll also notice that Matt Russell has taken over the weekly food column, now titled On the Menu.

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

EDITORIAL

Prop. 116’s failure, a lesson learned Here it is the end of November. What a bang-bang month it has been — an election, then honoring Veterans, (we at Inside Tucson Business honored our Women of Influence), then it was Thanksgiving and now the holidays have set in. But before we let November slip entirely away, we’re thinking back to Nov. 6. No matter how anyone feels about any election outcome, they are rarely either truly satisfying or total disasters. That was the case again this month. For our money there was no bigger head-scratcher than the outcome of Proposition 116 — a measure placed on the ballot with bipartisan support, faced no organized opposition, was widely endorsed by organizations and publications across the state and yet was defeated by 56 percent of voters. Proposition 116 would have increased the tax exemption businesses in Arizona take on newly purchased items such as equipment or machinery. The current exemption is about $68,000. The proposal would have increased that using a formula calculated to be an amount equal to the annual earnings of 50 workers in the state. For the 2013 tax year it would have amounted to an exemption of about $2.3 million. State budget officials had calculated the impact to state revenues would hardly have been a drop in the bucket. But it would have encouraged businesses to spend money expanding their Arizona operations and providing more jobs. A win-win-win — for the state’s economy, securing needed additional jobs and ultimately bringing in more revenues to the state. The measure, written by the small business group the National Federation of Independent Businesses, was called the Small Business Job Creation Act. In the days and weeks leading up to the election, most people assumed the measure would pass. Why wouldn’t it? Accounting firms were advising clients to hold off on purchasing equipment until Jan. 1 or later when the

higher exemptions were due to kick in. What will businesses do now? If they’ve been holding off on major purchases until now, they might as well hold off a little longer. And while they’re about it, maybe it’s worth checking to see if it might be more advantageous to expand into other states and put jobs there. On the other hand, there’s the coming fiscal cliff that suggests its not worth spending money on anything, anywhere at this time, which is leading to talk of the potential of another recession kicking in next year. Meanwhile, we’re still trying to figure out what happened to Proposition 116. Was it anti-business backlash of some sort? Was it too complicated? Those seem hard to believe, especially considering the very next item on the ballot, Proposition 117 was far more obtuse, had organized opposition and supposedly benefitted “special interests” but was approved by 57 percent of voters. Passage of Proposition 117 eliminates Arizona’s system of computing property taxes on two valuations, combining them into one that cannot be increased by more than 5 percent in a year. It won’t necessarily change how much anyone pays in property taxes, just the way the taxes are calculated. It has been suggested the lack of opposition hurt Proposition 116. Without wide debate, busy voters simply weren’t educated enough about the positive impacts Proposition 116 could have made to their lives. After all, the tendency is that when in doubt, vote “no.” So now we know: Just because a measure is wellwritten, widely supported, has no opposition and could benefit every person in the state doesn’t mean voters will approve it. That is the lesson to be learned from the failure of Proposition 116.


InsideTucsonBusiness.com

NOVEMBER 30, 2012

21

OPINION SPEAKING OUT

It’s time for the president to be elected by national popular vote President Barack Obama won the popular vote and more than the required electoral college votes of 270 in this month’s election. But that hasn’t been the case and plenty of pollsters going into the Nov. 6 election suggested that it might not be the case this year. Regardless of whether we’re happy with the outcome of this election or not, it is time for the president and vice president of the U.S. to be directly elected. Four times now, the winner of the popular vote did not win the majority of the electoral college. • In 1824, in a four-way race no candidate won the majority of electoral votes so it went to the U.S. House of Representatives, which picked John Quincy Adams despite the fact that Andrew Jackson had received more of popular votes (though at the time not all states permitted counting of popular votes for president). • In 1876, Rutherford B. Hayes won a majority of electoral votes and was elected despite the fact that he had 48 percent of the popular vote to Samuel J. Tilden’s 51 percent. • In 1888, Benjamin Harrison won the electoral college while Grover Cleveland, who was seeking re-election, won more popular votes. • In 2000, which may be remembered for the “hanging chads” on Florida ballots, George W. Bush won the electoral college while Al Gore won the popular vote. Under the electoral college system, and

as happened this year, presidential campaigns have devolved from national campaigns to focus on “battleground states” — those with significant close electoral college votes. CAROL WEST But polls have found that voters want their individual choices to count rather than allotting them to the respective presidential electors representing their states as a whole. What is the historical background of the electoral college? “The founding fathers designed the electoral college as a ‘compromise’ between election of the president by congress and election by popular vote.” Each state is entitled to the number of presidential electors equal to its total representation in the U.S. Senate and House of Representatives. The District of Columbia is allotted three electors. The nation’s founders wanted to ensure that smaller states had a role in the election of the president. The emphasis on the power of the state as contrasted with the power of the individual voter fostered the principle of federalism. Some believe we need to amend the Constitution so the people vote directly for the president and vice president rather

than voting for respective electors in each state. However, the amendment process is cumbersome and takes years. It requires Congress to pass the amendment with a two-thirds vote of both the Senate and House followed by ratification of threefourths of the states ratifying the change. To date Congress hasn’t made the move to get rid of the electoral college. The U.S. Constitution gives states the power to allocate their electoral votes. They may change their state laws concerning the awarding of electoral votes at any time. This may be a better way to achieve the presidential popular vote while maintaining the electoral college. How would this work? An editorial in the Sarasota Florida Herald Tribune makes a good argument pointing to a plan being promoted by a bipartisan group called National Popular Vote, which “calls for legislatures to pass bills committing their state’s electoral votes to the candidate who receives the most popular votes nationwide; the bill would take effect only when enacted by states that together have enough electoral votes to elect a president,” or 270 electoral votes. National Popular Vote guarantees the majority of the electoral college to the presidential candidate who receives the most popular votes in all 50 states and the District of Columbia. The National Popular Vote concept has been enacted in states representing 132 of

the 270 electoral votes. National Popular Vote bills have been introduced in the Arizona Legislature, but haven’t passed. Opponents of National Popular Vote say electors from states not participating in the compact would have little influence on the selection of the president. But those favoring National Popular Vote say voters in non-compacting states will have their votes counted equally to everyone else in the country. Some believe Congressional approval may be needed to make the National Popular Vote enforceable. Proponents say U.S. Supreme Court rulings have established that most state compacts don’t require congressional approval, citinig women’s suffrage as an example. However, it may be necessary to present a congressional bill to grant consent for the National Popular Vote on behalf of the District of Columbia. National Popular Vote would guarantee the candidate who receives the most votes in the national election is elected president. Many Americans believe this is a good idea. It is the best way to ensure that our individual votes for president truly count. (I am indebted to the League of Women Voters for much of this information.)

Contact Carol West at cwwtucson@ comcast.net. West served on the Tucson City Council from 1999-2007 and was a council aide from 1987-1995.

GUEST OPINION

Of bargains: those grand and others not so much A hot wind blew off the Red Sea. Along with a dozen other reporters, I was camped out in an air-conditioned foyer at a royal palace in Jeddah, Saudi Arabia, waiting for the Saudi foreign minister and the U.S. secretary of State to emerge from crisis meetings in the weeks before the 1991 Gulf War. Hours ticked by. Reporters dozed. Somewhere near dawn, our Saudi handlers ushered in a rug merchant to distract us with his goods. I was a tough but seasoned bargainer, tossing out the word “soumak” when he unrolled a flat-woven rug. Not to be taken for a rube, I began decisively, cutting the offering price of the tribal textile in half, all the while staying cordial with my new “friend.” I knew when to act miffed, when to say I could go no higher, and when to give ground. “Mabrouk,” the merchant said, pumping my hand as we finally closed the deal. “Congratulations, sir. You bargain well and have excellent taste.”

I got my prize, plus a small brass coffeepot — and something even better: a great story. Robin, my wife and artistic director, had taught me to look for that tribal rug JOHN YEMMA design. I had watched her 10 years earlier drive a hard bargain in the Hamidiya souk of Damascus, so this would be an excellent “Hi, honey, I’m home!” trophy. I could see my carefully acquired soumak spread out under the coffee table. One day, I imagined, someone might ask the intrepid foreign correspondent if there was a story behind that rug. Well, yes, ha-ha, now that you ask: A hot wind blew off the Red Sea.... Some weeks later, I unpacked my bags, and Robin examined the rug. She seemed

to admire the style. I told her about the negotiations, the back-and-forth drama, and the hearty “Mabrouk” that sealed the deal. “Nice to have you home, dear,” she said. The rug was placed under the table. A few days later, somebody spilled a tumbler of water on it. The colors ran, burgundy flowing into beige, brown into ochre. The wool puckered, and forever afterward the not-so-valuable and certainly-not-old dust catcher was known as “John’s famous mabrouk soumak.” Our dogs enjoyed it. Goodwill eventually accepted it. The larger point? Negotiations are tricky. Prices and values are not objective facts but markers of give and take, set by us when we engage with each other. When we negotiate, we know our starting position but cannot dictate the outcome. Congress and the president of the United States are engaged in an epic negotiating session to try to figure out how

much government should spend and tax and how to avoid plunging off the Jan. 1 “fiscal cliff.” Psychologists say that when you are negotiating, the important thing is to clearly articulate what you want, remain open-minded and genial, and be ready to make a deal. You may not get what you thought you wanted, but you don’t get anything by refusing to bargain. I wanted an impressive trophy. I got something that has lasted much longer: a story.

John Yemma is editor of the Christian Science Monitor and has been a foreign correspondent, Washington reporter, political editor, and covered economics, science, and culture in 38 years as a journalist working for the The Dallas Morning News, The Boston Globe, UPI and The San Antonio Express-News.


22 NOVEMBER 30, 2012

INSIDE TUCSON BUSINESS

OPINION GUEST OPINION

A 35% tax rate is a number, not a principle We’re about to find out if the Republican party is willing to commit political suicide over the idea that no person in America, no matter how wealthy, should ever pay a tax rate above 35 percent. Thirty-six percent? No way. Thirty-nine percent? Never. Give us 35 percent or give us death. Republicans believe this line in the sand is based on principle. Our Founding Fathers enshrined several absolute rights into the Bill of Rights: the right to bear arms, the right to freely assemble, the right to exercise religious freedom. These are principles worth fighting for. Life begins at conception. That’s another principle. And I can understand anyone’s unwillingness to compromise on that. It’s not relative. But a top tax rate of 35 percent? Really? That’s not a principle – it’s a number. The principle underlying it is that lower tax rates stimulate the economy. And from almost any historical perspective, a top tax rate of 38 percent or 39 percent would be low. Back in 1945, the top tax rate was 94 percent. In the early Roaring ‘20S, it was 73 percent. In the early 1960s, when the

economy was growing at 5 percent annually, the top tax rate was 91 percent. And in the last big boom of the 1990s, it was around 40 percent. Tax rates are, by their very nature, JIM SOLLISCH relative. And that means in real negotiations, there should be room to move that number. But that won’t happen if Republicans continue to treat 35 percent as an inalienable right. And that means there will be little room for a dispassionate discussion, which is what we need in order to approach the fiscal cliff as what it is: a math problem to solve. Even though the mood was collegial when leaders from both parties gathered at the White House earlier this month, I’m still not convinced Republicans are willing to leave their dogma at the door when the real negotiations start. And unless that happens, I worry that several meaningful questions that are the bedrock of the lower-taxes-create-jobs-theory won’t even

be asked. Like what percentage of people making over $250,000 a year are actual job creators? I understand, at least in theory, that if you give a small business owner a tax break, she may invest more in her business and hire more workers. But at what rate? Does every $50,000 in lower taxes translate to a new hire? And how about all those lawyers, doctors, CEOs, and upper-management types who make well over $250,000? How do they use the income they keep from lower tax rates to create jobs? They aren’t direct job creators. The thinking is that they invest more money in the stock market, giving corporations more capital so they can hire more workers. Again, this is fine in theory. But the Dow has been over 13,000 for much of the last six months. Where are the jobs? In the 1950s, if you gave companies more capital, they built more plants and invested in more equipment. And that meant more jobs because they needed people to operate that equipment. Today, when companies have excess capital, they don’t always hire more workers. And if they build another plant, it

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may be off shore. So when a neurosurgeon making $850,000 a year gets to keep an extra $100,000, and he invests it in the stock market to create capital so companies can hire more workers, we have to acknowledge that most of the money may simply go to some corporation’s bottom line. But we can’t have these discussions when a majority in the House treats relative tax rates like Newton’s law of gravity. Since the election, the pundits are talking about how Republicans are running straight toward a demographic cliff, even as the nation heads toward the “fiscal cliff.” The Republican Party needs to change more than its appeal to Hispanics and other minority voters. It needs to show the country that it can help solve our economic problems. I’m optimistic that as we approach the edge of the cliff, Republicans will find that the one principle they believe in – even more deeply than 35 percent – is political survival.

Jim Sollisch is creative director at Marcus Thomas Advertising, an agency in Cleveland, Ohio.

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Inside Tucson Business 11/30/2012