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SITUATIONAL AWARNESS Police, border patrol, military eye innovative Strongwatch system PAGE 14

Your Weekly Business Journal for the Tucson Metro Area WWW.INSIDETUCSONBUSINESS.COM • DECEMBER 21, 2012 • V VOL. 22, NO. 29 • $1

the way

Another ‘Peach’ of a renovation

LEARNING

Rehab of Armory Park Apartments is underway Page 5

WRIGHT

Tribe’s succession plan succeeds Pascua Yaqui Tribe to self-manage gaming Page 6

UA, business leaders share their expertise inside Wright Elementary School

End of the darkest days Statistically, the housing nightmare is finally over Page 19

PAGE 3 Patrick McNamara

John Hildebrand, left, shows a mouse brain to students, from left: Araceli Caraveo, Marsayah Arviza and Joya Summa.

Did holiday shopping season already go over the ‘fiscal cliff ?’ By Mark Guarino The Christian Science Monitor The final stretch to Christmas Day will make or break retailers’ holiday shopping season following a sluggish start that has been been hampered by turbulent weather conditions in some parts of the U.S. and more recently by the debate over the fiscal cliff. Retail sales in November inched up just 0.3 percent compared with October, according to the U.S. Commerce Department. Black Friday, the day after Thanksgiving, appeared at first glance to indicate a significant downturn for retailers. According to MasterCard SpendingPulse, which tracks retail sales via all forms of

payment, including cash and check, Black Friday sales this year totaled about $18.9 billion, a 4.9 percent drop from 2011. However, because most retailers opened their doors earlier than normal on Thanksgiving Day, an extra $6.2 billion was spent, hiking the combined spending for the two days by 2.1 percent over the same days in 2011. Retail spending overall eased in early December, which Michael McNamara, vice president of research and analysis at MasterCard Advisors SpendingPulse, attributes primarily to headlines about the looming fiscal cliff of tax increases and spending cuts that are causing consumers to think twice about committing to big ticket spending.

According to a survey released last week by the National Retail Federation, almost half of holiday shoppers, 47.8 percent, said the state of the economy will affect how much they purchase; 46.9 percent of those surveyed said they will pursue sales more than before, and 36.7 percent said they would comparative shop online. The survey polled 8,333 shoppers from Dec. 4 to Dec. 10 and has a margin of error of plus-or-minus 1 percent. For retailers this year, the final 10 days before Christmas are crucial, according to SpendingPulse: Last year, the time period accounted for 24 percent, or $147 billion, of total holiday season sales. McNamara says sales in all retail sectors are

relatively even at this point into the season, although there is a slight increase for furniture and furnishings, primarily due to the “general stability and mild recovery in the housing market.” Also potentially helping sales during this final stretch is the calendar: Last year, the final Saturday landed on Christmas Eve, which hurt sales. The extra full shopping day this season is expected to give retailers a boost that equals or surpasses the weekend following Thanksgiving. Overall, the National Retail Federation forecasts that holiday sales will grow 4.1 percent to $586 billion compared with last year. The organization includes the full month of November in its estimation.


2 DECEMBER 21, 2012

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InsideTucsonBusiness.com

DECEMBER 21,2012

3

NEWS

UA, business leaders join to make a difference at John B. Wright Elementary School

More Arizonans traveling, and farther, this holiday

Patrick McNamara

About 1.8 million Arizonans will leave their homes for the holidays, mostly to visit friends and loved ones, according to AAA Arizona. The number is an increase of about 1.2 percent over last year. AAA defines the holiday period as from Saturday (Dec. 22) to Jan. 1. Of the Arizonans who are traveling, 1.6 million will take to the roads to get to their destinations. That represents about 28 percent of the state’s population. AAA said about 137,000 will fly. That’s a 3.8 percent increase over 2011. Besides the increase in numbers, Arizonans are traveling farther; an average of 1,038 miles, up about 77 miles from last year. Despite the increasing numbers of travelers and distance, they’ll be spending less. AAA estimates median spending will amount to $694, down about 10 percent. One reason for that is the price of gas this year. Transportation expenses account for the biggest chunk of what travelers spend. AAA uses IHS Global Insight research to develop its annual travel forescasts, which it has been issuing for about 20 years.

A preserved human brain, presented by UA professor Gail Burd, captivated students.

By Patrick McNamara Inside Tucson Business A classroom full of fourth graders marvel and squeal as Gail Burd pulls a preserved human brain from a bowl and holds it aloft. “I get off on getting the kids excited about science,” said Burd, vice provost of academic affairs and professor of molecular and cellular biology at the University of Arizona. “I like them to have a positive event related to science.” Burd and her husband, John G. Hildebrand, regent’s professor and head of the department of neuroscience at UA, were visiting John B. Wright Elementary School, 4300 E. Linden St., teaching the fourth-grade classes about brain biology. “I want very much for kids to think well

of the university,” Hildebrand said. “I don’t want them to think it’s an alien place and not for them.” Hildebrand and Burd are among the more than 30 UA professors and researchers who over the past year have spent time at Wright School, teaching lessons and exposing grade-school kids to the sciences. The program of bringing UA academics to the Tucson Unified School District (TUSD) school was the inspiration of Kathleen Perkins, chair of the UA’s Bio5 Institute business advisory board. “It kind of pulled me in,” Perkins said. “When I walked out the door I had a real connection with the school and the kids.” Perkins said she had driven past the school many times and contemplated volunteering before she stopped and spoke with

Principal Maria Marin. Perkins decided the best way to help out the school was to work her connections through the university to bring some of the top researchers in the country to give lectures and teach lessons to the elementary school students. In addition to the UA connection, other private-sector players have donated time and work to the midtown school, which serves one of TUSD’s most economically challenged populations. Nearby neighborhoods along Columbus Boulevard include aging houses and apartments as well as trailer parks. Crime is a problem in the area. This year, five murders and nearly 500 burglaries have occurred in and around the areas the school serves, according to crime statistics on the CONTINUED ON PAGE 4

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Inside Tucson Business to change deliveries Jan. 18 In four weeks, subscribers to the print editions of Inside Tucson Business will start receiving their weekly copies of the publication early Friday mornings via direct delivery in the same manners as other newspapers are delivered in the Tucson region. Inside Tucson Business’ circulation department is continuing its push to encourage subscribers to make sure their delivery address is accurate and capable of receiving direct delivery of newspapers. Circulation Manager Laura Horvath says she has been receiving a steady stream of inquiries from subscribers. To help answer those questions, she has posted a series of questions and answers on our website — www.InsideTucsonBusiness.com . You’ll find it about the center of the home page, just beneath the latest news reports but above the new blog posting section called “Quick Hits.” The delivery change takes effect with the issue of Jan. 18. Delivery will still be available via U.S. Postal Service to subscribers who specifically request it. Also, subscribers living outside the direct delivery area or using post office boxes will continue to receive their copies of Inside Tucson Business by mail.

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4 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

With or without gun lobby, Grijalva calls for new laws

Tech Park solar facility sold A 6-megawatt commercial solar project built on a 38.5-acre parcel in the University of Arizona’s Science and Technology Park has been acquired by Duke Energy Renewables, based in Charlotte, N.C. The project, which was started a year ago, went online this week. Named the Gato Montes Solar Power Project, it was constructed by AstroSol Inc., a joint venture between solar panel manufacturer Astronergy Solar Inc. and solar project developer Solmotion GmbH of Germany, which took out a $12.3 million loan for the project. A purchase price to Duke Energy Renewables was not announced. The project used solar photovoltaic (PV) thin-film, amorphous silicon technology. It is one of several technologies being tested at the UA Tech Park. Power produced at the facility is sold to Tucson Electric Power, under a 20-year agreement.

Patrick McNamara

Regardless of whether “pro-gun activists” are willing to negotiate, U.S. Rep. Raúl Grijalva, D-Ariz., says it is time to enact stricter gun control laws. Grijalva issued some of the strongest wording coming from any politician in the wake of the Dec. 14 shootings at Sandy Hook Elementary School in Newtown, Conn., in which 20 6- and 7-year-olds and six of their school leaders were killed by a man wielding a semi-automatic weapon. He also referenced the Jan. 8, 2011, shootings in Tucson that killed six people at a Congress On Your Corner event put on by then-Rep. Gabrielle Giffords. “The scandalous availability of highly lethal weapons to even the least qualified, least competent and most dangerous among us has gone on long enough,” said Grijalva, whose district includes downtown and Tucson’s west side. “If pro-gun activists will not negotiate in good faith, it is time for the country to move on without them.” U.S. Rep. Ron Barber, D-Ariz., who was among those shot Jan. 8, 2011, worded his stance less emphatically, saying in an opinion published in the Dec. 16 Arizona Republic, “I am a strong supporter of the Second Amendment and the right to bear arms — but we must take action to deal with the easy availability of assault weapons and extended magazines. “We must take action to prevent people who are a danger to themselves and others from getting access to these weapons.”

WRIGHT ELEMENTARY CONTINUED FROM PAGE 3

John Hildebrand, left, shows a mouse brain to John B. Wright Elementary students, from left: Araceli Caraveo, Marsayah Arviza and Joya Summa.

Tucson Police Department’s website. In addition, the school population is 100 percent Title I, which means all of its students qualify for the free and reduced lunch program. Another challenge for the school has been a high mobility rate. Nearly half of Wright’s students move at some point during the school year. With more than 1,000 hours spent volunteering at Wright, Perkins has become a common sight for the children, many of whom hug her and grab her hand as she walks the halls. “Science has been the hook at John B. Wright,” Perkins said. Students also have heard from neurologists, physicians, astronomers, optical scientists, mathematicians and dendrochronologists. The Research Corporation for Science Advancement has contributed to the school. President, James Gentile, a former professor of biology and chemistry, is a regular participant at school lectures. T-shirts that read “Future Scientist” were given to all of the students at the school by the Research Corporation for Science Advancement. The students have responded with enthusiasm. A visit from a microbiologist was particularly memorable. Principal Marin recalled how months after the visit, a second-grade student showed her a picture she had drawn of herself working alongside the scientist who taught the lesson about salmonella and other bacteria. “She said, ‘I know what I want to do with my life,’” Marin said. “It was really powerful.”

The lessons have provided the students with exposure to and a connection with people who work in the various sciences that might otherwise seem foreign to them. “They’re not going to get that from YouTube or a slideshow,” Marin said. Wright School also has received help from others in the business community. Sundt Construction recently completed an extensive reconstruction of a garden at the school. Building the garden was in line with the company’s philanthropic ideals, said Kurt Wadlington, building group leader for Sundt in Tucson. But there was a more altruistic reason for helping as well. “All of our businesses exist because of this community,” Wadlington said. “Giving back is an important thing to do for all of us.” Another reason, Wadlington admits, might be viewed as self-serving: “It makes people feel good to help out.” Hildebrand agreed, and said that the experience of spending time in classrooms full of children was gratifying. Even for researchers accustomed to spending time alone in the laboratory and might be reluctant to speak with children, Hildebrand said they’re usually surprised after they take the time to speak with students. “Once somebody tries it, they get hooked,” he said. TUSD Superintendent John Pedicone said the private-sector help at the school has been a factor in students’ academic improvement. He also credits Perkins for her work at incorporating the UA into the school and to Marin and her staff. “It was a C school, but working real hard,” Pedicone said. “John B. Wright is a B school

today, and I don’t think it’s a B school by chance.” He said the private-sector working with the school has helped to develop a vision for TUSD to follow. And it’s not unique to Wright. Members of the business community and private sector contribute to schools across the district. “It’s critically essential that the business community and the university form a bridge with elementary schools,” Marin said. “Building the connection with people who are knowledgeable and passionate is the key.” Perkins said people shouldn’t only look at helping at schools as a personal quest, but as being an active member of the community. “This is not a self-realization issue,” she said. “It’s participating in a societal issue.” There’s also the chance that some of the students, many of whom Sundt’s Wadlington said intently watched the garden construction process, could become the next generation of workers in the construction industry. “I would hope a few of them would get interested in construction,” he said. “We still need people who are interested in construction as a profession.” Exposing children to people who work in various professions has been one of the biggest effects the influx of university and private sector volunteers has had at the school, Marin said. “Every child in that room may not become a neuroscientist,” Marin said. “But I’m sure they connected with a handful of kids.”

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


InsideTucsonBusiness.com

DECEMBER 21,2012

5

NEWS This Week’s

Armory Park Apartments rehab targets more mature market

Good News Holiday time The holidays are here. Your shopping is nearly finished and now is the time to slip into neutral and enjoy family and friends. That is until you and your accountant have to reconcile the books. But that can wait until after Jan. 1.

By Roger Yohem Inside Tucson Business

The Tucson

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

Downtown negotiations

George Howard

It’s got “good bones.” It will cost $3 million to $4 million to renovate. It’s downtown. It should be open by the summer. It’s going to be called The Herbert. “At this point, student housing is pretty well taken care of downtown with all the new projects. That is a great market, there’s a rally in building that caters to them. But based on our other projects, we’re seeing there is a desperate demand for product downtown for older, more mature tenants,” said developer Ron Schwabe, owner of Peach Properties. This month, for approximately $3 million, a partnership venture between Peach Properties and Holualoa Arizona acquired the 40 year-old Armory Park Apartments, 211 S. Fifth Ave. Under an intense six-month construction schedule, the partners plan to renovate the property into a modern, amenityheavy, market-rate apartment complex. “The solid bones of the building are what attracted us. It is almost identical to One North Fifth with poured-in-place concrete throughout. Both buildings were done by the same architect and the same contractor just a few years apart,” said Schwabe. In 2008, Peach Properties and Williams and Dame Development, Portland, Ore., redeveloped the former Martin Luther King Public Housing facility at 1 N. Fifth Ave. That complex, built in 1969, also was converted into market-rate rentals, plus new street-level commercial space was added. On six floors, the former King building had a total of 96 units. On eight floors, the Armory Park structure has 144 units. “You couldn’t afford to build either now, built when concrete was something like $8 a yard compared to over $100 now. They’re classic concrete buildings, so solid, way over the top in structural quality,” Schwabe said. “With a building like this, this is the one chance to dress up the boxes and do the right thing with the interiors.” Each apartment will be gutted and rehabbed with quality kitchen and bathroom finishes and amenities. The interior décor will be “mature, designed to appeal to adult tenants” and triple-pane windows installed, Schwabe explained. The project’s architects are Eglin-Bresler Architects, 7391 E. Tanque Verde Road, and FORS Architecture + Interiors, 2810 E. Fourth St. The building’s central chiller/boiler system needs to be upgraded and the plumbing, electrical and water systems all will be addressed. The contractor is BSH Builders, a company that offices alongside Peach Properties at 44 E. Broadway. Schwabe has done other

Anne Lawrence, Asset Manager, Holualoa Companies; Ron Schwabe, Peach Properties. At left, Armory Park Apartments.

renovations with BSH and characterized the firm as “an in-house collaborative contractor. These types of projects have endless surprises and problems so when there’s a change order, they just work through it.” Conversion of The Herbert will be done by local subcontractors and “we will go out of our way to use them and American-brand materials,” Schwabe emphasized. The name change is derived from Herbert Avenue, the property’s eastern boundary. On the ground floor’s 6,000 square-feet of common area, planned renovations include a new fitness area, entertainment room, lobby/lounge, and WiFi system. For the entire complex, the re-developers plan to pursue some level of LEED (Leadership in Energy & Environmental Design) certification, de-

pending on costs. Monthly rents are projected to be about $700 for a 460 square-foot studio and about $1,000 for a 620 square-foot one-bedroom apartment. Rents will vary by floor, said Schwabe, “as there’s demand to be 90 feet up in an apartment with a great view.” “Our product will be skewed to mature adults, young professionals, early retirees. We’re going the other direction, away from students,” said Schwabe. “At our One North Fifth building, the wait list to get in is about six months.” Last August, the residents of Armory Park Apartments were moved to replacement housing just west of downtown to Sentinel Plaza, 795 W. Congress St., a new $27 million complex for low-income seniors. These affordable-housing units were developed by a collaboration of Senior Housing Group, based in Chicago; and Evergreen Partners based in Maine. Peach/Holualoa purchased the Armory Park parcel from Senior Housing Group. Anne Lawrence, asset manager for Holulaloa, will have administration responsibilities for newly renovated Herbert. “Once the sale closed, we were ready to start immediately. Our building schedule is six months,” said Schwabe. “On the day we closed, we kick the ball forward.”

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

There’s no deal yet and those involved say it could still go either way. Negotiations are continuing that would give the Dallas Police and Fire Pension System some prime developable downtown Tucson property, including part of Sun Tran’s Ronstadt Transit Center, 215 E. Congress St., in exchange for the 287 acres of desert land it owns in the Tucson Mountain foothills between Speedway and Anklam Road. The three-way negotiations involve the City of Tucson, Pima County and the pension fund. The fund acquired the 287 acres in 2005 for $27 million with the expectation it would be developed as a subdivision known as Painted Hills. The county had been eyeing it for purchase as an open space gateway to Tucson Mountain Park but could never come to terms with previous owners. But after it acquired the property, the pension fund let lapse an agreement with Tucson Water, which put a halt to extending water lines outside the city limits. That prompted a lawsuit from the pension fund and a settlement. That’s being negotiated now. Most likely the deal would involve the pension fund trading the open space for the city’s downtown property and having Pima County pay the city for the property it is selling. Local officals talk glowingly of the pension fund as the major investor in Cityscape in downtown Phoenix that consists of a 27-story office tower, a hotel and retail that would replace some of the numerous diesel-belching Sun Tran buses clogging up downtown streets going to and from the existing transit center. An idea is to establish a multimodal transit center on the westside serving Sun Tran, Greyhound and possibly others that would be connected to downtown via Sun Link, the modern streetcar.

Ahead of San Diego Speaking of downtown, a few years ago naysayers would insist that Tucson stop trying to compare its downtown to other places like San Diego. But at this moment, Tucson’s downtown is ahead of San Diego’s in one important way: There are three construction cranes up in Tucson and only one in San Diego.


6 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

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

FORECLOSURE NOTICES Upwardly Mobile LLC 4180 N. Swan Road 85718 Tax parcel: 109-19-0370 Original Principal: $252,000.00 Beneficiary: Commerce Bank of Arizona Auction time and date: 11:30 a.m. March 5, 2013 Trustee: Steven J. Itkin, Waterfall Economidis Caldwell Hanshaw & Villamana, 5210 E. Williams Circle, Suite 800 SEC M&I LLC Vacant residential property at the southeast corner of Irvington and Mission roads, 85746 Tax parcel: 137-29-429 Original Principal: $642,000.00 Beneficiary: Enterprise Bank & Trust, Phoenix Auction time and date: 10 a.m. March 6, 2013 Trustee: William Scott Jenkins Jr., Ryley Carlock and Applewhite, 1 N. Central Ave., Suite 1200, Phoenix

LIENS Federal tax liens Luna Negra Inc., 1928 E. 17th St. Amount owed: $5,797.97. Gateway West Realty Inc., 2151 W. Felicia Place. Amount owed: $36,162.04. Beebe Steel LLC and Vivian Utley, 275 W. Continental Road, Green Valley. Amount owed: $1,170.00. L&K Roofing LLC and Francisco Mariscal, 2320 E. Summit St. Amount owed: $24,280.69. Motorex Inc., 3575 E. Grant Road. Amount owed: $5,287.92. Fairfield Custom Woodwork Inc., 150 S. Camino Seco, Suite 109. Amount owed: $49,521.58. Solar Industries Inc., PO Box 27337, 85726. Amount owed: $593,691.53. Los Campas LLC and Leonel E. Campas, 13116 S. Highway 191, Pearce 85625. Amount owed: $44,599.47. Rio Rico Health & Wellness Center, 3225 S. 12th Ave. Amounts owed: $21,388.38 and $5,849.56. Anthony’s Heating & Cooling Inc., 10911 E. Limberlost Road. Amount owed: $15,816.36. K&K Insurance Agency LLC and Carlos M. Arias, 536 W. Utah St. Amounts owed: $16,918.75 and $2,123.41. KGVY LLC, PO Box 767, Green Valley 85622. Amount owed: $8,407.53. Law Offices Lisa M. Kimmel PLC and Lisa M. Maxtutis, PO Box 89820, 85752. Amount owed: $16,636.29. AGG Haulers LLC, 7681 N. Calle Sin Controversia. Amount owed: $5,832.00. Desert Horticulture and Andrew J. Bessey, 2939 E. Cushman Drive. Amount owed: $4,458.45. JRD Masonry Inc., 1700 W. Placita Caracol, Oro Valley. Amount owed: $17,114.78. Southern Arizona Rain Gutters Inc., 8987 E. Tanque Verde Road 309-29. Amount owed: $7,737.61.

State liens (Liens of $1,000 or more filed by the Arizona Department of Revenue or Arizona Department of Economic Security.) Arizona Truck Outfitters and ATO Tucson LLC, 625 N. Stone Ave. Amount owed: $231,795.25. Chopstix Asian Diner and ML Brothers LLC, PO Box 10392, Phoenix 85064. Amount owed: $15,371.37. My Little Angels Daycare Centers Inc., 1960 S. Park Ave. Amount owed: $2,011.44. Better Bodies Wellness LLC, 7285 E. Tanque Verde Road #135. Amount owed: $3,123.64. Scissorworks Pet Styling LLC, 660 W. Camino Casa Verde 3, Green Valley. Amount owed: $1,121.32. Quality Maintenance and Cleaning Service LLC, 6242 S. Logger Drive. Amount owed: $2,447.46.

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

Brewer Restoration LLC, 3232 W. Philadelphia Lane, against Choi W.J. LLC, 115 S. Vista Grande, Anaheim, Calif. Property: 11133 N. La Canada Drive, Oro Valley. Amount owed: $28,620.73.

CEO Long completes succession plan; tribe to self-manage Casino del Sol By Roger Yohem Inside Tucson Business Mission accomplished. As part of its longterm management succession plan, leadership of Sol Casinos will be transferred to a Pascua Yaqui Indian tribal member by early June. After seven years as CEO of Pascua Yaqui Gaming Enterprises, Wendell Long will yield his executive duties to one of five tribal members being considered for the top post. None of the candidates has been publicly identified. “This is the outcome of our management succession program. I was brought here in March 2006 to be the last non-tribal member CEO. We have succeeded in this goal,” said Long. “We’ve done some pretty fantastic things here and as planned, I worked myself out of a job.” Through its innovative STEP (Supporting Tribal Employment Partnership) program, tribal member-employees receive training in professional development and management succession. It is a flexible mix of training based on an individual’s interests. STEP includes on-site workshops, on-thejob training, classes at Pima Community College, shadowing department heads, self-study and personalized coaching. The goal is to promote from within and have a tribal member prepared to take over a position before an opening occurs. “I’ll be replaced by someone already working here, already trained to do this. I’m confident any of the five tribal members can do this job. Now is the time for them to manage their own casino and resort,” Long said. “The tribal council was happy to have me and I liked it here.” The Pascua Yaqui Tribal Council will select a successor and Long will collaborate with the new executive through the transition. At the latest, Long will stay until June 9. Pascua Yaqui Gaming Enterprises owns and operates two casinos. Casino Del Sol Resort, Spa and Conference Center, 5655 W. Valencia Road, includes an outdoor amphitheater performance venue, and a new $100 million hotel and convention center. It also continues to operate its original Casino of the Sun, 7406 S. Camino De Oeste. Of the approximately 300 employees hired at the hotel, opened in November 2011, 87 percent are tribal members. None had any prior hotel experience. “We brought them on three months early for training. As a testimony to the success of STEP, the hotel already has earned the AAA Four Diamond Award rating,” said Long. The tribe’s overall operations employ about 1,400 people. Since coming to Tucson, Long has been active in volunteer leadership positions and

Wendell Long

community service. He is a member of the Tucson Conquistadores and serves on the boards of the Tucson Zoological Society, Tu Nidito, Southern Arizona Red Cross, and Tucson Regional Economic Opportunities. Last year, he was chairman of the board for the Tucson Metro Chamber. “We worked very closely on a number of major initiatives, like upgrading the chamber’s political clout, creating new ways to serve small business, promoting improvements in education, economic development and how the chamber could positively impact the quality of life in Southern Arizona,” said Mike Varney, CEO and president of the chamber. “It was obvious from the start that Wendell is a man of vision who believes in possibility thinking.” Long, 49, began his gaming career 30 years ago at the Playboy Hotel & Casino in Atlantic City where he also worked for Trump Organization. In Connecticut, he worked at Mohegan Sun and Foxwoods Resort Casino. He then served as general manager at Treasure Island Casino in Minnesota prior to joining

Pascua Yaqui Gaming Enterprises. He holds degrees in business administration, finance and marketing, and law. He is married and a licensed commercial pilot. Since Long has a no-compete clause in his employment contract and plans to continue his career in gaming, he most likely will leave Arizona. “One thing for certain, I’ll stay with the skill I know best. I’d like to help out another tribe somewhere,” he said. Indian gaming’s unique conditions and business goals appeal to Long more than those of a traditional, commercial operation. Although both have the goal of making money, tribal gaming has different priorities. “In a place like Atlantic City, all the profits go back to the owners,” said Long. “In tribal gaming, I like seeing the tangible results of hard work, like funding a new wellness center or a new senior citizens center or a new school.”

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


InsideTucsonBusiness.com

DECEMBER 21,2012

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7


8 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

SALES SALES JUDO

Let’s review 2012 revenues and sales rep performances It’s going to be all over but the shouting in just another week. For those of us with calendar fiscal years, we’ll soon begin the process of figuring out what our final balance sheets and income and cash flow statements have to tell us. And since this is a sales column, it’s only proper to focus on the “top lines” of our income statements. How much of what did we sell? What did it cost to deliver those products and services? And just how much did they throw off in variable contribution to cover our overhead

and fixed costs and to produce a pre-tax profit? Who sold the most? Who sold the least? Who goes and who stays? William Cron’s and Thomas SAM WILLIAMS DeCarlo’s classic 499-page text, “Dalrymple’s Sales Management,” has some great ideas in the last chapter, titled

SALES REP PERFORMANCE MATRIX Sales (mil.)

Compromisers

Stars

$3.87

Average sales

$3.17M

Average sales

$2.91M

$3.66

Avg. contribution $

$1.13M

Avg. contribution $

$1.09M

$3.44

Avg. contribution %

35.8%

Avg. contribution %

37.4%

$3.23

Number of calls

1,122

Number of calls

$3.02

Avg. sales per call

$2.8K

Avg. sales per call

$2.80

Number of reps

18

888 $3.3K

Number of reps

Laggards

11

Slowpokes

$1.78M

$2.03M

$2.59

Average sales

$2.38

Avg. contribution $

$640K

Avg. contribution $

$750K

$2.16

Avg. contribution %

35.8%

Avg. contribution %

$37.1%

$1.95

Number of calls

$1.74

Avg. sales per call

$1.53

Number of reps

958 $1.9K 11

Average sales

921

Number of calls

$2.2K

Avg. sales per call

16

Number of reps

Variable contribution margin percent

34.8%

35.1%

36.0%

36.6%

37.2%

37.8%

38.7%

“Evaluating Performance.” While you can always buy the book (prices range from $5 to $200 from online vendors) and read the chapter, there’s one particularly useful technique called the Performance Matrix that I’ll review and build upon today. The matrix has two axes. A vertical axis on the left shows the amount of sales achieved. A horizontal axis at the bottom shows the variable contribution margin (revenues less cost of goods sold and sales commissions). The matrix is divided into four quadrants. In the upper right quadrant, 11 “star” salespeople not only generated the highest amount of sales ($2.9 million per sales representative) but the highest level of variable contribution on those sales (37.4 percent). Each rep made an average of only 888 sales calls, the lowest of all four quadrants, for the highest average sale per call, $3,300. So, while the stars’ average sales of $2.91 were below those of the compromisers, at $3.17, they appeared to have the highest productivity per call and the highest contribution margin. On the other hand, the 11 “laggards” in the lower left quadrant of the matrix were the poorest performers with only $1.8 million of sales per sales rep and $1,900 per sales call. Their contribution margin of 35.8 percent is at the same level as the 18 “compromisers” in the quadrant above it. While the matrix provides some excellent insights, the performance graph based on the same data offers a visual comparison that highlights several important distinctions. All four groups have contribution margins that fall quite close to an average of 36.5 percent. But the spread in average revenues between the top and bottom two groups is pronounced! It’s clear the “slowpokes” and “laggards,” which account for roughly half of the sales force, need special attention, and that’s where another version of this graph be especially useful.

This graph compares the quarterly sales performance and variable contribution of two new salespeople, Chris and Kim,

throughout 2012. In the first quarter, Kim’s revenues and contributions lagged behind those of Chris. This trend continued through the second, third and fourth quarters.

Since both worked in the same territory, we can rule out the possibility that the variations in their performance were caused by different market conditions. Their manager coached both about how to increase their prospecting activities and to sell products with full margins. By the end of the year, Chris had produced $35,000 more contribution on $30,000 more revenues than Kim. Chris’ performance, while average at first, continually improved. On the other hand Kim’s performance, also initially average, showed only modest improvement. Their manager will have to decide whether to replace or continue to coach Kim. Some sales managers display similar graphs on cork boards containing the quarterly results of each of the members of their eight-to-10 person sales teams. When salespeople compare their performance with those of their peers, they are often strongly motivated to improve but may not know quite what to do. In my next column on Jan. 4, I’ll connect the dots from these graphs with another straightforward visual aid that will help sales people and managers identify just what to focus on to improve their results.

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


InsideTucsonBusiness.com

DECEMBER 21,2012

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9


10 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

PROFILE

Long history amplifies Chicago Music Store’s reputation By Christy Krueger Inside Tucson Business Electronic sound equipment giving way to computers, cuts in school music programs and modern streetcar construction on Congress Street have all presented challenges for Chicago Music Store. But these roadblocks have also created opportunities for the 93-year-old downtown music retailer. Clara Levkowitz moved her family to Tucson from Chicago in 1918. The following year, she opened a general store in downtown, selling everything from animal feed and ammunition to automotive parts. During the 1950s and 1960s, the shop began concentrating solely on music. Two of the seven Levkowitz children, Joe and Phil, remained in the business until 2004 when both died within two weeks of each other. “I guess they wanted to be together,” said Joe’s son, Mark Levkowitz, who worked at the store since he was a child. After the deaths of his father and uncle, he bought out the other family members and took over the business. Recognizing the need to update the store’s business model, Levkowitz hired David Fregonese, former owner of L.A. Music and Guitars Etc., to help guide the company into the future. “Mark approached me to join him and reestablish a new identity,” said Fregonese, now chief executive officer of Chicago Music Store. “I was brought in to help redirect the company after Joe and Phil passed away. The industry had changed over the previous 15 to 20 years and the store hadn’t changed much in the previous 35 years. We were behind.” Strategies Fregonese implemented include this year’s relocation of Chicago Music Store’s east-side location to a more visible site at 5646 E. Speedway, from Broadway and Kolb Road where it had been since 2006. The new location was previously the home of Guitars Etc. Fregonese also was able to obtain a

grant from the City of Tucson through Downtown Tucson Partnership to restore the Congress Street store’s facade. The building had housed a J.C. Penney store for decades. After three downtown moves, the Chicago Music Store has remained in the building at 130 E. Congress St., since 1967. “I got a grant that allowed us to refurbish the outside of the building. The entire exterior is being restored to its quasi-original state. We’re exposing historical aspects, including the transom windows. This is of historical significance.” Fregonese expects the project to be completed this month. Another move the CEO is making to bring the business into the 21st century is the use of online marketing and updating the website. “We’re working with a company to help establish a better reach through the social media market that will be our face in 2013,” he said. One of the most unique features of the business, according to Fregonese, has been

Some of Chicago Music Store’s various retail elements have changed over the years. Today it sells, buys, rents and repairs instruments and offers sheet music, instruOriginal location in 1919, downtown. ment cases and sound equipment for sale. The 6,000-square-foot Speedway store also provides lessons in its seven teaching studios. “We were more diversified in the ‘60s and ‘70s,” Fregonese said. “We sold records and tapes. We had large P.A. systems; instruments of all types were purchased widely. There’s less demand now for a lot of electronics. They’ve been replaced by computers.” Band rentals have been an important factor in the store’s longevity. “Students become older buyers of ours. We have generations of customers,” Fregonese BIZ FACTS said. So it was of some concern when funding Chicago Music Store for school arts programs www.chicagomusicstore.com was cut. Business dropped for Chicago 130 E. Congress Street Music Store. (520) 622-3341 “We’re a premier provider to schools. Five its inventory of vintage 5646 E. Speedway years ago schools cut instruments. (520) 886-1516 music programs, but “Joe and Phil wanted they were recently to make sure they didn’t re-introduced,” due in part to pressure run out of anything, so they were always applied by parents, Fregonese noted. And buying inventory. They’d find golden gems. while the school segment, repairs and People could find things that were disconlessons are currently strong, he admitted tinued,” he said. the recession and more recently the Not long ago, a man came into the shop modern streetcar construction has hurt with a flute and clarinet dating back to approximately 1860 that had been stored in general retail sales. Levkowitz however, is confident the his mother’s closet. streetcar payoff will be significant. Such one-of-a-kind finds attract “It will bring a huge amount of people musicians from across the country, on a regular basis and they won’t have to including contemporary legends Sheryl hassle with parking or one-way streets. For Crow and Jackson Browne. us it’s huge – my understanding is there will “Acts that play downtown almost always be a stop right in front of our store,” he said. come through Chicago Store. The store has And there’s always the shop’s reputation a reputation,” Fregonese said. That name to lean on. recognition also attracted the filming of a “The biggest advantage we have is history scene from “Alice Doesn’t Live Here and longevity and the band rental business,” Anymore” in 1974 and this year’s feature in Fregonese stated. “You become a household Country Living magazine’s Portrait of name when you’ve been around for so long.” America.

Start your Friday morning with a cup of coffee and

Tucson’s only Weekly Business Journal. onlyWeekly Inside Tucson Business will be delivered to your front door every Friday morning starting January 18, 2013. Go to www.azbiz.com for more information or call Circulation at 520-295-4220


InsideTucsonBusiness.com

DECEMBER 21,2012

MEDIA

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â&#x20AC;&#x2DC;Sunnyâ&#x20AC;&#x2122; Jim back in the saddle running Journal stations

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By David Hatfield Inside Tucson Business Jim Arnoldâ&#x20AC;&#x2122;s media career has spanned both TV and radio. Now heâ&#x20AC;&#x2122;s doing both at the same time. On Monday, he became vice president and general manager over the Journal Broadcast Groupâ&#x20AC;&#x2122;s two TV stations and four radio stations in Tucson. â&#x20AC;&#x153;I just found that I had too much energy and too much time to squander it,â&#x20AC;? he said. Heâ&#x20AC;&#x2122;s especially excited for the opportunity running a quality group of stations in what is basically his hometown market. Many of the Journal employees are peers or friends he has known for years. A graduate of the University of Arizona, Arnold was known as â&#x20AC;&#x153;Sunnyâ&#x20AC;? Jim when he was a top-rated morning radio personality on KCUB for 10 years before leaving Tucson in 1978 to climb the managerial ranks of media stations. After stops in El Paso then Lubbock, Texas, where he jumped into TV, then on to Madison, Wis.; Rockford, Ill.; and Amarillo, Texas, Arnold returned to Tucson in 2000 to take the helm of CBS-affiliate KOLD 13, owned by Raycom Media. Under Arnold, KOLD moved up from being a ratings cellar dweller and grew revenue, according to estimates by the market research firm BIA/Kelsey. Arnold, 65, left KOLD in March 2010 saying at the time that family issues were consuming more of his time. His son Jeff had lived with a brain tumor nearly all of his life, and was going in and out of chemo therapy. Jeff Arnold died May 9 this year. He was 35. Arnold replaces Julie Brinks, who left early in November after five years and one month on the job. Journal Broadcast Group is headquartered in Milwaukee, Wis. Its Tucson operations consist of two TV stations, ABC-affiliate KGUN 9 and CW-affiliate KWBA 58, and four radio stations, Mix-FM KMXZ 94.9-FM, the Truth KQTH 104.1-FM, the Groove KTGV 106.3-FM and ESPN Radio Tucson KFFN 1490-AM/104.9-FM. Besides his media work, Arnold is involved with the Pima County Sports and Tourism Authority, and the Boys and Girls Clubs of Tucson.

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Jim Arnold

Broadway. Once thatâ&#x20AC;&#x2122;s competed, the plan is for KUDF to begin broadcasting locally originated programming, including newscasts. Among the stationâ&#x20AC;&#x2122;s new hires is Patty Ruiz, who has a long career in media sales in Tucson, including work in radio, newspapers and other publications. Founded in 2001, Azteca America is owned by Mexicoâ&#x20AC;&#x2122;s TV Azteca. Although Azteca America is smaller on a national scale than its two U.S. rivals, Univision and Telemundo, the Tucson affiliates of those networks are mostly based outside of Tucson. Most of Univisionâ&#x20AC;&#x2122;s programming is produced in Phoenix and Telemundoâ&#x20AC;&#x2122;s programming originates in Dallas. LM Media Group, which acquired KUDF in March, is a Tucson-based company that also operates digital billboards in Mexico near border crossings into the U.S. and in Hermosillo, Sonora.

Ratings gorilla The nationâ&#x20AC;&#x2122;s biggest TV ratings company, Nielsen, said Tuesday it is acquiring the nationâ&#x20AC;&#x2122;s biggest radio ratings company, Arbitron, in a deal valued at $1.26 billion. The deal, which was approved by the two companyâ&#x20AC;&#x2122;s boards, needs regulatory approval and an antitrust review. If itâ&#x20AC;&#x2122;s approved, all broadcasters â&#x20AC;&#x201D; TV and radio â&#x20AC;&#x201D; can grumble about Nielsen ratings.

The Dream Raffle is the largest annual fundraiser for the Tucson Museum of Art, with proceeds benefitting art education programs in your community. 1(:7+,6<($5 GRXEOHWKHFDVKYDOXHVRQFHLQDOLIHWLPHWULSVVSHFLDOPHPEHUVRQO\ DQGUHSHDWEX\HUGUDZLQJVDQGRYHUDGGLWLRQDOSUL]HV

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

11

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Proceeds from the 2013 Dream RafďŹ&#x201A;e beneďŹ t the Tucson Museum of Art and Historic Block. Thank you for supporting the Museum and its mission of â&#x20AC;&#x153;connecting art to life.â&#x20AC;? ALL SALES ARE FINAL. NO PAYMENTS WILL BE REFUNDED. Must be at least 21 years of age to enter. For ofďŹ cial rules, please visit TucsonMuseumofArt.org.


12 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

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account. 3. When you can, choose a username that is not your email address. That makes it harder to guess. 4. Use a random series of letters and DAVE TEDLOCK numbers for each password. As of today, a brute force attack will fail against a strong, 16-character password. 5. Pay special attention to usernames and passwords for key accounts such as email, banking and online stores. These key accounts can really cost you if hacked; others may cause you major embarrassment or inconvenience but not cash. 6. Do not provide typical answers to security questions. Hackers can probably find, for example, your mother’s maiden name on the Internet, so make up nonsensical answers to common security questions. For example, if the question is, “What elementary school did you attend?” your answer could be “My Big Fat Aunt Winona” (apologies to Aunt Winonas everywhere). 7. Do not make a list of all your usernames and passwords and save them on your PC and or your smartphone. If you do and either gets hacked or stolen, you’re screwed. Instead, print out a username and password list without saving the file. 8. Don’t share your usernames/ passwords via email. Finally, if you’ve been paying attention, you may be thinking (correctly), “Great, but if my email does get hacked somehow, the hacker can just reset all those fancy usernames and passwords I created.” True. Therefore, (ideally) take step nine: Create a separate, private email address you use only to manage your online accounts. Do not share that email address with anyone. If you follow these steps, you’ll be better protected than 99 percent of Internet users. Better to be in the 1 percent who are hardest to hack than among the 99 percent. Among the 99 pecent, some are going to wake up tomorrow with a dead or missing smartphone and a big hole in their bank account. You don’t have to risk being one of them.

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


InsideTucsonBusiness.com

DECEMBER 21,2012

On behalf of all of us at the Inside Tucson Business and is page, businesses represented on th and partners I wish our readers, clients and a wonderful holiday season much success in 2013! Sincerely, Publisher Thomas P. Lee,

13


14 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

NEXT GENERATION

By Patrick McNamara Inside Tucson Business In the military and police worlds, achieving situational awareness is a key to a successful mission. Strongwatch Corporation, a young Tucson-based technology company, designs and builds surveillance systems that provide situational awareness for law enforcement and military forces. The company calls the system “Freedom on-the-Move,” and it’s designed to give police and military covert and mobile surveillance capabilities in an easy-to-use modular system. “A lot of what we do is being a very good incorporator of technologies,” said William “Drew” Dodds, director of sales for Strongwatch. Much of Freedom-on-the-Move is made from components acquired from various manufacturers, including parts like optical sensors, cameras, laser range finders, gyro stabilizers and a mast that sends the

Patrick McNamara

Strongwatch surveillance system gives police, military ‘situational awareness’

Pima County Sheriff R. P. Krygier operates the system with ease.

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mailbox-sized sensor head that houses all that acquired technology 25 feet in the air. The system can be installed in the bed of a pickup truck or rear of other heavy-duty vehicles. When fully deployed, the mast looks like that on a television news truck. Another borrowed technology Strongwatch employs makes controlling the system as simple as playing a video game. The company integrated Xbox home gaming system controllers to operate the system, which Dodds said sets the Freedom-on-the-Move system apart from other similar mobile surveillance. In addition to the familiarity of the Xbox controller, it provides a low-cost option for replacements. “If it breaks, BIZ FACTS you can send StrongWatch Corporation someone to Walmart and get 5255 E. Williams Circle, Suite 1030 one for $60,” www.strongwatch.com Dodds said. Repairs on other (520) 298-1600 surveillance systems with proprietary interfaces can cost $1,000 and more to replace and take weeks to get done, he said. Dodds also said he can train a person to use the system in about half a day, as opposed to other surveillance systems that have largely proprietary operating systems and require months of specialized training. “You practically need a master’s degree to operate some of the others,” he said. That simplicity and ease of use has attracted buyers like the Pima County Sheriff ’s Department, which recently purchased a system from Strongwatch. “This really is a force multiplier,” said Lt. John Stuckey of the Pima County Sheriff ’s Department. The sheriff ’s department bought the system from Stongwatch using $250,000 in federal grant money. The department plans to use the system, at least initially, for its Border Crime Unit, which operates along the U.S.-Mexico border region and areas of known drug and human smuggling. “Basically, anywhere where we need covert surveillance,” said Sgt. Robert Krygier, who supervises the Border Crime Unit. For that reason, sheriff ’s officials did not want the vehicle that bears the Freedomon-the-Move systems identified. Krygier said drug smugglers often work with spotters hiding in the deserts who watch law enforcement movements and report back to the smugglers. The mobile capabilities also attracted


InsideTucsonBusiness.com

DECEMBER 21,2012

15

NEXT GENERATION If the user doesn’t logon and complete the update, Strongwatch disables the system. “Then you have a very expensive paperweight,” Dodds said.

Patrick McNamara

dom-on-the-Move system sees. Operations also can be viewed from remote headquarters or command posts. Dodds wouldn’t confirm how many of the systems the company had sold, but said it was more than 25 and fewer than 100. “We actually had to turn down an opportunity with a buyer in Mexico because we couldn’t verify who it was going to,” he said. As an added measure of security, the system requires bi-weekly updates that Strongwatch sends via email, similar to software updates on a PC.

the sheriff ’s department. Similar systems can take several minutes to set up and equally long to tear down. But the thing that most sets the Strongwatch system apart from others, Dodds said, is that it can continue to conduct surveillance while on the move. With the mast dropped to its lowest position, the vehicle can continue to watch suspected drug smugglers or illegal border crossers. In addition, the system can be deployed or taken down in a matter of minutes, Dodds said. But it’s not just law enforcement, military or border patrol that have uses for the system, Dodds said. “This thing has applications for fire, search and rescue and covert narcotics surveillance,” he said. In search and rescue, the system’s infrared capabilities could make locating lost or injured people easier for rescue crews. The same holds in a structure fire situation where a person could be injured or unconscious inside a smoky building. It takes one or two people to operate the system, which is controlled from the cab of the vehicle with the Xbox controller and a computer monitor. Using a secure Internet connection, personnel in off-site areas with various mobile devices can view what the Free-

The Strongpoint system also features surveillance on the move.

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


16 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

OUT OF THE OFFICE ARTS & CULTURE

ON THE MENU

Exotic eats: Where the buffalo Three Tucson traditions to roam and the kangaroo hop take in this holiday season

Maria Mazon. Mazon grew up in Sonora, From Sonoran dogs to huevos ranchebeing taught from an early age “what a taco ros, dishes made by local chefs have put is supposed to be.” Tucson on the national foodie map. Every time she sees tacos on a menu Beyond the fare for which the region is with, gasp, lettuce and sour known however, there are exotic cream, she renews her pledge to things happening on Tucson “change the world, one taco at a menus. time.” When Tucson chef Jonathan While she may not have Landeen purchased the Cork officially changed the world yet, and Cleaver Restaurant, 6320 E. she got the world’s attention last Tanque Verde Road, in 1994, year when she sold her first lion one item on the menu he knew taco. Activists and allies alike he had to keep when he lined up at Boca to see what the re-opened as Jonathan’s Cork roar was about. was buffalo. Adventurous eaters A year later, Mazon remains found it to be a delicious MATT RUSSELL committed to culinary exoticism. departure from the standard She features a different exotic fare of the day. The exotic bison filet was a popular dish. taco on her menu every Wednesday. She has served up eel, camel, turtle, jellyfish Nearly 20 years later buffalo occupies the and kangaroo tacos. same space on Jonathan’s Cork menu, The kangaroo is always a guest favorite, which now also features everything from with “a mild flavor similar to ground beef, lamb chops to lobster tails. and a distinct finish of game that lingers at Landeen says the number of courathe end,” she says. geously curious patrons has grown and his When asked what tequila she recommenu is widely known for regular rotations mends pairing with the kangaroo, Mazon of bore, venison, antelope and ostrich. didn’t hesitate. “The Penasco Anejo, of While options for exotic meats are virtually course, the oak of the agave works very well limitless, Landeen assumes a decidedly with the Kangaroo’s subtle gaminess.” conservative posture. After visiting with Landeen and Mazon, “We’re not exotic for the sake of being I may have to expand my own exotic exotic,” he affirmed. “If it’s not tender and palette. flavorful, we won’t serve it.” Anyone else game? When it’s available, ostrich is currently his top-selling exotic item, and much to the surprise of patrons, Landeen suggests a Contact Matt Russell, whose day job is medium rare preparation for the bird. CEO of Russell Public Communications, at And when asked the obvious question, mrussell@russellpublic.com. Russell is also he responds, “No, it doesn’t taste like the host of “On the Menu Live” that airs 4-5 chicken!” p.m. Saturdays on KNST 97.1-FM/790-AM. Closer to the University of Arizona campus is Boca Tacos y Tequila, 828 E. Speedway, a small taqueria with a large menu that’s as exotic as its owner and chef,

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Art

Ballet Tucson’s production of the holiday classic “The Nutcracker” takes A new exhibit at the Museum of Constage at Centennial Hall, 1020 E. University temporary Art (MOCA), 265 S. Church Ave., Blvd. on the University of Arizona campus, titled “Capitalist Masterpieces,” showcases for five performances tonight through large-scale paintings by Peter Sunday. The timeless ballet is Young that feature a range of filled with whimsical costumes, experiments in abstract painting. creative sets and giant rats Young’s work is in permanent fighting toy soldiers. Definitely collections of institutions something for the whole family. including as New York’s Museum Performances are at 7:30 p.m. of Modern Art, the Whitney and tonight, 2 and 7:30 p.m. Saturday the Guggenheim as well as the and 1 and 5 p.m. Sunday. Tickets Hirshhorn Museum in Washingare priced from $28 to $56 with ton, D.C. Young has lived and discounts for students, children, worked in Bisbee since 1972. seniors and groups of 10 or MOCA’s hours are from noon to 5 HERB STRATFORD more. Buy them through p.m. weekdays. Centennial Hall’s box office at www.uapresents.org or (520) 621-3341. On the subject of holiday traditions, the annual Winterhaven Festival of Lights is A pair of high-profile films open today, open from 6-10 p.m. through Dec. 29. Bring a sneaking in before the traditional Christnon-perishable can of food for the Commumas Day deluge of Oscar-bait movies. One nity Food Bank when you go. The two is the comedy “This is 40” from director remaining drive-through nights are Dec. 28 Judd Apatow. It stars Leslie Mann and and 29, otherwise it’s walk-through. Trolley Paul Rudd as a young family who approach and hay wagon rides are available. Details are their eponymous birthdays with dread, on the festival’s website www.winterhavenfacing their accomplishments and unfulfestival.org/haywagon_rides.htm . filled dreams. The other is the new Tom The Winterhaven neighborhood is north Cruise vehicle “Jack Reacher,” based on of Fort Lowell Road and south of Prince the Lee Child series of books about a Road between Tucson Boulevard and retired military loner who helps those in Country Club Road. need when there are few other options. The Loft Cinema, 3233 E. Speedway, opens the excellent German film “Barbara” which takes place in East Germany before the The Mini-Time Machine Museum of fall of the wall. The movie is Germany’s entry Miniatures, 4455 E. Camp Lowell Drive, into this year’s Academy Awards competition presents its annual “Wee Winter Wonderand features an edgy atmosphere of dread. land” featuring holiday décor, musical Contact Herb Stratford at herb@ performances and children’s craft projects. ArtsandCultureGuy.com. Stratford teaches Events continue from 9 a.m. to 4 p.m. Arts Management at the University of Arizona. His Wednesdays through Saturdays and noon column appears weekly in Inside Tucson Business. to 4 p.m. Sundays through Jan. 6.

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InsideTucsonBusiness.com

DECEMBER 21,2012

17

BRIEFS GET ON THE LIST Next up: Accounting firms, tax preparers The 2013 Book of Lists will be published January 25. Now it’s time to start gathering data for the 2014 edition. For January, regular weekly editions of Inside Tucson Business will publish lists of businesses and organizations in these categories: • Jan. 4: Accounting firms, Tax preparers • Jan. 11: Economic development organizatons • Jan. 18: Advertising agencies, Public relations firms, Graphic design firms • Feb. 1: Public school districts, Private elementary schools, Private secondary schools, Charter schools • Feb. 8: Colleges and universities, Specialty and training schools, Child care providers If your business fits one of these categories, update your profile now. 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. There is still a short period of time to place advertisements in the 2013 Book of Lists to be published in January. Call (520) 294-1200.

MANUFACTURING

Raytheon lands two missile contracts Raytheon Missile Systems received a couple of military contracts.

One is a $254.6 million order for 252 Tomahawk missiles from the U.S. Navy. The work will be done at multiple Raytheon locations in the U.S. but the biggest share will take place in Tucson. The company will build 132 missiles for use on a vertical launch system located onboard surface ships and 120 missiles for use on a capsule launch system located on submarines. Work is scheduled to take place through August 2015 and the funds to pay for it carry on beyond the government’s current fiscal year. The other contract is a $108 million addition to produce a version of its standard missile for the United States and foreign allies. This contract is in addition to one Raytheon received earlier in the year and brings the total to more than $200 million. The Standard Missile 2 is a surface-to-air weapon that is used in the U.S. Navy and other nation’s defense systems. The Navy has committed to supporting the missile through 2035, and the company will offer support for buyers, said Michael Campisi, the company’s senior director for Standard Missile 2 production.

Officials with Opinonology declined to comment on the reasons for the closure.

RETAIL

Historic El Con Mall sign to be re-installed

TELESERVICES

The distinctive El Con Mall monument sign that was taken down in 1999 has been designated a historic landmark and will be re-installed at 5 p.m. Saturday (Dec. 22). Featuring a conquistador’s swords, the sign marked the shopping center’s entry off East Broadway from 1962 to 1999. It was removed to make space for a free-standing pad for Krispy Kreme, since replaced by Chick-fil-A. Jude Cook, of Cook Signs, 134 S. Tucson Blvd., has refurbished the sign to its original state. It will be re-installed and lighted to commemorate the mall’s 50th anniversary. Tucson Mayor Jonathan Rothchild and councilman Steve Kozachik will officiate the re-lighting, which will be followed by performances by the Tucson Boys and Girls choruses. From 6 p.m. to 9 p.m., caroling will continue inside the mall with free hot chocolate and cookies refreshments.

Casa Grande call center is shut down

Hobby Lobby says Tucson store will open by April

A call center in Casa Grande was abruptly shut down and about 150 employees were put out of work on December 12. Opinionology, formerly Western Wats, had operated the center gathering opinion data and market research since 2006. Western Wats had been purchased last year by Survey Sampling International LLC.

Arts and crafts retailer Hobby Lobby has finalized plans to open its first Tucson store by April. Renovation construction is underway for the store at the northeast corner of East Broadway and Craycroft Road where it will be next door to SteinMart, which opened this month. Once open, Hobby Lobby officials say

they expect to hire 35 to 50 workers. The hourly pay levels will be $13 for full-time employees and $9 for part-time workers. This is Hobby Lobby’s 13th store in Arizona. “Adding new jobs and revitalizing an empty facility enables us to become an integral part of the community while sharing in the growth of both the city and the state,” said John Schumacher, Hobby Lobby’s assistant vice president of advertising. Hobby Lobby, headquartered in Oklahoma City, is privately held with over 520 stores nationally.

SPORTS/RECREATION

Former UA Coach Tomey to lead college all-stars Dick Tomey, the winningest football coach in University of Arizona history, will serve as a head coach for the Jan. 11 Casino Del Sol College All-Star Game at Kino Stadium. Tomey was the head coach at the UA from 1987 to 2000. He led the Wildcats to a 12-1 record in 1998 and a fourth-place ranking in both major polls, the highest end-of-season rank in school history. He also held head coaching positions at the University of Hawaii and San Jose State. Currently, he lives in Hawaii and is special teams coach at the University of Hawaii at Manoa. Tomey’s counterpart will be Houston Nutt, one of the game’s head coaches in January this year. Nutt’s head coaching posts have included Murray State, Boise State, Arkansas and Ole Miss. The all-star game will be played at 7 p.m. Jan. 11 at Kino Stadium, 2500 E. Ajo Way. Tickets are available through the Tucson Padres ticket office.

PEOPLE IN ACTION RETIREMENTS Gordon A. Ewy, MD, a founding faculty member of the University of Arizona College of Medicine – Tucson, who has served as director of the UA Sarver Heart Center since 1991, has announced his plan to retire from the University, effective June 30, 2013. Ewy is noted internationally for his pioneering work in resuscitation research. The Sarver Heart Center Resuscitation Research Group found that compression-only CPR is more effective in the case of sudden primary cardiac arrest than “mouth-tomouth” breathing, which had been part of “Standards and Guidelines” for 40 years with no change in survival rates. Ewy was recruited to the UA College of Medicine’s

GORDON A. EWY

FRAN NEEDHAM

newly established Section of Cardiology in 1969 by founding chief of cardiology, Dr. Frank Marcus. He served as chief of cardiology from 1982 to 2010 and as director of the UA College of Medicine’s Cardiovascular Fellowship Training Program from 1982 to 2009, a program that has graduated more than 120 cardiologists.

tax and investment advisory firm of Raskob Kambourian Financial Advisors (RK). Prior to joining RK, Needham owned a tax and accounting practice in Sun City, Ariz. Prior to that she had a practice in Colorado. She now serves on the board of directors of the Southern Arizona Chapter of Enrolled Agents.

NEW HIRES

ELECTIONS

Enrolled Agent Fran Needham has joined the

The Arizona Manufacturers Council

PAT GRUETZMACHER

MICHAEL QUINN

{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. has elected Patrick J. “P.J.” Gruetzmacher, president and CEO of LAI International, Inc., as a director of the board for the organization. The AMC, which joined forces

in 2007 with Arizona Chamber of Commerce and Industry, promotes a positive business climate for manufacturing and supports a strong industrial manufacturing base. It

LOIS LOESCHER

works to provide a globally competitive environment for the manufacturing sector of the economy and promotes innovation and investments in research and development. AWARDS Michael Quinn, vice president of industry and community relations for Caliber Collision, was recently inducted into Collision Industry’s Hall of Eagles. Quinn, a Tucson

resident, was selected for this “hall of fame” honor, considered the most prestigious in the industry, because of his career achievements that have benefitted the collision repair industry and the community. Quinn was the only inductee this year to receive the award, annually selected by majority vote of past Hall of Eagles inductees. Lois J. Loescher, Ph.D., R.N., FAAN, has been inducted as a Fellow

in the American Academy of Nursing (AAN). Loescher has spent her career conducting cancer-prevention research and program development, particularly for skin cancer, the most common cancer diagnosed in the United States. As an associate professor at the University of Arizona College of Nursing, founding member of the University of Arizona Cancer Center Skin Cancer Institute, and founding member of the Pan-Pacific Skin Cancer Consortium, based in Arizona and Queensland, Australia, Loescher has made a significant contribution to skin cancer prevention and risk reduction.


18 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

FINANCE YOUR MONEY

5 new taxes that take effect Jan. 1 to pay for Obamacare Like them or not, here are five taxes that will go into effect Jan. 1 because of the Affordable Care Act, or Obamacare. Whether you’re for or against the act, you should know about the most important tax increases coming in less than two weeks as a result of this legislation. 1. Surtax on investment income — a $123 billion tax increase. This is a new 3.8 percent surtax of investment income earned in households making at least $250,000, or $200,000 for a single filer. This applies to many real estate transactions as well as the sales of investments, like stocks, bonds, mutual funds, and the like. If you’re not sure whether it will apply in your particular circumstance, you’re not alone. Tax professionals are also waiting to hear through rulings from the IRS as to how to apply this complicated new tax. 2. The medical device tax — a $20 billion tax increase. Medical device manufacturers have 409,000 employees in 12,000 plants across the country. The Affordable Care Act imposes a new 2.3 percent excise tax on gross sales, even if a company doesn’t earn a profit in a given year. In addition to killing small business jobs and impacting research and development budgets, this will increase the cost of healthcare by making everything from pacemakers to prosthetics more expensive. 3. The “haircut” for medical itemized deductions — a $15.2 billion increase. Right now, those Americans facing high medical expenses are allowed a deduction to the extent that those expenses exceed 7.5 percent of adjusted gross income. This “haircut” (tax increase) imposes a threshold of 10 percent of adjusted gross income. The limiting of this deduction mostly harms near-retirees and those with modest incomes with high medical bills, by widening the net of taxable income on the sickest Americans. 4. The “Special Needs Kids” tax — a $13 billion tax increase. The 30 million to 35 million Americans who use a Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs will face a new government cap of $2,500 (currently there is no federal limit on the accounts, although employers are allowed to set a cap). The one group of FSA owners for whom this cap is particularly cruel are parents of the millions of special needs kids who use FSAs to pay for their education needs. Tuition rates for these schools are usually expensive. In Washington, D.C., for example, the National Child Research Center reports tuition rates for these schools can easily exceed $14,000 a year.

Under current tax rules, FSA money can be used to pay for this type of special needs education. The Affordable Care Act tax provision will limit the options available for these families. DREW BLEASE 5. Medicare payroll tax hike — a $86.8 billion tax increase. The current Medicare payroll tax is 2.9 percent on all wages and self-employment profits. With this new tax increase, wages and profits exceeding $200,000 ($250,000 for married couples) will now be faced with a 3.8 percent tax rate instead. This is a direct marginal income tax hike on small business owners, who are liable for self-employment tax in most cases. In addition to these five tax increases, another ramification of the Affordable Care Act is the fallout from the many large and small businesses that will either be laying off workers or reducing full-time employees to avoid the high penalties under the Affordable Care Act. Among some of the nation’s companies that have announced plans to make adjustments are these: • Welch Allyn, a manufacturer of medical diagnostic devices headquartered in the central New York town of Skaneateles, is laying off 275 workers over the next three years due to the new medical device tax. • Dana Holding Corp., a supplier of axles, driveshafts, off-highway transmissions, sealing and thermal-management products, and service parts headquartered in in Maumee, Ohio, has warned its 21,500 employees of coming layoffs to help cover the $24 million it will need over the next six years for additional healthcare expenses. • Stryker Corp., a medical device manufacturer based in Portage, Mich., is eliminating 1,250 jobs over the next year. • Boston Scientific Corp., a developer, manufacturer and marketer of medical devices based near Boston, is cutting between 1,200 and 1,400 jobs while also shifting investments and workers to China. • Medtronic Inc., based in Minneapolis and the world’s largest medical technology company, cut 500 jobs this year and will cut another 500 in 2013.

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

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

Company Name

Symbol

Dec. 19 Dec. 12 Change

52-Week 52-Week Low High

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

AERG.OB CEXIQ.OB PRSC UNS

0.02 0.07 15.92 43.01

0.02 0.08 15.54 42.48

0.00 -0.01 0.38 0.53

0.02 0.01 9.56 35.20

0.12 1.00 16.05 43.40

8.64 0.94 2.33 11.19 61.65 9.19 90.10 11.90 55.38 3.57 19.96 39.45 38.01 31.46 40.05 16.48 98.68 39.75 48.75 11.83 84.30 64.92 19.92 33.95 34.43 61.77 63.77 195.08 31.11 62.13 5.53 43.53 36.64 16.66 44.75 26.50 1.16 39.27 35.11 41.17 57.73 38.77 37.22 37.95 49.60 68.70 20.88 18.46 58.75 51.30 18.14 46.74 44.28 12.80 10.56 42.64 39.75 61.52 17.87 31.25 47.64 23.96 125.77 20.72 13.48 32.20 68.52 37.24 34.62 10.65 21.54

8.65 0.65 2.60 10.61 60.97 8.71 89.32 12.18 54.74 3.39 19.69 37.53 37.42 29.87 39.84 16.16 97.72 39.07 47.54 10.72 83.82 64.17 19.21 32.52 31.83 62.93 61.10 192.95 31.25 60.28 5.55 42.77 35.73 15.27 43.75 26.59 1.18 37.87 34.73 41.44 58.40 38.86 35.92 37.37 47.72 68.15 19.45 17.11 58.14 50.61 17.85 46.66 42.38 11.90 10.02 41.94 39.64 60.54 17.74 31.06 47.26 21.41 124.70 21.01 12.70 31.87 68.94 36.67 33.50 10.10 20.60

-0.01 0.29 -0.27 0.58 0.68 0.48 0.78 -0.28 0.64 0.18 0.27 1.92 0.59 1.59 0.21 0.32 0.96 0.68 1.21 1.11 0.48 0.75 0.71 1.43 2.60 -1.16 2.67 2.13 -0.14 1.85 -0.02 0.76 0.91 1.39 1.00 -0.09 -0.02 1.40 0.38 -0.27 -0.67 -0.09 1.30 0.58 1.88 0.55 1.43 1.35 0.61 0.69 0.29 0.08 1.90 0.90 0.54 0.70 0.11 0.98 0.13 0.19 0.38 2.55 1.07 -0.29 0.78 0.33 -0.42 0.57 1.12 0.55 0.94

7.97 0.24 1.48 5.10 50.95 5.30 75.50 11.41 52.10 2.97 14.66 24.61 23.38 16.11 22.19 11.94 78.81 35.83 36.44 7.83 42.54 50.27 12.06 30.54 21.38 41.52 51.43 177.35 27.10 50.89 3.94 30.83 26.10 6.17 42.72 20.98 0.68 18.83 24.76 37.02 49.67 31.43 28.35 21.87 39.07 56.56 15.69 5.88 46.39 38.63 14.73 33.03 28.89 6.25 7.76 39.01 25.74 47.25 14.04 26.06 33.62 17.25 99.93 18.36 4.97 26.08 57.18 28.53 26.21 5.85 15.15

10.92 0.95 3.65 11.49 61.81 9.75 90.93 27.95 60.00 4.93 21.16 40.11 38.19 32.70 40.63 16.65 105.97 43.43 49.23 12.25 89.98 67.20 22.79 48.96 34.46 65.92 64.35 211.79 37.70 62.33 5.85 46.49 37.54 17.30 55.25 27.11 1.81 39.88 36.47 43.36 62.83 42.17 41.84 42.59 49.83 71.25 43.18 18.66 59.06 51.75 23.16 47.76 85.90 14.32 10.20 46.08 40.40 65.80 18.23 34.24 48.54 25.84 129.27 58.29 14.51 35.46 77.60 37.75 36.60 10.99 22.81

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


InsideTucsonBusiness.com

DECEMBER 21,2012

19

INSIDE REAL ESTATE & CONSTRUCTION

Statistically, housing’s nightmare is over By Roger Yohem Inside Tucson Business Book it. The worst is officially over for the region’s housing market. Unless there is an unexpected, shocking, catastrophic change of market conditions, 2012 will be the statistical turning point that marks the industry’s recovery from the Great Recession. The bottom was 2011. And 2013 will start the transition into the long-anticipated “new normal” for the future. Book it. Year-to-date 8,755 foreclosure notices have been issued compared to 9,433 for all of 2011. With a margin of 678 with one month left in 2012, notices likely will decline this year. Book it. Year-to-date, existing home sales are within 185 of last year’s total of 12,791 closings. Since July, closings have been averaging 1,064 a month. Book it. Since December 2011, the average sales price has gone up about $21,000 to $182,539 as of November. That is a 13 percent increase. The November median sales price of $144,627 was about $24,600 higher than in December 2011, a 20 percent gain. Book it. Year-to-date, 1,903 new home permits have been issued compared to 1,438 for all of 2011 and 1,865 for all of 2010. It’s now likely that builders will pull more 2,000 permits this year. Through November, new home closings totaled 1,382, already topping the entire year of 2011 by 90. “Demand has been good through the last half of 2012 despite worries over consumer confidence related to the November elections and the impending fiscal cliff. We will most likely reach about 2,050 permits for the year, nearly matching the 2,077 permits

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

TUCSON REAL ESTATE

12/10/2012

12/3/2012

$163,250 5,007 325 325 152

$151,000 5,012 372 322 165

Source: Long Realty Research Center

MONTHLY BUILDING PERMITS: NOV. 2012 2012

2011

2010

2009

Pima County

46

27

35

56

Marana

36

22

13

12

Tucson

28

10

19

21

Sahuarita

20

9

9

23

So. Pinal

12

8

14

4

Oro Valley

13

2

1

5

155

78

91

121

Total Source: Bright Future Real Estate Research

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

2011

2010

2009

Pima County

543

473

637

701

Marana

478

282

323

179

Tucson

312

202

302

336

Sahuarita

258

169

294

492

So. Pinal

170

154

162

159

Oro Valley

142

40

43

52

1,903

1,320

1,761

1,919

Total Source: Bright Future Real Estate Research

issued in 2009,” said Ginger Kneup, owner of Bright Future Real Estate Research. “We still have a margin of about 500 homes between permits and closings so we expect the first half of 2013 to post good new home closings as well,” she added. Compared to 2011, every jurisdiction in the region has issued at least 10 percent more permits this year (see chart). On a percentage basis, Oro Valley is up about 350 percent, followed by Marana, up 70 percent. In real numbers, Marana also had the biggest increase, issuing 196 more permits year over year.

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

Current

Last Week

12/18/2012

One 12 Month 12 Month Year Ago High Low

3.50% 3.75%APR 3.38% 3.625%APR 4.95% 2.88% 3.125%APR 2.88% 3.125% 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.

3.38% 2.88%

By volume, Pima County has issued the most permits this year at 543, followed by Marana at 478.

Scattered best-sellers As a change of pace, the best-selling neighborhoods in November were scattered across the entire region. By volume, the east side and Sahuarita were popular. On a percentage basis, lower-priced homes near Tucson International Airport sold well. The most homes, 61, were sold in zip code 85710, which is basically the neighborhood around East 22nd Street and South Pantano Parkway. Next biggest, 47 sales, were in Sahuarita and 45 sales occurred in the Sabino Canyon-area zip code of 85750. On a percentage basis, all nine listings in Midvale Park’s 85714 zip code sold. In zip code 85747, a large area northeast of Old Spanish Trail abutting Saguaro National Monument East, 43 of 86 listings sold for a 50 percent ratio. Also at 50 percent, 26 of 52 listings sold in zip code 85756, which takes in neighborhoods near the airport between Interstates 19 and 10. High levels of home inventory remain in

three areas with the most in Green Valley at 301 listings. Zip code 85739 was next highest with 279 listings. It is the general area along North Oracle Road from Catalina State Park north to the junction of state routes 77 and 79. The third-highest level was in the central Catalina Foothills area with 234 homes. The data is from the Tucson Association of Realtors Multiple Listing Service.

Sales and leases • Oracle Office Plaza LLC purchased a multi-tenant office building at 7491-7493 N. Oracle Road for $3.35 million from AEH Investors IV and PMH Investors IV, represented by Michael Sandahl, CBRE. The buyer was represented by Zach Fenton, Fenton Investment Company. • Levine Investments LP purchased a former Chevron service station site at the southwest corner of East 22nd Street and South Kolb Road for $2.2 million from LCCKolb/22nd St LLC, represented by Brian Harpel, the Harpel Company. The parcel has been cleared and is being redeveloped as a McDonald’s restaurant. • SMDSK Encanto LLC purchased Encanto Plaza, 3232-3244 E. Speedway, for $760,000 from Pacific Income Properties, represented by Brian Chang, Red Point Development. The site consists of a 16,067 square-foot building on 56,130 square-feet of land. The buyer was represented by Debbie Heslop, Volk Company Commercial Real Estate. • Disruptive Products LLC purchased 44.1 acres of vacant commercial land at the southwest corner of Postvale and Adonis roads, Marana, for $200,000 from Wells Fargo Bank. The transaction was handled by Chuck Corriere, Keller Williams Southern Arizona. • Southern Arizona Glassworks leased 5,268 square feet at 3880 S. Palo Verde Road, Suite 401-402, from Palo Verde Trust Partners, represented by Rob Glaser and Paul Hooker, Picor Commercial Real Estate Services. The tenant was represented by Fletcher Perry, Colliers International. • Cindy and Michael McGee, doing business as Cattleman’s Café, leased 1,900 square feet at 10110 N. Oracle Road, Suite 180 in Oro Valley from Jesjo Inc. The transaction was handled by Rob Tomlinson of Picor. • Charlie’s Comic Books leased 1,810 square feet at 5445 E. 22nd Street from Larsen Baker, self-represented by Andy Seleznov and Melissa Lal. • Everest Interscience leased 1,800 square feet at 2102 N. Forbes, Suite 107 from East Park VI Holding Company. The transaction was handled by Rob Glaser and Stephen Cohen with Picor.

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


20 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

EDITORIAL BIZ BUZZ

First they create a crisis then call it a ‘cliff’ Using the word “cliff,” as in fiscal cliff, is curious especially when politicians talk about going over it. Most of us would picture going off a cliff in the context of a car chase in an action movie or to me a better example is what happens to Wile E. Coyote in a Road Runner cartoon. At this month’s University of Arizona Economic Outlook forecast, professor Gerald Swanson said he and those DAVID HATFIELD sitting at his luncehon table thought the ramifications of what might happen would be better described as going down a “slope” instead of a cliff. Other economists have suggested using the word “hill.” Apparently the use of the word cliff stems from an appearance 10 months ago by U.S. Federal Reserve Chairman Ben Bernanke before the House Financial Services Committee where he talked about “a massive fiscal cliff of large spending cuts and tax increases” that would take place Jan. 1, 2013, if Congress didn’t change what it had set in place. In these days of nine-second sound bites, that was all that was needed to put a proper state of panic on something that talking heads in the news media couldn’t otherwise explain. The fact is the spending cuts and tax increases wouldn’t have had any immediate impact. Their affects would have taken place over weeks and months of 2013. On the other hand, the word “cliff ” put pressure on those in Washington, D.C., to get a resolution before the end of the year. And yet they were responsible for manufacturing the crisis in the first place due to their inability to get along with one another. Worse, they don’t feel any shame about it, either. And when a resolution is reached, some of these same people will be hailed for doing something momentus. Maybe cliff was the right word after all. We Amercians effectively handed the keys of our cars over to elected officials and said, “go ahead drive it off a cliff.” It’s remarkable that when it comes to social skills and interactions, we in the U.S. expect less of our elected leaders than we do of our pre-schoolers and kindergarteners. People making business decisions would have failed if they acted as Congress did.

Sad holiday It’s not a Tucson business story but the Dec. 14 shooting massacre of 20 little ones at Sandy Hook Elementary School in Connecticut has put a pall over this holiday season, the likes of which I haven’t felt since President Kennedy’s assassination before Thanksgiving when I was in junior high school. It doesn’t help that our two grandsons, ages 5 and 2½, are out of town this year. They’re getting extra special hugs when they get back on New Year’s.

Home delivery Four weeks from today, assuming everything stays on track, subscribers to the print edition of Inside Tucson Business will start receiving their weekly copy on their driveway each Friday morning, along with any other newspapers you receive. Please be on the lookout for a mailer any day now to update your delivery address.

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

EDITORIAL

Is there a Santa Claus? A now famous editorial published in the Sept. 21, 1897 issue of the New York Sun sought to answer this letter: Dear Editor— I am 8 years old. Some of my little friends say there is no Santa Claus. Papa says, “If you see it in The Sun, it’s so.” Please tell me the truth, is there a Santa Claus? Virginia O’Hanlon The Sun’s editorial then begins with: “Virginia, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except they see. They think that nothing can be which is not comprehensible by their little minds.” “All minds Virginia, whether they be men’s or children’s, are little. In this great universe of ours, man is a mere insect, an ant, in his intellect as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.” “Yes, Virginia, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist…” The editorial goes on to express wonderment at what could be in the unknown: “Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world” - and “Only faith, poetry, love, romance, can push aside the curtain view and picture the supernal beauty and glory beyond.” So here we are 115 years later and probably most of the adults among us look upon such things as the Sun’s editorial as an anachronistic remembrance of simpler times and innocence. That’s too bad. There will be people who look back on us 115 years from now and think these were the simpler times. Will they do so with any admiration for us living through the Great Recession? Will they laugh at the folly of Americans fretting over

a “fiscal cliff ”? Will those living in Arizona’s Sun Corridor look back upon political squabbles among our local governmental leaders as petty and insignificant? Will they think these recent years of Arizona’s national notoriety on matters such as anti-illegal immigration legislation were the products of hateful people who didn’t know any better? Will they think we gave politicians far too much authority over how we live our lives? Anyone who has traveled outside the U.S. knows that nobody else celebrates holidays quite like we Americans. We go all out for almost every holiday. We may borrow and adapt traditions from other countries. Some among us are critical for the materialism associated with our celebrations but the fact is they’ve grown from years of having the freedoms to do them in the ways of our imaginations. That imagination is also what creates inventions and makes for successful businesses. Without imagination, we could have settled for things as they were and never change. We’d be helpless. For Americans, there would be little to live for. The Dec. 14 shooter in Newtown, Conn., didn’t have imagination. Twenty innocent little 6- and 7-year-olds and six of their adult school leaders lost their lives in a most despicable act. That New York Sun editorial ends with: “No Santa Claus! Thank God! He lives and lives forever. A thousand years from now, Virginia, nay 10 times 10,000 years from now, he will continue to make glad the heart of childhood.” It’s good and healthy to clear a mind to imagine and dream like a child. Anything is possible. It’s also possible for us to work to make some of those dreams to come true.


InsideTucsonBusiness.com

DECEMBER 21,2012

21

OPINION BUSINESS INK

Banks should tighten up their loose coins policy It was one of those “you idiot” moments that hit me weeks after the act. I realized my careless stupidity at a time and a place too late to do anything about it Because there is money at risk, I’m still worried. Soon after Labor Day, I started sorting through and clearing out closets cluttered with decades of stuff. Off to Goodwill went boxes and bags of too-tight clothes, mismatched small electronics and just plain old stuff. Phase I of the de-cluttering campaign had involved scanning and saving thousands of old photos, slides and other visual keepsakes onto disks. That year-long project emptied six of those mega-large plastic storage bins from our home office. As the dust settled, several boxes of old coins emerged from the dark closet interiors and from under the beds. Long ago, they had been stashed away and forgotten. It took several weekends to pick through it all. In total, some 125 rolls of coins were re-discovered, mostly pennies. There were a dozen or so rolls of nickels, dimes and quarters mixed in. Plus, two old cigar boxes held loose 50-cent pieces and a few silver dollars. With great anticipation, the Internet

research was on to determine what, if any, had rare or special value. Every paper roll was unrolled and carefully inspected, then re-rolled again. In the end, there were no extremely valuable ROGER YOHEM pieces of buried treasure. After selling a handful of silver coins for scrap value, there was about $100 left in change. The remaining coins weighed too much to take to the bank all at once. So instead, the rolls were boxed up and put in the car trunk. The financial plan was simple: cash in five or six rolls at a time for paper money. Without naming names, the first exchange was at our credit union. With $20 in coins from the car trunk, I went inside to cash a check. At the teller’s window, the heavy rolls were presented. She looked at me funny. She handed me a pen. She said I had to write my account number on each roll. It was policy. Without giving it a thought, I scribbled out the

digits, got my $20 bill and left. It wasn’t until weeks later that I realized the error of my ways. This time at our bank, I grabbed 10 rolls of pennies from the car trunk. At the teller’s window, I began to scribble my account number on the rolls. She looked at me funny. She told me that was not necessary. After an awkward silence, she offered her opinion: “That’s really stupid if you think about it.” I hadn’t. “Everyone who handles rolls will see it.” Good point. “That’s how fraud happens.” You’re scaring me. After getting back into the car with my $5 bill for 10 penny rolls, I did start to think about it. Slowly, my thoughts turned to anger. As careless as I was, think how risky it is for credit unions and banks to require customers to put their account numbers on rolls of coins. It’s a dumb, dangerous policy that certainly increases the chances of identity theft, financial fraud or illegal access to bank accounts. Once the rolls get into the back room, who knows who else sees them?

At the office, a co-worker told me she had had the same experience. At her bank, a different one than mine, policy also requires her to write her account number on rolls. She has since stopped trading rolled coins for paper money there. Likewise, my credit union is now off my exchange list. If financial institutions are so worried about fraud, why have such a reckless policy in place that could help fraudsters? To me, the logic is weak: if someone only puts 49 dimes in a $5 roll, they want to know who to ding for the 10-cent shortage. Yet, if some fraudster steals an account number from a coin roll, the bank will spend more in time and resources trying to fix the fraud. Over the next several months, I’ll be watching my credit union statements very closely. In life, it’s easy to do stupid things when you’re not thinking or asking questions why. I’ve learned a valuable lesson. At what cost is yet to be determined.

Contact Roger Yohem at ryohem@ azbiz.com or (520) 295-4254. His Business Ink appears biweekly and weighs in on local political, social and business issues.

SPEAKING OUT

A little of this and that from around Tucson This time of year when there are many holiday events, Tucsonans venture out to visit with one another in the spirit of the season. I learn news tidbits at these events. Such as: • The Central Arizona Project cannot supply enough Colorado River water for thirsty Tucsonans and Phoenicians forever. Other water resources are under consideration. For now, Tucson Water, is introducing its new year-round water conservation and efficiency program, “Water Smart.” The program offers rebates for low-flow toilets, gray water systems, and rainwater harvesting. There’s also a Water Smart program for businesses to reduce utility costs while saving water. Visit tucsonaz. gov/water/watersmart • Tucson city elections will take place next year — the primary is Aug. 27 and the general is Nov. 5 — for city council seats in Wards 3, 5, and 6. There might also be a ballot measure on mayor and council salaries. Since 1999, council members have been paid $24,000 a year and the mayor’s salary is $42,000 per year. City Manager Richard Miranda will tap a citizen’s committee to research and study the salary matter and make a a recommendation for the November ballot. City residents who

want to serve on the committee should contact Yvonne L. Espino at Yvonne.Espino@ tucsonaz.gov. • Let’s hope there is also a ballot proposal to make Tucson’s elections CAROL WEST non-partisan. This is the only city in Arizona with partisan council elections. I am ambivalent about ward-only elections, but if that would sweeten the deal on non-partisanship, then let’s add that to the mix. • The Tucson City Council recently held a retreat. Their two native Tucsonan guests, former Arizona Attorney General Terry Goddard and Mesa Mayor Scott Smith, along with Stephen Gilliland, professor of management and organizations at the University of Arizona, talked about the past for being a foundation for the future. The speakers suggested looking at recruiting more small businesses rather than spending time and incentives on seeking a major employer. • There’s been speculation as to why Debra Chandler resigned this month as the city’s

director of economic development. Some elected officials like to be in the limelight on economic development issues without communicating to staff what is under consideration. This micromanagement can lead to staff frustration. • For the past year, Lucy Amparano has served as a capable interim city transportation administrator. More potholes have been filled and street medians cleaned because Amparano re-organized the streets department. Now she is going back into retirement. • Fortunately, Tucson will not ban plastic bags. Any recycling numbers reported include plastic bags and shrink wrap from around the state, not broken down in each jurisdiction. Now a formula for better local data collection has been developed. The Tucson City Council recently voted to increase plastic bag consumer education. Programs for school children already occur. Retailers will be responsible for employee and customer education at their respective stores. • Tucson golfers believe it is short-sighted to close Fred Enke Golf Course, 8251 E. Irvington Road, one of the better desert courses in town. A strong marketing plan

would bring more players there. • Will Tucson be the home of the next United States Secretary of Interior? Those close to U.S. Rep. Raúl Grijalva say he is not actively seeking the position. Besides, Secretary Ken Salazar hasn’t indicated he will resign. • School closures in the Tucson Unified School District would only cover about half of TUSD’s $17 million budget deficit. Cuts will also have to be made in adminnistration. • A well-organized strategy to get eligible Latino voters registered and to the polls paid off in the last month’s election in Arizona. The Arizona Hispanic Chamber of Commerce says Latino-registered voters comprise 18 percent of the state’s electorate, which is ahead of Colorado with 16 percent and Nevada at 14 percent. • Tucson Arts Brigade headquarters has moved to 738 N. Fifth Ave., the “old YWCA” building. The staff is writing grants to continue their work with youths to replace graffiti with artistic murals. That’s it for now.

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.


22 DECEMBER 21, 2012

INSIDE TUCSON BUSINESS

OPINION GUEST OPINION

Fiscal cliff could stall Arizona’s entrepreneurial leadership As the fiscal cliff discussion takes Washington, D.C., by storm, a number of state governors paid a visit to the White House to bring their perspectives on the complicated negotiations. The one apparent theme of the visit was a plea for a solution to the fiscal cliff debacle. This is for a good reason. Failure to find a solution will, in all probability, mean another painful recession for the nation and the states will get the short end of the stick. For Arizona, memories of the “great recession,” which lasted almost 2½ years and ended in December 2009, are still fresh. The state suffered immensely. Arizona gross domestic product fell by 8.2 percent in 2009 and at the height of recession the state’s unemployment rate reached almost 10 percent. State tax revenues, which mainly rely on income and sales taxes, fell by nearly one-third during the recession. Arizona lawmakers took appropriate actions to confront the problem head on. Major jobs packages that included business tax reductions and job incentives were signed into legislation in 2010 and 2012. Arizona has begun to slowly recover, but unemployment is still a problem (8.1 percent in October 2012). However, recent state tax changes have put the state on the right path. Job creation has started and the 2011 Kauffman Index of Entrepreneurial Activity put Arizona at the head of the pack. Arizona had the highest entrepreneurial

activity rate in the nation, 520 per 100,000 adults were creating businesses each month compared to an overall number of 320 per 100,000 adults for the nation as a PINAR ÇEBI WILBER whole. Any bad news from Washington, D.C., such as the possible increase in the federal capital gains tax rate, will be a direct impediment to Arizona’s economic recovery. Investors already face high combined federal and state tax rates on capital gains. An analysis released by the American Council for Capital Formation based on a survey conducted by Ernst & Young shows investors currently face state-level capital gains taxes in 41 states with an average top individual capital gains tax rate on corporate equities of 5.7 percent in 2012. Combined with the federal rate, these taxes substantially increase the separation between what an investment yields and what an individual actually receives (the “tax wedge”). The higher the tax wedge, the fewer investments that will be worth an investor’s time and risk, resulting ultimately in fewer investments being undertaken and longer holding periods as investors delay selling assets.

Both of those outcomes will ultimately further pressure tax receipts. While Arizona’s capital gains tax rate is below the U.S. average, an Arizona resident currently pays a top combined effective federal and state rate of 18 percent. Assuming the Bush-era tax cuts, including those on capital gains, are extended through the end of 2013, that rate will increase to 21.8 percent due to the new mandatory 3.8 percent Medicare surcharge on savings and investment which takes effect next year as part of the new health care law. Then there is the most sobering scenario — if Congress doesn’t act and allows the Bush-era tax cuts to expire, the federal capital gains taxes will return to 20 percent. Under that scenario, Arizona residents would see a dramatic jump to a 27.7 percent combined rate (including the Medicare surcharge). Legislation was signed into law on May 11, 2012 included a 25 percent reduction in the state capital gains tax rate (phased in over three years beginning July 1, 2014). This was the right thing to do to spur entrepreneurial activity in Arizona. However, if the nation goes over the fiscal cliff, the state’s effort might prove fruitless, especially in terms of investment and job creation. The increase in federal rates will more than offset the reduction in Arizona’s capital gains tax rate. In recent years, each $1 billion increase

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Do you support the idea of higher salaries for the Tucson mayor and council? Yes 31.5% No 68.5% Next week’s poll: If the “fiscal cliff” is not resolved, do you know anyon anyone whose job may be eliminated as a result?

in investment in the U.S. is associated with an additional 23,200 jobs. Conversely, decreasing the amount individuals and firms will invest due to federal and state capital gains taxes form a direct impediment to entrepreneurship and economic growth. Research by Allen Sinai, an internationally highly regarded economist, has already predicted a decrease in jobs simply from moving from the current 15 percent tax rate on long-term capital gains to 20 percent. Real economic growth falls by an average of 0.05 percentage points and jobs will decline by an average of 231,000 per year. For Arizona to keep its entrepreneurial stride, lawmakers must foster a favorable tax and business climate to allow risk taking and investment. The state has taken important steps to do just that. However, it is hard to keep your head above water when the federal deadlock threatens to pull it back under. A speedy and responsible resolution to the crisis in Washington will allow states like Arizona to breathe a sigh of relief.

Dr. Pinar Çebi Wilber is a senior economist for the American Council for Capital Formation (www.accf.org), a Washington, D.C., nonprofit, nonpartisan organization promoting pro-capital formation policies and cost-effective regulatory policies.

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DECEMBER 21,2012

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24 DECEMBER 21, 2012

SBA Lending Getting the right business financing is key in today’s economy. A Wells Fargo SBA loan is a smart choice, because the low down payment and low monthly payments help you maintain capital and cash flow. If you’re looking to purchase real estate for your business, acquire another business, expand to an additional location, or simply buy equipment or inventory, turn to Wells Fargo SBA Lending to help you do it. You can be confident in our experience as an SBA lender. In 2011, we approved over a billion dollars in SBA loans to businesses across America — more than any other bank in SBA lending history.2 We’ll use that experience to guide you through the process and make sure you get the financing you need. Apply for a loan or learn more today. Stop by a Wells Fargo location to talk with a banker, or call 1-800-545-0670 (Monday – Friday, 7 a.m. – 7 p.m. Pacific Time). You can also visit wellsfargo.com/sba.

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Wells Fargo is the #1 SBA 7(a) lender by dollars according to the U.S. Small Business Administration as of September 30, 2011. Based on data from U.S. Small Business Administration, for federal fiscal year 2011. All credit decisions subject to approval. © 2012 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. (709199_04421)

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INSIDE TUCSON BUSINESS

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Inside Tucson Business 12/21/12