Tag Archives: arizona commerce authority

Barry Broome, GPEC - AZ Business Magazine January/February 2012

GPEC’s Barry Broome Outlines Plan To Attract More High-Paying Jobs

Roadmap for the future: GPEC President Barry Broome outlines plan to attract more high-paying jobs, keep the ones we have

The Greater Phoenix Economic Council ( GPEC ) is beginning 2012 with an updated roadmap, the first leg of a five-year strategic plan, says its CEO and President Barry Broome.

Along with its historical mission to attract high-quality, high-paying jobs to the Valley, Broome says 2012 will also see GPEC bolstering its retention and expansion efforts, particularly in the aerospace industry.

Broome took time recently to list four of this year’s goals in the strategic plan. Look for GPEC to:

1. Help the Arizona Commerce Authority get off the ground. The public-private entity was established last year to create jobs and investment in Arizona. Broome says GPEC is working to coordinate efforts, leverage each other’s strengths and avoid duplicating efforts.

2. Work more diligently on retention and expansion, particularly in the aerospace industry, which is facing potential cuts by Congress’ Joint Select Committee on Debt Reduction, otherwise known as the Supercommittee.

“We’re analyzing 800 aerospace companies as we speak,” Broome says. “We want to make sure we really understand the aerospace sector.”  Information gleaned from analyses will be used to help cities identify companies under threat of budget cuts and find ways to support them.

Using the analytical skills of GPEC’s research team and internalizing it to Arizona is a new undertaking, he says, one that will help everyone better understand the sectors that drive the Valley’s economy. Historically, researchers have — among other things — focused on understanding the California market and which companies there may be candidates for relocation.

3. Support with data and information solid economic development tools. GPEC will be “meticulously” going over Gov. Jan Brewer’s veto letter for Senate Bill 1041, which would have cut the rate at which a business’ property is assessed if it committed to constructing or expanding in Arizona. The bill was meant to complement the larger, business-friendly tax package passed earlier by the Legislature. Broome says if a policy effort emerges to resurrect some of those ideas, GPEC will support it with data and technical expertise.

4. Focus on science and technology. GPEC established an Innovation Council last summer whose mission is to better understand and cultivate opportunities in the high-tech sector, says GPEC board member Steve Shope, president of Sandia Research Corporation and a member of the council.

For more information about GPEC and CEO/President Barry Broome, visit gpec.org.

Arizona Business Magazine January/February 2012

 

Arizona Commerce Authority, AZRE Magazine November/December 2011

Arizona Commerce Authority Celebrates Its 1st Anniversary

With the Arizona Commerce Authority celebrating its 1st year, jobs remain the focus as the state’s CRE industry reaps the benefits.

Arizona Commerce Authority, AZRE Magazine November/December 2011In August, Tempe-based First Solar purchased 635 acres in Pinal County for $9.8M and announced plans to build a generating station on the property.

The rapidly expanding, clean-energy company is still constructing its solar module manufacturing plant in Mesa, expected to be up and running by mid-2012 with as many as 600 new, high-paying jobs.

The company also is building generating stations in Gila Bend and Yuma. In January, Power-One opened its first North American manufacturing facility in Phoenix. The California-based company, which makes inverters to convert renewable energy to usable energy, said it will employ as many as 350 people at build-out.

At Power-One’s grand opening ceremonies, Gov. Jan Brewer credited  the Arizona Commerce Authority for the big win and for wielding CEO clout and corporate incentives in making Arizona a hot spot for solar companies looking to expand or relocate.

“I have been consistently focused on ensuring Arizona is a magnet for business relocation, capital investment and a catalyst for the creation of new business and new jobs. And, with the work of my Arizona Commerce Authority, we’re seeing tremendous results in the solar space,” Brewer said at the time.

A year after the Arizona Department of Commerce, a government agency, morphed into the Arizona Commerce Authority, a public-private partnership led by a board of directors filled with many of the state’s top business leaders, six solar companies boasting a combined 1,700 new jobs have announced plans to expand or move to Arizona, says Bennett Curry, who has been piloting the organization’s business attraction efforts since it launched.

Besides growth in the renewable energy sector, diverse companies are finding Arizona attractive. They include:

  • Amazon, which recently announced plans to add another 1.2 MSF of warehousing space and 200 jobs to its existing Arizona enterprises;
  • Able Engineering, which hopes to expand into new manufacturing facilities in Mesa, eventually more than doubling its 230-employee roster within a few years of the expansion;
  • Ventana Medical Systems, which is expanding and adding another 500 jobs in Oro Valley.

Best is yet to come

Arizona Commerce Authority, AZRE Magazine November/December 2011Arizona Commerce Authority counts new jobs, not the square footage to house them, so it’s difficult to estimate the new office, manufacturing and warehousing space represented by the business growth, Curry says.

But while Arizona Commerce Authority’s mission is to generate jobs, Arizona’s commercial real estate industry is a big beneficiary of the growth, adds Mike Haenel, executive vice president Industrial Division at Cassidy Turley/BRE Commercial.

“Job growth creates absorption, construction and new development opportunities for the state’s commercial real estate industry,” Haenel said.

Arizona Commerce Authority has assisted companies such as Amazon, First Solar, Suntech and others with expansions and relocations, he says, but possibly even more important is the organization’s impact convincing local legislators and other Arizonans about the importance of proffering tax breaks and other enticements to snag coveted business.

He credits the prestige of the corporate leaders backing the group with influencing passage of the Arizona competitiveness package. And their combined weightiness as enticing to national business leaders looking for relocation options.

“Even though the Arizona Commerce Authority has only been in existence for one year, and the fact that we are in a slow recovery cycle, the Arizona Commerce Authority has  been instrumental in educating the business community and those businesses looking to relocate that Arizona has the incentives available for quality job growth,” Haenel says. “We’re still in a tough economy and having Arizona Commerce Authority can only help the state with job attraction.”

Sundt Construction chairman Doug Pruitt, an Arizona Commerce Authority board member, says the organization has logged some early successes.“Working with Arizona Commerce Authority partners, there has been a
massive reduction in vacant space,” he says.  But Pruitt says the biggest bang-for-the-buck is still to come as the organization spent much of its first year laying groundwork.

“Arizona Commerce Authority’s active projects are up 38 percent over a year ago,” Pruitt says. “One of our short-term plans includes aggressive recruitment of California-based firms within our targeted business sectors.”And the vision doesn’t stop at the Pacific Ocean. “Not only are we working to promote the state nationwide, we are taking the message that Arizona is the best place to do business to a global audience,” he says.

DMB Associates chairman Drew Brown, also an Arizona Commerce Authority board member, says each successful recruitment breeds more business. And as the expansions and relocations pile up, a boom in the state’s commercial real estate industry will be a welcome by-product.

“I think Arizona Commerce Authority’s function of attracting high-quality export jobs will be a big shot in the arm for the local economy,” he says. “The multiplier effect will encourage other new jobs.”

As more businesses come to the state, they will fill up vacant residential and commercial real estate, generating demand for new construction and development and the new jobs associated with that. “It’s out there. It will happen,” he says.

Building lasting relationships

Arizona Commerce Authority, AZRE Magazine November/December 2011Brown, like other Arizona Commerce Authority leaders, says the organization can’t take most of the credit for attracting the impressive influx of new business during its first year.

Arizona Commerce Authority has been forging important strategic relationships with key economic development groups such as Greater Phoenix Economic Council (GPEC) and Tucson Regional Economic Opportunities (TREO) to marshal joint clout, Brown says.

“We are working with the Arizona Commerce Authority on several active projects,” says Laura Shaw, TREO’s senior vice president for Marketing and Communications. “While the authority is still very new and thus getting its legs, so to speak, we have formed a close partnership and have many opportunities moving forward.”

And the Arizona Commerce Authority’s Curry says the new competitiveness package passed early this year opened a lot of doors for Arizona Commerce Authority to pitch the state’s wares.

“Before our toolbox didn’t have a lot of tools,” Curry says. “Now Arizona is ranked high among Western states.”

During a recent trade conference in San Francisco with international companies looking for a U.S. presence, the organization landed 19 meetings with interested prospects, and three are actively pursuing a possible Arizona relocation, he says.

Pruitt adds the Arizona Commerce Authority still faces hurdles — the uncertain global economy and Arizona’s somewhat tarnished reputation regarding school funding, immigration, gun laws and other issues. But he is optimistic.

“Some 300,000 of our residents have lost jobs since the recession began,” Pruitt says. “We realize that people are counting on us to do our job. The Arizona Commerce Authority takes this duty seriously and is focused on a single task — getting businesses to invest in Arizona to create jobs.”

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www.azcommerce.com
www.gpec.org
www.treoaz.org

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AZRE Magazine November/December 2011

Commercial Real Estate Industry - AZRE Magazine September/October 2011

How Legal Issues Will Affect The Commercial Real Estate Industry Recovery, 2012

How Legal Issues Will Affect The Commercial Real Estate Industry Recovery, 2012

Arizona legislators packed the recent regular session with 357 new bills covering everything from food stamps to firearms.

But barely a handful will directly impact the state’s commercial real estate industry in 2012, and even those not significantly, says Greg Harris of Lewis and Roca LLP.

Still, that doesn’t mean the recent doings of Arizona’s state government, whether dictated by seemingly non-real estate focused laws or budget issues, won’t make a difference to the industry in the coming year, Harris and other local legal experts predict.

The few commercial real estate-related bills which did make it through the recent session were aimed at easing or clarifying municipal regulations and procedures that otherwise could hamper new development, Harris says.

SB1525, which was the latest of a series of laws aimed at limiting development impact fees, and SB1598, which attempts to provide some uniformity in permitting procedures among municipalities, are examples he cited.

Snell & Wilmer partner Ron Messerly adds a few more. SB1166 creates a tax exemption for certain commercial lease structures, and SB1474 has the effect of restructuring insurance requirements on multi-housing projects, Messerly says.

But any or all of those are unlikely to make much of an impact, the lawyers said.

Nor is anything monumental blowing in the wind for the next legislative session.

“There is nothing bright and shiny on the horizon that will have a significant impact on the commercial real estate industry,” Messerly says.

And that is good news, adds David Kreutzberg of Squire, Sanders & Dempsey.

“The legislature was so absorbed with budget problems, it took energy from other issues,” he says.

Kreutzberg, who specializes in hotel real estate, says he was especially pleased that certain  laws which were proposed didn’t pass during the previous session.

He noted a chunk of immigration-related bills that were rejected by the legislature or vetoed by the governor.

“SB1070 was a disaster for the hospitality industry,” Kreutzberg says. “I think the legislature got the message that they were doing injury to the state.”

On another positive note, the legislature’s continued efforts to reform the business property tax structure is a hopeful sign, and the abolishment of the Commerce Department and establishment of the new Arizona Commerce Authority is “promising,” he says.

NAIOP Arizona chairman Mike Haenel echoed Kreutzberg’s concern about revising the tax structure to make Arizona attractive to potential new or expanding businesses.

Haenel says job generators will fuel the future of Arizona’s commercial real estate industry, and HB2001 may have more of an impact on the industry in the coming years than any of the actual real estate-focused bills passed during the recent legislative session.

All those legal issues help establish Arizona’s attractiveness as a place for businesses that might be looking to expand or establish new offices in the state, he said.

A legislative negative, however, is state budget cuts for public schools, Kreutzberg says.

“We’re losing our competitive edge. It’s one of the things that is holding Arizona back,” he says. “The governor and the legislature need to face the fact that it’s a big issue.”

And not all legal issues impacting Arizona’s business growth, and therefore it’s commercial real estate industry, are spawned by the lawmakers.

Harris is concerned less about what the legislature did than what local advocacy groups did or may do to restrict development.

Examples include recent litigation and unfavorable rulings on Phoenix’s incentives for upscale mixed use complex City North, and Glendale’s proposals for saving the Phoenix Coyotes, the centerpiece of the city’s vast commerce cluster.

“Even if you have a project that most think is a good idea, advocacy groups challenging (incentives) may have a chilling effect on investors moving forward,” Harris says.

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For more information about the real estate industry and the firms mentioned in this story, visit the following links:

www.lrlaw.com
www.swlaw.com
www.ssd.com

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AZRE Magazine September/October 2011

 

AZRE Magazine Digital Issue

AZRE Magazine November/December 2011

AZRE Magazine November/December 2011:

Grand Designs

This issue, find out how AIA Arizona Members are bringing their skills to the global issue. Plus, the Arizona Commerce Authority is 1-year old; how are they making a difference? And as part of our centennial series, take a look at some architectural achievements that have graced Arizona’s diverse landscape. Also, AIA-Arizona members are bringing their skills to the global stage, and our special section covers BOMA, Building Owners & Managers Association, which discusses its mentoring program for young professionals, as well as the TOBY Awards 2011, and much more.

Take it with you! On your mobile, go to m.issuu.com to get started.

Don Cardon, Arizona Commerce Authority

Don Cardon: The Driving Force Behind The Arizona Commerce Authority

A political appointee with a successful track record in the private sector, Don Cardon has become the face of the new and innovating Arizona Commerce Authority. While Gov. Jan Brewer is chair of the public/private economic development agency and sports mogul Jerry Colangelo serves as co-chair, it is Cardon, as president and CEO, who has his hands on the reins.

Leaders who have gotten to know Cardon better during the process of creating the Arizona Commerce Authority say he keeps his cool at all times, in good days and bad, is respectful of all points of view, is thoughtful, and someone who projects an element of stability for the state of Arizona.

But even more importantly, according to Roy Vallee, outgoing chairman and CEO of Avnet, are Cardon’s financial skills.

“Not only does he have numeric literacy, (he also has an)  understanding of financing, how to pull deals together and how to interact with banks and other sources of capital,” Vallee says.

Cardon began his employment with state government in March 2009 as director of the Arizona Department of Housing, and just a couple of months later Brewer appointed him director of the Arizona Department of Commerce, predecessor of the ACA. Before joining the state, Cardon was president and CEO of Cardon Development Group, creating low-income workforce housing projects in Phoenix, Gilbert, Eloy and Winslow, and was the visionary behind the group that helped create CityScape, a mixed-use development in Downtown Phoenix.

Cardon’s stated intention was to see the ACA through its formative stage until a permanent president and CEO could be brought onboard, enabling him to return to the more lucrative private sector. But as the ACA board of directors took shape, comprising the cream of Arizona’s business and community leaders, Cardon was urged by Brewer, Colangelo and board member Michael Manson to remain.

“We sat him down and said you can’t create vision and hope with no structure or follow through,” says Manson, co-founder/executive chairman of Motor Excellence in Flagstaff. “That’s the worst kind of leadership. He realized that was true. We identified him as one of the few people in the state who had the political connections, the Commerce Department background and the business connections to make this work.”

Manson, who has founded several other companies, including PETsMART, says Cardon brings enthusiasm, energy and integrity to the ACA.

“He’s eternally optimistic and politically sensitive,” Manson says. “It takes a unique person to be politically rooted, but business oriented, and to be able to handle all of the political and business entities and very strong personalities it requires. He is truly focused on doing the right things for this organization.”

Indeed, focus is a key word in Cardon’s vocabulary. In guiding the ACA, the focus is attracting and retaining businesses in science and technology, aerospace/defense, renewable energy, and small business/entrepreneurship. He once told an interviewer: “You can’t just kind of throw a line in water and say whatever fish comes along you’ll take, which isn’t to say we won’t respond to any other opportunities. But you have to know what you’re trying to go after.”

At the Commerce Department, economic development was “a shotgun approach,” Cardon says. It was an approach he intends to avoid.
“There was no focus within the department,” he says. “Because of the lack of focus, I don’t believe the Legislature has had a great deal of confidence in our efficiency, our ability to accomplish what we set out to do. It was an agency that has really lost touch with what it’s really supposed to be about.”

Another ACA board member, Mary Peters, president of a consulting group bearing her name, touts Cardon’s private-sector background.
“Don understands what it takes to attract and retain businesses in Arizona,” says Peters, whose resume includes stints as federal highway administrator of the U.S. Department of Transportation in President George W. Bush’s administration from 2006-2009, and director of the Arizona Department of Transportation from 1998 to 2001.

“He knows how to put projects together and how to manage,” Peters says. “That’s the value I see in Don and what he brings in the transition from the Commerce Department, having that continuity. Having spent most of my professional career in the public sector, it’s helpful for me to have someone with that private-sector experience to realize what businesses are looking for. I have a different perspective. I know very well the regulatory side of government. I know what it’s like to work through issues with government agencies so those issues aren’t barriers to companies that would like to come into Arizona.”

When Vallee of Avnet, also on the ACA board, heard about a move to encourage Cardon to accept the top ACA job, even after a search firm had been hired and specs of the job had been outlined, his instant reaction was, “That’s fantastic.”

The reasons: Cardon had a good track record at the Commerce Department and had been intimately involved in the creation of the Commerce Authority.

“He understands the history and the purpose of what we’re trying to accomplish,” Vallee says. “This was a brand new entity, and if we recruit someone who had not been involved in creating it, that person would flounder for a while trying to figure out what the job is all about.”

Because the ACA is a public/private partnership, having a CEO with experience and expertise in both areas is considered a huge benefit.

“He is better able to manage that environment very, very well — better than anyone with one viewpoint or the other,” Vallee says.

Vallee mentions Cardon’s core values, especially integrity.

“We all want someone in that role we can trust,” he says. “People are going to want to do business with someone they can trust, whether it’s investment coming from within state or from outside. As people get to know Don and develop that trust, it’s going to be beneficial to economic development.”

Vallee pauses and adds, “Don is a good man and a good executive, which makes him a really great fit for this job.”

[stextbox id="grey"]For more information about the Arizona Commerce Authority, visit www.azcommerce.com.[/stextbox]

Arizona Business Magazine September/October 2011

 

Arizona Commerce Authority - AZ Business Magazine September/October 2011

Arizona Commerce Authority Aims To Bolster The Business Environment

The new kid on Arizona’s economic development scene is poised to shake things up. The Arizona Commerce Authority (ACA), a public/private entity, is not merely a name change, a rebranding of the Arizona Department of Commerce that over the years received its share of praise and an increasing level of criticism. And it’s not just a committee of top-shelf business leaders.

“It’s more than that,” says Don Cardon, president and CEO of the Arizona Commerce Authority. “It’s really a call to arms.”

Created by Gov. Jan Brewer through an executive order a year ago, and formally established by the Arizona Legislature early this year, the Arizona Commerce Authority is the cornerstone of the Arizona Competitiveness Package, a mix of tax benefits and incentives targeting quality job growth. The Arizona Commerce Authority’s leadership board consists of 17 of Arizona’s top CEOs who provide oversight and valuable input, with House Speaker Andy Tobin and Senate President Russell Pearce as ex officio members. Brewer chairs the Arizona Commerce Authority, and sports entrepreneur Jerry Colangelo serves as co-chairman.

The state’s university president, chair of the Rural Business Advisory Council and other committee chairs round out the balance of the 31-member ACA board.

The leadership board’s focus is on growing and diversifying Arizona’s economy and creating quality jobs throughout the state. The ACA works closely with such key partners as the Science Foundation Arizona, the three state universities, regional economic development groups and local communities.

The ACA is targeting these key base industries — aerospace and defense, renewable energy, science-technology, and small business and entrepreneurship. It is funded through existing payroll withholdings under an annual operating budget of $10 million, plus a so-called deal-closing fund of $25 million, some of which will be allocated for job training.

Michael Manson, an ACA board member and founder/executive chairman of Motor Excellence in Flagstaff, says he thinks the quasi-public agency will produce results for a number of reasons.

“By involving business leaders as we have and funding it by government we are removing some of the politics, enabling more performance and quicker response to commercial opportunities,” says Manson, who also founded PETsMART. “The pendulum swung a little far before the recession toward government regulations, but we need to get back to being more oriented toward entrepreneurial commercial opportunities.”

Mary Peters, president of Mary E. Peters Consulting Group, says the ACA draws from the successful endeavors of other states.

“We now have a mindset that Arizona is open for business,” says Peters, a former federal highway administrator with the U.S. Department of Transportation and former director of the Arizona Department of Transportation. “We’ll do what we can, especially in the aerospace and defense industries. If we’re not out there working to bring them to Arizona, other states will.”

Under the deal-closing Arizona Competes Fund, a company will need to achieve certain performance measures including average employees’ wages above the county’s average wage, health insurance coverage minimums and other requirements similar to the state’s existing job-training program. Backers say the fund will spur investment in projects in the targeted industries.

It replaced the inactive Commerce and Economic Development Council deal-closing fund, is controlled by CEO Cardon, and puts Arizona among the top one-third of states with aggressive economic development programs, supporters say.

Funds provided to growth projects must result in a net benefit to the state, consistent with the Arizona Constitution’s gift clause. In addition, an economic impact analysis by an independent third party will be conducted on all projects to determine potential return on investment benefits to the state. Furthermore, funding will be awarded with contractual provisions for performance and “claw-back” of funds for non-performing projects.

The Competitiveness Package extends the existing job-training program, a reimbursable grant program for job-specific training plans for employers creating new jobs or increasing the skill and wage levels of current employees.

Arizona’s Enterprise Zone Program is replaced with a new Quality Jobs Tax Credit for new job creation statewide. This tax credit is performance based on net new job creation and capital investment with specific eligibility qualifications for urban and rural businesses.

The tax credit for each new quality job created is $3,000 per year for three years and is limited to 400 new jobs per employer, per year. The program is capped at 10,000 new jobs per year. Experts say the program will increase Arizona’s competitiveness ranking to No. 3 from No. 9 in the Mountain West.

On the tax side of the equation, the electable sales factor for multistate corporations increases to 100 percent from 80 percent in equal increments from 2014 to 2017. A corporation that conducts business both in-state and out-of-state must apportion its income from business activity based on the ratio of property, payroll and sales in

Arizona compared to the corporation’s property, payroll and sales everywhere.

The corporate income tax rate is reduced by 30 percent to 4.9 percent from 6.97 percent in equal increments from 2014 to 2017. The change is expected to improve Arizona’s national ranking from 24th to No. 5, and from No. 6 to No. 3 in the Mountain West.

Arizona Commerce Authority

Under personal property, depreciation schedules are further enhanced for prospective acquisitions of commercial personal property on or after 2012.
Colangelo, partner of JDM Partners, explains his determination in agreeing to serve as co-chairman of the Arizona Commerce Authority.

“We will eliminate all distractions in pursuit of the ultimate goal — restoring economic vitality and stability to our state,” says Colangelo, former top executive of the Phoenix Suns and Arizona Diamondbacks. “Our new structure automatically eliminates the agency’s culture of entitlement and political sloth, and we have introduced what I believe to be a ferocious approach to both retaining and attracting business for the benefit of Arizonans, their families and our children.”

For more information about the Arizona Commerce Authority visit www.azcommerce.com.

AZRE Magazine July/August 2011

Doug Pruitt: His Retirement & Accomplishments

Doug Pruitt - AZRE Magazine July/August 2011As president and CEO of Sundt Construction, Doug Pruitt is responsible for landmark building projects in the United States and abroad. As he prepares to retire in September after 45 years with the Arizona-based company, it’s the little things, he says, to which he’s looking forward.

“I’ve had a great career and fortunately I have enjoyed getting up every day and working,” says Pruitt, who steps down Sept. 29. “I hope to spend more time with my lovely wife (Becky) of 43 years and have our kids and grandkids join us often. I plan to hit a few golf balls, as well. It will be very different for both of us, but we are looking forward to it.”

Perhaps it’s only fitting that on his 45th anniversary and final year with the firm — he joined the employee-owned business in 1966 — Sundt is the nation’s 45th largest construction company, according to Engineering News Record. Sundt reported revenues of $1B in 2010. It has Arizona offices in Tempe, Phoenix and Tucson, plus offices in California, Nevada, North Carolina and Texas.

But it’s the leadership and direction of Pruitt, who prefers to take a low-profile approach, that have put Sundt on the map as one of the top general contractors in the nation. Asked what he’s most proud of, Pruitt doesn’t hesitate in his response: It’s the Sundt Foundation that was started about 10 years ago.

“The Sundt family had a long history of contributing to our society in many ways, but we hadn’t created an environment that encouraged our employees to get involved in charitable giving and volunteerism,” Pruitt says. “The Sundt Foundation has given them that opportunity. They have really risen to the occasion, and through a combination of their gifts and the company’s matching funds, the foundation has been able to award grants totaling more than $4 million. Employees have also volunteered thousands of hours. I’m extremely proud for what they have done.”

Pruitt’s retirement comes at a critical time. The commercial real estate industry continues to grapple with the aftermath of the Great Recession. However, Sundt has been able withstand the economic downturn better than other general contractors, but it isn’t immune to the industry’s peaks and valleys. The industry was flourishing when Pruitt served as executive vice president and manager of the building division, as well as in 1992, when he assumed the position of president and CEO.

“Construction is a very cyclical business and as the economy cycles we are usually hit a lot harder than most industries,” Pruitt says. “In this recession, the general economy saw an unemployment rate at approximately 10%. However, in the construction industry it hit 24%.

“Sundt has had its share of ups and downs during the many years that I have been there. I have now been through six recessions and Sundt has been very resourceful at adapting to the different markets, and moving around the globe to keep our revenue up and survive.”

These days, it’s rare for one person to spend more than a handful of years — let alone an entire career — in one place. Besides running the company, he has authored articles and chaired national and state committees. Pruitt is a board member with the Arizona Commerce Authority, and in 2009 was president of the Associated General Contractors of America, the trade organization for commercial contractors.

“My theme for my year as president was, ‘Dare to Challenge — Dare to Change,’ ” Pruitt says. “I chose that theme because our industry has seen very little productive growth compared to other industries, and I really wanted us to challenge our industry to change.”

Pruitt’s retirement this fall marks a new chapter in terms of his role with Sundt and in the community. He will remain a member of the board of directors at Sundt, and he will continue serving as a board member of the Arizona Commerce Authority.

He offers these parting words: “Think about it. There is nothing that goes on in our society that doesn’t go through our industry. We build the homes you live in, the streets, highway and bridges you drive on, the hospitals you are treated in, the schools and universities you are educated in, the power plants that generate your electricity, and the list goes on. What an awesome job.”

For more information on Doug Pruitt and Sundt Construction, visit Sundt’s website.

AZRE Magazine July-August 2011

Arizona Unemployment

Arizona’s Unemployment Rate in February Stays Steady at 9.6 Percent

The state’s unemployment rate held steady in February at 9.6 percent for the fourth month in a row. The economy added 23,400 nonfarm jobs. The Arizona Commerce Authority (ACA) reports today that the job gains were predominantly seasonal and slightly lower than the historic average.



Feb. ’11 Jan. ’11 Feb. ’10
United States 8.9% 9.0% 9.7%
Arizona 9.6% 9.6% 10.2%



The private sector generated 12,000 jobs in February and the government sector created 11,400 jobs.

“Overall, nonfarm employment in Arizona in February was somewhat weaker than typical Februarys
in years prior to the recession, but moderately better than the last three years,” according to the ACA employment report.



Feb. ’11
Jan. ’11
Feb. ’10
Overall 2,386.6 2,363.2 2,381.3
Monthly Change 1.0% -1.8% 0.8%
Annual Change 0.2% 0.0% -4.4%



Nine of the state’s 11 major sectors gained jobs, one was flat, and one lost jobs last month.

Gains were reported in: government (11,400); educational health services (4,300); leisure and hospitality (3,500); trade, transportation and utilities (2,800); and professional services (1,700). Financial activities, other services, manufacturing and information combined created fewer than 10 percent of the total jobs in March.

Losses were reported in construction (-2,300); and natural resources and mining was flat.

The unemployment rates dropped in all of the state’s largest metro areas.


Feb. ’11
Jan. ’11
Feb. ’10
Phoenix Metro 8.8% 9.3% 9.7%
Tucson Metro 8.8% 9.2% 9.3%
Yuma Metro 21.5% 23.1% 20.0%
Flagstaff Metro 8.9% 9.4% 10.2%
Prescott Metro 10.5% 11.0% 11.0%
LHC-Kingman Metro 10.9% 11.5% 11.7%
Construction Industry, AZRE Magazine March/April 2011

Arizona Construction Industry Gains Footing In 2011

Fueled by education-related projects, another new Cactus League spring training facility and Indian casinos, the construction industry in Arizona appears to be gaining footing in 2011.

Though not experiencing a full-scale rebound, contractors have reasons to be somewhat optimistic. For example, K-12 school districts around the state won voter approval in November of bond issues and budget overrides totaling more than $500M — but not all of the money is earmarked for construction or remodeling.

Contractors also anticipate increased activity in the solar energy field, thanks in part to SB 1403, approved in 2009. The law offers tax incentives for businesses locating alternative and solar energy manufacturing plants and corporate headquarters in Arizona.

Perhaps the highest-profile project that attracted numerous general contractors is the proposed spring training stadium and facilities for the Chicago Cubs in Mesa. Beth Huning, Mesa city engineer, says the city hopes to break ground on the 100-plus acre project southeast of the intersection of the Loop 101 and 202 freeways by the end of 2011. The Cubs want to use their new facility for spring training in 2013.

Mesa voters on Nov. 2 approved a ballot measure that allows the city to spend up to $84M for a new stadium, practice fields and training facilities. In addition, city officials have promised to spend no more than $15M for associated infrastructure improvements. The Cubs will be responsible for any cost overruns, and plan to build a “Wrigleyville West” entertainment and retail complex next to the baseball facilities.

Mortenson Construction, which just completed Salt River Fields at Talking Stick, the new spring training home of the Arizona Diamondbacks and Colorado Rockies at Loop 101 north of Indian Bend Road on the Salt River Pima-Maricopa Indian Community, was among the general contractors vying for the Cubs facility.

George Forristall, director of business development for Mortenson, says the firm is involved in major projects at all three state universities. He cites two Arizona State University recreation facilities — one at the Polytechnic campus in Mesa and one at the ASU West campus — each in the $17M range; a $53M Health & Learning Center at Northern Arizona University in Flagstaff that may not break ground until 2012; and an expansion of the north end zone at the University of Arizona football stadium in Tucson. The UA project, estimated at $50M, includes replacing aluminum seating with 5,000 upgraded seats, new concession concourses, additional restrooms, and elevators to improve access for the disabled.

Robert “Bo” Calbert, Southwest regional president of McCarthy Building Companies, says his firm expects to be active in public school projects, considering the success of numerous bond issues and budget overrides totaling a half-billion dollars.

“The K-12 market is a pretty big market for us,” Calbert says. “We expect to see several projects this year — not a ton compared to the last few years, but it’s a steady market.”

Among the successful school districts were Kyrene Elementary, $116.9M; Scottsdale Unified, $115M; Chandler Unified, $84.3M; Washington Elementary, $65M; and Marana Unified, $43M.

“A lot of schools will do upgrades and renovations, but not much new construction,” Calbert says. “Considering the state of the economy, it’s a fairly active market, albeit smaller than two-three years ago.”

He suggests a reason for the wave of successful bond issues: “The public has seen … state cuts in education spending. If not for bond issues, the needs of these schools would not be met.”

Many of the projects will involve heating and air-conditioning upgrades, with some schools opting for solar devices.

McCarthy, making a big push into solar, has secured one contract and was closing in on a second substantial deal, Calbert says. He sees solar, particularly in Arizona with abundant sunshine and relatively low-cost construction, as an industry for the present and future, though challenges remain for financing.

“We’re betting on it,” he says.

McCarthy is building a new hotel for the Pasqua Yaqui Tribe near Tucson and hopes to land the Navajo Nation’s proposed Twin Arrows Casino in Northern Arizona. And there is talk of a new Fort McDowell Mohave-Apache casino near Fountain Hills, Calbert says.

In addition, despite mounting local opposition, David Jones, president and CEO of the Arizona Contractors Association, says he expects the Tohono O’odham Nation to be successful in building a resort and casino adjacent to Glendale for an estimated $500M. Also in 2011, Jones sees a continuation of healthcare and hospital construction, solar projects in the Kingman and Gila Bend areas, a private prison near Prescott, mining projects southeast of Tucson and near Patagonia, and perhaps federal projects to beef-up security along the border with Mexico.

Forristall says the formation of the Arizona Commerce Authority, a public/private agency to spur economic development, is “a very positive sign.” He also praises the efforts of the Greater Phoenix Economic Council in utilizing the tools in SB 1403 to attract solar projects.

Forristall sees a gradual recovery in 2011. He says 2009 was a tough year for construction and 2010 basically maintained the status quo. “I see 2011 — not a U-shape — but I see a bit more activity, more optimism,” he says. “So we’re positive about the outlook.”

For more information about the construction industry and the projects mentioned in this story, visit:

mortenson.com

mccarthy.com

mesaaz.gov/engineering/cubs.aspx

AZRE March/April 2011 

arizona flag 2011

Legislation to help re-establish Arizona as an economic leader

Gov. Jan Brewer today called the Legislature into Special Session for the consideration of a comprehensive plan to put Arizona back to work. Known as the Arizona Competitiveness Package, the proposal includes a mix of targeted business incentives and broad tax reforms designed to rev the Arizona economy.

“The Competitiveness Package will make Arizona a magnet for business expansion, relocation, capital formation and investment,” Brewer said. “This is our roadmap for future economic growth.” Improving Arizona’s competitiveness in the global marketplace is the first of the governor’s Four Cornerstones of Reform that she unveiled earlier this year. The centerpiece of the plan is her creation of an Arizona Commerce Authority.

Replacing the Arizona Commerce Department and its hodge-podge of more than 50 mandates and responsibilities, the Commerce Authority will have a single focus: the retention and recruitment of quality jobs for Arizona. The Commerce Authority will be overseen by a public-private board comprised of Arizona leaders in business and policy.

Designed to be nimble and flexible in responding to economic opportunities, the board will be armed with a $25 million deal-closing fund to help land some of the nation’s most highly-sought corporations and business ventures for Arizona. No dollars will be awarded prior to performance, and “claw-back provisions” and an independent, 3rd-party economic analysis will ensure that companies awarded public funds meet their promised obligations.

“This package of tax reforms and targeted investments will give Arizona the tools it needs to compete for economic development on the global stage,” said Don Cardon, president and CEO of the Arizona Commerce Authority. “Arizona can’t afford to wait for economic growth. We’re going to aggressively pursue quality jobs and stable industries that will become the bedrock of this state’s economic future.”

The Arizona Competitiveness Package is focused on both urban and rural job creation, and is intended to make this state a destination for business growth and development. Specific aspects of the plan include:

• The creation of a Quality Jobs Program, with corporate tax credits of up to $9,000 for each qualifying new job. ($3,000 per job, per year, with a 400-job cap).

• An increase in the electable state corporate income-tax sales factor to 100 percent, up from the current 80 percent. This will encourage firms to establish headquarters and manufacturing centers in Arizona.

• Re-authorization of the Arizona Job Training Program, providing job-specific, reimbursable grants to train employees for new careers.

• A four-year, phased-in reduction of the state’s corporate income tax to 4.9 percent, beginning in January 2014. This will give Arizona the nation’s fifth most competitive corporate income-tax rate.

• A 10 percent increase in the state’s Research & Development tax credit, encouraging further collaboration between Arizona’s research universities and the private sector.

• A 5 percent acceleration of the depreciation schedule for business personal property, spurring purchases of new equipment and other capital investments.

The Arizona Competitiveness Package is consistent with Brewer’s long-held call for corporate tax relief that would be phased-in after Proposition 100 expires and the state’s budget is on firmer footing.

“The development of a stable and growing economy is the key to Arizona’s future,” she said. “It will provide good jobs for our citizens and revenue for the state programs and services everyone enjoys. I urge legislators to act quickly in enacting these reforms and furthering Arizona’s economic recovery.”

Bill Pepicello, chairman of GPEC and president of University of Phoenix - AZ Business Magazine Jan/Feb 2011

Q&A Bill Pepicello, GPEC Chairman And University Of Phoenix President

What are your top goals as chairman of GPEC?
First, and foremost, my goal is to build on the momentum that Michael Bidwill, GPEC’s immediate past chairman, and Barry Broome, GPEC’s president and CEO, have driving the region toward new high-quality jobs. … I also want to expand on their vision and ideas to build a healthy economy. Many of the pieces of the puzzle are coming together now. Arizona’s Renewable Energy Tax Incentive Program is driving hundreds of new jobs and millions in capital investment. In addition, many leaders are focused on moving Arizona’s economy beyond its former reliance on the construction, retail and real estate industries.

How would you characterize Greater Phoenix to companies looking to expand here?
Greater Phoenix is a strong investment decision for companies. We have ground-floor business opportunities for companies looking for the right place to expand their businesses. Renewable energy companies and bioscience companies do very well here. The semiconductor and aerospace industry are intertwined in Arizona’s history. Also, Greater Phoenix is an ideal location to launch a business and export products to California, which has a more expensive business environment. … We have highly skilled labor, an affordable operating environment and new available buildings.

Why is GPEC targeting the renewable energy industry?
The industry provides high-quality jobs for local communities, injects millions in capital investment, and draws other companies that serve as suppliers. … GPEC will continue to focus on renewable energy policy and the state’s aggressive Renewable Energy Standard that appeals to companies. Michael will continue to play a pivotal role in advancing the renewable energy industry, as Gov. Brewer has appointed him to lead the Arizona Commerce Authority’s Renewable Energy Growth Sector Committee.

What is GPEC doing this year to advance the region?
We are partnering with the Legislature to bring more high-quality jobs to Arizona, and we are working with lawmakers to modernize the state’s Enterprise Zone to draw more companies here. We are continuing with rebranding efforts to move Arizona’s national image beyond the immigration debates. I believe our efforts to continue diversifying the region’s economy will have a lasting impact for the region and Arizona. GPEC is working very hard to strengthen the economy. We have many tasks to accomplish this year but we are definitely up for the challenge.

AZ Business Magazine Jan/Feb 2011

Arizona Commerce Authority

Arizona Commerce Authority Is Tasked With Re-Invigorating The State’s Economy

As Arizona enters 2011, unemployment continues at about 9.5 percent, and according to one national ranking of commercial real estate site selectors, Arizona’s reputation as a business-friendly state continues to slide. That’s where the newly formed Arizona Commerce Authority comes in.

“It’s not about re-branding, and it’s not about a committee,” says Don Cardon, ACA president and CEO. “This is about a plan that has the governor involved. We want to significantly advance Arizona’s economic future into a pronounced global competitive position.

“This is not about politics or any industry in particular. It is how we distinguish Arizona within a global market,” Cardon adds. “The competitive nature of global markets requires the state’s absolute focus and collaboration with private-sector partners to achieve growth and diversification of the economy.”

Gov. Jan Brewer took steps to accelerate the ACA’s mandate at the board’s second meeting. Besides officially naming Cardon head of the ACA, Brewer vowed to work with the state legislature to finish “re-creating the authority as a streamlined, modern organization that unleashes the most innovative minds in the business community.”

In outlining some of the details of her economic development plan for Arizona, Brewer touched on three items:

• Creating a “deal-closing fund’’ for the government to provide cash to companies willing to expand or relocate here.

• Expanding the tax credits available to corporations that conduct research and development in Arizona.

• Eliminating capital gains for investments made in small businesses.

Putting Cardon in charge of the ACA is the first step in implementing that plan. He will lead the organization, which will focus on attracting new businesses and retaining existing businesses that create more high-wage, quality jobs.

“My intention was to return to the private sector. However, Governor Brewer and Mr. (Jerry) Colangelo convinced me this is the most critical time for Arizona,” Cardon says. “Since the Governor has allowed me to assist her in designing the road map we are pursuing, I realized this was a unique time in life where my continued involvement may be best concerning all the ACA is aggressively endeavoring to achieve.”

“Don Cardon’s work with me in restructuring and revitalizing the new Commerce Authority has been groundbreaking,” Brewer says. “His credibility in the arena of business and industry is essential to our success in advancing Arizona’s economy.”

In an executive order last summer, Gov. Jan Brewer established the 35-member, statewide ACA to replace the Arizona Department of Commerce. The ACA is led by a private-sector board that will work to align diverse assets and opportunities within the state in order to compete economically in both domestic and international markets to create high-quality jobs for Arizona residents.

In picking a board vice chairman, Brewer reached out to one of the Valley’s most successful and visible businessmen, Jerry Colangelo. Under Brewer, Cardon and Colangelo, the ACA will have a focused approach to four core areas on which to advance the state.

The ACA will work on improving the state’s infrastructure and climate to retain, attract and grow high-tech and innovative companies. The focus will be on aerospace and defense, science and technology, solar and renewable energy, and small business and entrepreneurship.

At the board meeting, committee reports detailed sustainable strategies that will help Arizona compete globally.

• Focus on science, technology, engineering and math in K-12 education.

• Focus on the innovation cycle to grow knowledge-based businesses.

• Develop toolbox and retain policy enablers for capital intensive industries to encourage high-wage employers to invest in Arizona.

• Make positive changes to Arizona’s regulatory environment.

• Foster collaboration that enables development of Arizona’s small-business community within the industry sectors.

• Enhance the ACA’s industry sectors by establishing the leadership required to connect all stakeholders, companies, universities, private-public partnerships and other organizations.

“During one of the most challenging economic conditions in our nation’s history, we are fighting for the health and future of our families and this state,” Colangelo says. “It’s also about business retention … to put everyone in the position where they can be successful. Let the people who know how to do these things take charge.”

Adds Joe Snell, president and CEO of Tucson Regional Economic Opportunities (TREO): “The ACA needs to work with the state Legislature to ensure that we have the tools and programs needed to compete with other states. Arizona desperately needs a competitive jobs bill that must address incentives.”

Creating jobs and attracting new businesses are at the top of the ACA’s list. While there are projections that Arizona will add more than 400,000 jobs by 2018, about 300,000 will be needed just to make up for those lost since the recession began in December 2007. Not helping matters is the state’s murky business climate.

The Pollina Corporate Top 10 Pro-Business States for 2010 ranks Arizona the 27th friendliest state for business. Arizona was a Top 25 state in 2004 (15th), 2005 (20th) and 2006 (25th). It dropped from the Top 25 in 2007.

In Site Selection magazine’s poll of state business climates, however, Arizona climbed to No. 17. Two major announcements at the end of 2010 helped buoy that ranking: pharmaceutical giant Roche Group’s expanded operation at Oro Valley-based Ventana Medical Systems (500 new jobs in biomedical research) and Intel Corporation’s announcement that it was upgrading and adding jobs at its facility in Chandler.

“The ACA brings a much-needed public/private partnership to lead the state in these difficult economic times,” says Don Keuth, president of the Phoenix Community Alliance. “They can address those issues that make Arizona less competitive and create strategic solutions to allow us to compete. And, they can focus on growing those industry clusters where we have a competitive edge.”

The renewable energy bill passed by the Legislature in 2009 demonstrates that economic development programs can immediately impact an industry cluster.

Case in point: Arizona is leading the country in the creation of new solar jobs. Recent examples include Rioglass Solar, a Spanish company, building a $50 million reflector manufacturing plant in Surprise; and China-based Suntech selecting Goodyear for its first manufacturing plant outside of that country.

“We need a broad vision to accept that new rules and new tools will be needed,” says board member Mo Stein, principal and senior vice president of HKS Architects, whose company designed the Valley’s newest spring training facility, Salt River Fields at Talking Stick. “It is no longer business as usual; not the same questions and certainly not the same answers.”

For more information about the Arizona Commerce Authority, visit azcommerce.com.

Roy Vallee, Chairman & CEO of Avnet - AZ Business Magazine Jan/Feb 2011

CEO Series: Roy Vallee

Long-time member talks technology, dealing with global economic problems, adapting to the changing world of technology, and more.

Roy Vallee
Title: Chairman and CEO
Company: Avnet

How you would you assess the current state of your industry?
Things are going pretty well for technology. Calendar 2010 will be a very good year by historical standards for our electronics business and our IT business. And in 2011, I would say things are going to normalize and grow at the secular growth rate for the industries. For us that’s good news because secular growth is kind of 1-1/2 to 2 times overall economic growth, so things are pretty good in technology.

You had a great first quarter. What do you think that portends for the economy in 2011?
Well, I’m not 100 percent sure, of course, but I think a couple of things are clear. Technology is leading this recovery. We’re growing a lot faster than the overall economy, certainly certain segments of the economy. So, I’m very pleased about that. And I think it also does indicate that we are at least in the early stages of a macro-economic recovery, even if it’s a gradual one … and hopefully that cyclical recovery will continue through 2011 and beyond.

Could this improvement possibly be a blip?
I think from an IT spending perspective that the possibility of it being a blip is there, but let’s maybe define blip. … Corporate psychology is such that it’s ready to invest in IT projects after it’s done swapping out the old hardware. I would also like to point out, though, that a significant part of our business is electronic components and a portion of those find their way into a variety of consumer goods, and that part of our business is quite strong, as well. So it’s not just corporate spending that’s driving our growth.

How is Avnet dealing with the various Global economic problems?
We deal in a variety of markets. Some of them are actually quite exciting right now; obviously places like China, India, Brazil, other parts of Asia Pacific, parts of Eastern Europe. There are parts of our business growing very rapidly these days. So the way we deal with that is we gear up and try to support the market that is there. In the areas where the developed countries have been hard-hit by the economic downturn and credit crunch, we simply dial the resources down. … we basically size our business to the amount of opportunity that exists on a local level.

In December, Avnet celebrated 50 years on the New York Stock Exchange. What do you think that says about your company?
It says a lot of things. First and foremost, adaptability: there have been a lot of economic cycles, there’s been changes in technology, there’s been changes in our industry structure at the fundamental value proposition of distributors like Avnet; there’s been globalization. So, the company being (on the NYSE) 50 years says we’re highly adaptable as an organization. … I think another thing it speaks to … is what I would call financial conservatism or fiscal discipline. And I think the third thing … is the culture. We’ve got a culture that is very grounded in our core values.

    Vital Stats



  • Joined Avnet in 1977
  • Appointed president of Hamilton/Avnet Computer in 1989
  • Elected to Avnet’s board of directors in 1991
  • In July 1998, he was elected chairman of the board and chief executive officer
  • Named to the Twelfth District Economic Advisory Council for the Federal Reserve Bank of San Francisco in 2010
  • Member of the Arizona Commerce Authority board of directors
  • Member of the boards of directors for Teradyne and Synopsys
  • Inductee of the CRN Industry Hall of Fame
  • Participates in Greater Phoenix Leadership

Arizona Business Magazine Jan/Feb 2011

Unemployment

Arizona’s Unemployment Rate Drops in November

The state’s unemployment rate dropped one-tenth of a percent to 9.4 percent in November, as the economy added 12,800 jobs. The Arizona Commerce Authority (ACA) reports today that the private sector generated 9,300 jobs, while government added 3,500. Traditional holiday hiring boosted the November job gains.



Nov. ’10 Oct. ’10 Nov. ’09
United States 9.8% 9.6% 10%
Arizona 9.4% 9.5% 9.3%



This is the fourth consecutive month of over-the-year gains in total nonfarm employment. The state’s 1 percent year-over-year gain in November was higher than the nation’s gain of 0.6 percent. Arizona’s 1 percent gain totals about 24,900 jobs added since the previous November.

“Overall, Arizona’s employment situation continues to improve,” according to the ACA employment report.



Nov. ’10
Oct. ’10
Nov. ’09
Overall 2,448 2,435.2 2,423.1
Monthly Change 0.5% 1.3% 0.6%
Annual Change 1% 1.1% -6.5%



Over the month, six out of the state’s 11 major sectors saw job gains. The sector that had the most gains for the month was trade, transportation and utilities, with 9,900, mostly due to the 8,700 jobs gained in the retail sector.

Gains were reported in: professional and business services (2,300); educational and health services (1,700); government (3,500); manufacturing (600); and information (400).

Losses were reported in: construction (-3,000); financial activities (-900); leisure and hospitality (-900); other services (-700); and natural resources and mining (-100).

Construction lost the most jobs of any sector in November, but it still is recording net job gains for 2010.

The unemployment rates climbed in almost all of the state’s largest metro areas.


Nov. ’10
Oct. ’10
Nov. ’09
Phoenix Metro 8.9% 8.4% 8.7%
Tucson Metro 8.8% 8.3% 8.5%
Yuma Metro 26.8% 25.7% 22.4%
Flagstaff Metro 8.1% 7.8% 8.1%
Prescott Metro 10.2% 9.7% 9.8%
LHC-Kingman Metro 10.9% 10.9% 9.8%
Arizona Commerce Authority

Cardon Named CEO, President Of State’s New Commerce Authority

Don Cardon today was officially named CEO and President of the newly formed Arizona Commerce Authority by Gov. Jan Brewer at the ACA board meeting at the Arizona Capitol.

Brewer named Cardon Director of the Arizona Department of Commerce in May 2009. On June 29, 2010, Brewer issued an Executive Order establishing the ACA and transitioning out the Department of Commerce. Cardon was on the committee to select the new head of the ACA. The committee looked no further than its backyard.

The 35-member, private sector ACA will work to align diverse assets and opportunities within the state to compete economically in both domestic and international markets to create high-quality jobs for the Arizona residents.

Cardon’s experience as an economic developer is vast. He worked in a rural Washington state community attracting international companies engaged in high-tech manufacturing, electronics and energy; he is a former entrepreneur, serving as President and CEO of Cardon Development Group, creating low-income housing tax credit projects throughout Arizona.

Cardon also helped initiate the formation of Phoenix Future, assembling business, political and financial leaders to create CityScape, a mixed-use development in downtown Phoenix. Cardon is experienced in financial planning, zoning activities, marketing and partnership development.

Arizona's Unemployment Rate Drops in October 2010

Arizona’s Unemployment Rate Drops in October 2010

The state’s unemployment rate dropped two-tenths of a percent to 9.5 percent in October, as the economy added 27,400 jobs. This is the largest October job gain since 2004. The Arizona Commerce Authority (ACA) reports today that the private sector generated 93 percent of those jobs, or 25,600.  Year-over-year, total non-farm employment was up 1.1 percent last month.


Oct. 2010 Sept. 2010 Oct. 2009
United States 9.6% 9.6% 10.1%
Arizona 9.5% 9.7% 9.3%

This is the third consecutive month of over-the-year gains in total nonfarm employment, and the rate of gains has been increasing each month. According to the ACA, Arizona now ranks 18th in the nation in over-the-year employment growth. The state was ranked 32nd in September. Significantly,  Arizona’s construction industry continued to show signs of improvement, and in October posted its first over-the-year increase since December 2006.

“Overall, Arizona’s employment situation is beginning to show indications of welcome improvements,” according to the ACA employment report.


Oct. 2010 Sept. 2010 Oct. 2009
Overall 2,432.4 2,405.0 2,408.0
Monthly  Change 1.1% 0.7% 0.7%
Annual  Change 1.0% 0.5% -7.2%

Over the month, 10 out of the state’s 11 major sectors saw job gains. The sector that had the most gains for the month was trade, transportation and utilities, with 7,100.

Gains were reported in: professional and business services (1,700); financial activities (600); educational and health services (6,400); natural resources and mining (100); construction (5,100); leisure and hospitality (3,300); government (1,800); other services (1,400); and manufacturing (200).

The only sector to lose jobs was information (-300).

The unemployment rates dropped in almost all of the state’s largest metro areas.


Oct. 2010 Sept. 2010 Oct.2009
Phoenix Metro 8.5% 8.7% 8.8%
Tucson Metro 8.3% 8.6% 8.6%
Yuma Metro 25.8% 23.9% 21.9%
Flagstaff Metro 7.9% 8.1% 8.4%
Prescott Metro 9.7% 10% 9.9%
LHC-Kingman Metro 10.9% 10.8% 10.8%
Arizona Commerce Authority - AZRE Magazine November/December 2010

Arizona Commerce Authority: Team Effort in Arizona CRE

If there’s one person who can help give Arizona the home-field advantage when it comes to attracting new businesses, new jobs and making the state more competitive in the global market, it’s Jerry Colangelo, the vice chairman of the Arizona Commerce Authority.

Perhaps that’s why Gov. Jan Brewer picked the Valley businessman as vice chairman of the newly formed Arizona Commerce Authority, a private sector board that will replace the Arizona Department of Commerce. The 35-member board includes a diverse group of business and educational leaders from across the state.

No matter what you’re in, it takes teams and people to win,” Colangelo said. “It’s true in every walk of life. Look at the disconnect that has existed in our state for such a long time, with the Legislature, with the business community, the lack of a game plan. Everyone has to be on the same page. And so the good news is this: There’s only one way to go. There is plenty of space here for us to be very, very successful.”

There definitely is room to grow when it comes to business attraction in Arizona.
According to Department of Commerce statistics, 47 companies located or expanded in Arizona in 2007, bringing a capital investment of $1.6B, almost 10,000 new jobs and an annual payroll of $483M. Then the recession hit and in just two years those figures took a nose dive: 24 companies located or expanded in Arizona with a capital investment of $255M, 2,649 jobs and a $124.6M payroll.

“When I became governor, I promised to get Arizona back on track by creating quality jobs, attracting high-growth industries, and advancing our competitive position in the global economy,” Brewer said. “With this board, I have now delivered a model to advance Arizona.”

Arizona Commerce Authority: Addressing the Industry’s Needs

How that model will advance Arizona is a question those in commercial real estate are asking. To its credit, the Arizona Commerce Authority includes several board members with direct business ties to the industry.

They are: Drew Brown, chairman of the board, DMB Associates; Peter Herder, chairman of the board and CEO, Herder Commercial Development; Mike Ingram, CEO and president, El Dorado Holdings; Doug Pruitt, chairman and CEO, Sundt Construction; and Mo Stein, principal and senior vice president, HKS Architects.

How do those in the industry envision an entity such as the Arizona Commerce Authority boosting a sagging commercial real estate market in Arizona?

“I look for the Arizona Commerce Authority to create a business model for all aspects of development in the state,” Stein said. “The authority will allow leverage of both public and private strengths that go beyond individual projects to opportunities that impact large segments of our communities and industries throughout the state.”

Mike Haenel, executive vice president, Industrial Division at Cassidy Turley BRE Commercial, noted: “I would like the Arizona Commerce Authority to communicate to the State Legislature exactly what it would take to relocate a company to Arizona. Thanks to a sophisticated local commercial real estate development industry, we have well-located and functional real estate available. Given the current economic conditions, pricing is extremely attractive, which translates into a perfect time to rent and or buy real estate in Arizona. The Arizona Commerce Authority needs to figure out what our state government should do to be competitive in attracting and retaining companies.”

Jim Gibson, senior associate in real estate at Squire, Sanders & Dempsey adds: “There has always been a long-standing partnership between economic development and the commercial real estate industry. Because of its role attracting new businesses to the state, I suspect that the Arizona Commerce Authority will be a tremendous resource for lead generation to brokers, developers and others in the industry. In addition, because of the Arizona Commerce Authority’s make-up of leaders in the private sector, it seems well-positioned by having both the business savvy to understand the wants and needs of companies looking to expand or relocate to Arizona, as well as having established relationships in the real estate industry to help each company assemble the right team depending on its particular real estate needs.”

Brewer made sure the new Arizona Commerce Authority is a statewide endeavor. While most board members are from the Metro Phoenix area, there also are four board members from Tucson, two from Flagstaff, and one each from Prescott and Yuma.

By creating a more competitive landscape and making economic development a higher priority, commercial real estate opportunities and transactions will result,” said Joe Snell, president and CEO of Tucson Regional Economic Opportunities (TREO). “The ability for the authority to assist groups like TREO in attracting and expanding primary jobs will result in significantly more commercial opportunities downstream.”

Listening to the Industry’s Concerns

While those involved are excited over the prospects of what the Arizona Commerce Authority may be able to achieve, there also is guarded optimism. Mark Singerman, regional director of Rockefeller Group Development Corp., said that just to stay even with what most other states offer, Arizona needs to become more competitive in attracting businesses to relocate here. He cites SB 1403, a bill giving special tax breaks and incentives to the solar energy industry.

Within several months of that incentive for renewable energy companies becoming law, there were at least a dozen solar companies looking to locate here,” Singerman said. “This type of incentive program needs to be expanded to all desirable industries.”

Up until 2006, Singerman said, Arizona became complacent about attracting residents and businesses. By virtue of being in close proximity to high-cost California, the state enjoyed steady growth with little effort.

“We now have to up our game to stay even with other states,” Singerman said. “If we have competitive economic incentive programs similar to what other states offer, our total package will be hard to beat when companies do their comparisons. But we are not there yet.”

Added Tim Lawless, president of NAIOP-AZ, adds: “While strategically targeting specific industry sectors like aerospace in the hopes of further diversifying our state’s economy is laudable, it is very unclear what the Arizona Commerce Authority can or will do to assist the vast number of firms that are already in the state, especially with their very limited budget. We need to keep in mind that we have more than 350,000 firms in our state and we need policies that will create an environment for them to survive and add jobs.

This can only happen should the Commerce Authority advocate for broad-based tax reform, rather than exclusively relying on esoteric tax breaks that create winners and losers,” Lawless continued. “Cake and ice cream tax breaks for industries like solar are fine, but only after a more substantial and well-balanced economic development diet is put on the table for all firms.”

For the Arizona Commerce Authority to make the state more competitive in business attraction, Lawless said Arizona needs to lower overall commercial property tax burdens, which are among the highest in the U.S.; create a significant deal-closing fund (non-tax benefit related) to land large employers that leverage the highest paying jobs; and lower corporate income tax rates that would put the state in a better position to compete with other Western states.

Arizona’s political climate could be another stumbling block in attracting new businesses, said Marty Alvarez Sr., CEO of Sun Eagle Corp.

“Part of the problem is the perception throughout the country that Arizona is a racist state with no upside for their companies to move here,” Alvarez said. “The Hispanic business community needs to be part of the marketing effort to dissuade the thought that our state is in political turmoil. This is the time to bring national and international firms to Arizona.
The collaboration led by the ACA needs political, social and business direction from the Hispanic business community in order to create a positive atmosphere for incoming companies,” he added. “The idea and implementation of the ACA is not only good but is a necessary solution for the future economic well being of our state. The leaders chosen to enact this organization and jumpstart the dialogue must be a public-private partnership.”

AZRE Magazine November/December 2010