Tag Archives: economic

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Arizona Lottery Breaks Sales Records

The Arizona Lottery reports a record-breaking $724 million in sales, a 4.5 percent increase over the previous fiscal year, and the highest amount in the Arizona Lottery’s 33-year history.

Lottery beneficiaries received more than $175 million in net funding during the year. As a result of revenues for beneficiaries increasing 33 percent over the past five years, fiscal year 2014 marks the fifth consecutive year that every beneficiary designated by the Arizona Legislature received full funding.

Lottery dollars support a wide variety of programs under four main pillars: education, health and public welfare, economic and business development, and the environment, benefitting cities and towns throughout all of Arizona’s 15 counties.

Players received a huge payout with nearly $460 million in Arizona Lottery prizes, including 17 winning tickets each worth $1 million or more.

Arizona Lottery retailers big and small earned more than $48 million in commissions during the year from the sale of Lottery tickets, also a record amount.

“Generating essential funding for important state programs, while benefitting the state’s retailers, speaks to the Lottery’s commitment to enrich the lives of all Arizona residents,” said Jeff Hatch-Miller, executive director of the Arizona Lottery. “We are proud to report record-breaking sales for the seventh consecutive year and are already working toward surpassing this record by introducing innovative games to engage new audiences, while continuing to provide a wide range of choices for our core players.”

Director Hatch-Miller credits much of fiscal year 2014’s success to a surge in Scratchers® sales, which totaled more than $483.9 million for the year. The introduction of the popular Lucky Life Scratchers series greatly contributed to the year’s strong ticket sales.

The addition of the new All or NothingTM draw game and a revamp of Mega Millions® also contributed to fiscal year 2014’s financial success. All or Nothing is the first Arizona Lottery draw game offering players the chance to win $25,000 twice daily, Monday through Saturday, by matching all or matching none of the drawn numbers. The Mega Millions game was redesigned in October to have larger starting jackpots, faster-growing jackpots, a $1 million second prize and better odds of winning any prize – all for the same price of $1 per ticket.

In fiscal year 2015, the Arizona Lottery plans to introduce additional new games, beginning with the September launch of $185 Million Cash Explosion, a new Scratchers ticket that offers the highest payout ever for a $20 Arizona Lottery ticket.

Players must be 21 years or older to purchase or redeem tickets. Winners have 180 days from the drawing date to claim their prize at an Arizona Lottery office or by mail. Overall odds vary by game. All sales are final. In accordance with the ADA, these materials may be made available in an alternative format. Gambling Problem? Call 1.800.NEXT STEP (1-800-639-8783). Please Play Responsibly™. Scratchers® is a registered service mark of the California Lottery.

Ballet Arizona

Top Things to Do This Week

It’s the week of Valentine’s Day, which means that this weekend will have plenty of lovely events to attend. Watch the sad love story of “La Bayadère: The Temple Dancer” at Arizona Ballet or see the majestic Arabian Horse Show and be awed by the beautiful creatures. No matter what you do this weekend, make sure beauty is part of it. Don’t forget to share photos of you enjoying these events with the hashtag #SL5 and follow us @scottsdaleliving on Instagram!

 

Art Laboe’s Valentine’s Super Love Jam

All the classic R&B oldies are coming to U.S. Airways this Thursday for a jamming love concert that will bring you back to the good old days. With 11 acts performing, such as The Intruders, Malo, and Sunny and the Sunliners listen to all the lovey songs that line your memories.

US Airways Center Feb. 14th @7:30 p.m. get tickets at ticketmaster.com

 

Arabian Horse Show @ WestWorld

Kicking off this Thursday is the 59th annual Arabian Horse Show. Thousands of exotic horses will be at the show trying to win and be presented as the best breed horse. Tickets can be bought from ticketmaster.com or at the door for $10.

 

VNSA Book Sale

Heaven is a library, or a book sale with enough books to fill an entire warehouse. The VNSA Book Sale surely has that many books for sale this weekend to satisfy anyone no matter what book you’re looking for. Head to the Arizona State Fairgrounds Exhibit Building this Saturday and Sunday starting at 8 a.m. and shop for knowledge until you can’t shop anymore.

 

“La Bayadere: The Temple Dancer” @ Ballet Arizona

This weekend, watch Ballet Arizona perform the classic story of a love that could never come into fruition. The Indian tale of a young warrior and temple dancer that only unite in death will leave your heartbroken this Valentine’s Day weekend. The Phoenix Symphony will perform alongside the ballet at the Symphony Hall. Tickets are on sale at Ballet Arizona Box Office at 2835 E. Washington St. or call 602-381-1096

 

Arizona Cocktail Week

Get your drink on starting this Friday, Valentine’s Day, for an entire week as Arizona Cocktail Week kicks off for another fun round of drinks. Visit arizonacocktailweek.com to find out which bars and cocktail lounges in the Valley are participating. Be ready to drink and have a good time all across the valley, and submerge yourself in the state’s fine cocktail culture.

 

Chocolate, Chocolate, Chocolate:

Carefree Festival of Fine Chocolates and Fine Art

Indulge in the truly finer things in life: chocolate and art. Carefree is hosting this free festival to cater to everyone with a sweet tooth and a fine sense in art this weekend. Bring the family or bring that special someone in your life and guarantee a great time. The festival kicks off on Thursday at noon and ends at 5 p.m. Friday through Sunday the event begins at 10 a.m. until 5 p.m. The festival is at 101 Easy Street on the Carefree Desert gardens and Sanderson Lincoln Pavilion.

Chocolate Lovers’ Festival

All aboard the chocolate train! Verde Canyon Railroad is filling its first class cars with chocolate with a view of the Verde Canyon. Visit verdecanyonrr.com/events/ to book your ticket for the chocolate festival that is happening this Friday-Sunday.

Chocolate, Chili and Cochineal

Head to the Heard Museum this weekend and learn of the origins of all your favorite foods that started in the Americas. Plus, learn all about the tiny insect who loves to eat prickly pear cactus and became the source of a brilliant red dye coveted by sixteenth-century Spanish conquistadors. The exhibit opens this Sunday and runs through November. Head to heard.org for more information

 

Anti-Valentines Day:

Valentine X – Candlelit Night of Horror at the 13th Floor

Dive into the other well-known side of Valentines day, the horror. 13th Floor is hosting a haunted house that is sure to leave you absolutely terrified whether you’re with a date or not. This Friday and Saturday, come to the 13th floor and feel real fear. The house opens at 7:30 and closes at 10:30 p.m., 2814 W. Bell Rd. in Phoenix

Voodoo Tines: Anti-Valentine’s Day @ Hula’s Modern Tiki

No one showing you love today? Get back at the ones who’ve wronged you with an ice cold round of revenge! Bring a picture of your ex and smack it on a custom voodoo doll as you have your revenge upon him or her this Valentine’s Day. Call 602-265-8454 for more information or come to 4700 N. Central Ave. in Phoenix

rsz_glendale_corp_ctr

CBRE Negotiates Sale of Single-Tenant Building in Glendale

 

CBRE negotiated the sale of a 16,632 SF building at Glendale Corporate Center, a Class A office park north of the NEC of 99th Ave. and Camelback Rd. in Glendale.

The building is 100% occupied by the United States Marshals Service.

Barry Gabel, Mindy Korth and Ashley Brooks of CBRE’s Phoenix office represented the seller, HR GCC LLC, an entity controlled and managed by Los Angeles-based Regent Properties. The buyer was Glendale GSA LLC, an entity controlled by Titanium Real Estate Advisors in Chicago. The purchase price was not disclosed.

“This was the perfect match between buyer and seller,” Gabel said. “The seller originally purchased the building as part of a vacant three-building campus acquisition and successfully leased the building for 10 years to a tenant that the buyer is very familiar with. In fact, the buyer specializes in GSA properties, and this purchase marks their fourth GSA-leased asset acquisition in Arizona.”

Located at 5365 N. 99th Ave., the single-tenant office building sits in an amenity-rich area, minutes from Jobing.com Arena and the University of Phoenix Stadium, as well as numerous shops, restaurants and hotels. Its close proximity to the Loop 101 freeway offers easy access to many parts of the Valley via its connected highway system.

The GPEC building in Phoenix - AZ Business Magazine Jan/Feb 2011

Greater Phoenix Economic Council Profiles

Georgia Lord, GPEC Ambassador ChairwomanGeorgia Lord
GPEC Ambassador Chairwoman
Former Vice Mayor
City of Goodyear

As the wife of an Air Force officer, Georgia Lord has experienced myriad of cultures. Little did she know that while with him on assignment in Germany, she would get the opportunity to ride in a blimp bearing, coincidentally, the name of the city she later served as a city council member — Goodyear.

Lord was originally elected to the Goodyear City Council in 2005. Following her successful re-election in 2009, she was elected by the council to be vice mayor. At the end of 2010, however, she had to resign that position in order to run for mayor of Goodyear.

“I’m fortunate to be able to take complicated issues that are important to citizens, break them down in a way that allows us to address the impact of our decisions, and really consider the consequences our actions will have down the road,” she says.

Lord conducts these discussions with others outside of the Goodyear leadership, as well. In fact, she’s able to fuel her passion for Goodyear’s economic development through participation with the Greater Phoenix Economic Council, a venue that provides a sounding board for her ideas, and encourages interaction and support from other cities in the Valley.

“By working together as a team member of GPEC, we’re able to benefit from economies of scale and achieve our goals,” she says.

Lord is most specifically involved with GPEC’s Ambassador Program, which educates both the private and public sectors by highlighting the state’s strengths and the best ways to capitalize on them. Those education efforts, Lord explains, include tours of industrial facilities, workshops with industry experts, educational seminars and business training. She also participates in GPEC’s International Leadership Council, where she is able to draw on her past experiences overseas as she and other council members encourage foreign companies to invest in Arizona.


Scott Smith, mayor City of MesaScott Smith
Mayor
City of Mesa
www.mesaaz.gov

Scott Smith is not one to sit quietly on the sidelines. So, when he became increasingly frustrated with the direction Mesa was headed in, he decided it was time to “put up or shut up,” and was successfully elected mayor in 2008.

One of Smith’s greatest challenges since taking office has been the state of the city’s economy.

“It’s not allowed us to pursue some of the opportunities we would have liked to be well down the road with already,” Smith says. “We know that the only way for us to recover is to create a business environment where the economy can grow and business can thrive, so we’re working diligently to create that kind of environment.”

Smith has found that his involvement with the Greater Phoenix Economic Council (GPEC) has been very helpful as he navigates the murky waters of the economy.

“Organizations such as GPEC that are focused on the region’s economic success are absolutely necessary tools for us to really experience the kind of success we think we are capable of,” he says.

The best way to build a successful environment, Smith says, is to identify a city or region’s strengths. The city of Mesa has done so through its HEAT Initiative — Health, Education, Aerospace, Tourism. Boeing, an important employer in Mesa, has received good news, Smith says, that will help solidify its position in the region, and MLB Spring Training continues to draw tourists to the state.

“If we can build upon our strengths … I think we can create a new or expanded economic base that will help us to grow in an organic and measured manner, rather than the boom-and-bust that we experience when we depend on growth as an industry,” Smith says.

Participation in GPEC and working with other cities, he adds, will be much more helpful for Arizona’s overall economy than a city trying to work its problems out on its own.

AZ Business Magazine Jan/Feb 2011

Omer Faizi Room 3

Sellers Beware: Staging Can Help Sell Your Home!

It wasn’t just the tall cheetah print chairs, luminous red and green chandeliers strung from the ceiling, that were distracting. When apartment hunters stepped into the 5-floor studio for sale, they found a white leather upholstered bed with red and orange shimmering pillows, funky artwork and a hanging L.E.D. lamp giving off different shades of colors. Some said it reminded them of a set out of a science fiction movie.

Omer Faizi Room 4“Some would laugh,” said one of the listing brokers for the building. This was the model apartment for a condominium conversion project, and it was not selling itself, much less helping to sell other units in the same building as it was intended to do.

“They quickly realized that it hurt more than it helped,” the broker said.

I knew it would take more than replacing towels to make buyers feel comfortable in a space where even Lady Gaga might crave beige walls and cream couches.

With help from an interior designer, he had the white wood floors stained a darker shade and installed furniture more commonly found in Manhattan apartments, like a rectangular bed. He strategically placed on the kitchen counter martini glasses, a bowl of lemons and a shaker primed for after-work cocktails and left around reading material like the Sotheby’s catalog.

“This is the where I would live: said most of the people viewing the model, and a lot of people can identify with this,” said the new management team members as the owner walked through the new model unit.

The designer’s efforts had paid off.
 During the real estate boom, eager buyers bought units requiring enormous imagination to picture as homes: They bought un-built condos or empty spaces with blank walls. Today, buyers are much less likely to take risks on apartments, lofts, condos and single-family homes where they cannot figure out how to fit in their sofa bed or sideboard. So, brokers have been redecorating old model units or filling unfurnished apartments by doing it themselves, which can back fire if you don’t have the eye for design (to save cash), or by doing the smart thing, hiring a interior designer.

Omer Faizi Room 2The difference between three years ago and now is that you could have actually shown an empty apartment without much staging, the market was great, but now – we all know what is happening do I need to go any further?

For some high-end listings, the brokers will fill cabinets with fine china, not just “dishes in there from Kmart.” He has even had brokers fill closets of for-sale apartments with clothing like “Louis Vuitton, Prada, Chanel, and Paul Smith.”

If you’re going to hang anything in the closet, it should be a name brand that the buyer can relate to
. The clothing and accessories do not go to waste, they get moved to the next condo project.

But we must remember nothing comes cheap. There is a price to pay to hire a creative designer/team to execute a amazing sexy retro to traditional styles. So hire a designer who has the vision and can turn a blank canvas into a home – ”your home.”

Employee Discontent Experiences Sharp Rise

Employee Discontent Experiences Sharp Rise, Study Finds

Workers are poised for a mass exodus next year, according to a poll of more than 1,400 workers in North America by Right Management. Employees are feeling increasingly restless and intend to leave in droves if opportunities open up in the job market.

Eighty-four percent of the employees polled say they plan to look for new jobs in 2011, up from 60 percent reported in Right Management’s survey a year ago. Only 5 percent now say they intend to remain in their current position.

“This finding is more about employee dissatisfaction and discontent than projected turnover,” says Douglas J. Matthews, President and Chief Operating Officer for Right Management. “We view it as a barometer of their trust in management or commitment to the job. It’s a workplace equivalent to opinion polling on whether or not ‘this country is moving in the right direction.’ Just as people are questioning their elected leaders in government, so too are workers wondering if their management is up to the challenge of renewed growth or developing a sound strategy moving forward.”

Matthews observed that the prolonged recession, continued job market weakness, along with disruptive economic and workforce changes are the underlying factors contributing most to employees’ backlash. “Employees’ trust has been seriously shaken and there is a general lack of confidence in leaders.”

The discontent is widespread, but this doesn’t mean an organization’s management is helpless, but nor can they afford to ignore the problem. “Clearly, if the job market picks up a lot next year many employees are going to take advantage of it, and organizations stand to lose some of their top contributors. So this is a wake-up call to management.”

One step management should take, Matthews advises, is to identify star performers and have open and constructive career discussions with them. “High value employees always have opportunities available to them. Know who they are and be sure to take care of them in ways that are meaningful and aligned with the businesses goals.”

Matthews noted that restlessness can also be alleviated by managers being honest and positive with employees. “Provide them with feedback on what they are doing really well and ways to help them improve. A mentoring relationship between the manager and employee will build mutual trust and hopefully limit future defections.”

Right Management surveyed 1,413 employees in the United States via an online poll. The survey ran between Oct. 11 and Nov. 15, 2010.

Sluggish Demand for Office Space in Phoenix

Sluggish Demand for Office Space in Metro Phoenix Continues

The Phoenix office market continued to feel the effects of a sluggish and wavering economy, according to Cassidy Turley BRE Commercial’s 3Q 2010 office market trends report released today.

Economic indicators remain mixed causing uncertainty as to whether our economy is headed into a “double dip” recession or a period of slow growth. The best word to describe market conditions during the third quarter is flat. Net absorption was negative for the second time this year and the overall vacancy rate increased 30 basis points to finish at an all-time high of 27.9%.

Tempe/South Chandler and 44th Street Corridor posted the largest gains in net absorption; collectively they gained more than 257,590 SF in the third quarter. Downtown North and Airport Area were the two submarkets with the largest declines in occupancy; they collectively lost 221,927 SF during the third quarter. The majority of leasing activity has been in space that is an upgrade to the tenant’s prior location, otherwise known as “flight to quality.”

This has been a trend for several quarters, as nearly all positive absorption, both the quarter and year-to-date, have come from either Class A buildings or new construction. Class A average asking rates continue
to decline as landlords compete for tenants by offering heavy concessions and discounted rates. Class A rental rates dropped nearly 2 percent in the third quarter to finish at $25.07.

With the extreme over-supply of space, overall asking rental rates will continue to soften but at a slower pace and should reach bottom within the next 12 months. Office market leasing is likely to remain flat through 2010 and improve gradually into 2011 as businesses start to add jobs and tenants take advantage of reduced rates. Landlords that have weathered the recession, remained financially strong and adjusted to current market conditions should start to see some relief as tenant demand gradually improves.

With large blocks of premium office space available, lower rental rates, a high quality of life, affordable housing and great weather, Metro Phoenix is positioned to attract companies looking to relocate or add to their current operations. These factors should improve leasing and owner occupant demand bringing some relief to the office sector.

office building

Tucson Office Market Sector Remains Consistent

Uncertain whether the market has bottomed out, buyers and tenants continue to be hesitant whether they should take advantage of attractive sale and lease opportunities.

That’s the word on the street as the 3Q Tucson office market report was released today by Picor Commercial Real Estate Services, a Cushman & Wakefield Alliance member.

For the most part, Tucson office market activity has remained fairly consistent throughout the year, with no exception in 3Q 2010. Consistency is a positive sign, however, it is still unclear whether this is a sign of more activity to come, or simply where the market is going to stay for some time.

Despite this consistency, landlords are still willing to offer attractive rental rates, concessions, and generous tenant improvement allowances. This practice will likely continue until the air of uncertainty clears. Savvy general office and medial tenants are taking advantage by locking in very attractive rental rates.

Purchase activity is still virtually nil because of the difficulty to secure commercial financing. The occasional investment sale is due to the seller’s agreement to provide short-term financing thereby enabling the buyer to weather the drought in the conventional credit market.

Valuation methods show a large difference between pricing of office and medical properties from an owner/user perspective and those evaluated from an investor perspective. Per square foot purchase prices for users still remain fairly high, while numbers for investment sales are much lower due to a market wide drop in rental rates and an increase in cap rates. These two valuation methods will likely equalize in the future, with the likely result being the reduction in per-square-foot user pricing.

Industrial market

Economic slowing persists in the Tucson industrial sector. Tenants and buyers recognize the opportunity to apply leverage in this environment, resulting in continued pressure on lease rates and sales prices. While market-wide vacancy dipped from 11.4% to 10.9% in 3Q, positive absorption is expected to be reversed before the end of 2010.

Sales activity increased in 3Q, equaling the first two quarters combined, with nearly all owner/user purchases using SBA and seller financing due to scarce availability of institutional capital at favorable terms.

money

Johnson Bank Closing 4 Offices In Arizona

Johnson Bank offices in Phoenix, Mesa Peoria and Rio Verde will close their doors on Jan. 8, 2011, it was announced today.

The closings come as a part of the bank’s plan “to maintain the health of the business in the midst of depressed economic conditions,” according to a company press release.

Arizona office closing are at 1850 N. Central Ave., in Phoenix; 1001 W. Southern Ave., in Mesa; 16155 N. 83rd Ave., in Peoria; and 18815 E. Four Peaks Blvd., in Rio Verde.

The bank has an additional five locations in Phoenix and Scottsdale that will remain open. Approximately 12 associates will be affected.

“These carefully planned branch consolidations will result in fewer locations, yet allow us to continue to provide good coverage of the Scottsdale and Phoenix areas and most importantly the same high level of service our clients are accustomed to,” said Russ Weyers, COO/incoming CEO. “We’re making the right decisions to remain a strong, long term financial partner for our clients.”

The banks will remain open until the closing date. Weyers said he expects the impact on clients to be minimal.

“Our client relationships are important to us, we appreciate their business and feel our five remaining full service financial services locations will continue to meet their needs,” Weyers.

E012850

Greater Phoenix Economic Forecast 2011: “Painfully Slow”

The economy may be better in 2011 than it was in 2010, but the road to full recovery will remain long and full of potholes. But hey, it could be worse. It could be 2009.

That’s according to economist Elliott D. Pollack, CEO of Elliot D. Pollack & Company. Pollack was speaking at the Greater Phoenix Chamber of Commerce’s Economic Outlook 2011 breakfast today at the Arizona Biltmore Resort & Spa.

Pollack said population growth in the Valley should settle at 1 percent this year and rise to 2 percent in 2011. Net job growth will contract by 1 percent in 2010 and climb by 2 percent in 2011. Retail sales will increase 1 percent this year and rise by 8 percent next year. Building permits will increase by 20 percent in 2010 before jumping 50 percent in 2011.

In summarizing his 2011 forecast for the Valley, Pollack read a laundry list of good news and bad news:

  • The housing market is at or past bottom, but there are many negatives still trumping a full recovery, most notably slower migration flows.
  • The commercial real estate market is at or past bottom, but recovery will be slow and “take a long time.”
  • Sales tax revenues are no longer falling, but they aren’t growing quickly enough to fix the state’s battered budget.
  • Retail sales have past bottom and there is pent-up demand among consumers, however, those same consumers are still so worried about personal debt that they will continue to curb spending, thus thwarting a big recovery.

While Pollack said the Valley’s economic recovery will be “painfully slow,” he points out that a recovery is indeed underway. For example, the state’s standing in employment growth compared to the rest of the nation is gradually improving — but only after a precipitous decline. In 2006, Arizona ranked second in the nation in job growth; that dropped to 22nd in 2007; 47th in 2008; and 49th in 2009. Up to July of this year, the state had moved up to 42nd in job growth.

Another indication that the Valley’s economy is showing improvement is in the number of economic sectors that have shown net job gains. Of the state’s 12 major economic sectors, five have shown net job gains so far this year (education and health services; trade; leisure and hospitality; professional and business services; other services). That compares to the same time last year, when no economic sectors reported net job gains.

But, Pollack pointed out again, the Valley and state can’t expect the robust and recoveries that have accompanied past recessions.

He says the Valley’s housing market continues to be weighed down by:

  • Weak job growth
  • Tough underwriting standards
  • Negative home equity
  • Loan modification failures
  • High foreclosures
  • Option ARMs (adjustable rate mortgages) peaking in 2011

In terms of equity, 51 percent of houses in the state have negative equity. The national average is 23 percent. Such negative equity severely curtails people’s ability to buy and sell homes. In addition, supply still outstrips demand in the single-family home market, with an excess inventory of houses somewhere between 40,000 to 50,000 units, Pollack said. A balance between supply and demand will not be fully achieved until about 2014, he added.

The picture is bleaker for the commercial real estate market, with delinquencies on loans still very high. In the office market, Pollack cited forecasts from CB Richard Ellis that said vacancy rates would peak at 25.6 percent in 2010 before dropping to 23.9 percent in 2011. As Pollack pointed out, there currently is no multi-tenant office space under construction in the Valley. In fact, he expects “no significant office building in Greater Phoenix for the next five years.”

Industrial space vacancy rates are faring only slightly better, with CB Richard Ellis predicting year-end vacancy rates of 16.4 percent for 2010 before falling to 15.2 percent in 2011. As for the retail market, the vacancy rate will rise to 12.3 percent in 2010 and hit 12.9 percent in 2011.

For office, industrial and retail commercial real estate, Pollack said he did not expect vacancy rates to reach normal levels until 2014-2015.

Still, Pollack maintained that the economic outlook for the Valley “remains favorable,” thanks to the recovering national economy, increased affordable housing in the Valley, a rise in single-family home building permits, unemployment bottoming out, consumer spending improving and continued problems in California.

light reflecting off gold bars

Don’t Count On The Current Gold Rush Lasting

The recent economic recession forced society to relook at what we consider to be financial norms. What was considered reasonable several years ago is now unjustifiable based on today’s new standard.

The comfort of having money in an actual wallet is greater than having a pricey purse to carry it in.

It is possible that the same fear that shifted people’s spending habits is what has driven the price of gold to an all-time high.

In my book, “Financial Intelligence,” I show the historical volatility of the price of gold per ounce. Ten years ago this July, gold was trading at approximately $288 per ounce. Today, gold is now trading just shy of $1,200 per ounce. That is a near 15 percent compound rate of return per year over the last 10 years, while the stock market has gained no ground.

Now that the economy is slowly stabilizing, will gold continue to be a profitable investment? Only time will tell, but history suggests that there most likely will be a decline in price. Everything in this modern economic world is cyclical and vulnerable to corrections.

I am amazed about how many people assume that because gold is a tangible asset, it does not carry any risk. Despite what the late-night infomercials say, there is risk in gold and you should consider that risk before investing in it.

In my opinion, when you start to see repetitive get rich quick TV commercials, you should begin to doubt that “investment.” Remember in the late 1990s when TV commercials were touting that through day-trading stocks you could retire in your 4’s? Or the real estate gurus that told you that you could make millions in real estate if you attended their workshops? Today you can’t watch TV without seeing some type of commercial encouraging you to buy gold.

Given the economic environment that we just experienced, it makes sense that gold appreciated in value. Gold historically has increased in value during times of great uncertainty, but the tide is slowly changing. If the global economy can avoid a double-dip recession, we may see the price of gold revert back to its historical mean.

Apart from winning the lottery, there is no such thing as a get rich quick strategy. It always takes longer that you originally hoped and there are always setbacks.

It is always a wise move to invest in an asset that you feel meets your long-term investment objective and that enhances your diversification. Don’t try to time the market or try to get in on the next big thing; you could do more damage than good.

Bottom line, if you had a crystal ball, you should have invested in gold 10 years ago. Now it may be too late.

Cohesive Workplace

Cohesive Sustainable Workplace Environment

The summer of fun in Arizona has arrived. What are some of the exciting topics around the water cooler this season? Consider these: A splendid May that has seen unseasonably cool temperatures; our Phoenix Suns vying for a championship; environmental disaster in the Gulf of Mexico; this little thing called Senate Bill 1070.

Did you just feel the air go out of the break room? Regardless of personal and political ideology, the recent piece of state legislation (with national implications) brings to light a workplace issue that should be at the forefront of managers minds: How do we build a cohesive and sustainable workplace?

Cohesion in the workplace drives company loyalty, reduces employee churn, increases efficiency and productivity, and creates an environment where people desire to work. What does this mean from a business sustainability standpoint? Better people, better work, and better potential profit. A workplace environment in which employees dread coming to work, do not feel engaged, and are not valued does not equate to a prudent business model. An organization that embodies employee respect and engagement has a framework for success and sustainability.

In the midst of our state’s economic and social uncertainty, here are some ideas to help foster a more cohesive environment in your workplace:

Stakeholder Engagement:
You will be amazed at the innovative ideas and solutions that your employees possess. Provide your employees, at all levels, with the opportunity to “co-create” their future and the future of the organization in concert with you, the manager.  Buy-in, especially by those most closely tied to the organization, is always in style.

Employees as Assets:
Don’t marginalize or alienate the greatest asset in your workplace; employees. Make a concerted effort to develop and advance your employees professional and personal life. You will be amazed how a little development will produce a lifelong raving fan that works harder and better for the organization.

Create a nurturing environment:
Workplace stress can have deleterious effects on employee behavior, health, and family life. Combat this by making the workplace one in which people have fun, interact, and look forward to coming to each day.

Arizona is a beautiful state that is home to a diverse and pluralistic community of individuals that provide us with a rich culture. Naturally, this permeates into our collective workforce. While businesses should always act in a manner that complies with the current legal framework, they should also make a concerted effort to establish a more cohesive environment for its diverse workforce and act in a more sustainable manner.

What are your success stories in creating cohesive and sustainable business environments?

Green World

Green News Roundup-Sustainable Haiti, Economic Development & More

The catastrophic events that have stricken the people of Haiti demonstrate — quite lamentably — that in a world of nanotechnology, Google-enabled mobile phones, double tall soy lattes, and proposed universal healthcare, there remain societies on the brink of social, economic, and environmental collapse. For comparison sake, recall the 1989 earthquake that struck the San Francisco Bay Area; a 7.0 geological shift took the lives of 63 people. The same magnitude befell the people of Haiti on Jan. 12; while estimates vary, 100,000 could be dead. That is half of the population of the City of Tempe.

International aid organizations have begun to alleviate immediate suffering; there has been a nationally televised charity concert where people could “text-message” help from the comfort of their own home; myriad countries have sent physical and monetary support. However, there remains a normative question that should be on our minds:

What should we do to ensure a more sustainable Haiti, in the future?

Consider these:

Expand education efforts:

In a nation where 38 percent of the population is under the age of 14, developing intellectual capital will allow good ideas to originate, blossom, and be implemented in a country that is in dire need of them.

Economic development and investment:

Haiti is the poorest country in the Western Hemisphere. By advancing an equitable combination of foreign direct investment, NGO/nonprofit work, and domestic revenue producing opportunities we can ensure that Haitians are placed on a path of economic self sufficiency;

Further micro-lending networks and opportunities to allow access to entrepreneurial capital and development. Jobs starting from bottom up will empower individuals and reduce the economic stratification that is rampant in the country.

Establish legitimate governance systems:

Haiti’s government has utilized 8,000 U.N. peacekeepers to maintain some semblance of order and control since 2004. While a future government does not have to be a veritable paragon of representative democracy and efficiency, the people of Haiti deserve a government that will work — vigorously and in earnest — to advance their well-being. Imagine there were a comprehensive and enforced modern building code prior to the earthquake; would Haiti have fared more like San Francisco?

The world is not a mutually exclusive place anymore. We, a global people, are connected to one another in innumerable ways. As such, we need to demonstrate our solidarity and resolute commitment to creating a more sustainable Haiti. I challenge you to ask what else you, your business, organization, or nonprofit can contribute towards the economic, social, and environmental revitalization of Haiti.

Let’s start a thoughtful and innovative conversation about how businesses, organizations, and nonprofits can move beyond status-quo assistance and be truly entrepreneurial and ground-breaking in their aid. I look forward to making positive change happen, together.

Valley Forward: Colin Tetreault

Colin Tetreault
Master of Arts Student
Arizona State University, School of Sustainability
schoolofsustainability.asu.edu

As a student at the Arizona State University School of Sustainability, Colin Tetreault is exploring ways for the business community to play a greater role in enhancing the global environment.


It’s a natural blend of interests for Tetreault, who is pursuing a master’s degree in sustainability and has a bachelor of science degree in marketing from the ASU W.P. Carey School of Business, as well as a minor in sociology. He has a diverse business background and skill set tempered in marketing, business development and philanthropy. His goal is to integrate his business acumen and cutting-edge knowledge of sustainability.

When ASU President Michael Crow said, “Sustainability is a way to grow and prosper while reducing the stress on the planet,” and asserted that sustainability would be a hallmark at ASU, Tetreault says, “I knew this was absolutely something that I not only wanted to pursue, but I felt compelled.”

Tetreault’s background led him to the field of sustainability.

“I grew up hiking and climbing and having an appreciation of the outdoors,” he says, “but my parents are both business individuals. My mother was a professor of marketing and my father was a business executive. I loved being outside, but I also loved what business can do. Business can accelerate change and can act as an advocate for it.”

Some individuals may view business as being unfriendly to the environment, and with some justification, Tetreault says.
“Admittedly, in certain instances they may be right, but now business has done more than ever for the environment and can act as an advocate for the world,” he says. “It marries two areas that I love — a synthesis of business and the entire global perspective of sustainability, which is not just hugging trees and savings animals.”

Sustainability will provide a “meaningful, productive and just way of life,” Tetreault says, adding that it is vital to save the trees and have clean air so humans can live on this planet.

“Sustainability is paramount to that, to help achieve economic viability and a robust society,” he says. “Everything is connected. Our actions have a direct impact on us now and in the future and on everything around us. I feel this is my calling.”

Tetreault, who joined Valley Forward this year, hails the organization for its role in preserving the environment and for being “not only an aggregator of information, but also an advocate for positive change.”

“Valley Forward embodies those type of ideals,” he says.

West Valley Industry Turnover

WESTMARC Unveils The Results Of A Work Force Labor Market Study

What started as an initiative from the city of Surprise Economic Development Department quickly turned into an unprecedented work force study on the entire West Valley spearheaded by WESTMARC. The study came about through a collaboration of communities, corporations, government entities and educational institutions that contributed more than $150,000 to fund the report.

“West Valley communities have experienced tremendous growth since the 2000 Census. They were having difficulty addressing questions from business prospects concerning the size and skill levels of the regional work force,” says Surprise Economic Development Coordinator Megan Griego, who sits on WESTMARC’s economic development committee and was chair of the Workforce Labor Study of the West Valley. “The communities of the West Valley formed a consortium to better understand their region’s work force and to better promote its growth and development.”

Russ Ullinger, senior project manager of economic development for SRP, and WESTMARC co-chair and member of the economic development committee, adds that the concept for the study developed out of necessity.

“Numerous surveys and studies have identified work force as one of the most important assets when national site selection consultants consider different regions and locations for businesses,” he says.

“This is relevant in good economic times, as well as poor economic times. This study truly drills and provides specific labor information unique to the West Valley.”

Harry Paxton, economic development director for the city of Goodyear, who also acted as co-chair of the study, credits WESTMARC’s partnerships with the Maricopa Work Force Connection, as well as Maricopa Community College in the development and funding of the study. He also praises WESTMARC for bringing together work force professionals to get their input on what the study should entail.

In May 2008, WESTMARC enlisted California-based ERISS Corporation to prepare the comprehensive labor market analysis.

“That analysis involved a survey of all businesses in the West Valley with 20 or more employees — all such businesses were contracted and 1,100 completed the survey — and a detailed review of newly available government information,” Griego says.

The detailed data developed by the survey and the analysis of various government data sources is also available through www.usworks.com/westmarc, which presents the comprehensive information and data relevant to businesses, site selectors, economic development professionals, work force development professionals and educators into convenient and customizable reports.

The results of the study can now help the 15 West Valley communities represented in the report to identify their specific needs when it comes to work force issues, transportation and industry growth, and demand. For example, Glendale encompasses more than 6,000 firms, according to the report. Health care accounts for more than 12 percent of total employment in Glendale, which is higher than the Metro Phoenix area as a whole (9.1 percent), but is on par with other West Valley cities. The results also show that 19.6 percent of Glendale workers live and work in the city. The majority of other Glendale employees travel from Metro Phoenix (35.3 percent) and as many as 1.3 percent commute from Tucson.

In general, the study found there are more than 450,000 workers available to fill jobs for the right offer. In addition, there are growth and expansion opportunities in the industries of transportation, wholesale trade, traditional and non-store retail, as well as education. Regarding industry growth, health care leads the trend with a 6 percent growth rate. Construction and transportation/utilities follow closely with a 5 percent growth rate each, and retail in the West Valley has a 4 percent growth rate.

As part of the study, businesses were asked to rate their own work forces on a scale of one to seven, one representing the lowest productivity rating and seven the highest.Sixty-six percent of the area’s employers ranked their employees in one of the two highest categories.

Absenteeism is also a non-issue when it comes to West Valley workers as a whole. The majority of employers, 63 percent, reported that absenteeism is “not a significant problem” at their firms, and when absences do occur, 61 percent of employers reported that the cause is a legitimate illness with childcare.
Jack Lunsford, WESTMARC’s president and CEO, says ERISS Corporation did an excellent job with the study and the results have given them a course of action.



“We found that we have in the West Valley, even in this economy, a very large and qualified labor supply, and we still have some industries that are currently growing and that anticipate growth,” he says, adding that results also show West Valley communities need to implement a live/work/play strategy to avoid the problems with transportation issues.

Landis Elliott, business development director for House of Elliott, says the benefits of the study are numerous. “The study is a tool that the West Valley cities can use while working with potential locates to validate the high-quality employees we have in this region,” she says.

Oath

Thunderbird School Of Global Management Continues To Deliver In-Demand Education

Managers consumed with maximizing short-term profits and the value of their stock options have destroyed billions of dollars in shareholder and taxpayer money. A culture of greed lies at the root of this economic meltdown that has seen banks collapse, markets tank and unemployment rates soar.

The aftershocks of this global disaster continue to claim victims, and companies around the world are scrambling to brace themselves for the uncertain times ahead. The survivors will be those who are properly equipped to navigate the economic crisis with strong, ethical leadership, innovative global mindsets and sustainable strategies that will solidify their long-term viability and create lasting value for their organizations and the communities they serve.

With this in mind, the Thunderbird School of Global Management continues to create innovative ways to deliver relevant and in-demand education to companies and executives in a market where the need for continuing education is great, but company resources are slim.

Thunderbird Corporate Learning, the executive education division of the school, already has begun tailoring its programs to help companies and organizations navigate this financial crisis, including a new global leadership certificate program called Leading and Managing in Turbulent Times. This program helps global leaders understand what elements of management have changed during the economic downturn — and what things never change. A 12-week session began in March, and a three-day concentrated version took place in May.

The program, taught by Thunderbird faculty members who have extensive first-hand experience working with global managers, will help students broaden their understanding of global business issues that are transforming the international landscape. The program will arm students with useful decision-making tools for increased job performance, and help them build more effective cross-cultural relationships by giving them insights into how the economic crisis is affecting different cultures, regions and markets.

The program will also take topics such as corporate social responsibility, international marketing, organizational culture and financial management and relate them to the economic crisis.

Another new executive education program will debut June 9. Communicating and Negotiating with a Global Mindset is a three-day course that will help working professionals develop strategies for influencing people from other cultural backgrounds. Participants will learn their own global mindset profile and develop an understanding of their own negotiating preferences. The need for such skills has been amplified in the global economic crisis as companies scramble for competitive advantages.

Helping social sector organizations get through the crisis is another area in which Thunderbird has extended its offerings. The Thunderbird Social Sector Leadership Program conducted in March with the support of a grant from the American Express Foundation, reached out to nonprofit, governmental and nongovernmental organizations such as Habitat for Humanity, the International Rescue Committee and the Grameen Foundation.

The five-day program guided participants on how to develop new leadership skills in these tough economic times with training in leadership, sustainability, strategy, brand management, fundraising and innovation. The program, designed solely for a group of nonprofits, governmental and nongovernmental organizations, is the first executive education program of its kind for Thunderbird, and the school is hoping to use it as a model for similar opportunities in the future.

Keeping in mind that times are tough and resources are tight, Thunderbird has launched a free, interactive Web site and quarterly executive newsletter, which are both designed to help busy global executives navigate this economic crisis. The Thunderbird Knowledge Network is an interactive, multimedia forum that gives executives open access to the expertise and insights of Thunderbird’s faculty, alumni and other corporate executives around the world on the latest, most relevant global business issues and trends, including the global recession. This content is delivered in stories, columns, videos, podcasts and blogs, including my blog on global leadership. Each posting in the Knowledge Network offers an opportunity for reader comments and feedback.

Executives also can tap Thunderbird’s global business knowledge through the school’s new Executive Newsletter, a free electronic newsletter that is distributed quarterly to busy working professionals, including the school’s corporate clients and alumni.

Arizona State Seal

A Quarter Century Of Wisdom Points To The Right Solution

In 1982, I was beginning my first term in Arizona’s House of Representatives. After years of spending increases, our state was suffering an economic slowdown. Recovery was just around the corner.

In 1984, Ronald Reagan was elected to his second term as president of the United States, the federal government announced that it would build an orbiting space station, and the Phoenix area was one year away from receiving its first deliveries of Central Arizona Project water.

In other words, the more things change, the more they stay the same.

Yes, we are a different state today than we were a quarter century ago.

Our population has doubled from 3.06 million to 6.8 million.

Per capita income has risen 256 percent, from $13,866 in 1984 to $32,953 today.

The world may be suffering the symptoms of an under-the-weather economy, but citizens from high-tax and high-regulation states will continue to move to Arizona, just as they have for the past 25 years. They will come because of our freedom-loving attitudes, our incredible business and environmental climate, and a commitment to nurturing opportunity.

However, since we have ignored history over the past few years, we must re-live the lessons of previous cycles. Once again, after stumbling through several years of free-spending fostered by a previous administration, Arizona must bring spending back to reality.

This is why I offer a five-point plan to cure what ails us:

  • Cut spending as much as feasible.
  • Don’t create or expand programs.
  • Stop treating one-time windfalls as permanent revenue. Even the feds must stop printing money eventually, so don’t think cash will keep flowing out of Washington.
  • Modernize our tax structure. Let’s get spending under control by 2012. Then let’s renovate our tax system to foster well-paying, sustainable jobs.
  • We must be responsible. The previous administration spent too much, and we must pay the bills, even if it leads to temporary tax hikes that automatically expire in three-to-four years.

Some think our political climate has changed. To those people I say, the more things change, the more we need the wisdom of some of the best political minds from the 20th century: Ronald Reagan and Barry Goldwater. They advocated:

  • Keeping taxes reasonable.
  • Limiting government intrusion.
  • Encouraging opportunity.
  • Creating prosperity.

Back in 1984-85, for the first time in state history, Arizona officially became a Republican state. We tended to elect conservative Republicans for decades, but many rural and blue-collar Democrats re-registered and pushed my party over the top.

When I became secretary of state in 1998, I watched a national trend away from political affiliation, which made it look like GOP domination would erode. As of April 1, 2009, our 3.1 million registered voters were split into three semi-equal groups. About 36.8 percent are Republicans, 33.8 percent registered as Democrats and 28.5 percent are not affiliated with either party.

Voters may be disenchanted with both parties, but they still love freedom, want limited government intrusion in their lives, and place their faith in the wisdom of Reagan and Goldwater.

The evidence is clear that Arizonans remain as committed as ever to limited government. This is why, come 2010, I am confident that our state will continue to follow the path blazed by Reagan and Goldwater by trusting sustainable, conservative solutions that realistically and responsibly address Arizona’s financial crisis.

Job Increase

Green Jobs, Good Future

We are all very aware of the plight our economy is facing, but there is one bright spot in the darkness of the recession — green jobs.

According to a study by the Pew Charitable Trusts, the number of green jobs in the United States grew 9.1 percent from 1998 to 2007. Traditional jobs, on the other hand grew by only 3.7 percent in this time frame. This trend was also reflected on a state level.

This is great news, not just for the world of “green” but also for the economic future of our country. It shows that even, or rather especially, in troubled times we are recognizing the importance of sustainability.

The study also stated that “America’s clean energy economy has grown despite a lack of sustained government support in the past decade. By 2007, more than 68,200 businesses across all 50 states and the District of Columbia accounted for about 770,000 jobs.”

And there’s more good news. While many who have been lucky enough to avoid layoffs still live in fear of possibly being let go, 73 percent of respondents in North America to the first ever Carbon Salary Survey reported that they feel safe in their jobs, thanks to ever-increasing attention being placed on the sustainability sector.

I find this information comforting and refreshing. Comforting because it’s nice to know that even in this bleak environment there are still job possibilities out there, and refreshing because well, quite simply it’s refreshing to hear at least some positive news.

Here’s to a greater, greener future.

Source:
Pew Charitable Trusts
Carbon Salary Survey

pill to swallow

Arizona’s Health Care Industry Must Adapt To New Compliance Procedures In 2009

The current economic downturn and the prospect of dramatic changes to the nation’s health care system under a new administration are making 2009 one of the most challenging years ever for Arizona’s medical industry.

If that weren’t enough, however, our state’s hospitals, clinics, and diagnostic and out-patient centers — and the physicians who serve them — are getting a crash course on how to administer sweeping new compliance procedures and regulations recently issued by the Centers for Medicare and Medicaid Services (CMS).

Last year, CMS posted the 2009 Final Hospital Inpatient Prospective Payment System (IPPS) rule, which is having an impact on hospital operations and policies, as well as physician arrangements. Included were several changes to the so-called Stark Law (named for U.S. Rep. Pete Stark, D-Calif.) covering Medicare and Medicaid.

The impetus for the new provisions was a worthy one — curbing physician self-referrals and stopping kickbacks. Nevertheless, Arizona doctors and health care entities are scrambling to alter their ways of doing business. The downside for not doing so: denied payments, or penalties, from Medicare and/or Medicaid.

Some of the provisions went into effect last October and others begin this October. They will result in the significant restructuring of many physician arrangements, particularly joint ventures between doctors and facilities. Some of the rules are providing more flexibility in these arrangements, while others have become more restrictive.

Stand in its Shoes
One area of flexibility is CMS’ decision, effective last October, to decline adopting tougher “stand-in-your-shoes” procedures. This would have mandated that when physicians’ organizations contracted with an entity such as a hospital, each physician in those groups would have been deemed to be part of that contract as well.

Under the finalized rules, only physicians who have an “ownership or investment interest” in such an organization will be considered to “stand in its shoes” for purposes of compliance with the Stark regulations.

Percentage-Based Compensation
Soon to be a thing of the past is percentage-based compensation arrangements for space and equipment rental lease arrangements. CMS initially proposed a broad prohibition for using percentage-based compensation formulas to calculate revenue from services performed or business generated in leased office space or from leased equipment.

This October, the final rules will take a more targeted approach, specifically addressing CMS’ concerns with percentage-based compensation regarding lease arrangements.

Per Click: Lease Arrangement Payments
Also this October, the new procedures will significantly limit the use of unit-of-service, or “per-click,” payments in the context of physicians’ space and equipment lease arrangements. This pertains to physicians leasing time on diagnostic equipment to perform tests on Medicare and Medicaid patients.

Specifically, CMS revised exceptions for such leases, determining fair market value, and for indirect compensation arrangements to prohibit “per-click” payments to a physician lessor where the payments reflect services on patients who had been referred to the lessee by the physician.

Furthermore, the prohibition applies regardless of whether the physician is the lessor or whether the lessor is an entity in which the referring physician has an ownership or investment interest.

CMS states that the new rule does not prohibit physicians from leasing equipment or space to entities on a per-use basis for services rendered to patients who were referred from others. In most cases, CMS will not prohibit time-based deals in which a physician rents time on a CT or MRI scanner.

Services Provided Under Arrangements
Entities, including physicians, that provide services to hospitals “under arrangements” (for example, when a hospital bills for services but arranges for another entity to provide the services), will now be considered DHS (designated health services) entities themselves for Stark Law purposes.

Previously, only the person or entity that billed for DHS was deemed to be “furnishing” the DHS. CMS’ new definition of entity, effective in October, is that a person or entity is considered to be “furnishing” DHS if it has (1) performed the DHS even if another entity bills for the services; or (2) presented a claim for Medicare benefits of the DHS.

As a result, physicians will be limited in their ability to refer patients to “under arrangement” service providers in which they have an ownership or investment interest. Restructuring of existing joint ventures between physicians and hospitals will be needed.

This is only the start. There are several other provisions — including malpractice insurance, physician retirement plans, disallowed referrals, compliance requirements and other hospital-physician agreements. Hopefully, this gives you an idea of the issues and challenges facing Arizona’s health care industry during the rest of 2009.

The Ubiquitous Topic Of Green Is Popular For A Reason — It Works

The Ubiquitous Topic Of Green Is Popular For A Reason — It Works

Lake Superior State University may not be too well-known, but it does generate some publicity each year with the release of its annual List of Words to be Banished from the Queen’s English for Mis-use, Over-use and General Uselessness.

Those who tire of hearing or reading certain words and phrases go to the Michigan university’s Web site and nominate them for consideration. The big losers for 2009 are the word “green” and such related phrases as “going green.”

Good luck with getting those banished — especially in Arizona.

Many who have been beating the drum for energy efficiency, water conservation and sustainable business practices have found willing ears in executive suites across the state.

General Dynamics C4 Systems in Scottsdale is just one company that has proactively embraced standards set forth by the U.S. Green Building Council under its Leadership in Energy and Environmental Design, or LEED, Green Building Rating System.

Genesis Worldwide Enterprises in Cottonwood took a bold step forward in 2005, when it installed an 84-kilowatt photovoltaic power system, which then became the second-largest private commercial solar power system ever installed in Arizona.

It’s impossible to log onto Web sites for such utility companies as Arizona Public Service, Salt River Project or Tucson Electric Power without being directed to information about their green programs and services.

And if none of that is convincing enough, consider this. Light rail has come to the Valley of the Sun with the debut of a 20-mile, $1.4 billion system in late December.

Granted, these are just some of the steps Arizona businesses and municipalities are taking along the road to sustainability. But they are important steps.

“We could get a lot better than we are, but we’re doing pretty darn good,” says Charles Popeck, president and CEO of Green Ideas Inc., an environmental building consulting firm in Phoenix, and one of the founders of the USGBC’s Arizona chapter.

And Popeck sees a general acceptance of sustainability principles throughout the Arizona business community, not just among specific industries such as high-tech firms.

“I’d have to say it’s across the board. Everyone seems to be catching onto it,” he says. “The reason is it’s just common sense. I mean, how can you argue with saving water and saving energy?”

Bonnie Richardson, the new chair of USGBC Arizona, believes the decision to go green usually starts at the top.

“I think it really comes from the corporate philosophy,” she says. “I do think that folks in high-tech businesses have been exposed to more of the new ideas and so they tend to be more willing to embrace and try things out. However, I think we’re now at that tipping point where it just makes good financial sense for businesses to do this, and that’s where it’s going to be a lot easier for people to adopt it.”

John Neville, a sustainable systems consultant and president of the Sedona-based networking organization Sustainable Arizona, emphasizes those financial considerations in terms of a willingness to go green.

“Sustainability means the ability to last,” he says. “And if you look at your business and make business decisions based on the idea that you’re going to last a long time, then you look at your expenses and your income in a different way. If all you’re concerned about is next quarter, then you make your business decisions differently and you’re not going to be sustainable.”

When LEED-accredited professionals like Popeck, Richardson and Neville talk about sustainability and business, they oftentimes are referring to companies and institutions that are seeking one of the various levels of LEED certification.

According to the USGBC, “LEED promotes a whole-building approach to sustainability by recognizing performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality.”

In fact, the nationally recognized LEED certification system is not just restricted to new construction. There are ratings programs for existing buildings, schools, commercial interiors and retail spaces among several others. Each category has a specific checklist that earns points for applicants. The more points earned, the higher the rating level with basic certification at the low end and the LEED Platinum level at the top.

Those going for new-building certification can earn points, for example, by locating a building on a site that accommodates alternative transportation methods for its employees, maximizes open spaces, utilizes water-efficient landscaping, has on-site sources of renewable energy and implements a construction waste management program.

USGBC Arizona includes a statewide list of completed LEED-certified projects on its Web site.

Popeck argues that green buildings are no more expensive than any other type of new construction.

“I think the biggest misconception out there is that it has to cost more upfront. It certainly does not,” he says.

When costs go up, it’s usually because someone decided to go for LEED certification well after the design process got under way.

“That is a typical problem out there and then people say, ‘Well green building costs more.’ Well it doesn’t really cost more,” Popeck says. “It’s because you designed your building twice that it cost more.”

Companies can recoup some of the expenses involved in greening their buildings through government tax credits and utility company rebate programs. But there are also significant savings from taking a green approach. This can include lowering the price of energy and water, as well as trimming shipping costs by sourcing construction materials locally or rethinking product packaging.

So why isn’t everyone going green these days?

“Of course, the downturn economically has hurt us,” Richardson says. “But I don’t think it was particular to green building. I think it was just across the board because our construction industry here was really devastated and it’s going to take some time for all of that to come back.

“So we’re no different than any other part of the country where the downturn is slowing growth for some of our new businesses and also, perhaps, people aren’t confident to make big investments at this moment.”

Neville seconds that.

“Everyone kind of pulls in during an economic slowdown,” he says. “It’s difficult at times when you have cash-flow issues. It’s very difficult.”

Neville is certainly not opposed to companies jumping into the green movement with both feet, but in some situations he thinks it’s actually better for companies to take incremental steps.

When he works with a business or government entity, they start out by analyzing the organization’s mission.

Neville outlined the process: “You take a look at, ‘What am I trying to accomplish here? How does my business work?’ Whether it’s a business or running a city or running a school, you say: ‘How does this work? What are all my businesses processes? What are the things that really please the customer?’ And then, ‘How can I do those and get rid of the other things that I’m doing that are ridiculous?’

”He points to a printer who saved money while going green by switching from inks containing volatile organic compounds. This eliminated the need for filing a toxic release inventory report every year, which involved hiring an outside firm to conduct an audit.
“Going green is getting better at your job. It’s doing your business better,” Neville says. “Becoming more sustainable is becoming a higher-quality business, a more efficient and effective business. That’s really what it is.”

Richardson, who works as an architect and principal planner for Tempe’s transportation division, says it’s important for those promoting sustainability to make outreach and educational efforts during a downturn.

“As we recover, there will be people with a lot more ideas about what they want to do with their business and what direction they want to go,” she says. “What’s really interesting is that once you get people looking into it, they recognize that there’s significant savings for businesses that decide to grow their business green.”

Anthony Floyd, another LEED-accredited professional, manages Scottsdale’s green building program. His city does a lot more than just talk the talk when it comes to environmentally responsible building.

In 2005, Scottsdale passed a resolution mandating that the city adopt a LEED Gold policy for designing, building and constructing new municipal facilities. The Granite Reef Senior Center, which opened in 2006, became the city’s first such building to earn LEED Gold certification. There is a new fire station that was going through the certification process earlier this year.

The Scottsdale green building program is primarily a residential program, but it plays an important role in terms of influencing commercial entities.

“When we started the residential program, after a few years of that we realized that we needed to start practicing what we were preaching,” Floyd says.

They set the bar high, he says, because “we realized we need to lead by example.”

Floyd serves as a green-strategies resource for various Scottsdale departments, other Arizona communities and numerous organizations. In early 2008, he put together a report for the AZ Minority Green Business Conference titled “Greening the Building Process.”

The report contains pertinent strategies, facts and figures. But it also covers a practice known as “greenwashing.”

“It’s just like whitewashing,” Floyd says. “I mean, there are a lot of companies out there that are advertising themselves as being green. But you really have to look deeper.

“There are multiple attributes to green building and there are shades of green.”

Like manufacturers that freely trumpet the sometimes debatable health benefits of their products, there are others who “mislead consumers regarding the environmental practices of a company or the environmental benefits of a product or service.”

Floyd uses the example of a business that may have sourced some construction material locally and uses that as a reason to promote itself as being green.

“But that’s greenwashing,” he says. “Just one particular product is not going to make a building green. It’s about the strategy and the design, and the combination of materials and resources that determines the overall greenness of the project.

“You can’t just look at water and say you’re green. You can’t just look at energy and say you’re green. In a building, you have to look at everything.”

But water and energy are two important considerations in Arizona, where the first may be scarce before long and the second can be extremely costly during summertime.

“In most of the LEED buildings that are being done, there is real focus on both water and energy,” Richardson says. “And that’s a new tack for Arizona.”

There are various ways to trim the use of potable water, such as installing low-flow fixtures and waterless urinals, harvesting rainwater and landscaping with native plants as Tempe does at its new transportation center.

“As long as water is relatively inexpensive, it’s a little harder to make the case that that investment turns around quickly,” Richardson says. “But I think over the next five years, there’s going to be a lot more discussion about how valuable water is in the desert and how we really need to change attitudes about managing it in a better way.”

Water efficiency is a major issue for Popeck. “It’s my pet peeve, really,” he says. “Yet every time you go into one of these project team meetings, you know, no one seems to get it. Everyone thinks the water’s unlimited. And it’s just really not.”

The need for energy efficiency and renewable energy are not just arguments coming out of Washington, D.C., these days.
Neville likes to say that the least expensive energy around is energy you don’t use. Energy is among the highest expenses on business ledgers.

“Whenever possible,” he wrote in a Sustainable Arizona position paper, “developments should incorporate energy technologies that rely on available, renewable, clean energy sources, such as solar, wind, ground-source, geothermal and other beneficial resources.”

Floyd is similarly inclined.

“If you’re green and you’re in Arizona, you need to be doing renewable energy,” he says. “It’s not an option. If you’re green, you should be generating a portion of your electricity using solar.”

There’s another, equally important part to this strategy, Floyd argues: “You need to start by reducing your energy load by being energy efficient. And then once you do that, you get a bigger bang from your solar buck.”

Mixed Use Development

Mixed-Use Developers Urged To Plan For Defect Claims Before Signing Contract

Developers of mixed-use projects can reduce the likelihood of costly construction defect litigation by anticipating risk and allocating responsibility at the time of contract. Unfortunately, developers often assume that the standard industry forms provide sufficient protection.

These forms, however, rely heavily on good faith for resolution of issues in the future. There are certain approaches developers can take to protect them, prevent construction defects and resolve issues arising from them.

Determine project function and likely defects prior to contract
The developer’s contracts with contractors and designers are best structured after the developer has arrived at a clear “big picture” understanding of how the project will function. Gaining this understanding includes consideration of regulations, financing, insurance and marketing plans specific to the development. It would behoove the developer to conduct a “what if” analysis to determine the defects most likely to result from failures in the design or construction.

Knowing how the project will function and what defects are most likely to arise places the developer in the best position to craft project-specific core objectives for negotiation of the contract.

These core objectives related to defects should include:
A clear allocation of responsibility and accountability for preventing critical defects.

A determination of comprehensive insurance and bonding requirements based on an assessment of which risks can and should be covered.
A clear statement of how disputes will be triggered and resolved during and after completion of the project.

Resolution of disputes deserves particular attention given the implications of technical issues and the possible need to involve numerous categories of potentially responsible parties. The solution will differ from project to project.

Beware of the economic loss rule
Developers sued for construction defects invariably look to the designers and contractors for indemnification. If the designer or contractor is not held financially responsible however, the developer may remain on the hook even if subcontractors are truly at fault. Subcontractors can be immune from liability for construction defects under a principle known as the “economic loss rule,” which provides that a party whose claim is based upon a financial loss caused by construction defects is only entitled to recover under contract theories against those with whom it has a direct agreement. To the extent the economic loss rule applies, it prevents the developer from suing the responsible subcontractor, unless the subcontract provides otherwise.

Developers concerned about the economic loss rule typically require in the prime contract that each subcontract include text specifically indemnifying the developer from suits for construction defects caused by the subcontractor, and names the developer as an “intended third-party beneficiary” of the subcontract with the right to directly sue the subcontractor.

Require indemnification and defense
Developers typically do not cause construction defects, and assume the insurance furnished by the designer or contractor should be the primary source of payment for all related costs, including defense costs. Yet, under the standard industry form indemnity, the primary responsible party does not provide for defense. To address this gap, developers can explicitly require a defense obligation in addition to indemnity.

Nip the issue of warranty claims in the bud
There is the potential for confusion and discord in efficiently responding to warranty claims, given there will likely be multiple parties potentially responsible for the design and construction. Developers concerned with this concept should negotiate contract provisions for a “warranty response contractor” to ensure warranty/defect claims from third-parties are responded to and accommodated promptly, with allocation of responsibility being addressed later.

If the developer envisions the project to be above average in quality of design or construction — which is normally the case in upper-end developments where quality of construction administration is considered important to minimizing defects — the contract should memorialize that expectation. Otherwise, the enforceable measure of performance could be the minimum standard, which may make it more difficult for the developer to prove a breach of the standard of care and increase the likelihood of defects due to lower performance standards. To avoid disputes, the contract should reflect any understanding that performance will exceed minimum standards.

Contractual language dealing with any or all of these concepts is only as effective as the effort given to integrate them with the other contract provisions, as well as the core objectives, so that the entire contract clearly addresses the parties’ expectations for the specific project.