Tag Archives: July – August 2010

Companies Continue To Turn To ASU - Az Business Magazine Jul/Aug 2010

Despite Hard Times, Companies Continue To Turn To ASU For Executive Education Offerings

You might think companies designate the development of managers and executives as a low priority as they try to weather the storm of a recession. Though it’s true many companies scale back tuition benefits and send fewer people to executive education programs, most business leaders still are keenly aware they need to develop current and future talent, especially as the economy begins to recover.

Because of the recent recession, firms had to reduce staff precisely at the time when the first wave of baby boomers — a vast reserve of knowledge and experience — is set to retire. This leaves a much smaller and less-seasoned population of Generation Xers with the responsibility to manage the incoming “boomlet” of millennials. As a result, professional development opportunities no longer are considered a “perk,” and organizations are much more purposeful in identifying future leaders among current managers, and providing them with learning and development opportunities that are cost effective and build capabilities that translate into business results.

This situation raises a number of challenges and opportunities for business schools, which over the last 20 years have expanded from their traditional role of providing companies with freshly-minted graduates to also partnering with them in the development of their existing talent pools. Like many business schools across the country, Arizona State University’s W. P. Carey School of Business assumed this new role, in part, by creating a wide range of degree and non-degree programs for working professionals.

The school’s Center for Executive and Professional Development (CEPD) provides short, non-degree courses and certificates, including customized programs. The school’s MBA program is offered in executive, evening and online formats. The school’s full-time MBA program currently is ranked in the Top 30 in the nation by U.S. News & World Report. The evening MBA program is ranked in the Top 20.

Two part-time master’s degrees also are offered to working professionals: the Master of Science in Information Management (MSIM) is a one-year evening program that prepares IT managers; and the Master in Taxation (MTAX) is a one- or two-year evening program focused on the skills needed to provide tax advice and administer tax laws.

New demands from companies continue to raise the bar on all of W. P. Carey’s programs for working professionals. In response to customer surveys, CEPD recently shifted away from offering multi-day, on-campus short courses to instead scheduling courses over multiple evenings, weekends and online. This minimizes disruption to work schedules. This August, CEPD will launch a series of online, one-week “mini-courses” in marketing, finance, accounting, information systems management, leadership and supply chain management. The courses will be taught by W. P. Carey faculty.

The center also has ramped up its ability to design and deliver custom programs, with objectives and learning materials that can be tailored to specific industry and company needs, and that can be delivered on campus, at company locations, provided entirely online or in a “blended” live/online format.

The school’s professional MBA programs also have several initiatives underway. One involves a deepened focus on leadership across all of the working professional MBA programs. That includes community leadership in concert with an increased focus in the business world on corporate social responsibility.

In addition to integrating significant, new leadership components into the coursework, students, alumni and staff from all of the W. P. Carey MBA working professional programs also recently engaged in volunteering and fundraising for various local nonprofit organizations. The school also initiated annual Student Leadership Awards, with community leadership a major criteria for nomination and selection.

The school’s two other masters programs for working professionals, MSIM and MTAX, also are aligning their programs more closely to the needs of businesses. In the MSIM program, student teams work on a year-long project with a company of their choice (which, in most cases, is their employer). They analyze the competitive forces within the company’s industry, then come up with a transformation plan involving a major IT component and leveraging all the courses they’ve had in the MSIM curriculum.

“Companies see real value in the projects,” said the program’s director, Uday Kulkarni. “Some of our past projects have been actually used by companies, since the plans make specific recommendations about technology platforms, capital and revenue budgets, human resources and project rollout.”

He also points out that the program holds an executive seminar series four times a year so “Valley leaders can speak directly to students about how they are transforming their businesses.”

Similarly, the MTAX program incorporates local practitioners as instructors and seeks to maintain a cutting-edge curriculum through a rigorous annual review process that includes input from an advisory board composed of alumni and distinguished practitioners.

In many ways, the school’s challenges in increasing the accessibility and impact of its programs for working professionals are similar to those faced by companies as they strive to better serve and expand their customer base.

Arizona Business Magazine Jul/Aug 2010

University of Arizona Customized Executive Education - AZ Business Magazine Jul/Aug 2010

University of Arizona Targets Niche Markets For Customized Executive Education

The Eller College of Management at the University of Arizona has a customized executive education program that targets highly skilled professionals with advanced degrees in the industries of medicine, bioscience and engineering, and who are called upon to lead key divisions within the company.

These leaders frequently have had little or no formal training in essential business concepts and strategies. This “gap” between technical expertise and business training is widely recognized by the executives affected. Customized executive education can be designed to successfully bridge this gap, and specifically target an organization’s unique learning goals and performance objectives. The Eller College business of medicine, business of bioscience, and business of technology programs present topics and address issues specific to the client organization.

All executive education certificate programs are categorized as non-degree. Many Eller College business of medicine programs qualify for Category 1 Continuing Medical Education (CME) credit for physicians, in partnership with University of Arizona Health Sciences.

Step 1: Exploratory meetings
The director of executive education meets with the organization’s executives and key stakeholders to review the company’s strategic goals and objectives. A preliminary needs assessment facilitates a better understanding of the company’s challenges, which leads to the identification of specific learning objectives. Based on the outcome of these meetings, a proposal outlining the suggested curriculum is presented for discussion and review. Once the proposal has been refined and the contract executed, the project moves into the development phase.

Step 2: Program development

The proposed curriculum is fleshed out in detail using Eller’s 3-Cs of customized executive education development: content, context and critical mass. The content of each session, or module, must be results-driven, i.e. what action, behavioral change or deliverable is the ultimate goal? Next, how can the material be given context through embedding unique/specific corporate data, projects or activities into the module design? The third C is critical mass. The college believes that in order to effect behavioral change, or create momentum strong enough to enhance and influence actions beyond the classroom, there must be sufficient participation to create consensus, as well as critical mass within that organization.

Eller executive education programs are designed for a minimum of 15 participants and a maximum of 50. Faculty and industry experts are selected based on their formal areas of expertise, as well as specific industry knowledge or experience particularly relevant to the audience. The client’s key stakeholders or planning team collaborates with the executive education team and UA faculty in developing the curriculum. Optimal results are achieved when instructors have ready access to key personnel within the organization during the development process for purposes of discussion and feedback. Also needed is access to pertinent data and internal reports relevant to the topics covered, and the overall learning objectives of the company. To ensure confidentiality, a non-disclosure agreement is put in place at the beginning of the development process.

Step 3: Program delivery

Custom programs are a minimum of one day in length and may be considerably longer based on the needs of the organization. Typical programs consist of multiple sessions or modules, with each module being one-and-a-half days to two days in length. Classes are dynamic and participatory; attendees engage in inter-session activities and exercises designed to transfer knowledge back into the organization after formal sessions are concluded. Participants are expected to complete advance readings prior to each session, and may be asked to complete specific activities following the module or between (multiple) modules. Classes may be conducted at either of the Eller College locations in Scottsdale or Tucson, or at a client-designated facility.

Step 4: Program feedback, evaluation and review

Following the conclusion of each module, program participants and other key stakeholders are asked to complete an evaluation designed to rate the process, instructors, content and deliverables. All evaluations and feedback, both formal and informal, are jointly reviewed by the Eller executive education team and the company’s management team. Specific activities or follow-up sessions are frequently assigned at the conclusion of each module to reinforce content, action items and deliverables.

Executive education as an investment

Customized executive education is an investment in a company’s single most important asset, its people. Every company is faced with the challenge of successfully developing, motivating and retaining top employees. This applies equally to current executives and high-potential individuals who are key to the company’s future success. An investment in executive education can pay significant dividends in many different ways, whether it is adding value that visibly impacts the bottom line or one that substantively enhances a company culture that believes in promoting excellence through continuing professional development.

Arizona Business Magazine Jul/Aug 2010

Tips To Help You Get The Best Price In A Down Economy - AZ Business Magazine Jul/Aug 2010

If You’re Selling Your Business, Here Are Some Tips To Help You Get The Best Price In A Down Economy

The past 18 months have been extremely difficult for participants in the mergers and acquisitions community. Purchase and sale transactions in 2009 were at their lowest levels since shortly after the dot-com bubble burst at the beginning of this decade. The main culprit? Most observers agree that the lack of debt financing to fund (or leverage) buy-out transactions stymied deal-making in 2009. Further, valuations (or more accurately, the multipliers that drive valuations) took a nosedive as well. Finally, a general lack of uncertainty caused both potential buyers and sellers to approach any proposed transaction with a great deal of trepidation.

The result, of course, was a down market as both buyers and sellers sat on the sidelines waiting for conditions to improve. Many of the deals that did occur were fire sales (often in connection with liquidation proceedings), rather than the culmination of a well-planned and profitable exit strategy.

Although the economy is showing signs of recovery in 2010, many industries remain depressed (real estate, construction, and manufacturing, to name a few) and unemployment remains high. Many economists and dealmakers are cautiously optimistic about the future, but down in the trenches things are still very tough. As a result, a business owner who might otherwise desire to develop an exit strategy for his or her business is likely working 24/7 just to keep the business afloat. From the “glass half full” perspective, however, the depressed economy presents the foresighted owner with an opportunity to get her house in order, so that when market conditions improve she will be in the best position possible to seal a deal quickly.

You should begin preparations to sell your business at least 12 months prior to the date on which you anticipate completing a sale. If you are lucky enough to receive indications of interest in your company, you will discover quickly that selling your business is a full-time job in and of itself. However, the time demands will be much more manageable if you have properly prepared your business for sale long before you receive the first inquiry from a potential buyer.

As the owner of your company, the first thing you should do is step back for a moment and consider how indispensable you are to the business. If you take a week’s vacation, does it take you a month to get the company back on track once you return? Likewise, are you the primary contact for your company’s most significant accounts? If the answer to either of these questions is “yes” (or even a strong “maybe”), then you are in a difficult position. Buyers, especially financial buyers, generally prefer acquisition targets without significant “key man” risks. Start now to wean the company from you by developing a plan to delegate authority to other individuals and automate company operations. If you don’t, you will likely find yourself saddled with a burdensome employment or consulting agreement after the sale is complete in order to mitigate the buyer’s perception that your departure would lead to the company’s imminent demise. On the other hand, if you want to continue to work for the company after the sale, your “key man” status is a sure-fire way to ensure your continued employment.

In a similar vein, does your bottom line reflect your company’s true profitability? Put another way, once your potential buyer begins its due diligence, will it be required to restate your financial statements in order to get a true picture of the company’s cash flow, balance sheet and net income? Many entrepreneurs find it difficult to separate their personal financial situation from their company’s. Although it may be tempting to run personal expenses through the company’s books in order to obtain expense deductions, this practice often clouds the true performance of the company and can limit your return on the back end once you are ready to sell. If you have not done so already, adopt tax strategies for your company that are transparent and, above all, legal and that won’t require your buyer to do back flips in order to get a true understanding of the business’ financial position and results of operations.

Think carefully about your existing arrangements with key employees. Are they properly incentivized to stay around once the company is sold? Would it help to lock some of them into long-term employment arrangements if they are key contributors to the value of the business? On the other hand, do any employees have change of control or “golden parachute” agreements that will burden the business, or that the buyer will insist be bought out at or prior to closing? It is often best to deal with these types of issues before the rumors of a sale start circulating among the employees.

Does your company own the real estate on which its facilities are located? If so, you may want to consider spinning off the real estate to a separate company owned by you (as opposed to being owned by the operating company). Buyers often do not want the real estate associated with an operating business unless the property has some strategic value. As such, much time and effort often is spent detaching the real estate from the operating business as part of the acquisition transaction. This process can be tedious and time consuming, as it requires new title insurance commitments, appraisals, or assignment or renegotiation of financing arrangements. Also, if your business is a corporation, there are very good tax reasons to transfer ownership to a non-corporate entity. Finally, the real estate component of the transaction can also be another source of income for the owners through the negotiation of a valuable long-term lease of the facility to the buyer.

As you begin to consider a sale, be sure your company is properly positioned from a tax standpoint. Sit down with your tax adviser and discuss the tax ramifications resulting from either an asset sale by the company or a sale of the equity by the owners. Generally (for tax and other reasons), buyers prefer asset sales and sellers prefer equity sales. Further, the legal treatment of a transaction often does not coincide with how the transaction is treated for tax purposes. For example, to meet both buyer and seller preferences, an equity sale for state law purposes can be treated as an asset sale for income tax purposes. While a full discussion of income tax treatment is beyond the scope of this article, it is imperative to involve your tax adviser as early in the sales process as possible, and it may be well worth the time and upfront costs to restructure your business now in a manner that best positions the business from a tax standpoint for a potential future sale.

Make sure there are no skeletons in your closet before you commence negotiations with your buyer. Do you have audited financial statements for your business? If not, consider engaging a certified public accountant to conduct an audit of your company as of your most recent fiscal year, or at the very least take steps to put the company’s financial affairs in order so that an audit can be conducted quickly later. Most buyers (or the lender providing the financing to the buyer for the acquisition) will require at least one full year of audited financial statements. An audit requires a thorough review and cross-check of the company’s books and records, and will likely result in certain additional management controls being put in place for your business. These controls may be outside the norm of the company’s historic business operations, but will likely result in increased efficiencies once implemented.

In addition to getting your financial records up to speed, you should also prepare for the legal due diligence review that the buyer (and its lender) will conduct of your business. Make sure your contractual relationships are all documented and well organized. Do you operate with “handshake” agreements? If so, take the time to enter into written, legally-binding agreements with your vendors and customers, even if these agreements are fairly simple. Also, make sure none of your important agreements is set to expire shortly before or after the time you expect the transaction to close. By renegotiating expiring contracts now you may be able to take the buyer out of the negotiation process later on. Documenting or renegotiating contracts will take the concerted effort of your management group, including all employees who have authority to enter into contracts, as well as the assistance of legal counsel. Remember that the only thing worse than an unwritten agreement is a written agreement that does not actually reflect the agreement or course of dealing between the parties.

Finally, if you have not already done so, consider preparing a procedures manual for your business and engaging an attorney to prepare an employee handbook and significant company policies. The existence of well-drafted manuals, handbooks and policies will give your business credibility and make the transition to new ownership less difficult. You should do this well in advance of closing to give your management team and employees adequate time to adjust to any new procedures or protocols that may need to be implemented.

Like the financial markets in general, potential business buyers crave certainty and stability in an acquisition target. Engaging in the preparation and organizational exercises described above will go a long way toward injecting stability in your company, which in turn will instill confidence in your buyer and enable you to negotiate the best price possible for your business.

Arizona Business Magazine Jul/Aug 2010

CEO Series: Kathleen H. Goeppinger - AZ Business Magazine Jul/Aug 2010

CEO Series: Kathleen H. Goeppinger

Kathleen H. Goeppinger, Ph.D.
President and CEO, Midwestern University

How did the recession affect Midwestern University’s enrollment and course offerings?
It’s a very interesting thing, but when a student is ready to make a career choice, we’re finding that more and more want to go into health care, because it’s one of the professions – whether it be medicine or dentistry or occupational therapy – that they know is always going to be needed in the future. So, instead of having a concern about our enrollments, the application pool and the applicants is so high right now that our toughest job is deciding who we can admit. It’s pretty much the reverse of the industries that I know of around the Valley.

What kind of feedback are you getting from business leaders in terms of what they need from Midwestern’s course offerings?
One of the tough things that we are always doing is looking very strategically at the health care needs of all of the communities that we serve. We spend a great deal of time analyzing and looking at what’s needed next. In many times, we’ll start an academic program to meet a shortage within the state. A great example is nurse anesthesia. We began the nurse anesthesia masters program in the College of Health Sciences because the local hospital CEOs came to us and said, We can’t recruit; there’s not enough here in the Valley; we absolutely have to have a program. So we have responded to the community need, the hospital need, and even the general health care need when we’e gone ahead and started new programs.

What are some of the challenges and trends facing private universities such as Midwestern?
I’ve been the president and CEO now for 15 years. And in those 15 years, while sometimes challenges may change because student expectations might be a little different, curriculums change, but I don’t know if I see any of the core values of running a higher education university different today than I did 15 years ago. I think sometimes we have to be a little more aware of the academics around us. We have to be a little more sensitive to the students who come in – not with the same background that I might have had when I was a college student or a graduate student. But I think for the most part, the core values of who we are and how we serve the community have never really changed.

What skills are needed to be an effective C-level executive at a private university?
I think people who want to be in leadership roles have to be very willing to carefully listen to others and not be the one to talk, but be the one to listen and understand people’s needs, to be able to give them coaching and direction. The other thing I would say (to people) looking to get ahead in their career is to never be afraid of the numbers. I have had people who have worked for me say, “I can’t understand the numbers.” Well, I think that you have to understand the numbers and you have to make sure you have a great understanding of the financial part of an organization and how does it grow and what do the numbers say to you. I’ve always told people here that you can’t manage what you can’t measure. So, if you can measure it and understand it and set up clear objectives, you then can be very effective.

Vital Stats

  • Appointed president and CEO of Midwestern University in 1995
  • Member of the university’s board of trustees since 1985
  • From 1985 to 1995 served as professor and director of the Center for Organization Development at Loyola University Chicago
  • Worked at Carson Pirie Scott & Co. from 1966 to 1985
  • Received the Corporate Citizen of the Year Award from the Glendale Chamber of Commerce in 1999
  • Received the Excellence in Osteopathic Medical Education award from the Arizona Osteopathic Medical Association in 2003
  • www.midwestern.edu

Arizona Business Magazine Jul/Aug 2010

Celebrity City, AZRE July/August 2010

Mixed-Use: Celebrity City


CELEBRITY CITY

Developer: Old World Communities
General contractor: TBD
Architect: CCBG Architects
Location: 
 NWC 32nd & Van Buren streets, Phoenix
Size: 1.3 MSF

The 10-year, multi-phased plan calls for 640 residential units within five multi-story buildings; an 820-room hotel; 177,000 SF of retail space; and 380,000 SF of office space within two mid-rise towers. Construction is estimated to begin in the latter part of 2010 or 2011.

AZRE July/August 2010

Multi-Family Market - AZRE Magazine July/August 2010

Multi-Family Market: Its Recovery And What It Means

In this article, Allie Bell takes a look at the recovering multi-family market and what it means for Arizona.

Finding something “hot” in today’s commercial real estate industry is difficult, but as the residential market begins to recover, so does Arizona’s multi-family sector.

Multi-Family Market - AZRE Magazine July/August 2010“The Metropolitan Phoenix multi-family market is emerging from a 12-quarter downturn, which produced the lowest occupancy since the days of the Resolution Trust Corporation,” says Tyler Anderson, vice chairman of CB Richard Ellis’ Multi-Family Institutional Group in Phoenix.

According to M/PF Research, a national apartment survey firm, apartment occupancy nationwide declined about 3 percent in 2008, but leveled off in 2009. Annual rent change declined less than 1 percent in 2008, but fell more than 4 percent in 2009. “Rents across the country are anticipated to drop a bit more in 2010,” Anderson says, “but occupancy appears to have turned the corner as new construction tails off .”

Mike Sandahl, senior vice president of CBRE’s Multi-Family Private Client Group in Tucson, says Tucson’s multi-family market still experienced a steep decline in sales in 2009, despite government-sponsored enterprises (GSEs) keeping liquidity in the market.

Only one project over 100 units sold, and it was sold at a trustee sale,” he says. “However, since the beginning of 2010, there has been renewed momentum in the marketplace. Sales volume has picked up, dominated by over-leveraged properties that have gone back to the lender.”

Multi-Family Development

“There is no new multi-family development activity going on and there doesn’t appear to be any on the horizon, which is both bad and good,” says David Dewar, a principal at Trillium Residential.

However, recovery of the multi-family market is imminent, says Ron Brock Sr., who is the president and CEO of Pierce-Eislen, a local apartment research firm.

We currently have eight properties in Phoenix under construction, and they will all finish this year with nothing else in the pipeline,” he says. “However, Phoenix has traditionally had one of the highest-rated development markets in the country for population — and that’s not going to change.” He adds that the multi-family market will begin its recovery in the latter part of this year, and take on substantial momentum over the next two years.

Market fundamentals in Tucson are showing signs of stabilization, Sandahl says. Occupancy has stopped its steady decline and rental rates appear to be following suit.

Construction in Tucson has remained in-check for the past seven years, sparing the multi-family market from the negative effects of overbuilding.

He noted that when it comes to construction in 2010, there are several properties in Metro Tucson potentially breaking ground this summer — a 330-unit community on the East side, a 300-unit property in the Northwest Central submarket, a 120-unit complex on the West side of town, and 168 units in the far Northwest.

“Overall, development continues to be very cautious,” says Brad Cribbins, senior vice president of the Southwest-Mountain Region for Alliance Residential. “People are very cautious about how to proceed forward, but we will see a very slow emergence into new development over the next 18 to 36 months.”

Investment Review

“The investment market nationally has picked up,” says Brad Goff, principal of Apartment Realty Advisors. “Our market in Phoenix saw only 17 trades in 2008 with more than 100-units, but in 2009 that doubled to 35. … It seems like the rest of the country is a year behind Phoenix — none of the other marketplaces have taken off like Phoenix has in terms of sales volume.”

Anderson agrees. Compared to other major commercial property sectors, multi-family looks very good at present, he says. One of the advantages in multi-family is that lease terms are relatively short, which means revenue can turn quickly after occupancy bottoms.
“The major challenge facing investors today is increased competition from other investors, who are seeking to take advantage of price levels not seen in Metro Phoenix for years,” Anderson says.

Brock reported that Greater Phoenix hit a floor in prices this past year and is holding up fairly well, which resulted in a lot of investment activity with people buying apartments that were previously waiting on the sidelines.

“It’s a very attractive time for multi-family investment as properties have been discounted substantially in most markets,” he says. “Certain areas like Phoenix, Las Vegas and Florida have some substantial reduction in prices, compared to what they were in 2003 and 2007, when there was also a lot of activity.”

He noted that Metro Tucson has not had the same amount of investment activity as Phoenix, as there has not been a great deal of condominium conversion activity or over development in the area.

Anderson says the Phoenix area also is experiencing some capitalization rate compression, as a result of the wide and deep interest in the area’s multi-family offerings among many investor groups.

“Some of the buildings sold in the last month or so were at sub 6 percent cap rates,” Goff says. “That’s a significant change from the 8, 9 and 10 percent rates we’ve seen previously. … I call it a ‘scarcity premium,’ created by the enormous amounts of demand chasing a limited piece of the market.”

Cribbins says, “Today people are purchasing notes, rather than the assets themselves. Right now, development costs don’t produce the yields owners are after, so the investment market influence is for bank notes versus new builds.”

Multi-Family Market - AZRE Magazine July/August 2010He adds that most investors in the Greater Phoenix marketplace are looking at corridors within the Camelback, Tempe and Scottsdale areas. “The demographics are there, as well as the general basic footprints in terms of a healthy multi-family market, so deals are happening,” he says.

When it comes to the types of property classes investors are targeting, Brock explains that, “Investment is like a thumbprint — each investor has their own view of what they want to pursue.” He adds that most of the activity in the Phoenix market is in the upper-end properties in the Class A and high Class B categories. However, buyers and sellers are having trouble capitulating over price points. As for Class C multifamily properties, Brock says those have been hit the hardest with the employment losses.

Sandahl noted that nationwide — no one product type is preferred, as there is strong investment demand across all asset classes.

Southwest College of Naturopathic Medicine, AZRE July/August 2010

Medical: Southwest College Of Naturopathic Medicine


SOUTHWEST COLLEGE OF NATUROPATHIC MEDICINE

Developer: Southwest College
General contractor: Kitchell Contractors
Architect: [merz]project
Location:
2164 E. Broadway, Tempe
Size: 15,000 SF

The $1.9M medical campus renovation began construction in April and finishes in November. The project will transform part of the 25-year-old corporate office complex into a medical haven. Phase I includes a 40,000 SF renovation with 6 classrooms, retail pharmacy and community outreach clinic.

AZRE July/August 2010
Goodyear Complex - AZRE Magazine July/August 2010

Goodyear Complex: Successful Teams In Baseball And Construction

Goodyear Complex

Building stadiums in the Arizona desert requires unusual strategies to overcome resource, schedule and environmental challenges. Goodyear Complex, the new spring training center for the Cleveland Indians and Cincinnati Reds, is a case in point.

Elemental Challenges

Water supply was a concern. The 100-plus acres of grass for fields, parking lots and common areas require about 100,000 gallons of water per day for site maintenance and aesthetics. During pre-construction, the project team determined that a 3-million-gallon lake, located between the two developments, would meet requirements. The lake uses reclaimed and potable water sources, and includes a 1200 GPM pump system.

Unexpectedly, drenching rainstorms resulted in 20 lost workdays. To recover lost time and limit overtime costs, the general contractor for the project, Barton Malow, stacked more trades throughout the site and had key subcontractors bring in additional crews.

The project team experienced varying soil conditions. For instance, while excavating the ballpark bowl, Barton Malow hit caliche — a concrete-like material — at the footing locations for the main retaining walls. Excavation required use of jackhammers and hole rams to drill through the caliche and install footings.

Granular sand located at the Indians’ dugout and at random areas around the bowl created unstable barring areas. With the soils engineer, the building team removed the granular sand, and replaced it with a sand-slurry mix. More than 100 cubic yards of material were removed and replaced, with minimal schedule impact.

Spring training facilities are usually sodded, but Goodyear was “sprigged.”  Defined as plugs of grass taken from sod, sprigs minimize the logistics, schedule and cost issues associated with sod. This method results in flatter fields, improving player safety, and in this case, resulted in savings of approximately $500,000.

Successful teams – in baseball and construction – demonstrate collaboration and creativity. Here, the City of Goodyear, baseball clubs, architect, subcontractors, vendors and builder worked with a single purpose — and though the project was set in a challenging environment, the construction process flourished.

Goodyear Sports & Recreation Complex

Developer: Rose Development
Contractor: Barton Malow Company
Architect: Populous (formerly HOK S+V+E)
Size: 42,873 SF

Construction began on the $80 million ballpark and development complexes for the Cleveland Indians and the Cincinnati Reds in September 2007, and finished in January 2009. During the off-season, the 10,000-seat, open-air ballpark’s patios and party decks are available for holiday festivals, arts and craft shows, concerts, weddings and other private and public events. The ballpark is anchored by the main home plate building, which rises three stories. A team shop, restrooms and concessions occupy the ground floor, suites are on the second floor, and an 80-person party deck is on the third level. The two-story, right-field building has a party deck with a bar on top; and a lower level opening to the ball field that houses two clubhouses, a batting tunnel and laundry facilities.

The Spring Training facilities includes major and minor league clubhouses, locker rooms, coaches’ offices, weight training room, physical and hydrotherapy rooms, indoor/outdoor batting cages and team/public parking as a part of the 150-acre site. The property includes two half fields and six full practice fields, including a replica of Jacobs Field in Ohio.

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Written by Arthur Perkins, LEED AP, who is the Western Region vice president for Barton Malow Company.

www.bartonmalow.com

Reprinted with permission.

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AZRE Magazine July/August 2010

Green Building - AZRE Magazine July/August 2010

Green Building Is A Smart Business Solution

Green building is inevitably a smart business solution.

When it comes to the bottom line, companies that want to be in the black — go green. As building owners, developers, brokers and designers, the industry is trying to re-define how they do business to stay in business, and it is vital that these efforts align with the paradigm toward green building.

Existing assets — empty buildings, existing properties with leases expiring, etc. — may be the most marketable commodity right now. Building owners should look at new ways to use this economic downturn as an opportunity, and not a road block. By incorporating four simple measures, owners and developers can reposition their real estate assets to be more marketable — a concept better known as real estate asset positioning (REAP).

GOING GREEN – GREEN BUILDING

Invest in sustainable strategies. A building that can call itself “green” is much more marketable than one that lacks environmentally conscious attributes. Leading organizations are demanding green designs, while employees increasingly view sustainability as a corporate responsibility. In fact, a Harris Poll found that 33 percent of Americans would be more inclined to work for a green company, than one that did not make a conscious effort to promote sustainable practices.

Daylighting, shading, varied glass types and occupancy sensors are just a few strategies that have demonstrated a quantifiable Return On Investment (ROI), and are proven to benefit occupant health and well-being. Furthermore, increased building value and elevated rents often have been cited as benefits of green buildings, according to Turner’s 2008 Green Building Market Barometer. Going “green” is a great way for building owners to leverage their assets for strategic market repositioning.

ENERGY REDUCTION

Incorporate measures to reduce consumption by investing in sustainable strategies that are efficient in their use of water, energy and other resources. Examples include using low-flow plumbing fixtures, high-efficiency lighting and air quality monitoring.
Out of 754 commercial real estate executives surveyed, Turner’s report found:

  • 84 percent of respondents cited lower energy costs in green buildings
  • 68 percent noted overall operating cost savings
  • 72 percent say green creates higher building values

Sundt Construction, currently in the process of realizing a lab building for an Arizona university, conducted energy consumption metrics showing the cost to provide occupancy sensors for a 294,000-square-foot building would be $15,598. The owner’s savings for the first year were estimated at $29,905 — a noticeably fast payback on an initial investment.

Building owners and some tenants also may receive tax deductions of up to $1.80 per square foot if they install energy-efficient interior lighting; upgrade the building envelope; and install heating, cooling, ventilation and/or hot water systems to reduce energy consumption by 50 percent, in comparison to meeting minimum ASHRAE 90.1 requirements.

MARKET DRIVEN

Focus on looks and extras. When it comes to attracting the best tenants in today’s real estate market, there has never been a more prudent time to assess an existing building’s worth.

Upgrading and retrofitting 40-, 20- and even 10–year-old buildings during this economic downturn can result in significant cost savings, as the current market experiences up to a 30 percent drop in construction costs.

New lobbies and entries, updated restrooms and elevators will attract potential tenants and retain existing ones, who may be considering relocation. Providing additional amenities to elevate an existing building to Class A office space provides the competitive edge necessary to exist in the new, highly competitive marketplace.

In addition, envelope and exterior skin upgrades from Low-E insulated glazing units to new, longer lasting and maintenance-free, environmentally friendly materials will enhance the building’s appearance, as well as its internal support systems.

By incorporating aesthetic upgrades and modernizations to reposition assets, a building’s life can be extended well beyond its initial years.

ADAPTIVE REUSE

Innovate. It’s easy to envision an existing historic structure retrofitted into a modern, trendy boutique hotel. However, it takes a creative mind to realize that a brand new, empty, speculative high-rise office building has that same potential.

The real estate is there — it’s a matter of incorporating flexibility into the process of assessing the market’s changing demand. Introducing a new function or use into an existing asset, based on what the market is saying, is a cost-effective way to extend the longevity of a building and exceed the ROI on existing real estate.

What better way to “go green” than to recycle and re-use an existing building?
As asset repositioning — or REAP — continues to catch on, the value of revitalizing existing buildings is becoming paramount to how the economy will affect the design and construction industry in Arizona for the next 10 to 20 years. Understanding the market demand and how it affects an existing asset is the first step. Secondly, developing an analysis of the property may be the most viable way to determine its future potential — whether it makes sense to update, retrofit or green-up, the possibilities are infinite.

This is not a new practice, just a smart one that will provide ongoing opportunity for those willing to take the plunge and invest in what already exists. Let’s REAP the benefits together!

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Martha Abbott is an architectural senior project manager for the Workplace Studio of SmithGroup’s Phoenix office, with 20 years of experience.

www.smithgroup.com

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AZRE Magazine July/August 2010

Adaptive Reuse - AZRE Magazine July/August 2010

Waste Not Want Not – Successful, Sustainable Adaptive Reuse

Adaptive Reuse

In this economy, it isn’t surprising that everyone is looking to get more for less. Whether you are an owner, representative or a member of the commercial real estate industry, the importance of delivering value has never been greater. Naturally, clients are looking to reduce cost per square foot, but they are also searching for more value in that square footage by making their spaces more efficient and reducing energy costs. Adaptive reuse of an existing building can be a viable marriage of these philosophies, for companies and brokers alike.

According to the Urban Land Institute (ULI) and PricewaterhouseCoopers’ 2010 Emerging Trends in Real Estate report, projects of the future are trending toward “infill, urbanizing suburbs and transit-oriented development.” The populace is looking for convenience, shorter commutes and reduced energy expenses — at home, in their vehicles and in their businesses.

Applications

Tina Burger, a principal at Excel Commercial in Scottsdale, agrees with the report and points to the Scottsdale Airpark area as a good example of these trends, and how they can affect redevelopment and reuse. Burger is on the Scottsdale Airpark Advocacy Subcommittee, and assists both the Chamber and the City of Scottsdale with their General Plan on redevelopment. In the Scottsdale Airpark area, she says there is a vast amount of vacant, functionally obsolete space that could be sustainably adapted to accommodate a variety of tenants. The Advocacy Subcommittee is working toward a plan for the Airpark area that provides a roadmap for development.

Using an existing structure, as opposed to building new, is a sustainable solution. From an environmental vantage, there is an opportunity to reduce waste in construction and be more efficient with the space. This efficiency can be realized by utilizing sustainable design philosophies and innovative products.

Finding the Right Space

When exploring adaptive reuse, it is important to keep a few things in mind:

  • Appropriate space selection is vital to achieving success.
  • Warehouses and big box retail spaces can provide valuable flexibility, and accommodate a variety of functions and amenities.
  • Look for types of facilities that provide ample ceiling height and large floor plates.

From a design perspective, high ceilings allow for ease of installing and maintaining building systems by providing several feet of space above the ceiling. This extra space enables the mechanical ducts, plumbing lines and light systems to be stacked, instead of being packed into a more typical space of only about 18 to 20 inches. This allows for less expensive maintenance and increases the space’s flexibility.

Conversely, ceiling height may be an acoustical challenge for open work spaces, private offices or conference rooms in which noise will be a distraction. However, several design techniques are available to mitigate these issues. Interior designers and space planners work with individuals and firms to position heavily trafficked areas away from conference rooms and private offices. Individual work spaces can allay these issues by installing clouds, or lower hanging acoustical tiles, to reduce noise and increase privacy without compromising the collaboration that open-office plans seek to nurture.

Buildings that lend themselves to reuse:

  • Warehouses
  • Theaters
  • Cafeterias
  • Large retail centers

Property types with larger floor plates allow for greater flexibility, and the potential for a larger benefit from expert space planning. Work stations can be planned in the most beneficial and efficient layout for the client. Critical relationships between staff can be placed together in a neighborhood, while communal areas such as copy rooms, break rooms and restrooms can be centralized. These layouts reduce waste through unnecessary duplication of services, and allow for future office reconfigurations that do not require demolition.

Designing Spaces

When choosing to adapt a large space, it is important to create appropriate degrees of scale for the comfort of users. By designing and planning effective lighting, ceiling treatments, furnishings and color finish palette, these adapted spaces can provide creative, inviting, comfortable meeting and work spaces on an appropriate scale for large and/or small groups.

Lack of natural daylighting is an obstacle to overcome when adapting an existing space. Those concerned with energy efficiency and productivity understand the importance of natural daylight. To increase daylighting, additional windows, skylights or solar tubes can be installed. Solar tubes increase the amount of daylight that can be introduced deep into a structure’s interior. New technologies may also be incorporated into existing windows, to reflect light deeper into a space while avoiding glare. This technique’s effectiveness may be increased by incorporating a white ceiling during the conversion.

On the other hand, should the desired end result of adapting a structure be a computer training classroom, a worship center or a theater — the lack of natural daylighting available in a warehouse or large retail center may be a positive, money-saving advantage.

Another added benefit of big box retail and warehouse adaptation is the increased floor load capacity. This can provide for further flexibility, particularly for computer-intensive businesses, or the incorporation of amenities such as a fitness center or rock-climbing wall.

Green Spaces

Although some adaptive reuse spaces provide adequate electrical loads and HVAC capacity, it is not unusual to have to add additional capacity. This upgrade process is an ideal time to install equipment that will improve indoor air quality, increase electrical efficiency or add photovoltaic collectors. These steps can decrease energy expenses and, according to a response included in ULI’s report, will “’fetch a bigger price than comparable space without green features” when owners choose to sell. Choosing to have an adapted space certified by the U.S. Green Building Council is objective verification that the space stands apart, offering energy efficiency and heightened productivity.

Burger agrees, adding, “The biggest reason for an owner to upgrade their property is to preserve the asset’s value today and in the future.” Many energy-efficient upgrades have reasonable payback periods.

An organization’s culture also is a significant factor in choosing to adapt an existing building. A site might be chosen for its historical significance, location or prestige. Other institutions appreciate the anonymity that an adapted building can offer, while other owners may need a larger space and chose to reuse rather than rebuild.

There are many reasons to choose adaptive reuse and, if done wisely in partnership with a design professional, such a choice can be cost-effective, sustainable and successful.

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Article written for AZRE by H. Joshua Gould, AIA, LEED AP,  who is the chairman and CEO of RNL; and Carl Price, AIA, LEED AP, who is a principal at RNL. www.rnldesign.com

www.pwc.com
www.scottsdaleaz.gov
www.uli.org

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AZRE Magazine July/August 2010

South Shore, AZRE July/August 2010

Mixed-Use: South Shore


SOUTH SHORE

Developer: Nautica Development Group Ltd.
General contractor: GCON Inc.
Architect: Berkus Design Studio
Location: 
 Arizona Ave. & Lake Dr., Chandler
Size: 657,000 SF

A mixed-use, lakeside development slated to include 186,568 SF of Class A office space; a 95,256 SF hotel with 150 rooms and meeting space; 28,805 SF of restaurant space; 65,108 SF retail shops and 41 residential loft units.

 

AZRE July/August 2010
Girl Scouts Camp Sombrero, AZRE July/August 2010

Other: Girl Scouts Camp Sombrero


GIRL SCOUTS CAMP SOMBRERO

Developer: Girl Scouts Arizona Cactus-Pine Council
General contractor: TBD
Architect: Marlene Imirzian & Associates
Location:
16th St. & Dobbins Rd., Phoenix
Size: 37,900 SF on 14 acres

The camp is currently raising funds to reach projected development costs of $14M. The Girl Scouts organization hopes to begin construction in 2012. Plans include new buildings and major site amenities such as an archery range, large amphitheater and fire rings, splash pad, climbing tower, low ropes course, tent sites, zip line, labyrinth and large multi-purpose field.

AZRE July/August 2010
Surprise Medical Plaza, AZRE July/August 2010

Medical: Surprise Medical Plaza At The City


SURPRISE MEDICAL PLAZA AT THE CITY

Developer: Ensemble DevMan of Arizona
General contractor: Low Mountain Construction
Architect: Matthew Budge Associates Architects
Location: SWC of Litchfield Rd. and Statler Blvd., Surprise
Size: 35,400 SF

The $8M medical office building in Surprise will be 2 stories and will beanchored by a 20,000 SF suite occupied by a Banner Health primary care practice, women’s health group, urgent care center and imaging center. Completion is expected by 1Q 2012.


AZRE July/August 2010
Tenant Improvement - AZRE Magazine July/August 2010

Tenant Improvement Projects Showcase Extraordinary Design

Tenant Improvement

Tenant improvement projects happen every day, but some stand out from the rest with their brilliant, unique design. Three such projects have been completed over the past year in the Valley — transforming not only their buildings, but the neighborhoods and communities in which they stand.

Blasts from the Past

A couple of years ago, The Parlor Pizzeria in Phoenix was an abandoned beauty shop. Today, thanks in part to Navin Pathangay of Pathangay Architects, it’s a pizzeria designed around the building’s history — even though it was rebuilt from the ground up.

“There were only two existing walls,” Pathangay says. “We threw the whole thing out, but we tried to keep the design as authentic as possible.”

Not far away, The Vig tavern opened its second location in April. The retrofit facility is an old bank structure originally designed in the late 1960s and early 1970s. Peter Koliopoulos of Circle West Architects says they tried to accentuate the unique qualities of the building in their design — such as the vault, which they uncovered behind old drywall. Koliopoulos calls the vault, which became the bar of the restaurant, “a jewel within the space.”

In nearby Tempe, an entrance of Arizona Mills Mall has been remodeled to include a walk-through aquarium. According to Project Manager Andrew Abernathy of The Architecture Co., the entry originally looked like all the others with a unique paint scheme, but was based on a common design vocabulary.

Design Evolution

The first decision to be made when taking on such large, retrofit projects as these is to select the best construction materials for the job. Pathangay and Koliopoulos both opted for the sustainable option.

“We tried to reuse everything we could,” Pathangay explains. However, they were unable to save the original floor boards because of complications with the underground plumbing. Despite site challenges requiring them to pour new concrete, the builders were able to reuse the undamaged wood in other areas of the project.

Koliopoulos also was able to incorporate reused wood products in The Vig’s retrofit, most of which were recycled wood that had been abandoned by subcontractors. “Our goal is always to use sustainable materials,” he notes.

He also tried to leverage natural daylight as much as possible to, “accentuate the spaces and reduce the electrical load.”

For the aquarium, Abernathy says the most significant construction materials used were metal framing and drywall for projects such as the metal canopy over the entry, which was designed in a “wave” to create an ocean motif. The floors have epoxy finishes with contrasting chips to enhance their appearance. In fact, a lot of the space uses special theming finishes of wood, fiberglass and concrete, “to create rock and masonry effects in the attraction displays,” Abernathy explains.

Challenging Concepts

When describing their tenant improvement projects, all three architects recall logistical challenges being the most complicated.

“We had parking and sign issues,” Pathangay says. Koliopoulos also remembers parking issues, which he solved by adding a valet concept to the restaurant.

“Parking is always a concern,” he adds. However, Koliopoulos noted that the bigger challenges came from utilizing unusual aspects of the existing structure. “The building had a drive-through teller window for the bank facility,” he explains. The drive through ultimately became a covered outdoor area, benefited by the shade provided by the existing roof.

Encountering unusual property elements in retrofits are not the only challenges for architects. Small spaces can create large problems, depending on the scale of a property’s renovation. The logistics of having excavation, concrete pours, pipe installation, drywall construction and sprinkler pipe fitting all being done at the same time, in a very limited construction space, contribute to the difficulties of a project’s completion.

The aquarium was completed in nine months, with demolition beginning in late September 2009 and the grand opening taking place in May. The Vig also had a quick turnaround, with design beginning in July 2009 and construction being completed in April.

Only Pathangay describes a lengthy process for The Parlor’s transfiguration. His firm took on the project in late 2007, and were the fifth architecture firm to tackle the redevelopment. The design process took eight months, and the restaurant did not open until March 2009.

In the end, though, all three tenant improvement projects were successful. While the architects who designed these extraordinary retrofits certainly deserve a round of applause, they give credit to the rest of the teams involved for the finished product’s resulting success.

“As architects, we can design a beautiful structure,”  Pathangay says, “but the soul of the building only happens with other factors — like the location and atmosphere.”

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www.aia-arizona.org
www.architecturecompany.net
www.circlewest.net
www.pathangayassociates.com

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AZRE Magazine July/August 2010

Sol Casinos Hotel and Convention Center, AZRE July/August 2010

Hospitality: Sol Casinos Hotel and Convention Center


SOL CASINOS HOTEL & CONVENTION CENTER

Developer: Pascua Yaqui Tribe
General contractor: McCarthy Building Companies
Architect: Leo A. Daly
Location: 
 5655 W. Valencia Rd., Tucson
Size: 44,500 SF

The convention center will add 215 luxury hotel rooms to the market, along with a 14,000 SF multi-functional ballroom. The expanded facility will include a steakhouse, an international buffet, a lobby lounge and bar, fully equipped exercise facility with full-service spa, outdoor pool and sundeck, and a 1,120-car multi-level parking structure. Construction began in March and is slated to finish fall 2011.

AZRE July/August 2010
Asset Repositioning - AZRE Magazine July/August 2010

REAP What You Sow: The Benefits Of Asset Repositioning

When it comes to the bottom line, companies that want to be in the black — go green. As building owners, developers, brokers and designers, the industry is trying to re-define how they do business to stay in business, and it is vital that these efforts align with the paradigm toward green building.

Existing assets — empty buildings, existing properties with leases expiring, etc. — may be the most marketable commodity right now. Building owners should look at new ways to use this economic downturn as an opportunity, and not a road block. By incorporating four simple measures, owners and developers can reposition their real estate assets to be more marketable — a concept better known as real estate asset positioning (REAP).

Going Green

Invest in sustainable strategies. A building that can call itself “green” is much more marketable than one that lacks environmentally conscious attributes. Leading organizations are demanding green designs, while employees increasingly view sustainability as a corporate responsibility. In fact, a Harris Poll found that 33 percent of Americans would be more inclined to work for a green company, than one that did not make a conscious effort to promote sustainable practices.

Daylighting, shading, varied glass types and occupancy sensors are just a few strategies that have demonstrated a quantifiable Return On Investment (ROI), and are proven to benefit occupant health and well-being. Furthermore, increased building value and elevated rents often have been cited as benefits of green buildings, according to Turner’s 2008 Green Building Market Barometer. Going “green” is a great way for building owners to leverage their assets for strategic market repositioning.

Energy Reduction

Incorporate measures to reduce consumption by investing in sustainable strategies that are efficient in their use of water, energy and other resources. Examples include using low-flow plumbing fixtures, high-efficiency lighting and air quality monitoring.

Out of 754 commercial real estate executives surveyed, Turner’s report found:

» 84 percent of respondents cited lower energy costs in green buildings

» 68 percent noted overall operating cost savings

» 72 percent say green creates higher building values

Sundt Construction, currently in the process of realizing a lab building for an Arizona university, conducted energy consumption metrics showing the cost to provide occupancy sensors for a 294,000-square-foot building would be $15,598. The owner’s savings for the first year were estimated at $29,905 — a noticeably fast payback on an initial investment.

Building owners and some tenants also may receive tax deductions of up to $1.80 per square foot if they install energy-efficient interior lighting; upgrade the building envelope; and install heating, cooling, ventilation and/or hot water systems to reduce energy consumption by 50 percent, in comparison to meeting minimum ASHRAE 90.1 requirements.

Market Driven

Focus on looks and extras. When it comes to attracting the best tenants in today’s real estate market, there has never been a more prudent time to assess an existing building’s worth.

Upgrading and retrofitting 40-, 20- and even 10–year-old buildings during this economic downturn can result in significant cost savings, as the current market experiences up to a 30 percent drop in construction costs.

New lobbies and entries, updated restrooms and elevators will attract potential tenants and retain existing ones, who may be considering relocation. Providing additional amenities to elevate an existing building to Class A office space provides the competitive edge necessary to exist in the new, highly competitive marketplace.

In addition, envelope and exterior skin upgrades from Low-E insulated glazing units to new, longer lasting and maintenance-free, environmentally friendly materials will enhance the building’s appearance, as well as its internal support systems.

By incorporating aesthetic upgrades and modernizations to reposition assets, a building’s life can be extended well beyond its initial years.

Adaptive Reuse

Innovate. It’s easy to envision an existing historic structure retrofitted into a modern, trendy boutique hotel. However, it takes a creative mind to realize that a brand new, empty, speculative high-rise office building has that same potential.

The real estate is there — it’s a matter of incorporating flexibility into the process of assessing the market’s changing demand. Introducing a new function or use into an existing asset, based on what the market is saying, is a cost-effective way to extend the longevity of a building and exceed the ROI on existing real estate.

What better way to “go green” than to recycle and re-use an existing building?

As asset repositioning — or REAP — continues to catch on, the value of revitalizing existing buildings is becoming paramount to how the economy will affect the design and construction industry in Arizona for the next 10 to 20 years. Understanding the market demand and how it affects an existing asset is the first step. Secondly, developing an analysis of the property may be the most viable way to determine its future potential — whether it makes sense to update, retrofit or green-up, the possibilities are infinite.

This is not a new practice, just a smart one that will provide ongoing opportunity for those willing to take the plunge and invest in what already exists. Let’s REAP the benefits together!

Martha Abbott is an architectural senior project manager for the Workplace Studio of SmithGroup’s Phoenix office, with 20 years of experience.

For more information about SmithGroup or asset repositioning, visit smithgroup.com.

AZRE Magazine July-August 2010

Green Awards - AZRE Magazine July/August 2010

BIG Green Awards: Commercial Green Building Award

Twelve categories, hundreds of nominations — but only one will take home the green. It’s the first annual Southwest Build-it-Green Awards, where BIG teamed up with the USGBC to bring you the leanest sustainable leaders and projects in Arizona.

An in-depth glance of the winning real estate projects is listed below, followed by a list of the additional winners and finalists.

Commercial Green Building Award

Winner: Museum of Northern Arizona Easton Collection Center

Green Awards - AZRE Magazine July/August 2010Owner: Museum of Northern Arizona
General Contractor: Kinney Construction Services
Architect: Roberts | Jones and Associates
Completed: June 2009

Recognized for being an exemplary public green building, the 17,282-square-foot sustainable repository houses thousands of objects comprising the anthropological, biological and fine art collections of the Flagstaff museum. Architects Jim Roberts of Roberts | Jones and Associates and Project Manager Mike Thomas of Kinney Construction Services (KCS) approached the project with LEED Platinum Certification in mind.

Green Awards - AZRE Magazine July/August 2010Green strategies included appropriated solar orientation; exterior walls, key interior walls and floors constructed of high-thermal mass materials; extensive use of insulation; energy efficient heating and cooling systems; energy efficient window systems; extensive green living roof system; water conservation plumbing systems; sustainable landscaping; day-lighting and a 13 kW photovoltaic array roof installation. The Museum of Northern Arizona has a “green power contract,” under which 50 percent of all electricity purchased for the building will come from renewable sources.

The building was constructed of locally manufactured masonry, stone and concrete, produced from locally-extracted materials. Exterior wood siding is reclaimed lumber from a decommissioned railroad trestle in the Great Salt Lake area. Additionally, 78 percent of all construction waste was reused or recycled. All salvageable materials from the demolition of the four existing buildings were recycled or diverted for reuse. The calculated amount of CO2 reduction is approximately 49,970 pounds.

Green Awards - AZRE Magazine July/August 2010Finalist: Queen Creek Branch Library

Owner: Town of Queen Creek
General Contractor: CORE Construction
Architect: Dick & Fritsche Design Group
Completed:Nov. 2008

The LEED Gold library is the first municipal building constructed under the Town of Queen Creek’s Green Building Policy. This library represents the successful implementation of the new policy by not only reaching the required minimum LEED Certification, but also by achieving a Gold rating on the same budget. The project achieved a 53 percent energy use reduction according to the ASHRAE 90.1 model. The amounts to a 446,987 kWh per year savings, or almost 10 kWh saved per square foot. That amounts to 321 metric tons of CO2 equivalent in energy savings alone. The project also includes solar reflective roofing, 33 percent water efficiency through low-water-use fixtures and an average of 22 percent recycled content using local materials. More than 80 percent of construction waste was diverted from landfills.

Green Awards - AZRE Magazine July/August 2010Finalist: Lee H. Brown Conservation Learning Center at Reid Park Zoo

Owner: City of Tucson
General Contractor: Adolfson & Peterson Construction
Architect: Swaim Associates Architects
Completed:May 2008

The 10,430-square-foot center in Tucson achieved LEED Platinum and serves as the Tucson Zoological Society’s center for education and community outreach. More than 50 percent of the original structure was recycled, including the site’s bamboo plants, which were integrated into the center’s perimeter fencing and gates, or to feed the zoo’s animals. The facility incorporates both passive and active rainwater harvesting systems, commercial grey water systems, low-water-use fixtures and other alternative and sustainable building materials. The building’s overall energy savings is 75 percent, including the solar water heating system that provides 100 percent of the building’s domestic hot water supply; and photovoltaic arrays that generate 48 percent of the facility’s energy needs. It is the first LEED Platinum project at any zoo or aquarium in the world.


Green Schools Excellence Award K-12

Green Awards - AZRE Magazine July/August 2010Winner: Agua Fria Union High School District

Agua Fria UHSD is one of the first districts in the state to apply green concepts to its building program and the classroom. The high school district is recognized as an exemplary piece of efficient design and sustainable best practices.

Green Awards - July/August 2010Milestone celebrations for the district include two LEED-Certified High Schools — Desert Edge High School and Verrado High School, both constructed by Adolfson & Peterson Construction — which were certification firsts for Arizona. These schools’ efforts included infrastructure conservation, curbing heat island effects, night sky and protected ecosystems, and conservation of resources for the state and local community.

The LEED for School pilot program, which encompasses the district’s operations and maintenance, was tested on Agua Fria in order to troubleshoot the program and find areas of refinement by USGBC. Other sustainable practices by the district included ozone depletion, recycling programs, green cleaning and light pollution reduction.

Finalist: Washington Elementary School District

Green Awards - AZRE Magazine July/August 2010Washington Elementary School District consists of 32 school campuses with three administrative locations covering 44 square miles. The District serves 24,000 elementary school students, and in spring 2008 the District agreed to benchmark its facilities for energy efficiency. The goal was to conserve 10 percent in electric, natural gas, water and solid waste consumption District-wide over the course of a year. Achieving this goal would save the District $610,000 or more in fiscal year 2009. “Energy Violation Tickets” were used in an effort to remind students and school staff to keep sustainability in mind during daily operations and maintenance. At the end of the year, the District conserved 6.6 million kWh of electricity with a savings of $743,000; natural gas savings of 8,661 therms for $18,340; and solid waste savings of $125,000.


Green Schools Excellence Award Higher Education

Green Awards - AZRE Magazine July/August 2010Winner: Arizona State University

Arizona State University was the first higher education institution in the state — as well as the country — to open a School of Sustainability that focuses on educating students about alternative energy, waste reduction, water and land conservation. In 2004, ASU created the Global Institute of Sustainability to serve as a hub for all of the university’s sustainability initiatives in research, education, outreach and business practices.

Green Awards - AZRE Magazine July/August 2010Since 2005, all new university-owned buildings are required to be certified LEED Silver or better. ASU currently has 21 LEED Silver or better certified buildings, including the first Platinum-certified building in Arizona. Additionally, the university’s solar initiative has installed 2.04 MW of photovoltaic power on the Tempe campus so far, with plans for 10 MW of solar power capacity by the end of 2010.

Finalist: Rio Salado College

Green Awards - AZRE Magazine July/August 2010The college has adopted several measures to “think green” and beyond. Rio Salado College’s view of sustainability includes the socio-cultural, environmental and economic dynamics essential to making sustainability bearable, equitable and viable.

During the 2007-2008 academic year, Rio Salado launched a major initiative in support of the global sustainability movement, which included becoming a chapter signatory of the American College and University Presidents’ Climate Commitment (ACUPCC). In October 2009, Rio Salado College was named a winner of America’s Greenest Campus contest. The winnings were used to develop a community garden for the Sustainable Food Systems Program and the new Cafe @ Rio.

AZRE Magazine July/August 2010

Tax Incentives - AZRE Magazine July/August 2010

Tax Incentives for Green Construction Projects

It Saves to be Green – Tax Incentives

Though famous for saying, “It’s not easy being green,” Kermit the Frog may be singing a different tune in today’s economy, where going “green” often comes with significant opportunities for tax incentives and savings.

Both the federal government and many states, including Arizona, provide a range of tax credits and other financial incentives for builders to go green. Key among these incentives are federal’s energy-efficient commercial buildings tax deduction and energy investment tax credit, and the State of Arizona’s commercial and industrial solar tax credit and renewable energy tax incentive program. Unfortunately, many builders and real estate professionals have been slow to reap the benefits of these green project incentives, often leaving cash on the table.

Federal Level

Energy-Efficient Commercial Buildings Deduction

Enacted as part of the Energy Policy Act of 2005, the federal energy-efficient commercial buildings deduction provides owners with an immediate tax deduction for all or part of the cost of installing certain energy-efficient property. The deductible amount is up to $1.80 per square foot for the installation of interior lighting, heating, cooling, ventilation, hot water or building envelope systems that are installed as part of a plan to reduce the amount of power used by 50 percent or more, in comparison to a reference building as defined in the Treasury Regulations. The deduction is available for property that is “placed in service” before Dec. 31, 2013, and covers “green” projects such as the installation of automatic lighting controls, efficient insulation, and the use of recycled water for cooling and restroom facilities.

Energy Investment Tax Credit

The federal energy investment tax credit is aimed at encouraging taxpayers to produce and use energy sources other than oil or gas. Under the Internal Revenue Code (IRC), businesses are entitled to claim a 10 percent or 30 percent credit for installing systems that generate energy for the business’ own use. A 30 percent credit is available for the installation of equipment using solar energy to generate electricity or to heat or cool a building, fuel cells that generate electricity, and small wind energy property. A 10 percent credit is available for the installation of a solar system for lighting a building, certain combined heat and power systems, and equipment using groundwater for heating or cooling. In order to claim the credit, the taxpayer must either construct or reconstruct the property, or be the first user of the property, and the residence must satisfy certain performance and quality standards set forth in the Treasury Regulations.

State Level

Arizona Commercial/Industrial Solar Energy Tax Credit

Under Arizona Revised Statutes (ARS), an income tax credit is available to businesses that install one or more solar energy devices in an Arizona facility. The tax credit is equal to 10 percent of the cost of the solar energy device, with up to $25,000 of tax credit available for a single building. The credit is available through the Arizona Department of Commerce (ADOC), which is authorized to certify up to $1 million in solar energy credits per year. Solar energy devices qualifying for the credit generally include devices designed to provide heating, cooling or daylighting, or to produce electrical power from solar energy.

Arizona Renewable Energy Tax Incentive Program

Effective Jan. 1, 2010, the State of Arizona began offering a tax incentive program aimed at encouraging renewable energy product manufacturers to relocate to Arizona, or expand their local operations. The program provides income and property tax incentives to businesses in the solar, wind, geothermal or renewable energy industries that make certain qualifying investments in manufacturing or headquarter operations in Arizona. Qualifying businesses may receive a refundable income tax credit, as well as real and personal property tax reductions. The credit is available through the ADOC, which is authorized to certify up to $70 million in income tax credits for a five-year period, beginning on Jan. 1, 2010.

The green tax credits and incentives highlighted above represent only the surface of potential tax and financial benefits available to companies committed to green construction. However, because the ability to claim tax incentives and credits for green projects often involves some pre-planning, certification or record keeping requirements, consulting with a professional tax adviser prior to undertaking a green construction project is advisable.

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www.azleg.state.az.us/ArizonaRevisedStatutes.asp
www.azcommerce.com/incentives.aspx
www.epa.gov/oust/fedlaws/publ_109-058.pdf
www.irs.gov/taxpros/article/0,,id=98137,00.html

Article written for AZRE by Kelly C. Mooney, J.D., L.L.M., who is a shareholder in the Tax Department at Gallagher & Kennedy P.A. She practices in the area of federal tax law, with an emphasis on the taxation of individuals, corporations, partnerships, tax-exempt entities, estates and trusts, and civil tax controversy matters.

www.gknet.com

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AZRE Magazine July/August 2010