Tag Archives: July – August 2011

100 Years of Notable Arizonans, Arizona Centennial Series

Centennial Series: 100 Years of Notable Arizonans

Arizonans who made a notable impact to Arizona & American history:

100 Years of Notable Arizonans - AZ Business Magazine July/August 2011


100 Years of Notable Arizonans:


Dr. Richard Carmona

Served as the 17th U.S. Surgeon General during the Bush Administration

Raul H. Castro

First Hispanic governor of Arizona; U.S. ambassador to Argentina

Cesar Chavez


Labor rights activist; union organizer Notable Arizonans, Arizona Centennial

Barry Goldwater


U.S. Senator; 1968 Republican presidential nominee

Carl Hayden


U.S. Senator; still holds the record for the longest service in Congress

Percival Lowell


Astronomer; founder of the Lowell Observatory in Flagstaff

Frank Luke


World War I ace fighter pilot; Luke Air Force Base is named in his honor Frank Luke, 100 Years Notable Arizonans, Centennial

Rose Mofford

First woman governor of Arizona

John McCain

U.S. Senator; 2008 Republican presidential nominee; Vietnam War POW

Evan Mecham


First Arizona governor to be impeached
Sandra Day O’Connor

First woman on the U.S. Supreme Court; ASU Law School named after her

Sandra Day O'Connor, 100 Years Notable Arizonans, Centennial

Lori Piestewa


First Native American woman killed in combat while serving in the U.S. military

Pat Tillman


Arizona Cardinals player; U.S. Army Ranger killed by friendly fire in Afghanistan Pat Tillman, 100 Years Notable Arizonans, Centennial

Morris “Mo” Udall


U.S. Representative; pro basketball player; presidential candidate Morris "Mo" Udall, 100 Years Notable Arizonans, Centennial

Frank Lloyd Wright


Renowned and highly influential architect

Frank Lloyd Wright, 100 Years Notable Arizonans, Centennial

[stextbox id=”grey”]Photos: Cesar Chavez/Jon Lewis; Pat Tillman/Gene Lower (Slingshot); Morris Udall/University of Arizona Library; Frank Luke/U.S. Air Force; Sandra Day O’Connor/Arizona Board of Regents; Frank Lloyd Wright/Frank Lloyd Wright Foundation[/stextbox]

WESTMARC Logo - AZ Business Magazine July/August 2011

New WESTMARC President Leverages GPEC Experience To Benefit Organization

Michelle Rider, President and CEO, WESTMARCIn June, Michelle Rider was named WESTMARC president and CEO. On July 1, she officially replaced Jack Lunsford, who had held the post for seven years. For nine years, Rider has held key positions with the Greater Phoenix Economic Council (GPEC).

How is the West Valley economy fairing compared to last year?

The West Valley still faces the challenge of having lost 300,000 jobs in recent years, as well as being affected by the housing bubble. It has also had several recent wins for its economy with the addition of companies such as Sub-Zero in Goodyear and Gestamp Solar Steel in Surprise.

What needs to be done to help the West Valley’s economy get back on track?

The West Valley has an opportunity to attract new quality employers. Bringing major employers in will create new jobs directly, but will also help provide a customer base for struggling small businesses. West Valley community mayors and councils aggressively compete for these opportunities.

How do you think your work at GPEC translates to your role at WESTMARC?

Everything I have done at GPEC translates in some way to leading WESTMARC. I have worked with many of the public and private sector leaders through GPEC on projects including fundraising, public policy and stakeholder engagement.

What new initiatives or policies will you implement for WESTMARC members?

We are developing a new strategic plan. I am fortunate that WESTMARC’s leadership (board and executive committee) is dedicated to prosperity in the West Valley. We look forward to creating a clear, measurable road map to guide the organization.

What sets the West Valley apart?

Most of the next decade’s growth projected for Greater Phoenix will occur here. We have the opportunity to define ourselves by leveraging and managing that growth to provide quality jobs.

Michelle Rider WESTMARC president and CEO

Arizona Business Magazine July/August 2011

Greater Maricopa Foreign Trade Zone - AZ Business Magazine July/August 2011

West Valley Cities Are Looking Toward Foreign Trade Zone To Boost Their Local Economies

After three years of hard work and dedication, WESTMARC and West Valley city leaders finally saw their labor come to fruition with the formal granting of the Greater Maricopa Foreign Trade Zone (GMFTZ) in December.

The establishment of the Foreign Trade Zone began following the Foreign Trade Zone Act of 1934.

Most FTZs are applied for by a single city, but Harry Paxton, economic development director for the city of Goodyear, says the GMFTZ is one of only a few in the United States that was supported by a consortium of cities for an entire region. The application fees were paid by landowners of the properties in the region requesting FTZ status.

“It is vital to high-volume importers and exporters (foreign or domestic) operating the United States in reducing duty fees and speeding up the supply chain, allowing companies operating … to maintain competitiveness,” Paxton says.

The GMFTZ, he adds, “is a valuable tool that is useful in attracting and retaining businesses, and creating new job opportunities.”

Paxton is a member of the GMFTZ Advisory Council, which was formed so each city participating in the GMFTZ would have representation.

The cities in the West Valley that are participating in the FTZ are Avondale, Buckeye, El Mirage, Gila Bend, Glendale, Goodyear, Surprise and Wickenburg. WESTMARC became involved in the process after community leaders with Goodyear and Surprise approached the organization requesting its support.

The approval in December gave FTZ General Purpose Zone status to four sites:


This 230-acre site located from Van Buren Street south to Yuma Road, will have approximately three million square feet of industrial and work space. It is located in close proximity to Phoenix Goodyear Airport, which is constructing an additional 4,300-foot runway and a new entrance to the facility, which will be adjacent to the FTZ site.


Located on the southeast corner of Waddell and Litchfield roads, this 130-acre site has access to the Burlington Northern Santa Fe Rail Line, which will send goods to Los Angeles ports.


Located north of Indian School Road along Loop 303, the site features 1,600 acres and has designated 235 acres for FTZ status. Development of the entire project will be phased over the next 20 years and is expected to feature 20 million square feet of office, retail, warehouse and industrial space.


This 318-acre site is located on 339th Avenue and the I-10 in Buckeye, providing easy access to the freeway.

Several additional sites throughout the West Valley are under consideration for FTZ status, including the Goodyear Crossing Industrial Park, a 198-acre site at the northeast corner of MC 85 and Cotton Lane.


The benefits to being in an FTZ, Paxton says, are numerous.

“Businesses in FTZs are treated as though they are outside U.S. Customs territory, and merchandise that is repacked, assembled, manufactured, displayed or placed in storage can be brought into the FTZ duty-free,” Paxton says. “Imports can be moved more quickly, without full Customs formalities. In addition, qualifying businesses located in a FTZ in Arizona are eligible for substantial reductions — currently 75 percent — on real and personal property taxes.”

Several large companies already have started construction or announced plans to start a location on the FTZ sites. A facility for appliance manufacturer Sub-Zero, based in Wisconsin, is under construction and will bring an estimated 380 jobs to Goodyear. In addition, the plastics manufacturing company Schoeller Arca Systems, based in the Netherlands, will hire an initial 45 employees for its new site in Goodyear.

Companies based in an FTZ, Paxton explains, must comply with regulations set by U.S. Customs officials. Communities benefit from these regulations as well, he says, due to the higher levels of security for imports.

Moving forward, Paxton says his goals for the GMFTZ revolve around helping not only the city of Goodyear, but also the entire West Valley.

“(I want to) ensure that each community that has a desire to participate has the best opportunity to succeed in helping existing employers expand and attract new employers to their respective communities, which will create new jobs for our citizens.”

Arizona Business Magazine July/August 2011

Erika Peterson, Record Center Innovations - AZ Business Magazine July/August 2011

Erika Peterson, Vice President Of Operations, Record Center Innovations Inc.

[stextbox id=”grey”]COMPANY: Record Center Innovations Inc. (RCI)
Vice President of Operations
Web: www.recordcenterinnovations.com[/stextbox]

Protecting sensitive business information is Phoenix-based Record Center Innovations’ (RCI) business. Founded in 1998, RCI provides secure information management and document storage from the day sensitive paper records arrive at its 100,000-square-foot warehouse to the day when those records are destroyed.

Record Center Innovations is the largest independent records management company in Arizona. One of its founding employees, Vice President of Operations Erika Peterson, says she believes the company has achieved this status due to its innovations in the record management industry.

“(Company founder) Jurgen (Achterfeldt), whose background was in the high-tech industry, took his experience and business principles and applied them to an industry that was very low-tech at the time,” Peterson says.

These innovations include document imaging, electronic document management, and scan-on-demand services.

“Our records-imaging services allow hard copies to be accessed electronically, so clients don’t have to wait for physical delivery of records,” Peterson says. “Secure interface allows access to documents whenever clients might need them.”

RCI uses confidential methods that are fully compliant with the Fair and Accurate Credit Transactions Act (FACTA) and the Health Insurance Portability and Accountability Act (HIPAA).

And due to its climate, Arizona is considered a “safe” state. That makes it ideal for clients from California and the Midwest who want to keep their documents protected from natural disasters.

“It used to be that you’d want to keep all your records because you never knew when you might need them,” Peterson says. “Now, it’s ‘keep them for as long as you need them,’ because you don’t want to be stuck holding them when they might hurt you.”

Arizona Business Magazine July/August 2011

State budget crisis - AZ Business Magazine July/August 2011

The State’s Budget Crisis Is Further Straining The Judiciary System

When talk turns to the state’s budget crisis, the discussion almost invariably focuses on the impact funding cuts will have on Arizona’s health and education systems. Among the general public, however, little to no thought is given to the effect budget cuts are having on the state’s judicial system.

“The state’s lack of resources promises to remain a challenge for several years,” says Timothy Berg, managing partner at Fennemore Craig. “However, it is important to remember that there are pronounced constitutional, social and economic dangers in rendering the Arizona court system ineffective by undue budget cuts.”

According the Arizona Judicial Branch, there were more than 2.6 million filings in Arizona courts in 2010.

“To make matters worse, the total number of persons working full-time in the Arizona judicial system decreased from 9,684 in 2009 to 9,379 in 2010 — a 3.1 percent decrease,” says David E. Funkhouser III, an associate at Quarles & Brady. “Thus, an already-strained judiciary is being forced to work more with less.”

As it is, the state’s judicial system receives just above 1 percent of the general budget, according to Don Bivens and Trish Refo, partners at Snell & Wilmer. Just a few years ago, Bivens says that allocation stood at 2.75 percent, a number still inadequate for the judicial branch’s needs.

“Funding state courts is a challenge all across America, as state courts face additional cuts to already inadequate budgets,” Refo adds. “Indeed, the situation is of such concern that American Bar Association President Steve Zack has formed a blue ribbon task force … to address the funding crisis in our state courts. State courts cannot fulfill their constitutional mandate to provide justice without adequate resources to do so.”

According to Snell & Wilmer, 80 percent of Arizona’s funding of the justice system goes to probation services. The remaining 20 percent is allocated across the supreme court, the appellate courts, and partial judicial salaries in local superior courts throughout the state. At least one county, Maricopa, is now shouldering the full burden for superior court salaries.

As Berg points out, cutting funding for the judicial branch will create an ineffective civil court system, which will have serious economic and social consequences on the state.

“Arizona’s judiciary is the arbiter of disputes involving government, corporations and individuals,” he says. “If businesses and entrepreneurs are unable to have their disputes resolved in a fair and timely manner, it is reasonable to expect that, over time, they will look to locate in other states.”

Thomas Irvine, a shareholder at Polsinelli Shughart, contends that the situation with civil cases will
likely become more dire as the court system continues to do more with less.

“Even with the 2012 opening of the new downtown criminal courthouse, we are out of courtrooms,” Irvine says. “Management miracles, as accomplished by the superior court in the last decade, cannot — without more — keep up with growth. There will be a need for more judges, staff and courthouses.”

In Maricopa County alone, Bivens of Snell & Wilmer says the clerk’s office has laid off 182 clerks. As a result, the court system is learning to work smarter.

“That loss of person power has accelerated the change over to electronic filing of court records, which, while causing commotion in the short term, will likely save millions in the future as the courts move from the laborious task of preserving mounds of paper for every court case, to filing and storing all court records digitally,” Bivens says.

Still, there’s no getting around the fact that funds for the judicial system are growing more and more scarce. To make up for the loss in tax revenue, fees for court filings have increased 44 percent during the last two years, according to Snell & Wilmer. Irvine of Polsinelli Shughart emphasizes that the funding cuts and fee increases are not just a problem for the legal community.

“Arizona business must take the lead in supporting adequate budgets and resources for the courts,” he says. “Justice, victims, our community and the low priority of business cases demands that this effort be made. Slowing down the dance of justice is out of the question.”

Arizona Business Magazine July/August 2011

Arizona Business Financing

Arizona Business Financing on the Rise

Arizona Business Financing: Even as the economic recovery seems stuck in neutral, Arizona business financing is increasing for both large and small firms.

“At Arizona Business Bank, we have noticed a resurgent, but cautious, interest from commercial clients in fortifying their working capital lines of credit and discussing owner-occupied real estate plans,” said Toby Day, president of Arizona Business Bank, which is part of CoBiz Financial, a $2.4 billion financial holding company based in Denver.

Of the bankers asked, all pointed to the bargains available in the commercial real estate industry, particularly the office market, as an impetus for businesses requesting financing.

“This year, the primary requests for financing are coming from businesses that have decided to take advantage of the market to buy buildings or, given their equity position, to refinance their building to take advantage of the low interest rate environment, including some who are taking advantage of the (Small Business Administration’s) new refinance program,” says Dee Burton, senior vice president, regional manager for Alliance Bank of Arizona.

According to a Phoenix Metro report from the brokerage firm of Cassidy Turley BRE, the vacancy rate for the office market stood at 28.3 percent during the first quarter of this year, up from 28 percent at the end of 2010. With vacancy rates still rising in the office market, business owners are finding prices that were unseen during the building boom.

“Current low rates seem to favor leasing, however, decreases in real estate values suggest opportunities to purchase the building at less than historic replacement costs,” Day says. “These factors, coupled with a low fixed-rate environment and increased bank willingness to lend have created a favorable financing arena.”

Depreciation changes included in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act, and the Small Business Jobs Act also are spurring businesses to pursue loans. According to Deloitte, under the two laws all qualified property acquired between Jan. 1, 2008 and Sept. 8, 2010 has 50 percent bonus depreciation; the bonus depreciation for qualified property acquired and placed in service between Sept. 9, 2010 and Dec. 31, 2011 is 100 percent; and for qualified property acquired and in service between Jan. 1, 2012 and Dec. 31, 2012, the bonus depreciation is 50 percent.

“With the bonus depreciation incentives coming from the Small Business Jobs Act, we’re starting to see more requests for equipment financing particularly in health care, such as MRIs, and dental and optical equipment,” Burton says.

Depreciation laws notwithstanding, a number of companies are seeking financing to replace equipment — purchases that have been deferred in some cases since 2008.

“Demand for equipment financing is also increasing in many sectors due to economic conditions moderating and slightly improving and companies being unable to defer capital expenditures for improved efficiencies, replacement needs and near-term projected growth,” says Scott Schaefer, president of Meridian Bank.

Fattening up lean inventories is proving to be another incentive for companies to seek new sources of financing.

“During the downturn, (businesses) were able to generate cash by shrinking inventories and collecting accounts receivable,” says Dean Rennell, Wells Fargo regional president, Arizona Business Banking. “That cycle is reversing now, creating a need for financing.”

Despite signs of improvement, Brent Cannon, executive vice president and director of Metro Banking at National Bank of Arizona (NB|AZ), says loan demand remains tepid due to economic uncertainty and the “weakened state or quality of loan applicants.” He added that the bank forecasts loan demand will “remain somewhat soft in 2011” until the economy shows more significant recovery and unemployment numbers drop.

While the slow economic recovery is causing many businesses to shy away from asking for loans, Day at Arizona Business Bank says banks also have some soul-searching to do.

“Industry wide, banks have been somewhat introspective and the calling efforts (planned sales calls) on clients diminished,” he says. “According to industry trade groups, the number of calls to clients over the past three years has been the lowest since the late 1980s. Increased calling efforts by Arizona banks will be mirrored by decreasing loan problems for the banks — both of which will drive renewed growth in our market. We are optimistic for the mid- and long-term future for our state.”

For more information on Arizona Business Financing, please visit: www.sba.gov

Arizona Business Magazine July/August 2011

Glendale CVB - AZ Business Magazine July/August 2011

Glendale CVB Expands Its Mission, Scope By Serving Entire West Valley

Glendale CVB – Whether travelers are visiting for leisure or business, Glendale has blossomed from being considered a one-day destination to a highly sought-after travel experience both nationally and internationally in a single decade. And to successfully market Glendale’s increasing expansion as the host city of sporting and mega-events — as well as the entire West Valley — the Glendale Convention & Visitors Bureau (CVB) was formed in July 2010.

The first incarnation of the CVB was formed in 2007, with partners comprised of representatives from Glendale, Westgate City Center, University of Phoenix Stadium and Jobing.com Arena. This group was called the West Valley Events Coalition and eventually grew to 300 members. Its growth led to the creation of the CVB within three years.

“As a brand new CVB, one of our primary focuses is to increase awareness and exposure of our region through various activities that showcase the West Valley,” says Lorraine Pino, manager of the CVB.

The Glendale CVB promotes Glendale are through a regional visitors guide and sponsoring events to media buyers in national and international markets.

With venues such as the Phoenix International Raceway in Peoria, Jobing.com Arena in Glendale and spring training sites across the region, the Glendale CVB has successfully collaborated with businesses and West Valley cities to make these events possible and boost tourism.

According to Pino, the spring training facilities generate $328 million annually, and the Tostitos Fiesta Bowl in Glendale generates $200 million per year. In addition, there is revenue from concerts, Arizona Cardinals and Phoenix Coyotes games and NASCAR events. As a result, hotel room count in Glendale alone has more than tripled from 400 rooms in 2007 to nearly 1,500.

“The West Valley is the real hub of spring training in Arizona, showcasing nine of 15 teams in the Cactus League,” says Frank Ashmore, director of sales and marketing for The Wigwam in Litchfield Park.

Because the CVB has been able to bring sporting events to the area, in turn attracting visitors, businesses in the region are benefiting.

The events have made a huge impact on all neighboringbars and restaurants, says Michelle Sniegowski, sales and marketing manager for The Shout! House in Glendale.

“The events bring in thousands of people; they fill our venue and in turn boost our economy,” she says.

One attraction vitally important to the Glendale area, according to Pino, is Westgate City Center. It generates tax revenue by drawing visitors from around the world.

Paul Corliss, director of communications for the Phoenix International Raceway, says “the West Valley certainly deserves attention.”

“It’s the quality of dining, shopping, hotel rooms, spas, convention space and more that keep (tourists) coming back,” says Nicole Traynor, director of public relations for Westgate City Center.

As West Valley tourism increases, The Wigwam is receiving a facelift from its new owner, the development company JDM Partners. Headed by former Phoenix Suns owner Jerry Colangelo and his partners Mel Shultz and David Eaton, JDM Partners is investing in the multimillion-dollar restoration, with Phase I recently completed.

It seems to be making a difference. “Group markets are up nearly 50 percent over the last year,” Ashmore says.

Arizona Business Magazine July/August 2011

West-MEC Aviation High School, Glendale, Ariz. - AZ Business Magazine July/August 2011

West-MEC’s Aviation High School Trains Teens For Jobs In The Aerospace Industry

Young people in the West Valley who have always wanted to work in the aerospace maintenance industry will now have the opportunity with the opening of the West-MEC Aviation High School in Glendale.

Aviation High School – The West-MEC program, which provides technical training in a vast array of careers, has grown exponentially since opening in 2003. What began with 450 students now serves more than 26,000 in 40 high schools within 12 member districts. Cliff Migal, assistant superintendent for West-MEC, says the program’s success is due in part to its partnerships with the business and education communities.

West-MEC Aviation High School, Glendale, Ariz. - AZ Business Magazine July/August 2011There were no technical training institutes in the West Valley, Migal says, but through partnerships, they were able to get something started.

As Freshman, students may start taking satellite program classes on school grounds. As juniors, they can take the central program classes, which are held off school grounds. The programs also will one day be available to adults. The cost of adult tuition is still being determined, but Migal said it could cost about $14,000. Students in high school pay $500.

The aviation program, which officially launches Aug. 8, is a licensure program requiring 1,952 hours of training. It will
include studying an airplane’s wings, propellers, landing gears, hydraulics, electrical system and engine. Once completed, students can take the Federal Aviation Administration licensure exam. Those who pass will become licensed aviation maintenance technicians, qualified to work for airplane repair shops. The program, which is in the final stages of certification with the FAA, will be audited and reviewed annually by the federal agency, Migal says, to ensure the school is following curriculum and delivering a quality education.

The aviation school is the first of West-MEC’s programs to be built from the ground up. It was made possible through a lease-donation agreement with the John F. Long Revocable Trust and its innovative design has been recognized by WESTMARC with the Best of the West Architectural Innovation award.

DLR Group and McCarthy Building Companies were involved in the design and construction of the facility, which is like an airport hangar, but with features that disguise its identity. The exterior, Migal says, was designed to look like free-flowing wings and has taxi lines running up the sidewalk and into the building.

Inside, 12,000 square feet of open space provides plenty of room to maneuver.West-MEC Aviation High School, Glendale, Ariz. - AZ Business Magazine July/August 2011

Distinctive features include air ducts resembling airplane air ducts, a light fixture in the main lobby that simulates helicopter blades and airplane-related wall murals.

Sustainable features include a white roof to reflect the sun and an evaporation cooling system that cools and heats almost 40 percent of the facility. Solar panels might be added.

Advanced Real Estate Resources helped with the design and development. Williams Aviation Consulting helped develop the program’s curriculum and in locating donated equipment.

The program would not have been possible without an advisory committee of industry representatives from across the Phoenix Metropolitan area, Migal says. “We will always make sure that the skill set the school provides is the skill set industry needs and demands.”

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For More Information:

West-MEC Aviation High School
Glendale Airport
6997 N. Glen Harbor Blvd., Glendale
(623) 873-1860



Arizona Business Magazine July/August 2011

ASU Report, Commercial Real Estate, AZ Business Magazine July/August 2011

ASU Report Claims Commercial Real Estate On Upswing, Experts Still Cautious

Is Commercial Real Estate On the Upswing?

While many people have been watching the housing-market crisis in the Valley, fewer have paid attention to the situation in commercial real estate. Industrial and office space, retail and multi-family units are among the types of properties also affected by the recent real estate plunge. However, a recent report from the W. P. Carey School of Business at Arizona State University finds that although the housing market is still struggling, the commercial market may be starting to rebound.

“While the Phoenix-area residential housing market declined for more than three years, the commercial real estate market drop lasted less than a year and a half,” says Karl Guntermann, the Fred E. Taylor Professor of Real Estate at ASU, who authored the fourth quarter 2010 Repeat Sales Index Report (ASU-RSI) with research associate Adam Nowak.

However, Craig Henig, managing director for CB Richard Ellis, has a different take on the data.

“This report offers a clear picture of repeat sales for residential, commercial and segments of the multi-family market — on a macro-level,” he says. “However, the indices used to complete the study are trailing indicators and not necessarily what’s happening today.

“In addition, the report does not provide a breakdown or data about exact submarkets or residential and commercial property types, which would tell us which specific areas of the market or product types are still struggling or are in fact beginning to show signs of improvement,” he continues.

According to research by Cassidy Turley BRE, there have been some “glimpses” of recovery. However, the overall commercial real estate market is still relatively flat. Cassidy Turley BRE’s research adds that until significant job gains are made,
vacancies in the Greater Phoenix market cannot be absorbed because companies will not consider expanding, opening new locations or even starting new businesses.

The commercial real estate market first went negative in 2008, and by the end of 2009, commercial prices in Metro Phoenix had bottomed out at an unprecedented annual rate of decline of almost 40 percent. The new figures from ASU show that by the end of 2010, prices had already bounced back to almost a 13-percent annual rate of increase.

“Big investors are starting to buy up some of these commercial properties for 50 to 60 cents on the dollar,” Guntermann explains in his report. “Long term, the Phoenix market still has the fundamentals for growth, so they see real investment opportunities here.”

Guntermann’s report adds that developers aren’t building commercial properties right now, so no new supply is being added. This means that as the economy picks up and demand increases in the next few years, it will take a while for developers of new properties to catch up.

The ASU study is based on repeat sales and uses the same methodology as the S&P/Case-Shiller index, which was developed for 20 national housing markets. Repeat sales compare the prices of a single property against itself at different points in time, instead of comparing different properties with different quality factors.

Those in the industry put a lot of stock in the S&P/Case-Shiller index, but they say that it is a better gauge when discussing the single-family home market as opposed to commercial properties.

“This type of index only partially shows the overarching trends of the CRE industry,” says Daniel H. Pollack of Pollack Investments. “As a result of removing ‘sales with extremely high or low prices per square foot,’ the true market moving transactions are ignored. … Without these sales, the picture painted by the index is not a true representation of what is happening currently in this market.”

Pollack adds that the report does not explore factors such as large changes in supply, customer preferences and demographic shifts.

“Overall, the ASU-RSI is a good general barometer of what is happening in the market, but it fails to capture what is going on at the street level or to give any indication of how the Phoenix market compares to the rest of the country,” Pollack says. “These are both critical factors for any serious CRE professional to consider when analyzing a market.”

Arizona Business Magazine July/August 2011

Robert Meyers, president & CEO of Phoenix Children's Hospital, Phoenix, Ariz. - AZ Business Magazine July/August 2011

Robert Meyer, President And CEO Of Phoenix Children’s Hospital

Robert Meyer discusses his very first job, what he learned from it, who his biggest mentor is, and more.

Robert Meyer

Title: President and CEO
Company: Phoenix Children’s Hospital

Describe your very first job and what you learned from it.
I was a laborer in a forge shop in Toledo, Ohio, making leaf springs for trucks. The major lesson I learned from this job was the value of a college education. While the money was good, the work was very hard and dirty, and most importantly, the 50+ old guy next to me was making the same wages.

Describe your first job in your industry.
Medicare auditor for Blue Cross of Northwest Ohio. I learned early the complexity and nuances of Medicare reimbursement and its impact on hospital operations.

What were your salaries?
The forge shop was $7.50 an hour. Blue Cross was $12,000 annually.

Who is your biggest mentor?
My father, who gave me my work values and respect for integrity and honesty in dealing with people.

What advice would you give to a person entering your industry?
Take the time to learn all aspects of the business. Don’t be afraid to roll up your sleeves and get dirty.

If you weren’t doing this, what would you be doing instead?
I would love to be a business school professor preparing our next generation of leaders to be successful.

Robert Meyer

Arizona Business Magazine July/August 2011

Girlfriend University, Scottsdale, Ariz. - AZ Business Magazine July/August 2011

Girlfriend University Inspires Confidence in Women Entrepreneurs

After just one year, Jodi Low and Renee Dee, owners of Scottsdale-based Girlfriend University, have turned heads and gained nods from business professionals. Despite the business’ seemingly light-hearted name, its goal is a serious one — to help empower women to be inspirational leaders.

“We named the business Girlfriend University because the name completely indicates our style,” Low says. “A sassy approach to serious business.”

According to Low, women do business differently, collaborating, sharing, connecting and supporting one another in a manner unique to women. This is why Low and Dee decided to market their business specifically toward women who are striving to succeed, whether that means opening their own business, maintaining it or to simply gaining the confidence to achieve their goals.

“We work with and empower women to build wildly successful enterprises with real, bottom line, measurable tools that create results,” Low says. “We provide anything and everything an entrepreneur or executive could possibly want or need … all under one roof.”

From business coaching to marketing to leadership development, GU offers an entire spectrum of classes and training for any Girlfriend University, Scottsdale, Ariz. - AZ Business Magazine July/August 2011woman. What makes its classes unique is Low and Dee’s desire to transform their students, both personally and professionally, to be their absolute best selves.

Nikal Conti, owner of Phoenix Architecture, attended Girlfriend University’s social media classes and the impact was immediate. Conti walked away with a solid social media strategy, as well as hundreds of potential clients following the business online, she says.

However, it was the Leadership 101 classes — comprised of two days of training — that really left an impression on Conti and her confidence as a leader and owner of Phoenix Architecture.

“With the expert and very challenging instruction, you actually push far past your normal comfort zone, revealing your true leadership potential,” Conti says. “You also see how a group of individuals can become a team; that is powerful. I know that I am a better leader because of it.”

Another popular class is Entrepreneur in U — Business Coaching. The class has an intense and honest approach to consulting and brainstorming has sometimes helped a client completely re-brand her business.

“Our half-day business intensives are wildly popular because our clients love having Renee and me sit down with them for a solid three hours and just create an entire brand, look, marketing strategy and plan with them,” Low says. “It’s an amazing process that is uniquely our own.”

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Girlfriend University

15279 N. Scottsdale Road, Suite B-240
Scottsdale AZ, 85254
(480) 278-7200


Arizona Business Magazine July/August 2011

Online collaboration tools - AZ Business Magazine July/August 2011

Online Collaboration Tools Keep Executives Connected And Productive

By all accounts, the five-day work week is rarely applicable to today’s business world. For that matter, the standard brick-and-mortar office in which the entire team converges and collaborates Monday through Friday, 9-to-5, is becoming a thing of the past. Even in some of the largest enterprises, teams are spread out from coffee shops across town to satellite offices around the world. For executives, especially at the C-level, this can mean a management nightmare — or an opportunity.

This dilemma has given way to a burgeoning market of online applications that allow teams to communicate, collaborate and share data more efficiently.

Executives can now manage productivity from anywhere, any time zone. Here are some new applications that can keep executives dialed-in and on top of the work:

File and project sharing

Executives can be faced with a myriad of documents, spreadsheets, presentations and the like on a daily basis for review, approval or to pass onto the customer. Tools such as Dropbox and iDisk for Mac allow executives to access shared drives remotely. However, they have some inconvenient pitfalls. For instance, if an employee makes changes to a document, the most recent version may not show up in the shared drive right away. Microsoft’s SkyDrive in the 2011 Office suite is aiming for a solve so multiple users can work on documents simultaneously from any location.

Idea generation

Nearly three years ago, Yammer emerged as a solution that promised to harness the power of social media for the workplace. Now that an estimated 80 percent of Fortune 500 companies are using Yammer, it appears the company might have succeeded. The goal is to improve workplace communication and collaboration by providing a secure, private forum where workers can share information, pose questions, get answers and build stronger relationships. The CEO of one of Yammer’s customers, Deloitte Digital, posted a message on the Deloitte Australia Yammer network for a new ad campaign. Within the next 24 hours, hundreds of employees submitted thousands of taglines.

Video conferencing

If you’ve ever initiated a video conference with customers, prospects or even your own employees, you have no doubt felt the pain of the download. Watchitoo uses a patent-pending technology to let you see up to 25 people on one call and share files (including large media files) using nothing more than a Web browser. No clunky downloads and nothing to configure.

Virtual teamwork

A scenario that’s becoming more common as advances in audio-visual equipment find their way into design, architecture and engineering firms is the use of SMART Boards from CCS Presentation Systems to enable collaboration with those at the home office and those in the field. These tools used in virtual teamwork are especially important when combined with BIM software and other 3-D technology.


Arizona Business Magazine July/August 2011

AZ hospitals, how to attract top talent, AZ Business Magazine July/August 2011

Arizona Hospitals Share Strategies For Recruiting, Retaining Top Performers

The health care industry in Arizona managed to hold its own during the worst of the recession. But the challenges aren’t over yet.

Human resources experts have been warning companies across industries about the next big wave of change as the economic recovery takes hold: retaining the top talent that helped a company survive.

In good economic times, the health care industry often was faced with shortages of nurses and other professionals, so it’s an old hand at devising ways of attracting and retaining talent. Arizona Business Magazine asked four hospitals and health care systems about how they attract the best.

Abrazo Health Care

Currently, Abrazo Health Care’s website is the No. 1 way candidates are found when applying for an open position. Additionally, Abrazo Health Care utilizes social media sites such as LinkedIn and Facebook to attract and hire future employees. A large number of new hires comes from referrals within the organization.

Other recruitment efforts include the new graduate development program, a unique opportunity available to 100 nursing graduates per year. This competitive program gives new nurses 12 weeks of education and training to become an acute care nurse at an Abrazo Health Care facility. New graduates entering a specialty area also will be part of a bridge program for additional training.

Another opportunity available is the nurse-specialty training program for current nurses, which is offered four times per year. Nurses can apply to receive training to transition to a specialized nursing position in the operating room, emergency room or intensive care unit.

All applicants must complete a web-based interview developed in partnership with the Gallup Organization. The assessment helps to ensure a candidate will align with the cultural environment at Abrazo Health Care.

Abrazo Health Care employs more than 5,000 people. Currently, there are 400 positions available. Abrazo Health Care offers competitive salaries, health benefits and tuition reimbursement.

[stextbox id=”grey”]Carmen Hern is regional manager of talent acquisition at Abrazo Health Care, abrazohealth.com. [/stextbox]

Banner Health

Banner Health recruits talent through strategic work force planning such as:

  • Targeted media events
  • Academic relationships
  • Social media
  • Banner Health’s website

Banner’s approach to recruiting top talent aligns with the strategies of the organization by emphasizing Banner’s vision on patient care. Its hiring incentives are centered on total rewards compensation.

The Banner journey begins with a potential employee’s first experience (the website, at an event, videos or even as a patient). Once they have joined Banner, there is an ongoing, one-year, onboarding program. Throughout their time at Banner, there are opportunities for learning, coaching and developing employees’ careers.

There are three main reasons an employee stays at Banner are:

  • The relationship with their manager
  • The people they work with
  • Learning and growth opportunities

In addition, employees have a choice in their selection of benefits. They also get to participate in a 401k plan, life insurance, food discounts, transportation discounts, and childcare at some facilities. We look at each employee’s needs to determine which benefits are best for them

Banner prides itself on having created an environment of innovation and teamwork. It offers opportunities for employees to spread their wings, in addition to pay for performance. There is compensation for all when Banner meets and exceeds goals in the areas of patient satisfaction, financial performance and employee retention.

Recognizing that Banner Health is competing with many other health care systems in Arizona for quality employees, the company tries to stay in tune with the community. Banner may have more hospitals than anyone else, but we have to pay attention because we know there are other good hospitals out there.
[stextbox id=”grey”]
Shyrl Johnston is senior director of talent acquisition at Banner Health, www.bannerhealth.com.[/stextbox]

Phoenix Children’s Hospital

Phoenix Children’s strategy to attract new talent includes expanding space, growing programs and services, and aggressive recruiting.

Phoenix Children’s continues to grow and expand, thus offering exciting new prospects for top talent in the health care industry. An 11-story patient tower, which opened in June, will raise the hospital’s bed count from 345 rooms to 626 private rooms by early 2012. The hospital also added 96 PCIU/CICU rooms, 12 operating rooms, new services and programs, innovative research supported by leading clinical trials, and advanced education/training for clinical providers.

Collaborations and partnerships with Arizona State University, University of Arizona, Mayo Clinic, Banner Good Samaritan, and a Strategic Alliance with St. Joseph’s Hospital & Medical Center also add jobs and opportunities for attracting the best and brightest.

The hospital’s six Centers of Excellence also are growing. Phoenix Children’s is the only Level 1 Pediatric Trauma Center in Arizona; the Children’s Heart Center is recognized as one of the nation’s best; there is the Phoenix Children’s Center for Pediatric Othopaedic Surgery; the Newborn Intensive Care Unit, with 110 licensed beds, is one of the largest NICUs in the country; the Center for Cancer and Blood Disorders is Arizona’s only fully dedicated facility of its kind; and the Children’s Neuroscience Institute provides comprehensive care for children with neurological and behavioral disorders.

For the past four years, Phoenix Children’s Hospital has been steadily and aggressively increasing recruitment of nationally known physicians and superior staff. Medical staff at the hospital has increased to include more than 1,000 pediatric specialists with 40 pediatric specific specialties.

Recent prominent additions, to name a few, include: David Adelson, MD, a renowned neurosurgeon, recruited to lead the Children’s Neuroscience Institute at Phoenix Children’s; Richard Towbin, MD, a top neuro-radiologist who has served at children’s hospitals in Philadelphia, Pittsburgh, Cincinnati and Michigan; Lee Segal, MD, who came from Hershey Children’s to initiate the Center for Pediatric Orthopaedic Surgery; Heidi Dalton, MD, section chief critical care, who was recruited from Children’s Medical Center in Washington, DC; and Tamir Miloh, MD, a hepatologist recruited from Mt. Sinai, NY, who will create and lead Arizona’s first pediatric liver transplant center.

[stextbox id=”grey”]Jane Walton is head of media relations at Phoenix Children’s Hospital, www.phoenixchildrens.com.[/stextbox]

UA Healthcare

UA Healthcare is a private, nonprofit health-care entity located in Tucson. It was formed by the merger of two highly respected and well-established organizations: University Medical Center (UMC) and University Physicians Healthcare (UPH). The organization consists of the largest physician practice plan in Arizona, including a Health Plan Division, two academic medical centers and Southern Arizona’s only Level 1 Trauma Center.

UA Healthcare employs more than 6,000 people and is ranked one of the top 10 employers in Southern Arizona. University Medical Center was the first hospital in Arizona to earn the Magnet designation — the American Nurses Association’s highest honor for nursing excellence. The designation recognizes hospitals that provide the best nursing care and a supportive, professional environment. As the only academic medical center in Arizona, UMC offers many opportunities for professional growth, personal enrichment and career development.

UA Healthcare’s 2011 benefits package is designed to promote wellness and encourage healthy lifestyle choices. UA Healthcare considers staff members to be its most valuable resource and it is dedicated to providing a culture that keeps patients healthy.

The system provides managers with the tools required to retain its first-rate staff. It offers learning opportunities that ensure high levels of patient and employee satisfaction, as well as a strong financial position. UA Healthcare gives total rewards that are competitive in the Arizona employment market. UA Healthcare ensures individual and group accountability for performance, rewards and growth through ongoing communication.
[stextbox id=”grey”]
John Marques is vice president for human resources at UA Healthcare, www.azumc.com.[/stextbox]

Arizona Business Magazine July/August 2011

Rick Welts, president and CEO, Phoenix Suns - AZ Business Magazine July/August 2011

Rick Welts, President And CEO, Phoenix Suns

CEO Rick Welts discusses how the recession has affected the professional sports industry, the sports industry’s role in economic development, the Phoenix Coyotes, and more.

Rick Welts
Title: President and CEO
Company: Phoenix Suns

How did the recession affect the professional sports industry?

It certainly put pressure on pricing. The Suns haven’t raised prices in three years now and certainly didn’t feel like we were in a position to. The types of products that we tried to create for ticket buyers, I think, were reflective of the economy and understanding that we’re probably going to sell more partial full-season tickets than we are our traditional season ticket. … We have our own market for resale tickets for people who own tickets and want to sell them to other people, which was an opportunity for people to recoup some of the investment they’d made on season tickets. And I think we saw that across all the teams in the Valley.

Are you seeing any positive changes in the economy?

Our television ratings were up significantly this past year, and I think one of the trade-offs between people coming to the arena and the television broadcast was that we actually had more people that were part of our audience there. We’re unique among the Valley sports teams in that we produce and sell all of our own television games. … I think definitely last season we saw an upturn in ad spending, which is important to us because it’s a big part of our revenue on our television broadcast.

What role do pro-sports teams play in economic development?

I’m a huge believer that we are the greatest brand ambassadors for Phoenix that exist out there. … So, when we have games on national television coming from Phoenix, Arizona, and you have beauty shots of our incredible community, it’s really a two-and-a-half hour commercial for our region, for the city of Phoenix.

What about the rift between the Goldwater Institute and Glendale over the Phoenix Coyotes?

It’s really an important topic that cities are going to have to wrestle with, and our city is going to have to wrestle with. … The economics of our business are not such that sports teams by themselves can afford to build a multi-purpose facility … But how we pay for that, what’s the appropriate investment, what’s the right way to go about doing it is a very fair discussion to have out there between sports teams, the public and our elected officials.

Why was it important to publicly announce that you’re gay?

We really want to have an open discussion about sexual orientation within this industry, which is a very difficult topic for us to get to. For whatever reason, we’re a little out of step with where most of our society is today in having that discussion and feeling comfortable having it. The purpose was to hopefully facilitate more of that discussion, which I can promise you has been the case. What I also said is that I wanted to at least have a person out there who young people could identify with who might give them a little hope that pursuing their passion, if it’s team sports, wasn’t something that was out of reach just because of who they were. … I’m at the very beginning of what’s going to be a very interesting journey for me on this. … I’m going to let the experience guide me.

Vital Stats: Rick Welts

    • Worked for the Seattle SuperSonics from 1969 to 1979 starting as a ball boy and ending as director of public relations
    • Started his tenure in the NBA league office in 1982 as director of national promotions for NBA Properties
    • Credited with the creation of the NBA All-Star Weekend concept in 1984
    • In 1998, Brandweek magazine named him Marketer of the Year for his role in creating and launching the WNBA
    • Left the NBA office in 1999 as the league’s executive vice president, chief marketing officer and president of NBA Properties
    • Joined the Suns as president and COO in 2002
    • Named president and CEO of the Suns in 2009

Arizona Business Magazine July/August 2011

CopperWynd, Fountain Hills, Ariz. - AZ Business Magazine July/August 2011

Treat Yourself At Some Of The Top Day And Spa Resorts In The State

Even if you only have a day or even a few hours, you can still get away from it all at one of the many fine day and resort spas that can be found in the state. If you want to find the best places to relax, take a look at the following spa guide, which was compiled for Ranking Arizona.

Spas: Day/Resorts 100 Staff or More

Canyon Ranch Health Resort
8600 E. Rockcliff Rd.
Tucson, AZ 85750
(800) 742-9000
Year Est: 1979
Services: Offers more than 50 fitness and mind/body classes, wellness workshops and lectures daily; a climate-controlled, 80,000-square-foot spa complex that includes six gymnasiums, a spacious Pilates and Gyrotonic studio, exercise and weight training rooms, squash and racquetball courts, and a yoga/meditation dome.

Miraval Arizona Resort & Spa
5000 E. Via Estancia Miraval
Tucson, AZ 85739
(800) 232-3969
Year Est: 1995
Services: Miraval Arizona offers award-winning programs, classes, cuisine and spa services; prices start at $425 per person/per night

Willow Stream The Spa at the Fairmont Scottsdale
7575 E. Princess Dr.
Scottsdale, AZ 85255
(480) 585-2732
Year Est: 2001
Services: Award-winning treatments and amenities, rooftop pool and more.

Mii amo, a Destination Spa at Enchantment
525 Boynton Canyon Rd.Mii amo, Sedona, Ariz.
Sedona, AZ 86336
(928) 203-8500
Year Est: 2001
Services: Reiki, Cranial Sacral, hydrotherapy baths, body treatments, Watsu, Ayurvedic treatments and facials, fitness classes and massage.

Sanctuary Spa
5700 E. McDonald Dr.
Paradise Valley, AZ 85253
(480) 607-2326
Year Est: 2001
Services: Massage, facial, body treatments, fitness and wellness, tennis, nail and hair services, packages, Asian-inspired treatments.

DC Ranch Village Health Club & Spa
18501 N. Thompson Peak Pkwy.
Scottsdale, AZ 85255
(480) 502-8844
Year Est: 2005
Services: Full salon, facials and peels, sports, therapeutic, Thai and hot stone massages, body scrubs, organic products, Jan Marini skin care line.

The Spa at Gainey Village
7477 E. Doubletree Ranch Rd.
Scottsdale, AZ 85258
(480) 609-6979
Year Est: 1999
Services: The 25-room day spa offers results-oriented spa treatments, Six-Pack Rejuvenation series, and hair and nail artistry in a full-service salon, plus the Atrium Cafe

Dolce Salon & Spa
530 E. Shea Blvd., #175
Phoenix, AZ 85028
(480) 722-0500
Year Est: 2002
Services: Relax & Renew package ($320) includes facial, one-hour combo massage, pedicure, manicure, shampoo/style, makeup and lunch

Golden Door Spa at The Boulders
34631 N. Tom Darlington Dr.
Carefree, AZ 85377
(480) 595-3500
www.theboulders.com; www.goldendoor.com
Year Est: 2001
Services: The 33,000 square-foot facility offers couples massage, labyrinth, authentic TiPi, Watsu, Ayurvedic body treatments, a yoga studio and fitness center.

Elements Therapeutic Massage
19420 N. 59th Ave., #E-515 (5 locations)
Glendale, AZ 85308
(623) 847-4050
Year Est: 2007
Services: Many types of therapeutic massage, including deep tissue, Swedish, trigger point, hot stone, sports, chair and prenatal.

Spas: Day/Resorts 99 Staff or Fewer

Spa Avania at Hyatt Regency Scottsdale Resort and Spa at Gainey Ranch
7500 E. Doubletree Ranch Rd.
Scottsdale, AZ 85258
(480) 483-5558
Year Est: 2005
Services: Provides a holistic, total-immersion spa experience based on the six spa elements deemed most essential to the body’s changing daily rhythms and requirements. These include customized spa treatments, mineral water therapy, music, diet, the antioxidant benefits of the world’s finest teas, and natural light.

Joya Spa at InterContinental Montelucia ResortMontelucia Resort, Paradise Valley, Ariz.
4949 E. Lincoln Dr.
Paradise Valley, AZ 85253
(480) 627-3200
Year Est: 2008
Services: Nineteen treatment rooms, lavish lounges, private rooftop pool, fitness center, juice bar, terrace restaurant and authentic hammam.

The Spa at CopperWynd
13225 N. Eagle Ridge Dr.
Fountain Hills, AZ 85268
(480) 333-1900
Year Est: 1999
Services: No day packages, must be a resort guest.

Arizona Biltmore SpaArizona Biltmore Spa, Phoenix, Ariz. - AZ Business Magazine July/August 2011
2400 E. Missouri Ave.
Phoenix, AZ 85016
(602) 955-6600
Year Est: 1929
Services: Facial and body treatments, massage, salon, aromatherapy, hydrating, detoxifying.

Alvadora Spa at Royal Palms
5200 E. Camelback Rd.
Phoenix, AZ 85018
(602) 977-6400
Year Est: 2002
Services: Alvadora Retreat Package, T. Cook’s Sunset & Spa Package: $232/person, $367/couple inclusive of services.

Suddenly Slimmer Day Spa
3313 E. Indian School Rd.
Phoenix, AZ 85018
(602) 952-8446
Year Est: 1988
Services: Wellness & Med Spa services, HCG diet, B-12 injections, laser hair removal, peels, slim body wraps, massage, facials, waxing.

A Spa for You Sedona Day Spa
30 Kayenta Court, #2
Sedona, AZ 86336
(928) 282-3895
Year Est: 2006
Services: Therapeutic massage, hot rocks, Trager certified, Ayurvedic Abhyanga sessions, Shirodhara, Reiki, Jin Shin Jyutsu.

The Salon & Day Spa at The Scottsdale Plaza Resort
7200 N. Scottsdale Rd.
Scottsdale, AZ 85253
(480) 948-5000
Year Est: 2007
Services: Experience a complete menu of massages, skin care and more.

Aura Salon and Day Spa
15029 N. Thompson Peak Pkwy., #B-123
Scottsdale, AZ 85260
(480) 595-9590
Year Est: 2003
Services: Full service salon and day spa, hair, skin and body services, extensions, Brazilian Blowout, waxing, massage, microdermabrasion, dermaplaning. Sheraton Wildhorse Pass & Resort, Chandler, Ariz. - AZ Business Magazine July/August 2011

Aji Spa at Sheraton Wildhorse Pass & Resort
5594 W. Wild Horse Pass Blvd.
Chandler, AZ 85226
(602) 385-5759
Year Est: 2002
Services: $135-$205 for a full facial; $135-$215 for a full-body massage.

Arizona Business Magazine July/August 2011

Salt River Courtyard Marriott, AZRE July/August 2011

Hospitality: Salt River Scottsdale 101 Courtyard By Marriott


Developer: Salt River Devco
General contractor: W.E. O’Neil
Architect: PK Architects
Location: Pima Rd. north of Chaparral Rd., Scottsdale
Size: 96,705 SF

The $22M, 156-room hotel will be the first Marriott property to be built on tribal land. The 4-story hotel will include a bistro and 3,000 SF conference center. It is less than 2 miles from Salt River Fields at Talking Stick, spring training home of the Arizona Diamondbacks and the Colorado Rockies. Completion is expected by 1Q 2012.

AZRE July/August 2011
Yuma Regional Medical Center Data Building, AZRE July/August 2011

IT: Yuma Regional Medical Center Data Center IT Building


Developer: Yuma Regional Medical Center
General contractor: McCarthy Building Companies
Architect: Archsol
Location: Yuma
Size: 12,500 SF

The $5.2M freestanding data center will help YRMC transition to Electronic Health/Medical Records (EHR/EMR) and utilize tablet PCs for patient consultation. As a Tier 3 data center, the facility will have multiple independent distribution paths serving its IT equipment. Subcontractors include Delta Diversified, HACI Mechanical and Heywood Builders. Completion is expected by 3Q 2011.

AZRE Magazine, July/August 2011
ASU eSpace Innovation Lab, AZRE July/August 2011

Education: ASU School Of Engineering Espace Innovation Lab


Developer: Arizona State University
General contractor: Smith Construction
Architect: Cannon Design
Location: 501 E. Tyler Mall, Tempe
Size: 4,270 SF

The $560K eSpace Studio includes two rooms, each accommodating 40 students with interactive design areas, projection screens, whiteboards and writable glass wall panels. Subcontractors include JSC Contracting, DJB Enterprises, A Touch of Glass, P. King Construction, Techniqux, Dal A-C, Aero, Permanent Power and Power Plumbing. Completion by 3Q 2011.

AZRE Magazine, July/August 2011
Multi-Family Market - AZRE Magazine July/August 2011

Multi-Family Market Pumps Life Into The State's CRE Industry

The slowly recovering economy is revitalizing the multi-family market in Arizona, restoring the industry to robust health.

Rents are up, vacancies down, and, unlike most commercial real estate segments, any mid-level or upscale apartment property that hits the market attracts scores of investors hoping to make a deal.

After peaking at an alarming 15% in 2008, apartment unit vacancies in Metro Phoenix slipped to 9.7% at the end of 2010, says Marc Huisken, Cassidy Turley BRE Commercial senior vice president for the Multi Housing Investment Group.

And with no new supply in the pipeline, that trend will continue throughout 2011, regardless of any bumps or bruises to the overall economic recovery, he predicts.

In fact, the Valley’s apartment vacancy rate will dip to 7%, rental rates will soar 4% and another 11,000 units will fill up by year-end, says Brad Goff, Apartment Realty Advisors principal.

“Things are getting very healthy, very fast,” Goff says.

In Tucson, the supply of multi-family units remained low and demand high throughout the recession, according to Tim Prouty, managing director of CB Richard Ellis’ Tucson office.

“We have virtually no Class A rentals available,” Prouty says, a result of almost no construction for 10 years and a lack of in-fill space to build where the demand is strongest.

The rest of the state also escaped the volatility of Phoenix’s multi-family market because demand and supply, especially in areas with significant military or student populations, remained stable before and during the recession, says Arizona Multihousing Association CEO Tom Simplot.

Maricopa County accounts for about 80% of Arizona’s apartment inventory, Simplot says.

Multi-Family Market and Housing Shortage

So what’s driving all the demand that Goff says will lead to a “multi-family housing shortage until 2013” in Arizona?

According to Goff, four major factors are propelling the trend to rent: job growth, net in-migration to the state, decoupling of households and a major shift in the perceived value of home ownership. Virtually all of those factors were initiated or amplified by the recession or the just-starting recovery.

Job growth and in-migration were sluggish but positive in 2010, and are poised to pick up speed, according to Lee McPheters, director of the JP Morgan Chase Economic Outlook Center at ASU’s W. P. Carey School of Business. McPheters estimates the state will boost its population by 665,000 and add 300,000 jobs by 2015.

During the recession, many grown children moved in with parents or vice versa. With more jobs available and investments regaining value, those grown children and parents may be moving out now.

But the most important driver of the multi-housing boom is shifting priorities, fueled by the housing industry collapse.

“Buying a home used to be perceived as a vehicle for accumulating wealth, now young people see it as a vehicle for problems,” Goff says.

ST Residential CEO Wade Hundley agrees and says the trend to rent is a national phenomenon.

“It’s harder to get a loan to buy (a home),” he says. “But also, the younger generation is wondering ‘If real estate is where I want to invest.’ They are seeing a lot of people lose their wealth in their home.”

ST Residential, a Chicago-based public-private equity consortium, was founded in the middle of the housing collapse in order to rescue a portfolio of multi-housing assets from a failing bank.

That was in 2009, before a flood of would-be investors saw the value of doing the same. With rents rising and demand for rental units escalating, the scenario is enticing to investors willing to snag a bargain now but wait a while for a nearly guaranteed windfall, Goff says.

Since multi-housing is the only commercial real estate sector that can tap Freddie Mac and Fannie Mae funding, and lots more private money has been sitting out the recession on the sidelines, there is ample financing available, Goff says. Investors just waited until the bottom was well-defined to start shopping, he adds. That happened in 2Q 2010, when rents crept up a smidge for the first time in three years.

“Everybody believes in rent growth,” Goff says. “In summer 2010, the lights turned on. Optimism has returned, and right now, buyers want to be active.” Phoenix sales numbers paint the picture. There were

18 transactions of 100+ unit apartment complexes in 2008, 34 in 2009 and 80 in 2010, Huisken says.

Supply Limited

However, rising rents are not yet high enough to justify a flurry of new construction, Huisken says, so supply is limited.

“Investors can still buy properties for significantly below construction costs,” he says. “New properties won’t come out of the ground until (developers) think they can get the higher rents.”

In 2007, average Metro Phoenix apartment rents in properties with 100 or more units peaked at $802, or 96 cents per SF, but slipped to $771 in 2009. Rents have risen to $783, or 93 cents per SF, this year. That scenario has spawned the frenzy of activity among the wannabe buyers for existing properties, especially distressed luxury digs.

“We get 15 to 20 offers on any Class A building,” Goff says.

Among the Class A distressed properties recently changing hands is the partially completed Centerpoint Condominiums in Tempe. The languishing condo project is under construction — with a new name (West 6th Tempe) and a new focus.

“It’s a fantastic project” that lost its lending in the Mortgages Ltd. mess and watched the market collapse while the situation was resolved, says Tyler Anderson, CB Richard Ellis vice chairman. Anderson, who specializes in the sale of multi-family assets, brokered the sale of the Tempe property.

Also picked up for a song by savvy investors was 44 Monroe, a 196-unit luxury condo complex in Downtown Phoenix. ST Residential snagged not only 44 Monroe, but also the 155-unit 3rd Avenue Palms in Phoenix, the 89-unit Safari Drive condos in Scottsdale and 98 more properties nationwide for $2.7B.

To take advantage of the huge demand for apartments, the new owners are now leasing unsold condos at 44 Monroe, Hundley says.

“This allowed us to take advantage of a (condo) market that’s a couple of years away, “ he adds. “We feel better about leasing at today’s rates, and renting allows us to mothball the project for a while.”

Parsing Submarkets

While some of the best bargains have been for the distressed lender-owned properties, the investor demand is pushing valuations up and luring more sellers into the market to pay off loans or balance their portfolios, CBRE’s Anderson says.

“Value has recovered so that core Class A products are selling at replacement cost,” he says. “A seller may not get all (its) equity back, but can at least pay off the loans.” Still, the picture is skewed.

“The Class A and B product market is recovering quickly, with rent increases of 8% to 10%,” Anderson says. “The Class C market is work force housing, and it is showing early signs of recovery.”

The class differences become apparent in analysis of the submarkets. According to Goff, the apartment vacancy rate is an enviable 5.12% in Chandler, but tops out at 24.14% in the central Black Canyon corridor.

Construction Cycle Starting

At least one major player in the national and local multi-housing business thinks the time is ripe to build — if you can get the right deal.

Alliance Residential bought the 4.7 acres housing the long-empty Hard Rock Café and Marco Polo restaurants near 26th Street and Camelback Road in Phoenix for $10.5M, about a third of its mid-2000s value. The company already owns or manages 49,000 apartment units nationwide, 8,000 in the Valley under the Broadstone banner, and plans to build 270 ultra-upscale units in the tony Biltmore location, says Bob Hutt, managing director for Southwest operations.

Construction of Broadstone Camelback (its proposed name) is slated to start in the fall, with the first units opening in 4Q 2012, and the development completed in 2013, he says. Hutt says Alliance was positioned well to take advantage of recession-starved land prices, low construction costs due to the lack of competition, and fearful lenders.

“Clearly we wouldn’t have been able to touch this property if it hadn’t been for the recession,” Hutt says.

And since Alliance emerged from the economic downturn in excellent financial shape, it easily landed construction financing from lenders with ample cash but fear of spending it.

“It’s nice to get in early in the cycle,” Hutt says. “It’s a unique time when rentals are dominant. The opportunities today are very strong, and the outlook very healthy going forward. There is a lot to look forward to in the multi-family sector.”

For more information, visit the following links:


AZRE Magazine July/August 2011

Solar Panels - AZRE Magazine July/August 2011

Solar Panels And Installations Make Good Financial Sense

Figuring out the bottom line return on investment figures for installing solar panels on commercial buildings is a bit like hitting a moving target. Incentives from utilities are apt to change and sow uncertainty in the market, thus access to capital can be iffy in these challenging economic times.

But some business owners who have installed systems in the past year agree: The right incentive package from Arizona Public Service or Salt River Project, combined with federal and state tax incentives, makes solar a good financial — as well as environmental — bet.

Here is a snapshot of two businesses that managed to put the right ingredients together.

Cowley Companies and APS

Cowley Companies, a Phoenix real estate investment firm, placed one of the largest commercial rooftop solar arrays in the country on one of its warehouses near 25th Avenue and Buckeye Road.

The project cost $11.5M and includes 7,872 panels, which generate about 2.4 megawatts of power. According to CEO Mike Cowley, the solar array is producing half of the electricity needed in the 850,000 SF building, which includes tenants with industrial refrigeration requirements. His annual bill had been running about $1M.

Cowley says he had to sign a non-disclosure agreement with APS and cannot reveal what the utility company is paying him per kilowatt hour, but the agreement obligates APS to pay incentives until 60% of the project costs — the amount he borrowed to finance the project — is paid off. The incentive payments cover the loan payments. Cowley estimates that will take about 12 years.

He’ll recoup 30% of the cost through a federal tax credit. Additionally, tenants now reimburse him for power used. With that mix of incentives and payments, he calculated his self-financed portion of the project, about 10%, will be paid off in about six years.

With a 25-year warranty on the panels, the decision to erect the array made good financial sense, Cowley says.

In 2009, APS established a reverse-auction system that requires commercial entities to bid for an incentive package. Spokesman Steven Gotfried says APS scores each application and awards the bid to those who produce the most electricity for the lowest incentives.

APS’ calculator takes into account the system size, the amount of energy it is expected to produce, the incentive requested and years of payment. The lower the score, the smaller the incentive per kilowatt hour requested. Incentives are then awarded starting with the lowest score. This continues until all the funds are allotted. It’s a competitive, market-driven process designed to lower incentives.

Lower incentives, Cowley says, would have made his deal less feasible.

“People are not going to get excited about a 20-year payback,” he says. Businesses may even “be waiting for SRP and APS to bring the rate back up to where solar makes sense again.”

Gotfried says APS is trying to find the right balance between offering too few and too many incentives, with a finite pool or resources.

“The goal at the end of the day is to drive down the cost of solar,” he says. “The incentives weren’t meant to go on forever, they were meant to get things started.”

The price of solar panels has dropped 50% in the past three years, says Lee Feliciano, president of the Arizona Solar Energy Industries Association and a solar developer with CarbonFree Technology.

There may come a time, he says, when the industry no longer offers incentives for the panels, but that day is not yet on the horizon.

“The incentives are there to position the industry,” Feliciano says. “A lot of the biggest industries in the country would not be here without incentives.”

Even with incentive amounts dropping, installing solar panels on a commercial building can still be a good deal, says Gary Held, sales and marketing manager with Harmon Solar, which worked on the Av-Air project.

With incentive rates running around 10 cents to 12 cents per kilowatt hour, someone with access to capital can have a system paid off in about eight years. With a 20-year production-based incentive, that still makes financial sense, he says.

An owner who leases a system can see the end of lease payments in about 12 years and have eight years of incentives.

“We shout from the rooftops: If you are a commercial business owner with cash or access to capital with good credit, putting solar on your rooftop is a sound investment,” Held says.

Av-Air and SRP

“I am extremely satisfied with the way it is turning out for us,” says Bob Ellis, president of Reason’s Aviation, the parent company of Av-Air, a Chandler-based company that offers aftermarket parts and services to the airline industry.

Harmon Solar of Phoenix installed a 151,800-watt photovoltaic system made up of 550 solar panels on Av-Air’s rooftop, which is equivalent to about 20 residential-sized systems.

Ellis says the total cost of the project was $808,000. About 30% of the cost was covered by a federal grant and $25,000 will come back to him as a state tax credit, which is available to companies whose solar systems are operational this year.

The solar array covers 100% of his energy needs and SRP, he says, is paying him an incentive of 21.4 cents per kilowatt hour for 10 years, which comes out to $6,000 a month. Add that to the approximate $4,000 a month his tenants pay him for solar generated electricity and the fact that he’s no longer paying an electric bill, and the decision to go solar was “a no-brainer.” Ellis says it will take him about four years to pay back his $560,000 in up-front, out-of-pocket expenses.

The only downside to the process occurred when none of the four or five banks he does business with would lend him money for the out-of-pocket expenses, saying they were too unfamiliar with the incentive process.

Ellis also concedes it may be difficult for companies today to replicate Av-Air’s circumstances because SRP’s incentives are much less generous than they were in 2009.

“It was a really good deal and I got in on it just at the right time,” he says.

Both SRP and APS have production based incentive (PBI) programs for medium- and large-sized commercial customers. PBIs pay a customer over time based on the amount of energy produced, as opposed to the up-front incentives given to homeowners or small-business owners.

SRP now offers a PBI of 12 cents per kilowatt hour for 20 years for the first two megawatts of power applied for, but lowers the funding to 11 cents and then 10 cents respectively for each successive two megawatts. Its annual pool is for six megawatts.

Lori Singleton, SRP manager for sustainable initiatives and technology, says the utility simply has a finite set of resources and is trying not to over-subsidize an emerging industry.

“As the cost of solar decreases and demand increases, we have restructured our solar incentives to reflect that,” Singleton says. “It has been our intent from the beginning to reduce the rates as prices come down, so one day the industry can stand on its own without incentives.”

Reducing incentives also allows SRP to provide them to more customers, she says.

For more information about solar panels and incentive programs, visit srpnet.com or aps.com.

AZRE Magazine July/August 2011

Naturopathic Medicine - Scottsdale Living July-August 2011

More People Turn To Naturopathic Medicine, Homeopathy To Relieve Ailments

More people are turning to naturopathic medicine and homeopathy to relieve ailments

Some may be skeptical that plant- and mineral-based remedies can relieve the symptoms of headaches, ADHD and everything in between.

But for a 9-year-old girl who developed insomnia and permanent blinking ticks due to taking Ritalin for just one week, homeopathic treatment helped dramatically when conventional medicine and treatment had failed.

Her ADHD symptoms were reduced by 75 percent, and her ticks are almost gone after just two months of treatment via homeopathic remedies.

Homeopathy takes a holistic, non-toxic, natural approach to increasing health and wellness, whether you’re looking to cure the flu, relieve a headache or cure an ear infection.

The remedies’ main ingredients are comprised of plants and minerals, and they’re FDA approved — homeopathic medicine being the only system of natural medicine regulated by the FDA.

The remedies are so safe women can treat severe nausea during their pregnancies without having to worry because of the natural ingredients.

Women can also treat PMS, menopause and other menstrual irregularities.

Homeopathy takes a “like-cures-, like” approach. This means that what a medicine can cause in a healthy person, it can cure in someone who’s sick.

Jamie Oskins, a naturopathic physician at the Arizona Natural Health Center, explains it further by using red onions as an example.

“We’ve all cut an onion and got the burning eyes or the burning nasal discharge,” Oskins says. “If somebody has symptoms that match the red onion, there’s a homeopathic remedy to treat things like hay fever or the common cold with the same symptoms.”

This natural form of medicine helps stimulate the body so it can heal.

“Sometimes your body gets off track, and homeopathy stimulates your body to get back on course,” Oskins says. Homeopathic treatment also is individualized to each patient’s symptoms, with a level of detail somewhat irrelevant to a conventional doctor, Oskins says.

Homeopathy is a type of treatment, under naturopathic medicine, that concentrates on healing and treating a patient’s entire being.

“Naturopathic physicians really treat the root cause of the problem and not just the symptoms,” says Marianne Marchese, naturopathic physician and adjunct clinical faculty at the Southwest College of Naturopathic Medicine in Tempe. “Instead of just giving them a drug or herb for the headache, I actually figure out why they are having headaches.”

While homeopathy is the most common alternative medicine used in the world, according to Oskins, interest and awareness in naturopathic medicine and homeopathic treatment has increased. In fact, it has trended over the past four years in the Valley and business has doubled, according to Marchese.

“People are definitely looking for alternative and conventional medicine instead of just drugs,” Marchese says. “For example, people are really looking to increase their knowledge to improve their health on their own, or they look for natural medicines instead of medication to treat or prevent their own conditions.”

For more information about homeopathy, visit www.aznaturalhealth.com or call (480) 456-0402. If you’d like more information about naturopathic medicine, call the Southwest College of Naturopathic Medicine at (480) 970-0000.


Brainwave Optimization - Scottsdale Living July/August 2011

Brainwave Optimization Balances And Harmonizes Brainwaves

Brainwave Optimization balances and harmonizes brainwaves, clears the mind and diminishes health problems

Some say music is relatable; it’s therapeutic and alters moods. But did you know music has the ability to balance brainwaves and diminish the after effects of trauma to the brain?

In 2000, Lee Gerdes, founder and CEO of Brain State Technologies in Scottsdale, needed relief and to gain his life back.

He found his cure after nine years of enduring post-traumatic stress disorder following a
violent assault.

After years of unsuccessful treatment, he put his knowledge of physics, math, psychology and science to use. He began looking closely at the brain and how it works, realizing that the problem was rooted there. Studying his brain patterns using rudimentary software and ECG hardware, he came to a conclusion.

He reported distinct brain patterns during feelings of positivity and negativity. When he was feeling good, his brain patterns were close together, and when he was feeling bad, they were far apart.

Gerdes then studied the range of frequencies and turned them into musical notes, which he then played back to himself. The brain hears and resonates with the healthy patterns, balancing and harmonizing the brainwaves.

This is called Brainwave Optimization with Real-Time Balancing. It’s a non-intensive, holistic method in which the client sits back, relaxes and sensors are placed on strategic spots on the head. The technologist then plays back the transformed music notes, collects the information and helps interpret the data afterward. The science behind the music notes can be explained by comparing the brainwaves and notes to tuning chords.

“Say you have two tuning chords, and you strike one, and the other one picks up on it, and you stop the first one,” Gerdes says. “You take your hand off the first one, and the first one picks up from there; the second one resonates back to it … a loop. That’s what I did with my brain.”

Gerdes’ symptoms dramatically diminished. Now, a decade later, Gerdes’ Brainwave Optimization has helped more than 30,000 people, both nationally and worldwide, to manage various conditions, including addiction, anxiety, lack of concentration, stress, weight management and insomnia (the most common reason why most try Brainwave Optimization). General stress, anxiety and depression are close behind.

Brainwave Optimization isn’t a treatment or cure, but a means to become more clear minded, which in turn helps diminish problems, according to Gerdes.

“(Brainwave Optimization) isn’t meant to attack the disease,” Gerdes says. “It’s meant to inspire the body to take control of it. And what we’re doing is inspiring the brain in that state to take control of things as well, but to do so from the position of being helped and not being stuck in either a freeze or flight response to trauma.”

Business executives and professional athletes also are taking advantage of Brainwave Optimization. About five percent of the 30,000-plus Brain State Technologies’ clients are business executives. They use the procedure to balance their brainwaves to gain that extra edge. As for athletes, Brainwave Optimization helps improve concentration, focus, clarity of thought and dexterity.

One client in particular, Alexandria Houser, tried Brainwave Optimization for her ADD. She didn’t like the idea of taking anti-depressants and consuming pills. After her experience with Brainwave Optimization, she is now off the medications in just 15 sessions.

“After a recent session, I described the feeling I had as a window in my mind opened up and let fresh air in,” Houser says. “I feel calmer, less tense, less aggressive about my own opinions and more open to my friends and family. (I’m also) craving unhealthy foods less and less, which isn’t always easy at nearly eight months pregnant.”

Gerdes says in the future he hopes Brain State Technologies will have the ability to identify problems that patients may not be aware of.

“I would say in time that ability will grow as we have a lot more clients, because then we’ll have strong enough data patterns to identify the potentiality of problems or pathologies as well as intentionally diagnosing those problems,” Gerdes says.

However, Gerdes and Brain State Technologies maintain that the sole mission is simply to help people and guide the brain back to a natural, healthy state.

Brain State Technologies has more than 130 centers across the nation and 16 in other countries, with the headquarters in Scottsdale.

For more information about Brainwave Optimization, visit www.brainstatetech.com or call (480) 588-6840.

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Brain State Technologies

15150 N. Hayden Road, Suite 106
Scottsdale, AZ 85260
(480) 588-6840


Retail Centers - AZRE Magazine July/August 2011

Arizona's Retail Centers Are Top Economic Drivers

Arizona’s Retail Industry, Retail Centers Top Economic Driver

The world of retail has come a long way since Arizona’s first shopping center, Park Central Mall, opened in 1957. Back then, the state was known mostly for cowboys, cactus and critters.

How times have changed.

Arizona’s retail industry is now one of the state’s top economic drivers, as spectacular shopping centers have sprung up from the desert floor over the years.

The History of Arizona’s Shopping and Retail Centers

Built in 1961, trendy Scottsdale Fashion Square is Arizona’s largest retail center at 2 MSF. The Westcor-developed mall is home to high-end retailers such as Barneys New York, Nordstrom, Gucci and Neiman Marcus.

To appreciate the history of retail in Arizona, however, one simply needs to return to its roots: Park Central Mall.

Located on Central Avenue in midtown Phoenix, Park Central Mall originally was anchored by Goldwater’s, Diamond’s and a “five-and-dime” store. It was an open-air facility that helped put Arizona on the real restate map. It served as the first stepping stone to Arizona’s long history of retail. The next two major projects — Christown Mall and Metro Center — also are key milestones on that timeline. Rick Hearn, director of leasing at Vestar Development Company, recognizes their historical importance.

“Christown, Metro Center, Park Central — what was happening in Arizona was also happening around the country. We were in step with the rest of the world,” Hearn says.

Christown, now known as Phoenix Spectrum Mall, was Arizona’s third shopping center. As the state’s first closed center, it also was one of the first air-conditioned malls in the Western United States.

According to Stan Sanchez, president and partner of De Rito Partners, much of Christown’s appeal and success were a result of the surrounding mixed-use amenities. There were multiple components including hotels, auto malls and other retail stores. These elements enhanced Christown’s viability in particular, and Arizona retail in general.

Metro Center, at 1.39 MSF, is Arizona’s second largest retail center. When it opened in October 1973, it was considered one of the largest malls in the country. With two levels and a series of popular anchors, Metro Center set a great precedent for later retails projects in Arizona and the U.S.

According to Hearn, Metro Center was a step away from the typical “mom-and-pop centers,” but certainly a step in the right direction. It wasn’t just a retail center; it was a commercial location as well, building on the mixed-use components for which Christown had previously become famous.

Malls such as Metro Center catered to typical shoppers and enabled them to purchase multiple, everyday needs in one easy trip.

“As (retail) developers we really have to cater to the retailers,” says Jim Pederson, chairman of The Pederson Group. Pederson, along with other real estate developers, also made it a point to identify the needs of the consumers.

Metro Center was a stepping stone to the next level for Arizona, De Rito’s Sanchez says. And that next level would be achieved with each additional project after Metro Center. Scottsdale Pavilions, recently renamed The Pavilions at Talking Stick, was built in 1989. It was one of the first retail centers built on Native American land in Arizona.

Today it’s a 1.1 MSF open-air “power center” with retailers such as Sports Authority, Target, Home Depot and Walmart. According to Chuck Carlise, president of De Rito Partners, the strongest anchors for shopping centers are grocery stores. As the “bread and butter” of De Rito and other developers, grocery stores have proven to be a very successful format for retail.

But more goes into building a successful retail center in Arizona than just anchor stores, especially in the unavoidable heat of the desert. In the middle of summer, shoppers need a place to go and a place to eat that will shelter them from the blistering sun. With retail centers such as Mesa Riverview and Tempe Marketplace, there is the option to shop, eat or play inside and out.

“It’s important to withstand the extreme temperatures while still taking care of the people’s needs” Pederson says.

Mesa Riverview, a De Rito development that opened in 2007, targets a broad audience and all aspects of the consumer with office buildings, auto malls, retail stores and other commercial businesses. From a trendsetter’s standpoint, Hearn of Vestar understands the need for people to avoid the heat and the need to design projects that can keep them cool and happy.

Part of what keeps shoppers happy is the lifestyle component of destinations such as Kierland Commons and Scottsdale Quarters, which include residences, hospitality, entertainment, office and retail.

Designed in 1997 to be the first urban village to integrate mixed-use with outdoor shopping, Kierland Commons (on the Phoenix-Scottsdale border) opened in 2000 and has served as a benchmark for similar mixed-use projects around the nation.

“If you were able to take a look from a satellite view, it was really the evolution of the communities that led to the method the developers used to custom tailor the development to Arizona’s lifestyle and how they wanted to live” Sanchez explains.

CityScape in Downtown Phoenix is another example of how Arizona retail has evolved. As Phoenix grew, CityScape, a mixed-use skyscraper, became a part of the downtown skyline. Part of the appeal, according to Hearn, is the downtown office, urban feel that CityScape provides. It’s unique to the area, but gives Phoenix a great deal of character. The only aspects missing are quality residential developments.

Despite the recession and record-high vacancy rates in Arizona’s retail sector, there is hope for the future.

“Phoenix has always rebounded,” Hearn says. “We’re in the top 11 states for job growth and for relocation. We have a quality of life that no one else has.”

That quality of life is evident at such retail projects as Scottsdale Fashion Square, Chandler Fashion Square and San Tan Village in Gilbert

From its start in 1957, Arizona retail has grown into a formidable industry across the state. With mixed-use, open air and luxury options, shoppers have every aspect of retail at their fingertips.

“The beauty of how Arizona’s retail has evolved is the fact it created your Saturday mid-day experience,” Sanchez says. “Arizona developers have given the public all they need for every day of the week.”

AZRE Magazine July/August 2011

AHCCCS Alternative - AZ Business Magazine July/August 2011

AzHHA Proposes Alternative To Medicaid Reform Plan, AHCCCS

AzHHA and other health care organizations propose an alternative to Gov. Brewer’s Medicaid reform plan, the Arizona Health Care Cost Containment System ( AHCCCS )

The economic recession has had an impact on industries across the board and health care in Arizona is no exception. Arizona hospitals have lost more than $700 million in state and federal Medicaid funds since 2008 due to previous payment cuts and freezes and another $530.7 million in cuts is headed to hospitals in fiscal year 2012, bringing the total cuts to $1.3 billion.

To address the state’s fiscal woes, the Legislature passed a budget that authorizes several reforms to Arizona’s Medicaid program, the Arizona Health Care Cost Containment System (AHCCCS).

On March 15, 2011, Gov. Jan Brewer presented her plan, which includes reforms that will lower costs by an estimated $500 million in the State’s General Fund for the partial first year.

Included in these reforms is a phase-out plan for the Proposition 204 population — a voter-passed initiative that entitles anyone whose annual income is equal to or below the federal poverty level of $11,000 annually for an individual to AHCCCS coverage.

In a statement on the organization’s website, the Arizona Hospital and Healthcare Association (AZHHA) stated they are “deeply concerned that the budget will damage Arizona’s economy at a time when we are struggling mightily to recover from the recession. The budget authorizes the Arizona Health Care Containment System (AHCCCS) Administration to alter eligibility in a way that could result in 160,000 patients losing their healthcare coverage and financially harm the hospitals and healthcare professionals who will care for them when they become ill or injured.”

The most pertinent matters to AzHHA include: the 5 percent cut in all provider payments; the elimination of the Medical Expense Deduction program for patients with catastrophic illnesses and injuries; elimination of federal emergency services coverage for foreign national patients; and implementation of an inpatient bed day limit.

“Each of these proposals will increase the cost of uncompensated care hospitals provide, part of which will be passed on to patients with private health insurance,” says Laurie Liles, president and CEO of AzHHA.

“When AHCCCS and other government programs stop paying for care or pay hospitals significantly less than the cost of caring for their patients, hospitals must make up these losses elsewhere,” Liles adds. “Some hospitals — particularly those located in small, rural communities that operate on very slim margins and serve a high number of AHCCCS patients — have little ability to shift their costs to commercial plans. For those hospitals, the cumulative effect of the AHCCCS budget cuts will be devastating,”

As CEO of a hospital in a rural community, Tim Barnett of Yavapai Regional Medical Center understands this all too well: “Cutting expenses may seem like a good short-term solution but when those cuts are carefully and thoroughly analyzed, it’s clear that the long-term ramifications are potentially disastrous,” Barnett says. “It is far more prudent to think in terms of identifying additional sources of cash coming into our state for the benefit of all our residents.”

According to Barnett, Yavapai Regional Medical Center will lose at least $14 million annually from the cuts in AHCCCS funding.  This amount is more money than the center’s annual net revenue.  “We would have to look at very drastic changes in how we serve our community… The cuts would affect our ability to care for everyone, not just AHCCCS patients,” Barnett says.

Jim Dickson, CEO of Copper Queen Community Hospital in Bisbee agrees. “It will have a severe economic impact… They’re downsizing the healthcare system substantially, Arizona is already undeserved and we’re going even lower.”

On average, AHCCCS now pays hospitals less than 70 percent of the costs they sustain caring for Medicaid patients. Weathering the recession has been difficult enough and these additional cuts would force hospitals to cope with losses by delaying construction projects, some staff may experience salary freezes and furloughs, eliminating certain high-cost services, leaving vacant positions unfilled and more.

Though AzHHA supports Governor Brewer’s effort to preserve coverage for the existing Proposition 204 population, their goal is to maintain coverage for even more Arizona residents. AzHHA along with a coalition of Arizona hospitals, Medicaid health plans and skilled nursing facilities has proposed a viable alternative to the proposed reforms — a special health care assessment that would generate $465 million to protect coverage for low-income Arizonans.

“AzHHA believes the special healthcare assessment represents a fiscally responsible alternative to AHCCCS cuts included in the recently enacted state budget and the cuts included in the governor’s Medicaid Reform Plan,” Liles says.

AzHHA’s proposal, developed with the Arizona Association of Health Plans (AzAHP) and the Arizona Health Care Association (AHCA), would be tied to available funds and bring in $465 million annually, which would then generate two federal matching dollars for every one dollar from the assessments. The assessments would also stop reductions in health care provider rates, a component of Gov. Brewer’s proposal.

“Part of the federal match would be used to reimburse providers for the assessment, so there is no pressure to pass the assessment on to commercial insurers, business or patients,” Liles says. “The assessment is a ‘loan’ to the state to bring in additional federal dollars to help cover people enrolled in the Proposition 204 program.”

The federal matching funds would come from federal tax dollars that Arizonans are already paying and the assessment is considered to be a short-term solution through 2013 while the economy recovers. In the meantime, the organization plans to work with policy makers on a long-term plan to streamline Medicaid utilization and improve quality of care. Many of the hospitals that may otherwise be adversely affected by Gov. Brewer’s reforms have a positive outlook on the health care assessment.

“AzHHA’s proposal is definitely a good alternative… The best-case scenario would be for the legislature and the governor to work collaboratively along with AzHHA and its colleagues to implement the best solutions for patients,” Barnett says. Recognizing the economic difficulties Arizona is facing and a shared mission of helping heal the state’s economy is something Barnett hopes will bring both sides to a resolution.

“We’re blessed that we already have that solution developed…  AzHHA, nursing homes, Medicaid insurance plans and hospitals throughout Arizona are focused on how we can contribute to the solution and how we can help make Arizona an even better place to live and work,” he says.

AzHHA plans to work with policy makers to ensure that lawmakers reconsider their health care assessment and support this alternative to eliminating health care coverage and provider payment cuts.

AHCCCS Cuts Hurt Arizona’s Economy

  • The Arizona Health Care Cost Containment System (AHCCCS), the state’s Medicaid program, is a shared matching program between the state and federal government. For every $1 the state puts in, the federal government matches it with $2.
  • A rollback of the Prop. 204 population would result in a loss of nearly $1.5 billion in state and federal funding. The annualized impact is $2.27 billion.
  • If Arizona chooses to opt-out of the Medicaid program, the state will be removing $7.2 billion in federal money from the economy.
  • Money spent on healthcare is a long-term investment that pays off. The healthcare sector is vast, and there are many large and small companies in various industries. It is also one of the only areas of the economy that has continued to grow throughout the recession.


AHCCCS Cuts Result in Job Losses

  • As lawmakers struggle to recover the 300,000 jobs lost during the current recession, cuts to the AHCCCS program undermine these efforts by causing more jobs to be lost.
  • Arizona currently holds a 9.4% unemployment rate.
  • Scaling back Prop. 204 will eliminate 13,568 private-sector healthcare jobs and 30,000 jobs across all areas of the private sector, as well as a reduction of $2.5 billion to the gross state product in the first full year of the rollback.
  • A total elimination of Arizona’s Medicaid program would result in a loss of 159,000 jobs, nearly 82,000 in healthcare alone. The healthcare jobs that will be affected are high quality, high-paying positions such as physicians, physician assistants, nurses, dentists, physical therapists, and behavioral health professionals.
  • These cuts and resulting job losses then create an access-to-care issue (particularly in rural areas) for all patients when services and the professionals who provide them are no longer available.


AHCCCS Cuts Create a Cost Shift to Arizona’s Businesses

  • Healthcare providers often respond to reductions in AHCCCS payments by shifting a portion of the cost to private payers and insurance companies, which results in higher premiums for Arizona’s businesses and the privately insured.
  • This cost shift limits the ability for businesses to grow and prosper.


Sources: The Potential Economic Impact of Withdrawing from Medicaid in Arizona. January 2011. W.P. Carey School of Business, Arizona State University.
Arizona Chamber of Commerce

Arizona Business Magazine July/August 2011