Tag Archives: June 2010

Building And Maintaining A Green Office - AZ Business Magazine June 2010

The True Benefits Of Building And Maintaining A Green Office

When it comes to the design and operation of your office space, going green can actually green your bottom line. Consider the current findings: According to a 2008 study by the General Services Administration, commercial green buildings on average consume 26 percent less energy, can reduce overall operating cost by more than 10 percent and have a 27 percent higher occupant-satisfaction rate.

However, even with the recent evidence supporting the value of green design, it is estimated that only one out of nine new construction projects are designed with green building attributes. Perhaps the misconception that green design costs substantially more, along with limited knowledge and resistance to change, are to blame for the missed opportunity to save money, increase workspace efficiency and occupant well-being, and conserve our limited natural resources.

Healthy performance
One of the greatest benefits of green design, although sometimes difficult to measure, relates to the overall health, happiness and satisfaction that building occupants report in green office spaces. As indicated in the Journal of Sustainable Real Estate 2009, occupants working in a green office space are found to be 30 percent more productive than in a conventional working environment. These benefits come in the form of lower absenteeism, fewer headaches at work, greater retail sales and easier reconfiguration of space, resulting in less downtime and lower costs. In addition, the contribution of a green office space has been estimated by sources such as the Annual Review of Energy and the Environment to save companies $17 billion to $48 billion in total health gains, and $20 billion to $160 billion in worker performance.

Connecting ROI to the bottom line
Now is the time to make the business case to go green. If the performance issues related to employee productivity aren’t enough to convince you, consider that building sale prices for energy-efficient structures, according to the U.S. Green Building Council (USGBC), are as much as 10 percent higher per square foot than typical, high-energy consumption buildings. In addition, average occupancy rates of green projects are 3.5 percent higher.

Regarding the investment to build green, a study titled, “The Costs and Financial Benefits of Green Buildings: A Report to California’s Sustainable Building Task Force,” determined that an upfront investment of just 2 percent in green building design, on average, results in life cycle savings of 20 percent of the total construction costs — more than 10 times the initial investment. As more building owners and occupants strive for this transparent green business case, the backing of these recent financial findings and case studies has made it more viable to gain confidence that your minimal upfront investment will be more than worthwhile. Obviously, no one-size-fits-all solution exists in the design and construction of green buildings, but a knowledgeable, integrated sustainable design team can make well-informed, project-specific ROI estimates. Building and designing green is certainly a smart option for those who plan to own a building for several years, as value-impact results derive from not only rent, but also lower operating expenses and lower capital rates.

The benefit of third-party certification
Understanding these benefits of green design to your business is a foundation for change. If you are planning an upcoming major renovation to your space or relocation, start by pursuing a Leadership in Energy and Environmental Design (LEED) certification for your project. LEED is an internationally recognized green building certification system providing third-party verification that a project is designed and built utilizing strategies for improving performance across these metrics: energy efficiency, water conservation, carbon emissions reduction, improved indoor air quality and limited use of our precious natural resources.

Developed by the USGBC, LEED provides building owners and operators a comprehensive approach to identifying and implementing green building design, construction, operations and maintenance solutions. Clearly the cost of going green varies by market and location, but as a generalization, initial costs associated with a basic LEED certification for your project hover just 0.6 percent above the total construction cost. Contracting the services of an educated and experienced team (designer, engineer and contractor) will best guide you successfully on this path.

A greener way to work
If you currently occupy an office space and have no intention of planning a major renovation or moving to a new building, opt for a variety of options to retrofit your space into a healthy, holistic, low-impact environment:

Include your staff, improve morale and ask for volunteers to create a Green Team to generate creative ideas, such as reducing consumption and waste in the office.

Stay home:
Flexible work schedules, including telecommuting, can save you time, reduce company overhead expenses and increase staff satisfaction. This can be easily achieved due to current technological advances such as instant messaging, video conferencing and other innovative workflow tools.

Shed light:
Change out standard incandescent bulbs to more energy-efficient CFLs (compact fluorescents), and install electronic motion light sensors in an effort to conserve energy.

Cut paper:
Consider purchasing or leasing more energy-efficient printers and copiers. Opt for models with double-sided printing capabilities. Select eco-friendly office products, such as those made from recycled paper.

The greenest paper is no paper at all. Explore options for a paperless environment by promoting electronic filing procedures and defaulting computers to low-energy settings.
Consider adjusting your current office layout for optimizing views to nature and gaining access to natural light. Not only could this improve staff morale, productivity and overall satisfaction, it also may reduce your energy bill with more emphasis on utilizing daylight.

Clean green:
Considering the importance of healthy indoor air quality means choosing green cleaning products and supplies. Conventional cleaners often contain chlorine, phenol, ammonia or formaldehyde, which are toxic. According to the U.S. Environmental Protection Agency, inside air is typically two to five times more polluted than the air outside, and in extreme cases 100 times more contaminated, largely due to common products and cleaners. Inquire with your building management or cleaning company about options for less toxic, more environmentally friendly options.

No excuses:
The results of a green office can be astounding. Greening your office demonstrates environmental responsibility with the added benefit of a positive financial impact, and most of all, it can be a place where your building occupants and employees work happy and healthy.

Arizona Business Magazine June 2010

State’s Tough, New Immigration Law - AZ Business Magazine June 2010

Business Leaders are Concerned About the Repercussions the State’s Tough, New Immigration Law Will Have on Arizona’s Still Struggling Economy

Opponents of Arizona’s toughest-in-the-nation immigration law charge that it is unconstitutional and will lead to racial profiling, specifically targeting Hispanics. Supporters counter that the state statute corresponds with federal law and is designed to deal with those who break the law by entering the country illegally. Caught in the crossfire is Arizona’s fragile economy.

Regardless of where one falls on the SB 1070 debate, there is no doubt that it is having negative repercussions on the state’s economy. How severe those repercussions will be is unknown, and Valley and state business leaders are working hard to head off any further damage.

“It’s a negative and it’s not helping us,” said Barry Broome, president and CEO of the Greater Phoenix Economic Council.

The Phoenix City Council was told the city alone could lose up to $90 million in hotel and Phoenix Convention Center business over the next five years. At press time, city officials were monitoring at least 19 upcoming events, including some that already had pulled the plug on Phoenix, said Deputy City Manager Dave Kreitor.

Last month, Los Angeles became the largest city in the nation to prohibit its local government from doing business in Arizona unless the immigration law is repealed. There are estimates that the L.A. boycott could affect up to $8 million worth of contracts with Arizona. About two-dozen groups already have pulled events from Arizona, which tourism officials say has cost the tourism industry millions of dollars.

SB 1070
On April 23, Gov. Jan Brewer signed Senate Bill 1070 into law, making it a crime under state statute to be in the country illegally. Wording in the original law directed local police to question people they had made “lawful contact” with about their immigration status if there was reason to suspect they were illegal. Amendments to the law days after Brewer signed it included changing “lawful contact” to “lawful stop, detention or arrest”; and adding that officers cannot base their reasonable suspicion on race, color or national origin. The law goes into effect on July 29.

Although boycotts already have begun impacting the state’s tourism industry, Brewer said she has no intention of backing down. The state had to act, she said, because the federal government failed to secure the border with Mexico.

In a statement titled “Misguided Boycott,” Brewer said that when she signed the legislation, “I stated clearly I will not tolerate racial discrimination or racial profiling in Arizona.”

In response to a question about what Brewer can and will do to turn around the spread of boycotts and meeting cancellations, the Governor’s Office released this statement: “Governor Brewer will continue to aggressively oppose economic boycotts as a thoughtless effort that harms innocent families and businesses. Both proponents and adversaries of SB 1070 in Arizona have come out in staunch opposition to an economic boycott, including most recently Congresswoman (Ann) Kirkpatrick and the Tucson Hispanic Chamber of Commerce.”

Brewer went a step further in May when she announced the formation of a task force charged with rebranding the state as a tourist destination. Brewer said it was time to “get the truth out there” about the law.

Meanwhile, polls taken before and after the law’s passage show Arizonans’ support of the statute is fluctuating. A Rasmussen poll taken a week before the law was signed showed 70 percent of residents supported the measure. A survey taken a week after the law was signed showed support dropping to 52 percent. National polls have consistently shown strong support for the law.

“When you think of Arizona now, you think of this immigration law.  That’s not the first thing you want people to think of.” – Barry Boome, Greater Phoenix Economic Council

Threat to tourism
Debbie Johnson, president and CEO of the Arizona Hotel & Lodging Association, released a statement saying the tourism industry is “deeply concerned about the repercussions that will result from the debate around Senate Bill 1070.”

The statement from Johnson, who also leads the Valley Hotel & Resort Association and the Arizona Tourism Alliance, continued: “Arizona tourism is currently in a very fragile state of recovery and the negative perceptions surrounding this legislation are tarnishing Arizona’s image and could easily have a devastating effect on visitation to our state.”

Any loss of business negatively impacts the tourism industry and “directly affects the paychecks and health benefits of our most vulnerable tourism employees as well as their families,” Johnson added. She also stated that the tourism industry provides 200,000 jobs and $1.4 billion in tax revenues to state, city and county budgets.

Kristen Jarnagin, communications director for the Arizona Hotel & Lodging Association, said that as of the first week of May, 23 groups had cancelled meetings in Arizona, resulting in a loss of up to $10 million.

One group that pulled out is the American Immigration Lawyers Association, which canceled a fall conference in Scottsdale. Another is the African-American Alpha Phi Alpha Fraternity Inc., which was supposed to hold its convention in Downtown Phoenix in July, bringing an estimated 5,000 attendees and as many as 10,000 visitors. Instead, it’s going to Las Vegas.

Corporate impact
Some Arizona companies also are feeling the sting generated by the controversy. Some opponents of the law are urging people not to fly Tempe-based US Airways or to rent trucks from Phoenix-based U-Haul.

Even the state’s professional sports teams have been affected. Pickets urging a boycott of Arizona took place outside of Wrigley Field in Chicago when the Arizona Diamondbacks were playing the Cubs there. In addition, Sen. Charles Schumer (D-NY), has called on Major League Baseball to pull the scheduled 2011 All-Star game out of Phoenix.

Derrick Hall, president and CEO of the Diamondbacks, said he was concerned, but noted that planning for the game has advanced to the point where “it would be difficult to back off … for 2011.” MLB Commissioner Bud Selig has been ignoring the boycott calls.

Phoenix Suns Managing Partner Robert Sarver stepped into the middle of the debate in May, by announcing that the team would wear its “Los Suns” jerseys in recognition of playing on Cinco de Mayo. Then he added that “frustration with the federal government’s failure to deal with the issue of illegal immigration resulted in passage of a flawed state law.”

But has the federal government’s failure to secure the border with Mexico cost Arizona business? Some of the state’s top economic development experts say no. Shortly after the law was signed, Broome of GPEC said he had never heard of any businesses that were considering relocating to Arizona expressing concerns about the state’s porous border with Mexico.

“In our discussions with companies looking to move to Arizona, we want to begin and end with good things — the emergence of (Arizona State University), quality of life and a talented work force,” Broome said. “The biggest hardship is on the brand. When you think of Arizona now, you think of this immigration law. That’s not the first thing you want people to think of.”

David Drennon, director of communications for the Arizona Department of Commerce, agreed with Broome that the flow of illegals across the border has been a non-factor in business relocation decisions.

“Actually, the proximity to Mexico is advantageous, giving businesses access to markets in Mexico and even South America,” Drennon said
As Arizona’s No. 1 trading partner, Mexico imported $4.5 billion worth of Arizona products such as semiconductor chips, machinery and plastics in 2009, according to the Arizona Department of Commerce.

What needs to happen next, Broome said, is for business and government leaders to clearly communicate the law’s intention.

“This law was signed without a clear understanding of how we are going to get involved in a communications strategy,” he said. “People need to understand that this is a law that mirrors federal law. That’s been lost.”

While the experts say the illegal flow of immigrants into Arizona has not chased away relocating companies, the storm over the new law is causing some out-of-state corporate anxiety.

Laura Shaw, senior vice president of marketing and communications at Tucson Regional Economic Opportunities (TREO), noted that officials with two major relocation prospects for the Tucson area say they are concerned about the uproar the immigration law has sparked.

“But they haven’t said no,” Shaw quickly added. The two prospects are in aerospace and bioscience, and would provide hundreds of jobs.

“Businesses looking to relocate or expand don’t like controversy,” she said.

Politicians, pundits and stars
It was precisely controversy that attracted high-profile celebrities to Arizona, including civil rights leader the Rev. Al Sharpton, actor Danny Glover and Colombian singer Shakira. And, in protest, comedian George Lopez canceled an appearance at an Indian casino just south of Phoenix.

As the Arizona bill was making its way through the capitol, the state’s two U.S. senators, John McCain and Jon Kyl, announced a 10-point border security plan. Among other things, it calls for deploying 3,000 National Guard troops along the Arizona-Mexico border and permanently adding 3,000 more Custom and Border Protection agents in the state.

McCain, who came out in support of the immigration law, said the current wave of protests and what happened after Arizona voters rejected a paid Martin Luther King Jr. holiday in 1990 are completely different.

“One was about honoring a civil rights hero who a majority of Americans held in extremely high esteem,” he said. “The other is about an issue of national security and the security of our citizens, where we have broken borders and are literally overwhelmed with both human smuggling and drugs.”
After the King vote, which was reversed in another election two years later, the NFL pulled the 1993 Super Bowl from Arizona. Estimates of lost convention business in the Phoenix area alone topped $190 million.

J.D. Hayworth, a former U.S. congressman and McCain’s opponent in this year’s hotly contested GOP primary, had urged Brewer to sign the law. In 2005, while still in Congress, Hayworth introduced the Enforcement First Act, which focused on border security. The bill did not pass. Hayworth’s press secretary, Mark Sanders, said the former congressman is continuing his efforts to seal the border.

“That’s where we start,” Sanders said. “And no amnesty. No reward for illegal behavior.”

U.S. Rep. Raul Grijalva, a Democrat who represents Southern Arizona’s 7th Congressional District, created an uproar of his own when he called for a boycott of a large chunk of the state’s tourism industry.

In a statement made a few days after the law was passed, Grijalva said, “This is a specifically targeted call for action, not a blanket rejection of the state economy … we are calling on businesses and organizations not to bring their conventions to Arizona until it recognizes civil rights and the meaning of due process. We don’t want to sustain this effort any longer than necessary. It’s about sending a message.”

Boycotting boycotts
James E. Garcia, director of communications for the Arizona Hispanic Chamber of Commerce, said his organization does not support the boycotts, but it is concerned about civil rights issues.

“We believe passage of this bill sends a message to the country and world that Arizona is somehow under siege by immigrants,” Garcia said. “That kind of message tells people: don’t start a business in Arizona and don’t be a tourist here.”

David Roderique of the Downtown Phoenix Partnership said the organization had arranged to have several individuals ask Brewer to veto the bill, fearing an economic backlash. After the law was signed, partnership representatives were involved in pitching Phoenix to the Democratic National Committee as the host city for the 2012 Democratic National Convention.

“The likelihood of the Democrats coming here now is zero,” Roderique said. “We have a definite concern that this will create a significant economic impact when we can least afford to have another major disruption.”

In May, the Republican National Committee bypassed Phoenix as the host of the 2012 Republican National Convention. AZGOP Chairman Randy Pullen immediately issued a statement saying that many would cite the new immigration law “as one of the reasons that Phoenix was not chosen (and) nothing could be further from the truth. Members of the RNC overwhelmingly support the immigration bill signed … and Republicans from coast-to-coast stand with Arizonans as we fight to secure our border.”

To that end, Roderique noted that if several other states pass similar laws, some of the spotlight might be shifted away from Arizona.

“If we’re not the lone wolf out there and other states are doing this, the feds are going to have to act,” he said. “It should not lie in individual states or individual municipalities to try to enforce immigration laws. We need a comprehensive federal reform package.”

At the Greater Phoenix Convention & Visitors Bureau, Doug MacKenzie, director of communications, said it was “misguided to bring the tourism industry into the crosshairs of this political issue.”

The CVB, which is trying to dissuade groups from considering boycotts, stated that “we may never know the full impact that all the publicity surrounding the passage” of SB 1070 will have on decisions by visitors and organizations choosing convention sites.

Michael Stawiarski, president of the Arizona Sunbelt Chapter of Meeting Professionals International, released a statement from the organization’s national president, Bruce MacMillan, blasting the boycotts: “Using travel boycotts as a political weapon in Arizona (or anywhere) only hurts the local communities and the 200,000 workers in the state that benefit from the meeting and event industry.”

gpec.org | azhla.com | aila.org | azcommerce.com | treoaz.org | azhcc.com | visitphoenix.com | tucsonchamber.org

Arizona Business Magazine June 2010

At First Fridays, thousands of residents and visitors gather - AZ Business Magazine June 2010

Downtown Art Walk Is A Homegrown Success

If you’ve ever been to the Downtown Phoenix area on the first Friday night of the month, you most likely noticed that the streets were alive with people. At First Fridays, thousands of residents and visitors gather to tour more than 70 galleries, venues and art-related shops in what has become one of the largest, free, self-guided art walks in the country.

The event has come a long way since its humble beginnings in 1994, when it was “an informal, self-guided tour of art spaces Downtown,” says Greg Esser, a key player in the Artlink First Fridays program. Today, the events attract more than 15,000 people to the Downtown area each month.

Esser credits the Greater Phoenix Convention and Visitors Bureau (GPCVB) in part for the growth and success of First Fridays.

“The GPCVB has been a critical partner in making sure this success doesn’t remain a ‘best kept secret,’” he says. “ The efforts of the GPCVB have expanded the word-of-mouth phenomenon that started First Fridays, into national coverage and recognition for the event that now attracts visitors from well beyond the state line.”

Doug MacKenzie, director of communications for the GPCVB, calls First Fridays the perfect way to showcase “Downtown at dark,” as well as the talented artisans and vibrant art culture that exists and thrives in the area. He adds that First Fridays is just one of the “various segments that weave a pattern of hospitality and uniqueness” throughout the Downtown Phoenix area.

Beyond simply bringing people together on a Friday night to enjoy tours of local art galleries and museums, Esser believes, “The arts have been both a catalyst and a beneficiary of the growth and development of Downtown. Audiences have attracted new development and new development has attracted more audiences.”

Specifically, he notes Arizona State University’s new presence in Downtown and the development of the light rail as helping to give First Fridays events new life.

“The presence of ASU Downtown has infused new vitality, participation and programming on the part of students, staff and faculty,” he says. “Light rail has created a widely popular way to experience First Fridays without the challenges of parking Downtown.”

Despite the event’s success in attracting more and more people each year, it has not been immune to the state’s current economic troubles.

“The recent decline in consumer spending has created a significant strain on many of the businesses, artists and cultural organizations that are vital to Downtown,” Esser admits. “We have unfortunately lost a handful of businesses.”

This recognition of the harsh realities of the economic upheaval prompts Esser, who is now director of civic art for the Los Angeles County Arts Commission, to send Valley residents a message.

“Now more than ever it is important to spend locally and support those who have committed all of their energy and resources into creating a more vibrant community Downtown,” he says.

He anticipates First Fridays attendance will continue to expand over the next five years from its current monthly status of 15,000 visitors.

“I hope to see that number continue to grow to where (we) attract 100,000 visitors that support the rich fabric of Downtown neighborhoods, including Roosevelt Row, Grand Avenue, Garfield, the Warehouse District, Melrose, Coronado, the Museum District and the newly emerging CityScape and East McDowell Arts District — 10,000 visitors in 10 Downtown neighborhoods,” Esser says.

MacKenzie echoes those sentiments and notes that the GPCVB’s marketing efforts highlight all the services in the Downtown Phoenix area, as well as unique events such as First Fridays. He believes that despite the economic challenges, Downtown Phoenix is starting to become a “destination Downtown” in which people come to check out an event and then stay at one of the new or revamped hotels in the area.

“There is a glimmer of hope,” MacKenzie says. “We just need the spirit to move forward.”

Quick Facts

First Fridays

First Fridays runs all year from 6-10 p.m.

Free event shuttles run throughout the tour route, so you can get on/off wherever you choose.
The shuttles initiate at the Phoenix Art Museum, First Fridays’ headquarters.
Free parking is available at the museum, as well.

While local artists are highlighted, you can also check out pieces from national and international artists.

Arizona Business Magazine June 2010

Federal Rule Aimed At Stopping Identity Theft - AZ Business Magazine June 2010

Businesses Need To Prepare For A New Federal Rule Aimed At Stopping Identity Theft

Starting this month, the Federal Trade Commission (FTC) will begin enforcing a new law, the Red Flags Rule, to combat identity theft. It regulates most businesses that sell goods or services without a contemporaneous payment. It requires businesses to adopt written policies identifying and addressing red flags of identity theft patterns, practices or specific activities that indicate the possible existence of identity theft.

Since other laws already require businesses to safeguard personal information, the rule’s purpose is to prevent identity theft after personal information is misappropriated. Because the rule potentially applies to a universe of businesses, every business will need to understand the rule, determine whether it applies and comply, if necessary.

The rule requires any creditor maintaining covered accounts to “develop and implement a written Identity Theft Prevention Program that is designed to detect, prevent, and mitigate identity theft in connection with the opening of a covered account or any existing covered account.” A creditor’s administration of its program involves proper program adoption and effective enforcement, training and supervision.

The rule broadly defines a creditor as “any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit.” It defines credit as “the right granted by a creditor to a debtor to defer payment of debt or to incur debts and defer its payment or to purchase property or services and defer payment therefore.”

Basically, anyone who sells property or services without a contemporaneous payment could be a creditor. Virtually every business, aside from pure point-of-sale retailers, falls within this definition. The definition appears to exclude retailers who merely accept as payment credit extended, renewed or continued by third parties, for example, businesses allowing payment with third-party credit cards.

However, the rule’s definitions of account and covered account clarify this point. An account is “a continuing relationship established by a person with a financial institution or creditor to obtain a product or service for personal, family, household or business purposes. Account includes: (i) An extension of credit, such as the purchase of property or services involving a deferred payment; and (ii) A deposit account.”

A covered account is one the creditor offers or maintains that is itself a “continuing relationship” between the customer/debtor and the creditor allowing purchases paid for in installments and over time. This definition includes: (1) an account primarily for personal, family, or household purposes, that involves or is designed to permit multiple payments or transactions, and (2) any other account for which there is a reasonably foreseeable identity theft risk to customers or to the creditor.

Once a creditor determines that it falls within the rule’s broad scope, the program components are straightforward — identify, detect, respond and update. Identifying requires the creditor to identify relevant red flags for the accounts that the financial institution or creditor offers or maintains, and incorporate those red flags into its program. Thus, while many different businesses must comply, the rule states the program be appropriate to the size and complexity of the financial institution or creditor, and the nature and scope of its activities.

Creditors should consider several risk factors and several sources for appropriate red flags to identify. The risk factors include: (1) the types of covered accounts the creditor offers or maintains, (2) the methods the creditor provides to open its covered accounts, (3) the methods the creditor provides to access its covered accounts, and (4) the creditor’s previous experiences with identity theft. Recommended sources for red flags include: incidents of identity theft that the creditor experienced, methods of identity theft the creditor identified that reflect changes in identity theft risks, and applicable supervisory guidance.

Detection requires a creditor to establish policies and procedures to detect red flags that have been incorporated into the program. The FTC encourages adopting policies that require verifying identities, authenticating customers, monitoring transactions and verifying address changes when dealing with covered accounts.

The response requires the creditor to respond appropriately to any red flags that are detected in order to prevent and mitigate identity theft. The FTC suggests creditors consider adopting measures appropriate to their unique risks and aggravating factors, such as monitoring accounts, contacting customers, changing passwords, closing accounts, not opening new accounts and notifying law enforcement.

Updating requires the creditor to ensure the program be updated periodically to reflect changes in risks to customers, and to the safety and soundness of the financial institution or creditor from identity theft. The FTC suggests periodic program review and update to determine changes internal to the creditor and with evolving methods of identity theft and handling.

According to the FTC, there is no private right of action under the rule. However, consumers can file a complaint with the FTC about a company’s program, and the FTC intends to use such complaints to target its law enforcement efforts. Only certain agencies have jurisdiction to enforce the rule, but they have a variety of options at their disposal to ensure compliance, including penalties of up to $3,500 per violation, and injunctions.

Businesses should evaluate the rule’s applicability and, if necessary, implement a compliant program to avoid sanctions. At a bare minimum, the rule requires any creditor to periodically review its operations to assess whether the rule applies to it. Indeed, the FTC suggests that even low-risk businesses should adopt a minimal program. The FTC has published “Fighting Fraud With The Red Flags Rule: A How-To Guide For Business” to help companies interpret and apply the rule. The guide is available at www.ftc.gov/redflagsrule.

Arizona Business Magazine June 2010

La Hacienda at The Fairmont Scottsdale - AZ Business Magazine June 2010

La Hacienda Returns To The Fairmont Scottsdale

Tucked away at the Fairmont Scottsdale is a hidden gem and an old friend, La Hacienda. After shutting its doors in 2008, the fine-dining Mexican restaurant was re-opened in January with a new chef and new décor.

The Fairmont is touting the re-opened La Hacienda as having “a fresh, contemporary twist.” The restaurant’s traditional Spanish architecture is now accented with sleek, urban décor. Along with a new chef, Richard Sandoval, the revamped La Hacienda also features fire pit patio seating. And then, there’s the bar.

When my companions and I arrived, we spent some time at the vibrant bar exploring the beverage menu. La Hacienda offers more than 100 tequilas, as well as a full margarita menu, meaning that no matter your taste buds, there is a drink for you.

After some time at the bar (we recommend the sangria — with tequila, naturally), we moved to the cozy dining room. Our table was next to a roaring fireplace and the atmosphere was quiet and relaxing, despite the room being filled with diners. If you prefer outdoor seating, request a table on the front patio to watch the hustle and bustle of the resort as you enjoy your meal.

The menu at La Hacienda contains many Spanish words, but don’t let that intimidate you; the wait staff is extremely helpful in making recommendations. We started out with guacamole para la mesa, for the table. It was fresh and delicious, complete with avocado, tomato, onion, cilantro and serrano chile, all served with tortilla chips.

After enjoying the delicious guacamole, we ordered our antojitos, or appetizers. The table favorite was the flautas: crispy tortillas wrapped around shredded chicken, three-chile citrus, tomatillo salsa and cotija cheese. They were fried to perfection and devoured within minutes of arriving at our table. Also a favorite were the tacos de langosta — yes, that’s lobster tacos. Inside these delicious tacos were black beans, chile de arbol sauce, avocado and cilantro. It was by far the fanciest (and tastiest) taco I had ever eaten.

After our antojitos were cleared, we were brought our platos fuertes, or entrées. We sampled the costilla de res, or braised beef short ribs, which we found to be absolutely scrumptious. They were served with vegetable escabeche, a sour cream potato puree, habanero chiles and guava sauce. Although everything was delicious, the overwhelming table favorite was the pipian de puerco: slow-cooked pork shoulder with roasted corn puree, pumpkin seed and pipian sauce. The pork was cooked to tender perfection, making the dish the star of the dinner.

For dessert, my companions and I ordered cinnamon churros and empanadas. Both were simply fabulous, but the churros took the prize. They were fluffy and delicious, and certainly not your standard amusement park treat. Our churro standards have been raised. The four of us devoured six churros in no time.

The highlight of the evening came in the form of a flaming coffee. Our waiter prepared it right at our table, drawing the attention of the entire dining room as flames shot into the air. Once it was prepared, it was positively tasty and the perfect size for sharing.

For a fun, relaxing evening out, La Hacienda is incapable of disappointing. Welcome back, La Hacienda!

If You Go:
La Hacienda
Fairmont Scottsdale
7575 E. Princess Drive, Scottsdale
(480) 585-4848 ext. 7320

Arizona Business Magazine June 2010

Customized HR: Employees Want A “New Deal” At Work - AZ Business Magazine June 2010

Customized HR: Employees Want A “New Deal” At Work

I’d like the pie heated and I don’t want the ice cream on top, I want it on the side, and I’d like strawberry instead of vanilla, if you have it; if not, then no ice cream, just whipped cream, but only if it’s real; if it’s out of the can then nothing.”
~ Sally Albright, When Harry Met Sally

If consumers can customize everything from their food and beverage orders to their kitchens and closets, why can’t employees customize their needs at work? Typically, if an employee wants a different “deal” at work — perhaps more time with their families and less responsibility and compensation — they have two options: try to negotiate a special arrangement or look for a different employer.

Or do they? Smart managers are waking up to the fact that when it comes to compensating employees, cookie-cutter pay packages are no longer the norm. But the majority of executives and managers resist the idea of customized rewards packages because it’s easier to treat all employees the same. Making “special deals” requires time, positive intention, creative thinking and discussions that many managers and HR practitioners have little experience or comfort with. But that’s exactly what is needed in order to effectively attract, motivate and retain the talent needed for business success, according to a new WorldatWork research report, “Beyond Compensation: How Employees Prioritize Total Rewards at Various Life Stages.” Nearly 700 workers participated in the survey conducted by Next Generation Consulting (NGC) and Dieringer Research through a research grant from WorldatWork.

The survey found that employees value different things at different stages of life. These rewards go beyond their pay check and include benefits, work-life, career development and recognition. The research concludes that:

Work-life balance is significantly more important for women with young children.

Benefits are significantly more important for breadwinners, particularly female breadwinners who are further along in their careers.

Professional development (ex: training) is significantly more important for young employees (under 40) who are not yet supervisors.

Older employees value benefits more; younger employees value work-life balance and career development more.

Men favor money over work-life balance (though recent studies show men experience almost as much work-life conflict as women do).

What does this mean for talent managers? Given the increasing diversity of today’s work force, a one-size-fits-all approach to managing employees no longer works. Smart managers invest the time and energy to understand and create a “new deal” consisting of both cash and non-cash rewards if they want to attract and retain the best and the brightest.

Arizona Business Magazine June 2010

Pricing Strategies Through Online Moves - AZ Business Magazine June 2010

Some Industries Reveal Their Pricing Strategies Through Online Moves

In the Web’s early days, self-styled seers proclaimed that the ironclad law of online commerce would be survival of the cheapest. Consumers could compare products with a few clicks of a mouse, these folks said, and thus they’d all soon migrate to the places where they paid the least.

It hasn’t worked out that way.

Rob Kauffman, a professor of information systems at the W. P. Carey School of Business at Arizona State University, says pricing transparency now has become just one part, though a critical one, of companies’ online strategies. Firms have realized that their online relationship with consumers is deeper than just a number. As in brick-and-mortar stores, customers care about the quality and attributes of goods and want to interact online with their retailers and each other. Unfortunately for consumers, however, firms also have come to understand that online systems give them, in effect, a legal way to collude with each other by signaling their pricing intentions.

Unfriendly skies
One of Kauffman’s areas of expertise is the online travel business. Here, more clearly than in many sectors, you can see how firms have become sophisticated in their use of online pricing techniques. An obvious example is the airlines. They’ve experienced the very sort of brutal price competition that was predicted in the early days of the Web.

“It’s easy to describe an airline ticket, and thus we’ve seen extreme commoditization with those,” Kauffman says. “Pennies can put you at the top of a search engine’s price list.”

Airline fares have become so transparent that sites like Kayak.com have emerged that enable consumers to search the search engines. Kayak combs through all of the major travel sites and offers a variety of user-friendly tools people can use to refine and pinpoint searches for the best fares.

Yet even on Kayak, a stated low price isn’t quite as simple as it seems at first glance. Thanks to sophisticated algorithms and the ease of changing information on the Web, airlines tweak their fares constantly.

Their systems also enable them to try to influence buying behavior by, for example, showing seat inventory. Thus, when searching for a fare, a consumer will often see that there is only a small number of seats available at a given price.

“(Airlines) have no incentive to say there are 80 seats at that price,” Kauffman explains. “You’ll see two, three or four. That encourages the consumer to think that something could change in the near future. They’re using psychological tools to get consumers to respond in ways that they have already charted out.”

Prices also can serve as signals among air carriers — as suggestions that they all might want to raise their rates. In theory, an airline can post a higher fare on the Internet, hoping that its competitors will match it. If competitors don’t respond as hoped, the airline isn’t locked into retaining that fare. It hasn’t committed to a print ad campaign or made promises to travel agencies, so it can quickly change the price.

This doesn’t sound all that radical until you realize that in pre-Internet days, airlines could land in legal trouble by trying to coordinate their fares. In a famous incident in the 1980s, Bob Crandall, then-CEO of American Airlines, was accused by the U.S. Justice Department of attempted price-fixing for calling the boss of Braniff International and suggesting that they both raise their fares at Dallas/Fort Worth International Airport. A judge ruled that Crandall hadn’t broken any laws, because he’d only suggested raising fares but hadn’t done it. A similar attempt today would require no telephone call, just a few keystrokes by an anonymous programmer.

Getting to know you
Retailers such as L.L. Bean and Best Buy have responded differently than airlines to online pricing transparency. Instead of developing complicated pricing formulas and changing prices frequently, they’ve typically chosen to use the Web as a way to deepen customers’ shopping experiences. By providing lots of details on features and uses of products, for example, they stymie consumers’ efforts to make head-to-head comparisons. Thus a $49 pair of work pants offered by L.L. Bean begins to look different from a $48 pair of Carhartt jeans sold by Cabela’s.

“Initially, for many companies, the Web was simply a digital catalogue,” Kauffman points out. “Then they realized that there were different ways to represent what they were selling. They also saw that, through all of those transactions, they were learning about their customers’ tastes. So now they had the ability to up-sell and cross-sell and started doing pairing and recommending.”

Travel companies, too, have tried to stress features and thus thwart comparison. They do this by offering fare bundles in which a consumer might receive not only a plane ticket, but also, perhaps, a hotel room, a rental car and even meals.

“It’s impossible to represent those in a way that makes the stated ticket price the dominant issue,” Kauffman notes. “There are just too many variables.”

A version of this article first appeared on Knowledge@W. P. Carey, an online resource from Arizona State University’s W.P. Carey School of Business that offers the latest business insights, information and research from a variety of sources. To read more, visit knowledge.wpcarey.asu.edu.

Arizona Business Magazine June 2010

William Pepicello, President, University of Phoenix - AZ Business Magazine June 2010

First Job: William Pepicello, President, University of Phoenix

William Pepicello, Ph.D.
President, University of Phoenix

Describe your very first job and what lessons you learned from it.
My first job was reading gas meters in Erie, Penn., as summer employment. I learned the importance of being on time and that the work had to be done regardless of the weather or other harsh conditions, which included crawling around grungy basements, avoiding aggressive dogs, and in one case a small riot.

Describe your first job in your industry and what you learned from it.
My first job in higher education was as an assistant professor of English at the University of Delaware, teaching freshman English. This job taught me that I really could have a positive effect on students’ lives. I also learned the value of connecting with students. Even in classes of 100, I made it a point to learn each student’s name and to talk to them when I saw them on campus. I have on occasion over the years run into one of these students, and surprisingly I still remember their names — and they mine.

What were your salaries at both of these jobs?
I read gas meters at about $5 an hour, and my first teaching job garnered the princely sum of $12,000 a year.

Who is your biggest mentor and what role did they play?
My most significant mentor was Dr. George Johnson, the dean of arts and sciences at Temple University, where I taught in the ’80s. He taught me that being good was not good enough. He saw my ambition and helped me learn to think out of the box. Most importantly, he taught me that I should follow my passion, and that if I did this and was open to change, I would find success.

What advice would you give to a person just entering your industry?
The same advice that Dr. Johnson gave me many years ago. Higher education is in a period of significant change in America, and it is not an easy path to follow. But it is a very satisfying and vital profession. This is truly a time to focus on one’s passion for education and follow the path that presents itself. It has led me from being a professor of English and classical languages to my current job (who’d have thought?). And there is not a day that I don’t wake up energized and eager to get to work. Every day is an exciting new adventure.

If you weren’t doing this, what would you be doing instead?
I would still want a career that keeps me connected and that ties to one of my passions. I have over the years done lots of radio and TV spots, as well as writing the occasional newspaper column. So, getting out of the box, I’d really love to do a morning drive-time talk show, probably sports talk. I even have the name: Pep Talk. So far Doug and Wolf aren’t biting though, and Phoenix has a great complement of sports broadcasters. But a guy has to dream …

Arizona Business Magazine June 2010

Local First Arizona Champions Buying Locally - AZ Business Magazine June 2010

Local First Arizona Champions Buying Locally

Today, people generally recognize the importance of shopping locally and supporting our region’s independently owned and operated businesses. But that wasn’t always the case. As recently as seven years ago, the concept was nearly unheard of in Arizona. But in 2003, Kimber Lanning, of the independently owned and operated Stinkweeds music store, started Local First Arizona, then called Arizona Chain Reaction, in an effort to bring the community together and support each other.

“People weren’t really connecting,” says Lanning, who lives in and loves the Phoenix area.

That love of Phoenix compelled her to start a crusade for local, independent store owners. That crusade turned into Local First Arizona, a statewide organization aimed at helping to strengthen local communities in Arizona, bring them together and encourage them to support one another. And she did it one person at a time.

“I just started knocking on doors,” Lanning says of her start-up approach to educating local residents about the importance of celebrating the uniqueness of independently owned businesses in their very own neighborhoods versus the chain stores.

In 2006, she applied for 501(c)3 nonprofit status and changed the name from Arizona Chain Reaction to Local First Arizona to better reflect the goal and mission of the organization — to help people understand the benefits of buying locally and to build a better sense of community.

“I think neighborhoods are finally realizing how important it is (to buy locally),” she says. “It’s like it finally just dawned on us that we can create diverse and unique cities … we can control this.”

It is part of Local First’s mission to educate people on the facts about the real benefits of shopping locally. Studies show that for every $100 spent in a locally owned business, approximately $42 stays in the state. If that same $100 is spent in a chain store, just $13 of it stays right here.

In 2008, Lanning created the Small Wonders maps, pocket-sized guides — one each for Phoenix, Tempe and Scottsdale — that list unique shopping and dining destinations in the three defined areas. Lanning printed 75,000 copies of the Phoenix version, and downloadable versions of the maps also are available at www.localfirstaz.com. She says the buzz around the maps has been incredible.

“They’ve really taken off,” Lanning says. “Now is the best time to promote independent businesses.”

Indeed that remains one of Lanning’s biggest challenges, managing the rapid (“almost too rapid”) growth of her concept, along with securing funding. But she hasn’t let the latter stop her.

“With any new concept, it’s difficult to secure funding,” she says. “So I’m running it like an entrepreneur would, rather than relying on grants.”
Local First currently has 1,800 members, but Lanning has high hopes for the future.

“As I’ve gotten more involved, I’ve realized things we need,” she says.

She hopes to develop awareness for the adaptive reuse of existing buildings to ensure sustainability, increase business-to-business support, grow membership to 5,000, and develop a diversified staff that can offer programs, benefits and support for the state’s locally owned businesses.
Lanning, whose very own personal business, Stinkweeds, resides in the Central Corridor, is thrilled as she talks about the recent growth and development in the Downtown area.

“I am overjoyed to watch the city growing into itself,” she says. “It’s phenomenal. I feel like I’m in the right place at the right time.”

But Doug MacKenzie, director of communications at the Greater Phoenix Convention and Visitors Bureau, thinks it’s more than just a little luck. He credits Local First and Lanning with driving the unique farm-to-table food product and for helping Phoenix become a culinary destination in its own right — complete with amazing farmer’s markets and unique events. One such event was the recent Devoured Culinary Classic at the Phoenix Art Museum, which Local First spearheaded and co-sponsored.

MacKenzie says that due to efforts by Local First, locals and visitors to the Phoenix area have the opportunity to “really experience the authentic and native foods of the region and the Southwest. Local First is great for promoting our culinary scene.”

More than just promoting local dining establishments, Local First also seeks to bring together communities, neighborhoods and people — one door at a time.


Arizona Business Magazine June 2010

Hosting email and websites on the internet cloud - AZ Business Magazine June 2010

Hosting E-mail And Websites On The Internet Cloud May Save Money, But It Could Also Lead To Headaches

When a weatherman says, “Cloudy today — chance of storms,” he could be talking about hosted cloud services. As businesses look to manage their workflows more efficiently, it seems as if everyone is jumping into the cloud with their eyes closed and fingers crossed. The monetary savings are attractive, and even the city of Los Angeles is saving tons of money by using Gmail cloud hosting for e-mail, but at what other costs?

Promises such as cost savings, “fair” usage based billing, and unlimited scalability have created a great deal of interest, but the fact remains there is no solid definition or clear-cut use case for cloud hosting.

Despite this, companies of all sizes are starting to use cloud-hosting technologies for critical services such as e-mail and website hosting. While cloud hosting for e-mail and Web applications provides some interesting benefits, it isn’t well suited for all business. Here are some realities about cloud hosting:

E-mail downtime
The term “Gmail is down” is searched more than 50,000 times a month using Google Search. Similar phrases for Yahoo and other free or low-cost cloud hosting services are searched tens of thousands of times every month, as well. That’s a real problem.

These outages are widespread and well-documented. Imagine if you had a customer who needs something immediately — something you just can’t fax — and your e-mail is down because your cloud server is having “issues that will be resolved shortly.” That’s the reality of the cloud itself, in many cases. Some companies don’t require that their e-mail function reliably during working hours every day of the year, but most can’t handle any downtime well.

Website downtime
Websites hosted on cloud services face space limitations and are susceptible to this kind of downtime — there’s just no way around it. In a shared/cloud environment, all sites are competing for a limited amount of bandwidth or processing resources. And these resources are truly limited in the cloud, despite the perception of the cloud being “infinite.” If multiple websites spike coincidentally, it can result in everyone going offline at once or having extremely slow response times.

When the cloud is slow or goes down, everyone is impacted. What if you need to e-mail a newsletter that drives people to your website? What if your website is unavailable during a peak traffic time such as Cyber Monday for e-commerce stores? For some businesses, having their websites offline or slow isn’t a big deal. For others, it’s a deal breaker.

Security holes
In addition to reliability problems, cloud hosting also has security issues that are not trivial. You shouldn’t use cloud services to process important confidential data, such as credit card information, patient records or legal documents. In fact, companies governed by regulatory mandates like the Health Insurance Portability and Accountability Act (HIPAA) or Peripheral Component Interconnect (PCI) cannot achieve compliance when hosting in the cloud.

Going back to the city of Los Angeles, security was a major concern when it decided to go with a cloud hosting service. It wasn’t until Google agreed to compensate the city in the event the system was breached and data exposed or stolen, that the e-mail hosting contract received approval from Los Angeles officials. But Gmail isn’t the only e-mail service in the cloud. Yahoo, Microsoft and Doteasy all claim to provide cloud-based e-mail and website-hosting solutions adequate for the needs of business. But if security is your organization’s primary concern, you need secure hosting that can deliver the reliability and protection you require.

The city of Los Angeles may have settled for after-the-fact, reactive, financial retribution in the event Google can’t maintain privacy, reliability and stability for e-mail hosted in the cloud, but you don’t have to settle. More secure options exist. Companies that have been drawn in by the low cost of entry and fast implementation provided by cloud hosting understand first-hand that you really DO get what you pay for.

Arizona Business Magazine June 2010

Weaknesses And Strengths Of Wealth Management Advisers, Service Models - AZ Business Magazine June 2010

The Recent Market Turmoil Revealed The Weaknesses And Strengths Of Wealth Management Advisers, Service Models

The market turmoil of the last 18 months has caused investors to ask a lot of questions. Am I properly diversified and allocated to withstand additional market gyrations? Is my risk tolerance really as high as I think it is? Do I trust my financial adviser and those I’ve placed in charge of managing my wealth?

The answer to the last question — particularly within the past two years — rests largely on the issue of client service. Since no investor was immune from the market declines witnessed in 2008 and 2009, the issue of client service has become increasingly important to many investors.

The recent market turmoil has not changed the wealth management client service model; it has revealed it. Weak models have been exposed and strong models have withstood the pressure.

A strong service model has a clearly defined process. And while every service professional has a process, not all can readily identify or communicate theirs. For many, the process is merely a set of reactions to client concerns, questions and requests. But therein lies the problem, as such a reactive model inevitably leads to inconsistency in delivery.

For example, say an investor’s portfolio profile calls for a 70/30 mix of equities to fixed-income investments. Following the recent bull market run, the equities portion of the portfolio becomes over-weighted, and the investor has not objected as he/she is enjoying watching their overall portfolio increase in value. Therefore, no change to the equity/fixed-income model is discussed by either the investor or the financial adviser. Suddenly, the portfolio mix is 85/15. Is there a service process in place to rebalance the portfolio back to its original target allocation percentages? Without a detailed model, a financial adviser may find out that he/she has unknowingly subjected an investor’s portfolio to more risk than desired simply by not having a proactive process in place.

A well-articulated service process outlines deliverables, timeline and accountability for completion. This process can serve wealth management professionals as a guide during times of turmoil and as motivation when market activity hits a lull, ensuring consistency regardless of external circumstances. In short, managing wealth should be handled the same way as running a successful business. There must be a business plan defining your goals, consistent performance reviews to assess whether goals are being met, and accountability of every member in achieving these goals.

There are five important characteristics for every service process:

  • Repeatable — Consistency of service is oftentimes more important than the service itself. Whatever the model, an adviser or team must be able to apply the same definition and process multiple times for the same client or different clients.
  • Scalable — Whether the business is small with just a handful of clients or much larger with a broad, complex client base, a service model must be scalable and work for all clients. Tailoring service is inevitable and appropriate, but models that don’t enable an adviser to “franchise” the model are far too cumbersome.
  • Deliverable — While this characteristic is fairly intuitive, many businesses identify a service model that is unrealistic in its delivery structure based on time, resources and other limitations. Recognizing limitations and appropriately weighing the service needs of the clients with an honest assessment of resources is critical. The focus of the communications should certainly be centered on the clients’ best interests. However, over-promising and under-delivering is never a recipe for successful client service.
  • Measurable — Just as an investor needs to measure the results of his/her investments, so too should financial advisers be able to measure the results of their service. Don’t be fooled into thinking that such a measure is merely a reflection of client satisfaction. There are many ways — quantitative and qualitative — to measure client service. Retention, accountability, success achieving client goals, consistency of message, tone and frequency of dialogue are all factors that should be considered.
  • Proactive — Ensure the delivery of service occurs regardless of market conditions. Market lulls often draw advisers into a false sense of complacency. The discipline of consistently applying the pre-established service model pays dividends in the end.

In addition to these process characteristics, there are other important service functions such as real-time availability, open discussion and dialogue, and regular reviews of the clients’ long-term objectives. But it is the consistent execution and the extent to which advisers have built these functions into a broader, well-defined service model that separates the mediocre from the great.

The recent market turmoil didn’t change the fundamentals of wealth management client service as much as it emphasized it. Advisers who did not have a definable service model were often themselves traumatized by the unfortunate events in late 2008 and 2009, and were thus less effective in working in their clients’ best interests and in addressing their concerns. They were exposed, though exposed in a different way from their more successful industry peers.

Regardless of market activity, wealth management professionals who develop a strong client service model and apply it consistently will have success.

Arizona Business Magazine June 2010

Listen to your employees - AZ Business Magazine June 2010

Listening to Employees

In tough times, the give-and-take relationship between workers and employers needs to be nurtured

U.S. productivity is up. According to the latest reports from the Bureau of Labor Statistics, the annual measure of labor productivity increased 3.8 percent from 2008 to 2009. While some may view this as a sign of an economic recovery, the fact is more than 15 million Americans are still unemployed, the national unemployment rate is hovering near 10 percent and the economy isn’t creating many jobs. Any near-term growth in business is likely going to come from getting more out of the current work force; and the best way to get more out of workers is to help them be more focused and engaged.

While the recession has brought higher productivity per employee, it also has lowered employee satisfaction. Employees are distracted and unable to focus on the job at hand. The Tell It Now poll by ComPsych, an employee assistance provider based in Chicago, found that about three in every four employees are somewhat to very worried about job stress and workload.

Based on the latest research, here are five ways employers can strengthen the exchange relationship in which the employer provides monetary and non-monetary rewards to employees in return for their time and talent.

Communicate more, even if it’s negative
Conceptually, most employers know that communication impacts employee motivation and commitment. Unfortunately, this conceptual understanding does not always translate into action. In fact, the New York-based human resources consulting firm Watson Wyatt’s (now Towers Watson) 2009/2010 Communication ROI Study of 328 employers found that many companies plan to scale down their communication to workers. A 2009 Gallup study of 1,000 employees found that 25 percent feel ignored; that is, they receive neither positive nor negative feedback from their bosses. Neglecting employees is far worse for morale than negative feedback, which at least lets people know they matter. It seems employees crave communication, even if it’s negative.

Pay particular attention to the sales force
In the early stages of economic recovery, many organizations rely heavily on their sales forces to recoup lost revenue. During this critical time, organizations need to ensure they properly motivate their sales force in order to achieve positive results. The best place to start is to simplify the sales compensation plan, such that it can be discerned and executed easily. Joseph DiMisa of Sibson Consulting, a human resources consulting firm with offices in Phoenix, is the author of “Sales Compensation Made Simple.” He says, “There’s a difference between being complex and being complicated. You do not need to have numerous measures, mechanics and linkages to ensure good performance.”

Create career development opportunities
According to the association of human resource professionals WorldatWork’s 2009-10 Salary Budget Survey updated in January, at least 50 percent of employers froze pay for some or all employees in the 2009 recession, while 13 percent cut pay. Cash-strapped organizations are turning to intangible ways to reward and motivate employees, such as career development opportunities (33 percent), non-cash rewards and recognition (28 percent), leadership training on employee motivation (21 percent), and flexibility options (20 percent). Career development opportunities can come in many forms: working on important projects, helping in another department or branch, volunteerism, or training and certification. While training and certification do entail some costs, several associations are offering scholarships to help those who are unemployed, underemployed or underfunded.

Expand programs to include hourly workers
Employers tend to exclude nonexempt workers from flexible work arrangements based on traditional limitations, such as work hours and safety requirements. A recent study by WorldatWork and the Work Design Collaborative, Flexible Work Arrangements for Nonexempt Employees, found that the three biggest industrial sectors allowing hourly employees to telework were manufacturing, education and business services. Manufacturing came as a surprise, as it is traditionally dominated by nonexempt employees working on-site. The study concludes that allowing hourly employees to take part in flexible work programs is becoming more of a business imperative. As such, employers need to have a process in place to determine eligibility. They must also utilize formal employer-employee contracts regarding alternative work arrangements.

Add value by offering voluntary benefits
With the rising cost of employee benefits, how can employers enhance the value of benefit offerings without adding to overhead costs? The answer may lie in voluntary benefits. A 2009 study by the insurance company Unum finds that employee satisfaction with benefits plans is 19 percent higher among employers that offer voluntary benefits than those that don’t. What’s more, these benefits do not cost the employer anything and help employees afford a plan because rates are based on the group rather than the individual. Examples of voluntary benefits include ID theft insurance, pre-paid legal plans, pet or vision insurance, hospital confinement indemnity plans, and other types of supplemental insurance. Finding ways to keep workers happy without impacting the bottom line is a definite advantage in today’s competitive environment.

The economy has certainly dealt a hard blow to today’s work force, but employers still have options to help their employees. If nothing else, the downturn has served as a catalyst for ways to enhance the employee-employer exchange relationship.

Arizona Business Magazine June 2010

Three Things Building Owners Need To Know To Reduce Their Taxes - AZ Business Magazine June 2010

Three Things Building Owners Need To Know To Reduce Their Taxes

In today’s economy everybody is looking for ways to improve their cash flow, especially as it relates to real estate. Implementing tax-saving strategies is certainly a way to help cash flow in the current year, and in some cases these strategies will provide benefits for years to come. While there are numerous strategies for lowering taxes, three of the more popular current items for building owners are outlined below.

Repair and maintenance deductions
The difference between deductible expenses and capital expenditures can mean significant tax savings for property owners who perform regular maintenance and repairs. The key is when certain costs can be considered expenses that are deductible from current income.
Generally, taxpayers must capitalize expenditures that:

  • Substantially prolong the life of the property.
  • Materially increase the value of the property.
  • Adapt property to a new use.
  • “Put” the property into a useful condition.
  • By contrast, taxpayers may be able to deduct expenditures for:
  • Routine maintenance.
  • Incidental repairs.
  • Equipment and materials that “keep” the property in an ordinary, efficient operating condition.

In most cases, taxpayers will reduce taxes by classifying an expenditure as a repair and taking the current deduction, rather than recovering the cost through depreciation. The IRS has recently adopted more liberal standards for expensing large-ticket items previously considered capital investments.
The difference between repair and maintenance, and capital improvement can be subtle. For example, the wooden shingles on a building are damaged. Replacing the roof with new wooden or asphalt shingles would be considered maintenance and repairs, and it would not have to be capitalized. However, upgrading to a maintenance-free roof system with an expected lifespan of 50 years would have to be capitalized as a long-term improvement to the building.

Many building owners have improperly classified maintenance and repair costs as capital expenditures, creating opportunities to go back and reclassify certain expenditures and recover previously paid taxes.

To claim the deduction, the building owner must submit Form 3115 to request an automatic change in accounting method. The accounting change allows the taxpayer to claim a current-year deduction for expenditures that should have been a deduction in a prior year.

Cost Segregation
Under IRS guidelines, most buildings constructed, purchased or renovated since 1986 are eligible for a cost segregation study. The goal of the study is to make sure business owners are using the appropriate depreciable life for their assets. A cost-segregation study allows a building owner to change the useful life of certain assets and take advantage of any tax savings that may result.

The standard depreciation period for most commercial buildings is 39 years. When buildings are constructed (or renovated) many companies incorrectly use the 39-year depreciation life, even though parts of a building should be depreciated over a much shorter period. Special use items, such as floor coverings, fixtures, and specialty electrical and HVAC equipment, often can be depreciated over a shorter term. It is best to complete a cost-segregation study in the year a building is acquired, although the IRS does allow adjustments to prior depreciation deductions. If the proper amount was not claimed in prior years, depreciation not previously claimed is now allowed as a deduction in the current year by filing Form 3115.

Section 179D Energy Efficiency Deduction
This popular deduction allows the owner of a commercial building to qualify for deductions of up to $1.80 per square foot for buildings that are constructed or renovated to reduce total annual energy use.

The primary beneficiaries are owners or lessees of commercial property and certain residential buildings. Government buildings, such as schools and universities, courthouses, jails, and office buildings, also may qualify. However, since government entities do not pay tax, the deduction can be transferred by written delegation to a tax-paying entity, such as an architect or engineer.

Qualified property owners are able to claim the $1.80-per-foot deduction for buildings constructed or renovated to save 50 percent or more of total annual energy costs as determined by national engineering standards.

Energy savings must be achieved by constructing or retrofitting any of the envelope, interior lighting, or heating, cooling and hot water systems. A building not meeting the 50 percent savings requirement may still qualify for a portion of the deduction. Before the 179D deduction can be claimed, the property owner must obtain independent certification of energy savings from a professional engineer or third-party contractor using software qualified by the Department of Energy.

Arizona Business Magazine June 2010

Doug Fulton CEO, Fulton Homes - AZ Business Magazine June 2010

CEO Series: Doug Fulton

Doug Fulton
CEO, Fulton Homes

How would you assess the current state of the home building industry?
Today, I would say it’s in recovery. I would definitely say we have hit the bottom and we are experiencing the trough here. … From this point, things can only get better … This is our fourth year (dealing with the downturn). It’s a very, very tough cycle. This is a cyclical business, it always has been. I was here in the ’80s and ’90s when it cycled then, with the Keating, Lincoln Savings (& Loan) RTC days. It cycles. This one has been a vicious, tough, tough cycle where we’re paying for the run-up and the escalation — and the runaway inflation in the homebuilding industry is really what we had. Now, we’re paying for it.

Foreclosures are expected to be higher in 2010 than they were in 2009. How will that affect the home building industry?
Luckily, the banks aren’t fire-selling these properties, which is a good thing in two ways. One, is that it’s keeping the values somewhat stable, not letting them fall through the floor. And second, it’s very frustrating for people to buy a foreclosed home or a home that is in the short-sale mode. It takes a lot of time, it takes a lot of energy, so I have an entire group out there that is very frustrated about the whole process. And guess what? I can give you an answer (on buying a new home) in 24 hours.

What strategies has Fulton developed to cope with the collapse of the housing market?
We have targeted foreclosures — that’s what we’ve done. We’ve gone after them, talked about them, we do the little tongue-in-cheek “lipstick on a pig equals foreclosure.” We have the foreclosure-cost calculator. … You can actually go onto our website … and you can punch in cabinets, countertops, flooring, paint … and it shows what you are really going to pay for this (foreclosed) house when it is all said and done and you have it all fixed up to the level where you want to live in this thing. And then there is a button off to the side of that … that goes out to our quick delivery inventory homes and finds homes $5,000 up or down of what you’re going to pay for a home that you are basically (going to have to renovate). … That’s how we’re combating the current market status.

What lessons can the home building industry take away from the economic downturn?
First and foremost, it’s a cyclical business. It always has been and it always will be. Some are going to be tougher than others. This has been the toughest one in over 30 years that I’ve experienced. Going back to quality construction, treating your people with respect. … When times get tough, people want a safe harbor. … Consumer confidence is at all time, historical lows, so if they are going to make that decision (to buy a home), they are going to go to somebody they feel comfortable with, someone they know, that their neighbors brag about — word of mouth. Obviously, word of mouth is an important way to advertise. We earn that by delivering a quality product and treating our customers (well).

What is the role of a C-level executive working in the home building industry today?

I have lots of hats. We don’t have anyone here with executive-itis. … We don’t have anyone here with their mahogany playpen at the end of the hall barking out orders to secretaries. There’s never been a secretary at Fulton Homes and there never will be. Never happen. If your garbage is full — empty it. If you want a cup of coffee — the break room is over there. We are very hands-on. So when you say “the role,” I don’t even know where to begin. I don’t do it all, not even close. I don’t want to give that impression. I hire people that I don’t have to go around wiping their nose. … I make it very clear to everyone that this is where we’re going, get them to buy into it, to understand it, and treat them with respect.

    Vital Stats

  • Joined Fulton Homes in 1981
  • Served as vice president of marketing and president at the company
  • Attended Pierce College, Utah State University and Arizona State University
  • Is a special deputy with the Maricopa County Sheriff’s Office, a member of the Central Arizona Mountain Rescue Association and an honorary commander at Luke Air Force Base
  • www.fultonhomes.com

Arizona Business Magazine June 2010

Steve Koeppelle, Owner, Scottsdale Jean Company - AZ Business Magazine June 2010

Steven Koeppel, Owner Of Scottsdale Jean Company, Comes Out On Top By Selling Bottoms

Steven Koeppel
Scottsdale Jean Company
Title: Owner
Est: 2005  |  www.scottsdalejc.com

“You can never learn too much and you can never be too smart – ask a lot of questions.” – Steven Koeppel, owner of Scottsdale Jean Company

When it comes to battling with the best in the retail clothing world, Scottsdale Jean Company is Arizona’s largest, successful independent retail store, standing strong against big guys like Macy’s and Nordstoms.

Despite its name, Scottsdale Jean Company carries more than jeans. While jeans make up 55 percent of the business, men’s and women’s clothing collections, jewelry, accessories, and sunglasses make up the rest. More than 100 designer brands, including Michael Stars and True Religion, fill the 10,000-square-foot store in the Scottsdale Airpark. The store also carries the exclusive line of skin, hair and body products, Kiehl’s.

Scottsdale Jean Company began when Koeppel sold his automobile business in the New York City area in 2004. He then moved to Arizona with a few ideas, but saw a void in the market for the business he has since established.

Even though moving from cars to clothes may have been a difficult transition, Koeppel learned that “business is business.” His experience running a large chain in New York proved to be invaluable when opening up Scottsdale Jean Company. Koeppel self-funded his Arizona business from the beginning and was successful from day one.

“If you have a good foundation you can do anything,” Koeppel says.

Although the company closed a second store in Peoria, Scottsdale Jean Company has 18 employees and is still staying profitable during this economic downturn.

“We have a very well-run, viable business. It is just a matter of waiting through these times, doing what we have to do, and wait for things to turn,” Koeppel says.

Plans for the future consist of expanding the store out of state and rebuilding the company website.

“We are now one of the premier stores in the country and we put a great name in the industry. We do sizeable business online and we ship all over the world, which has helped us to develop and build a name not just in Arizona, but everywhere,” Koeppel says.

The company’s website features a personal shopper and live, online help to answer any questions while visitors browse the site. The website is a marketing tool that can track where most of the traffic is coming from and how it got there. According to Koeppel, this is a great way to gear specific advertising toward that market.

“The most important thing in Internet marketing and online sales is people finding you. We optimize keywords and are getting about 1,000 visitors a day at this point,” Koeppel says.

When all is said and done, Koeppel’s No. 1 advice to fellow business owners is to “make sure you have a thorough business plan. Not everyone opens their doors and is successful the moment they open.”

Arizona Business Magazine June 2010

Downtown Phoenix Ambassador program - AZ Business Magazine June 2010

Downtown Phoenix Ambassadors Work To Make Visitors And Residents Feel At Home

Whether you are a visitor to the Downtown area trying to find a parking spot, a new resident in search of a security escort to your car, or a local looking for a new hotspot to frequent, the Downtown Phoenix Ambassadors can help.

Perhaps you’ve noticed these boosters in bright orange — you know, the ones wearing the shirts that announce, “Ambassador, Ask Me” on the back.

According to Ambassador Program Manager Samantha Jackson, the Downtown Phoenix Ambassador program, formerly called the Copper Square Ambassadors, began in 2001 as a safety program. It has since evolved into more of a hospitality service. The Ambassadors try to make someone’s day, she says, whether that someone is a visitor to the area, an ASU student, a Downtown employee or a resident.

“We go beyond the typical concierge service,” Jackson adds. “It is the goal of every Ambassador to go above and beyond the call of duty; and you just never know how we can help, which is why our motto is ‘Questions? Ask Us!’”

The Ambassadors work the Downtown area 365 days a year, from 6:30 a.m. to 11 p.m. on weekdays and 8 a.m. to 11 p.m. on weekends. They offer a bevy of services that include recommending a great new restaurant (and even calling the place to see if there is a wait) and giving directions to jumping a car battery or helping someone find their car when they can’t remember where they parked.

The program works closely with the Greater Phoenix Convention and Visitors Bureau (GPCVB) to ensure it is heavily staffed during major events and conventions.

“Convention guests are some of the people who need the Ambassadors the most,” Jackson says.

The Ambassadors often take a table inside the conventions held Downtown, so they can be of added assistance.

“We try to meet any special requests the CVB may have, because we know that our service could be that added bonus that sways delegates to select Downtown Phoenix as their destination,” Jackson adds.

Doug MacKenzie, director of communications for the GPCVB, says he hasn’t seen a program to the extent of the Downtown Phoenix Ambassadors in any other city.

“It is truly one of a kind,” he says. “They are true ambassadors in every form of the word. They are on the forefront, greeting our guests from all over the place, and they are the prime example that our hospitality is as warm as our weather.”

And it’s no coincidence that the Ambassadors are friendly, in addition to being knowledgeable about everything pertaining to Downtown. Jackson says the program has been very lucky when it comes to its staff members, who all really believe in the Downtown area and love to promote it.

“We have taken the program from meet-and-greet to really having specialized jobs,” Jackson says.

She calls one staff member the First Responder Ambassador for helping the homeless in the Downtown area by collecting clothes, checking in on them when needed, and maintaining a good relationship with the police in the event they need to be called in. The Ambassador program also boasts an Arizona State University liaison who promotes the Downtown area to the students, a resident liaison who pens a weekly “what’s happening” column and a streetscape supervisor.

All this adds up to a program that really wants to help Downtown Phoenix feel like a community, according to Jackson. In that vein, the program has hosted several free events, including Festive Fridays in which Ambassadors gave out food samples and gift certificates for various Downtown restaurants; Third Fridays Insiders Tour, which included tours of local art galleries, retail boutiques and restaurants and was led by Sloane Burwell, president of Artlink; a Mardi Crawl pub crawl; and a Zombie Walk around Halloween in which participants dressed like zombies and dragged through the streets of Downtown.

Beyond fun and games, Jackson is proud of the help the Ambassadors offer the people both living in and visiting the Downtown Phoenix area. One particular Ambassador became a hero to a young mom with two children. As she was getting off the light rail with her younger child in the stroller, the train took off with her four-year-old still inside. The Ambassador chased the train to its next stop and returned the child to a very relieved mother. It was all in a day’s work for a Downtown Phoenix Ambassador.

So the next time you see an orange-shirted character strolling the streets of Downtown Phoenix — ask them anything — more than likely they’ll know the answer.


Quick Facts
Downtown Phoenix Ambassadors

  • In 2007, the Ambassadors tracked 87,000 assists; in 2009 that number jumped to 94,043.
  • If an Ambassador can’t be found on the streets, there are many ways to get in touch with one via the hotline (602) 495-1500, text (“ASK” to 25866) or e-mail at ambassadors@downtownphx.org.
  • The Ambassador Information Center, located at 101 N. 1st Ave, Ste. 190, is open every day from 8 a.m. to 8 p.m. and offers all things Downtown, including restaurant menus, brochures, coupons, entertainment guides, information on the light rail, and more.

Arizona Business Magazine June 2010

Using Personally Owned Life Insurance - AZ Business Magazine June 2010

Using Personally Owned Life Insurance (POLI) As A Sinking Fund

Affluent families and individuals, successful business owners, and those engaged in certain occupations, such as the medical or construction industry, all face similar challenges when choosing to invest: They have worked hard to accumulate wealth, and now they want to keep it.

Wealthy investors are driven by the same concerns:
Preservation: Given the choice between risky strategies or preserving what they have, most affluent investors will choose to preserve what they have.

Liquidity: Without access to your money, wealth may not be maximized.

Protection from creditors and frivolous lawsuits: The legal risk posed to affluent investors in today’s society is extraordinary.

Control: Affluent investors value the flexibility that allows them to respond to changes in their personal and business lives.

Taxes: Although we can’t be certain that taxes will go up, the odds suggest they will — perhaps significantly so. Mitigating the bite of the tax man is a top priority for wealthy investors.

To address these concerns, affluent investors and their advisers have many investments to choose from, such as IRA and Roth IRAs, equities and mutual funds, tax-advantaged bonds, annuities and personally owned life insurance (POLI), to name a few. Each of these investments has advantages and disadvantages when addressing the concerns of affluent investors. But what is POLI? To answer this question, we need to look at life insurance in an entirely different way.

Getting the most out of your investment type
What if instead of shopping for the most death benefit for our premium payment dollars, we sought out the federal minimum required death benefit in our policy to keep our insurance costs low and our investment value high? What if we created a “sinking fund” by investing in personally owned life insurance to create a tax-advantaged retirement supplement plan, and much more?

People often don’t recognize the value of permanent life insurance as an asset in their portfolios. Cash value life insurance offers much more than simple death protection.

Consider the following asset characteristics:
Qualified plan and annuity assets, in addition to being included in the taxable estate of an owner, are also subject to income in respect of decedent (IRD) at death. Seventy percent is an estimate of the combined impact of estate and IRD taxes, as well as credits given in the high net-worth decedent’s estate. The number can be higher or lower depending on the applicable marginal brackets.

Death benefits of a life insurance policy are generally received income tax-free by the owner of the policy. In order to avoid estate inclusion, the death benefit must be received outside the estate, often by designating the “B” Trust as the contingent owner and beneficiary of a policy owned by a decedent. Certain types of split dollar and loan transactions used in conjunction with an irrevocable life insurance trust (ILIT) also can be used to exclude the death benefit from estate inclusion. These techniques may involve gift tax implications, such as using a portion of the annual gift tax exclusions.

The benefits of POLI
Structured properly, POLI allow unlimited contributions, tax-deferred accumulation, tax-free redistribution, tax-free withdrawals, total liquidity, no income or estate tax at death, and the possibility of asset protection. This is an extraordinary combination of benefits.

Put simply, when structured properly the investor retains control of all the assets in a POLI account, including the right to terminate the account and withdrawal of the cash value. There is nothing “irrevocable” about a properly structured POLI contract. POLI, when properly structured, allows for nearly unlimited withdrawals after the first year at rates between 1 percent and 0 percent.

Using POLI, unlimited after-tax deposits may be made by the investor to be deployed in the equity and fixed income markets in almost any combination. An additional benefit is that in many states, the assets in POLIs are creditor protected. Asset protection against the creditors of an insurance-based contract owner is a matter of state law. Some states offer no protection for annuities life insurance cash value, some offer some protection for a portion, and others offer complete protection (check with local counsel to determine the applicability of asset protection in a given jurisdiction). Finally, assets invested in POLI are removed from the investor’s estate, while still providing the investor control of the assets.

Life insurance: A cautionary note
Of course, federal tax law definition of “life insurance” limits your ability to pay certain high levels of premiums. In addition, if the cumulative premium payments exceed certain amounts specified under the Internal Revenue Code (IRC), your policy will become a Modified Endowment Contract (MEC). If your policy is a MEC, many benefits of POLI are removed.

An “optimized” life insurance policy involves several elements. First, the contract should pass one of two tests for the definition of life insurance, thus avoiding status as a MEC under IRC 72, which generally limits the amount of cash value or contributions relative to the amount of death benefit. To exceed these limits causes distributions to be taxable. Second, in order to avoid estate inclusions, the death benefit must be owned outside the estate.

These are highly sophisticated and complex investments, and you should discuss whether a POLI is right for you with a knowledgeable team of financial, legal and tax professionals.

Arizona Business Magazine June 2010

Downtown Phoenix After Dark - AZ Business Magazine June 2010

Great Cuisine Helps Lure People To Downtown Phoenix After Dark

It’s amazing how quickly things can change. As recently as five years ago, Downtown Phoenix was practically deserted in the evenings. It was a place people came to during the day to work, but left as soon as 5 p.m. hit. Now, Downtown Phoenix has finally become a destination for concerts, sporting events and a happening nightlife. Much of its new found popularity is attributed to the innovative restaurants that have begun springing up, drawing in customers before and after events.

“The Downtown Phoenix cuisine is becoming a center of good food, farm-to-table concepts, and a variety of locally owned restaurants,” says Douglas MacKenzie, director of communications for the Greater Phoenix Convention and Visitors Bureau. “From before a game or concert to late-night dining, the culinary scene is eye-catching and mouth-watering.”

Indeed, most of the restaurants open downtown can’t be found anywhere else. Cheuvront Restaurant & Wine Bar has been open since 2003, so owner Ken Cheuvront has witnessed the downtown makeover firsthand.

Cheuvront says the restaurant attracts most of its customers from the arts community, especially those who attend the opera, the symphony and the theater. Five years ago, he started advertising in playbills and giving to arts organizations.

“Now that more and more people are coming downtown for their entertainment needs, we see people before or after their events,” he says. “Our demographic is 35 and up, but we think of ourselves as hip.”

District American Kitchen, the full-service restaurant inside the Sheraton Phoenix Downtown Hotel, draws in theater patrons before and after shows with its live weekend entertainment.

“Theater people come to dinner before the show, then come back after for jazz music on Saturday nights,” says general manager Heinrich Stasiuk.

He says the restaurant also appeals to theater patrons because it intentionally offers dinner items that can be prepared quickly without sacrificing quality, since diners often have time constraints.

Jonathan Cullen, general manager of Kincaid’s Fish Chop & Steakhouse, says his restaurant sometimes offer discounts to those who attend the symphony.
Downtown restaurants also benefit from First Friday, the art walk that takes place on the first Friday of each month.
“First Friday is huge for us,” Cheuvront says. “Those are our biggest nights of the month. That’s a huge benefit to us.”
While the arts certainly bring a lot of people to Downtown Phoenix, so do other big events, especially professional sports games. With the Phoenix Suns and the Arizona Diamondbacks playing right next door to each other, sports fans are constantly moving through the downtown area — and of course they’re hungry.

The Phoenix Convention Center houses what Executive Chef Jesus Cibrian dubs an “upgraded food court” called Metro Marche. It incorporates various stations serving several kinds of food from Asian to American, and it’s open to the public, not just convention attendees. Although most days only two or three stations are open for lunch, Cibrian says if there’s an event taking place, they open more and extend the hours.

“We are what the guests want us to be,” he adds. “We are a chameleon.”

Not only does the convention center provide great food for the community, it provides the community with more business. Since the expansion, the convention center has drawn large numbers of convention-goers to the downtown area and to area restaurants.

“We always contact the heads of the conventions in town,” Cullen notes. By doing so, he says he attracts many convention attendees.

Another recent addition to the flourishing downtown area is Arizona State University’s newest campus. Thousands of young adults travel downtown to take classes, and many of them live there, as well. Many nearby restaurants, particularly Pasta Bar, which is only a block away from the campus, regularly see students as customers.

Even those pricier restaurants with a bigger focus on happy hours benefit from the younger demographic.

“We have a lot of employees from ASU,” Cullen says, even though most students can’t afford to dine at Kincaid’s.

Of course, a lot of downtown dining business still comes from those 9-to-5 professionals. Johnny Chu, owner of the Asian tapas and sake restaurant, Sens, says most of his customers are businesspeople on their lunch breaks or stopping by after work.

One of the biggest changes to the downtown landscape in recent years has been the addition of the light rail, which opened in late 2008. Although it was a nuisance during construction, restaurant owners agree it has ultimately brought more people and business to Downtown Phoenix.

“We were down to 30 percent of our sales” during light rail construction, Cheuvront acknowledges. “People couldn’t even get into our parking lot. But it went back up. Last year was the best year we’ve ever had.”

Chu agrees that the light rail brings more business downtown.

“On the weekends, most of our customers take it in from Tempe or Mesa, so they can avoid a DUI on the way home,” he says.

Wade Moises, owner of Pasta Bar, sees a similar trend.

“A lot of our regulars take the light rail,” he says. “They tend to take it downtown and come here for an inexpensive night on the town.”

So with some help from the new and improved dining scene, Downtown Phoenix has become one of the hottest destinations in the Valley.

“Downtown Phoenix is a little different than downtown in other cities,” says Cullen, who has watched the evolution since Kincaid’s opened 10 years ago.

“We’re in the beginning, growing stages of it. We’re finally starting to see downtown develop into what it’s going to become. It’s been good to see it happen. Everything is moving in the right direction.”

www.cheuvronts.com | www.districtrestaurant.com | www.kincaids.com | phoenix.gov/phxpccd.html | sensake.com | www.pastabaraz.com

Arizona Business Magazine June 2010

St. Joseph’s And Phoenix Children’s Announce A Strategic Alliance - AZ Business Magazine June 2010

St. Joseph’s And Phoenix Children’s Announce A Strategic Alliance

Two major forces in the Valley’s health care industry are joining together to ensure the future of quality pediatric care in Arizona. St Joseph’s Hospital and Medical Center and Phoenix Children’s Hospital are in the process of negotiating a strategic alliance that will make Arizona a medical destination for young patients with complex and acute health care needs.

“Phoenix is the fifth-largest city in the country and it deserves to have a children’s hospital that is top tier in the country with the same breadth of programs, depth of resources and reputational scores for quality as children’s hospitals in other major markets,” says Robert Meyer, president and CEO of Phoenix Children’s Hospital (PCH).

Under the proposed alliance, St. Joseph’s will transfer a substantial portion of its pediatric service line to PCH. The collaboration will result in a full-service pediatric hospital, bringing together the best both hospitals have to offer. If an alliance is reached, much of the two hospitals’ pediatric medical staff, nurses and other staff will be united by mid-2011. At that time, the construction on PCH’s new 11-story hospital tower is expected to be complete, making Phoenix home to the second largest children’s hospital in the nation.

Under a current, non-binding memorandum of understanding, St. Joseph’s would continue to operate its neonatal intensive care unit and treat pediatric patients in its trauma unit, as well as patients age 15 and older. In addition, St. Joseph’s would be a minority member of Phoenix Children’s, with limited representation on PCH’s board of directors.

“When we brought our strengths to the table we became a tremendous force in the care of kids in this country,” says Linda Hunt, service area president of Catholic Healthcare West Arizona and president of St. Joseph’s Hospital & Medical Center. “We have leaders in pediatric care, advocacy and research that we can bring together to make this incredible force and improve kids’ care in the Southwest.”

Along with creating a powerhouse pediatric hospital, the shifting of services will enable St. Joseph’s to fulfill its strategic plan to become a destination hospital for patients from across the nation and around the world. To that end, Hunt says St. Joseph’s is expanding specialty programs such as neurosurgery, neurology, cardiology and pulmonology.

The two entities already have collaborated on specific programs, including physician cross-coverage for the Children’s Heart Center and a National Institute of Health grant that’s part of PCH’s Heart Center, housed at the Barrow Neurological Institute at St. Joseph’s. In spite of the various joint programs, no large-scale alliance had ever been attempted. PCH initially approached St. Joseph’s about a wider-ranging alliance, and the timing proved to be just right. Due to state budget issues, capacity constraints St. Joseph’s is facing, and the expansion already underway at PCH, the collaboration seemed like the natural progression.

“When I approached Linda Hunt in 2008 about revisiting a formal collaboration, we agreed to discard the baggage of failed collaborations of the past and brought fresh thinking to the discussion,” Meyer says. “What we found is that we are more alike than different. We share a common vision and very similar values. We are equally committed to excellent medical care, (and) both need to grow.”

The challenges facing these two health care leaders are daunting. Phoenix is one of the fastest-growing regions in the nation, and medical centers and hospitals must be prepared to face a large influx of young patients in the future. However, with both noted hospitals banding together, incredible progress can be made.

“By combining our pediatric programs, we can achieve a level that would be on par with the leading children’s hospitals in the country more quickly and efficiently than doing so alone,” Meyer says.

Among other things, the alliance will improve access to higher quality pediatric health care services in a cost-effective manner, enhance recruitment and resources for services and programs, accelerate the development of research programs, maintain and improve medical services for the under-served and more, Meyer adds.

The process of finalizing the proposed alliance is ongoing. At this time, presentations outlining the plans for the alliance have been made to physicians and staff at both hospitals. In addition, feedback programs have been created to field any questions or concerns employees may have. The process of assembling work groups with representatives from both hospitals participating in the integration plans also has begun.

“We believe this strategic alliance with CHW/St. Joseph’s will enable us to achieve our bold vision to be recognized as a national leader in pediatric health care,” Meyer says. “This community benefits from the strength of two of the leading providers of children’s medical care, because we’re better together than alone.”

www.phoenixchildrens.com | www.stjosephs-phx.org

Arizona Business Magazine June 2010