Tag Archives: Tim Lawless

Arizona Health Care Cuts, AHCCCS

NAIOP Arizona announces opposition to Prop 480

The NAIOP Arizona board of directors has unanimously opposed Prop 480, an item on the Nov. 4 general election ballot that asks Maricopa County voters to approve a $1.4 billion general obligation bond over 27 years for the Maricopa Integrated Health System (MIHS).

If passed, Prop 480 would be the third largest bond issuance in Arizona history, according to the Arizona Tax Research Association (ATRA), the group spearheading the effort to defeat the proposition.

The NAIOP board could have supported a narrower bond request focused more on the behavioral health component and replacement of the Level One Trauma Center and Arizona Burn Center, NAIOP-AZ President Tim Lawless said.

However, it is opposed to the bond issuance, which would pit a taxpayer supported institution against a number of private healthcare systems where there is much duplication of services and excess hospital beds that private payers must support within a relatively small geographic radius of about five miles.

“We are especially concerned about duplication and unfair competition with taxpayer money,” Lawless said. “While the proponents claim there are three discrete funding components, the wording of the ballot proposal seems far more open-ended regarding the purposes the monies can be used.

“The timing of the bond issuance is also troubling as there was a massive property tax shift from residents to businesses during the Great Recession and these same businesses are still struggling to recover,” Lawless added.

From fiscal year 2010 to fiscal year 2014, there was a 30 percent increase in property tax rates for businesses. If the bond passes, a typical small business with assessed valuation of $1 million will be paying $7,800 more over time in property taxes.

“We also believe patience is the watchword as we still are not certain of all the impacts of the Affordable Care Act, which was allegedly created to better meet the needs of the uninsured yet who are cited as the primary reason for the bond,” Lawless said. “Related to this, the state expanded Medicaid insurance to the poor to draw down more federal dollars and there appears to be an equity issue that only Maricopa County residents are being asked to pay for the MIHS services when these same taxpayers already pay $65 million per year.”

The point that proponents make where interest rates are near or at historic lows thereby decreasing overall costs seems valid until it is realized that the total cost of the bond ($935 million is the actual amount) with principal and interest will exceed $1.4 billion over 27 years.

The NAIOP board says it needs the Affordable Care Act provisions to be understood with all of the attendant costs associated with its implementation before Arizona embarks on the bond issuance where a new hospital and multiple clinics financed by taxpayer money are constructed only to compete against private hospital systems in an area that already has excess bed capacity and duplication of services. The costs will be shouldered by the same private payers.

“Our board has also set aside some level of funding for the opposition campaign formed by ATRA,” Lawless said of a $10,000 contribution to be made by NAIOP Arizona to the opposition campaign.

sales.tax

Arizona Business Community Supports HB2111

The undersigned organizations and businesses want to express their strong support for the passage of HB2111 with the floor amendment that will be offered by Senator Steve Yarbrough. This final amendment represents major concessions to address concerns that have been expressed by the city representatives.

This final amendment reflects the cities’ request for a separate online portal for the collection of sales taxes in the 18 non-program cities. In addition, the amendment reflects the cities’ demand to maintain the authority to audit single-location businesses in their city. Lastly, the amendment removes all of the changes to prime contracting tax except for the trade and service contractors.

While the Yarbrough amendment reflects major concessions to the cities that undermine some of the important reforms recommended by the Transaction Privilege (Sales) Tax Simplification Task Force, we believe this final proposal still reflects historic progress that deserves final passage.

The Senator Yarbrough floor amendment will provide for the following:

* Single Point of Administration – the Department of Revenue (DOR) will become the single point of administration and collection of TPT. However, at the request of the cities, there will be a separate online portal for the 18 non-program cities. Despite this concession, the cities remain opposed because they want to continue to require businesses making paper sales tax remissions to pay the state and city separately. Their proposal provides most small businesses no administrative relief from making multiple payments to multiple jurisdictions each month.

* Single and Uniform Audit – DOR will administer a standardized state audit program where all state and city auditors are trained and certified by DOR. Despite major concessions from the business community to allow cities to continue to audit local businesses, the cities continue to push for further changes that will undermine much needed reforms to standardize state and local audits.

* Trade/Service Contracting Reform – Service contractors working directly for an owner to maintain, repair, and replace existing property would pay tax on materials at retail and not be subject to the Prime Contracting Tax. During Task Force deliberations, the cities repeatedly conceded that this area of the prime contracting tax was problematic and should be changed. However, after almost a year of study and discussion, they have offered a change to the taxation of service contractors that provides no administrative relief and couples that change with a request that the state give the cities $80 million from use tax collections.

Arizona’s chaotic and dysfunctional sales tax system has been the subject of considerable controversy at the Capitol for over 30 years. The creation of the Task Force, as well as the appearance for the first time that the cities recognized the need for reform, gave Arizona businesses great hope that this system would finally be reformed. We strongly encourage state policymakers to pass a sales tax reform bill that is grounded in sound tax policy and focuses on reducing the extraordinary compliance costs on Arizona businesses.

Kevin McCarthy, President, Arizona Tax Research Association
Michelle Lind, Chief Executive Officer, Arizona Association of REALTORS
Bas Aja, Executive Vice President, Arizona Cattlemen’s Association
Glenn Hamer, President & CEO, Arizona Chamber of Commerce
Steve Macias, Chairman, Arizona Manufacturer’s Council
Francis McAllister, Chairman, Arizona Mining Association
Courtney LeVinus, Arizona Multihousing Association
Michelle Allen Ahlmer, Executive Director, Arizona Retailers Association
Steve Chucri, President/CEO, Arizona Restaurant Association
Rick Murray, Chief Executive Officer, Arizona Small Business Association
Steve Zylstra, President & CEO, Arizona Technology Council
Greg Turner, Vice President, Senior Tax Council, Council On State Taxation (COST)
Lisa Rigler, President, Small Business Alliance AZ
Todd Sanders, President & CEO, Greater Phoenix Chamber of Commerce
Tom Franz, President, Greater Phoenix Leadership
Connie Wilhelm, President, Home Builders Association of Central Arizona
Tim Lawless, Chapter President, NAIOP
Farrell Quinlan, Arizona State Director, NFIB
Ronald E. Shoopman, President, Southern Arizona Leadership Council
Scot Mussi, President, The Arizona Free Enterprise Club
Matt Beckler, Vice President, Treasurer & Chief Tax Officer, Apollo Group, Inc.
Steve Barela, State & Local Tax Manager, Arizona Public Service
Steve Trussell, Executive Director, Arizona Rock Products Association
Michael DiMaria, Director of Legislative Affairs, CenturyLink, Inc.
Gayle Shanks, Owner, Changing Hands Bookstore
Michelle Bolton, Director of Public Affairs, Cox Communications
Nikki Daly, Owner, Flair! Salons
David Karsten, President, Karsten’s Ace Hardware
Reuben Minkus, Minkus Advertising Specialties
PetSmart, Inc.
Tina Danloe, General Manager, Pima Ace Hardware
Molly Greene, Senior Government Relations Representative, Salt River Project
Les Orchekowsky, President & Co-Owner, Sierra Ace Hardware, Inc.
Ann Seiden, Administrator/Corporate Public Affairs, Southwest Gas Corporation
Joseph Hughes, Director of Government Affairs, U.S. Airways
Walgreens Co.

Glenn Hamer is president and CEO of the Arizona Chamber of Commerce and Industry. The Arizona Chamber of Commerce and Industry is committed to advancing Arizona’s competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans.

Tim Lawless Discusses HB 2001 - AZRE Magazine September/October 2011

Q&A With NAIOP-AZ President Tim Lawless: The Impact Of HB 2001

Q&A with NAIOP-AZ President Tim Lawless who discusses HB 2001,  commercial property tax and how the commercial real estate industry is affected by these tax cuts

Recently, the Arizona State Legislature passed the most sweeping economic development/job recovery bill in years (HB 2001). It included a number of phased tax cuts and tax credits for businesses along with a deal-closing fund to attract high wage firms to Arizona.

Q: WHAT WERE THE SPECIFICS?

Specifically, the corporate assessment ratio used to calculate commercial property taxes will be reduced from 20% to 19.5% in 2013, 19% in 2014, 18.5% in 2015, and 18% in 2016. Moreover, the current corporate income tax rate of 6.968% will be reduced over four years to 4.9%. The $25M “deal-closing fund” (the Arizona Competes Fund) partially derived from lottery revenues will also give the privatized Arizona Commerce Authority (ACA) a key tool in landing firms that may need a nudge in deciding between finalist states for relocation or regional expansion decisions.

Q: WHAT DOES IT MEAN FOR THE COMMERCIAL REAL ESTATE INDUSTRY?

Significantly, NAIOP-AZ’s top three priorities to: 1) reform our uncompetitive commercial property tax system; 2) to lower our corporate income tax rate; and 3) to enact a deal-closing fund to attract new firms to the state are all contained in the law. This is a remarkable turn of events for our industry. NAIOP-AZ helped lead the fight six years ago to begin lowering the property tax assessment ratio from 25% to 20%, which resulted in more than a billion dollars in property tax savings to businesses over this time. More needs to be done but we have successfully addressed the single biggest impediment to job creation in our state — high uncompetitive property taxes for commercial real estate.

Q: WHERE WILL WE RANK NOW COMPARED TO OTHER STATES?

The corporate income tax rate reduction down to 4.9% will bring us more in line with our Western state competitors (some of whom who do not have a corporate income tax) and give us the fifth lowest rate in the nation. We also are now seeing the fruits of our labor as we have moved from having among the top five worst business property tax burdens in the U.S. to currently 15th and with these changes we expect to move to the middle of the pack by 2016, which is more where we should have been all along.

Q: WON’T THE DECREASE IN BUSINESS PROPERTY TAXES BE SHIFTED TO HOMEOWNERS?

No, this was not the intent of the legislation. In order to address the issue of perceived shifts in taxation to residents, legislators agreed to toggle the “Homeowners Rebate” upward in the future per calculations from the Dept. of Revenue and to help finance this impact to the State General Fund by reforming the Homeowners Rebate for those that illegally take it on multiple homes that are not their primary residence and those homes that are vacant and in foreclosure. In short, those who are most deserving get a bump and those that are abusing the credit get dumped.

Q: WHAT BIG ISSUES ARE ON THE HORIZON FOR COMMERCIAL REAL ESTATE?”

The eventual sunset of the recent sales tax increase will exacerbate a structural budget deficit for our state should it prove politically untenable to cut base spending levels more than they have already. As a result, the spending lobby will be looking to raise almost a billion dollars, especially for K-12 education, at the ballot next year. Initial ideas are to either make permanent the temporary sales tax rate increase; to increase the sales tax to currently exempt goods and services; and/or to institute a new statewide property tax. Because commercial property tax rates are still considerably more than what residents pay, NAIOP-AZ would certainly fight the specific alternative to raise a new statewide property tax. This would erase all the progress we have made the last six years in making our state more competitive for job creation. The proposed expansion of the sales tax base to exempt goods and services would also bear close watching as some proposals may make commercial lease sales subject to state taxation again which would be a hindrance to economic recovery for our industry and in turn for the state.

Q: HOW WOULD YOU SUM UP THE ACCOMPLISHMENTS THIS SESSION?

Hopefully, the measures passed in the recent “Jobs Bill” will give your readers, our members and businesses in general the confidence that Arizona is a great state to locate, invest, and expand.

AZRE Magazine September/October 2011

 

 

NAIOP Arizona's Developing Leaders - AZRE Magazine September/October 2011

NAIOP Arizona’s Developing Leaders Pairs Veterans With Young Professionals

NAIOP Arizona’s Developing Leaders mentoring program designed to pair veteran and young CRE professionals to bolster the industry

For a group that has yet to commemorate its first class, NAIOP Arizona’s Developing Leaders mentoring program has some fairly heady goals.

That’s evident by its mission statement:

* To Improve the communities in which we develop, build, and broker commercial real estate;

* To Impact the careers of young real estate professionals through educational development, and exposure to pertinent topics;

* To Instill the knowledge, values, and expertise of today’s industry leaders in developing leaders;

* To Influence the professional growth of developing leaders by fostering valuable long-term relationships with industry peers.

NAIOP Arizona’s Developing Leaders mentoring program is relatively new to the Arizona chapter, although it’s been around for awhile nationally — where it has been successful.

“It was a natural evolution,” Clay Wells, a co-liaison on the NAIOP Arizona board of directors and director of business development at McShane Construction Company, says about implementing a mentoring program. “The first year we were involved with getting our feet wet. The second year we tried to make it grow by working on charitable events.”
Now in its third year, it’s time to get the ball rolling.

“The program will bring the best elements of the entire membership together,” says NAIOP Arizona president and CEO Tim Lawless. “It will create synergy with older more experienced people and younger up-and-coming members.”

The goal is for those in the commercial real estate industry to help provide protégés with insight on how to become successful, says Nate Goldfarb, an associate at CBRE and co-chair of the mentoring program.

The program will be comprised of 10 highly experienced industry professionals as mentors, each paired with two protégés who are existing developing leaders under the age of 35.

Other chapters have had mentoring programs for several years, with those in San Diego and Colorado boasting some of the strongest programs, according to Wells.  “We looked at other chapters and tried to steal the best details,” he says.

Lawless will be involved in the final mentor screening process and says he will be looking for the best and brightest people who are experts in their niche and would bring the most to the table.

Protégés will be selected based on application information and not on personality, says Wells, who is part of the selection committee that is made up of five to six board members.
Initially an email survey was sent out to all developing leader candidates to probe interest and to determine which industries members would like mentors from, Goldfarb says.

“There was a strong response from potential protégés and response from prospective mentors was phenomenal, particularly senior members,” Goldfarb says.

“We’re looking for an Icon,” says Lawless, adding that NAIOP Arizona’s membership has an excellent crop of mentor candidates such as Keith Earnest from RED Development and NAIOP chairman Mike Haenel of Cassidy Turley BRE Commercial.

When protégé and mentor are paired they will meet at least once a month for 10 months.
“There will be a lot of active listening to the mentor who has already walked the path,” Goldfarb says.

The inaugural class function will be held this fall and will be a black tie event, according to Goldfarb.

“We want to make events special for protégés so that they are impressed by the mentor, the program and the events.”

[stextbox id="grey"]For more information about the NAIOP Arizona’s Developing Leaders mentoring program, visit www.naiopaz.org/dl.[/stextbox]

AZRE Magazine September/October 2011

 

Mike Haenel, Chairman, NAIOP - AZRE Magazine September/October 2011

NAIOP-AZ Mike Haenel A Major Player In Future Of State's CRE Industry

NAIOP-AZ chairman Mike Haenel a major player in the organization and in the future of state’s CRE industry

For 26 years, Mike Haenel, executive vice president for Cassidy Turley/BRE Commercial Industrial Group, has been successful marketing industrial and back-office land and building space in Arizona.

In the early 1990s, he even did a brief stint in the development side of the business.
Since 2003, Haenel has completed 300-plus deals worth a combined $740M. He also has collected several industry awards along the way.

But Haenel said he couldn’t have achieved these significant accomplishments without his partner, Andy Markham, and the support of Cassidy Turley.

They have been able to close transactions during the good and bad times.

So for more than two decades, he has been an active member of NAIOP — the organization he considers a must for anyone hoping to be a major player in Arizona’s commercial real estate future.

Now as NAIOP Arizona chairman, Haenel gets to set the course for the organization.

It’s a challenging time to be at the helm.

Arizona’s commercial real estate industry, like that of much of the country, is adrift in turbulent waters.

In Arizona, the industrial segment has hit bottom and is slowly heading back into better times, Haenel said.

The Phoenix metro area absorbed 3 MSF of industrial space in 2010, and, with the new Amazon warehouse deal, already surpassed 4 MSF by mid-year 2011.

“There are several large build-to-suits looking in the marketplace, and we expect to exceed 5.5 million square feet (absorbed by year-end),” he says.

But the office market, NAIOP’s other purview, is still foundering with too-high vacancy rates and too low rents.

Still, Haenel offers tempered optimism for that segment going forward.

Office rental rates “showed some stabilization” in second quarter, he says, and that is a hopeful sign.

“If we continue to absorb industrial space as we have for the last 18 months, I see speculative development again within the next three years,” Haenel says. “Clearly, office would be longer.”

NAIOP will be essential for charting a clear course through the still-choppy seas ahead, he adds.

Industry professionals banding together, exercising their combined clout and sharing knowledge and experience, helps them survive the difficult times and prosper when the storm clouds dissipate, Haenel says.

“NAIOP is such a great networking organization,” Haenel says. “It shows how important relationships are especially in a period like this. The relationships you create, nurture and foster help as the market recovers, but help (especially) when the market is as tough as it’s been.”

Haenel said while it’s a rough time for Arizona’s commercial real estate industry, it’s really not so bad sitting in NAIOP’s pilot seat.

The previous chairman, Todd Holzer of Ryan Companies US, and NAIOP Arizona president Tim Lawless, have set so many fruitful programs in motion, Haenel just has to hold the wheel steady, he says.

“I am grateful for the past chairmen and current/past board members who have built the organization to what it is today,” Haenel says.

But he has his own pet programs, too.

Member education, developing the industry’s future leaders and fostering positive public policy, are top focuses for the new chairman. He sees them as the keys not just for his organization, but for the future of Arizona’s commercial real estate industry.

Providing networking events, information sessions, and education opportunities for more than 540 members is so important for fostering relationships and keeping industry pros abreast of issues and concerns that impact their business, he says.

The Arizona chapter’s Market Leader Series, quarterly events that feature small panels of experts on such important local topics as job growth, distressed real estate and the like, has garnered standing- room-only attendance, he says.

This year, local members also get to share with their peers from around the country and showcase their own state’s attributes as Phoenix hosts NAIOP’s annual meeting in October.

Other key strategies for Haenel as he steers the NAIOP ship forward are mentoring and encouraging the next generation of local commercial real estate leaders to ensure the industry remains vital for the short- and long-term future.

“As we continue to get older, we are blessed to have some great young people coming up in the ranks,” he says. And Haenel is determined to indoctrinate them with the importance of his “build relationships” mantra.

He is a big backer of NAIOP’s Developing Leaders program, aimed at the under-35 up-and-comers, and the Arizona chapter’s DL Mentor Program, a new initiative that has been a year in development and has just launched.

Along with continuing education for all members and developing and nurturing the young members, the third leg of Haenel’s stool of NAIOP initiatives aimed at nursing the state’s commercial real estate industry back to health, is influencing public policy.

The group lobbied hard for HB2001, dubbed “the jobs bill,” which has several elements including tax incentives and the new Arizona Commerce Authority to proffer those enticements to businesses looking to expand or relocate. Haenel hopes the new legislation will reinforce Arizona’s image as business-friendly and provide a big lure for new or growing businesses and their commercial real estate needs.

Haenel says NAIOP will continue to pressure the legislature on issues that the organization feels could make Arizona more competitive for any type of businesses, and to educate members on the legal ramifications of any new or proposed bills and clarify why they should care.

His assessment of the local commercial real estate industry’s short-term future is that Arizona has all the right elements to take advantage of the recovery as it gains ground, and, long-term, to grow and prosper.

“Arizona is considered a top-tier commercial real estate community,” Haenel says. “We are so lucky to have the quality of professionals in Arizona to create and develop first-class commercial real estate projects. And that allows us to attract, compete and win high quality jobs.”NAIOP-AZ Chairman Mike Haenel

For more information about NAIOP-AZ and chairman Mike Haenel, visit www.naiop-az.org.

AZRE Magazine September/October 2011

 

Tim Lawless, AZRE Magazine September/October 2010

Q&A with NAIOP-AZ President Tim Lawless

Q&A with NAIOP-AZ President Tim Lawless

Q: A year ago you cited several factors that needed to occur for the regional economy to get going again. Have those changes occurred and what impact have they made, if any, in regard to the outlook of local commercial real estate?

Last year, I said that four things needed to occur before we could get on our feet again as an industry. They were:

1) credit markets need to act more normally;

2) job losses need to stabilize;

3) the glut of housing inventory needs to be absorbed so folks can sell their homes in the Midwest and California and continue to migrate here; and

4) we need a more competitive state tax code and to enact policies that diversify the economy in order to attract the flight of capital and brainpower, especially from California.

The credit market is not yet normal. People are still hoarding cash and there is an expectation that hundreds of banks nationwide will still fail when they take further haircuts on distressed properties that have yet to move into the barber’s chair.

We have stabilized job losses, but the rebound is much slower than hoped and few think we will replace all the jobs lost even after 5 years in our state. Nationally, many of these jobs will never come back. They are in India and other countries.

Regarding the glut of homes available, we are seeing some activity that gives hope, but I wouldn’t “bet the house” on it recovering just yet.

And finally, we have done little to nothing regarding the tax code besides talk about privatizing a Department of Commerce and enacting a solar tax credit that only helps on the far periphery. If anything, we have gone backwards as business has had to absorb two major tax increases with the prospect of more coming.

Of the four things, the job losses and housing are the most improved, while we are still waiting for the brunt of commercial property foreclosures to move through the system. Once the foreclosure “pig” is digested in the “python,” the credit markets will be more normal. This digestion, however, is soon upon us, which becomes necessary for recovery.

The factor that holds the least optimism is the prospect of changing our uncompetitive business tax code, especially as it relates to high commercial property taxes. Perhaps this can only be accomplished in tandem with yet another tax increase as the political courage to further cut spending has waned.

The silver lining about all of this is that properties are fast becoming a bargain and a lot of cash on the sidelines may soon come in.

Using a baseball analogy, we are in the late innings regarding a residential property recovery, and perhaps only in the mid-innings regarding a commercial property recovery. What we all hope to avoid is the prospect of extra innings through a double dip.

Q: What are some of the new challenges you see facing the industry in 2011?

While it was anticipated that at least one major tax increase would occur (two in fact occurred, the reinstitution of the $250M per year state equalization property tax and the $1B per year sales tax increase) the prospect of multiple tax increases at either the federal, state or local levels is the new challenge.

The feds seem intent on taxing commercial partnerships more like ordinary income rather than the lower capital gains tax treatment, while the state’s structural budget deficit will be more than a billion dollars beyond 2014. The locals will also be eying ways to raise revenue, most likely via the property tax rates.

Multiple tax increases on small businesses that are tenants in our buildings and at financial risk will only result in more potential vacancies if not more rent concessions. Further tax burden increases will also harm our ability to attract more firms to our state.

Q: How do you envision NAIOP-AZ helping to address those challenges?

NAIOP-AZ will continue to advocate at the state Capitol for a more competitive tax code that creates more high-paying jobs for our economy. Besides advocating for property tax reform, we also are now advocating a corporate income tax rate reduction and a deal-closing fund for the governor in order to attract more firms and allow existing firms to expand.

Q: What are some opportunities you foresee in the industry in 2011?

As the foreclosures and the sale of distressed properties mount, this creates the opportunity for more out-of-state entrants to become active in our community. In other words, the companies that were well known before will be replaced by new firms that may re-charge our communities and have the potential to provide new perspectives.

This is the essence of the rising Phoenix myth and the image of Arizona that most Americans have — that it is an egalitarian state where one rises and falls on their merits and where even a desert can be remade into an oasis.

Q: What are some NAIOP-AZ initiatives for the coming year?

During an economic downturn, the key is to do more with less. Our trade association is not immune, as many of our members have lost their job or taken new jobs for less pay in the last year. As a result, we are trying to offer more networking and educational opportunities.

A key example is the institution of a Market Leaders Sunrise Series. We invite our membership to hear from industry panels that are experts in certain fields such as lending, economic development, brokerage or “green” initiatives.

We also have attempted to pursue strategic alliances with other trade associations, where we can co-leverage resources toward more bang for the membership buck. An example is we plan to co-sponsor ULI’s Trends Day in January, where our members may get a reduced fee for attending. We also have partnered with BOMA-AZ in offering multiple continuing education courses.

Internally, we are looking at pursuing a mentoring program, where individual board members would partner with commercial real estate professionals 35 years of age and under from our Developing Leaders Committee.

In closing, we would be remiss in not thanking our corporate sponsors and members who have made our trade association a relevant force in public policy advocacy and in providing a platform for education, networking and philanthropic involvement.

For more information about NAIOP-AZ and Tim Lawless, visit naiop-az.org.

AZRE Magazine September/October 2010