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December 29, 2014

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Jon, Interesting column. Respectfully, I see things differently. AZ turns out to be the bluest "red state" there is....

Virtually all of the economic activity which requires "risk capital" is supplied by government agencies or commitments of cash flow. See, e,g,:

Downtown Phoenix Renovation (stadiums, convention center, hotel capex and opex) - all state funded.

TGEN and BIO Activities - ALL publicly funded.

U of A Medical School in Phoenix - State funded.

ASU Expansion - publicly funded.

Light Rail - publicly funded.

APS "Solar Investment" - 100% funded by ratepayers under force of State law (so, looks like a tax). No market activity at all in the state, except for rate carve outs (roof top solar) which are then publicly funded/subsidized/at risk.

NFL Superbowl - publicly funded. See also subsidies to NHL Coyotes and MLB DBacks stadiums

Job Growth - mostly occurring in public sector and/or due to medicaid expansion.

Apple/GT Advanced - Required millions in subsidies and then failed within 60 days. In a heavily (and previously) subsidized First Solar facility.

Grand Canyon "University" Expansion - funded by student loans. See also: Apollo, etc.

Anon,

By your reasoning then San Francisco and Seattle would both be the reddest of "blue urban centers" because they possess and attract large amounts of private investment capital?

Me thinks there is a Goldwater Institute reptilian mind behind this Anon mask.


Arizona got to the future first. It was the first state to drastically cut taxes, reduce government, hike state university tuitions, and embed as public policy a drive-everywhere, no-sense-of-place built environment. Congratulations to all Republicans for forcing Arizona into a shotgun marriage of Ayn Rand and Aryan Jesus. One question: when do they make Ayn Rand's birthday a state holiday? At least with her, there's no disjunction between the Republican values professed and those acted on. O, come all ye greedheads.

I'm returning to Phoenix next week for the first time since I left it. I'm not looking to be disappointed or to have a negative bias confirmed. There are real things, sunshine, and people I miss. But unless the voodoo of tax cuts has finally given birth to a miracle, what will I see? A state that proudly flips off anyone who actually cares about its environment and cities? Replace citizenship with consumerism, and you have the civic impulses of a Wal-Mart. That's Arizona. You saved money! Now go spend it at an Olive Garden.

There's no bridge to this future that doesn't collapse from deferred maintenance. For all the brave talk of population growth and cheaper gas, there's no vision once you distort public policy with a bankrupt ideology based on the novels of a second-rate writer. If you don't love Arizona, you're living in the right state. Because once it's all about you, then there's nothing you would want to love. Your individualism may not be rugged but it's enough to turn Arizona's civic project into a going-out-of business sale.


As someone who was born in this state some 50+ years ago (and graduated from the same high school as Jon), I refuse to think Arizona is hopeless. The question is how do we move from apathetic to engaged? We listen to the rhetoric and believe it. We need a thinking and engaged citizenry. Most importantly, we need people to get to vote. I remember when I turned 18...I could not wait to vote! It is one of the most sacred rights we have and yet if you believe the numbers, most people squander it away. I think people have accepted idiotic rhetoric as who we are and I know we are far smarter than this...maybe I have my head in the clouds but without hope you don't have much left.

Henry IX,

Think we crossed signals. My point is that Jon is right that AZ is a mess, but i differ in that i don't think that AZ's "continuing crisis" has much to do with genuine conservative economics.

While AZ has a very bad record of "social conservatism" (see: MLK Day, SB 1070, SB 1062) it is much harder to find evidence of "economic conservatism". The state's economy is centrally planned and funded.

Consider: AZ is the most reliant on Federal spending and much of its land is managed by the Feds and Native American Nations. AZ ranks terribly (49th) in Sales Tax climate (should be considered #50 as it is second only to a state with no income tax). AZ has no organic finance capacity (literally, there are no material banks, IB's, venture of PE funds in AZ). There are 5 fortune 500 companies, but PetSmart sold to PE (so now the State has four F500 companies). Of these, 2 of the 4 are low margin distributors with revenue but low rate of earnings. Hometown airline just left (see, also: Detroit, St Louis, Cincinnati). AZ runs monopoly energy markets with unusually profitable and connected (and for-profit) "public service" utilities (one of which just selected its own regulators and state AG). Overall, the market system is avoided in the state, so hard to blame markets for much...

Seattle and SF attract capital because the brains and the opportunities offer attractive returns to that capital. In AZ, unelected "economic developers" pick and choose favorite projects. I listed several of such projects, worth Billions in misdirected taxpayer money (dozens more come to mind). The Phoenix Business Journal lists 50+ "economic development" employees working for just the top 5 "economic development" organizations.

So suggesting that AZ proves economic conservatism fails doesn't work -- because the state hasn't tried it.

Anon (Another faceless poster) Said.
Consider: AZ is the most reliant on Federal spending and much of its land is managed by the Feds and Native American Nations.

How corporation and the government keep screwing the Indians:
http://america.aljazeera.com/opinions/2014/12/feds-navajo-shepherdsmining.html#

I'm a native who has lived in NY for almost 25 years. When I left Arizona in 1990, it was on the cusp of being a great state. It continues to dangle on the cusp. Nice place to visit but...

FACTS:

Federal Spending: Phoenix Business Journal - Arizona more reliant on federal spending than California, New York, blue states.

http://www.bizjournals.com/phoenix/news/2014/12/02/arizona-more-reliant-on-federal-spending-than.html


Federal Land: 42% of AZ is Federal Land which brings in $745 MM in tourism revenue (and AZ not responsible to maintain, govern or police that land).

http://www.deseretnews.com/top/2318/43/Arizona-From-03-to-811-What-percentage-of-each-state-is-owned-by-the-federal-government.html (Slide #43)

The last time Arizona was on the "cusp of being great" was February 26, 1919.

I'm for Arizona being 100 percent National Wilderness.

Arizona has become a haven for right wing nuttery politics. The newest Supt of Public Instruction works in a stained glass store and has no education background. She defeated a great candidate, with lots of experience and ed credentials. The new governor favors charter schools over public schools, and the new Attorney general was backed by big APS dollars. The best slate in years of Dem candidates, went down in defeat. Don't count on that to change, since the gubernatorial election always falls in a non-presidential election year. I would definitely leave if I could. My grown kids did. AZ has become the Mississippi of the West.

Patricia hits it on the nail. We on this blog are engaged and vote, but this last election points to what is wrong: fellow travelers did not get out and vote and now we are stuck with their lack of civic responsibility. I am sure tho the governor of Mississippi might take a page from the playbook of Alabama and point out to Rogue readers how much better off Mississippi is than Arizona.

Wish there was a "like" button on Kathy's post.

I live in north central Phoenix (district 6/leg 15) and once again had a ballot where Republicans ran unopposed for several seats. Anybody have Howard Dean's phone number? Mesa is the most conservative city in America, and I'd wager their voter turnout is high. Same with Scottsdale and Sun City. Arapio didn't win by much. If the Democrats would make a real GOTV effort here it could work.

The riddle of the entire state is that "Republicans" tend to win statewide offices, are hugely energized on social issues, but serially fail to govern as fiscal conservatives. Brewer (no doubt hated in these quarters) expanded medicaid and raised taxes. Again, the state has the worst sales tax in the USA. And is, again, slated to run a budget deficit next year. Nothing like TX, OH, IN and the other States that have used R governors to straighten out their books.

Dems don't do much, although they control Phoenix and Tucson and (prior to her resignation) Janet Napolitano was governor (Brewer was Sec of State and filled vacancy). While mesa is conservative, their mayor (Scott Smith) didn't win statewide because he was not particularly conservative and considered too much of a centrist. The congressional delegation is roughly split.

Think those who want to blame the R's for the State's problems will have to confront the reality that this high tax, "machine-style" political system looks alot more like Rhode Island than it does Texas.

At what point do people give up their expectation that things might even BEGIN to turn around? When I was visiting the valley in October, I talked with a lifelong dem (young dems, envelope stuffer for JFK, Goddard et al., SNCC-CORE) He said "If people don't see through Ducey and he's elected, there's no hope." We didn't even mention Sup Pub Instr. But I bet that he's still in there hoping.

I suspect that many of us have said similar things with similar disappointments many times. Having 'given up hope', what to do? Some just turn their backs. Some lower their expectations but still vote, give money, etc. Morris Berman moved to Mexico.

Chronic disappointment is dispiriting. Aside from money, one resource that the Right has all over the Left is zeal/passion. To the extent that it's religiously based, it's inexhaustible.

Soleri:

AZ is pretty hopeless politically, but there are some cool things in Phoenix that probably weren't here last time you were: the local shops including Stinkweeds at Central & Camelback, the new Changing Hands/garden store/wine bar/restaurant at 3rd Ave & Camelback in the old Beefeaters spot; the Film Bar, Moira Sushi, and Nobuo at Teeter House downtown. we still lack urban density and vibe, but there are some real gems here and there.

Four years after leaving, the hurt is fading away. I miss Arizona so much, mostly the nature. But living here in anti-eco, ultracompetitive McLean, Va. -- where one risks running into Cheney at Starbucks then Newt in the Giant grocery -- it's much less stressful because the lowest common denominator is much higher. Conservatives here are informed, unlike the fools dominating Arizona's right. Arizona's undoing is its long-running brain drain (oft-mentioned by Jon) and influx of immigrants from the Midwest
and elsewhere who aren't the brightest LED's on the planet. AZ is a place where intellectualism . . . even mere thinking . . . is disdained, ridiculed and punished. That's why it's hopeless.

Metro DC is a drifter's city with an influx of immigrants from the Midwest and elsewhere who are a legend in their own mind but who can't hold a stick to the mental power of Manhattan, the Bay Area, Chicago or other US cities. The greed and arrogance of Northern Virginia has resulted in the slaughter of countless innocents worldwide with no end in sight. Arizona's stupidity is indefensible but it doesn't have blood on its hands like the land of ass kissing bureaucrats. It is a great city to live in though I must say.

Chris Thomas, The Newton at 3rd Ave & Camelback, which includes Changing Hands, was still under construction when I left. Other than that, all those under venues you mentioned were open. I lived about a half mile from the old Beef Eaters and was hoping that project might augur some increasing interest in the area. Unlike downtown, this was - mostly - private money investing in a part of Phoenix that has some coolness interwoven in its fabric. I used to argue with people that for all its dumpy aspects, central Phoenix was still more intriguing than Scottsdale or even Tempe. There are still some uniquely authentic things to be found there. Not nearly enough but some. You see a few other "nodes" here and there that seem to be evolving in a good way, but the imperative to drive everywhere is overpowering and, ultimately, self defeating. For all our good intentions, Phoenix is hamstrung by this necessity. You can't retrofit sprawl. If creative urbanists rehab the few old buildings remaining, they can be put to good use. Still, there are too few of them to change the destiny of Phoenix.

I ran into another Phoenix exile at a Christmas party here in Portland. He's an architect who had restored a priceless relic in Garfield but left in 1997. I had never met him before but I had heard about him for years from a well-known friend of mine and downtown booster, Frank Contreras, who also self-exiled a few years ago. This architect is exactly the kind of person you want tilling the hard and unforgiving soil of Phoenix. But he got worn out by immensity of the task. Cheerleading won't change the facts on the ground. Phoenix does have gems but the fact you have to drive miles from one to find another is crushing.

The political climate in metro Phoenix is not an accident. Isolate citizens in their cars and unwalkable neighborhoods, and you get the political kookiness and intractable dreariness that are the defining characteristics of sprawl. You tend to want to opt out of civic life, reduce your taxes, and hang out in your own backyard. Phoenix's problems are holistic for that reason. Similarly, Portland's suburbs may as well be Scottsdale or Mesa. It's the city of Portland that leavens Oregon's politics. You want saner politics? Create a real city. Better yet, preserve the real city you already have before the cars can eat it.

There are a lot of people living in Phoenix and some of them are truly wonderful. But you need more than a Ben Bethel or Kimber Lanning. You need a majority willing to vote themselves higher taxes, invest in good transit, work for political change, and stop blaming Democrats for their own passivity. But I can understand why people check out of politics in Phoenix. What else can you do? I checked out of the place altogether. I didn't want to die in an overgrown suburb.

Partly true, Drifter. The reality is more complex. We're not just bureaucrats. McLean means tech wizards and wealthy immigrants replacing stateside old money folks like the Kennedy's; the District draws young gentrifiers pricing out inner-city folks; Tacoma Park is hippietown; Manassas is Latinoville. Agreed, D.C. is blood ground zero. (I attended Langley High near the CIA, hanging with kids of senators, Nixon's AG and top domestic advisor.) But Manhattan also is a blood geyser, and the greed of its hedgefundsters and Wall Streetbanksters is legendary. Naw, DC's mental prowess isn't inferior to other U.S. cities (although I'll concede NYC's subset of Manhattan is superior). The best comparison is by neighborhood: Oakland or Chicago's South Side aren't that brainy. But AZ has few intellectually focused neighborhoods, partly the product of undereducated folks flocking there in past decades for jobs at factories or construction. Phx's median brainpower is so low it's hopeless.

Back the title, no its not hopeless. But the situation is bad and trending worse.

I don't like sprawl and cars, but don't think this is the cause of the issue. SoCal is a sprawling mess - same for dallas, silicon valley and san diego - and all of these MSA's are quite productive. This is because their brains and policies make investment attractive.

In fact, to "fix" sprawl, the City of Phoenix (and to some extent the State) fought sprawl with a series of investments in its downtown which have been ruinous. So bad investments and silly central planning is factually a "two party" mess here in Phoenix, AZ.

Specifically, Phoenix and AZ embarked on the disastrous course of having politicians use taxpayer money to make investments in concepts that they favored but which the market refused to make. Sometimes they set up fake "public-private" partnerships like GPEC and ACA to spend our money. At last report, each of the following investments listed below loses money and/or is at risk of full repayment.


- Sheraton Downtown Hotel - City asks Hotel Industry to build new hotel. Hospitality industry determines that a new hotel is not needed. So City ignores market and decides to become a developer/owner of the largest hotel in the State. Costs are $350 MM which is butt of jokes across the industry. This failing, expensive hotel is within walking distance from previously subsidized and under-utilized hotels already there. No surprise, the new hotel also can't return on its investment. In fact, it can't even break even - it loses millions a year - $28 MM total to date - and balance grows every day). AZ Rep reports that it runs at 51% occupancy.

- Phoenix Convention Center - City goes all in on $600 MM convention center. Poor (ironically, sprawling) design; well behind financial plan, consumes city's capacity to borrow.

- TGEN and Related - City "decides" that it wants to be in a new industry and throws hundreds of millions of dollars at idea. No ROI at all. Oddly, first thing they did was spend millions on buildings, not people/brains/academics. A financial disaster.

- Light Rail - make no mistake, this centrally-planned idea has been a stunning financial failure. Capital costs exceeded $1.4 Billion and the system now loses tens of millions of dollars per year. Last estimate i saw is that they system costs about $75k per daily user - and it doesn't really go anywhere other than ASU and Downtown Phoenix (the 2 locations with good bus service, etc). Last chart is saw shows that the riders simply shifted from inexpensive bus service to very expensive LR service. Story not over: Tax expires in 2020, is estimated to be a billion dollars underfunded. And City wants to extend it and borrow $300 MM more !!

- The Glendale Catastrophe - This mess is so crazy it gets its own paragraph. Because no sane investor would put sports teams in this far outlying suburb, the City itself decided to bet its future to build an NFL stadium for 8 football games a year. And then inexplicably also borrowed hundreds of millions more and built a hockey arena - for worst performing team in league - some 25-40 miles away from its fans. When hockey team went bankrupt (literally), they then offered a $25 MM per year gift to a hedge fund - who took the gift and retained the right to move the team in a few years). City has annual budget issues and can't survive a shortfall in revenue, which occurs every recession. This story not over...

- Baseball - The Phoenix Chase Field is an economic disaster. Rumor is that it will still be empty soon as team shops for its next deal (on reservation?). City built huge (often empty) parking deck, too. Note also (per USA Today) that each minor league stadium also loses money. Overall, the state subsidizes MLB in huge numbers. But at least the City "green washed" the mess with an unprofitable solar array on the roof of the unprofitable asset.

- First Solar and Apple - Mesa gets back a large plot of land waaaay outside the urban core. House builders buy some of the cheap land, but industry wants nothing to do with this remote site. So instead of letting the market sort it out, the State and Mesa and SRP subsidized a huge factory for First Solar.... Which was obsolete the day it was finished and abandoned. FS and Government take bath and sell to Apple, who also takes state money and abandons it. Deals done because land owned by connected friends of the old guard, not because it is well located or near a workforce, etc.

- APS - This parasitic utility makes the list because it acts with force of law (or so they claim - whether and where they got their "monopoly" is very interesting and not clear). APS is now one of the most profitable utilities in the world - and pulls approx a billion out of the state per year (especially phoenix, the heart of their customer base). APS industrial rates are so bad that industry has gone to Chandler or beyond to escape their scheme (and taken their jobs and money with them). Scheme is perpetuated by recycling excess profits into elections (e.g., 2014). Also, world renowned for fighting solar and discouraging investment in renewables - again, all with force of law. To be fair, this mess is owned by the "republicans" at the ACC.

- City North - Plenty written on this (thankfully) unconstitutional scheme. Dem mayor gifts Dem billionaire about $100 MM to build a mall next to another large, one-story mall. Years later, the scheme is ruled unconstitutional by State Supreme Court.

- The few growth industries - for-profit hospitals, charter schools and for-profit universities are all funded by taxpayer money/guarantees (plenty of it federal). No private sector risk-taking, here. 15 years later Feds finally looking at whether it makes sense to loan kids money to go to these "universities".

So,,,, i ask the board - what more could "central planners" do for Phoenix or AZ? Maybe central planning doesn't work and we should let markets allocate the distribution of investment capital ?

Back the title, no its not hopeless. But the situation is bad and trending worse.

I don't like sprawl and cars, but don't think this is the cause of the issue. SoCal is a sprawling mess - same for dallas, silicon valley and san diego - and all of these MSA's are quite productive. This is because their brains and policies make investment attractive.

In fact, to "fix" sprawl, the City of Phoenix (and to some extent the State) fought sprawl with a series of investments in its downtown which have been ruinous. So bad investments and silly central planning is factually a "two party" mess here in Phoenix, AZ.

Specifically, Phoenix and AZ embarked on the disastrous course of having politicians use taxpayer money to make investments in concepts that they favored but which the market refused to make. Sometimes they set up fake "public-private" partnerships like GPEC and ACA to spend our money. At last report, each of the following investments listed below loses money and/or is at risk of full repayment.


- Sheraton Downtown Hotel - City asks Hotel Industry to build new hotel. Hospitality industry determines that a new hotel is not needed. So City ignores market and decides to become a developer/owner of the largest hotel in the State. Costs are $350 MM which is butt of jokes across the industry. This failing, expensive hotel is within walking distance from previously subsidized and under-utilized hotels already there. No surprise, the new hotel also can't return on its investment. In fact, it can't even break even - it loses millions a year - $28 MM total to date - and balance grows every day). AZ Rep reports that it runs at 51% occupancy.

- Phoenix Convention Center - City goes all in on $600 MM convention center. Poor (ironically, sprawling) design; well behind financial plan, consumes city's capacity to borrow.

- TGEN and Related - City "decides" that it wants to be in a new industry and throws hundreds of millions of dollars at idea. No ROI at all. Oddly, first thing they did was spend millions on buildings, not people/brains/academics. A financial disaster.

- Light Rail - make no mistake, this centrally-planned idea has been a stunning financial failure. Capital costs exceeded $1.4 Billion and the system now loses tens of millions of dollars per year. Last estimate i saw is that they system costs about $75k per daily user - and it doesn't really go anywhere other than ASU and Downtown Phoenix (the 2 locations with good bus service, etc). Last chart is saw shows that the riders simply shifted from inexpensive bus service to very expensive LR service. Story not over: Tax expires in 2020, is estimated to be a billion dollars underfunded. And City wants to extend it and borrow $300 MM more !!

- The Glendale Catastrophe - This mess is so crazy it gets its own paragraph. Because no sane investor would put sports teams in this far outlying suburb, the City itself decided to bet its future to build an NFL stadium for 8 football games a year. And then inexplicably also borrowed hundreds of millions more and built a hockey arena - for worst performing team in league - some 25-40 miles away from its fans. When hockey team went bankrupt (literally), they then offered a $25 MM per year gift to a hedge fund - who took the gift and retained the right to move the team in a few years). City has annual budget issues and can't survive a shortfall in revenue, which occurs every recession. This story not over...

- Baseball - The Phoenix Chase Field is an economic disaster. Rumor is that it will still be empty soon as team shops for its next deal (on reservation?). City built huge (often empty) parking deck, too. Note also (per USA Today) that each minor league stadium also loses money. Overall, the state subsidizes MLB in huge numbers. But at least the City "green washed" the mess with an unprofitable solar array on the roof of the unprofitable asset.

- First Solar and Apple - Mesa gets back a large plot of land waaaay outside the urban core. House builders buy some of the cheap land, but industry wants nothing to do with this remote site. So instead of letting the market sort it out, the State and Mesa and SRP subsidized a huge factory for First Solar.... Which was obsolete the day it was finished and abandoned. FS and Government take bath and sell to Apple, who also takes state money and abandons it. Deals done because land owned by connected friends of the old guard, not because it is well located or near a workforce, etc.

- APS - This parasitic utility makes the list because it acts with force of law (or so they claim - whether and where they got their "monopoly" is very interesting and not clear). APS is now one of the most profitable utilities in the world - and pulls approx a billion out of the state per year (especially phoenix, the heart of their customer base). APS industrial rates are so bad that industry has gone to Chandler or beyond to escape their scheme (and taken their jobs and money with them). Scheme is perpetuated by recycling excess profits into elections (e.g., 2014). Also, world renowned for fighting solar and discouraging investment in renewables - again, all with force of law. To be fair, this mess is owned by the "republicans" at the ACC.

- City North - Plenty written on this (thankfully) unconstitutional scheme. Dem mayor gifts Dem billionaire about $100 MM to build a mall next to another large, one-story mall. Years later, the scheme is ruled unconstitutional by State Supreme Court.

- The few growth industries - for-profit hospitals, charter schools and for-profit universities are all funded by taxpayer money/guarantees (plenty of it federal). No private sector risk-taking, here. 15 years later Feds finally looking at whether it makes sense to loan kids money to go to these "universities".

So,,,, i ask the board - what more could "central planners" do for Phoenix or AZ? Maybe central planning doesn't work and we should let markets allocate the distribution of investment capital ?

I should hasten to add: AZ has lots of folks who are cool, thinking, smart, open-minded. But not enough to change its course.

Anon, I appreciate your trenchant comments but I want to push back just a bit on these "investments". Some of them had very little to do with "place-making" downtown. The Convention Center has been there since the early 1970s, usually loses money, and hoped extra hotel rooms would somehow levitate it to first-tier market status. You're completely right about the Sheraton catastrophe, which has the look of an off-Strip casino in Las Vegas. The City of Phoenix hired the hotshot Miami firm Arquitectonica and got a few hundred million dollars of visual dreariness for that bad decision. The ballpark and basketball arena, I'm fond of repeating, really were a desperate gamble to make downtown relevant as a go-to location absent any other compelling reasons for being there. Unfortunately, they only succeeded in metastasizing downtown's dead zones. The cure turned out to be far worse than the disease itself.

The better question to ask is why downtown failed in the first place and why corporate welfare seemed like its only salvation. If there was a market-based solution, it never presented itself. The market made its preferences very clear as east Camelback Rd, Scottsdale, and now Tempe can attest.

Phoenix did not originate this strategy of engineering a raison d'être for itself with lollapalooza projects. It's been going on a long time in other markets with greater if not complete success. But it has failed more conspicuously in Phoenix than any other major American city. I think the answer is clear as to why. The urban heartbeat itself was allowed to die. By that, I don't mean just the downtown with its department stores, local banks, and real-world retail but the nearby central city that never evolved the urban neighborhoods crucial for a vibrant downtown.

Public investments are not always wrong, however. Successful cities build transit, for example, which is fundamental to their success. Light rail in Phoenix is not unique in requiring public subsidies. It's actually shows political maturity to build infrastructure that might not immediately return its investment. All good cities do this. They also build schools, parks, and - occasionally - art complexes that frequently return multiples on their initial investment.

What we call corporate welfare is used as planning tool to magnify a downtown's allure, and in better cities, usually works out better than in Phoenix. A Quincy Market in Boston certainly outshines an Arizona Center in Phoenix (another APS scheme, btw). Do high-rises in downtown justify public subsidies? Given the architectural mediocrity, I'd say no. I'm not an economist but on a purely emotional level I'd probably agree with you.

The counterexample of Los Angeles, you seem to suggest, shows that sprawl is not problem. But Los Angeles has huge income disparities and blight to go along with its sensuous Mediterranean climate. Sprawl is a civic catastrophe that can hollow out cities with worse bones. Phoenix, for example. Los Angeles is investing heavily now in transit and private investment has now discovered the old downtown that somehow eluded the bulldozers. Still, for years, it showed Phoenix how to create dead zones with inert public buildings and by clear-cutting real urban fabric.

Cities are organic entities that live or die according to the willingness of their citizenry to fund their maintenance. In the 1950s, Phoenix essentially decided to create a new downtown for itself on north Central Avenue. In the 1980s, it decided to create a newer downtown on east Camelback Rd. The net result is a metroplex without a real core, which mean that there is no manifest civic consciousness in greater Phoenix, or in Arizona overall. We pay a terribly high price for this loss. It means there are few civic stewards since their wealth is no longer tied to a specific place and endeavor. It means we don't evince the self-confidence that successful cities show in their downtowns. It means our politics are stupid and neurotic. Central Phoenix, including downtown, is actually a civic disaster. I agree with you that Phoenix has fared poorly in many of its investments. Seemingly every bad decision we have made multiplies newer and worse problems as time goes on. Whether Phoenix is worth saving or not is a question you need to consciously entertain. Private investment won't save a metroplex with the nervous system of a jellyfish. Citizens will have to do better than relying on the "magic" of a private market that really has little stake in Phoenix's future. Phoenix stumbled into this mess thinking anything was possible. If it's going to climb out, it will require some very tough choices it has never before had to make.

Thank you Soleri. I appreciate your insightful comments. I think we agree on plenty, even if we have different perspectives on other items. Fwiw, i am a business person and just can't get over the math. Phoenix and AZ waste billions and have zero humility about it -- they want more light rail, more downtown "investment" and more "public private partnerships". In these ways, the "red state" is bluer than ohio, new jersey and others...

As if on cue, the business journal just announced that their "business person of the year" runs a non for profit "bio accelerator". She was up against Dr. Crow at ASU (for all of his strengths, he is not a business person), a guy who inherited an NFL team from his Dad and a free stadium from [insolvent] Glendale. Other "competition" included someone who runs a "for profit" Christian university (that is going NFP so they can keep getting access to taxpayer funded student loans). Amazing that most of their finalists for Business Person of the Year are not even in Business.

That pretty much sums it up - in AZ we think that business requires unelected "public-private" actors (public provides the risk capital, private keeps the upside) . I am still looking to find investors that risk capital for upside which is how america (outside of AZ) builds things...

Until we get real and let winners win, and losers lose, we will get more "splatter" on the map. Glendale stadiums, Mesa plants, N Phoenix malls, downtown districts all exist because pols put them there, not because any market force wanted them there. This is why they all fail. You can build the hotel, but that doesn't make it worth visiting...

re the convention center, the old one was downtown, but the city put $600 MM of new capital into it. Apart from the $350 MM hotel. Each loses money. So they are now in a Billion+. But instead of working to bring conventions, they are going to create a new tech corridor on central ave and fund "bio tech" investments that no one else will make. Same for the ACA's annual "venture" give away. Literally tech valuations are at an all time high but AZ is going to "outsmart" the VC's and seed favored ideas. Here we go again


Anon, I'm going to think out loud here because while I don't have your business acumen I am curious how this plays out in Phoenix, a city that is pretty much uncompetitive with its peer cities (San Diego, Denver, Seattle, e.g.) Part of the problem is that once Phoenix began shedding so much of its electronics' manufacturing, there wasn't much to replace it except the leisure industry and growth itself. And this is why people like Michael Crow and Jeffrey Trent came to such prominence. Invest money in biotech and related fields and you might have something that actually enhances incomes instead of the familiar food chain of McJobs, Social Security payments, and health care. Phoenix was flailing in turbulent waters after the housing crash because there wasn't anything as solid as a raft to hoist itself on.

Given the epic failure in real estate, it's easy to see how cities ended up fighting each other over a limited pie. Sales tax revenue is extremely important when the economy is otherwise stagnant. Glendale calculated that Westgate could pay for the cribs of the Cardinals and Coyotes and then some. Phoenix calculated that City North would reap a fortune in sales taxes from from North Scottsdale burghers. Mesa used various abatements and incentives to lure Apple while Scottsdale loots the economic assets of Phoenix (Finova, Dial, Medicis, etc) because there's no longer a dynamic core where businesses needed to be.

I appreciate the cost of corporate welfare, but the real cost may come from having no strategy at all. The Research Triangle in North Carolina has been extremely successfully using the public-private model. Silicon Valley and San Diego had enormous public investments in place like the Salk Institute, Stanford, UC Berkeley, Livermore Lab. Ditto Route 128 around Boston. Pittsburgh has gone from rust-belt has-been to a real player in the new economy. Chicago's considerable legacy assets have created a dazzling city in the loop but a burned-out shell where the old-time manufacturing jobs were.

Phoenix doesn't have many assets except for the little it's trying to midwife downtown. Where is its future otherwise? In private capital picking winners and letting losers bite the dust? City government looks around and does the math. Doing nothing is not an option.

So, where in the geography of your imagination do you see venture capital and private investment doing the grunt work of transformation? Can you name a locale that has done a spectacular job without government aid of some kind? From our perspective on this blog, Phoenix's failings are much more than just bad investments or crony capitalism. They're really about what stirs this particular cocktail in a global marketplace. Phoenix isn't competing. Do we "stop wasting money" because it's hopeless? If so, do we just cut taxes some more or pray for a few maquiladoras? At some point in the past we lost the local stewardship class that guided this beast of a metroplex. Now we're down to a few ragtag visionaries, and time is not on our side.

You know, Rolls Royce doesn't build a $20K econobox and Kia doesn't build a $300K sedan with hand stitched leather interior.

Why?

Manhattan wasn't in the running for the TESLA factory and I don't think many people look forward to golfing in Buffalo in the winter.

Why?

Anon's posts point out something profound. Why try to turn Phoenix into something it pretty clearly isn't and probably will never become? Why risk those public funds when a return is so unlikely?

Phoenix is a low cost option (hence being on the short list for the TESLA factory). It's not going to compete with Hollywood for movies, or Silicon Valley for software, or Wall Street for financial services. And no one is looking for a winter home in Chicago.

Play to its strengths. If you're going to throw public money at commerce, help the resorts in North Scottsdale. Or make the airport easier to get in and out of. Or encourage manufacturing or the I-10 west distribution corridor.

Think of it like a businessperson instead of someone with some type of grand vision to turn Phoenix more towards the "urban form". As someone pointed out above, there will be some market based advances in urban-ness. But to throw billions at something like light rail given the complete lack of housing density anywhere near it?

And if I lived in Glendale after the ride the Coyotes and Westgate developers have taken the city council for, I'd be livid.

As yet another example, 24th and Camelback won and downtown lost. And if you think it make sense for policy makers to try to true that up, take a walk south of the Suns stadium (I can't even remember what they call it)1/2 hour after a game. You might want to bring a friend cause otherwise, it's downright lonely.

Hate Gilbert? Guess what. IT WORKED. And it is still working.

Hate tourism? Well, there's a Fiesta Bowl, the Phoenix Open golf tournament, the Super Bowl, an NCAA final 4 in the works, $300.00 a round golf at Troon, and a thriving baseball spring training industry. Did it get any subsidies?

Phoenix will be just fine. But if you're hoping to turn Central and Camelback into the Capital (ol??) Hill neighborhood of Seattle, hopeless sums it up pretty well.

A friend of mine was fond of saying "You can't make chicken salad out of chickenshit". Sic Transit Gloria.

INPHX, you should read Anon's comments one more time, then reread yours. Maybe something will jump out at you, although I suspect it would make your head hurt. All that corporate welfare Anon was railing against is the very thing you extol when it involves playing to our strengths, be it spring baseball, a Superbowl in Glendale, NCAA tourneys, etc. They're all in venues made possible by government largesse. Likewise, there's no boomburb called Gilbert without the government-subsidized freeways, water, and mortgages that made it possible. Essentially, you're advocating for free-market solutions that aren't free, that involved making conscious, taxpayer-funded choices but only when they validate your preferences. We can argue all day about whether those choices were wise (hence, this blog), but make no mistake - Arizona is here not because of the free market but because other people were paying for the drag show you call a beauty pageant.

Arizona is the perfect ideological emblem of the right's hypocrisy. It's a net-taker state that is only here because of the federal government. Its economy only works because of all those federal transfer payments to "rugged individualists" watching Fox News in their government-financed abodes. Be it ever so humble, there's no place like the one other people made possible.

Obviously, you disagree with our preferences. You think a bombed-out city in the center of metastatic sprawl is just fine. You say the market spoke when it moved that core from its original location to Camelback Rd and to a newer one yet, say Tempe, which has benefited greatly by its decision to enhance its core with a taxpayer-financed jewel (Tempe Town Lake) filled with taxpayer-financed water delivered safely by a taxpayer-financed hydraulic system called the CAP.

So, the few and feeble attempts to redirect government investments from the suburbs to the bedraggled urban core elicit your scorn. Why that's SOCIALISM!!! as you are wont to say about anything that doesn't enrich the already rich. God wants us to drive everywhere, from one could-be-anywhere place to another. That's freedom!

Your preferences are free but not your choices. Arizona suckled on the government teat long before the current crop of elderly welfare queens were born. They don't know it, but it's people like Talton and most readers of this blog (aka, liberals) who want to make sure those welfare queens get their government checks despite your preference that they pay for it themselves. Keep the government's hands off my Medicare!!! they plaintively wail at Tea Party rallies.

We can argue all day about our preferences, which I think is the real conversation we're having here. The fake conversation is the one the Goldwater Institute and associated loons redirect our discourse to. The "free markets" mantra is propaganda that disguises something entirely different. Call it crony capitalism or winner-take-all economics, it's "free" in Arizona only in the sense that other states are paying for it.

Sadly, but accurately, the posts have profoundly recited the issues and the resultant failures from lack of planning. The real need is for everyone to wake up and truly see the conditions present. You can't get better until you cure what ails you. To recover, you have to cure the disease.
A mirror needs to be placed in front of the city so that it sees what it has become.
Jon has done a great service removing the veil (with great help from some very incisive writers); let us hope that the truth can be seen so that efforts can be made with an eye for the consequences that can be identified and much thought given to the unforeseen but possible consequences.
One commentator above focused on the economic failures; most could have been identified if an effort had been made to focus on the possible outcomes.

The debate in Glendale was a perfect example but the boosters won rather narrowly and what did they gain?

It does take the use of public money to kickstart ventures when there is no private money available. But that must absolutely mean that the venture has to be able to explain why it can be viable if private investors will not invest in the venture. Yes, the public may be willing to accept less return on the investment but those making the investment should treat the public funds as it were their own and be able to prove the return needed to justify the investment.

This is not to say that there is a social component to the return expected but social engineering can be a far too easy excuse to use the public money.

Some public investments cannot easily demonstrate economic returns but can be additive to the community as a whole (say a park.)

If there is one phrase that might be of value in the debate over any future investments, it would be "follow the money." Whole is making the money, who will receive the long term financial return. And if it cannot be proven or demonstrated, then it may be that the investment should be avoided.

Soleri:

You need not lecture me about what to read or re-read. Wasted words, like most of your posts.

I've pretty much given up on keeping government and business as separate as they should be. We are all pigs at the trough.

My point is in Phoenix, how should those funds be used?

Like a business person. Not some urban dreamer trying to turn Phoenix into Boston.

Lots of world class golf up in Portland?

I wonder why....

Confused? Hopeless? One explanation for the new (and last) year.

INPHX, how should the funds be used? Yes, that is an aspect of the debate.

You have the dreariest suburban agglomeration in all of America, and it offends you that a few of us want to create a city instead of more suburbia. Remember, you come here to preach your inane Randian gobbledygook, conveniently forgetting that Phoenix is now an also-ran as a major economic player, that Arizona's tax-cutting strategy has landed it in the bottom quintile of states when it comes to median income levels. This was a conscious strategy beginning with J Fife Symington. It has failed spectacularly. Instead of Arizona zooming to the top as was promised by your merry tribe of hucksters and ideologues, it has sunk to a level only rivaled by Mississippi and Alabama. Take a bow, chump. Your cult cannot fail. It can only be failed.

There is always hope (because it dies last). And why not? Some of the technology and manufacturing sector is still there. All the usual suspects like banks, government, education, healthcare, and Walmart are the largest employers but that's not different from other states.

Meanwhile the resort model is holding on. You could say AZ is thriving in its pockets of wealth and natural beauty. One could also say that AZ pioneered a Dubaiesque economic model before Dubai was even on the map. Establish the hot resort and slum hard in the service sector. Because everything else is being consolidated.

As for healthy urbanity, yes, the hope curve approaches zero. There will be no market-driven (or government-driven) changeover if the concrete has already been poured all over the landscape. You can't go out and buy a new city like a new shirt. What little hope is left is in a potential free-for-all city. Do what you want with it. It won't be pretty but maybe if population growth holds up some souls will find their way there.

Along the way, when it comes to spending public money a 'First do no harm' approach should be adopted. No more money for ill-fated 'urban renewal' projects but also not for more highways and cul-de-sacs either. The financial bomb of sprawl will go off soon enough - you don't have to make it worse.

If life becomes too hot for multicellular organisms that's the point when all hope will be gone. The resort will be gone long before that.

Okay. I've had all I cans and I can't stands no more… INPHX, I mean you!
Just checked list of 100 best public golf courses by Golf Digest. (public access, that is, includes privately run courses.) Oregon has 5. Arizona…2.
Portland proper has an urban growth boundary, so the in-town courses are many decades old. Eastmoreland (now a muni) hosted the PGA tour for many years but the length of the modern game outgrew it. Same thing happened with Phoenix Open and Phx CC. I suppose that Eastmoreland could have expanded into Reed College, an amusing notion.
Given the weather, Portland, for me at least, has as many playable days in a year as Phoenix. The courses here are lovely with old growth trees and lush grass.

I want to unpack a few of INPHX's points.

1. The starter light-rail line was no dreamy urbanism. It was a smart response to a bus corridor that ran at 125 percent above capacity. Also, there is hardly a "complete lack" of housing density near the line. This was funded, after all, by the Bush administration, hardly a bunch of latte quaffing creative-class Jane Jacobses. It has since proved highly popular, as well as an essential link between the downtown and Tempe ASU campuses. Only people from north Scottsdale or elsewhere on the fringes would imply there's nothing here and equate it with the cotton-field hustle of Glendale. The LRT line runs in the heart of the city.

2. Tesla. Arizona was never really on the "short list" except as a bargaining chip for Elon Musk in his quest to extort corporate welfare. Arizona has never established the eco-devo game to compete for such big projects, was never prepared to put up a billion in incentives -- and a good thing in this case, as Nevada has probably screwed itself.

3. Twenty Fourth and Camelback is not the new "downtown Phoenix." It lacks public spaces, city government, abundance of transit and numerous other attributes of a downtown. It is too limp to qualify as one of LA's many urban nodes. Instead, it is a product of developers getting their way at city hall, destroying the old semi-rural neighborhood, running a real-estate hustle. The market didn't magically crown it the "winner." Rather, Fife Symington and his cronies gamed government to gain an advantage.

4. Gilbert "worked," as Soleri pointed out, because of numerous government subsidies obvious and hidden. Before what it is today, it "worked" because of taxpayer-funded reclamation. But the externalities of a Gilbert are never priced in, even as they represent real costs. I'm glad the Anglo LDS-heavy folk there are happy, if they're happy, but they are not living in the creation of a "free market" but a gamed one.

5. Golf and tourism. The former is stagnant-to-dying, so it's hardly a "strength" to leverage very far. The latter is growing more problematic because of competition, environmental degradation, local market saturation, etc. Tourism creates low-wage jobs, hardly a strength. And both golf and tourism have long benefited from subsidies and government help at all levels. To take but one example, north Scottsdale and all its wonders required massive investment in flood control, roads, the freeway, infrastructure for water and sewer, federal air-traffic control at Scottsdale airport, police and fire protection that stretched the city budget...all to allow the proud "entrepreneurs" to beat their chests, proclaim their superiority and fight against taxes. The real result was to destroy priceless desert for the benefit of a wealthy few.

6. So the lesson I glean is that the "strengths" are tourism and catering to rich people and the fringes. Unfortunately, what might work in, say, Ketchum, Idaho, won't cut it in the nation's sixth-largest city and 12th most populous metro. Such a place needs many more moves, assets and choices.

Phoenix has had several iterations. Some required mighty acts of the public and private sectors, led by visionary SOBs to make Phoenix become something it wasn't before. So it is with every competitive city. Today's call to accept entropy with championship golf is not a winning strategy.

7. "My point is in Phoenix, how should those (government) funds be used? Like a business person. Not some urban dreamer trying to turn Phoenix into Boston." I'm not sure what this means. Nobody is suggesting turning Phoenix into Boston, but rather making intelligent responses to its many challenges. The public good is not a business. Too many of today's business types are sociopaths trying to get government welfare for their companies, gain an advantage by bending/breaking the law, or taking "rents" rather than making investments in productive investments in job-creating enterprises.

Which brings us back to, "Is Arizona hopeless?"

INPHX brings an interesting perspective to this blog. Maybe it's the "north Scottsdale 'pragmatist'" view, as opposed to the usual right-wing screaming.

But I find golf, tourism and Gilbert as unpersuasive cause for hope.

INPHX just to be clear my umbrage was of the faux (not foe) variety. Talk all you want about civic economics and such, but when it gets to golf, I'm all churlish. I appreciate the edge that you provide.watchin' some Ducks.

Glendale did NOT pay for the Cardinals stadium. That stadium was financed, in part, by a temporary sales tax on car rentals that a Maricopa Superior Court judge later ruled as unconstitutional.

However, Glendale DID finance the Coyotes Arena and Camelback Ranch Spring Training facility which are hurting the city financially.

We're No. 7!

http://www.thestreet.com/story/12968105/4/the-10-most-dangerous-states-in-america.html

Washington is No. 8.

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