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March 14, 2012

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Please stop ignoring the point at issue, phxSUNSfan. The issue is not whether other sites existed, the issue is whether they are on State Trust Land.

The parcel Apple wanted (without any suggestion from Phoenix) is on State Trust Land.

Stanton says of Apple that "State Trust Land did not excite them". He adds "...so there was no other Phoenix site REASONABLY IN CONTENTION".

This means that other sites "reasonably in contention" were also State Trust Land. This, combined with "byzantine" land release rules for property development by the state for such land, may explain, at least in significant part, why places like Chandler have seen much more development of this sort recently than Phoenix.

Ok, but what does that matter in the larger scheme of things? Why does State Trust Land matter so much if both the State and City were serious about being competitive...it doesn't. Fine, there was no other site on State Trust Land; "so what's plan B?" should be the next question already answer when a strong economic development effort is in place.

State Trust Land didn't excite Apple, yes we read that...so again, what site will. Where could a company like Apple locate within the city that would be an attractive site? Near light rail and Sky Harbor yet still close enough to freeways since urban housing stock is in short supply in this region, I'd presume. Why was Apple not made aware of sites other than the ONE in North Phoenix?

Furthermore, a strong and well developed economic development effort would have realized the hurdles that existed on State Trust Land long ago and tackled those issues...or take least had a simple plan in place for removing them once the site was selected for development.

Thanks for that link, "AWinter".

phxSUNSfan, Apple CHOSE to examine that site: it was not "made aware" of it by Phoenix.

How could the city "remove the issue" once the site was selected, if the city was not informed by Apple that it was under consideration? How can the city development machinery trump state law or tell a state agency to drop everything and make an exception whenever the city planner says so?

How about cooperation in an effort to accommodate future economic development endeavors? So really what you are saying is that you simply believe that the location was the only one Apple would consider?

I think that instead of "presuming", you should listen to what Stanton said:

"State Trust Land did not excite them, so there was no other Phoenix site reasonably in contention."

This seems like a problem that needs to be addressed at the state level. Can that be done by a legislature whose ranking Republican members come from districts outside the Phoenix area? Would Mesa or Chandler area legislators revise state law in a way that makes Phoenix more competitive against them? Would legislators in Fountain Hills, Anthem, or rural areas rush to aid urban Phoenix development, or would they sit on their hands for the benefit of their buddies in East Valley sprawlville?

I never wrote that Phoenix made Apple aware of the site. I wrote that if Phoenix had known of Apple's interests it could have been more accommodating and had alternate sites preselected that would be competitive. With the help of a strong economic development resource, the CITY HALL would have been Apple's first stop.

Again, you are saying that Apple would only consider that land for development even if the city was aware of their interest from the get go?

How would the mayor know that there was "no other Phoenix site reasonably in contention" if the city learned of Apple's interest after the fact? I don't remember reading that the Mayor met with Apple to discuss the details. Perhaps you are putting too much stock in one sentence?

phxSUNSfan wrote:

"So really what you are saying is that you simply believe that the location was the only one Apple would consider?"

No. Please stop rephrasing my comments in a manner designed to further your agenda.

Now, one might profitably ask, what does "reasonably" mean, in Stanton's quote? Were there sites "unreasonably" in contention? What makes a site reasonable versus unreasonable, in this context? If you can discover this, and post some concrete information, that would be useful.

North Phoenix is no different in terms of sprawl compared to Chandler or Mesa. If anything, the conservative base has strong ties to North Phoenix/Scottsdale; two communities this development would have impacted.

"How would the mayor know that there was "no other Phoenix site reasonably in contention" if the city learned of Apple's interest after the fact?"

Obviously, because he was informed by Apple, either directly or through the state Commerce Authority (which apparently HAD been in touch with Apple) AFTER the fact!

Don't you have anything better to do than waste my time with silly questions you could answer yourself?

My "agenda" is only stating that Phoenix lacks a serious economic development resource. And yes, I am questioning your inference (from one sentence) that Apple was or would only "reasonably" consider one site. I'm simply don't read that much into a one liner from the mayor who may very well be embarrassed that he wasn't at the table when Apple came to town.

It's Sunday and I'm a little hungover, so no, I don't really have anything better to do today.

Note that there is a difference between North PHOENIX and Anthem or Scottsdale or some other non-city-of-Phoenix political and developmental entity.

You don't seem to grasp the difference between geography and politics. Lots of municipalities share borders with Phoenix. That doesn't mean they want to change state law to make development in Phoenix easier, since it might take away from their own development.

Furthermore, Phoenix is run by DEMOCRATS. Chandler, Mesa, Scottsdale, Anthem, etc., are not. Politics again.

Apple employs creative type employees. Austin, in the middle of Texas and nine hours from nowhere, is a destination city for creative type employees. Why is that the case?

Phoenix, located in a beautiful state within a day drive to the west coast, less than two hours from mountains, a day trip to Mexico, and a short flight to Las Vegas, has difficulty attracting a creative employee pool. Why is that so?

The tax benefits from local government certainly is a factor in city selection for Apple but the ability to attract creative talent no doubt weighed heavily in the location choice.

I suspect that the Mayor was deliberately cut out of the loop.

The state Commerce Authority is a creation of the Republican governor and her legislative cronies. They went headhunting and Apple bit. Hard to say what kind of incentives were offered, or suggested. However, the idea was for the CA to justify itself with this big trophy. So, part of the conditions for the incentives, especially until a decision had been made, was not to inform the City of Phoenix, which had its own resources and agenda and might have stolen the CA's thunder.

I'll let someone else chime in, but I don't buy that argument. There is no way the state would let Apple slip away just because the mayor is a Dem. You don't think Brewer and the rest of the kooks would be out there with Stanton claiming their piece of the pie? Geography and politics? Apple would have located in LD 11...no?

"So, part of the conditions for the incentives, especially until a decision had been made, was not to inform the City of Phoenix, which had its own resources and agenda and might have stolen the CA's thunder." -Emil

That is completely plausible. I'm not stating this to argue with you or simply contradict you, but do you not agree that if Phoenix had a more powerful Economic Development Department with their ear to the ground and nose in the air that Apple would have heard from the City even if the State was trying to keep City Hall out of the conversation?

I didn't say that the state let Apple slip away because the Mayor is a Dem.

I suggested that the state Commerce Authority cut the City of Phoenix out of the information loop as long as possible, using the promise of incentives as pressure to obtain Apple's discretion, because it wanted the trophy itself. The fact that Phoenix city government is Democratic is merely an aggravating factor.

jmav, good points. But there is more to it than that and I think Apple chose Texas, not just Austin, because of the tax breaks (incentives) they will receive. Translation, profits. They chose Austin next in order to satisfy their employees' liberal tastes or to give them the illusion that they are somewhere liberal.

Texas and Arizona aren't that different: Gov. Perry or Brewer? And Texas has gutted their public education system even more than AZ.

jmav wrote:

"...the ability to attract creative talent no doubt weighed heavily in the location choice..."

And yet, in Apple's own documents submitted to Austin, it wrote that it was also considering Phoenix given its "supply and cost of labor" as well as Phoenix's accessibility to its Cupertino, CA headquarters.

http://www.bizjournals.com/austin/news/2012/03/15/apples-austin-expansion-not-a-done.html?page=all

Could a better city development machine have detected this in the works? Could well be. Could the city have approached Apple before the CA? Surely they did.

Don't forget that the state of Arizona may have incentives outshining anything the municipal government of Phoenix has to offer. That may include the State Trust Land (within Phoenix city limits) that Apple was looking at. They could make some sweet offers on that. What would Phoenix have to offer, competitively, that wouldn't bankrupt the city coffers?

"Could the city have approached Apple before the CA? Surely they did."

Weren't we left with the impression that they didn't know Apple was considering the City until it was too late?

Also, there is the Discovery Triangle within Phoenix and Tempe that offers incentives from the city, state, and federal government...

http://www.discoverytriangle.org/incentives/

The Discovery Triangle stretches from downtown to Papago Park to the ASU campus in Tempe. Companies within these boundaries already are On Semiconductor, First Solar, Microsoft, etc.

Nice discussion. I notice only a couple of you noticed the absurdity of a company with $100 billion in cash, coming to cities with hat in hand looking for a handout. AND the cities falling ovr themselves to give this company with no morality all the cash they ask for.

Corporations, don't worry, no property tax for you for the next ten years.

Citizens, so sorry, raising property tax for you forever and we're going to cut fire, police and education because for some reason we don't have enough of a tax base. Go figure.

A correction to my earlier post: I stated that the site Apple was looking into is located in AZ LD 11 when in fact it is in LD 7.

AzReb, so true. Moreover, Phoenix would be on the hook for infrastructure improvements and connections in an undeveloped site in N. Phoenix. This would have cost Phoenix much more in the long run.

To me, it's nuts to be peddling state trust land as your big asset for something like Apple. Putting something like this in the middle of nowhere when there's so much empty land in the heart of Phoenix, right on the light-rail line.

Again, the lack of serious economic development policy combined with the knee-jerk desire to develop empty, fringe land are terrible policy. They especially work against the city of Phoenix. Desert Ridge is a cancer.

And it is because the UT Engineering College along with the Engineering colleges at Texas A&M and Texas Tech that Apple came to Austin. Apple needs a workforce of educated technical professionals and Texas can fulfill that obligation.

Look, you may thing Texans are ass backwards on a lot of issues and you are correct. But looking at your governor and my governor, they are both idiots. However, bashing Austin for recruiting an employer isn't going to solve your problems. Your state has failed miserably to advance higher education and research. I will give ASU and AU kudos for work they have done in space exploration and in the material sciences. Unfortunately, that still doesn't solve your state's education issues.

Intel probably wishes it would have built its last fab in Austin because it has a bigger pool of engineers and technicians. However, the financial incentives and reduced taxes won them over.

Where is S.I. Hayakawa?

"This seems like a problem that needs to be addressed at the state level. Can that be done by a legislature whose ranking Republican members come from districts outside the Phoenix area? Would Mesa or Chandler area legislators revise state law in a way that makes Phoenix more competitive against them? Would legislators in Fountain Hills, Anthem, or rural areas rush to aid urban Phoenix development, or would they sit on their hands for the benefit of their buddies in East Valley sprawlville?"

I AGREE.

"I'll let someone else chime in, but I don't buy that argument. There is no way the state would let Apple slip away just because the mayor is a Dem. You don't think Brewer and the rest of the kooks would be out there with Stanton claiming their piece of the pie? Geography and politics? Apple would have located in LD 11...no?"

I DISAGREE. I think the kooks would do such a thing after all they are willing to destroy America to not let Obama be re-elected.

"jmav, good points. But there is more to it than that and I think Apple chose Texas, not just Austin, because of the tax breaks (incentives) they will receive. Translation, profits. They chose Austin next in order to satisfy their employees' liberal tastes or to give them the illusion that they are somewhere liberal. Texas and Arizona aren't that different: Gov. Perry or Brewer? And Texas has gutted their public education system even more than AZ. "

MAYBE: but, my daughter moved to Phoenix a few months ago. In Texas she taught math to gifted Children in a public school for three (3) times what she is now receiving as a elementary teacher in Phoenix.


"And it is because the UT Engineering College along with the Engineering colleges at Texas A&M and Texas Tech that Apple came to Austin. Apple needs a workforce of educated technical professionals and Texas can fulfill that obligation."

I AGREE This is one of the major reasons why my grandson chose to NOT accept an offer from ASU and Choose the University of Texas, in Austin.

If Apple is so interested in great engineering programs and the number of graduates, why not just remain in California where the schools ranked in the top 10 for Computer Science, Engineering, Programming proliferate?

Bottom-line, PROFITS gleaned off the backs of taxpayers in Austin and Texas. The Apple Campus will be built in sprawling NW Austin...not in downtown or near the UT campus and Austin lacks basic public transit besides a fledgling bus system. The Engineering programs at UofA and ASU are also top tier programs; I don't buy the UT argument.

I forgot to mention Austin's also Capital Metro Rail without a stop near the Apple Campus and with limited service.

Top engineering schools: UT #8, ASU #43:

http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-engineering-schools/eng-rankings

For all its flaws, which pSf has pointed out, Austin has a real technology ecosystem; Phoenix doesn't. Texas has a congressional delegation that brings home the earmarks for research, etc.; Arizona doesn't.

Gen. Sherman said if he owned Texas and hell, he would rent out Texas and live in hell.

Austin has some outstanding strip clubs, which is where the Austin people would have taken the Apple dignitaries. Apple dignitaries who are normally used to the hairy hippie chicks of the northwest and northern California. All the paperwork for the deal was probably signed in the VIP room of one of the clubs. Done deal.

phxSUNSfan, when I said that Phoenix had no doubt approached Apple before the CA, I meant only that Phoenix is always trying to recruit big companies like that (certainly, the Greater Phoenix Economic Council is) and that Apple has been on their watch list for a long time. That's perfectly consistent with Phoenix being cut out of the loop by the new state Commerce Authority. I have to assume that GPEC was not informed either, since if it were the Phoenix City Manager's Office would have known.

Note that an updated version of the story which appeared in the Arizona Republic Business section on Sunday, added a sentence revealing that Apple had also been considering sites in Mesa and Chandler.

Bloomberg News confirmed this in a story datelined three days ago, with quotes by Mesa and Chandler mayors:

"Chandler Mayor Jay Tibshraeny said a site near an Intel Corp. project was one of the finalists for Apple. He said a snag in the state capital became an issue.

"I was told they needed some kind of tax policy assurances at the state level that didn’t happen in the time frame they needed it," Tibshraeny said."

http://www.bloomberg.com/news/2012-03-16/apple-hits-pause-as-austin-digs-deeper-to-net-texas-plant.html

The article reveals that even as Apple was promising Austin (in effect) the right of first option, they were still using the threat of picking Phoenix as leverage to insure the Austin City Council voted to approve its incentives package.

Note also that Apple itself, in the Bloomberg story, states that it rejected Phoenix because "it would be too difficult to get permission to build" on the State Land Trust property.

Stanton learned of the prospective deal two weeks ago, and tried to work with Apple, "but it was too late".

To me, the salient point remains that, in Phoenix, the only land under consideration by Apple was State Trust Land; whereas (apparently) this was not the case in Chandler and Mesa.

Everyone talks about "empty land" in the Phoenix city limits as if Apple had its pick, but nearly all land is owned by someone already, either public or private. The question, in addition to property price and property tax rates, is whether the location, zoning, accessibility, and other issues make it desirable for the particular purpose Apple designated.

The Desert Ridge site was right at the confluence of 101 and Tatum. That makes for easy commuting by car, which may be what most Apple employees prefer (why should they be any different than the general population?).

Housing in the area is much cheaper (and newer) than downtown or central Phoenix because those areas are already built up and have been for a long time. A lot of Rogue readers have yet to internalize the lesson that sprawl occurs because undeveloped land on the fringes is cheaper and makes for cheaper housing. There is also a great deal more urban decay in the downtown and city center. The question of schooling also may appeal to Apple employees and to managers considering living areas for them close to work.

I don't think that the quality of ASU engineering graduates is particularly relevant. The company's Austin workers are "mostly in sales, administrative and finance for the North Americas" (see Bloomberg) and the new operations center looks like more of the same: mostly non-technical jobs.

phxSUNSfan, I did graduate from UA and I appreciate that you got back on topic. Ad hominem attacks aside, you and Serene Cannibal were just being dicks above. ASU's school of sustainability is an asset, as is the sudden increase in research funding. Meanwhile, UA has been doing a great deal that we should acknowledge as beneficial -- primarily through their research and engineering innovations (like building new semiconductor crystals in their optics labs, for instance, which help bring cheaper solar panels). Let's not attack what's good in our state. Let's stick with going after all those unwilling to take on the hard stuff that might actually make this place better.

An article in the Arizona Republic's Business section on Sunday makes my point for me:

"If they don't mind rising fuel costs and driving stress, workers today can live in areas where housing and living costs are lower and commute to areas where salaries are higher."

The article reports the findings of the Rudin Center for Transportation at New York University, which found that Tucson-Phoenix ranked first in the nation in the number of "super-commuters".

A figure of 54,400 was given, but it's unclear if this was daily, since as the report itself points out, "the super commuter typically travels once or twice weekly for work, and is a rapidly growing part of our workforce", with computers and other remote devices allowing work from home (or at least the home city) the rest of the time.

The question of how much an increase in gas prices might deter commuting and sprawl depends largely on the amount of the increase versus the need for less gas by newer and more efficient motor vehicles, as well as the salaries of the commuting professionals and whether the company includes rising gas costs in employees compensation.

http://www.usatoday.com/USCP/PNI/Business/2012-03-18-PNI0318biz-insider-beardPNIBrd_ST_U.htm

P.S. Perhaps I should have made explicit that the commute in question is BETWEEN Tucson and Phoenix.

ptb, you are right. I was being an ass, though I wasn't too harsh on the UofA. ;-)

Gave you guys a "shout out" for your Engineering Program as well...

Are "super commuters" willing to pay the price or forced to? What if, as Jon writes in his next article, our nation had invested in rail and other infrastructure...much nicer commutes could be had between Phoenix and Tucson on high speed rail.

As for cheaper sprawl, it is only so because externalities aren't considered in the price. We pay much more as a society to subsidize the sprawl machine.

The question of gas prices is fascinating.

Domestically, demand for gasoline is at a 12 year low, and that isn't expected to change.

The United States exported nearly as much gasoline (not oil) in 2011 as it imported: 562,000 barrels versus 596,000 barrels.

Major East Coast refiners have actually been shutting down. They aren't operating anywhere near maximum capacity; they make decisions based on demand and profitability.

http://www.cnbc.com/id/45826765/

Oil has risen in cost, with tensions about Iran. Dan Dicker has been trading in oil instruments (options, swaps, futures) for 25 years. He claims that the speculative premium in oil is 40 dollars a barrel.

http://www.thereformedbroker.com/2012/02/12/dan-dicker-almost-half-the-price-of-oil-is-speculative-premium/

Did you all see the comments in Jon's Seattle newspaper blog?

How in the world is a city to juggle the following items and still strike a balance in these times?

Growth
Transportation
Crime
Homelessness
Rich People
Poor people
shoppping
tourism
Drugs
Smart people
dumb people
education
taxes
no taxes
tax exemptions

Seems like too much to ask.

Emil is this a judgment?
"A lot of Rogue readers have yet to internalize the lesson"

By the way I ran into Sam Pulsifer today.

Not a judgment so much as an observation. I think that support for mass transit is fine, but there is a difference between how we'd like things to work and how things actually do, and it's important to base analysis of "real world events" on the latter.

Only about two percent of Phoenix commutes involve mass transit. That's abysmal. But there are reasons why sprawl occurs and why companies like Apple favor locations in the suburbs rather than downtown (whether in Phoenix or Austin) and they should not be ignored in analyses of company behavior. So too must a similar dynamic be considered when evaluating the behavior (present and future) of actual and potential homeowners and migrants.

Phoenix is built on the model of cheap land = cheap housing and single-family homes. The cheap land is in the suburbs and exurbs for reasons involving basics of supply and demand, as well as infrastructure (its presence or absence) and development costs.

I don't think that gasoline prices alone will eliminate sprawl because gas prices will follow a pattern nationally whereas housing will remain cheaper where land exists for development. The housing market (particularly underwater mortgage holders) is much more significant in holding back a return to the previous model of in-migration and development, but that is temporary, even though I expect it may take ten years to correct.

When municipal expansion is restricted through geographic means (e.g., surrounding municipal borders) or by laws restricting density or land usage, then "suburbia" takes the form of surrounding municipalities and the Big Commute continues. This is true, for example, of Seattle, which sees little growth itself but which is surrounded by areas which grow and grow because they face no such restrictions (or less) and because the dynamic for growth continues to be valid. The distinction is arbitrary, because the metropolitan area takes the place of a single municipality, and sprawl exists either way.

Look also at some of the top 10 supercommuting cities mentioned in that article and you will see that over the last decade long commutes from the suburbs and exurbs have increased dramatically.

I've heard the new country of So. Sudan (or whatever it is called) has STOPPED oil production because No. Sudan has been using the monies for itself and not passing it along -- in addition to continuing religious and ethnic cleansing in disputed areas. That is 6% of Chinese imports so now they have to get it elsewhere...

Sudanese oil exports to China are down, but the Saudis have increased theirs: so have Iraq, the UAE, Kuwait, and Russia.

China has also cut imports from Iran to show its displeasure with tough Iranian bargaining terms. If it can afford that sort of political brinksmanship, it probably is getting all the oil it needs from other sources (which are numerous).

http://www.reuters.com/article/2012/03/21/china-crude-iran-idUSL3E8EL37820120321

Associated Press reports that the Chinese government just raised gasoline prices for the second time in two months. However, the government is concerned that the economy will overheat, so it is targeting lower growth (just 7.5 percent this year, instead of the 8.9 percent annualized rate seen in the last three months of 2011). The Chinese government is also trying to reduce speculation in the housing market, and home prices in 45 cities have dropped as a result.

The real news, for me anyway, is that BHP Billiton, a mining company, predicts that Chinese use of iron ore has maxed out: it predicts about the same use in 2020 as today. Iron ore is the main component in steelmaking, of course, so that seems to say something (not sure what, yet) about the Chinese manufacturing sector.

The Arizona Republic carried a story in today's Business section today headlined "Arizona leads U.S. in innovators"

http://www.azcentral.com/arizonarepublic/business/articles/2012/03/15/20120315report-arizona-leads-us-innovators.html

The story could probably have been more accurately titled "Arizona leads U.S. in desperate individuals who cannot get hired and who consequently hire themselves".

I took a look at the report that the story was based on:

http://www.kauffman.org/uploadedFiles/KIEA_2012_report.pdf

The index measures the percentage of individuals ages 25-64 who do not own a business in the first month, who own a business in the next month and devote 15 or more hours of work.

Note that the index for high-school dropouts is higher than for other groups, as is the growth in the index since the recession, suggesting that these are not "entrepreneurs" (where would high-school dropouts get the capital?) but rather, desperate individuals who cannot find work and as a consequence "hire themselves". Nothing in the requirements (and I'm not sure how "new business" is determined except as an unverified response in a survey -- check this) suggests that the business must be successful or that stuffing envelopes as a free contract agent, etc. is excluded from the "businesses".

The index for high-school dropouts was 0.42 percent in 2007 and 0.57 in 2011; for high-school graduates it was 0.30 and 0.33 respectively (a much smaller increase); and for college graduates it was 0.33 and 0.29 respectively, a decline. See Table 5, p. 15 of 32.

Interesting footnote:

1. The U.S. Census Bureau notes that the definitions of nonemployers and self-employed business owners are not the same. Although most self-employed business owners are non-employers, about a million self-employed business owners are classified as employer businesses.

http://www.census.gov/econ/nonemployer/index.html.

Thanks for deconstructing the "innovators" story, Emil. I go back to this eye-opening story in the Business Journal of maybe six years ago that showed metro Phoenix actually had fewer startups per 100,000 residents than any peers. It was something like 32nd in the nation. Phoenix is many things. It does not have an ecosystem for genuine startups, much less innovation.

"Lancaster, Tucson and the Ecosa Institute at UofA have a long road ahead before they match campus sustainability efforts made by ASU."

The suggestion that Brad Lancaster somehow devolve into a bloated echo of the surrounding, unmitigated sprawl of his city in order to "match" ASU is comical, at best.

You should be quiet now. You don't have much more credibility to piss away.

"Serene Cannibal"?

Methinks I detect the strident whinny of Rosinante. Have you undergone a name change here recently?

Whoops. I meant Rocinante. At any rate, there was a user here recently, claiming (with what they used to call the Latin Temper, and an online handle to match) that the world would end in 2012.

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