The grim reality: Timing proves bad for Phoenix

[HX_Guy]

An article from USA Today highlighting Central Ave. and downtown including some insighs on projects such as Hotel Monroe and the Jackson Street Entertainment District. It's really nothing we in Phoenix didn't know about, but if anything, I think it's a good reminder of how we should be thankful that projects like Cityscape are still building at this point.

http://www.usatoday.com/money/econom...-phoenix_N.htm

Pain on Main Street: Timing proves bad for Phoenix

If you dine in the Compass Room, a rotating restaurant atop a skyscraper in downtown Phoenix, you'll get a 360-degree look at huge development projects going up.

Luxury hotels, university dorms, nightclubs, condo lofts and a commuter train are all under construction or just completed here. The new projects huddle on both flanks of Central Avenue, the main street of America's fifth-largest city.

The place seems to be booming.

But what you can't see is the stress on the faces of big investors and small shop owners who have poured money into a burgeoning metropolis at what just might be the worst possible time.

First, the housing market crashed, wiping out Arizona's main economic engine. Foreclosures set a record in September, although they've since fallen. But as the credit market dried up, developers were left without financing, and construction on some of the city's major projects is at a standstill. To make matters worse, tourism, the lifeblood of many downtown businesses, went into the tank. A million fewer passengers have passed through the city's airport so far this year.

Now, Arizona State University, which just expanded its downtown campus, is firing instructors to cut its spending. "We had a big bubble here, and it burst," said Anthony Sanders, professor of economics and finance at ASU. "We've taken Kevin Costner's Field of Dreams and now it's Field of Screams. If you build it, nobody comes."

In a speech just months ago, Mayor Phil Gordon described how downtown Phoenix was on the cusp of a new era: Central Avenue would no longer be empty after dark, but the main artery in a bustling metropolis.

Today, the mayor is trying to cut his office spending by 30% amid a budget crunch, and recession hovers over Central Avenue like a vulture.

Even boosters struggle to maintain enthusiasm. "Some cities might have a downtown in decline. Ours is on the move," said Lyle Plocher, an urban property specialist. "But no doubt about it, we've been hard hit. Our biggest problem in terms of 'Main Street' is the real estate slowdown." Last year, home building, sales and related industries accounted for $1 of every $3 generated in the metro area.

"The thing is, people aren't spending," added Ioanna Morfessis, an economic development consultant in Phoenix. "Consumers aren't spending. Businesses aren't spending. Unemployment is going to increase."

Slowdown hits hard

Developer Dale Jensen said his vision of a $500 million entertainment district just off Central Avenue is in limbo because there's no financing.

"It's not the end of the world," Jensen added. "It's just: Can you survive? And that's what everybody's doing, trying to tread water."

Much of the development in downtown Phoenix has been bankrolled or subsidized by taxpayers. The city alone has participated in 15 major projects with a tab of $1.5 billion, according to municipal records. Those incentives spurred another $2.1 billion in private investment on nine projects.

John Chan, downtown development director for Phoenix, said that while the credit crunch has prevented new projects from getting started, those already underway will pay off eventually. "We're still optimistic long-term," he added. "But everyone's working toward that critical mass."

For now, even developments that moved forward are threatened. Plocher said some residential loft prices have dropped 50% since 2007. CB Richard Ellis Inc., a market analyst, reports vacancy rates in Phoenix office space rose to 17.1% in the third quarter this year, up from 12.9% during the same period in 2007.

The recession's impact may be illustrated best by the story of Mortgages Ltd., the largest private lender in Arizona. As the nation's economy faltered in the spring, the company founded by Scott Coles began drowning in red ink. On June 2, Coles took his own life. Within days, Mortgages Ltd. filed for bankruptcy protection. Thousands of investors are expected to lose money. Dozens of major projects were suddenly without funding.

One of those is Hotel Monroe, the $100 million transformation of an old office building into a boutique jewel with 150 rooms. It was supposed to open in October, but stands empty and unfinished, a monument to recession in the city's heart.

Another casualty is the entertainment district along Jackson Street, Jensen's plan for an eight-block stretch of nightclubs, restaurants and other attractions.

"It's going to be one of the coolest — an authentic, vibrant, 24/7-type area," Jensen said with spirit. Then he added, "There's no credit to do anything. These are hopes until this thing (the economy) gets square."

Small businesses hit hard

Small businesses already have weathered more than a year of traffic disruptions in anticipation that the $1.5 billion Metro light rail will bring customers from the suburbs when it opens Dec. 26.

For now, though, Central Avenue is dead after dusk. A few bars remain open, but most eateries close after lunch, and other businesses shut down by 5 p.m.

Steffin Newman, a downtown ambassador employed by merchants to assist visitors, said he often sends tourists to Scottsdale and Tempe when they ask about night life. "Since I started here six months ago, it's looked like recession to me," he sighed. "It's a ghost town."

In Alice Cooperstown, bartender Jessica Lawrence rolled her eyes when asked how business is doing. "I can't make my rent," she said. "We have fewer customers, and those who do come in don't tip. It's in people's faces. Everybody's affected. Everybody's worried."

Three blocks away, Jukka Göös, 30, of Helsinki, snapped pictures of an empty Central Avenue at 5:45 p.m. on a weekday. In a thick Finnish accent, he explained that he was attending a convention and wanted to send a photograph of Phoenix to his wife. "I'm trying to find the city's heart," he said, "but I'm not able to. What is Phoenix? I don't see anything. No Phoenix people are here. I just see (homeless) people hanging around, not doing anything, asking me if I have a dollar.

"Am I speaking straight?"

[glynnjamin]

What a stupid fucking article. Don't bother mentioning all of the new businesses that have opened in the last year. Don't bother mentioning that Cooperstown has lost business because it used to be the only bar in town and now there are about 15 of them in the area. Don't bother mentioning that USAir just posted great profits and, since almost all of their flights come through Phx, this is good for AZ. Forget about the new convention center that is booked up for the next two years or the new hotel that is also booked up.

Times are tough, no shit. And Phx has a lot of problems. But we are no where near as bad as some other places...especially some other cities in the valley. Sure we have a huge deficit but we have more ground to cover than any other city. I'm surprised the city is doing as well as it is, in all honesty.

[KEVINphx]

Originally Posted by HX_Guy

An article from USA Today highlighting Central Ave. and downtown including some insighs on projects such as Hotel Monroe and the Jackson Street Entertainment District. It's really nothing we in Phoenix didn't know about, but if anything, I think it's a good reminder of how we should be thankful that projects like Cityscape are still building at this point.

http://www.usatoday.com/money/econom...-phoenix_N.htm

That last paragraph doesn't sound like Phoenix in a recession, it sounds like the experience many tourists would probably have on any given day downtown.

[HooverDam]

Was this article ghost written by John Talton or something?

[glynnjamin]

There is a certain amount of irony in that last paragraph as well. The article goes on about no tourism and blah blah blah...then you get to the end. An international traveler...bringing FOREIGN MONEY into the state...is here for a convention (thanks to our lovely convention center). It would be a pretty rough go if we HADN'T built that convention center, huh? Next year's article -

Downtown Phoenix - A Boomtown No More.
After dumping over one billion dollars into projects around the downtown heart of the nation's 5th largest city, Phoenix has begun to descend into the ashes from which it once rose. A combination of federal, state, and city dollars went into constructing a commuter system to bring citizens back to the core of the Valley of the Sun. But now that they are here, they aren't spending, and that doesn't bode well for the businesses that feel like they paid for the system.

"Every day I have to get up 5 minutes earlier to catch the light rail. It's so crowded that I have to stand the whole way to work. The air conditioning is so cold too, so I always have to bring a sweater," says Jon Wills who works for Arizona Public Service. "I then have to walk almost 3 blocks to get to my office. They stopped paying for my parking downtown and gave me a metro card instead. Times are tough."

Wills' sentiments are echoed around the downtown area. Many people are getting right off of the train and heading into the adjacent Starbucks. Mary Johansen is a manager there. "They just get a grande and leave. They don't even tip any more. I've been trying to find other work but all of the jobs along the lightrail are taken."

Massive infill development has taken jobs away from the once booming areas and redirected them to formerly blighted areas of town. The city of Surprise, about 20 miles outside of downtown and once the fastest growing city in the US, has suffered greatly and had to cut back on funding. "We used to have two WallMarts within a mile of our house. Usually, we'd get off of work at 6 and drive for an hour and hit the WallMart on our way home. Now, one of those WallMarts closed and moved to a SuperWallmart closer to town. We have to drive to the other one and, because of traffic, it takes 20 more minutes." The sentiments of Joe Sanders are felt throughout the sleepy community that has fallen silent thanks to foreclosed homes bought for four times their estimated value and a commute that rivals anything in Los Angeles. "There aren't any jobs out here. When we moved in, we though, 'The drive won't be so bad and at least we have brick walls to keep the Mexicans away' but then the houses started getting boarded up and immigrants started using them as smuggling houses or even meth labs. I could move closer to my job but I don't want to give up my 3200 sqft house on 3000sqft lot. It's my home."

The city is dying. The freeways even look deserted during some parts of the day. The I-10 Broadway Curve, one of the busiest freeway stretches in America, has actually dropped to 15th on the list over the past year thanks to the lightrail. Shannon Cooper says "We spent all of this money on this freeway and no one uses it. They wonder why we have such a large deficit; it's because of wasteful spending like this. It doesn't even go anywhere that I want to go. There is nothing on the east side of town. We've got all 4 sports teams over here without ever setting foot out there."

It is clear that something needs to be done. With ever increasing density as a result of former Mayor Phil Gordon's pledge to revitalize downtown, the other cities are clamoring for a piece of the action. The election of Gordon to take the place of now Secretary of Homeland Security Janet Napolitano as Governor has incited many local mayors to call for his resignation. Cities like Surprise, Goodyear, Gilbert, Anthem, and Chandler are increasingly becoming hostile towards Phoenix's growth while they stagnate and suffer. Soon, little will remain of the Valley of the Sun and it will start to look more like the Phoenix we know from the 50's. Certainly a step backwards for those who are stuck there.

[HX_Guy]

Haha that's awesome! Good write up. I hope it's what we will be reading a year from now.

[trigirdbers]

Gordon is guv now? Someone needs a fact checker.

In other news, almost THREE BLOCKS, boo hoo hoo!

[HooverDam]

Originally Posted by trigirdbers

Gordon is guv now? Someone needs a fact checker.

In other news, almost THREE BLOCKS, boo hoo hoo!

In other news, which is denser trigirdbers or iridium?

[Vicelord John]

Is anyone so disillusional that they think light rail is going to take over as THE way to get around?

It's going to be ridden, but really now.

[glynnjamin]

Gzz people, it is called hyperbole...

The point was that light rail will spur transit-oriented development and draw the few available dollars towards it, leaving the suburbs to flounder. Those who have lost their homes will rent near the line. Those who still have their homes are going to be stuck with them because they cannot sell them. Those folks are not going to be happy as development moves away from them. The Broadway Curve area should see a dramatic drop in traffic thanks to the LRT as well. The article was not meant to be factual or accurate, it was a vision of how things are supposed to work thanks to the LRT exhibited through the comments of AZCentral-type individuals who complain about everything if it doesn't help them directly.

Maybe I overshot the reading level of the group.

[plinko]

Originally Posted by glynnjamin

The point was that light rail will spur transit-oriented development and draw the few available dollars towards it, leaving the suburbs to flounder. Those who have lost their homes will rent near the line. Those who still have their homes are going to be stuck with them because they cannot sell them. Those folks are not going to be happy as development moves away from them. The Broadway Curve area should see a dramatic drop in traffic thanks to the LRT as well. The article was not meant to be factual or accurate, it was a vision of how things are supposed to work thanks to the LRT exhibited through the comments of AZCentral-type individuals who complain about everything if it doesn't help them directly.

Do you honestly believe this? You think LRT is going to make a dent in Broadway Curve traffic? You think any new developments will be TOD? I'm totally an advocate of transit, but I'm sorry, the ONLY thing that will really keep the LRT moving is the ASU DT to ASU Tempe sections. And it might be handy for some suburbanites to park and ride to games and downtown events. Sure, once they actually put lite rail where the poor people live (Maryvale, South Phoenix, out towards Glendale) it might have a legitimate effect, but for the next few years it won't be much more than a cute little train.

You need to look at some other cities that have put in LRT to see that without some augmenting commuter rail, revisiting the zoning at a regional level, and mass subsidies for TOD, that the lite rail is an economic failure in most capacities. It's a small piece of the puzzle.

Am I happy they built it? Sure. But it is not a savior. And it won't improve traffic. Take a look sometime at Sacramento if you don't believe me.

[Vicelord John]

thank you plinko for actually posting something rational.

[glynnjamin]

I will repeat myself...

It's a vision of how things are SUPPOSED to work. Fuckin hell. Go read something along your grade level...like The Puppy Who Lost His Way

[Vicelord John]

I haven't worked my way up to that one yet.

I usually just look at picture books because all the scribble marks on regular books just confuse me.