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The Prescott Daily Courier | Prescott, Arizona

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11/10/2013 6:00:00 AM
Building back up
Sales tax, construction numbers indicate stronger economy, say local officials
Matt Hinshaw/The Daily CourierA construction crew with United Construction Group builds a home Thursday afternoon at the Granville subdivion in Prescott Valley.
Matt Hinshaw/The Daily Courier
A construction crew with United Construction Group builds a home Thursday afternoon at the Granville subdivion in Prescott Valley.
Cindy Barks
The Daily Courier

Buoyed by promising sales tax and housing numbers in recent months, government officials are optimistic about the area's economic outlook.

Coming off of nearly two years of gradual growth, the City of Prescott is reporting a first fiscal-year quarter that reflects healthy increases in many of its largest categories.

"We're back to a good, manageable incline," Prescott Director of Economic Initiatives

Jeff Burt said of the city's 4.7-percent overall growth for the first quarter (July through September).

Prescott Budget and Finance Mark Woodfill noted that the past quarter is just the latest example of the city's gradual comeback. "It's great; it's been positive (since about early 2012)," Woodfill said. Prescott's past fiscal year ended in June with nearly 6-percent overall growth.

Among all sales tax categories, Prescott's construction increases have been among the most dramatic - up 15.6 percent for the past quarter, and up 8 percent increase in the previous fiscal year (July 2012 through June 2013).

The city's Community Development Department reports 195 new single-family home permits in fiscal year 2013 - a significant increase from 133 in 2012, and 63 in 2011.

While the city is still far from its high of 579 homes in fiscal year 2005, the past year's numbers have recovered from the low of 59 homes during depths of the recession in fiscal year 2010.

The increases are even more dramatic on Prescott Valley, where sales tax growth is back in the double digits.

"We're on our way back," Prescott Valley Economic Development Director Greg Fister said, pointing to Prescott Valley's 14.5-percent overall sales tax growth in the first quarter of the current fiscal year (July through September).

He attributes the increases to the addition of a number of new Prescott Valley businesses just as the recession was beginning in about 2008/2009. Although taxable sales never reached their potential at the time, Fister said, "Now, the square footage is in place," and shoppers are responding.

And new businesses continue to start up. Topping all sales tax categories in the region is Prescott Valley's nearly 60-percent growth in construction - a number that reflects several of the community's large-scale commercial buildings (Wal-Mart and Dick's Sporting Goods), as well as a surge in home construction.

During the past fiscal year, Prescott Valley saw the start of construction on 241 new homes. Like Prescott, Prescott Valley is still far from its high of 1,100 or so home starts for both 2004 and 2005, but 2013's number is a significant increase from the town's low of 21 new homes in 2010.



Not fully back

Despite the overall numbers, many owners of local businesses are stopping short of uttering that hopeful word - "recovery."

While specific regions and sectors are obvious exceptions, a number of business owners are reporting stagnant numbers. And they worry that the recent paralysis in the nation's capital will trickle down.

In select areas, though, businesses are reporting gains even larger than the reports coming out of the city and town halls.

Roxanne Nielsen at the Prescott Brewing Company in downtown Prescott says sales numbers for the past summer were "huge" - much higher than the city's reported 3-percent increase for all restaurants and bars.

Nielsen acknowledges that the Yarnell Hill fire tragedy likely played a part in the increased traffic at the brewpub, which collaborated with the Arizona Craft Brewers Association to brew the "Heroes 19" beer honoring the fallen Granite Mountain Hotshot firefighters.

The special beer, which went out to members of the association, raised nearly $67,000 for the efforts helping families of the Hotshots, Nielsen said, noting that 100 percent of the proceeds went to the cause.

Meanwhile, she said, the many first responders who were in Prescott throughout the summer to deal with the deadly Yarnell Hill fire and its aftermath likely helped to drive business in downtown establishments. But even before the late-June fire, Nielsen said business was up - in the 5- to 6-percent range.

Tommy Meredith, owner of the Jersey Lilly Saloon on Whiskey Row, also reported a significant gain in the past year or so.

"I haven't done the numbers on percentages, but it's been the best year we've ever had," Meredith said.

Not only is the tourist trade up during weekdays, but Meredith said business from locals - the saloon's "mainstay" - has also been growing.

"The fact is I have to give some credit to the tourism and economic development (efforts under way in the community)," Meredith said, noting that he is seeing more people stopping in on their way to the Grand Canyon or Flagstaff.

In Prescott Valley, the town numbers also indicate a stellar quarter for restaurants - up by about 16.3 percent.

"We've just had the best quarter for restaurants, ever," Fister said. "I think it's a function of people spending a little more money again."

Kevin Leffler of the Fireside Grill in the Prescott Valley entertainment district said that upsurge was evident early in the summer, if not later on.

"July was a great month," Leffler said. "We had a great year all through July - more than our projection."

September, on the other hand, was inexplicably down, he said, adding that he had heard a similar story from other area businesses.



Business ambivalence

Businesses in other categories also reported somewhat spotty growth.

Margo Christensen, vice president of marketing and public relations for Ponderosa Hotel Management Services (Prescott SpringHill Suites and the Residence Inn by Marriott) reported "slow growth" for the past year.

"Both of our properties are up slightly for the year as compared to last year," Christensen said. While allowing that the upward movement has been somewhat sluggish, she added, "At least we are moving in a positive direction and not declining."

Other good news: Advance bookings through January 2014 indicate that the next three months will be strong, Christensen said.

The city's numbers show that Prescott hotels and motels were up about 6.2 percent over the past quarter, while the category was up by about 3.7 percent for the past fiscal year (July 2012 to June 2013). In Prescott Valley, hotels were up by 11.3 percent in the past quarter.

On the retail end, both communities also showed growth - 10 percent for Prescott Valley, and 4.3 percent in Prescott - in the past quarter.

That may not be carrying over, however, to some of the community's small businesses.

Jennifer Hayes, proprietor of Figgy's Trading Post on Cortez Street in downtown Prescott, sums the business scenario up in one word: stagnant.

"I don't see it improving or coming back any time soon," Hayes said, adding that she has not noticed any of the city's reported growth in retail.

So, while the restaurants and bars just down the block were reporting strong traffic, Hayes said, "This summer was slower than usual. I think the local businesses suffered from the (Yarnell) tragedy."

Hayes also attributes the stagnant numbers to a local government that she said is often overly focused on tourism, but not so concerned about other small-business sectors. In addition, she pointed to two of the community's largest population categories - retirees and people in recovery.

"You have a large segment that doesn't spend a lot of money," Hayes said. "It's a whole combination of things. You're pretty much on your own here."



Deep deficit

Even municipal officials who work to stimulate the economies in their respective communities allow that the community is still feeling the impacts of the recent recession.

"It is trying to come out of a hole," Burt said of Prescott's economy. "The recession put this market and virtually every other market in a hole. I don't recall any four or five years like what we just went through."

And Woodfill emphasizes that although Prescott's sales tax numbers have been improving in the past two years, the totals are still far from the highs of 2006 and 2007.

After showing healthy growth throughout much of the early and mid-2000s, Prescott suffered losses in fiscal years 2008, 2009, and 2010, and then weathered a couple of years with virtually no growth. "2011 was essentially flat," Woodfill said.

While Prescott tallied total taxable sales of more than $1.56 billion in fiscal year 2007, the total had dropped to a low of $1.17 billion by fiscal year 2010.

In the past fiscal year (2013), the city's taxable sales totaled $1.3 billion - still about $250 million short of 2007's total.

Fister and others in the community worry that impacts from the impasse in Washington D.C. could stop a local recovery in its tracks.

"I'm concerned that if Congress can't get its act together, that will bleed down into the local economy," Fister said.

David Seigler of the Devil's Pantry on Whiskey Row said he has already noticed federal impacts.

"I don't see much of a recovery," Seigler said. "I think the economy was very slowly progressing, and the health care thing came and stopped everything dead."

Employment uncertainty

Job growth is another area generating concerns. In a September presentation in Prescott, Arizona State University Research Professor of Economics Lee McPheters reported that the area was still down about 10,000 jobs. After losing about 11,100 jobs during the recession, he said the area had regained about 1,200.

From another perspective, Nielsen said the Brewing Company has consistently had trouble finding and retaining good employees. "I think there are jobs out there, but the quality of (employees) just isn't here anymore. We've seen a higher incidence of turnover."

Burt, who started his new job with the City of Prescott in September, said job creation would be his main priority.

"My focus is primarily on jobs, delivering jobs at or above the average salary," Burt said. But overall, he does not expect a return to the years of the early 2000s. "I don't think it's going to be that wild fling."



Follow the reporter on Twitter @Cindy_Barks.

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Reader Comments

Posted: Wednesday, November 13, 2013
Article comment by: O O

Liberalism is a mental illness!!!!!!!!!!!

Posted: Monday, November 11, 2013
Article comment by: Bane capitol

Over 40 Years of a Republican Death Grip on Arizona's Legislature, uncontested.

The Cruel, etched in Stone History of Conservatisms Decades of Failures in Governance are every where to be seen around Arizona.

Lie about it, try to skew test scores, falsify records and reports, deny dwindling water resources and air quality issues. Let Corporations run rough shod over consumers, stifle renewable energy for profits. Republicans have ruined this State. 17 of the 26 Red States that "Opted Out" of Medicaid expansion under ObamaCare are IN FACT the Biggest "Taker States" in All of America. Meaning they get more BACK in Federal Dollars than they Pay in. Example Mississippi gets $1.35 back for every $1.00 they Pay in Federal Taxes.

Conservatism TODAY is some kinda Sick Joke on the American Voters, and more are beginning to recognize it every day!


Posted: Monday, November 11, 2013
Article comment by: @To Barbara

Facts are not threats. I know Barbara very well. She is a retired capital management exec. Her job for 42 yrs was to guide fortune 500 companies in making the right investments. She never stated that was the PRIMARY reason. Corporations most certainly look at the states education as a factor when opening branches and relocating corperate head quarters. It takes money to make money. Good public school systems attract strong businesses. When Arizona now ranks 50th in the nation it is no wonder companies won't come here. Today's children are tomorrow's consumers and business owners better remember that. The hurt of the bond/override is going to hit the elementary schools harder than the high schools. The formative years. Local businesses poke fun at how undereducated our local students are and won't hire them. Why would companies want to come here and hire the same undereducated adults?

Posted: Sunday, November 10, 2013
Article comment by: I Can Spin The Market

Be careful out there. Data shows neophytes are jumping into the market, because is looks good and they don't want to miss out. By High, sell low. Also interest rates are so low, folks are putting their funds into the markets, instead of savings to get some sort of return

The Fed is pumping funds into the economy. Notice some big dips in the markets a couple of weeks ago. Rumors were the Fed was about to back off. When they ease, probably early next year, look out.

The economy is running on pumped money, and the markets know it.

Again be careful, if you invest do it long term.


Posted: Sunday, November 10, 2013
Article comment by: To Barbara

Education is simply NOT the primary reason that most people move (or don't move). Career opportunity including good wages, employer benefits and the ability to advance is what attracts people to other states and cities. After that, the cost of housing and living are the main reasons that people make relocation decisions. Only if there are equivalent job offers from several employers and similar costs of living do lesser priorities like educational resources come into possible play. If the prospective employee happens to have school age children, he will look for the best educational opportunity for his kids in the area which could be a charter school like Tri-City College Prep. So, quit with the silly threats about the loss of the too expensive override/bond initiatives as being the PRIMARY reason someone decides to move to or from the area.

Posted: Sunday, November 10, 2013
Article comment by: Shutter Me Baby!

The big long term picture here: Education spending in AZ way down compared to almost every other state in the last 5 years. Bond elections fail, because our less than intelligent populace doesn't get it. Arizona ranks among the lowest in the west in college degrees especially in Phoenix. That makes our workforce in Prescott more adept at flipping tacos and pounding nails than running a business or managing a hotel or teaching. Not exactly a good growth model we have here. I don't look for it to get better any time soon. But as long as we have Walmart shoppers in PV and beer drinkers I guess everybody's happy happy.

Posted: Sunday, November 10, 2013
Article comment by: Veritas Semper

@ Bane...the$24 billion loss was an estimate provided by Standard and Poors. It was based on lost revenue to Federal Parks, lost revenue due to vacations being cancelled and to lost Federal Workers wages and contracts.
A quick check on airline reservation cancellations and hotel cancellations during those 16 days showed absolutely no statistical change in either. Most Chambers of Commerce reported increased vacation activity meaning that people still went on vacation, they just spent their money in the private sector (a big no-no to most Democrats I realize). (Prescott's sales receipts exceeded the average during that time due to people coming here instead of the big hole up north)
The Federal Workers were paid their back wages so in essence they received a paid 16 day holiday.
The $24 billion number was obviously used as a political ploy to further the agenda of those who would benefit by it's outrageous sum and demonize others.
In case you haven't realized, no one cares anymore as they see themselves losing their insurance coverage and paying higher premiums with higher deductibles while being forced to carry insurance on things they don't want to.
Those that opposed funding the ACA were correct and time will prove it. (Unless of course one is a habitual "taker" within our society in which case they will continue to live off the efforts of others)


Posted: Sunday, November 10, 2013
Article comment by: Hot Air Bane Capitol

You can thank the stars above for the huge GOP REDUCTION in the deficit because of government sequester cuts to the runaway spending habits of the liberals.

We all know the economy is stuck in the mud no matter what our "commander of nothing" claims. A falsely propped up stock market (by restrained interest rates) is nothing to celebrate, unless you're shareholder.

...


Posted: Sunday, November 10, 2013
Article comment by: Dying Merchants

Virtually every small downtown business is experiencing "tourist deprivation". Tourism may be up yet downtown merchants are still shuttering their doors. The continual onslaught of transient merchants throughout the summer deny upswings and set the stage for winter disaster. The vast amounts of money that leaves town on Sunday assures poor mid week sales for the whole city. Wake up and save our downtown from those whose greed is ruining it! Prescott is more than bars, restaurants and hotels.

Posted: Sunday, November 10, 2013
Article comment by: Hot Air Steele

Blaming Washington for what has transpired in a Republican run state, house, senate and governor. ...

Posted: Sunday, November 10, 2013
Article comment by: To Tom Steele

Can't disagree with your position to reduce the rooftops and bringing in light industry.

Also, can't help but wonder what oppressive regulations you think the Feds have pushed on Arizona that keep us from fairly competing on a national level? Arizona is not competitive because of the self-interest of a few land holders in this state, got nothing to do with the Feds, buddy.

Had Brewer set up Arizona's own health-care option, rather than go with the national plan, we'd have control of our system. SHE and the Low minded politicos in Phoenix OPTED OUT of the Arizona plan.

Obama didn't force his hand on us, he was forced to set up a plan that would take care of the people of Arizona who are being screwed by the representatives voted into power by the same people who refuse to re-build our educational system.

Tell the story straight and lend some credibility to your message. If you know of an OPPRESSIVE regulation- then state it as support to your opinion. Otherwise you diminish your position and come off as just another old white guy cranking out the hate.


Posted: Sunday, November 10, 2013
Article comment by: J L

Wonderful isn't it? Row housing at it's best...And all these wonderful new homes look all the same....NO character AT ALL!

Posted: Sunday, November 10, 2013
Article comment by: Barbara Thorndyke

Gutting education is the quickest way to get the economy booming. Big businesses are just lining up to enter Arizona because of our top notch and top funded education in this state. This is exactly what major employers want for their employees. Come to Arizona big business. It's the perfect place to raise children who won't have as bright a future as the rest of those in the other 49 states. Keep cutting Arizona! No is the new yes and it is so attractive!

Posted: Sunday, November 10, 2013
Article comment by: DEVEL'S PANTRY DEMISE

Wow a local merchant selling to tourist has the business skill and economic background to blame his first summer's receipts on the "HEALTH CARE THING".

"I don't see much of a recovery," Seigler said. "I think the economy was very slowly progressing, and the health care thing came and stopped everything dead."

Does Seigler really think this, or is he pandering to local ignorants looking for a rally in his lagging sales? Whatever the answer for such a narrow-minded assessment of the local economy, I know that I will not shop in this guy's store simply can't trust a merchant who's political philosophy openly insults the intelligence of the local "silent" majority.


Posted: Sunday, November 10, 2013
Article comment by: Bane Capitol

...

Hard to Negative GOP spin the Stock Market More than doubling since Obama took office and nearing 16,000 for the first time EVER. The deficit has been cut in half and is dropping at the fastest rate in over 25 years, but when ALL Republicans have done is Whine and Obstruct, this makes sense, TO THEM. Remember our idiot Congressman GOSAR and his Tea-party buddies Voted to Shut-down the Government. 26 Billion and 300,000 Jobs lost in 16 days, Even Most Republicans came to their senses and Voted to re-open the Government. NOT our little Tea-bagger, Dentist / Congressman, HE thought keeping the Government Shut-down was a Good Idea. Gosar, Ted Cruz, Rand Paul rotten apples in the same rotten barrel.


Posted: Sunday, November 10, 2013
Article comment by: Tom Steele

Oppressive regulations and Obamacare from Washington Democrats is keeping the breaks on the general economy. High fuel costs and no real gains in take home pay will keep growth down for a few more years. Arizona is still sleeping at the switch and missing BIG opportunities to eliminate some business taxes to attract thousands of industrial jobs from a taxed to death California. The only way we will grow our economy is to bring in low water consumption companies not build thousands of homes consuming Millions of gallons of water we don't have. And the hundreds of people waiting for construction to come back need jobs sustainable year around jobs good paying industries would provide. It's time for Tobin, Fann and Pierce to step up and do right for rural Arizona.



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