Paradise Lost: Arizona's growth engine has stalled...

[Don B.]

http://www.azcentral.com/news/articl...ation1118.html



A move to fix Valley growth projections

Analysts revise methods, find no population rise since 2007

by Catherine Reagor - Nov. 18, 2009 12:00 AM
The Arizona Republic

Metropolitan Phoenix's population has remained basically flat since 2007.

That calculation will generate its own set of questions in an area with an economy based on growth. At the same time, it may be the first accurate estimate of population growth here in years.

This latest population estimate is the conclusion of an 18-month analysis by more than 30 of the state's top economists and business and government leaders, who are trying to fix Arizona's method for tracking population. Their report, "Influx/Outflux: Metropolitan Phoenix," was presented Tuesday at an Urban Land Institute Arizona
meeting.

Problems with the formula used to track the number of people moving in and out of Arizona in recent years led to inflated population figures. This exacerbated shortfalls in a state budget built on sales-tax projections.

Authors of the study used a new formula based on different data. Results of the 2010 census will be the best measure of the new formula's accuracy.

"Clearly, we don't know exactly how many people we have," said Rick Brammer, a partner with Applied Economics.

David Stocker, research director with ULI's Center for Balanced Development in the West, said this new effort is not intended to pre-empt the 2010 census. But it's a report to "help many make more informed decisions."

Accurate population estimates are crucial to planning for the state's future. Taxes, freeways, government and business budgets, as well as housing and commercial developments, are all based on how many people are expected to move here.

The news that metro Phoenix's population has remained flat since 2007 follows years of explosive growth. The area was averaging 60,000 to 100,000 new residents a year from 1999 to 2004, before population models went off-track. The Valley accounts for almost 80 percent of Arizona's population.

John Graham, president of Sunbelt Holdings, said he sees flat growth as good news because he thought the Valley had lost 200,000 people in the past few years

Discussing the new report at Tuesday's meeting, Lattie Coor, chairman of the Center for the Future of Arizona, said, "It's still too early to call whether the slowdown in population growth is a blip, like in 1980s, or is it the start of a new growth dynamic for the region."

Growth projections came into question in June 2008, when a Republic analysis found the method for tracking and forecasting the state's population, based on homebuilding permits and housing-vacancy numbers, was not accurate. The heavy influx of investors during the housing boom had driven up both numbers. Housing vacancies had grown so much that building permits became a misleading indicator of actual population.

The Urban Land Institute Arizona is a real-estate think tank that examines land-use issues. The new report was compiled by the institute's Center for Balanced Development in the West.

The report also found too much reliance on housing data to calculate population estimates.

In order to generate more accurate population estimates and projections, authors of the report recommend focusing on other key indicators: employment; live births; deaths; undocumented immigrants; school enrollment; utility customers; and, most importantly, household size and available housing, or total number of homes, instead of housing vacancies and building permits.

The importance of accurate population estimates, according to the report, can be illustrated in terms of related revenue and spending projec- tions.

For example, in metro Phoenix the difference between 1 percent population growth and a 1 percent drop could mean a swing of $1.5 billion in projected sales-tax revenue and billions more in business revenue.

Several years ago, state and census estimates said a record 196,000 people moved to the Phoenix area during the height of the housing boom in 2005. That startling figure led to projections for the Valley's population to more than double to 12 million by 2030.

However, by 2006, the widening gap between government-spending plans and incoming tax revenue indicated the area clearly wasn't growing at that rate.

The ULI report piggybacks on a state task force created by Gov. Janet Napolitano in 2006 to investigate Arizona's population numbers.

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40% of Phoenix's economy in 2005 was related to sprawl and development. You can imagine what that has done to Phoenix's economy.

In related news:

http://www.azcentral.com/news/electi...ssion1118.html

State, for 1st time, forced to get a loan

by Mary Jo Pitzl - Nov. 18, 2009 12:00 AM
The Arizona Republic

As lawmakers convened Tuesday to start chipping away at a $2 billion budget deficit, the state is preparing to turn to outside lenders for the first time in Arizona history.

The borrowing is needed to give the state enough cash to carry it through ongoing revenue shortfalls, state Treasurer Dean Martin said.

He estimates the state will need to borrow $700 million to see it through the June 30 end of the fiscal year. As of Tuesday, Martin said, the state had exceeded its threshold of $500 million in IOUs and would need to turn to institutional lenders. To date, the state has been borrowing against internal accounts...

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Phoenix is surrounded by miles of abandoned, half-built subdivisions like this:























--don

[lawfin]

Detroit in the desert?

[Leo the Dog]

Originally Posted by lawfin

Detroit in the desert?

Yep, pretty much. Detroit actually has some industry there though unlike Phoenix. Phoenix was all about growth and feeding off of growth. Now that that has stopped, every municipality in Metro Phx is in big trouble.

[ChiMIchael]

The grassless property is really an eyesore.
Plus it really benefits that state and its resources if the growth stalled.

[PHX31]

Originally Posted by Leo the Dog

Don,
Thank you for posting that. People in AZ are still living in fantasy land. Sometimes the truth hurts a little.

That's not the truth at all. "Detroit in the Desert?" "Surrounded by miles of those subdivisions". A picture of a rotten pool that's obviously no where near Phoenix (unless Phoenix suddenly moved to the Florida Keys or Hawaii).

Compare Detroit's unemployment to Phoenix's unemployment. Compare anything you want. That post is nothing but someone that gets their jollies from sadomasochism.

There are definitely some of those types of subdivisions, but who cares.... those were half-built subdivisons. We're better off that they were never built. It's not like entire neighborhoods that were once established have turned into a complete wasteland as residents have begun to "flee" Phoenix. When Willo or Arcadia or even DC Ranch becomes a weed-overgrown squatter city, then you can post something like that and compare it to Detroit.

[atl2phx]

seems a bit dramatic.

by the way, what does this picture have to do with AZ? it's nowhere in AZ. pushing the drama angle a bit much.

[Leo the Dog]

Originally Posted by PHX31

There are definitely some of those types of subdivisions, but who cares.... those were half-built subdivisons. We're better off that they were never built. It's not like entire neighborhoods that were once established have turned into a complete wasteland as residents have begun to "flee" Phoenix.

Oh you mean like the inner-city neighborhoods of Garfield, Durango, S. Phoenix, parts of Maryvale etc...the list goes on and on.

When Willo or Arcadia or even DC Ranch becomes a weed-overgrown squatter city, then you can post something like that and compare it to Detroit.

Detroit's upper-class neighborhoods are quite elegant even to this day.

[PHX31]

Originally Posted by Leo the Dog

Oh you mean like the inner-city neighborhoods of Garfield, Durango, S. Phoenix, parts of Maryvale etc...the list goes on and on.

Those places are just "rough" neighborhoods, every city in the country has them. They aren't at all abandoned (like the pictures above of never-occupied brand new neighborhoods), just relatively poor. Garfield is even a grass-roots urban renewal neighborhood by many urban pioneers.

Originally Posted by Leo the Dog

Detroit's upper-class neighborhoods are quite elegant even to this day. So lets not compare apples to oranges.

So are Phoenix's. What I'm saying is when those neighborhoods begin to be abandoned, this thread can be "accurate".

Overall Detroit has TONS of abandoned buildings, neighborhoods as they've been hard hit for basically decades. What about the Michigan Central Depot? What about the Silverdome being purchased for 500,000?? That's the apples to oranges comparison.

Obviously Phoenix has been "hard hit" by this recession, and a lot of Detriot is nice still, but this thread is pure drama, like atl2phx is saying.

[KEVINphx]

What a bunch of bullshit!

Massive population explosion goes FLAT during the worst economic climate faced by this city in modern times and now it's "Detroit of the desert"?!

Give me a break, perhaps someone just liked the sound of that little alliteration there but as others have stated, Phoenix is not Detroit, not yet at least!

No one here denies that there are serious problems at hand but come on!

[hudkina]

Phoenix could parallel Detroit over the next four decades, especially if the growth machine has stopped or at least significantly stalled. Construction jobs in Phoenix are the auto manufacturing jobs of Detroit 40 years ago. They represent a huge chunk of Phoenix's economy and as they dry up, it will be a major blow. Without those construction jobs other ancillary jobs will become obsolete.

Detroit is the result of 40 years of disinvestment. Nobody is saying that Phoenix compares to the worst of Detroit after just 2 years, but unless things change, Phoenix in 2040 will be a very different metro area than the Phoenix of today.

Those places are just "rough" neighborhoods, every city in the country has them. They aren't at all abandoned (like the pictures above of never-occupied brand new neighborhoods), just relatively poor. Garfield is even a grass-roots urban renewal neighborhood by many urban pioneers.

You don't think Detroit's worst neighborhoods were "rough" neighborhoods in the 70's and 80's? The reason they're abandoned now is because people moved out of those neighborhoods into the cheap, new housing on the city's edge, and with a severely weakened economy nobody moved into to replace them.

Overall Detroit has TONS of abandoned buildings, neighborhoods as they've been hard hit for basically decades. What about the Michigan Central Depot? What about the Silverdome being purchased for 500,000?? That's the apples to oranges comparison.

MCS and the Silverdome have little to do with this discussion. MCS is an outdated passenger rail station that was replaced by a smaller, newer station. While in most cities the old station would have been demolished, the fact that it had a 13 story building on top probably saved it from the wrecking ball. As for the Silverdome, the reason it sold so cheaply is because the city of Pontiac wanted it out of their hands. It costs them millions to maintain every year. The new purchaser will have to spend millions just maintaining the property (as well as pay taxes), and that's before any money is spent on redeveloping the site. Besides, that's a stadium on the outskirts of the metro area that has little to do with the "abandoned" neighborhoods of inner-city Detroit.

[plinko]

So after 62 years of incredible growth, the metro has two flat years in the midst of the worst economy in 75 years, and suddenly it's Detroit?

Hudkina's post is spot on, but the point is that a comparison to Detroit right now isn't even close. That's a possible path, but the Valley doesn't have to take it.

Rumors of the death of the Sunbelt due to this recession seem to be highly exaggerated.

[hudkina]

But it's not as if Phoenix has an easy way of getting out of such a mess. Without a strong economic backbone there won't be as much of a reason to move there, weather aside. As less and less people desire to move there, funding will be stretched thin. All that new infrastructure will be in serious disrepair 40 years from now and will need to be replaced, and the only way to do that is with higher taxes. Higher taxes mean that the area will be less business-friendly. A less-friendly business environment will keep jobs away, which in turn keeps people away, which means the local governments will have to raise the tax burden even higher. It's a viscious cycle.

Class warefare will occur as each group fights to maintain their share of an increasingly shrinking economic pie. Throw in the water issues, and you have yourself an even bigger mess.

While it's not guaranteed that Phoenix will become Detroit South, of all the cities in the nation, I would say Phoenix has the greatest chance of seeing a similar economic path.

[plinko]

Originally Posted by hudkina

But it's not as if Phoenix has an easy way of getting out of such a mess. Without a strong economic backbone there won't be as much of a reason to move there, weather aside. As less and less people desire to move there, funding will be stretched thin. All that new infrastructure will be in serious disrepair 40 years from now and will need to be replaced, and the only way to do that is with higher taxes. Higher taxes mean that the area will be less business-friendly. A less-friendly business environment will keep jobs away, which in turn keeps people away, which means the local governments will have to raise the tax burden even higher. It's a viscious cycle.

Class warefare will occur as each group fights to maintain their share of an increasingly shrinking economic pie. Throw in the water issues, and you have yourself an even bigger mess.

While it's not guaranteed that Phoenix will become Detroit South, of all the cities in the nation, I would say Phoenix has the greatest chance of seeing a similar economic path.

I completely agree, but I actually think Las Vegas might be worse off.

My hope is that the leaders at the local & state levels recognize the signs and make the necessary adjustments to shift the economy in a more stable direction. Given the natural climate, I see no reason why the city & state can't become a leader in renewable energy production (or some as yet undiscovered technology that thrives in the dry desert air).

The water issues are there, but they aren't as big a deal as most make them out to be. The agricultural lobby in Arizona isn't nearly as powerful as it is in California and thus there is alot of water to shift from farming use to urban use (at a much lower rate) should the need arise.

The social factors that exacerbated Detroit's decline aren't nearly as prominent in Phoenix either.

I think the comparison of what's going on in Phoenix right now parallels that of Houston in the early 1980's much more than what has happened to Detroit. If in 25-30 years Phoenix is as healthy as Houston is today (particularly in comparison at a national level), that's something to aspire to. But the days of 40% of the local economy tied to the growth machine and 40% population growth per decade are likely over.

Even if the national economy had kept on going the way it did, these growing pains and periods of stagnation were coming anyway. It was only a matter of time. The recession has just caused everybody to have to take their head out of the sand and start to look at different ways to do things.

[Buckeye Native 001]

How many times have companies introduced a new business platform to start in Phoenix being touted as "the next best thing" only to see its presence in the Valley at a minimum or nonexistent?

Stem cell research readily comes to mind. The state banked on home construction and tourism for too long. Its only been two years since the slide began, but its going to be a hell of a quagmire for Arizona to fix over a long period of time.

I'm not as pessimistic as Don, but I'm also not as optimistic as PHX31.

[plinko]

^"Ohio West"?

I'm not talking about industries like stem cells, where Phoenix simply can't compete because they lack...well...a REAL research university...let alone a medical school...

I'm talking about technologies that take advantage of Arizona's REAL advantages, most notably alot of land, alot of sunshine, few natural disasters, a young and able workforce, and a relatively hands off government that will bend over backwards for just about anything if it means jobs. I'm not exactly sure what that is (solar? low water agribusiness? desalinization? who knows...), but it's out there.

[PhillyRising]

So...I wonder when Philadelphia will pass Phoenix to take back 5th place?

I had to say it.

[Buckeye Native 001]

Originally Posted by plinko

^"Ohio West"?

I'm not talking about industries like stem cells, where Phoenix simply can't compete because they lack...well...a REAL research university...let alone a medical school...

I'm talking about technologies that take advantage of Arizona's REAL advantages, most notably alot of land, alot of sunshine, few natural disasters, a young and able workforce, and a relatively hands off government that will bend over backwards for just about anything if it means jobs. I'm not exactly sure what that is (solar? low water agribusiness? desalinization? who knows...), but it's out there.

Right, I was just pointing out things that have been proposed in the past that were supposed to be a boon for Phoenix that never panned out. Why nobody's come forward with developments that are advantageous to a place like Arizona is beyond me. Well, except for maybe the horrible economy at this point in time.

[leftopolis]

Hmmm. Lots of vacant land and lots parking lots that could have a "roof" creating shade/protection from the opressive heat, lots of unemployed construction workers, a nation short of domestic power production and the constant sun that would put the vibrant solar powar production of cloudy Germany--to shame...nope, I can't think of any new direction/industry that Phoenecians could turn to.

[glowrock]

Phoenix and Las Vegas are probably the two metro areas hurting the most during this terrible economy we've got right now, with places like L.A. (especially the outskirts), Miami, and a few others not too far behind them. That being said, Phoenix is certainly not at death's door. Those images of half-finished subdivisions can be seen all over the country, it's just that they seem even more obvious in desert climates. Bakersfield has tons of those kinds of half-finished developments, including several within a mile or so of my apartment! Phoenix is most certainly NOT alone in this regard.

All of that being said, Phoenix really, really needs to find its economic niche, for the days of relying on home construction and retail/service sector growth are pretty much over, at least for the time being.

Aaron (Glowrock)

[mwadswor]

Originally Posted by glowrock

Phoenix and Las Vegas are probably the two metro areas hurting the most during this terrible economy we've got right now, with places like L.A. (especially the outskirts), Miami, and a few others not too far behind them. That being said, Phoenix is certainly not at death's door. Those images of half-finished subdivisions can be seen all over the country, it's just that they seem even more obvious in desert climates. Bakersfield has tons of those kinds of half-finished developments, including several within a mile or so of my apartment! Phoenix is most certainly NOT alone in this regard.

All of that being said, Phoenix really, really needs to find its economic niche, for the days of relying on home construction and retail/service sector growth are pretty much over, at least for the time being.

Aaron (Glowrock)

Agreed that Phoenix isn't dead or even close to it. The problem, as others have been pointing out, is that growth is Phoenix's industry. Miami has beaches, LA has a fairly diverse economy, Las Vegas has the casinos (not the best growth engine, but certainly a powerful one), Phoenix has lots and lots of cheap land with good weather. With no one moving here to continue the building boom that cheap land and good weather doesn't produce a whole lot of income. To make it even worse, Phoenix is just recently starting to really feel the price of building all those cheap subdivisions and bringing in all those people without actually bothering to invest in the infrastructure to support all those people.

No Phoenix isn't dying yet, but the problem is that so many people here think that the solution is to wait out the recession and then continue business as usual until we run out of land. Phoenix is absolutely screwed with that attitude and desperately needs to diversify it's economy. I think attitude is the main point that that article misses. If you ignore the people and just look at the situation Phoenix is in, it's fine. Phoenix has resources and opportunities to diversify it's economy. The problem, though, is that people make the decisions, and this state is run by morons who are in little danger of being voted out of office. That's my opinion anyway.