2004 State of the City Address

Where We Are, Where We Are Going, How We Get There

Thank you for that wonderful introduction.  I first want to thank the Tempe Chamber of Commerce members and Chamber staff; particularly I’d like to thank Mary Ann Miller, the Chamber President, Eric Emmert, the Chamber’s Vice President of Public Relations, and Dan Henderson, who put this event together.

I’d also like to thank Edward Jones for all of that company’s great work on behalf of our community.  Not only has Edward Jones provided repeated and generous support for the Chamber of Commerce and so many other great organizations, but Edward Jones staff members have volunteered countless hours toward community-supportive charities and similar activities.  Barb Kimbrough, though recently retired from Edward Jones, is one example of that kind of commitment.  Barb volunteered enormous amounts of her time to our community and she continues to do so.  Notwithstanding her retirement, Barb currently is serving as the Chair of the Tempe Town Lake Foundation.  The Town Lake Foundation is charged with raising money to complete the public amenities that will serve Town Lake.  So my thanks to Edward Jones for leading by example.

As you undoubtedly know, we’re doing this a bit earlier than in past years.  Not long ago, I marked 100 days as Mayor of Tempe.  In fact, today marks 127 days, not that anyone is counting.  In that time, we have focused less on action and more on listening, less on immediate changes and more on assessing the true state of our community from the inside-out.  Our Council has worked to establish priorities and understand better those items that deserve our immediate attention.

It has proven to be a worthwhile approach.  Now after listening and observing for these 127 days, I’d like to describe for you this morning an initial assessments about our community; in particular, Where We Are, Where We Are Going and How We Get There.

A little background may give some insight into the perspective I have on Tempe.  I have spent my entire life as a Tempean.  I grew up here and am raising a family here.  Yes, I went to college and law school elsewhere and worked for a time in other places.  But Tempe has always been my home.  Moreover, with my experience elsewhere, now more than ever I am glad I’m a Tempean.  I believe we are on the brink of our greatest age yet.  It starts with the recognition that we have a great base on which to build to our brightest future.  Those who have preceded this Council in office have established and helped to maintain a unique, authentic community. 

In addition, across the Valley, state and country, there is one adjective I hear more often than any other when folks describe Tempe: PROGRESSIVE.  It’s true, too.  As history has shown, Tempeans are not satisfied with meeting the current challenges at hand; we continually strive for what’s better.  As a community, Tempeans have a reputation for tackling issues head-on and implementing ingenious and daring solutions.

It is in that time-honored spirit of wanting Tempe to progress, that I first want to review the state of things in our city.

Let’s start with WHERE WE ARE.  More than three years ago, City employees who were involved in graduate studies asked for thoughts on the greatest challenges facing Tempe.  After some discussion with the group, we identified three main challenges that Tempe faced at the time; we still face them today.  They are: Need for Economic Revitalization; the Budgetary Stress Imposed by the Rio Salado Project during its Transition to Success; and Deterioration of our Neighborhoods. 

First, our Need for Economic Revitalization.  In March, 2001, Tempe, like the rest of the nation, entered an economic recession.  The recession lasted 31 months in Tempe.  From March 2001 until October 2003, Tempe suffered a reduction in its sales tax receipts.  In the first full fiscal year of the recession, the fiscal year running from July 1, 2001 to June 30, 2002, the Council was able to cut the budget without trimming staff; $8 million was trimmed from the general fund and capital budgets.  Planning at the time included the next, more severe measures that might need to be taken were the recession to continue, which it did following the attack on our country on September 11, 2001. 

As a result, in the second full year, with the continuing decline in sales taxes, the next phases of belt-tightening were imposed. They required that staffing levels be reduced; more than 70 percent of Tempe’s budget is salaries, benefits and other staff costs.  The challenge was handled without any layoffs or other systematic terminations.  Through hiring freezes, early retirements and other consensual arrangements, the Council and City Manager were able to trim staff costs by almost 10 percent.  More than 125 full-time positions were eliminated through attrition and early retirement programs.  It was a bold and effective move that doesn’t get the credit it deserves.

What is interesting to note in comparing Tempe’s revenue performance and that of the surrounding cities is the differential impact of the recession on Tempe.  While the surrounding communities experienced an average decline of slightly more than 4 percent in sales tax receipts, Tempe’s sales tax base declined by almost 12 percent.

If the financial challenge from slowed sales tax growth isn’t enough, we also face a different loss of revenue because our community’s population is not growing much.  On a relative basis when compared to the growth experienced in other cities, Tempe is “shrinking.”  Accordingly, in another year, we will actually likely lose a portion of the revenues that we otherwise receive from the State.  The revenue source is called “State Shared Revenues” and provides all cities in the state with a split of a pool of money collected by the State essentially on behalf of municipalities.  These State Shared Revenues are divvied up based on relative population; as Tempe’s population shrinks relative to other cities, our City’s share of that revenue will shrink too.  Now we’re not facing this challenge alone.  For example, Phoenix and Scottsdale will both likely lose some revenues.  The last estimate I received is that Phoenix may lose as much as $27 million and Scottsdale as much as $3 million.  Tempe’s loss may amount to $7 million.  Not much perhaps when compared to Phoenix, but as a percentage reduction, Tempe’s will be the largest and, given our relatively small budget, very painful.  

Tempe in such a different position from our neighboring cities because our surrounding cities have continued to grow in population.  Tempe, as we all know, is landlocked.  That fact is the main source of these financial challenges we face.  While other communities can increase municipal revenue through growth, and at least mask the financial challenges facing municipal governments, Tempe can not grow itself out of this challenge.  Tempe is the first landlocked, urban community in the State.  It is the consummate example of a municipal canary in the mine shaft.  How Tempe meets these challenges, if managed successfully, and I believe they will be, will serve as a shining example of how to address population “build-out” and create a sustainable community.

In my view, Tempe’s geographic limitation is actually one of our greatest assets notwithstanding the financial challenges it brings.  Because our community’s boundaries are fixed, we know what we are.  There is no identity crisis brought on by not knowing where our boundaries will end.  No uncertainty caused by fluctuating numbers of residents.  No wringing our hands over how we’ll keep up with infrastructure stresses.

Thirty years ago, with great foresight and courage, city leaders choose not to annex further south.  (Some at the time the issue was being debated point to that “dastardly community,” Chandler, which, in the dark of night, “snuck” in and blocked Tempe’s opportunity to grow south, rendering any further debate about the issue moot.)  I view that event of one of the great blessings bestowed on our community.  Today we’re just 42 square miles.  That decisive move makes things easier for us in many ways.  Yes, we now must face the financial challenges I described, but our set boundaries keep our community more closely knit; our residents, from north to south, east to west, are more likely to know one another and to participate in City life.  That tight weave keeps our community fabric strong.

Then we have a second challenge.  And this one really is closely associated with the first.  It is the Budget Stress Caused by the Rio Salado Project as it Transitions to Success.  The Rio Salado Project has finished its first five years.  The investment our community has made has allowed us to reclaim a huge amount of land for recreation and development.  But we can be honest about this project; it still requires a great deal of care and attention, and the private sector investment has not occurred as quickly as originally assumed.  That circumstance is strongly related to the fact that the recession that began in the Spring of 2001 closed the window on the kind of private development activity that the Project needed and depended on.  That window was then firmly slammed shut on September 11, 2001. 

We do have exciting events happening frequently and all around the Town Lake, which is an increasingly popular venue for major events like Ironman Arizona, AVP Volleyball, P.F. Chang’s Rock N Roll Marathon and Orange County Choppers.

While the Lake has become one of the most important destinations for our region, the recreational aspects of the project don’t pay the bills.  The project requires $3 million a year to run.  We must work diligently to attract the private sector development that will generate the sales and property taxes needed to fund the project’s operations.  The Council has taken decisive action to assure the transition toward financial stability will be made.  In June, the Council added more than $6 million to the reserve fund to cover annual operations.  At the project’s burn rate, we need to grasp and implement our solutions to this challenge presented by slower than anticipated private sector involvement.  But we will.  I’ll describe that in a few minutes.

Finally, we must address the stability of our neighborhoods.  Much of Tempe’s housing stock is more than 30 years old.  It is sometimes difficult for homes in older neighborhoods to compete with those brand new subdivisions built to our south and east.  But they do.  Tempe has “location” on its side.  Tempe is in the “middle of it all.” 

But despite the desirability of these homes, new home buyers and young families aren’t buying these homes.  They are outbid by the professional landlords.  These landlords have found good money in investing in Tempe homes that they then convert to rental houses, most frequently to house ASU students.  This conversion of single family, owner-occupied homes to student rental houses is a trend that is picking up speed and now plagues almost every neighborhood in Tempe.  And I do mean plagues.  It is not that students as a group are bad folks.  But remember back to your own college days.  Few of us were worrying about mowing the lawn, painting the house or getting the kids to bed by eight.  Of course, the pressures of college life also requires the occasional “study break,” which, as I recall, regularly involves the flow of golden, bubbly beverages of one sort or another, loud music and, in a community as large as this Valley, many cars converging in one location.  When that takes place in an otherwise quiet residential neighborhood, the social response by the neighbors usually involves our Police Department’s “Party Patrol.” 

And at recent interest rates, professional landlords have been at a competitive advantage when it comes to buying available housing stock.  It’s tough for a young family that might like to buy into Tempe to compete in the bidding war for a house when the landlord has a large supply of likely tenants who will pay several hundred dollars a head to sleep (or not sleep) eight to a home.  This cycle also then undermines the success of the small neighborhood supportive businesses.  As families are replaced with college students, sales of groceries, hardware, housewares, dry cleaning services and the like fall.  Some of these businesses haven’t survived, leaving an excess of space in our neighborhood strip-malls.  The absence of convenient shopping and services makes a neighborhood less desirable for current residents and likely purchasers for owner-occupancy as well.

The trend also has meant fewer children to attend Tempe’s neighborhood schools, which in turn puts pressure on our school districts’ budgets.  This too, is a challenge that our community can meet.

So how do we meet these challenges?  Where Are We Going from here?  First let’s address how we will reinvigorate our economy.  I start with the fact that Tempe has amazing resources available within its borders.  If we start with our Central City Core, one sees a natural setting that is tough for any community to beat.  We have The Tempe-Phoenix Papago Park to the north.  This nature preserve is one of the nation’s largest natural settings that is fully surrounded by urban development.  For Tempe’s portion, we have “A” Mountain on the south side, now also a part of the preserve, and those desert preserves have nestled within them, the Rio Salado Project with its two-mile Town Lake, surrounded by park land and greenbelts.  There is nothing else like this in the region. 

This collection of natural elements includes, like four points of a “diamond in the rough,” some of the most unique historic elements one can find.  On the far north is the McDowell Buttes with the historic amphitheater built in the early 1930s.  On the east boundary, the Eisendrath House, one of the finest examples of Pueblo Revival Style architecture in existence.  On the south point, the 1908 Hayden Flour Mill and the silos, built in the early 1950s. And on the west point, the Phoenix jewel, Tovrea Castle.  Throw in for good measure three golf courses, one Phoenix’s, one Tempe’s and one ASU’s, Native American treasures in the form of the Rio Loma and Pueblo Grande ruins, the “A” Mountain petroglyphs and the recent work identifying “Hole in the Rock” as a site used as a crop and community planning tool, the Historical Society Museum, a military museum, the award-winning Phoenix Zoo and Botanical Gardens and one can quickly see that Tempe has a setting that affords one of the most active, outdoor lifestyles in the region, all within walking distance of our Downtown. 

Then within the Central City Core itself we have Arizona State University on which to build our more robust economy that will sustain our community long into the future.  This institution has been the heart of Tempe’s economy for more than a century.  At ASU we see some of the most active and visionary leadership in the Country.  For Tempe, the timing of Dr. Crow’s arrival could not have been better.  The development of the AZ BioDesign Institute, the integration of the University into our community, the creation of a vigorous, robust vision to carry the University to the leading edge of high tech, bio tech and nano tech research, all of these and the myriad initiatives of a similar nature provide Tempe with a fantastic opportunity to benefit from spin-off businesses and the resulting high-end jobs. 

The core of our downtown needs attention.  In my view we have allowed REIT driven development to move us away from our authentic roots and toward a corporatized caricature of the original.  But as the corporate stores move out, rents are moving downward and new “mom and pop” operations are beginning to take their places.  We need to stabilize this sub-economy as part of our larger program to reinvigorate our economy.  To do that we need to broaden the base of support from its dependence on “destination” visitors with residential components.  Having residents who call downtown home will provide a base of consumers who can help sustain a downtown grocery, pharmacy, dry cleaner and similar neighborhood supportive businesses that the west-side neighborhoods need to improve quality of life.  Having residents who call downtown home also will provide a social fabric that will help stabilize the social environment.  Downtown residents are more likely to frequent restaurants rather than bars on a regular occasion and they are less likely to resort to the anti-social behaviors that result from drinking too much beer late into the night.  The eyes and ears of those residents will also help public safety personnel reduce the incidence of crime and, when crime occurs, increase the likelihood of apprehension of perpetrators.  All of these effects have a stabilizing influence on our Central Core.

The direction also will lend itself to increases in property values and the property tax our community depends on.  And it is happening now.  We have four residential towers on the boards for the property between fifth and sixth streets, immediately east of Ash Avenue.  We have the Lakeside condominium projects by Suncor.  Can you believe it—the first phase condominium project on the south shore of the Lake is essentially fully reserved and the average price for the units exceeds $400 per square foot.  You have to get to Vail to find real estate prices that match these.

We are now in discussions with developers with mixed use projects that include substantial residential development immediately east of City Hall, along the east side of College Avenue at Fifth Street and along the west side of College Avenue at Sixth Street.  We have mixed use projects that include substantial residential on the north side of the Lake, east of Rural Road and a new developer that just “went hard” of a substantial investment on the Club Rio site on the west side of Rural Road.

Yes, we still must tie our Downtown’s sub-economy to the Lake’s sub-economy.  To do that, we have reached consensus that we must get the “wasteland” properties that separate Downtown from the Lake—the strip of Mill Avenue from Rio Salado Drive to Third Street—under development.  These properties now include the “America West” greenbelt on the west side of Mill Avenue and the historic, but currently unsightly Mill and Silos on the east side of Mill.  This section of land is the “neck” that will connect the “head” of Town Lake to the “body” that is Mill Avenue.

This Council knows that and gets it.  Maybe I’m too much the optimist on this matter, but I believe we can solve the current hurdles to the development of the Mill property in short order with the right attention.  Overcoming that hurdle won’t be cheap, but it will give us our best opportunity to ignite a full-blown economic renaissance for our Central Core’s economic development. 

And back to our City’s economic heart.  Note that the south shore of the Lake, from the center of “A” Mountain to the parking lot on the east side of Rural Road is owned by ASU.  Fortunately, ASU’s leaders have initiated a process recently to get its development of that property moving. 

So can we take advantage of all of this economic development activity?  Well, if you look down to your place setting for a moment, if you hadn’t already noticed, you have a small gift from one of our newest long-term partners who most believed was headed to the west side of the Valley for good.  This community just recaptured the Angels for 20 years, and maybe longer.  If we can renew that relationship when none thought it likely or possible, you bet we can make this easy stuff happen. 

And by achieving this economic renewal we have the tools to address a substantial portion of our financial challenge.  This economic renewal brings with it the promise of vigorous sales tax growth, reductions in operations costs spent to run our Central Core and, simultaneously will address the need to raise the cash-flow needed to sustain the Rio Salado Project.

As part of our economic revitalization, we also need to rebuild the smaller “business neighborhoods” outside our Central Core.  The aging strip malls and business districts that line our City’s arterial streets throughout our community need our attention.  In my view, we can’t address this aspect of our economic revitalization without recognizing that we must pay immediate attention to our neighborhoods’ vitality.  And I note that, all my prior, albeit, enthusiastic description of a need to rebuild our economy, is merely a means to an end, not the end itself.  Our community exists to provide services to residents; to maintain and improve the quality of life of our community members.  The focus on economic development, and on the Central City Core in particular, is a matter of necessity.  As I described earlier, Tempe faces financial challenges from the slowed growth in sales taxes and the anticipated loss of State Shared Revenues.  We need to focus our attention on the opportunities to generate revenue to our City, and do it in a way that adds to the quality of life of our community, precisely so that we can generate the resources needed to stabilize our neighborhoods.

And this issue brings us back to one of those dichotomies like the one presented by the fact that Tempe is land locked.  It is presented by the economic heart that is ASU.

ASU is the initial source of our community’s success and vitality.  It is a great source of the basis for Tempe being, truly, the “Smart Place to Be.”  ASU provides us the mantle of the intellectual property capital of the State.  It makes Tempe the cosmopolitan City that provides unparalleled opportunities to experience art, theatre, music, and education ranging from preschool to post-graduate work.

Yet for our neighborhoods, ASU’s amazing growth in Tempe, to one of the largest campuses in the country, has imposed a demand for student housing that has not been met by growth in the University’s own housing stock.  That demand has been met in part with the construction of multi-tenant apartment buildings.  But, sadly, as described earlier, that demand also has been met by the conversion of a substantial portion of our single family, owner occupied residences into student rental housing, with the resulting deterioration of neighborhood quality of life, loss of neighborhood supportive businesses and undercutting of the likely supply of students for our neighborhood schools.  So to reinvigorate our neighborhood business districts, we must concurrently seek the construction of substantial, quality student housing in and immediately around ASU’s campus.  And such housing must be built with great sensitivity toward the neighborhoods that abut ASU’s Tempe campus.

Which brings us to my third point.  How Do We Get There?  How do we achieve these goals; how do we capture this vision—of a vibrant, robust, safe and sustainable community; how do we get to this destination for our community’s brightest future? 

We are fortunate indeed.  We have new leadership at ASU that not only is supplying the opportunity to form the leading edge of the vigorous new economy, but is a leadership that already acknowledges the necessity that the University be integrated into our community and be part of the solutions to our neighborhoods’ challenges.  The focus of these leaders’ efforts, to build a new University in many places, brings to the Tempe campus a promise of enhanced graduate studies and a reduced focus on undergraduate work.  The rebalancing of the student population in Tempe will add to the power of the research and resulting economic development opportunities AND aid in our effort to reduce the worst facets of student life in our neighborhoods.  Further, these new leaders have committed to the construction of student housing that will accommodate in excess of 10,000 students, which concurrently carries the promise that, in the future, students can reduce their dependence on automobiles and, thereby, improve our traffic flows in and around the campus.

In honor of the commitment by that new leadership at ASU, it is my pleasure to introduce Dr. Crow’s representative with us today, Virgil Renzulli, Vice President of Public Affairs, and Steve Miller of ASU.  I would ask them to stand and receive the applause they so deserve.

Next, I need to reiterate a point that I feel that several of us have made in the last number of months, but it bears repeating here and now, especially in light of the honor that has been bestowed on all of us today.  Tempe has many friends in its neighboring communities.  We all understand that Tempe can not succeed in a vacuum.  Tempe’s success depends on our surrounding communities being successful too, just as the success of the other communities in the region requires that Tempe succeed.  We need to put away the competitive approach within this region, at least as best we are able.  Our communities need also to take steps to prevent others from using our communities against one another.  It was that idea that has given rise to the increasing vigor or conversations to reduce, through inter-City agreements, be they bi-lateral or multi-lateral, to reduce the use of sales tax incentives in disingenuous efforts to pit city against city.  Please welcome the Vice President of the Salt River Pima Maricopa Indian Community, Leonard Rivers; the Mayor of Mesa, Mayor Keno Hawker; the Mayor of Chandler, Mayor Boyd Dunn; the Mayor of the Town of Guadalupe, Mayor Vinicio Alverez; and the Mayor of Phoenix, Mayor Phil Gordon.  Thank you all for being here. 

Their presence is a demonstration of the mutual commitment that exists among our communities.  Tempe joins these leaders in a regional approach to economic development.  We must coordinate and cooperate on a new way of doing business.  There can be no more of the winner-take-all mentality that reared its head as a result of development incentives.  We should not be tripping each other to reach the finish line in development races – we should be crossing the future’s finish lines together.

Finally, I have saved the best for last in describing how we get to this brighter future.  We will do it with a team approach.  And that team is made up of our entire Tempe City Council.  It is that team that recently did what no one thought likely.  Ten weeks ago the Angels were heading to the West Valley.  Tempe’s Diablo Stadium faced the possibility that it would go empty.  We would lose the substantial economic value of Spring Training and the huge infusion of revenues to Tempe charities.  It was this team, working together, that pulled off a leaping catch that brought us this baseball victory, which is just the beginning.

In your program today we have included a brief description of the lead role each Councilmember will have in building our future.  Each member of the City Council is chair of one working committee.  And each council member also serves on a second committee.

Council member Pam Goronkin chairs our Technology Advancement, Tourism and Redevelopment Committee.  This group has a broad-based set of tasks, from improving the quality and quantity of jobs available in Tempe, to building on our reputation as the Smart Place to Be.  Tempe needs to land the high-tech, bio-tech, nano-tech jobs of the future – jobs that will be available at new operations like BioDesign Institute at Arizona State University.

Lest you think our goals are all about money, Tempe schools of all levels must also be one of our primary priorities.  Vice Mayor Mark Mitchell chairs our Education Partnerships Committee.  He will be shepherding us through some of the most exciting years in recent times.  Mr. Mitchell knows the value of re-committing ourselves to our 125-year relationship with ASU.  The university has a plan to begin its own elementary-level schools program, which seeks, among other things, to build programs from which elementary students will graduate fully bi- or multi-lingual.  Mark knows that it is vital to deepen our ties to the Tempe and Kyrene Elementary School Districts, and to the Tempe Union High School District.  Districts like Kyrene are moving with the times and staring down intense competition for students by creating an all-new Montessori program, for example.  The Tempe Elementary School District is trying to keep up with an increasingly diverse student population that speaks 63 different languages.  Given this diversity of language, where better to start a “university” school than in partnership with the Tempe Elementary School District. 

We as a city need to be right there with them, helping each other wherever possible.  We currently have a program for providing police officers to our schools; we all want to assure our community’s parents that our mission is to make sure that our schools are the safe havens our children deserve.

Tempe must continually strive to provide more responsive, substantive assistance to our residents.  To that end, Council member Ben Arredondo chairs our Neighborhood Quality of Life and Public Safety Committee.  If we are successful in our attempts to create greater revenue streams for the City of Tempe, our neighborhoods win.  More sales taxes brought in means more enhancements to local parks, to sidewalks and streets, and many more quality of life indicators.  We cannot overstate the importance of mitigating the impacts of rental properties on our community.  Ben’s committee is charged with working with ASU to encourage its construction of on-campus student housing and to encourage its expected future policy that all freshmen must live on campus.

Council member Leonard Copple chairs our Transportation Committee.  Len and his committee, along with the City, are anticipating a very big transportation-related development.  Light rail is coming down the tracks very, very soon.  Mr. Copple’s committee will address the traffic and business interruption issues that arise during construction and keep our community “on track” for light rail.   Len’s committee is also charged with overseeing street and alley maintenance, remedying traffic congestion and looking at noise reduction.  Our bus system is also a major area of emphasis for the Transportation Committee.

Council member Barb Carter chairs our Community Services Committee.

Among other things Councilmember Carter will continue her oversight of the performing arts center.  That committee also will shepherd the long-awaited North Tempe Multigenerational Center on the campus of Laird School.  For too long on the north end of town, our residents have gone without the valuable services of such a center.  Now generations to come will benefit from our foresight.

As we hope you have already heard, Tempe’s Diversity Department was given awards for its ground-breaking work in improving our work environment.  To help continue that great work, Council member Hut Hutson chairs our Diversity & Human Relations and Resources Committee.   Mr. Hutson’s Committee will also deal with all human relations and employment matters when it comes to the initial discussion and formulation of policy.

Please join me in giving this Tempe Team a round of applause.

CONCLUSION

So there you have it.  A sense of Where We Are, a glimpse of our vision of Where We Are Going and a statement of our course for How We Get There.  All of this is based on our relationships with our partners, like ASU, surrounding communities and our work on this Council as a team. 

But it doesn’t stop there.  Your help is essential as well.  We really do need the support of everyone in this room.  Each of you is a thread in our community’s fabric; your participation in the process of weaving at our community loom assures that the resulting fabric will be strong, sustainable and will endure the continuing test of time.  This community’s patchwork quilt is 133 years old.  Your help will assure that it will last long into the future. 

Thank you for your attention and for your thoughtful consideration of these ideas.  Moving forward, there may be uncertainties and uncharted terrain.  But this we know for certain about Tempe:

  • We know who we are. 
  • We’re the envy of many communities when it comes to jobs and recreation, citizen involvement and well-run operations. 
  • We’re growing up and filling in. 
  • We’re a metropolitan community. 
  • We’re the Smart, Active Place to Be, and that’s just the way we like it.