What’s up with the real estate market (Phoenix)? September 2013

Last week I had lunch at an event arranged by a friend of mine, and the guest speaker was from the Cromford Report, a report that analyzes trends in the Phoenix market. A year ago, I went to the same event and he predicted that we would have a buying frenzy in the spring. Partially as a result of that prediction, one of my clients decided to sell out their entire portfolio, and it really was a major frenzy. So from that experience and a few others, I give much weight to his comments about the market.

One of the interesting graphs that he showed was a plot of the average real estate price, starting from 1950. Most charts we see today look at 2005-current, or from 1990 – current. The longer term trend is more interesting. First, on average, the prices rise a little faster than inflation. We are currently below that target.

Second, there have been several “bubbles”, one being around the time of the S&L crisis, and the most recent one bottoming in 2011. In each of these cycles, in hindsight, it is pretty easy to see that there are hitches and bumps in the recovery process.

The Phoenix market has been really charged up lately — and now seems to be softening. It looks like buyers have started to back off, especially in the above 300k range. (I have a current listing less than 150k and it has been on the market for a month – unheard of, a few months ago!) The lower end is still strong though (my listing not withstanding). So is this a “top”, or just a pause?

The Federal Reserve announced at the end of this week, that they will print Even More Money. So this should alleviate interest rate concerns; and the Cromford Report presenter thinks that we are having a little buyer’s revolt around prices (up some 25%-30% in the last year). But he said that this was just a little pause, and we will continue to see a strong market, and increasing prices.

According to the statistics, we are very close to being in a more “normal” market, in terms of the number of homes for sale, the number pending (under contract), and the number of new listings each week. Still a seller’s market, but maybe not for much longer. It looks to be turning into a market that favors neither buyers nor sellers.

Another interesting statistic was about rental properties. Something like 20% of the homes in Phoenix are rentals. Most of us know that the lower end of the market has been dominated by hedge funds and REITs such as Colony homes, Blackstone, and others. These funds have been buying many, many homes. However, they account for a very, very small number of the rental homes! Most rental properties in Phoenix are owned by individual investors!

The effect of the funds buying in the low end has not had much effect, unless you were a buyer yourself trying to compete against their offers! It has been very difficult for a first time home buyer using financing, for example, to buy an inexpensive home.

Rental rates for single family homes have not increased very rapidly; only the larger apartment complex owners have been raising their prices. This is partly because credit has loosened, the foreclosure crisis is all but over, and FHA is willing now to allow people with a foreclosure or short sale to get financing much sooner.

Finally, he had a chart of the population change in Maricopa County since 1950, and alongside this chart, the number of new homes built each year (including apartment units). These two trends followed each other closely, until this year. This year, immigration is up, but home starts have not kept pace. It looks like there is now, or will shortly be, a shortage in starter homes. An opportunity for some builders?

So all in all, we are coming into a set of more typical market conditions, and it looks like prices will continue to rise. the below $200,000 market remains strong, and the higher end is seeing longer days on the market. Inventory is rising. This little pause we are having right now might be a great time to buy, if you have been frustrated by all the institutional buying that has been hammering the lower end of the market.

–PLH

The Real Estate Profession in Arizona

When I got my real estate license, my co-blogger and friend Mike told me that I would probably be able to pass the test without taking any classes. I had been an investor in real estate for a long time, and I decided to get my license because my flips had gone from 55k homes to 155k homes, and I didn’t want to give away an extra 6% on every deal (3% in, 3% out). So I went to the Arizona School of Real Estate and Business, and for about $1,000, took 120 hours of classes (all in a row, two week crash program because I thrive on immersion), and took the test a week later, with a 95%+ score.

So could I have passed without the classes? Probably not, because there was some stuff I didn’t know (mostly that doesn’t matter in regular real estate, such as how the Baseline and Meridian survey system works, how many people are on the real estate board, what the commissioner’s powers are, etc.) although there was some stuff I didn’t know that is important (how to fill out a HUD form, how agency law applies in real estate, stuff like that).

Generally the classes were really interesting to me, and I had a blast taking them, looking forward to being down there every day. The classes were broken into a math section and a non-math section, because there is lots of math they think you need to know to be a real estate licensee. Since I have a math degree, the classes that most people find daunting, were really boring.

The other fun thing about the classes is that it appeared that lots of the students thought it was really a fashion show… but I digress.

After going through all the classes and before you take the state exam, you have to pass the school exam; I studied for the weekend (last class was on Friday) and took the school test Monday. Then it was off to the test center to take the state test.

After all was said and done, I felt pretty much ready to practice real estate as a profession. Wow, was I wrong. I had no business trying to help people sell real estate at that point. Sure, it was legal, and I had all the knowledge, right? Not exactly…

In a similar experience, I went through the (very brief) classes for, and took the state test, to be a financial advisor. I passed all the tests, and then ultimately decided not to get the license. Again, I had no business being a financial advisor at the time, even though it would be legal.

These are two professions in which the public entrusts some of the biggest, most important, most life-altering decisions to a state licensed person.

What about when you go to get your hair cut, or your nails done? How much education is required for that? And experience? This was shocking to me:

COSMETOLOGIST LICENSE: 1600 Hours
BARBER LICENSE: 1500 Hours (Call Board of Barbering)
ESTHETICIAN LICENSE: 600 Hours
NAIL TECHNICIAN LICENSE: 600 Hours
ELECTROLOGIST LICENSE: 500 Hours (Call Board of Radiology ARRA)
COSMETOLOGY INSTRUCTOR LICENSE: Cosmetology License for 1 Year + 650 Hours
ESTHETICIAN INSTRUCTOR LICENSE: Esthetician License for 1 Year + 500 Hours
NAIL TECHNOLOGY INSTRUCTOR LICENSE: Nail Technician License for 1 Year + 350 Hours
MASSAGE THERAPIST LICENSE: 700 Hours

Real estate license: 120 hours

Is it any wonder that real estate agents often have poor reputations, one up (maybe) from used car salesmen? For sure there are some great options (but not requirements) to be a much better real estate agent, such as the GRI designation and lots of others. What about brokers, as opposed to “regular” agents? Pretty much you go through the exact same set of classes over again, another 120 hours, and take pretty much the same test again. Not much difference, except you have to take a brief “broker management” class that has a few more of the legal record keeping and agent legal procedures information tidbits in it. But as for getting more information… no.

After an agent has closed 50 or 100 deals, they are usually ready to perform transactions. So how does an agent get to 50 deals? The best way is for them to have a mentor, someone who guides them through the first bunch of transactions. There will be lots of initial handholding, but after 10-15 transactions, this is minimal and there are just occasional questions. Still, unusual situations still arise. I closed a large number of transactions in the first half of the year, and there were a few surprises. I closed one just this week in which I got a surprise. This after several hundred deals… we are all still students, still learning.

The first thing that needs to happen to our industry is a dramatic increase in the requirements to get a license. This will weed out all the weekend warrior agents, and that alone will do wonders. The agents who have held a license for 10 years and have done 20 transactions are not generally busy enough to really understand the market and the business; for them to represent clients is a disservice, in my opinion.

The second thing is a required mentorship. Many brokerages are starting to require it, but there are just as many that will sign you up if you have a license and a pulse, and let you go about your business. This is because the prevalent broker models in Arizona are more about renting office space for a monthly fee than promoting agent quality.

And before a licensee heads out on their own, they need a certain number of transactions under their belt, and they need to be signed off by a mentor.

The laws regarding real estate licenses are strict; they have a moral turpitude clause in them, among other things. The department can revoke a license if they feel that a licensee is acting with poor moral character! I think this is rarely done, but there it is. Perhaps we need similar requirements for public figures such as movie stars and sports figures. More about that in another post.

–PLH

Not your mother’s America’s Cup

I have been a big sailing fan for many years. I grew up with America being the only nation to hold the America’s Cup — and Dennis Conner was the winningest skipper. At least, until Australia beat us!

When they were still building the yachts according to the 12 meter rules, building the monohull boats, and flying spinnakers … I loved to watch the tacking duals, the protests, the close races. It was exciting.

During those days, a small business on the island of Saint Martin acquired a bunch of old 12 meter boats, namely Stars and Stripes from the Australia challenge, and several Canada boats. I was in the islands for the first time, and I got to take a ride on Stars and Stripes, as a “crew member” (they charge you $60 for a 1 or 2 hour “race” against the other boats, mostly for cruise ship passengers.)

When we were there, though, a hurricane had just rolled through and torn up lots of the island. And I was sitting on the dock in Phillipsburg, the day before I was supposed to leave, and this Englishman walks up to me and asks me, when are you leaving?

“Tomorrow,” I said. “Well that’s too bad, I am looking for crew members.”

“For what?”

He smiled, and explained that the Heineken regatta was two weeks away, and he needed some sailing crews to man his boats that he was entering. Well it was Colin Percy, who owned the “Sint Maarten 12 Metre Regatta” business, and he wanted me to crew … a 12 meter Armerica’s cup yacht! How could I say no?

I talked to my boss at work (at the time I was the principal engineer at a local Phoenix company that built network test equipment), and his response was pretty much “How can you say no? Go!” So I flew back to the USA for a few days to take care of some things, and went right back down to Saint Martin, and started training with the rest of the crew.

I got to crew for one of Dennis Conner’s skippers, and for Chris Dixon, who was an America’s cup skipper and a 3 time world match racing champion. Even had a drink with him, in the bar.

On one of the race days during the regatta, we had a “guest” on the boat, admiral Ellis of the USS Enterprise. He was a burly guy, so he got to be the main grinder — our tactician was a smallish Scot, Roddy Anderson, who really knew his stuff, and the whole race he was yelling at Ellis, “C’mon, man, put yer back into it!” Later I asked him if he knew who our guest was… “You mean I’ve been yelling at a bloody Admiral??” Later, Ellis invited us over to the Enterprise, he gave us a nice tour. Wow. I can say I have been on the bridge of the Enterprise!

After the race, I offered to buy the sailing crew dinner at a local restaurant. We ran into a table of really cute girls. It was Playboy magazine, they were on the island for a shoot… It was a fun night. Heck, it was a fun month.

Since then, the cup regatta has changed lots. There has been lots of time spent in courts, talking about the rules, there was a one sided race between a monohull and a catamaran, lots of crazy stuff.

This year, though, is different. The 12 meter boats were lucky to make 18 mph. These boats… 50(!!) mph. Take a look:

America’s Cup 2013

Fishing

I like to fish.

I have fished with lures, with worms, trolling, casting — lots of ways. And I thought I knew, pretty much, how to catch fish.

My brother and I go out on a lake in New York from time to time, and we fish. We catch bass, pike, perch, other stuff, but mostly bass and pike. Some people think pike are a trash fish, but trash or no, it is really fun to pull a 10 pound pike into the boat. Heck, it is fun to pull almost any fish into the boat.

A few years ago (ok more than a few…) I made friends with Gary Senft, who is the bass pro at Bass Proshop in Phoenix, and is also sponsored by Nitro, Lowrance, and a bunch of other bass fishing related companies. Gary has taken me fishing, in Arizona, many times; and we ALWAYS catch a bunch of fish. He knows the lakes, he knows his methods. They work.

So this year we invited him to come stay at our New York place, and, well, do some fishing. Now he did not use lures or plugs or anything like that. In fact, he brought his “tackle box” which consisted solely of a bunch of hooks he uses on Arizona lakes, and a large bag of random rubber worms and stuff. “This will be interesting,” I thought.

At least I thought it until he pulled in some 20 fish in a couple hours on a lake he had never fished before…

Of course, now I think he is spoiled, because while it has been 119 around Phoenix, we were fishing in cloudy to partly cloudy (and sometimes rainy) weather where the high was about 80. Gary showed us, my brother and me, how he fishes in Arizona, and how it works just fine. The bass in New York apparently are the same personality as the ones in Arizona.

He had some locals invite him to compete in a local bass tournament, and I am sure he would have done well, but he had to get back to his Arizona lakes.

So now my brother and I are fishing with rubber worms and funny looking hooks… I miss using a Meps or a Jimmy  Houston weedless spinner.. but I can’t argue with success!

-PLH

Joint Tenancies – A Residential Escapade

marijuana-leafI have been representing an out of state property owner for several years. Recently, they contacted me to list and sell some of their properties, mostly tenant occupied. For the most part, this is a simple process of finding investors who want to keep the property and tenant just as they are, and they will perform a minimal inspection to make sure there are no issues. A few do a regular professional inspection after a walk through if they think that there might be some issues.

We try not to disturb the tenants, requiring a signed contract before we permit inspections; this has worked pretty well, and it also has the effect of driving out the potential buyers who aren’t as serious or perhaps as experienced. Mostly the tenants are nice, and we arrange a mutually agreeable time when we can inspect, and that’s that. Every now and then, we have tenants who will not permit the inspection, and we have to serve a two day notice, and show up with a locksmith. It is rare, and in one instance we discovered that someone was illegally subletting the property. In another instance, the tenant was growing weed in the unit.

When we filed the notice to inspect, the tenant called me in a panic, now saying we are not allowed to go into two of the 3 bedrooms…. because he is growing a certain medicinal plant, all legal he says. And opening the doors will “damage” the plants.

I spoke with the department of Health and they say if he has a permit to grow them, then it is ok, the permit renews annually and if there is a dispensary within 25 miles then they won’t renew it. Oh and he can grow 12 of them. And if he is a care giver, for up to 5 other people and has care giver cards, then he can grow 12 for each of them, so up to 72 plants.

We recently had the forcible detainer hearing, and the tenant showed up with a pro-bono attorney who was actually well prepared. Our attorney, for reasons I do not understand, chose to file based on a violation of the crime free lease addendum which specifically states that the tenant will not do anything in violation of the federal controlled substances act. (Personally I would have just notified them based on an inability to inspect). 

Their attorney argued that this was a state eviction, a state matter, and if we were to evict based on a federal statute, that we should be in federal court. Our attorney argued that it is a simple contract dispute, because the tenant signed the crime free lease addendum and the landlord had an expectation that nothing illegal was going on in the unit, specifically addressing the federal statute explicitly named in the addendum.

There was lots of posturing but ultimately the judge ruled for us, and granted summary judgement, which they said they would appeal. So the story continues. I’ll write a future post detailing how this all works out.

-PLH

Pondering Pela’s Paradox, Part Four

In this post, I wrap up musing about Robert Pela’s challenge to implement authentic retail shopping experiences in downtown Phoenix, an issue he raised during Urban Planning Week in early April. When it comes to retail shopping, I’m inclined to libertarian thinking. Just as consumers verify what they desire in consumer goods, I think the market tells you where to locate the marketplace. Our city has unique assets to experiment with, allowing “crowd wisdom” of downtown dwellers to determine the best city center locations for appropriately-sized stores. Consider all the vacant lots and buildings in the downtown grid south of I-10 and north of Jackson Street between 3rd Avenue and 7th Street. These vacant lots and underdeveloped sites support installing local shops to test market demand for various types of food purveyors like bakeries, deli/cheese shops and other specialty food shops – and optimal sites for these merchants.

How can the City move forward the experiment? First, revise the Downtown Code to authorize for limited periods “pop-up” facilities to house small merchants. If food trucks can attract hundreds of customers living and visiting downtown, why should pop-up stores (without wheels) be less attractive? Merchants should be allowed to erect small shops in repurposed ISOs – cargo storage containers – on vacant lots and even on rooftops of buildings having strong flat roofs, such as city parking garages. What would be the result of having a pop-up group of stores on a few public garages downtown open at least during October through April when air conditioning doesn’t have to run 24 hours daily? (I’m not arguing that air conditioning isn’t needed during peak shopping hours where perishables are sold. Still, a merchant can supply a room-sized air conditioning unit to sufficiently cool the shop’s interior for a few hours daily.) The experiment would reveal the optimal permanent locations for these stores. LOT-EK is spearheading the use of a series of ‘incuboxes’ – re-purposed shipping containers that will be used as pop-up shops and concept stores – in the total makeover of Pier 57 in downtown Manhattan. New York’s City Council has backed the plan. The shops will reside topside of the redeveloped pier center. You can read about the concept and see renderings of the Pier 57 proposal at http://www.lot-ek.com/#UNIQLO-POP-UPS. Does using an insulated cargo storage container as a store on office rooftops or garage top floors sound nutty to you? Well, do you plan on parking on the exposed top floor of a public garage if you can avoid it? The uncovered rooftops of public garages generally are reachable by elevators; and they’re empty most of the time on weekends, evenings and otherwise most of the time when employees of public agencies have any choice at all over where they park.

The second city initiative is to promote City government as an “authority entrepreneur,” to borrow from Edward H. Ziegler. Let the City donate (or rent at nominal sums) sites to promote the experiment – sites turned over to merchants under temporary licenses with all necessary utilities lines installed for connection and otherwise ready for occupancy when the ISOs are anchored in some fashion to avoid adverse effects of occasional inclement weather and danger to shoppers. Indeed, the City could provide each merchant with a standardized “pre-wired and plumbed” ISO to move onto an available site. Since ISOs are fundamentally indestructible anyway (corrugated steel walls, floors and roofs, “compromised” only to the degree of openings cut for doors, windows and air conditioning units), the containers can be recycled and moved between locations when one license lapses and another commences. The City ought to make these units available to applicants for a retail license who can prove prior experience in retailing and the financial capacity to be able to cover its business expenses for a minimum period of one year. With a license and an ISO available, all the new downtown merchants need provide are staff, merchandise, floor and window coverings, food handling and other health/safety licenses and proof of liability and property insurance insuring themselves and the City. (Yes, of course it’s more complex, but this is the picture from 10 thousand feet aloft. Big ideas require one not to get lost in the minutiae at the moment of the idea’s inception.)

Phoenix will recoup some of its outlay to merchants by imposing a modest business license fee/tax on sales from temporary locations. Why should Phoenix make this investment? One, because it’s time for our City to be proactive, not simply reacting to downtown initiatives inspired from the private sector. Two, our citizens across the City (not just downtown) have everything to gain by an in-migration of skilled workers and members of the so-called “creative class” who want to live in a more vibrant downtown. Three, by enabling retailers other than hotels, bars and restaurants to succeed downtown, the City messages the development and mercantile communities that government is “on board,” welcoming commercial density that doesn’t diminish the pedestrian scale – which in turn will encourage other “big ideas” for making our city’s center livable, that is, eliminating the need to bust out of downtown to find the commodities of daily residential life.

After a few years of experimenting with various “pop-up” locations for specialty food shops and small groceries around downtown, consumers (both permanent dwellers and students in dorms) will tell downtown Phoenix where they want to buy their eggs, meat, dairy, paper products and baked goods. Perhaps the answer will be “Circle K,” if its business model is superior to those of small merchants. Maybe a few “micro-centers” will be identified downtown optimally serving the local population. Then, the city can determine where local public transportation ought to “daisy-chain,” delivering residents to and from those shopping nodes by jitney-style transportation, where there is a more or less fixed route, with occasional deviations for a special stop–like Houston is doing in its downtown. Let the experiment begin!


Pondering Pela’s Paradox, Part Three

Robert Pela shared during Phoenix Urban Design Week that downtown flourishing can’t occur without two elemental ingredients. One of them is that the community has readily accessible public education; and the second is that dwellers must have sufficient opportunities for shopping locally, without leaving the immediate downtown area, however one defines that. For the purposes of this post, “immediate downtown” means the area around Central and Van Buren where one can walk or bicycle within 10 minutes of leaving one’s front doorstep. Yes, there’s a market at McDowell Road – but recall from my previous posts that to many, north of the I-10 leg between 7th Avenue and 7th Street, McDowell Road is simply “out of bounds” in downtown terms.

The problem for our city center has been that the “groceries” business downtown has been dominated by one player, Circle K, with its limited inventories for as long as most of the folks living and working downtown today can remember. When it comes to retail shopping, I’m libertarian. I think the market tells you where to build the market, so to speak. That’s the approach used by supermarket chains but their typical analysis is grounded in a rigid demographic matrix. Rooftops and houses under construction at the time of the analysis is what chains are interested in before vertical development of a store occurs. “Premature” opening of a supermarket is grounds to end a manager’s career in that business. So while a supermarket chain may purchase land, “banking” it for future development when a parcel lies in the path of eventual population growth, if the demographic analysis doesn’t deliver the arithmetic answer that enough middle class shoppers live within the desired radius, there’s no development. And that’s Robert’s paradox – he wants retail necessaries to be on offer, to spur downtown population in-migration; but supermarkets won’t participate in that “order of business.”

The notion that supermarket shopping is the only way to buy one’s necessaries is odd. If you travel in Europe, have you noticed that, even in the most capitalist societies, supermarkets are still relatively smaller players, and in some places the “supermarkets” are little more than bulked-up convenience stores? A 40-thousand square foot food store would be a large player in many major European cities. When I represented Fry’s during the 1990s, the template store was 62,000 square feet – and that was well before the “lifestyle” behemoths that you see among the major chains today in low-density areas. While Fresh & Easy failed in the U.S., Tesco’s failure wasn’t its modestly-sized stores. It was more the failure of misguided initiatives like (a) using self-service check-out stands that confused consumers accustomed to heavy “store-helper” presence; (b) eliminating vouchers and coupons, which turned off price-sensitive shoppers; and (c) pushing ready-made meals that were incompatible with local tastes. Tesco’s immediate competition came from Whole Foods and Trader Joe’s, chains with equally small footprints. Wal-Mart began experimenting with smaller stores after Tesco announced opening Fresh & Easy, making Tesco’s way a bit tougher. [Wal-Mart’s experiment has become a commitment of sorts; in 2013, Wal-Mart projects opening 125 “supercenters” but also 115 new stores of fewer than 60 thousand square feet of sales area.] Tesco’s other misperception was that American shopping habits were similar to European traits. I visited three Tesco stores in Ireland in March, two in Dublin. Any of those Tesco stores would have survived on pedestrian traffic alone. No Tesco store in Arizona or Nevada could have survived merely on pedestrian traffic shopping, due to uncooperative weather and ingrained shopping habits.

Enough of Tesco; in addition to brand issues, there is the dilemma of accommodating parking and drives. Supermarkets promote the expectation of wide-open parking fields where shoppers navigate their hauls back to their SUVs in their carts. This means that even a modestly-sized (40,000 s.f. of sales area) supermarket with loading docks and 200 parking stalls “needs” a minimum of 7 to 8 acres of developable land. Phoenix has a number of vacant and underdeveloped lots downtown; but not too many of these are sufficiently large to support a conventional suburban-oriented supermarket. That fact explains why Circle Ks are numerous between 7th Avenue and 7th Street south of I-10, and supermarkets are not. But downtown Phoenix doesn’t require supermarkets and warehouse-shopping concepts to induce local dwellers to move into and shop downtown. In fact, there should be a big experiment, featuring Phoenix as one investor, in developing away from retail “Taj Mahals.” More on this in the next post.


Pondering Pela’s Paradox, Part Two

Robert Pela shared during Phoenix Urban Design Week that downtown flourishing can’t occur without two elemental ingredients. One of them is that the community has readily accessible public education for primary and secondary students. With that supplied, parents can feel comfortable relocating to the city’s core. Until the Mary Lou Fulton Teacher’s College (ranked 26th among all public and private graduate education programs by U.S. News & World Report in 2013) moved downtown, excellent education downtown seemed like a pipe dream, with the exception, perhaps, of the charter Arizona School for the Arts. I say perhaps because that school isn’t downtown, in the vernacular of some “downtown mavens.” What else prevented good schools downtown, besides low residential population? Perhaps no one was keen on teaching downtown, much less teaching and living downtown, when the amenities were fewer than have been developed in the last decade. Interestingly, downtown Phoenix is where the Teach for America corps’ residential enclave has been located in our valley since before Fulton Teachers College moved there.

Fulton Teachers College and Teach for America are combining forces to determine best practices in teacher education. Youth and energy for teaching (and a sense of mission) abounds in downtown Phoenix now, with the result that downtown is ripe for experimentation in school development along these lines: three new (or repurposed) schools for Kindergarten through 12th grade should be implanted downtown. The first should act as the “feeder” school for the other two, and it would be a primary school for grades K-4, inclusive. This primary school should be located as close to the ASU Teacher’s College as geography permits. This primary school should emphasize innovation, leveraging all that youth with drive and technology tools have to offer young pupils mentored by their energetic, up to date instructors. There are plenty of empty or underutilized buildings downtown available for repurposing with state of the art facilities for innovation. The primary facility should partner ASU with the City and those private sector believers like T. Denny Sanford, the entrepreneur who funded the Sanford Inspire Program. And those groups should rope into the mix of supporters major downtown employers like utilities companies who benefit directly and immediately from in-migration of employees committed to live where they work. If the City can donate land and invest $12 Million for the Arizona Center for Law and Society to induce ASU’s Law School to move downtown, it can repeat that type performance to promote public education in the lower grades.

Downtown needs to develop two schools for grades 5-12. One actually is underway, the ASU Preparatory Academy on 7th Street, offering instruction through grade 11. Unfortunately, the demand exceeds supply at the moment; a lottery determines whose children will attend. The demand is genuine; consider that each family who “wins” the lottery to enroll a child at the academy, is required to fulfill a minimum of 30 “credits” of service to ASU Prep each school year. (This seems to defy conventional wisdom saying that most public school parents can’t be cajoled to invest in their children’s education.) Obviously, ASU needs to expand the Prep Academy to accommodate increased interest. But a second school needs to be developed, one with severe admission requirements. I’m thinking of a school that, through graduation, demands intense application to studies in the pure and applied sciences, math and technology. This specialized high school would be in the mold of New York City’s specialized high schools: Bronx High School of Science; Brooklyn Technical High School; High School for Math, Science and Engineering at City College; Queens High School for Sciences at York College; and Stuyvesant High School. In short, this new STEM academy should be built to become the best-known, most prestigious place to attend a public school in Arizona. Admission should be determined by a highly competitive entrance examination process among Phoenix students in the primary grades. (In New York City, students in grades 8 or 9 who wish to apply to New York City’s specialized high schools must take the Specialized High School Admissions Test in one 150-minute burst.)

Developing this school is achievable by tapping the “science research hub” in downtown Phoenix, leveraging the assets of the University of Arizona College of Medicine-Phoenix, the Translational Genomics Research Institute (TGen) and the Arizona Biomedical Collaborative– the last a joint research venture of the UA, ASU and NAU. The mentoring and internship opportunities that are available from such institutions, added to the resources of ASU’s Colleges of Nursing & Health Innovation and Health Solutions, the Phoenix Biotechnology Accelerator and the Arizona Science Center, render downtown the most logical place to develop such a school for advanced preparation in the entire state. Will these research hub players participate? Imagine you’re a scientist, and you know that the brightest minds among a population, youth that will choose careers in the theoretical and applied sciences and engineering percolated across the street, wouldn’t you want to be part of those minds’ development process? Would your answer be influenced, knowing the parents of these really smart kids, themselves astute potential employees of your organization, would relocate downtown for the convenience of school attendance? Will universities participate? Well, isn’t “upping” educational opportunity the core business of higher learning institutions? Wouldn’t such a school provide a recruiting advantage to get some of the best young teachers-in-training to Fulton? Sure, some initial “promotion” is involved, but the outcome inevitably will be to open the school. That’ll get some creative class types moving into housing downtown, Robert!

(I’d turn over the Mercado facilities to this STEM middle and high school powerhouse; it’s located within two minutes’ walk of all the science and technology resources, enabling scientists and students to “commute” for education and internship purposes back and forth across Van Buren Street. Besides, that location enables sharing athletic and open spaces with Phoenix Preparatory Academy, a few blocks distant.)

Pondering Pela’s Paradox, Part Premier

I had the recent pleasure of attending an event at the Cronkite School of Journalism during Phoenix Urban Design Week which occurred partly last week. Will Bruder and Robert Pela participated in a panel discussion that yielded an interesting dialog on the essential prescription for triggering Phoenix’s full-blown downtown resurgence. Bruder offered that the key to creating a “20-minute city” in which auto-centricity is replaced by walkability across scalable pedestrian environments is adding dense and affordable housing. “Dense,” of course, refers to congregated developments of attached housing stock, built vertically to a significant height like the recent project on Roosevelt Street. Pela’s reaction to Bruder’s comment was most interesting. After reflecting that he’d been working and living in the area for years, he’d concluded that two ingredients have chronically been missing in Phoenix’s downtown and that a blossoming of downtown would continue to be thwarted by lack of those same ingredients. First is the availability of necessaries (primarily, groceries) to the residents of downtown, and second is the availability of schools in the downtown area. Robert’s paradox is that you cannot expect the “creative class” (Richard Florida-coinage) to move downtown if they cannot eat and send their children to school in safe, academically respectable institutions.

Since the program was styled to be about the arts as a trigger to downtown’s resurgence, I was amused that Robert didn’t nod toward the Arizona School of the Arts, which is headquartered at 1410 North 3rd Street, at McDowell Road. ASA seems to be doing just fine for its 800 students in grades 5 through 12, see goasa.org/about/2012ataglance.pdf. Perhaps the solution to Robert’s paradox on the schools front is to double the enrollment of ASA to admit additional children of adults inmigrating downtown. On the other hand, perhaps Robert’s issue is that 3rd Street and McDowell isn’t “downtown enough,” since McDowell Road is a full mile away from Van Buren and it’s north of I-10, a sort of Maginot line. (I can’t say where his attitude lies, since I didn’t ask.) In that case, however, I assume that Pela would acknowledge that ASU Preparatory Academy at 7th & Fillmore, which is K-11 (until next year, when 12th grade is added), is downtown enough. However, that school requires parents to win a “lottery” to enroll their students in grades 1-8 at the present time. Not exactly an open enrollment proposition; thus, the diciness of whether a parent could enroll his/her child would impair that parent’s secure feeling that the child would be able to live, shop for necessaries and be schooled downtown.

Since this is the era of envisioning downtown Phoenix, given the pending text amendment to the Downtown Code, a document in place since April 2010, I thought it would be fun to imagine ways to address Pela’s paradox, that shopping and education infrastructure (and the connectivity of transportation to these venues) must first exist in order to lure in greater residential density. It’s a paradox because those providers don’t typically spend for new construction until the rooftop numbers support development. First, however, I must identify “downtown” for the sake of reader orientation. So, I’ve artificially decided on these boundaries to accommodate Will Bruder’s desire for a 20-minute city. My downtown’s boundaries are Margaret T. Hance Park’s alignment on the North, Jackson Street on the South, 3rd Avenue on the West and 250 feet east of the eastern right of way of 7th Street on the East. I think that a person who is able bodied ought to be able to ride a bicycle or skate-board from one edge of this downtown to the other in 20 minutes or less, and to walk from the center of this rectangle (Van Buren Street, more or less) to either Hance Park or Jackson Street in that same time allotment. For the less able, 20 minutes ought to get one by light rail or the Nos. 0 or 7 bus lines from one edge to the other, north and south and via a bus east and west, including by a circulator-type route. McDowell will not be recognized as part of downtown Phoenix for purposes of these posts. The few following posts will address how Mr. Pela’s “essential ingredients” for downtown flourishing can be the subject of attainable and productive experimentation for City leaders.

Soldier On, Beantown

This morning’s Wall Street Journal quotes Dr. Paul Thompson, a 29 time finisher of the Boston Marathon, who, in lamenting that the race never will be the same again, observed that the event will be less fun and “less of a party,” forevermore. No one can question his judgment that the events of yesterday were terrible and will dwell in the collective memory of runners and Bostonians for some time to come. Nor can one question his right to weigh in, given Dr. Thompson’s perspective as a participant and as a physician who’s no doubt seen a lot of horrible human physical conditions.

Still, don’t Boston’s citizens get to decide whether to celebrate Patriot’s Day in the atmosphere of triumph over adversity that it has observed for more than a century of the running of this race? Wouldn’t a valid response be for 30 thousand Americans to turn out as participants next April on Boston’s streets?

I seem to recall that Bostonians turned out more than 200 years ago to say “no” to the actions of persons who sought to keep colonials in their proper political place. The American spirit is to celebrate, publicly, the heroics of citizens who respond to adversity with their best physical and mental efforts. We threw off the oppression of fear and uncertainty in the 18th Century. Our resolve should be just as stern here. Of course some caution in the future of the Marathon is merited; but we need not knuckle under to a generalized fear of what is possible. Buckle down, Massachusetts. We’re behind you.