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11/11/2013 8:56:00 AM
Building back up
Sales tax, construction numbers indicate stronger economy, say local officials
A construction crew with United Construction Group builds a home Thursday afternoon at the Granville subdivion in Prescott Valley.
Photo courtesy Matt Hinshaw/The Daily Courier
A construction crew with United Construction Group builds a home Thursday afternoon at the Granville subdivion in Prescott Valley.
Photo courtesy Matt Hinshaw/The Daily Courier

Cindy Barks
Special to the Tribune


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

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

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

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

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

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

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

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

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

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

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

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

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

Not fully back

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Business ambivalence

Businesses in other categories also reported somewhat spotty growth.

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

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

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

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

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

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

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

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

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

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

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

Deep deficit

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

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

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

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

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

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

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

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

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

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

Employment uncertainty

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

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

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

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


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