Welcome to the Boomtown: Caterpillar deal just part of Tucson's resurgence | What the Devil won't tell you
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What the Devil won't tell you

Welcome to the Boomtown: Caterpillar deal just part of Tucson's resurgence

Local economy is full steam (shovel) ahead after Great Recession hit hard

The arrival of Caterpillar may not be jump-starting Tucson's economic revival as much as it is piggybacking on a resurgence already begun. Don't look now but this pueblo, which the national press can't call "sleepy" often enough, has woken up.

Give Gov. Doug Ducey, Sun Corridor 's Joe Snell and Mayor Jonathan Rothschild their due in landing the best trophy fish in Tucson's economic development angling in some time. They set the hook, let out the drag and got the lunker in the boat.

Caterpillar management jobs pay well — the kind of well that Tucson isn't used to. These are take-the-family-to-the-movies-without-checking-the-account-balance salaries. They are put-an-iPad-on-debit-a-day-before-payday money.

After 14 months of calling B.S. left, right and center — which has left me at times feeling like the elderly Muppet Show hecklers — I figured I would explain how Tucson's economy seems to be blossoming in its own right. Good things are afoot here.

I hear ya, Caterpillar isn't Raytheon. Most of the big money positions won't be filled by Tucsonans. So again, the good jobs can come to Arizona but Arizonans seem best qualified to ask the imported Indianans if "they would like fries with that."

I know, it doesn't get less "green" than tearing open the earth and leaching it with cyanide.

But let's put the announcement in the context of bigger trends. In addition to Cat, we've got the county and state's work to back the high-altitude tech firm World View, as well as the expansion of capacity at the Port of Tucson. We're looking at more than 1,000 jobs our area's elected leaders helped land here in the last four months.

Caterpillar means $600 million in cash coming into Tucson, and that influx means other jobs. Also, because it's a headquarters, the odds are much better that support services will be contracted through Tucson firms and that means more good jobs here.

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The expansion here of the monster truck and equipment maker (if you've never seen how Godzillically huge open pit mine trucks are, prepare to be wowed if one comes rolling down I-10 at 1 mph) also confirms Rothschild's idea of using Mexico as an economic on-ramp. Caterpillar executives chose Tucson partly because the city has prepped the ground to be a port leading to our southern neighbor.

More could follow if a local infrastructure flowers supporting the — I'll say it — "megaregion's" Mexico-centric business ventures.

For the first time in a long time, the trends seem to be pointing up.

Unemployment at pre-recession levels

Caterpillar will bring 600 jobs to Tucson. Tucson businesses in the last year added 16,000 jobs and the Tucson area's unemployment rate has fallen to 4.7 percent. That's below the national average and below the state average of 5.0 percent.

There are issues with these numbers but, bottom-line, it means that a smaller slice of the people who are looking for jobs can't find them than before the recession. It makes it easier to find work. It means workers who have jobs aren't facing a boss who says "there's a long line of people waiting for your job," and wages can begin to increase because labor becomes more valuable.

Something happened to Tucson's job market that only affected a handful of communities during the Great Recession. The size of the labor force increased markedly during the worst of the crash, according to U.S. Bureau of Labor Statistics. In 2006, prior to the recession, Tucson's work force numbered 445,000. By Sept. 2010, it was 498,000 — a 10 percent increase. In other words, jobs were just part of the problem because the suddenly the unemployed were competing against 49,000 more workers.

The same thing did not happen in labor markets of similar size: Albuquerque, Omaha, Tulsa and Delaware all saw their ranks of active job seekers remain flat. The glut of new workers sporadically seemed to play out in places like Reno and Orlando-Kissimmee, where the real estate market got whacked badly.

Tucson had a good number of seniors living on retirement accounts at the very time the stock markets were crashing, reducing their monthly income as returns dried up. Looks like they were heading into the labor market but have dropped out since the market returned. Look: A link between Wall Street and Main Street.

The recession broke the back of job growth trends dating back to the 1990s. The most recent BLS numbers, tracked by the state, show that 455,000 workers had jobs in Tucson, up from 439,000 the year before. There were 431,000 jobs in April 2006 before the recession started. In 1997, the local economy supported 355,000 jobs. So the area added 76,000 jobs between 1997 and 2007 but has added just 24,000 in the nine years since the recession began.

Employment and unemployment numbers moved around a lot and can be confusing but the number of unemployed — now 22,000 — has been cut in half since there were 45,000 jobless here in 2010. The numbers are right on the trend line for the spring of 2006.

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All ain't perfect. Arizona's median income still sucks rocks compared to the national average. The state of Arizona as a whole ranks ahead of just seven states and Tucson lags behind the state average.

When the state pursues an economic development strategy rooted in low taxes meant to lure only the most cost-sensitive businesses, those businesses are going to treat labor costs as fat rather than an investment with long-term returns.

Yet the only way to start improving those wages is to start creating demand. We're doing that.

Homes prices get bubble off them

Real estate has long powered Tucson's economy. No recovery can happen here without a recovering real estate market. Check that mark.

The median sale price of a Tucson home in April stood at $176,000. That's still off the highwater mark during the bubble, when the median price was $225,000 from 2005 to 2007.

Let's go back. Way back to 1997. Plot a line of the median sale price that year of $104,000 increasing a inflationary rate of 2.8 percent. That line would cross through $176,000 in 2016. If there had been no bubble — no scheistering mortgages — Tucson's housing market is about where it should be.

Moreover, the U.S. Department of Housing and Urban Development's figures show the median income for a family of four runs about $57,000 here in Tucson. If a family can afford a home 2.5 times their annual income, then the typical home price is kinda, sorta in line with what a family can afford. The market seems supported by the local income.

This is good. As my esteemed editor points out: if housing prices are rocketing up again, we're just going to get in the same trouble we were in back in 2005. True. But, let's look back at the kind of mortgages being handed out now versus then.

In 2015, 5,500 homes sold through cash or FHA 30-year, fixed-rate mortgages. I've been told by experts that is the only loan a homebuyer should take out. Another 4,700 were sold through the umbrella "conventional" loans. What defines "conventional" can be problematic.

The Tucson housing market imploded when home owners could not afford resets to their mortgages sold during the bubbling boom. In 2005, mortgage companies reported just 53 adjustable rate mortgages in the Tucson area. 53. A lot of people would still have jobs if there were just 53 funky mortgages sold. That same year, mortgage companies reported 243 FHA loans but 14,870 "conventional" mortgages were sold — and that was a 50 percent increase in two years as home prices miraculously rose 58 percent over the same period.

Safe loans were abandoned for risky loans that were listed as conventional.

The point is that housing prices are returning to what they would have been without a bubble and are not out of line with the median income if we figure the bottom 30 percent are just not going to be in a home-buying position. Home valuations are expected to reflect a price point a bit higher up the income ladder. 

Just not that high up.

Those of you who in 2005 spent $262,000 on the median-priced, single-family detached house ... all I can say is you bought into the NASDAQ in 2000 and bought Chrysler in 1977. Not a lot we can do for you. Enjoy your freakishly overpriced apartment until incomes really start to climb.

Vivo Rio Nu-flipping-evo! 

In November 1999, my editors at the Tucson Citizen assigned me a story hailing voter approval of Rio Nuevo as a testament that Tucson was "open for business!" Republican Bob Walkup had just been elected mayor and the business-backed Downtown development project had been approved, too.

I wrote up the story and went home to my toddling 18-month-old daughter only intermittently blurting out words. So cute. This weekend I called to wish her a Happy 19th birthday and finally I can tell her "Rio Nuevo isn't a disaster, sweetie!"

Rio Nuevo is old enough to vote, buy Pall Malls and looks like maybe it will turn out okay, which is a relief because for a good number of years it seemed like it was going to bounce straight from juvie to Florence.

Yes, Rio Nuevo may yet turn out to be the Drew Barrymore of public projects: Both seemed destined to overdose on speedballs behind The Roxy before their 10th birthday but may have evolved into a life deserving of respect and dignity.

There was so much wrong with Rio Nuevo, it's hard to count the ways: A tax increment finance scheme that made sense when the future seemed paved with economic growth. Two recessions later (one of them modified by the adjective "Great") it kept running out of money. We were sold a sea aquarium that wasn't going to happen and were nearly sold a Sky Bridge that thank God couldn't happen and were left with incentivized deals that made the career of at least one reporter.

Today, Tucson has a revitalized Downtown and Caterpillar wants — nay, demands — to move Downtown. Who woulda effing thunk that during the Mr. An Incident of 2009?

Money Magazine ranked Tucson the No. 4 best place for Millennials in large part because of Rio Nuevo's success. 

Yes. It's no longer a municipal Glamour Don't.

Truth is, it started to turn the corner back in 2011, but boosters of the project complained that people didn't know because no one went Downtown. People staying away in droves, was a problem all its own. Today, avoidance isn't necessarily a problem.

Check these already dated figures from the Downtown Tucson Partnership:

$360 million of new private investment and $570 million of new public investment over the past 75 months. Nearly 200 new businesses and private investment projects including 38 new dining options, 12 new bars and nightclubs, and 23 new shops.19 new offices including three new corporate headquarters.  Nearly 600 new or repurposed housing units. Over 3,000 new or relocated jobs. New parking garages with tens of thousands of square feet of prime retail space.

Throw in 600 mining management jobs — of all things — and we've got a boomtown.

Due credit

A year ago, pissed off by yet another call center heralded and an economy still dragging, I urged the City Council to lock the door and get bloody with a sense of urgency to rewrite the equation. I was particularly rough on Joe Snell and Sun Corridor, nee TREO, nee Greater Tucson Economic Council, because that agency had done too little other than constantly re-imagining themselves over 10 years to justify gaudy salaries.

Tucson has waited a long time to see an economic development strategy pay off. The retention and expansion side is a better bang for the buck in economic development, but far less sexy. Sun Corridor claims success stories like ohhhh ... Tucson Electric, Raytheon Missile Systems and construction giant Sundt Corp. I'm sure they couldn't have done it without you, Sun Corridor.

Still, good work the last few months. Snell has gotten creative on two fronts and his work with Rothschild to build cross-border links into Mexico may pay off.

A lot has gone into Tucson bouncing off the bottom and props have to go to Rothschild. He's done well in just pushing on a bunch of players all at once, a little at once but keeping the pressure on. He's a sharp guy with a good heart and as I've mentioned before, a master of the long game. He just keeps moving in the right direction and edging others toward the goal.

Watch Tech Launch Arizona, the University of Arizona's project to turn research into patents and patents into business. Just one major breakthrough can change Tucson's economy far more than five Caterpillars. The mayor seems eager to help those gearheads launch their dreams.

Pima County Administrator Chuck Huckelberry, the Tucson areas's unelected "strong mayor," is also running a creative game of his own with altruistic overtones.

And, of course, Tucson is doing it for itself at the ground level — and that may be the biggest story of all.

Good stuff is happening in Tucson and it's part of a trend — rather than contrary to the prevailing winds. Thought I'd let you know.

Blake Morlock covered Arizona government and politics for 15 years, including 11 in the Tucson Citizen. He also worked on Democratic Party campaigns in the field of political communications. Now he’s telling you things that the Devil won’t.


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Dylan Smith/TucsonSentinel.com

Golden shovels await the symbolic groundbreaking of the Aviation Parkway south of Raytheon and TIA in March 2015.

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