A proposal in the Arizona House of Representatives could restore some lost funding to the Arizona Office of Tourism.
As legislators look to close a $3.5 billion state budget deficit, they have cut the budgets of a number of departments, including the Arizona Office of Tourism.
As part of the state budget just approved by legislators, the transaction privilege tax formula funding for the Tourism Office was removed. TPT money comes from bed, restaurant and amusement taxes collected from businesses across the state. Those funds totaled about $14.6 million in fiscal 2010, and legislators appropriated $10.7 million of it to the Tourism Office through the TPT formula.
But the fiscal 2011 budget removed that funding from the Tourism Office completely, eliminating the formula and earmarking all TPT funds for the General Fund instead.
Under the new state budget, the department’s funding will come only from a portion of Indian gaming fees and revenue collected under Proposition 302, a voter-approved 1 percent bed and 3.25 percent car rental tax in Maricopa County — money the office has received in prior years. While the amount fluctuates based on sales receipts, it is estimated at about $12.6 million for fiscal 2011, according to state budget documents.
By comparison, the fiscal 2010 budget totaled $22 million including the TPT funding.
The bill now being considered by state lawmakers would reinstate the TPT formula. The measure, House Bill 2243, is sponsored by Rep. Michele Reagan, R-Scottsdale. Reagan was not available for comment.
The bill would set the stage for legislators to revive the Tourism Office budget with those TPT monies at a later date, said House Republican Majority spokesman Paul Boyer.
“Even though AZOT won’t be funded (through TPT), this will put that formula back into Arizona statute,” he said.
Kristen Jarnagin, spokeswoman for the Arizona Hotel and Lodging Association, said the bill is important because the TPT formula is “the foundation of tourism funding. If the state needs to do other things with that money during tough times, we understand. We want to be supportive, but the Arizona Office of Tourism needs to have that funding renewed — and the sooner, the better,” she said.
The bill is making its way through the state House of Representatives and has passed the Appropriations and Rules committees. Still, the measure must make it through the caucus and be approved formally by the House of Representatives, then move on to the Senate for consideration. If it passes all of those steps, it would go to Gov. Jan Brewer for signature.
The Arizona Office of Tourism declined to comment.
Less than half of voters in the Austin Business Journal's latest online survey said the city lives up to its self-proclaimed "live music capital" name.
Of the 635 that voted in the unscientific poll, 36 percent said the city doesn't live up to its reputation, while 15 percent said they weren't sure. The poll generated many comments, both agreeing and refuting the title. About 49 percent voted "yes" the city is the nation's live music capital.
"In the late 90's it may have been for a minute. Nowadays the new Austin doesn't care about live music bad credit personal loan lenders. They prefer DJ Dance Clubs," one commenter said.
Another responded to one commenter saying the city only has cover bands.
"Obviously written by someone not familiar with the music scene in Austin that ventures only as far out to see cover bands at frat bars. Suggest you go see (and support) some of the real music that is being created in this town," the commenter said.
To view the full results, click here.
The nation’s second-largest shopping mall operator, General Growth Properties Inc., said Wednesday that it reached a deal with Canada’s Brookfield Asset Management Inc. that will speed its exit from Chapter 11 bankruptcy protection.
Speculation raged for weeks that General Growth might turn to Brookfield, which has been looking to expand its slate of U.S. retail properties and last year acquired an undisclosed stake in the company.
General Growth, in turn, could thwart last week’s $10 billion takeover bid from Simon Property Group Inc. The No. 1 shopping mall operator controls some 382 properties worldwide including the Regency Plaza center in St. Charles, St. Louis Mills mall in Hazelwood and Lincoln Crossing in O’Fallon, Ill.
General Growth rebuffed the unsolicited offer from Simon for being too low cash advance to savings account. A Simon spokeswoman didn’t have a comment.
General Growth owns or manages 200 shopping malls in 44 states, including St. Louis Galleria. The company racked up $27 billion in debt by the time it sought shelter from creditors last April, making it the largest real estate bankruptcy case in U.S. history.
As part of the new plan, General Growth would spin off some assets as a new company named General Growth Opportunities, which would essentially hold assets the company concedes aren’t producing much income currently, including the company’s master planned communities and some large retail hubs, such as the South Street Seaport in New York.
President Obama walked a financial tightrope in his State of the Union address on Wednesday.
Faced with an unexpectedly high unemployment rate, he talked at length about the need to spur job growth and help ease the financial strains on the middle class through tax credits, targeted spending and other measures.
But he made one thing very clear: He also wants to address the unsustainable growth rate in U.S. debt.
"[I]f we do not take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery - all of which could have an even worse effect on our job growth and family incomes," the president said.
Indeed, the Congressional Budget Office reminded policymakers this week that the U.S. government’s fiscal outlook is "daunting."
Here’s why: The interest on the debt and unfunded promises to future retirees in Medicare and Social Security are on track to consume an ever-increasing share of the federal budget. And that depletes resources for many of the basic functions Americans expect their government to provide.
To begin to tackle the problem, the president said he would create a bipartisan fiscal commission by executive order.
The commission would make recommendations to Congress for how to address the looming fiscal shortfalls. Deficit hawks have said such a commission should be allowed to put all spending and tax breaks on the table for consideration.
"This can’t be one of those Washington gimmicks that lets us pretend we solved a problem," the president said. "The commission will have to provide a specific set of solutions by a certain deadline."
Nevertheless, Obama’s panel is a weaker version of a commission that was voted down by the Senate on Tuesday because Congress won’t be required by law to consider the presidential commission’s recommendations or to vote on them.
And beyond the fiscal commission, many of the president’s deficit-reduction proposals were baby budget steps.
It’s not that they’ll be easy to accomplish given how deeply partisan lawmakers have become. But the actual savings achieved from the proposals relative to the accrued debt is very small.
Spending freeze: The president proposed a three-year freeze on non-defense discretionary spending, which accounts for $447 billion, or roughly 13%, of the 2010 federal budget. The freeze would start next year, he said, when the economy is stronger.
The estimated total savings from the freeze: $250 billion over 10 years. But that’s a fraction of the $9 trillion in debt the CBO projects the country could incur over the same time period.
"I think it is a small step," CBO chief Douglas Elmendorf told lawmakers on Wednesday. He added that there is no single step that can adequately balance the budget.
Pay for new policies: Obama has also thrown his support behind the push for statutory pay-go rules. Those rules would legally require lawmakers to pay for proposed tax cuts or spending increases by raising taxes or reducing spending elsewhere in the budget.
Pay-go rules don’t actually reduce the debt load already accrued, but they put the brake on future increases in the debt load, which is helpful first step, budget experts say.
The effectiveness of pay-go rules, however, depends on their parameters. The strongest form would not allow any policy to be exempt.
But the president has backed a proposal that would only apply to "any new non-emergency tax cut or mandatory spending expansion," according to a White House statement.
The problem: That would exempt Obama proposals that are not deemed "new" — for instance, the permanent extension of the 2001 and 2003 tax cuts for most Americans — which is estimated to cost federal coffers more than $2 trillion over 10 years.
Curbing some tax cuts: The president also reiterated some pledges he has made before but that have yet to be passed by Congress. He favors, for instance, taxing the portion of profits paid to managers of hedge funds and private equity funds as ordinary income rather than as a capital gain. That would subject it to much higher tax rates than the 15% capital gains rate currently imposed. Such a provision is estimated to raise roughly $24 billion over 10 years.
What’s really needed
Any credible long-term solution to the country’s fast-growing debt puts Obama in a tight political spot.
That’s because it would have to involve a combination of tax increases (sure to rankle Republicans) and spending cuts (certain to disturb Democrats).
To use just one would be economically prohibitive.
Just how prohibitive?
Suppose Obama and Congress wanted to rely solely on individual income tax increases to get annual deficits down to 3% of GDP by 2015. If they just raised taxes on high-income households — something Obama has promised — they’d have to more than double the top two tax rates.
And that would push the top rate above 75%, according to research by the Tax Policy Center.
If they relied only on spending cuts, they would have to slash the federal budget to the bone. That means they would have to cut much of the discretionary spending pot, including defense.
Elmendorf noted that lawmakers often object in general to "wasteful" discretionary spending.
But when it comes to the specifics, individual programs have fierce defenders, he said. It is after all the pot that pays for everything from public schools, safe roads, health research, national parks, veteran benefits and the court system. To name a few.
China, South Korea and other emerging economies in East Asia may grow at the fastest pace in three years in 2010 as the global recovery spurs demand for the region’s goods, a division of the Asian Development Bank said.
China, South Korea, Taiwan, Hong Kong and 10 Southeast Asia economies may expand 6.8 percent in 2010 from 4.2 percent this year, according to a report released today by the ADB’s Office for Regional Economic Integration in Manila.
Asia is leading the world’s emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates, averting a spiral into another Great Depression. Growth could falter as the effect of stimulus measures fade and governments exit expansionary policies, the ADB division said.
“With the global recovery tentative, monetary policy should remain accommodative where feasible, with a watchful eye on inflation and asset prices,” the division said. “The recovery could falter if policy makers tighten too early, but tightening too late may lead to higher inflation and unsustainable fiscal deficits in the coming years.”
Confidence in the world economy dipped last month as central banks’ actions to withdraw some emergency measures sparked concern about the strength of the recovery, a Bloomberg survey of users on six continents showed.
Policy makers in Asia have started raising borrowing costs to contain accelerating inflation. The Reserve Bank of Australia increased borrowing costs a total of 75 basis points at its last three meetings and Vietnam raised its benchmark rate by one percentage point to 8 percent in November saving account pay day loan.
Subdued Inflation
“Inflationary pressures appear to be well under control for the moment,” the ADB’s regional integration office said. “While recently showing slight increases, inflation is still expected to remain subdued as economies operate with excess capacity.”
Recovery in East Asia also hinges on the revival of growth in Europe and in the U.S., as this will affect the region’s export-dependent economies, the office said.
“The deleveraging cycle is still in its early years, and if households in developed countries, particularly the U.S., save more-than-expected to repair their balance sheets, then weaker consumer demand will delay recovery in these economies,” the ADB division said.
Emerging East Asia groups China, the Southeast Asian nations of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Vietnam, and the newly industrialized economies of Hong Kong, Singapore, South Korea and Taiwan.
Developing Asia, which includes economies such as India and Pakistan and excludes Japan, will probably expand 6.6 percent next year after growing 4.5 percent in 2009, the ADB said in a separate note today.
Clayton-based Enterprise Bank & Trust has agreed to acquire the assets and deposits of a small Arizona bank that failed on Friday.
Valley Capital Bank in Mesa, Ariz., was closed Friday by state regulators.
The Federal Deposit Insurance Corp. was appointed as receiver. However, the FDIC reached an agreement with Enterprise Bank.
Valley Capital’s single branch in the Phoenix suburb will reopen Monday as a branch of Enterprise.
Enterprise paid the FDIC a 2-percent premium for the right to assume all the deposits of Valley Capital, the FDIC said. Enterprise agreed to purchase "essentially all" of the bank’s failed assets. Full details on the transaction were not available.
Valley Capital Bank had assets of about $40.3 million and total deposits of about $41.3 million as of Sept. 30.
As part of the deal, the FDIC and Enterprise Bank entered a loss-share agreement on about $30 million of Valley Capital’s assets, meaning the FDIC would absorb 80 percent of losses on loans and foreclosed properties.
The acquisition is small compared to Enterprise’s size, which is about $2.5 billion in assets. But it allows the bank to expand in Arizona, where Enterprise already has a loan production office in Phoenix easy payday loans.
Last year, Enterprise applied to open retail banking in Arizona, but the state’s banking regulators curtailed new charter approvals due to troubles in the Arizona real estate market. The bank later withdrew its application.
The deal "allows us now to operate as a full-service bank in Arizona through our new Enterprise Bank & Trust location in Mesa," Peter Benoist, President and CEO of Enterprise Financial Services Corp., the parent of Enterprise Bank, said in a statement. "Also, it enables us to open additional Enterprise locations in the greater Phoenix area, subject to the normal regulatory approvals."
Currently, Enterprise Bank has 11 branches in the St. Louis and Kansas City metro areas.
Besides Valley Capital Bank, the FDIC also on Friday took over Overland Park, Kan.-based SolutionsBank and Miami-based Republic Federal Bank. Those operations were acquired by other banks. The three failures brought the number of FDIC-insured institutions to fail in the nation this year to 133.
Sales may have risen only slightly on Black Friday as U.S. shoppers sought deals on electronics, toys and clothes, but retailers appeared to have been better-prepared to protect margins against tepid results.
At the start of the U.S. holiday shopping season on Friday and through the weekend, both discount chains like Wal-Mart Stores Inc and higher-end stores like Saks Inc seemed to have lured more spending and avoided steep discounts, retail consultants and executives said on Sunday.
Specialty apparel chains, however, may face another tough year as they relied on heavy promotions to draw shoppers.
“Going through the mall on Friday, the stores that had not been doing as well — AnnTaylor, Limited, Gap — were very aggressively promoting,” said Jeff Edelman, director of retail and consumer advisory services at RSM McGladrey.
“Saks, which had low inventories, Bloomingdale’s, which had low inventories, were maybe 25 percent off or 30 percent off, and it was on selected items,” he said. “It’s not as if the entire store was on sale as it was last year.”
Edelman expects holiday sales to be flat this year, but he said he expected profits for most retailers to be higher.
For a graphic on U.S. holiday sales trends, click here
For a Reuters Insider segment on holiday sales, click on link.reuters.com/wuj63g
Data released on Saturday showed that sales rose a scant 0.5 percent on Black Friday, the day after Thanksgiving. Shoppers interviewed across the country said they were lured by bargains, but many said they would stick to their budgets and avoid purchases if they could not find a good deal.
Bill Taubman of Taubman Centers Inc said that anecdotally in his 24 malls, it appeared that traffic and spending rose in the high single-digit to low double-digit percentage range on Friday. On Saturday, business slowed, and it appeared to rise in the mid to low single-digit range.
“You’re seeing a little bit of a barbell — the low end of stores are clearly recovering and the high-end stores are also recovering against a low base,” he said.
That does not mean consumer spending is rebounding to levels in 2007, before a global financial crisis and recession.
“You’re clearly down on a two-year run rate,” Taubman said. But he added, “margins are going to be extremely good because (retailers) have been careful about what they bought.”
ShopperTrak said retail sales rose to $10.66 billion on Black Friday, which often is the single-busiest shopping day of the holiday season and can set the tone for the weeks leading up to Christmas on December 25.
In 2008, Black Friday sales measured by ShopperTrak rose 3 percent compared with the prior year’s Black Friday. Last year’s entire holiday season marked the worst performance in nearly 40 years. The firm stuck by its forecast for total holiday sales to rise 1.6 percent this year compared with 2008.
University City — For nearly two years, no new development in St. Louis County has obtained tax-increment financing, the controversial incentive that cities use to attract developers.
The Kingsland Walk development, about two blocks north of the Delmar Loop in University City, is expected to change that.
It will be the first TIF project in the county since state law changed the make-up of TIF commissions on Jan. 1, 2008.
For years, local governments doled out tax-increment financing as a tool to encourage developers to locate in their cities. In 2007, the Missouri Legislature changed the law, taking some authority from the cities and adopting a regional countywide approach. That — combined with the downward spiral of the economy — put a lid on TIF requests.
While not as far along as the U. City project, Brentwood, Valley Park, Bridgeton and St. Louis County also are beginning to look at possible TIF projects, said Glenn Powers, the county’s planning director.
Under TIF, a developer may divert some money that would have been used for taxes to help pay for some development costs.
Local governments and schools receive the same base property and sales taxes as before, but forgo part of the additional tax money generated by the development for a period up to 23 years. The jurisdictions expect to benefit fully from the development in future years.
In University City, developer Metropolitan Development-Kingsland Walk LLC has asked for $5.5 million in tax-increment financing for its $36 million project, featuring 98 condos and apartments and more than 23,000 square feet of retail space at the southeastern corner of Vernon and Kingsland avenues. The development would be built in two phases.
The proposed agreement with the city requires the developer to close private financing by March 1 and begin construction within 60 days. A 12-member TIF Commission has given unanimous support and recommended the City Council do the same. Final approval is expected Dec. 7.
"It’s a fabulous re-use of an almost vacant area," Mayor Joe Adams said. "It will help University City move forward."
The developer sought $2.5 million in TIF money for phase one — an area north of Metcalfe Park — and $3 million for the second part, extending to Vernon. The builder will be Metropolitan Design and Building with Thomas Cohen Architecture as architect.
Lehman Walker, director of community development in University City, said Kingsland Walk fit the criteria for the special financing because it’s in a depressed, largely vacant area. University City had only awarded TIFs "if an area is truly blighted and in need of redevelopment," Walker said.
The project would be U. City’s third TIF project and its first in more than 10 years direct payday loan lenders. Powers said TIFs were intended to encourage retail and commercial growth in areas where development might not otherwise happen.
hurting competitors?
The changes in state law altered the composition of 12-member TIF commissions — increasing the number of St. Louis County representatives to six and cutting to three from six the number of slots for the municipality in which the project is situated.
The other three appointees represent affected taxing districts such as school and fire districts.
"The idea behind the changes was to get the composition of the TIF commissions more regional," Powers said. "When a city’s members dominated the commission, a TIF was usually about the city getting more commercial revenue into their city, a lot of times that was at the expense of other cities. You’d open a store here, and another one would shut down over there. "
He gave as an example a Wal-Mart closing in Town and Country and a larger one opening in Manchester a mile away.
"As a county TIF commission member myself, we’re going to be scrutinizing these things a little more. … Do we really want to approve a new retail development if it’s going to hurt the competitor down the road?"
If a county TIF commission turns down a project, the local government may still approve it but only with two-thirds majority of the council. Powers, who was on the commission that voted on Kingsland Walk, said the project was a good use of TIF. "It strengthens what’s already there in University City."
Jay Simon, president and CEO of Metropolitan Design and Building Co. here, said the 98 condos and apartments would vary from 680 square feet to 1,600 square feet. One, two and three-bedroom units would be available in the nine-building project.
"We plan on just building primarily apartments at first due to the market condition on condos," Simon said this week. "Those units will start at $750 a month and go up to $1,680 a month."
Preliminary plans call for Phase One to include four buildings with 51 residential units and about 8,800 square feet of retail space, scheduled for completion by early 2011. Phase Two includes five buildings with 47 residential units and about 11,000 square feet of retail space scheduled for completion by early 2012.
City officials hope the project will be a catalyst to revitalize the eastern part of University City.
"We think this will generate additional improvements as the Loop continues to expand," Walker said.
Citigroup Inc said on Sunday it has agreed to sell its stake in Japanese telemarketer Bellsystem24 to U.S. private equity firm Bain Capital for 93.5 billion yen ($1 billion).
Bain has been widely expected to buy Bellsystem24 after securing exclusive negotiation rights earlier this month.
Sources had told Reuters last week that Bain was close to finalizing a roughly 100 billion yen deal for the company, marking the largest buyout by a foreign private equity firm in Japan in nearly two years.
Bain has beaten off rivals Permira and a team of CVC Capital and Blackstone, which had also made offers in the final round of bidding for Bellsystem24.
Citigroup said in an e-mailed statement that it had agreed to sell its 93.5 percent stake in Bellsystem24 for 93.5 billion yen in cash in a tender offer to be launched by a firm owned by funds advised by Bain Capital.
The tender offer will likely start on or before November 20 and be completed on December 30, Citigroup said.
The U.S. bank said the deal was not expected to have a material impact on its net income or capital ratios.
Citigroup put Bellsystem24 up for sale as part of a global effort to raise cash and replenish its capital.
Citigroup has already sold broker Nikko Cordial, a fund management firm and a trust bank this year in Japan. Including the Bellsystem deal, it will have raised a total of about 964 billion yen ($10.8 billion), according to company press releases.
The sale of Bellsystem24 initially drew strong interest from a number of private equity firms including Kohlberg Kravis Roberts & Co, which teamed up with trading house Itochu Corp before dropping out of the race.
The Nikkei newspaper said the total cost of the deal for Bain would reach 120 billion yen, including a special dividend payment. No one at Bain Capital could be reached for comment.
The deal will rank as Japan’s largest buyout by a foreign private equity firm since March 2008, when Permira bought agrichemical company Arysta LifeScience Corp for more than $2 billion.
Bellsystem24 is Japan’s largest telemarketing firm. It competes against Moshi Moshi Hotline Inc and Transcosmos Inc in Japan.
Bellsystem24 is now owned by Citigroup Capital Partners, which was known as Nikko Principal Investments, a private equity arm of brokerage group Nikko Cordial, which was bought by Citigroup in 2007.
Nikko Principal paid 220 billion yen to buy Bellsystem24 in 2004. While the sale price is roughly half its purchase price, Citigroup has generated returns from its investment by restructuring the company’s debt to take some cash out, a method known as recapitalization.
Bain’s financing will be supported by banking units of Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc, sources familiar with matter have told Reuters.
(Reporting by Junko Fujita and Nathan Layne; Editing by Will Dunham)
U.S. consumer sentiment fell in early November to the weakest in three months amid grim expectations for job and income prospects, a survey showed on Friday.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for November fell to 66.0, the lowest since August, from 70.6 in October. This was well below economists’ median expectation of a reading of 71.0, according to a Reuters poll.
The index of consumer expectations fell to 63.7 in early November from 68.6 in October.
“Confidence tumbled in early November due to the grim financial realities faced by consumers as well as weaker economic prospects for the year ahead — importantly, the decline in confidence was already in place before the announced increase in the unemployment rate to 10 fast payday loan.2 percent on November 6,” the Reuters/University of Michigan Surveys of Consumers statement said.
Within the survey, the 12-month economic outlook index fell to 67, the lowest since April, from 81 in October. The 1-year inflation expectation eased to 2.8 percent from 2.9.
(Reporting by Chris Reese; Editing by Chizu Nomiyama)
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