Sustainability Videos & Lecture Series

Kimber Lanning: How many of you have lived in the Valley more than ten years? More than 15 years? More than 20 years? Dr. Brooks, put your hand down. [Laughing] How ’bout more than 57 years? [Laughing] I know, I know, I know. I asked that question because I think it’s incredible. That was a pretty good display. Sometimes when I ask people to hold up their hands no one in the room, in an audience, has lived in Arizona longer than ten years. That was a pretty good display here. As Greg mentioned in that very nice introduction, I am raised here. I was born on Okinawa—a little bit about my background. My father was in the Vietnam War and was transferred to Luke Air Force Base and we landed here in 1968.

I went to school on the West side. I come from a very arts-related background. One of the things I have is Modified Arts right over here and I also have the Record Store that Greg—still. I’ve had it for 25 years. My arts background—my mother owns art galleries and my father was a jazz musician when he left the military. He was a jazz musician before he went into the military and so I jokingly say when I came home from school—I came home from college and announced to my parents that I was gonna throw away my full-ride scholarship to study architecture—to open up a record store called Stinkweeds—my parents went, “Honey, that’s a great idea.”

[Laughter]

Don’t worry. I went back to school later, but initially architecture school at ASU was not working for me and so I jumped out and did it. I’ll tell you, no one thought I could do it, outside of my family. My family was like—everybody is entrepreneurial and so everybody thought it was a great idea. What’s the big deal? My brothers came and helped me build the record bins. I started very, very small. I had 16 CDs the day that I opened in 1987 and mostly vinyl records and a lot of creative ingenuity and I worked all day every day. It’s sort of—people just got on board. They loved that store and they became rabid fans of the store. Pretty soon other cool businesses started to move in around. In the late ’90s I opened up Modified Arts which is right over here on what is now Roosevelt Row. Does anybody remember Roosevelt in the late ’90s? Okay. I was unable to get . I would call and I would order my pizza and they would ask the address and then I would go, “Hello? Hello?”

[Laughter]

It was rough and at that point my mom actually got down on one knee and begged me not to do that, but it’s important to know when we went in there, there were two existing businesses. There was a hub cap shop and there was a liquor store and the liquor store was a drive-through but nobody had a car so it was really more of a walk-up. That neighborhood was transformed with the sweat equity of young entrepreneurs who pooled their resources. Collaboration is one of my key themes in everything that I do. I bring this up because when you talk about economic development—I’m going to be talking about the economy and economic development a lot tonight and a lot of people shiver and run when they hear that ’cuz they think it’s gonna be really boring.

Roosevelt Row is the perfect example of healthy economic development and I’ll talk to you a little bit more about this. If you just look at a sliver—in eight years we created a hundred and forty-seven jobs. We ended up with 12 art galleries, 5 restaurants, 3 wine bars, 3 retailers and a light rail stop that says, “Arts District,” without any subsidy or any investment from any government help. It was all sweat equity of young entrepreneurs.

Audience Member 1: You’re such a substantial part of First Friday, as well.

Kimber Lanning: Well, when I got there I will tell you I was the only one on the street so I was trying to have a party on every first Friday so I handmade all of our invitations. For the first eight years I made invitations in my yard. My neighbors thought I was crazy—put them in little special envelopes and mailed them off. I mean I can remember when we were excited to have 300 people and First Friday now has 12,000 people on a regular basis. It is the largest art walk in the country. Many people don’t realize that. When Greg Esser came and said he was going to open up Eye Lounge next door, he goes, “Would you mind if we opened up an art gallery?” I just remember I leapt up and hugged him ’cuz two—two is greater than one and then we had three. Then there were five. We were trying to remember the other day the order and we’ve lost track of the order.

Nonetheless, that is healthy economic development and we need to create systems and procedures that make it easier for that to happen, not harder. Right now it’s very cumbersome. The process to open up a business is very cumbersome and it shouldn’t be. Two-thousand three rolls around and I start learning about the economics behind what local business does. Many of you know the statistic—for every $100.00 spent in a local business, $45.00 recirculates and stays right here in Arizona. For the same $100.00 spent in any national chain, only $13.00 stays. This study came out of Austin, Texas, and I was so excited about it I actually flew out to Austin with Cindy Dach, who owns Changing Hands Bookstore.

This study was done on the bookstores out there. It was a local bookstore called Book People versus Borders, which was across the street. Meeting with the people that ran the Austin alliance that was there, I became super inspired and Cindy and I came back and together we launched what was then called Arizona Chain Reaction, which we thought was a very clever name. It turned out that it was really too adversarial for our purposes. We wanted to deliver a more positive message about local business, rather than a negative message about any other type of business. We changed the name a few years later. In my mind—some people will ask, “How did you get here from a record store to talking about economics?” because at this point I’m doing a lot of work around smart growth, in-fill, density, economic development and it seems like a leap.

To me it seems like a normal step in a person’s life because so many of our bright young people that were coming into my record store and also into my art gallery at this point, were leaving Arizona. In their language they would say, “We’re leaving Arizona because there’s not enough culture. This place has no soul.” I heard that on a regular basis. I thought, “Well, I think that this place has a lot of soul and I feel like there’s culture here. Why do some people feel connected to this place and other people don’t? What is it about the sense of place that makes people feel like someplace is home?” How many of you know someone from Chicago that won’t stop telling you how great Chicago is? Right? Always at least 25-30 percent of the crowd—and there’s usually a woman pointing a—really at her husband like that.

[Laughter]

I became truly annoyed at how many people were telling me—they would live here and they were telling me, “Boy, you guys sure have made a mess.” I thought, “Who’s ‘you guys?’ I’m pretty sure you live here.” They always talked about how great Chicago was. I started asking people. I did my little poll. Why do you love Chicago so much? You know what they’ll tell ya? They’ll tell ya the locally owned businesses. They will tell you the locally owned business and they may not use those words. They’ll probably say something like, “That neighborhood.” They’ll say, “Those restaurants.” They might even say, “My parents went here and my grandparents went there. I feel rooted to that community.”

Then they move to Arizona and they changed their behavior entirely and they don’t act in a local manner. They eat at a big box or they shop at a big box and then they don’t understand why they don’t feel connected to this place. I would argue—true—I could go to Chicago having never been there—I could go to Chicago tomorrow and I could eat at Applebee’s and hit a Kohl’s and a Home Depot and a Lowe’s and I could leave and say, “What’s the big deal about Chicago?” Right? I wouldn’t understand their place. I set out, really, with two goals in mind—one, to stop the big subsidies that were coming in at that time for big box; two, to better connect people to place.

I was already doing that with my little businesses but I wanted to take it out there. I wanted more people to understand how to connect to place. Greg gave you a little bit of info but this slide is actually a little old word. Twenty-one-hundred businesses of all sizes—a lot of people mistakenly think we’re about shopping; we’re about restaurants and retail. In this we’ve got manufacturing. Our largest sector within our organization is actually business services. We have big companies like Bashas’, Shamrock, Harkins, Hickman’s, so we are the largest coalition. We have an online directory that gets about 38,000 searches and that’s not hits to our website. That’s searches to our directory.

The buy local campaign—how many of you feel like you’ve heard more about buying locally in the last, say, five years? Okay—a lot. Five years ago people used to say, “What do you mean buy local? The Wal-Mart couldn’t be any closer. It’s right over the fence from my house, right? That’s local.” You try to explain. “No, we’re talking about the economics behind local.” Long-term economic development—we’re trying to get people to stop thinking about their purchasing as a simple exchange of money that is over the minute you spend it. Stop trying to get people to stop thinking that cheapest is always better. We’re barraged with that type of advertising but we’ll analyze that together and see why that doesn’t work.

When I say the word sustainability, most people would think of the environment but this organization—Local First—is working on economic sustainability. I’ll talk to you a little bit more about that but people weren’t thinking about economic sustainability up until just about five to ten years ago. It was always just driven by, “Bigger has got to be better. Cheapest has got to be best.” Now we’re starting to rethink that. Growing deep wealth in a region—I’ll explain a little bit more about that but money is the most powerful thing we have and it’s the thing we think about when we spend it.

We really don’t think about the depth of where it’s going or what is the ROI? What is your return on investment for the way you’re spending your money? For starters let’s talk about small business. A lot of people—when I talk about local business they immediately, again—they think about shopping or they think about boutiques and restaurants. They think that local means small; not necessarily so. Small businesses are incredibly important. They foster a great pedestrian-friendly environment. This is a little restaurant that you may know called Cibo. It was in a blighted old house. There are the kinds of things that are quaint. La Grande Orange—we’ll talk about that a little bit more too.

The types of businesses that move into a neighborhood where you’re suddenly proud to be in that neighborhood—where you feel connected, where you see your neighbors and you walk your dog—that’s the power of small business. As we define local business for the intent of Local First Arizona for our membership, the owner has to live in Arizona nine months out of the year. The business cannot be publically traded. It has to be privately held. Once it’s publicly traded your owners live all over the globe and your money goes everywhere. Okay, the business needs to be unique to Arizona and the majority of the business has to be done in Arizona.

I already named off some biggies like Go Daddy. We also have Infusionsoft. CyraCom is another big Arizona-based company. Hensley—they’re the distributors of Budweiser but the Hensley family—the whole family still lives here—Cindy McCain’s side. Hickman’s Family Eggs—we got Harkins Theatres. These are all Arizona companies. Bashas’ is still family-owned. It is not a publicly traded organization. Those are very large employers in Arizona. How many of you have heard this term, “Economic gardening?” Anybody? This is a new form of economic development.

Economic development traditionally, as I said, has been, “How do we build? How do we traditionally grow? How do we create jobs?” Sometimes we have gone far off track in thinking about best value and we end up paying way too much per job by incentivizing. We also don’t think about always—we don’t think about the quality of jobs. Economic gardening really shifts that mindset of, “How do we get more companies to move here?” to, “How do we grow more companies here?” I’m going to give you a few different examples. Economic gardening is about celebrating our existing assets and figuring out how to grow them in the simplest, most economical manner we can.

We’ll use La Grande Orange as an example. This group was a couple—a young—entrepreneurs and one other gentleman they had as their partner. They took over Postino first. It was an old post office and they started Postino and then they opened La Grande Orange and then Chelsea’s Kitchen and then they have the pizza joint. They have all these different things going on there. When I started Local First Arizona, what I was getting from our elected officials was, “Oh, yeah. We like the local businesses. That’s cute. That’s great. Neat, so now let’s do some real business.”

I kept saying, “Wait a minute. Wait, wait, wait a minute. A business like this”—I went in front of the Phoenix City Council and I said, “Let’s look at this example. What does this mean to the City? Twenty-million dollars in revenue means four-hundred thousand dollars a year into City coffers and what did it cost the City of Phoenix?” It didn’t cost them a dime. It cost them a parking variance, right? They had to go through a hearing and give them a parking variance. It might’ve cost them some inspector time but these guys took a blighted post office and turned it around. When we grew up here, Arcadia was high school, not a neighborhood.

Now, Arcadia’s not only a neighborhood, you can’t buy a house within ten miles without it saying, “We’re near Arcadia or in Arcadia.” Now the neighborhood next door has renamed itself Arcadia Lite. Properties values have increased because of this. All of the homes in that area are coveted. They transformed that part of the City. That’s a pretty good investment I would say. Now, let’s juxtapose that with an example—let’s take Cabela’s, okay? Everybody familiar with Cabela’s? Most people think that Cabela’s is in the business of outdoor wear, right? Tents, fishing tackle—they’re actually not. They’re in the business of subsidies, so what I mean by that is they average $25 million per store in subsidy, before they even open their doors.

They send out a team in advance and they negotiate a deal based on the promise of sales tax revenue. “Here’s what we’re going to bring in for you. What are you gonna give us?” We’re at a disadvantage here in the metropolitan area because all of our cities are nuzzled up next to one another so you can literally stand on this side of Scottsdale Road and say, “Well, this is what Phoenix is gonna give us.” Scottsdale goes, “Okay, well we’ll give you a little bit more.” Then they go back to Phoenix and say, “Well, this is what Scottsdale’s gonna give us.” They negotiate and they ratchet it up so again, they average $25 million in subsidies.

Anybody wanna guess what they got from the City of Glendale? For one retail store they got $68 million in subsidies and that’s in a combination of free land, cash and tax abatement. Tax abatement means if you go in and buy something at a retailer that has a tax abatement, you spend your sales tax with them—they get to keep it, sometimes for as many as ten years. Okay? How many of you have heard on the radio the crisis that Glendale is in? Okay? A lot of this happened around when the Super Bowl came and they wanted to have all these businesses in place. What they didn’t understand is with this notion of, “place making people”—wanted to go to authentic Arizona when they got here. They didn’t want to go to the same old, same old place where they could go back home.

Glendale spent a ton of money bringing in a lot of national chains and everybody that was in town went over to Old Town Scottsdale and spent their money. Huge mistakes and we’re seeing the result of that now. They’re closing their libraries, but the sad thing is, is that we—that was our taxpayer dollar. Those were our taxpayer dollars. The people who live in Glendale paid for that Cabela’s and now they’re having their libraries closed. This is a bad form of economic development. They actually call this economic development. This was really popular throughout the ’90s and early 2000s—this subsidization of retail and restaurant in order to bring in businesses that promise sales tax returns. Sometimes they pay off. The vast majority of the time they do not pay off and we can cite this time and time again.

Right now Cabela’s is underperforming. No one can hold ’em accountable. The Bass Pro in Mesa got $32 million in subsidies. They forgot to require the Bass Pro to actually advertise that location and so when they run an ad in the Sunday paper, they send you to Bass Pro online. The City of Mesa actually ended up with Bass Pro Drive in the deal. My point is, is that is a bad deal for taxpayers, all the way around, and it simply isn’t sustainable. It is not a healthy model for growth. I talked a little bit about Chicago and I think that this is a really important piece of what we do—is building civic pride.

We’ll go back to the lady from Chicago who is living here now but she’s still in love with Chicago and she hasn’t really put up roots here in Arizona. How does that impact us: lower than average voter turnout? She’s not feeling accountable for her city or her state. She’s still saying, “You guys—what are you guys doing?” Lower voter turnout, lower than average incidences of volunteerism, lower than average charitable contributions, fewer butts in seats at a Diamondbacks game—I mean let’s face it. The Cubs could lose for 40 years and not lose a single fan. The Diamondbacks have a bad inning and we’re like, “I don’t know about you guys.”

[Laughter]

Right? Well, let’s think about that. That impacts us economically. When people don’t connect to the place where they live, we’re getting shortchanged. All these people come here. Let’s figure out how to make them Arizonans. I also put together a few slides here to give you an idea of the impact that small business makes on Arizona. Roughly 95 percent of us have fewer than 99 employees—$21 billion paid to employees of small businesses. This one usually catches people off guard. If small business was laying off people at the same rate as big business, we’d have 950,000 fewer jobs in America today.

We get a lot of questions at Local First Arizona of people trying to get us to tell the sad story about how hard it is for small and or local business. I refuse to play into that. I refuse. Local business can compete if we stop subsidizing the nationals. We can compete and we will. We need a level playing field and it’s up to the people. It’s the spending power of the people. We are voting with our dollars every day. If we want more Applebee’s, we’re gonna get more Applebee’s ’cuz we just gonna go and we’re gonna eat a lot of food at Applebee’s and they will multiply. We all know that.

It’s basic economics. If we don’t want any more Applebee’s and everybody says, “Nope. We don’t like it.” Guess what? Applebee’s goes away. It’s like we the people have forgotten that we’re holding the purse strings in the country. We really have forgotten that. I’m going to give you an example and I want to underscore that this is absolutely not a statement. Yes. Did you have a question?

Audience Member 2: No. Sorry.

Kimber Lanning: Oh. This is not a statement about Starbucks is bad. This is a much bigger concept than that. We are not an organization—when somebody walks into the room with a Starbucks cup and goes, “Oh, I can’t believe you went to Starbucks.” I don’t care. I don’t. Starbucks is a good organization. They pay their employees well. I am merely using them as an example in this slide. This side of the screen over here—the left side of the screen represents 15 Starbucks locations here in the Valley. This side of the screen represents 15 independent coffee shops here in the Valley. When we talk about dollars recirculating in the community, that’s what this slide underscores.

A lot of people will raise their hand and they say, “Well, I don’t understand what you’re talking about because Starbucks pays taxes. Starbucks has employees. They’re impacting Arizona’s economy positively.” Well, they are. They absolutely are. If that was what we were measuring, you’d be absolutely right. They do pay taxes and they do impact our economy by the number of people they employ. Let’s talk about now how many accountants Starbucks employs in Arizona. How many accountants do you think they support?

Audience Member 3: Zero.

Kimber Lanning: Okay. How ’bout graphic designers?

Audience Member 4: Zero.

Kimber Lanning: Web developers, payroll service providers, attorneys—anything? Right? Bueller, Bueller—

[Laughter]

Nothing. We buy something there and it immediately goes elsewhere. The money we have spent goes elsewhere other than the taxes they pay and the people they employee here and the simple things like that. Let’s look at this side of the screen. How many graphic designers got a gig?

Audience: Fifteen.

Kimber Lanning: Fifteen, right? How many of those coffee shops are gonna have a bookkeeper or an accountant?

Audience: Fifteen.

Kimber Lanning: Fifteen. How ’bout web developer—somebody built their website, right? How ’bout if they need an attorney? How ’bout—you know, I mean we could go on. You get the point. When you spend your money at one of these coffee shops, they are going to in turn spend that money elsewhere and when you multiply that over an entire community, suddenly we’re supporting jobs. If everybody went over here—and this is what has happened in this country—if everybody went over here we’re actually buying our way out of jobs because Starbucks for the hundreds of thousands of locations they have—I don’t know the exact number. Maybe it’s—does anybody know? Twenty-thou—I don’t know how many thousands of Starbucks locations they have.

They have one accounting firm. Now that’s a big accounting firm I’m sure, but it’s one accounting firm. When you look at something like office supplies, there used to be, in the late ’80s, there were 15,000 independent office suppliers in America. They all had accountants, bookkeepers, graphic designers, web developers, yada, yada, yada, yada. Today there are 1,400—15,000 to 1,400 in less than 30 years. That’s a whole lot of jobs. That’s a whole lot of jobs we went through and we’ve done this to ourselves over and over again. My point is a lot of times on the news we’re hearing over and over again that the economy is gonna get fixed by the federal government. Somebody’s gonna come forward with a strategy.

I would argue that the American consuming public is what’s gonna fix the economy, or not. Let’s continue. That’s secondary jobs. Let’s continue and turn the page even more and we’ll talk about tertiary impact. Over here we’ve got the accounting firm that remains open because he’s got ten small, local business clients. Well, that accounting firm then also has office supplies that they’re buying. They also have, maybe the janitorial service that comes and keeps the accounting firm clean. Those are dollars that are circulating yet again because of this and those are gone again, when we spent them at a business that is not located here. I affectionately call this, “Buying ourselves broke.” We only think, over and over again, that cheap is best and I’m arguably arguing with people, helping them understand why it’s important that we reevaluate what the true value is.

I’ll give you another example. A lot of times we think in our minds—we think in our minds that we go to the big boxes because they’re cheaper. Think about that last slide. We know that Starbucks isn’t cheaper. We know that. There was a study that just came out of independent pharmacies. It was study that looked at the comparison between CVS, Walgreens, Walmart and a local independent pharmacy. The local independent pharmacy came in cheapest 40 percent of the time in 15 different cities—40 percent of the time. Don’t you think that’s enough to actually shop around? We’ve forgotten how to shop around.

We do still have great independent pharmacies here, by the way so they are there. There was a study that came out a few years ago that showed when a big box moves in—particularly in a rural area— but generally when a big box moves in and creates two jobs, it will eliminate three local jobs. Again, I’d like to point out that this is not true economic development. Now, this could be free markets and we could prepare for this because the chain model is popular so we should prepare for this ’cuz this is going to happen. What I’m saying is that we don’t need to pay those companies to do this to us and we don’t need to take taxpayer dollars to pay those companies to do this, nonetheless. I believe that those jobs will be recreated in other ways as long as we continue to consume and to buy from independent businesses who will regrow in other areas.

That’s all part of a natural cycle. We did a study in 2008 to really give an example of this sort of spending, that is short-sighted and doesn’t really provide you the most value. We looked at the State of Arizona’s office supply contract, which at the time was with Office Max. It’s a $5 million contract that the State had and they gave it to Office Max because Office Max had that cheapest price. This pie chart—what you’re looking at is the return on investment. This is how much money stays in Arizona. We were able to compare hypothetically three different types of organizations. We compared Office Max, which is a national, obviously, with a regional distribution center here.

We compared Staples, which is a national and at the time did not have a regional distribution center here and we compared Wist, which is a third-generation, Arizona company based in Tempe. We can see that 11.6 percent of the money we spent of the $5 million stayed and recirculated in Arizona when we spent it with Office Max. Had we spent it with Wist, three times that money would have stayed here in Arizona and recirculated. Let me share with you the methodology. First of all we looked at jobs. Wist has 100 percent full-time employees with benefits. Okay? They take care of their own employees. Both Staples and Office Max have brought us approximately 60-62 percent part-time employees with no benefits. Now what does that mean? This is an economic equation. Those part-time employees with no benefits end up on the State health care program, so who’s paying for the health care for their employees?

Audience Member 5: We are.

Kimber Lanning: Okay, so this is taxpayer money, generally speaking, going to buy office supplies and yet we’re subsidizing the health care for the employees for the cheapest bidder. Well, I would argue that I could lower all of my prices at Stinkweeds if one of you would be so kind as to pay for the health care for my employees. Sounds like a pretty raw deal, right? Okay, but we get fooled by this on a regular basis and we think it’s gonna be cheaper. What we’re doing is just diffusing the cost and putting it off onto someone else. Charitable contributions is another area that we looked at. Wist gives $35,000 a year to Arizona charities and has done so every year for the last 10 years and can prove it.

Office Max and Staples could not point to any example of a charitable contribution in Arizona, at all. The third is what we call second-tier jobs, which I explained to you in the coffee slide a minute ago. Wist does business with Arizona. They have local accountants, graphic designers, web developers, attorneys, payroll service providers, etc. Staples and Office Max don’t have any business that they do secondary or tertiary here in Arizona so looking at the long-term impacts for these three, this is pretty astounding. Staples—if we were just measuring their impact via the sales taxes that they generate and the employees that they create, that is the sliver they have on Arizona’s economy.

Now what happened in the State of Arizona is in 2009, the year after the study was completed, the Office Max contract expired and Staples undercut ’em in the new bidding procedure and we awarded that contract to Staples. We’re actually moving backwards in terms of what is a good deal. We can raise our hand and say, “But wait. Wist costs more.” Does it really? If you’re looking at your spending in the very immediate sense, yes, but if you’re looking at as trying to grow an economy, no. Also, I would argue there are several cities around here, as well as large businesses that have made the switch to Wist. They sat down with Wist and looked at their pricing and worked with them and actually came away with a better deal than they were getting before and you know you’re gonna get what you ordered when you order from a local company.

Despite everything I’ve told you about the advantage of local business, we just recently did a study—not we, but some of my colleagues back East. Fifteen randomly selected cities with one million plus population and ninety percent of their economic development teams were still spending ninety percent or more of their budget on business attraction. Economic development might be considered as a five-pointed star—you’ve got incubators and start-ups. You’ve got business attraction, which is what this is. You got business retention, which is what we’re working on and you got business expansion, which right now in Arizona—arguably there’s not a whole lot of people working on that and there needs to be.

If we have 90 plus percent of our budget spent on business attraction, that means we’ve got less than 10 percent of our budget being invested in business retention, business expansion, incubators and start-ups. When we know you can look at any article—Wall Street Journal, New York Times—it doesn’t matter. They will tell you that new job creation in America is coming from two distinct areas. It’s coming from small business start-ups and small- and mid-sized business expansion. I just said, here in Arizona we are not focused on business expansion. We are focused on business attraction. I am advocating that we switch that around.

The old model is we focus on the global and somehow it must be better if it came from somewhere else and, “Well, you local guys better just hang on for dear life.” I’m advocating that we switch at least part of that—not all of it. I am not a naïve person who says we should be protectionist and we should only have local economies. I’m saying what if we shifted, even 30-40 percent of our budget to focus on business retention and expansion? What if we really connected people to place? What if we had super healthy, local, vibrant economy and people were proud to call it—what is our Arcadia bled through every part of the whole Valley? Guess what? We’d have a community where business wanted to be and they would come here and perhaps we wouldn’t have to pay them so much to get ’em to come here and we certainly wouldn’t be paying restaurants and retail.

I wanna say that distinctly because base-industry sector that creates jobs—that’s a different deal than paying Cabela’s millions of dollars to come here. I do believe that business attraction is highly important but I think that if we had a stronger local economy, we wouldn’t have to pay them so much. They would actually want to come here. I’m going to give you an example of a company that makes it their mission to buy locally, just to underscore what one company can do for Arizona’s economy. Rick DeGraw over at SCF Arizona—I call him Mr. Arizona. He believes in Arizona and they understand their role within the context of a healthy local economy, which means they’re not always looking for the cheapest price because guess what? The cheapest price doesn’t create jobs and guess what? When you’re not creating jobs you have fewer SCF Arizona contracts.

They’re actually thinking long-term sustainably. Wait a minute. If we only invest in companies that aren’t invested in Arizona, we’re not going to have any clients left. Right, that’s how it goes. They have made a commitment to buy locally. In fact in 2009 when we did this study, they sourced 82 percent of their goods and services locally—82 percent. That’s an incredibly high number. We had two really important measures that came out of this study. The first one is they spent $100 million—that was their budget—$100 million but it had a half a billion dollar impact on Arizona by the time it recirculated throughout the economy. That’s a huge difference.

The second area is even more important in my opinion. They directly employ 518 people, but they indirectly support 3,600 Arizona jobs because of the way they award their contracts. Those jobs are in manufacturing and medical supplies, etc. Those are companies that rely on SCF Arizona to bring them business so that is huge. Now imagine if we went to all of the larger employers in Arizona, demonstrated this study, and what if they all committed to just simply shifting a small portion of their spending? We took this study to APS and they said, “Absolutely, we can do that. We’re going to shift five percent of our spending,” and they’re doing that and these are some big numbers. They switched their $2 million office supply contract over to Wist.

We got a bunch of—Blue Cross Blue Shield is another one. We’re trying to get them. They said, “Well, we’ll switch to Wist but who’s got their insurance?” and Wist said, “Humana.” Blue Cross Blue Shield went, “Aha!” Now they’re trying to switch and do business together. These are making big impacts. Talking about shifting, I’m gonna bring this down to size a little bit. A lot of talk up here about all the different things that are going on at the State level but I want to give you an example of what you can do. This study—this is called Shift Arizona. Just out of curiosity, has anybody seen any of the marketing we’ve done? Did you see the light rail, wraparound Shift Arizona? A few of you did? Okay.

This was a study that was done in Grand Rapids, Michigan, that showed that if one community the size of Tucson—if everyone in that community simply shifted ten percent of their spending from a national to a local company, it would create a hundred and thirty million new dollars recirculating in that community. It would create 1,600 brand new jobs and $54 million in new local wages. That’s helping to create prosperity for all. For a ten percent shift—I’m gonna say that again so you understand. We’re not talking about only spending ten percent. We’re saying, “If you looked at your budget today and you’re spending 25 percent locally, I want you to get to 35. If you’re spending 45 percent locally, I want you to get to 50, so it’s shifting 10 percent of your existing spending.”

It would create $130 million new dollars, $52 million in new local wages and 1,600 brand new jobs for one community the size of Tucson. We created this campaign and as part of it we have a calculator that sits online at this website—shiftarizona.com—where you can enter your monthly expenditures if you’re curious. Click, “I pledge to shift ten percent,” and it will tell you how much you’re personally gonna recirculate for things like parks and libraries and fire departments. We’ve had, to date, over $62 million dollars pledged on that website and it’s been up less than 2 years.

I want to give you an example. When I talked to you about the office supply contract, you should know that Arizona’s one of three remaining states in the country that doesn’t do anything to acknowledge that a local Arizona company—or a local company—does more for the economy than a non-local. We’re just looking for cheap prices, as opposed to really measuring the best value. The best value can come in a lot of different shapes and sizes but if you’re looking at creating a healthy environment, sometimes you’re gonna spend a little bit more in the short-term. Sometimes you can negotiate so you don’t actually have to spend a little bit more but we’ve been unable to change the State laws.

We’ve been trying for the last few years, but in the meantime we had a huge breakthrough with the City of Phoenix. We got a very supportive mayor. Mayor Gordon was actually supportive of this and Mayor Stanton is the one who actually came in and got this—the rubber to hit the road. We changed the procedure. We weren’t able to change the law but we changed the procedure. The old model—any contract worth more than $5,000.00 used to go to an open public bid. “Again, we don’t care where you’re from. We really want the cheapest price.” We changed that. We raised the threshold to $50,000.00 and now any contract worth under $50,000.00—staff is retrained—they simply go to a database that’s populated only with Arizona companies. They get three bids so it’s still a competitive bid. Get three bids—go with the lowest and they’re done.

Now, Mayor Stanton has made—that’s a regional directory so he has opened that up to all the other cities in Maricopa County, not only to use it, but to populate it with their own businesses. One of my jobs is to go around and try to get as many other communities on board and get as many other businesses in that directory as we possibly can so that it’s utilized—it’s valuable. The thing that sparked it—what really got under people’s skin is there was recently an example where the City of Phoenix needed additional t-shirt screen printed for the City of Phoenix. The contract went to a company in Green Bay, Wisconsin.

I don’t know about you but I feel like I could pretty much stand anywhere in Phoenix with a rock and hit a screen printer that could use a $15,000.00 job right about now. That’s just a breakdown of communication. That’s not anything more than we as a municipality have not quite figured out how to best tap into the local business community and the local business community is not listed in a place that we can find them. That’s when we raised our hand and said, “Wait. We can help,” because we’ve got 30 plus screen printers in our database and the Phoenix Chamber and there’s a million chambers that could help with that problem. We’ve been working on that and the City of Phoenix has estimated they’re gonna be doing $18 or $19 million additional dollars in local business at $50,000.00 and under contracts per year—$18 to $19 million.

That number, I think, is gonna be bigger but we’ll see. I’m an optimist. Again, continuing on this theme of broken social contracts is a good example. I mean continuing on this theme of what can you do, broken social contracts is an important—I use this as an example to get us to think about how we’re involved in our own communities. Let’s talk about Little League mom and she goes out week after week after week and she buys the team’s snacks. She buys the team’s snacks at Costco because she believes that Costco’s gonna have the cheapest price—that’s just in her habit. That’s what she does.

Throughout the year she and all the other moms have been buying the team’s snacks at Costco. Then at the end of the year they all get together to plan out the year-end party for all the kids. All the moms are together now. We’ve got all these kids and they need food donated. They need a lot of food for the party. Do you think they’re gonna be able to go back to Costco and get donated food? No. What do you think they’re gonna do? They’re gonna go straight out and knock on Eddie Bashas door is what they’re gonna do and Bashas is gonna give ’em and they gave and they gave and they gave until they almost didn’t have any more to give. Bashas has given over $100 million to Arizona charities and can prove it, since 1932.

How does this make sense? How do we think we can continue to pour money into this company over here that doesn’t give back to our community in the form of charity, and expect that this company over here that we have not supported, is gonna be there to give to us? That doesn’t add up and that’s what I call a broken social contract. We can’t simply continue on that path and expect that it’s going to work out for everybody in the long run. I want to give you an example of a faucet. This is another example that relates to individuals. Let’s say you have to go buy a faucet tomorrow. You have a million ways you could do that—a million ways you could do that.

I’m going to put them in order for you in the best, or the biggest impact you can make locally down to the least impact. We won’t say worst. We’ll say biggest impact to the lowest. The number one thing you could do would be to go out and find an independent hardware store. Maybe you could even say, “Hey, is that an American-made faucet?” You’re paying your sales tax. You’re supporting jobs. You’re doing everything in a local guy. You know that he’s got all these other local secondary and tertiary jobs behind him. That’s the best thing you can do. The next best thing you could do is go to a True Value. True Value is an owner coop, kind of a situation. They have more employees that have ownership opportunities. They’re truly invested. They’re real strong in rural parts of America.

The next best thing, right up there clumped right underneath that is gonna be an Ace. An Ace is a franchise but you can sure bet that the owner of that Ace franchise is probably rooted in this community. He’s probably in there. You’re probably gonna see a Little League plaque on the wall and they’re gonna be rooted in that community. They’re gonna be paying their taxes locally, etc. Now there’s a big drop. There’s a big gap there, so those are your first three choices. Then the next down on the list is gonna be a Home Depot or a Lowe’s. We know that for every $100.00 you can spend in a Home Depot or a Lowe’s, only $13.00 is going to stay in the community. The vast majority of the products in those stores are not manufactured in this country and it’s important that you understand when you spend money there it’s not going to any Arizona-based graphic designers, web developers, accountants. It just leaves.

The absolutely worst thing—bottom of the list—bottom of the list for your impact, you could go online and buy that faucet from an out-of-state company and not even pay your sales tax. That would actually have almost no impact what so ever on the local economy and a lot of people do that. I’ll tell you a quick story. We have one online retailer here that has five million square feet of space, here in Arizona. They don’t collect sales tax but you could buy from the other side of town and they won’t collect sales tax. They claim it’s because they don’t have a physical presence here. What does this mean for us here in Arizona? They get a 9.3 percent advantage over bricks and mortar stores. They kept an estimated $750 million out of Arizona coffers last year alone.

People actually think they’re smart. We actually think, “I’m so smart. I saved my sales tax,” because we’re so disconnected from what that means. I was having a conversation with a woman who was bragging to me about doing all of her holiday shopping online but I wasn’t going to say anything. I swear I wasn’t. I was just minding my own business.

[Laughter]

Later in the conversation it became apparent that her husband was a firefighter.

[Participants groan]

You know you can only be patient for so long. I said, “So, that’s an interesting strategy you have.” She said, “What do you mean?” I said, “So you’re actually purposefully not paying into the actual coffers that pay your husband’s salary.” Her face turned white. It’s not that she didn’t care. She just never thought about it and that’s where we all are. In this country we are all in this place where we have forgotten our fiduciary responsibility in the role of who picks up your trash? Why does that street light come on? Why do I have roads? Why do I have public education system?

All of those things we contribute to, and the deal is we pay our sales tax. If we don’t pay our sales tax several things will happen. One is you’re gonna see closures. You’re gonna see things starting to fall apart. Your trash gets collected littler and littler. We’re gonna see a lot of political battles and a lot of mud flinging of everybody blaming everybody else. “Well, who wasted the money and where’d the money go?” Okay, but at the end of the day the impacts are going to come right back into our lives so our quality of life is gonna go down and then what? Then our property taxes go up. Then we have more red-light-running cameras to collect fees because cities don’t run without some sort of money coming in.

They cannot continue to deliver our services if we’re not paying into those coffers. The deal we made is we would pay sales tax. If we don’t want to pay sales tax, we’re gonna have to pay it some other way and that’s the bottom line, or we can opt out. I always jokingly say that with the guy who really is a big defender of online shopping. I go, “You know what? If there was a box that you could check that said you’re gonna opt of fire protection, I would be 100 percent behind you.” That catches people off guard because they’re not really thinking about that, but I think it’s important to talk about.

Another couple of things I just want to hit on and at the end I want to leave room for Q&A. We are working on regional tourism. Arizonans spend $6.5 billion a year vacationing in California every year. We have a set goal of redirecting just ten percent of that into our rural communities. Now how we’re doing that is we’re working with the businesses in those communities and teaching them how to use social media to marketing themselves as a destination. We just created a series—so far we have three done—of video clips. I encourage you to look on our website. It’s called WeekendZona and we have a blog we’ve developed that shows you fun things to do around Arizona—wine tasting, antiquing, the Art District down in Bisbee—just fun stuff that you can do. We’ve had some huge successes with that.

What Greg mentioned—we just won the Governor’s Tourism Award for creative collaborative marketing. That was for WeekendZona, specifically in Cottonwood. If you haven’t been to Cottonwood lately, you don’t know what you’re missing. They have five tasting rooms, great restaurants—it’s a blast. The last thing I want to mention is we just launched Fuerza Local, which is our Spanish language initiative. It is Local First for the Spanish-preferred community and we actually have a mixer tonight. We’ve got 60, 70, 80 businesses coming out to every one of our mixers and really getting involved in understanding how this impacts them as well. That’s gonna be very important for Arizona’s economy. With that I wanna ask how many of you learned something completely new? Great, great. I love that. Does anybody have any questions for me that I can answer? Miguel?

Audience Member 6: How is it possible for the downtown base, with so much money that’s spent to create this local phenomenon [inaudible] big old thing, have to do with Los Angeles?

Kimber Lanning: [Laughing] Where?

Audience Member 6: It’s on the—if you’re coming up 7th Street from—

Kimber Lanning: It’s like a billboard?

Audience Member 6: It’s the building. It’s like a building wrapped in—

Kimber Lanning: Oh, interesting.

Audience Member 6: - [cross talk] L.A. I thought that was—

Kimber Lanning: Huh. Do you know who—well, we can talk about it offline but I’m just curious. I don’t know who owns the building. I haven’t seen that yet.

Audience Member 6: It’s on the building right above [inaudible].

Kimber Lanning: Oh, interesting. Okay, so that’s in CityScape? Okay. I’ll find out.

Audience Member 7: What’s the cross street?

Kimber Lanning: That would be 1st Street and Washington.

Audience Member 6: It’s part of the Red Project I think and going on there, there is now visual pollution. They have got electronic billboards on top of that. I have just about had it.

Kimber Lanning: I have [cross talk]

Audience Member 8: I object to ’em period.

Kimber Lanning: [Laughing and cross talk]

Audience: I used to go to SOSY every day and I just wanna run to go past passed them.

Kimber Lanning: You’ll get a kick—one time I was a guest on a television show and I was talking up in-state tourism and they broke for a commercial and it was like, “Visit Utah.” [Laughing]

[Laughter]

You know it was just the timing was unbelievable. I thought it was funny but I had several friends that were outraged, but anyway—yes.

Audience Member 9: That’s horrible, but is there a locally-owned gas station?

Kimber Lanning: There’s a few and it is tough because there’s only so much of a—I like to explain it that there is no perfect—nobody’s going to be perfect. I am convinced that somebody is gonna jump out of the bushes and snap a picture of me coming out of a Walgreens one day. It’s like—

[Laughter]

- I do what I can. There’s two that I know of. JJs, which is on 16th Street and Osborn and then there’s one called—I wanna say it’s called Lucky Seven and I think it’s on 7th Street and Maryland or Glendale—somewhere in that stretch—Lucky Seven. There’s only a few.

Audience Member 10: May I add to that?

Kimber Lanning: Yeah.

Audience Member 10: Like you were describing [coughing] stores, one I would say very possibly supersedes even buying local on that one is buying with Sinclair. One hundred percent of all of that petroleum comes from the United States.

Kimber Lanning: Oh, wow.

Audience Member 10: All of it stays in the United States. We have at least three Sinclair stations I know of in the greater Phoenix area. I think there’s six so what I’m saying is since I’m all set to buy gas, I exclusively buy gas at Sinclair for that very reason. We’re talking about secondary and tertiary and other fall outs from that ’cuz there’s one that’s huge fall outs and I’m almost certain Sinclair on 40th Street and Camelback is locally owned as well—

Kimber Lanning: Okay.

Audience Member 10: - and those are all franchises also so they move out many of those like you were describing but some other stores are—kind of have the local class.

Kimber Lanning: Sure, and I like to explain. I love that question because there’re so many different varying degrees of local. I mean you can go to a local coffee shop and you might even be able to find a local grocer that supports that local coffee shops but you ain’t gonna find any locally-grown coffee. You know what I mean? There’s only so far you can go but I think it’s important to acknowledge that every little bit helps. You know like that ten percent shift study really underscored it.

Audience Member 11: [Cross talk] restaurant and you’re buying beer that’s brought in from China or something, you know?

Kimber Lanning: That’s right, or you could—so many restaurants now are offering local beers and wines. It’s amazing. I’m really excited about the enthusiasm and what are we doing? We’re building civic pride, right? So many people are like, “Oh, this is my hometown brew,” when they have visitors coming in. You know, “You gotta try Four Peaks. You gotta try San Tan.”

Audience Member 12: Do you know how GPEC is splitting their money? How are they spending it? Is that 90 percent bringing in businesses from out-of-state or how are they [cross talk]?

Kimber Lanning: Yeah, I love that I need films. Hi, Gary. [Giggling]

Audience Member 13: GPEC—great [inaudible] taking on the Council, for those of you who don’t know.

Kimber Lanning: No, GPEC was formed back in the day specifically for business attraction so the deal was GPEC was gonna work on business attraction. The chambers of commerce were gonna work on retention and expansion. That deal has not really worked so GPEC gets paid for the numbers of jobs that they attract into Arizona. My feeling is that we need more dollars going toward reten—even the retention of the companies that they’ve just attracted. Well, now that they’re here, let’s make sure that they fall in love with this place. Let’s make sure we know what they’re employees’ needs are so that we can meet those needs. Right now that discussion isn’t happening at the degree it should be.

Audience Member 14: You can go to L.A. You can go to Santa Monica for instance and there are diehards that wouldn’t go to Venice, which is [inaudible].[Laughter][Inaudible] paper. I also think that like when you start to talk about what the first few years were because we’ve had this perceived personality in all the United States that somehow it must be that much more capitalish. What has been your experience when talking about Local First Arizona? Do people think that you’re one of those—like you’re the Arizonans that are trying to keep people out?

Kimber Lanning: Great question. No. I think initially there was a response that we were being protectionist but I think as a leader I have gone above and beyond breaking those stereotypes. I’ll give you a great example. We have, in the country—there are a lot of people who are, I believe, irrational and unproductive with their hardline stance on local. It doesn’t help us if you’re willing to even buy a screw at Home Depot if your money is sitting in a huge international bank. I think people need to be realistic about what impact they’re going to make. I’ll give you an example. Walmart obviously has a very big presence here and a lot of people want to assume that I’m anti-Walmart, which I’m not.

My approach is to sit down with Walmart and to say, “Hey, how many Arizona companies do you buy from today?” They buy from 800 Arizona companies today, so my request to them was, “Would you be able to mark those products in your stores as Arizona-grown or Arizona-made so that your customers can participate in the ten percent shift?” Right? They loved that idea. Why does Walmart buy from 800 Arizona companies today? Ten years ago I would argue that it wasn’t even half that—maybe even a quarter of that.

Audience Member 15: It’s cheaper versus—

Audience Member 16: Transportation—

Kimber Lanning: Transportation, right? Their business model is attached to the most volatile industry in the universe.

[Laughter]

Right? What happens when gas is $8.00, $10.00 bucks a gallon? Suddenly your stuff’s not so cheap anymore, so they’re thinking, “Ah.” I love saying that. “Walmart’s localizing. Tell everybody.” I think that the days of people marginalizing this movement are gone because we are looking at what has happened to the American economy and we’re not being protectionist. We’re simply saying, “We are out of balance and how do we get that balance back?” There was a Supreme Court Judge that said in the ’50s, “When you substitute a nation of shopkeepers with a nation of clerks, enormous spiritual and emotional sacrifices are made.” What he didn’t predict was the economic sacrifices that we’d make. It’s huge.

I mean I could go on for days with examples of how we have replaced shopkeepers with clerks and we keep being told it’s the economy. The feds are gonna fix the economy over here but what was our role in that? What was our role in that? It was big. It was very, very big and I think getting over this whole notion that it’s more expensive to go local is a really big hurdle. I’ll tell you a real quick, fun story and I know we’re out of time, but I had a guy come up to me. He ran up and he said, “I gotta tell you. You really inspired me to think about how I was doing my spending.” He lived in Maricopa and at the time Maricopa was the most upside down community in America. I don’t mean in Arizona. I mean in America. They were really hurting.

He said, “I had been buying my tires for my car and my wife’s car every year in Phoenix at Costco. The worst part is that my neighbor owns a tire shop and I’ve never even been in it. Well, Maricopa really needs my sales tax right about now. Why am I not supporting my neighbor?” He’s telling me this story. He walked into the tire shop and he said, “Well, Ray, I’m here to buy eight tires from you but you’re gonna have to match Costco’s price.” Well, Ray got a big, huge smile on his face and he said, “I’m cheaper than Costco every day.” He said, “I’d be happy to match Costco’s price if you’d like to pay a little more.”

[Laughter]

Right, and he came back to me and he’s standing there and he goes, “Boy did I feel like a jerk.” He goes, “Why did I just assume that it was cheaper at Costco?” What we’ve done is we’ve forgotten to shop around and we just need to remember that and remember our role within the context of a healthy local economy.

Audience Member 17: My question is sort of both practical and philosophical. When CityScape came into downtown—the practical—do you think that it took business away from local retailers in the downtown area and more generally, do you get a sense that new retail coming into Arizona [inaudible] somewhat saturated? Do think at a certain point it becomes zero sum game even if it’s local businesses? Like if you [inaudible] our local businesses?

Kimber Lanning: Well, okay, so the first part of that question is no. I do not believe that CityScape took any business from any downtown entity. I honestly don’t, but the second part of your question is yes. It becomes a zero sum game because we don’t have enough density downtown. What we’re seeing right now is a really tough cycle of the FilmBar doing great and then the Crescent Ballroom opens and everybody just goes, “wschish.” Then you’ve got the Cupid’s Trumpet open and everybody goes, “wschish.” What we’re seeing is, not quite enough people to support the multitude of great places that are showing up.

I think as we get density and as we get more people—we got a lot of people who work downtown. If we can just get them to stop and have a bite to eat before they go home, that would be a huge impact right there, but we’ve trained them for years—seven and seven—in and out, in and out. “Let’s not stop and mingle.” I think that’s changing. I mean if you go to the Crescent Ballroom after work, you’re gonna see a lot of lucent ties and people who just stopped in to see what was going on. We didn’t have that a few years ago. As we increase density I’m optimistic. We’re still gonna lose some but I think in general you’re gonna see it continue to be a positive influx of more and more businesses opening up.

That’s also coupled with the fact that we’ve streamlined the process for adaptive reuse, which means it’s now easier to open up a business in an old, abandoned house or a blighted building. That’s been a huge success story with the City of Phoenix. It’s taken a lot to get there but when the word starts to get out that, “Hey, this is a great place for you to find an old building.” I mean think about the messaging. Think about the messaging. We’re trying to prove that we’re cool to New York. Forget that. Forget it. We don’t have to prove anything.

How ’bout if we say to the chef in New York, who’s 35, who’s hugely successful, “Why don’t you open up your own restaurant in New York?” He’ll go, “Oh, my gosh. I’d need multi-millions of dollars’ worth of investors and yada, yada, yada, yada, yada.” “Oh yeah? Well, you can move to Arizona, open a restaurant. People will clamor around it. Even if you do a pretty good job, and by the way, you can buy your building while you’re at it.” That’s what we have. We have a great environment for entrepreneurs. People will give you a shot, right? It’s not an insider’s game. It’s not who knows who. It’s, “Oh, wow. Cool. A new restaurant opened. Let’s go.” You know? Yes.

Audience Member 18: I was having a conversation with a friend a while back and I had bought this water bottle that was made by [inaudible] in Seattle or Washington. She goes, “Oh, that’s a cool bottle.” I was telling her about it and I said, “Oh, it was made in the USA,” and she goes, “Oh, that doesn’t matter.” I know it does. I mean that matters a lot. I always get kind of tripped up with my response to that. Is there an easy way to explain to people how [inaudible] the economy?

Kimber Lanning: Sure. I think the first thing is just explaining that if other countries are making everything we’re buying, who then works? Who has a job? What does your friend do for a living?

Audience Member 18: She works for the City.

[Laughter]

Kimber Lanning: You can just hit it right out of the park.

[Laughter]

Yeah, you could tell her that her salary depends on a strong economy and we’re seeing this hugely, I would say. The City of Phoenix is still so far down on the number of jobs for the people they had to lay off when this all happened—the State. I think that actually a really easy argument to make that her salary is directly impacted by how many sales tax dollars, or taxes in general, are recirculating in the community.

Audience Member 18: Even if it’s in another state?

Audience Member 18: It’s still in the US. Part of me is like, “Well, tell that to people who work there, you know.”

Kimber Lanning: Right, and the thing that really irks me is when people think, “Well, I’m not a manufacturer. What do I care?” If they’re—anything—they’re gonna be impacted sooner or later. Do you remember that old quote? “First they came for the socialists and I didn’t speak out ’cuz I wasn’t a socialist.” That Martin Niemöller quote, or whatever his name is, and then they came for them. “Then they finally came for me and there was no one left to speak out.” It’s sort of like that where you really—if you’re not impacted right away, you know?

Okay, so the plant closes down and lays off 300 people. If you’re not one of those 300 people, you’re still gonna be impacted in a number of different ways. You could be an accountant that worked for the firm that had—so maybe you’re gonna get laid off as an accountant even though you weren’t part of the initial lay off—you’re gonna get laid off. Maybe you were a graphic designer. You did the payroll for—it could be a million different things. It’s only a matter of time before those things ripple throughout the economy. Am I keeping you late? Where are we at on time?

Audience Member 19: You’re good.

Kimber Lanning: Okay. Yeah, I just didn’t know what time I was supposed to talk ’til. I’m gonna give you an example in my industry—in the record industry. When Tower Records closed, a lot of people went, “Oh, well, that’s too bad. Tower was cool.” You know they laid-off—I think it was around 700 people across the country. Seven-hundred people lost their jobs. It was in the paper that day, and that’s all we heard about it. “Tower Records closed. Seven-hundred jobs lost.” That’s kind of—generally speaking in this country that’s all we think about. When Tower Records closed, millions of dollars’ worth of merchandise got returned back to distribution plants. They were not anticipating millions of dollars’ worth of returns. In fact, they had maybe already spent that money, banking on the fact that Tower was going to pay them their monthly bill.

Instead they got several thousand dollars’ worth of returned goods—all of them did. Then, we lost seven American, independent distributors within three to five months of Tower going down. Then when those distribution centers closed, hundreds of independent labels were impacted because they had their merchandise in the distribution system. They got tied up in the courts—in bankruptcy court—so here’s this little label out here. “Wait a minute. That guy has all my merchandise and now it’s locked up in the court system ’cuz he claimed bankruptcy. Ahhh, I can’t pay my bills.” There goes about 20 independent, American record labels and then you got the artist who’s at the very the end of the line that’s not getting paid.

Now let’s talk about the thousands and thousands of American jobs that were lost when Tower Records closed, but that story doesn’t get told, but that’s true in every industry. When you hear the story about such-and-such a plant closing down, those impacts are going to be felt for years. They may not even be measurable for years, but it’s not just 300 jobs lost. It’s not that.

Audience Member 20: Have you recorded your presentation? I would sit here in it a few times and I have tried to argue and I have successfully best anyone who tries to argue against me but they still will come up with some fantasy thing. To hear it, especially from you with the ways you’re presenting it would be ideal. I can’t get ’em to come to your presentation—

Kimber Lanning: [Laughing]

Audience Member 20: - so if I could—I mean [cross talk]—

Kimber Lanning: Give me his address. No, I’m just kidding.

[Laughter]

Audience 20: Him? It isn’t a, “him.” It’s a bunch of, “hers.”

[Laughter]

Audience 20: If she wants—so what I’m thinking is give me more fuel to help with this—to make a [inaudible]. It turns out [inaudible] to do. We started into a dogma. We’re not in a church. It’s a religion now. Is that it? Ha ha—

[Laughter]

Audience 20: - to go argue this point with it stronger with others that I can’t get ’em to come to your presentations, so what I’m saying, have you recorded so I can, “Hey, click on YouTube and here’s Kimber giving this presentation,” would satisfy her.

Kimber Lanning: See, so I’d be happy to help you with that. They’re recording this right now. There’s a few different ones YouTube, of me talking but I’m not sure that that’s gonna—

Audience 20: Any little bit—

Kimber Lanning: Well, yeah. Every bit helps but I’m not sure what you can do about that, but I’m happy to—email me if you get stuck on a specific question. Another thing that I found is really helpful—if you find somebody—I was talking to a roomful of graphic designers one time. When we started the talk it was primarily women. Most of them had firms with fewer than five, six employees. When we started the talk most of ’em said, “Yeah, I shop mostly at chain stores. That’s what I do. I don’t think about it much. That’s what I do.” By the end of it I pointed out to them—when I asked ’em, “How many of you have a more thriving business today than you had five years ago?” They all said, “No. We have fewer clients today than we had five years ago.”

I said, “So think about it. You’re spending your money with companies that will never hire you—never. Target ain’t hiring a six-person firm to design the new Target logo anytime soon.” I helped them understand. You know, so here’s a graphic design woman who’s just like, “Oh, my God.” I said, “You’re spending your most powerful tool to effectively eliminate your own clients—your own future potential clients.” Then suddenly they went, “Whoa! I gotta change the way I’m doing this.”

Audience 21: What I’m finding is, so many people are brainwashed and it’s in the popular press, or coming through TV or the internet, that it’s all of a sudden more sacrosanct or it’s more the truth. That’s part of the reason I’m asking you if you could put it on YouTube or something because it’ll be that last little bit that I can’t deal with one-on-one— [Laughter] - and so hence the reason for my request.

Kimber Lanning: Yeah, sure. Well, there’s a few on YouTube for sure. There were a few other questions. I saw some hands go up. Yes.

Audience 22: Mine’s a quick one. I’d like to know how to buy more locally with local companies. Is there an online directory of this on your website?

Kimber Lanning: Yes. Thank you for asking. I’m always so caught up in the huge stuff I forget the nuts and bolts. We have localfirstaz.com. We have a directory with 2,100 Arizona businesses and you can search by business type, by the name of the business, categories—you can peruse through the categories. That’s the directory I referenced. It might have been before you came in, but we get about 38,000 searches a month on there. It’s growing. We’re growing by 60, 70 new businesses a month. Yeah, it’s growing very rapidly so please utilize that. If you see a business that you love that’s local and they’re not in it, just tell ’em, “Hey, you should get involved.” Yes, ma’am.

Audience 23: About five years ago or so, there was a lot of discussion on Phoenix about like Phoenix is a community without an identified industry and so there was the hope [inaudible] biotech and all that and a lot of investments in that. Today, maybe just because of where I’m sitting, I’m seeing so much more excitement about start-ups and incubators and there’s really kind of—I think this is the second wave. There was kind of the downtown arts district and now we have this really emerging incubator, entrepreneurship movement in Phoenix. I’m just curious about your thoughts about those two things and how do they relate to what you’re talking about?

Kimber Lanning: Sure. Excellent question, so first of all I think our investment in biotech is brilliant and I think that it’s gonna carry us a long way. When you start seeing more—the U of A Center—the Bioscience High School—obviously TGen and all of that that’s going on—what we’re doing is we’re attracting a higher educated workforce that is more likely to support an independent restaurant. I think they do feed off of each other and I think for the first time, in a very long time, we have development going on in the big stuff—what I call the silver bullets. We have the fine grain development advancing at the same time. Traditionally, Phoenix has been a place that thought, “Well, if we can land this one stadium here—if we can just land this one thing, it’s going to revitalize downtown.”

Uh-uh. Doesn’t work that way, but now we’ve got some great investment going simultaneously here and we’ve got a lot of investment in redevelopment and a lot of folks that are really interested in the smaller projects. I’m starting to see cool, little apartment complexes that were pretty rough, getting bought up and revitalized and all of sudden you got a whole new bunch of people moving in there. I still can’t get used to the eight stories going in on Roosevelt. I think it’s great. Most people would think I hate it. We need the density and they’re gonna have ground floor retail, but every time I round the corner I still go, “Huhhh,” ’cuz I’m just not used to seeing it there yet. It’s very exciting, so that’s a great question. I think we have both going on. Again, underscoring that type of incentive to put in a base-industry sector, I think is very different than restaurant or retail.

Audience 24: One of my concerns though is, for instance, that new place there. We’ve got that. We’ve got the Outfield 1:10:44. We’ve got Tapestry. They’ve all got that ground floor retail and they’re empty—absolutely empty. I mean, I don’t know how you see it but I see that we have more retail space than we could possibly ever support in our entire lives. In Phoenix it’s seemingly higher than in a lot of other parts of the country. It’s nice to say that you might have that retail there but if don’t get anybody to come in, you’re not—and Tapestry—a lot of the old guard there are absolutely thrilled to death that they don’t have restaurants there—

Kimber Lanning: I know [laughing].

Audience 24: - ’cuz they don’t want the smell.

Kimber Lanning: [Laughing] A couple of comments. You can put in ground floor retail ’til you’re blue in the face. If it’s not well-designed and if it’s not pedestrian-friendly, it isn’t gonna work. The goal is—ya know on Roosevelt, if we have storefronts, right—we’ve already got pedestrian thing going on. It’s gonna be a whole different game, in my opinion, than something that has a large setback, and or, is in an area that doesn’t have—has everybody driving into their specific parking thing. That doesn’t work. It’s gotta be hand-in-hand. Some of it’s gonna work. Some of it’s not. I also think that there’s a large demand now for freestanding buildings—cool little places where you can open up a restaurant, etc., as opposed to moving a restaurant in. I think there’s a few great success stories. Moira Sushi is a great example of a ground floor restaurant that’s really thriving. Yeah, it’s not gonna work for every type of restaurant. Some of ’em want—Cibo wants that quaint, old house feel.

Audience 25:Well, downtown Phoenix is still relatively low residential density though so there’s a lot of room for a lot of retail.

Kimber Lanning: It’ll grow as we get more density downtown, but I hear very well what you’re saying.

Audience 26:It’s frustrating to go by these buildings that have been open for five, six—you know? That kind of—in a sense, just ugly. It doesn’t look good.

Kimber Lanning: No, it does not. Yes.

Audience 27:Oh, I was just going to say we have a [inaudible]

Kimber Lanning: Oh, okay, great. Anybody else? Good call. You predicted it.

Audience: Thank you all for coming.