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RTA projects dig up construction and competitive challenges

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Posted: Friday, March 8, 2013 12:00 am

Conclusion of two parts.

For the next 13 years, Grant Road will be Ground Zero.

Broken curbs, potholes, intersection congestion and outdated traffic controls along the crowded east-west corridor will give way to five miles of new pavement, infrastructure and modern technology.

The construction chaos has shifted the workload into overdrive for the MainStreet Business Assistance program. Under the 20-year Regional Transportation Authority (RTA) program, MainStreet is tasked with helping businesses survive “the zone.”

“We’ve been out on Grant Road almost five years, telling businesses this project is coming. Get ready for construction,” said Britton Dornquast, program manager for MainStreet. “Now is the time to take advantage of our program, before the dirt is flying. We try to get them to install a plan, to minimize the financial impacts. Here are some options to get out in front of the issues. Coming out of the recession, businesses are lean and mean. They are stressed because of the economy, let alone the construction. To survive this project, there is no room for mistakes.”

The $2.1 billion RTA program included establishing and funding MainStreet. Within a quarter-mile of any project, free services are available to any company during construction.

MainStreet employs 10 private-sector consultants with deep business ownership and management expertise. The collaboration begins with a two-hour assessment with affected business owners. Core areas such as strategic planning, finances, customer service, sales and marketing are evaluated.

The budget is $116 million through 2026 to widen and upgrade Grant Road bewtween Oracle and Swan roads. An estimated 400 residential and commercial properties along the five-mile corridor will be demolished.

“Hundreds of businesses will be touched by this, losing chunks of their parking, access and customers,” Dornquast said. “Overall, I’d say less than 50 businesses will be relocated and at least that many homes.”

Ground Zero for the first phase is the Grant-and-Oracle intersection. Four businesses there were relocated: a retailer, service company, an accountant and a dentist. All relocations are handled by the City of Tucson real estate program (see separate story).

Some owners just want out. Those tend to be businesses that have been in the same location for decades, own their building and are ready to retire.

“They’re at the end of their careers, didn’t want to move or sell the business. So they took the money for their property. It’s their exit strategy,” Dornquast explained.

About 20 percent of affected businesses on Grant Road are expected to pick this option.

A few others likely will sell their companies and let the new owners work with the city to find a new site. They will “cash out the property and let somebody else continue the business and take advantage of their good name,” Dornquast said.

Downtown competition

Downtown is another hot zone for MainStreet where Sun Link, the modern streetcar, is under construction. Funded partially by RTA, it includes relocating and upgrading underground utilities, installing concrete-embedded rail, overhead lines, and new pavement.

Since March 2012, businesses have been disrupted. They’re tired of torn-up roads and detours, street and parking garage closures, construction fences that block access to their stores, the noise and those annoying traffic cones.

And this week, rail is being installed on Broadway between Church and Fifth avenues.

“The bottom line is we don’t want to lose a business as a direct result of construction impacts,” said Dornquast. “We spoon-feed them info on the construction around them so they can focus on running their businesses. Then when there’s an issue, they’re not calling the mayor who calls transportation who calls the project manager who calls us. By then, we have it resolved.”

In anticipation of a financial revival, the private sector has invested about $400 million in downtown. These visionary entrepreneurs are game-changers and pose a different type of threat.

“There are over a dozen new restaurants and night clubs in the corridor. That increased competition will have more impact on businesses than the construction,” Dornquast said. “We tell owners when the streetcar is done, they may see double or triple the competition for their products and services.”

Pizza is a prime example. For years, Enoteca, 58 W. Congress St., was alone in the zone. Then came Empire Pizza and Pub, 137 E. Congress St., “and they’re kickin’ butt, doing really well. And there’s Reilly’s (101 E. Pennington St.), an upscale place with a completely different vibe. There’s even pizza in the Presidio, all competing for discretionary income,” he said.

Coffee houses also are under pressure.

“God help them all, it’s just a matter of time before Starbucks is downtown,” said Dornquast.

Cut your losses

The intense competition will push some existing ventures out. Although it’s an issue Dornquast has stayed neutral on, downtown-area developers and brokers say there will be failures.

In some RTA zones, MainStreet found a few companies in deep trouble before construction started. Some were under-capitalized, or couldn’t pay their employees, taxes or rent.

In those cases, the recommendation is “cut your losses. Most already knew, we just confirmed it,” he said. “It’s not our role to tell them to close.”

To help businesses cope, MainStreet pushes the premise that positive results can result from this negative situation. There is potential to emerge from the construction chaos as a better, more profitable business. The only cost to owners is their time, energy and commitment.

“If they embrace that, they can transform their company by working the plan,” said Dornquast. “We’ve had businesses do that regardless of the construction impacts, and come out stronger on the back end.”

Contact reporter Roger Yohem at ryohem@azbiz.com or (520) 295-4254.

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