♪.

TED: COMING UP NEXT ON "ARIZONA HORIZON," WHAT'S BEING DONE TO ADDRESS THE UNIVERSITY OF ARIZONA'S MASSIVE BUDGET DEFICIT?

>>> TONIGHT AN UPDATE ON THE VALLEY'S HOUSING MARKET.

>>> AND PHOENIX-MESA GATEWAY AIRPORT IS SET TO EXPAND WITH THE OPENING OF A NEW TERMINAL.

THOSE STORIES AND MORE NEXT ON "ARIZONA HORIZON."

.

TED: GOOD EVENING, AND WELCOME TO "ARIZONA HORIZON."

I'M TED SIMONS.

MARICOPA COUNTY BOARD OF SUPERVISORS CHAIRMAN CLINT HICKMAN ANNOUNCED HE WILL NOT RUN FOR RE-ELECTION.

"WASHINGTON POST" REPORTS THAT HICKMAN SAID TIME WOULD BE BETTER SPENT WITH WIFE AND KIDS.

HICKMAN, A REPUBLICAN AND FORMER TRUMP SUPPORTER TWICE REFUSED TO ANSWER PHONE CALLS FROM TRUMP AFTER THE 2020 ELECTION AND PROVIDED INFORMATION TO SPECIAL COUNSEL JACK SMITH'S INVESTIGATION OF TRUMP'S ALLEGED ELECTION INTERFERENCE.

HICKMAN IS THE SECOND REPUBLICAN SUPERVISOR IN LESS THAN A YEAR TO DECIDE AGAINST RE-ELECTION.

JOINING BILL GATES WHO WAS DIAGNOSED WITH PTSD DUE TO THREATS FROM TRUMP SUPPORTERS AND ELECTION DENIERS.

A CONSERVATIVE GROUP CALLED THE "TRUE-THE-VOTE" GROUP BEHIND A 2000 MULES DOCUMENTARY, THEY DO NOT HAVE EVIDENCE TO SUPPORT CLAIMS OF ILLEGAL BALLOT STUFFING DURING THE 2020 ELECTION.

THE GROUP HAD FILED COMPLAINTS WITH GEORGIA SECRETARY OF STATE CLAIMING THAT IT HAD, QUOTE, DETAILED ACCOUNTS OF BALLOT STUFFING, BUT WHEN REQUIRED BY A JUDGE TO PRODUCE THE EVIDENCE OR SOURCES OF THAT EVIDENCE, THE GROUP RESPONDED THAT IT HAS NO NAMES OR OTHER DOCUMENTARY EVIDENCE TO SHARE.

>>> A NEW YORK JUDGE REJECTED DONALD TRUMP'S ATTEMPTS TO THROW OUT CRIMINAL CHARGES IN A CASE INVOLVING TRUMP MAKING A HUSH MONEY PAYMENT TO A PORN STAR.

TODAY'S RULING MEANS CRIMINAL TRIAL WILL PROCEED WITH A MARCH 25 START DATE.

TRUMP'S ATTORNEYS OBJECTED TO STARTING THE SIX-WEEK TRIAL NEXT MONTH SAYING COURT PROCEEDINGS WOULD INTERFERE WITH TRUMP'S PRESIDENTIAL CAMPAIGN.

TRUMP FACES 34 COUNTS OF FALSIFYING BUSINESS RECORDS IN ATTEMPT TO HIDE THE PAYMENT IN THE FINAL DAYS OF THE 2016 ELECTION.

>>> OTHER HEADLINES -- KANSAS CITY POLICE SAY A DISPUTE LED TO THE SHOOTING AT THE END OF THE KANSAS CITY CHIEFS SUPER BOWL PARADE.

ONE KILLED, 22 INJURED.

UPDATE ON CASUALTIES AND SUSPECTS.

>> Reporter: THE 22 VICTIMS, AGE RANGE BETWEEN 8 YEARS OLD AND 47 YEARS OLD.

AT LEAST HALF OF OUR VICTIMS ARE UNDER THE AGE OF 16.

AS MENTIONED YESTERDAY, WE HAVE SUBJECTS DETAINED.

TWO OF WHICH ARE JUVENILES.

WE'RE WORKING TO DETERMINE THE INVOLVEMENT OF OTHERS AND IT SHOULD BE NOTED WE HAVE RECOVERED SEVERAL FIREARMS.

TED: POLICE ADDED THAT THERE WAS NO INDICATION THAT THE SHOOTING WAS LINKED TO TERRORISM.

>>> ECONOMIC NOTE, MORTGAGE RATES UP FOR THE SECOND STRAIGHT WEEK, UP AT 6.77%, THE INCREASE TRIGGERED A DROP IN DEMAND FOR HOME LOANS ACCORDING TO THE MORTGAGE BANKERS ASSOCIATION WHICH REPORTS THOUGH THE WEEK OVER WEEK INCREASE WAS SLIGHT, RATES ARE CLOSER TO HALF A PERCENT HIGHER THAN THIS TIME LAST YEAR.

WE'LL HAVE MUCH MORE ON THE HOUSING MARKET LATER IN THE SHOW.

>>> THE UNIVERSITY OF ARIZONA HAS A BUDGET DEFICIT OF NEARLY $200 MILLION.

HOW DID THE U OF A'S FINANCES GET SO OUT OF WHACK AND WHAT'S BEING DONE TO CORRECT THE PROBLEM SO IT DOESN'T HAPPEN AGAIN?

FRED DUVAL IS CHAIRMAN OF ARIZONA BOARD OF REGENTS WHICH OVERSEES THE STATE'S UNIVERSITIES.

GOOD TO HAVE YOU.

>> THANK YOU.

>> 240 MILLION, DOWN TO 77, WHAT'S GOING ON HERE?

>> BIG MONEY.

177 MILLION AGAINST A BASE OF 2.4 BILLION.

IT IS A BIG NUMBER BUT THIS IS NOT GOING TO DISRUPT THE UNIVERSITY'S ABILITY TO SUCCEED.

WE HAVE TO MANAGE OUR WAY THROUGH IT.

SECONDLY, HIGHER EDUCATION IS CHALLENGED ACROSS THE COUNTRY.

YOU WILL SEE MANY UNIVERSITIES ANNOUNCING BUDGET DEFICITS.

THERE ARE DYNAMICS HAVING TO DO WITH WITHDRAWAL OF STATE SUPPORT, FLAT ENROLLMENT, DRIVING OTHER CHALLENGES.

IN ADDITION, WE HAVE UNIQUE FACTORS AT U OF A WHICH ARE QUITE SEVERE.

NUMBER ONE, A DISTRIBUTED MODEL THE WAY WE DO BUDGETS, 81 DIFFERENT BUDGET UNITS AND SOMEHOW THE UNIVERSITY DID NOT HAVE EYE SIGHT HOW THEY WERE SPENDING 61 OF THE 81 OR BORROWING AGAINST RESERVES, UNBELIEVABLE LOSS OF CONTROL.

WE'RE TAKING STEPS TO FIX THAT.

NUMBER TWO, TED, AND I KNOW YOU COME FROM ATHLETICS BACKGROUND, THE MODEL IS BROKEN, WE'RE LOSING MONEY IN ATHLETICS AND ONE OF THE THINGS WE'VE GOT TO DO IS FIND A NEW ATHLETIC DIRECTOR THAT KNOWS HOW TO CREATE A SELF-SUSTAINING MODEL, AND THIRD, THEY WERE BUYING EXCELLENCE.

EVERYBODY IS ADDICTED TO RANKINGS, PUSHING MONEY INTO RESEARCH, A SLOW ROI, PUSHING MONEY INTO FINANCIAL AID TO MERIT SCHOLARS ACROSS THE UNITED STATES TO KEEP THE QUALITY OF THE STUDENTS, ALL GOOD THINGS BUT NOT FINANCIALLY SUPPORTABLE.

TED: DID THIS BUILD OVER TIME, OR WAS THIS A QUICK HIT?

>> A LITTLE OF BOTH.

ACCELERATED QUICKLY.

HERE'S WHAT WE DIDN'T SEE.

OUR TOOL, WHICH IS PROVEN INSUFFICIENT, WAS CASH ON HAND, DAYS CASH ON HAND.

ENOUGH FOR MOODY'S, ENOUGH FOR THE RATING AGENCIES AND ENOUGH FOR THE STATE AUDITOR BUT CAMOUFLAGED THINGS AND THE ARRIVAL OF HUGE FEDERAL COVID MONEY SORT OF HID WHAT WAS GOING ON UNDERNEATH BECAUSE THE CASH ON HAND SITUATION LOOKED PRETTY GOOD, SO IT WAS HAPPENING BUT WE COULDN'T SEE IT WITH THE TOOLS WE HAD, AND THEN YOU HAD TWO OTHER SORT OF THINGS, YOU HAD A YEAR WHERE INFLATION WAS 6.5%, BUT THE TUITION INCREASE WAS 3%.

PRETTY BIG GAP.

EVERY THIRD OR FOURTH YEAR, YOU HAVE A 27th PAYDAY IN THE CYCLE, HAPPENED TO FALL LAST YEAR.

THESE THINGS ACCUMULATED INTO A STORM.

TED: THE CASH ON HAND, THOUGH, EXAGGERATED BY 30% OR SO.

AGAIN, HOW DOES THAT HAPPEN?

HIDDEN, I GUESS, A LITTLE BIT, BUT 30%?

>> IT WAS THIS LACK OF TOOLS, MONITORING THESE 81 BUDGET UNITS AND THE EXTENT TO WHICH THEY WERE IN THERE EACH INDIVIDUAL PURSUIT OF EXCELLENT, BORROWING AGAINST RESERVES AND DIDN'T SEE THE AGGREGATE UNTIL WE ASKED THEM TO LOOK AT THAT, AND ONCE WE SPOTTED IT, WE JUMPED INTO THE FRAY.

TED: OBVIOUSLY, DOESN'T SOUND LIKE A WHEEL AND SPOKE SITUATION THERE, CORRECT?

IN TERMS OF CENTRALIZING THE BUDGET.

>> THAT'S THE GOAL, CENTRALIZE THE BUDGET, GET EYE SIGHT ON IT.

A NUMBER OF THINGS WE'RE GOING TO CUT FROM THE TOP.

THE PRESIDENT AGREED HE'S GOING TO TAKE A SALARY CUT, ONE THING I WANT TO MAKE CLEAR TO VIEWERS THAT WE WILL NOT DO, THIS IS LIKE ANY BUSINESS THAT YOU RUN, WHEN YOU'RE IN THIS POSITION, YOU RAISE REVENUE OR CUT COSTS, WE'RE NOT GOING TO RAISE TUITION.

OFF THE TABLE, REVENUE IS OFF THE TABLE.

ALL GOT TO BE DONE ON THE COST SIDE.

>> I'M SEEING HIRING FREEZE, PROJECTS DEFERRED, AND AGAIN, NO MORE -- WHAT ABOUT TUITION GUARANTEES.

>> TUITION GUARANTEES, EVERY STUDENT CURRENTLY ENROLLED WILL NOT HAVE ANY CHANGE IN THE PACKAGE THEY HAVE.

WE'RE LOOKING AT CHANGING IT GOING FORWARD.

>> ABOUT 27 MILLION ALREADY CUT, WHAT'S BEEN CUT OTHER THAN THE PRESIDENT'S SALARY?

>> THOSE ARE ALL FREEZING, HIRING FREEZES, TRAVEL FREEZES, CONSTRUCTION FREEZES, CASH GOING OUT THE DOOR THAT WE COULD STOP.

>> THE GOVERNOR SAID THERE WAS A LACK OF ACCOUNTABILITY, A LACK OF TRANSPARENCY, A LACK OF LEADERSHIP.

YOU AGREE WITH THAT?

>> SHE'S RIGHT TO BE CONCERNED.

WE WERE SHOCKED WHEN WE HEARD IT, TOO.

WISH WE FOUND IT EARLIER, OUR TOOLS DIDN'T GIVE US.

THAT WE'RE GOING TO GET NEW TOOLS.

SHE SAID I WANT TO GET THIS FIXED.

WE OWN IT AND WE'LL FIX IT ON OUR WATCH.

TED: SHE ALSO WANTS A THIRD PARTY CONSULTANT TO COME IN.

>> SHE'S ASKED FOR THIRD PARTY CONSULTANT, THAT IS BEING ANNOUNCED I THINK MAYBE TODAY, BUT IMMEDIATELY.

SECONDLY, SHE ASKED US TO ABSOLUTELY NOT RAISE TUITION, AND WE'LL CERTAINLY HONOR THAT ASK AS WELL.

TED: I'VE SEEN COMPLAINTS IN TUCSON THAT THE BOARD OF REGENTS, THE EXECUTIVE DIRECTOR IS BASICALLY THE U OF A'S CHIEF FINANCIAL OFFICER.

YOU SEE CONFLICT OF INTEREST, THEY DON'T SEEM HAPPY ABOUT THAT.

>> RIGHT.

TED: WHAT'S THE MESSAGE TO THEM?

>> TWO THINGS.

THIRD PARTY AUDITS WILL HOPEFULLY CREATE CONFIDENCE IN THE NUMBERS AND SECOND, JOHN ARNOLD IS THE MOST EXPERIENCED PUBLIC BUDGET PERSON IN THE STATE OF ARIZONA.

HE GOT ARIZONA THROUGH THE TERRIBLE CRISIS THAT IT FACED IN 2008 AS THE BUDGET DIRECTOR.

HE KNOWS HOW TO DO THIS.

WORK OUGHT TO BE CHECKED, IT NEEDS TO BE CHECKED BY THE BOARD, BY THE AUDITOR, AND THE CONSTITUENTS ON CAMPUS BUT HE KNOWS HOW TO DO THIS.

TED: WHEN THEY'RE CONCERNED THE BOARD OF REGENTS AND U OF A AND TROUBLED U OF A, OBVIOUSLY 177 MILLION IS NO SPARE CHANGE HERE, THEY'RE CONCERNED ABOUT NO SEPARATION THERE.

>> THAT'S WHERE THE THIRD PARTY AUDITOR COMES IN, AND OUR HOMEWORK WILL BE PUBLIC.

WE ARE GOING TO BE AS TRANSPARENT AS POSSIBLE IN EVERYTHING THAT WE DO.

TED: LAST QUESTION HERE, AND YOU MENTIONED ATHLETICS.

THERE WAS CONCERN THAT U OF A, THAT'S ALL THEY GOT GOING HALF THE TIME DOWN THERE, TOO.

LET'S FACE IT.

ATHLETIC SITUATION IS A PUBLIC SERVICE PRACTICALLY.

WHAT CAN YOU DO ABOUT THAT?

THESE ATHLETIC BUDGETS ARE GOING NUTS?

>> THEY ARE GOING NUTS.

IT IS A DRUG, EVERYBODY IS ON IT.

WE'RE RACING OFF THE CLIFF.

HERE'S THE PROBLEM OF TRYING TO DO THIS BRIEFLY.

YOU CAN EITHER CHASE IT AND WHEN YOU FILL A FOOTBALL AND BASKETBALL STADIUM, AND U OF A IS DOING IT.

YOU FILL THE STADIUMS THAT REVENUE SUPPORTS EVERY OTHER SPORT ON CAMPUS AND MORE.

EVERYBODY WANTS THAT.

THAT REQUIRES WINNING IN ORDER TO FILL THE STADIUM.

THE OTHER WAY YOU DO IT, GO ON THE CHEAP AND HIRE LESS EXPENSIVE COACHES, AND THE GOOD ONES WILL GET SNATCHED TWO OR THREE YEARS INTO TENURE AND ROTATE THEM THROUGH.

WE'RE GOING TO TRY TO MAKE THIS WORK AND THE NEW ATHLETIC DIRECTOR IS THE WAY WE TRY TO DO IT.

TED: LAST QUESTION, 177 MILLION DOWN TO 48.

WHEN IS IT MANAGEABLE?

>> THERE WILL BE STEADY PROGRESS, WE WILL SHOW THE NUMBERS, WE WILL -- IT WILL BE DEMONSTRABLE WITHIN SIX MONTHS, SO MUCH OF IT IS TIED IN THE INCOMING CLASS, NEXT FALL, YOU GOT TO PAY ROLL.

CAN'T YOU TURN THE OFF SWITCH ON A LOT OF THINGS, YOU MODERATE THEM AND CATCH THEM IN THE BUDGET CYCLE AND WE WILL, AND IT WILL BE AS FAST AS WE OPERATE THE CHANGE.

TED: FRED DUVAL, GOOD CONVERSATION, GOOD TO HAVE YOU HERE.

>> THANK YOU UP.

>> NEXT ON "ARIZONA HORIZON," THE LATEST ON THE VALLEY'S HOUSING MARKET.

.

TED: HOME SALES IN THE PHOENIX METRO AREA WERE DOWN IN DECEMBER, CLOSING OUT A SIGNIFICANTLY SLOWER YEAR FOR THE HOUSING MARKET IN THE VALLEY AND OTHER AREAS OF THE COUNTRY.

JOINING US IS MARK STAPP FROM W.P.

CAREY SCHOOL OF BUSINESS TO GIVE AN UPDATE WHAT'S GOING ON OUT THERE.

GOOD TO SEE YOU.

>> GOOD TO SEE YOU, TOO.

>> HOME SALES, WHAT'S GOING ON OUT THERE?

>> THE EFFECT OF HIGHER INTEREST RATES.

INTEREST RATES RISE, THEY ROSE VERY QUICKLY.

THIS HAS A LAGGING EFFECT.

WE'RE SEEING SOME OF THAT NOW.

WE'RE ALSO SEEING THE EFFECT OF THE FACT THAT HOME PRICES HAVEN'T FALLEN THAT MUCH.

INVENTORY IS RELATIVELY LOW, MAKING IT HARD, AND INVENTORY'S LOW BECAUSE INTEREST RATES ARE HIGH.

80% OF MORTGAGES ARE 5% OR BELOW.

YOU GET 60 SOME PERCENT THAT ARE AT 4% OR BELOW.

YOU HAVE THIS LOCKIN EFFECT WHERE PEOPLE HAVE BEEN IN THEIR HOMES SINCE THE INTEREST RATES WERE VERY LOW, AREN'T MOTIVATED TO MOVE.

TED: PEOPLE AREN'T MOVING AS MUCH.

>> NOT MOVING.

IT DOESN'T CREATE A FLUID HOUSING MARKET AND BECAUSE OF THAT INVENTORIES ARE TOUGH.

TED: INFLATION.

HOW MUCH IS THAT PLAYING INTO WHAT'S HAPPENING?

>> IT HAS AN EFFECT.

WHAT YOU WOULD HOPE IS THE NEW HOME BUILDING SEGMENT OF THE MARKET WOULD PICK UP AND ADD MORE INVENTORY, BUT THEY'RE AFFECTED BY INFLATION, CONSTRUCTION COSTS, LABOR ISSUES, AND OTHER THINGS THAT MAKE IT DIFFICULT, PLUS THEY'RE STRUGGLING BECAUSE INTEREST RATES ARE UP, THEY'VE GOT TO DO THINGS LIKE BUY DOWN MORTGAGE RATES IN ORDER TO INCENTIVIZE BUYERS TO BUY THEIR HOMES.

THAT CAUSES, YOU KNOW, PRICES TO RISE ALSO.

TED: LET'S TALK ABOUT PRICES, ARE PRICES -- ARE PRICES A PROBLEM RIGHT NOW?

INTEREST RATES OBVIOUSLY EFFECT PRICES IN A CERTAIN -- PAY SOMETHING EVERY MONTH, IN GENERAL, PRICES, WHAT ARE YOU SEEING?

>> IT'S NOT FALLING.

SO THE FAULT WOULD BE THAT AS THE HOUSING MARKET SOFTENED, PRICES WOULD FALL.

THEY'RE NOT GOING TO FALL.

THEY'RE STABILIZED.

THEY'RE INCREASING BUT INCREASING MORE ALONG HISTORIC PERCENTAGES, SO YOU'RE GOING TO CONTINUE TO SEE HOME PRICES RISE.

MY CONCERN IS BECAUSE INVENTORIES ARE LOW, HOME BUILDERS AREN'T ADDING A LOT OF NEW INVENTORY AHEAD OF DEMAND, THAT IF INTEREST RATES DO COME DOWN, IT'S GOING CAUSE THE MARKET TO GET VERY ACTIVE AGAIN.

LOW INVENTORY IS VERY ACTIVE, IT'S GOING TO PUSH PRICES BACK UP.

TED: INTERESTING, YOU WOULD THINK WITH A LOT OF STUFF OUT THERE, YOU SEE PRICES DROP.

>> I DON'T THINK YOU'LL SEE PRICES DROP.

PEOPLE HANGING AROUND THINKING THAT'S GOING TO HAPPEN ARE GOING TO BE DISAPPOINTED.

TED: INTERESTING.

WHAT'S MOVING RIGHT NOW?

THE MARKET, ARE THERE EXPENSIVE HOMES, CONDOS, MID-LEVEL?

WHAT'S MOVING AND WHAT IS ABSOLUTELY STUCK IN THE MUD?

>> THE HARDEST PART OF THE MARKET IS THAT PART OF THE MARKET THAT IS AT THE MEDIAN LEVEL, 460 TO $450,000 AND BELOW.

VERY TOUGH.

IT'S HARD FOR BUILDERS TO BUILD ENTRY LEVEL HOUSING.

IT'S HARD TO FIND HOMES THAT ARE BELOW MEDIAN INCOME.

YOU SEE AT THE OTHER END OF THE SPECTRUM, YOU SEE HOUSES BEING BUILT AND SOLD AT THE VERY, VERY HIGH END OF THIS MARKET LIKE WE'VE NEVER SEEN BEFORE AT THE SAME TIME, AND SO YOU'VE GOT THIS DICHOTOMY IN THE MARKETPLACE WHERE THERE'S PEOPLE MOVING IN STILL, WE HAVE GOOD ECONOMY, EXCELLENT ECONOMY.

WE HAVE JOB GROWTH, WE HAVE SOME WAGE GROWTH, AND THEN HAVE YOU SOME PEOPLE THAT ARE VERY WEALTHY COMING FROM OTHER PARTS OF THE COUNTRY, BIG EXPENSIVE HOMES, AND YET AT THE LOW END, WE STILL HAVE A VERY SIGNIFICANT AFFORDABILITY PROBLEM.

TED: ARE INVESTORS IMPACTING THAT AFFORDABILITY PROBLEM, ESPECIALLY AT THE LOWER END?

>> I DON'T THINK SO.

SO THE IBUYER PEAKED IN 2021, IT'S BEEN FALLING.

LAST YEAR, 2023, ONLY 2000 UNITS IN THE PHOENIX METRO AREA.

I THINK 600+ WERE IBUYERS, SO THOSE INSTITUTIONAL BUYERS AND IBUYERS ARE AFFECTED BY THE SAME MARKET DYNAMICS, AS PRICES GO UP, IT'S HARDER FOR THE BUSINESS MODEL TO WORK.

THAT'S ONE OF THE THINGS THAT HAPPENED IN THIS MARKET.

THIS MARKET IS OVERPRICED.

WE'VE SEEN IT FALL DRAMATICALLY FROM 2021.

TED: HOW INTERESTING.

BANKRUPTCIES.

THESE SORTS OF THINGS?

>> WE LOOK AT THE STRESS SALES, FORECLOSURES.

IT IS UP A LITTLE BIT BUT NOT DISTURBING LEVEL AT ALL.

IT'S NOT LIKE WE SAW IN 2008, 2009, 2007, WHERE YOU HAD A REALLY SIGNIFICANT INCREASE IN THE NUMBER OF FORECLOSURES.

THERE ARE SOME.

IT'S BEEN GOING UP.

WE SHOULD ALWAYS BE CONCERNED ABOUT THAT.

I THINK THAT'S ALSO A REFLECTION ON THE AFFORDABILITY SIDE, BUT BECAUSE MORTGAGES THAT WERE WRITTEN FROM 2011, 12, 13 AND FORWARD, THE UNDERWRITING WAS MUCH BETTER.

YOU'RE PROBABLY NOT GOING TO SEE A LOT OF FORECLOSURES.

>> SOME PREDICTED THIS WAS GOING TO BE A REALLY BAD YEAR LAST YEAR AND ONTO THIS YEAR.

IT WASN'T SO SWELL, BUT IT WASN'T ALL THAT BAD.

WELL, MAYBE IT WASN'T ALL THAT BAD.

>> NO, IT WASN'T.

TED: WHAT DID THEY GET WRONG?

>> I THINK THERE WAS A PREDICTION OF A RECESSION.

I THINK THERE WAS PREDICTION WHEN INTEREST RATES ROSE THE WAY THAT THEY DID, THAT IT WAS GOING TO CAUSE THE HOUSING MARKET TO COLLAPSE, AND BECAUSE THE INVENTORY WAS SO LOW, IT DIDN'T HAVE EFFECT THAT.

THE THOUGHT THE THINGS THAT CAUSED THE MARKET TO FALL, NEVER HAPPENED.

YOU HAVE THE MARKET WE HAVE NOW.

TED: LAST QUESTION, THIS IS THE MARKET WE HAVE NOW.

I'M SEEING FOLKS ARE THINKING THINGS COULD TURN NEXT MONTH OR SPRING.

THINGS COULD TURN AROUND.

DO YOU AGREE WITH THAT?

>> I DON'T THINK IT'S GOING TO BE IN THE NEXT MONTH.

I DON'T THINK IT'S GOING TO BE SIGNIFICANT TURNAROUND IN THE FIRST HALF.

I THINK MORE LIKELY, AND THIS IS GOING TO DEPEND ON THE FED AND WHAT THEY DO WITH INTEREST RATES, YOU'VE GOT TO GET THAT GAP BETWEEN WHERE MOST OF THOSE MORTGAGES ARE IN THE MORTGAGE RATE DOWN TO SOMETHING, WHICH WILL LOOSEN UP HOME SELLERS TO MAKE A BIG DIFFERENCE.

HOME BUILDERS SIMPLY CAN'T BUILD FAST ENOUGH.

TED: YEAH, AND GIVE ME A NUMBER, FIVE?

>> WE DON'T KNOW WHAT IT IS.

I THINK THE COMMON THOUGHT IS ONCE YOU GET ON ABOUT FIVE, THEN YOU'RE GOING TO SEE A LOT OF PEOPLE, THE TRADE-OFF, HOUSE APPRECIATED IN VALUE, I'M NOT GOING TO TRADE OFF THAT MUCH IN INTEREST RATE IN PAYMENT, AND THEREFORE, IF I WANT TO MOVE, I'M GOING TO MOVE NOW.

TED: GREAT STUFF.

MARK STAPP, W.P.

CAREY SCHOOL OF BUSINESS.

GREAT STUFF.

THANK YOU FOR JOINING US.

>> THANK YOU.

.

TED: PHOENIX-MESA GATEWAY AIRPORT IS SET TO OPEN A NEW TERMINAL, A 30,000-SQUARE-FOOT EXPANSION WITH A NUMBER OF NEW GATES AND RETAIL SHOPS AND RESTAURANTS.

TO LEARN MORE, WE WELCOME BRIAN O'NEILL, CEO OF PHOENIX PHOENIX-MESA GATEWAY AIRPORT.

>> THANKS, TED.

TED: CONGRATULATIONS ON THE EXPANSION AS WELL.

FOR THOSE WHO AREN'T AWARE, AND MIGHT BE PEOPLE IN THE CENTRAL WEST VALLEY WHO HAVE NEVER BEEN TO THE AIRPORT, WHERE IS IT?

>> LOCATED IN THE SOUTHEAST VALLEY, DOWN JUST NORTH OF QUEEN CREEK IN MESA KIND OF EAST OF GILBERT.

TED: OKAY, AND GIVE US THE HISTORY OF THAT AIRPORT, THAT AREA.

IT HAS, OBVIOUSLY, IF YOU GO OUT THERE NOW, IT IS GROWING.

>> YEAH, THERE'S A LOT OF CHANGE GOING ON THERE.

THE AIRPORT STARTED OUT AS WORLD WAR II INSTALLATION, IT WAS AN AIR FORCE BASE AND DID A LOT OF TRAINING AND IN 1993 BRACK CLOSURE, IT WAS TURNED OVER TO CIVILIAN USE, AND THEN WILLIAMS GATEWAY AIRPORT AUTHORITY ASSUMED OWNERSHIP OF IT.

TED: NOW PHOENIX-MESA GATEWAY AIRPORT, EXPANDING NOW.

HOW MANY NEW GATES WHEN.

DOES THIS ALL OPEN UP?

>> THE NEW TERMINAL ADDITION WILL OPEN UP NEXT WEDNESDAY, FEBRUARY 21.

TED: HOW MANY NEW GATES?

>> WELL, IT'S A DIFFICULT QUESTION TO ANSWER BECAUSE WE ARE REPLACING A SUBSTANDARD FOUR-GATE, 10,000-SQUARE-FOOT FACILITY WITH A FIVE-GATE, 30,000-SQUARE-FOOT FACILITY AND WHAT WE LEARNED DURING COVID, WE HAD FOUR GATES BUT IF WE EVER HAD MORE THAN ONE FLIGHT OUT OF THERE AT A TIME, IT WAS AN UNHEALTHY ENVIRONMENT.

WE'RE ACTUALLY GOING TO GET THE PREFERENTIAL USE OF FOUR MORE GATES, SO INSTEAD OF SEVEN GATES THAT WE'LL BE ABLE TO OPERATE OUT OF SIMULTANEOUSLY.

WE'LL OPERATE OUT OF 11.

TED: OBVIOUSLY, TRAFFIC HAS INCREASED OUT THERE, HOW MUCH HAS IT INCREASEED?

>> THE PAST SEVERAL YEARS, RECORD SETTING PASSENGER ACTIVITY.

RIGHT NOW WE DO ABOUT TWO MILLION PASSENGERS A YEAR, ALLEGIANT IS OUR LARGEST AIRLINE AND HAVE NONSTOP SERVICE TO 45 DESTINATIONS AND HAVE SUN COUNTRY THAT SERVES MINNEAPOLIS AS WELL.

TED: AND SOME OF THESE ARE BIG SIZED JETS.

>> THEY'RE ALL BIG JETS.

THE AIRBUS 320 OR BOEING 737.

THEY'RE ALL LARGE JETS.

TED: I NOTICED A GLASS WALKWAY CONNECTS THE TERMINAL TO TICKET CENTERS OR SOMETHING LIKE THAT?

>> THE GLASS WALKWAY CONNECTS THE FIVE-GATE TERMINAL ADDITION TO THE REMAINDER OF THE TERMINAL.

WHEN I GOT HERE IN 2015, THERE WERE THREE DIFFERENT TERMINALS, GATES 1 THROUGH 4 AND 5 THROUGH 8 AND 9 AND 10.

WE'VE BEEN ABLE TO CONNECT THOSE.

WE HAVE THE SOUTH CONCOURSE, THE MID CONCOURSE AND THE NORTH CONCOURSE.

TED: AND RETAIL SHOPS, RESTAURANTS, MORE NOW?

>> MORE AND BETTER.

WE'VE GOT OHSO BREWING COMPANY WITH BIG INDOOR, OUTDOOR, RARELY FIND AN AIRPORT WHERE PAST SECURITY YOU CAN GO OUTSIDE AND ENJOY THE WEATHER, YOU CAN GO TO OHSO AND THEY HAVE THE GARAGE DOOR AND INDOOR AND OUTDOOR ENVIRONMENT.

PANERA, MACAYO'S FOODS, FAMILIAR NAMES.

TED: YEAH.

$28 MILLION.

HALF FROM THE FEDERAL GRANT.

THIS INFRASTRUCTURE BILL HELPED OUT A LOT WITH THIS, CORRECT?

>> IT WAS OUR SAVIOR.

WE IDENTIFIED WE HAD THE SUBSTANDARD FACILITY BUT DIDN'T HAVE THE MONEY TO MAKE THE CORRECTIONS NECESSARY.

WHEN THE ADMINISTRATION AND CONGRESS PASSED BIPARTISAN INFRASTRUCTURE LAW, WE WERE FIRST IN LINE WITH A SHOVEL READY PROJECT SAYING WE MEET ALL THE CRITERIA, WE REALLY NEED YOUR HELP, SO WE RECEIVED FEDERAL FUNDING FOR THAT.

WE RECEIVED STATE FUNDING, WHICH IS GREAT.

RECEIVED LOCAL FUNDING FROM MEMBER COMMUNITIES AND ABLE TO COBBLE TOGETHER THE $28 MILLION AND COMPLETE THE PROJECT.

TED: HOW BIG CAN THIS AIRPORT GET?

THERE HAS TO BE EVENTUALLY, OR DOES THERE HAVE TO BE EVENTUALLY A SIZE LIMIT?

>> THAT'S A GOOD QUESTION.

MY CRYSTAL BALL BROKE A LONG TIME AGO.

WE PLAY A MUCH DIFFERENT ROLE IN THE VALLEY IN THE GREATER PHOENIX AREA THAN SKY HARBOR.

WE'VE GOT 3,000 ACRES, A LOT OF PRIMARY.

DEVELOPMENT GOING ON, EXCITING, AERONAUTICAL PRIVATE DEVELOPMENT.

BUT I THINK BECAUSE THE POPULATION GROWTH IN THE SOUTHEAST VALLEY AND THE COMPANIES THAT ARE RELOCATING THERE, I DO THINK YOU'RE GOING TO SEE MORE AIRLINES, MORE OPPORTUNITIES, MORE NONSTOP DESTINATIONS, I WOULD SAY THAT WE'LL NEVER BE A SKY HARBOR, BUT RIGHT NOW WE DO TWO MILLION PASSENGERS A YEAR, PROBABLY SEE THREE OR FOUR IN THE FUTURE AND HAVE MORE AIRLINES AND MORE DESTINATIONS AND MORE OPPORTUNITY FOR TRAVELERS.

TED: AND YOU TOUCHED ON THIS, IT'S A GOOD POINT, I WANT TO ASK THIS QUESTION, CERTAIN AIRPORTS PROVIDE CERTAIN FUNCTIONS IN OTHER METROPOLITAN AREAS.

WHERE DOES THIS AIRPORT FIT IN THE PHOENIX METRO AREA?

>> I THINK WE'RE A RELIEVER AIRPORT.

I KNOW THAT SKY HARBOR HANDLES BETWEEN 46 AND 47 MILLION PASSENGERS A YEAR, THEY'RE A BIG DOMESTIC CONNECTING HUB.

THEY'RE GAINING NEW INTERNATIONAL MARKETS WHICH IS GREAT FOR THE REGION, BUT I DO THINK WE'LL BE A RELIEVER COMMERCIAL SERVICE AIRPORT, AND I ALSO THINK BECAUSE OF THE 3,000 ACRES WE HAVE, WE'LL ALSO HAVE ANCILLARY AERONAUTICAL BUSINESSES.

WE'VE GOT A LOT OF MAINTENANCE, REPAIR AND OVERHAUL COMPANIES.

GULFSTREAM IS BUILDING A 25,000-SQUARE-FOOT FACILITY.

VIRGIN GALACTIC IS BUILDING TWO FACILITIES, CESSNA, EMBREE AIR, THEY ARE ALL OUT THERE AND GROWING.

I THINK WE PLAY A DIFFERENT ROLE BUT AN IMPORTANT ROLE FOR THE AIR TRANSPORTATION SYSTEM OF THE GREATER PHOENIX AREA.

TED: GOING LIKE GANG BUSTERS OUT THERE.

BRIAN O'NEILL, CONGRATULATIONS ON YOUR SUCCESS AND SHARING YOUR STORY, APPRECIATE IT.

>> THANK YOU.

TED: THAT IS IT FOR NOW.

I'M TED SIMONS.

THANK YOU FOR JOINING US.

YOU HAVE A GREAT EVENING.