Sedona AZ (February 27, 2011) – In an open letter to City of Sedona Councilman Mark DiNunzio and SedonaEye.com, Sedona resident J. Rick Normand writes:

Councilor Mark DiNunzio and I are friends. I always enjoy talking and meeting with him and I always respect his opinion. He is a learned man who thinks well. On most issues we agree, however, we went different directions on the SR89A turn-back (to Sedona) issue. I’ve just recently received an email from him asking why I changed my mind from opposition to the turn-back to support of it. Here is my answer to him:

Sedona City Council

Good morning Councilor DiNunzio,

ADOT is negotiating with about a dozen other towns to take over the State Routes going through their towns. The mere fact that ADOT is making a statewide effort to accomplish what they wanted us to do here tells us that they have adopted a strategy to start relieving themselves of their greatest liability…road ownership.

Furthermore, I have studied the state’s economic forecast(s) done by ASU’s Morrison Institute for Public Policy and UofA’s Eller College of Management, as well as the study done by the private economic research company of Eliott Pollack and Company (Elliot Pollack was a business acquaintance of mine in Phoenix in the 1970’s and he’s a genius) plus Associated Press economic reports and several others. I referenced all these reports in my last article on the turn-back.

I’ve got a feeling, Mark, that you didn’t see the article. I explained why I had changed my mind on the issue. You see, the economic reports and the state’s projected budget tell me rather clearly, that A.R.S. 28-7209 WILL HAVE TO BE EMPLOYED in order to get ADOT, the states’ largest agency, out of the red…that’s why they’re currently running up a trial balloon with so many small towns. That’s why John Magee impressed upon Tim Ernster four times that the state ADOT would have to consider putting SR89A back to us eventually and that’s why, Tuesday night, he kept emphasizing that he couldn’t guarantee that the Board wouldn’t put it back to us…and do it soon.

Mark, Arizona is utterly broke and it has to find administrative ways to get rid of liabilities and operating costs right now…but it’s easier to get rid of liabilities that require only administrative action as opposed to going through long and hard public battles vis-a-vis the state legislature. ADOT is going to put 89A back to us one way or the other and our Council, or future Councils, will have no say in the matter in the end.

The most incredibly asinine argument I heard through this whole tedious process was “well, they’ve never done it before so there’s no reason to believe they will do it now…or at all!”

Let’s see now, the Japanese had never bombed a US Naval port before, the Federal Reserve has never used Quantitative Easing before, our banks had never been involved in massive foreclosure fraud before…I’m sure you get the point. If the state legislature didn’t want ADOT to use A.R.S. 28-7209, then it wouldn’t be on the books. Do you know why it was originally put there? It was precisely for the purpose of giving ADOT a way to deal with a budget in the red if the economy experienced a devastating turn-down…and now it has!

Mark, aside from being a fairly accomplished economist…which doesn’t pay the bills…I am a very, very skilled professional investor. I have created a highly successful portfolio in the past two years, when everyone else is getting devastated, by investing in just three sectors:  Precious Metals Mining, Rare Earth Metals Mining and Oilfield support technology!!!! I do hours of research per day as you know well. Because I do all this research daily, I understand the all-critical impact of rising fuel prices on the cost of doing business and consumerism. The Fed’s massive unending Quantitative Easing had to produce hyperinflation sooner or later.

Hyperinflation has to show up first in fuel, food and long-term interest rates which affects the cost of credit to governments, businesses and consumers and to our business model here in Sedona. That’s what’s happening now and its why violence is breaking out all over the world.

Once hyperinflation sets it, it takes 10 years, or more, to get it under control. Then it takes another 5-10 years to repair systemic damage to the economy. This country, and at least 15 states, including Arizona, don’t have that long to effect a recovery. In light of what I’ve just said above, any recovery will take a generation to manifest itself. Worst of all, Arizona’s economy relies on tourism, real estate and construction, the electronics industry, agriculture, and federal financial handouts. Guaranteed handouts are done, and ADOT is well aware of it. With the exception of the small electronics industry in Arizona, all other industrial sectors have been devastated and there is no plan in place to facilitate their recovery. ADOT simply cannot continue its current level of operations unless our economy recovers very soon. That cannot and will not happen….period! They’re going to eventually put that road back to us no matter what. Neither leaving title to it with ADOT or having Sedona take title to it now is any longer a debatable argument. Either we take it now with inadequate cash, or get it put back to us in the next five or six years with no cash.

From my viewpoint Councilor, Sedona loses either way.

You’re all (past and current Councils) arguing over the state of Sedona’s economy 15 years from now. Well, I’ve got bad news for all of you although I know all of you won’t listen since you never do…the collapsing muni-bond market will be revived but on a credit allocation basis that Sedona will never qualify for…and since this town absolutely refuses to adopt a new-non-tourism based business model, Sedona will die and become a ghost town long before that 15 year mark is approached is it doesn’t change it financial policies right now. If not, then mega-wealthy and powerful foreign investors and hedge funds will come here and buy up Sedona, piece by piece. Don’t laugh… George Soros’s hedge fund is going around the world and buying up the world’s best price-discounted destination-market tourist/lodging facilities dirt cheap. You had better believe this is going on world-wide right now. Sedona will be such an easy target! That’s a given.

Why is it that any of you on Council are so concerned about the economics of the turn-back issue a decade and a half down the road, when you all can’t even understand that tourism will not, and second home real estate will not, substantially recover for a period long after the 15 year projection you’re all hung up on.

For instance, you (meaning the past two Councils), have shown no concern for 1] squandering $11,000,000 on that worthless Series 2007 bond issue to finance the Chapel district sewering,  2] you have no concern over squandering hundreds of thousands a year on public funding of the Chamber of Commerce (which virtually no other city in the entire U.S. does) who cannot do anything whatsoever to revive tourism here or bring in new taxpaying businesses, and instead has been costing us tourism dollars in the last year, and 3] you have no concern over the tens of thousands of dollars that you waste every year on meaningless consultants reports and surveys that are commissioned because your staff isn’t capable of doing simple surveys, while 4] the current and previous Councils had no concern for complete negligence in the maintenance of the waste water treatment plant nor any concern for re-designing and upgrading it before it was too late, and (lastly), 5] you have shown no concern whatsoever for the fact that Sedona, on a percentage basis, has the most bloated and overpaid City Staff in the entire state which is justified by your Mayor because staffers are “family!”

No one in City administration has any idea of how the municipal bond market works, what’s happening to it now, what rising long-term interest rates mean to the bond market and this City, and why, as I’ve warned for 3 three long years, that Sedona can’t rely on new debt issues to replace lost tourism excise taxes. No one cares to get off the tourism and real estate teats. No one wants to think about the fact that Sedona could retire its debts over the next few years with the money it literally squanders on the funding of your Chamber of Commerce.

Meanwhile, you permit, day in and day out, your Chamber of Commerce, your realtors, and your main newspaper, none of whom know anything whatsoever about economics, to govern your thinking on financial issues and yet, now, you’re all consumed by financial projections 15 years down the road. Councilor, what this whole thing comes down to is that we in Sedona conduct endless irrelevant financial debates and surveys predicated on non-existent knowledge of the discipline and, therefore, always arrive at the wrong conclusions.

Your Mayor admitted that he hadn’t known me to be wrong about a single economic prediction over the last three years, which pains him no end, yet he never spent one minute with me to discuss the turn-back issue when five Councilors did! What was that all about?

Any argument, now, over financial risks for this City some fifteen to twenty five years from now is patently ludicrous. Could it be worse than that…yes it could, since all of you will continue to allow the Red Rock News and the Chamber of Commerce, a few entirely biased hotel operators and realtors, to issue economic conclusions to you which are laughable amongst the community of educated economists. Well, you all can just keep it up while I explain to you what happened as you all continue to miss the economic mark.

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