Lorenzo Perez of Venue Projects in Phoenix has a model of apartments from containers.

Phoenix architect and developer Lorenzo Perez is planning what could be the ultimate in recycling: building studio apartments out of used shipping containers.

He joins a growing number of architects, developers, researchers and others who have become fascinated with new uses for the ubiquitous metal corrugated containers that transport goods globally by truck, train and ship.

The containers revolutionized international trade when they were created about 50 years ago. Now, new and recycled containers are being used for homes, apartments, dorms and shopping centers throughout the world.

The containers are virtually indestructible and, at $2,000 for a standard new 40-foot container, quite affordable.

They usually come in 20- and 40-foot lengths and are 8 to 9 feet wide and tall.

Perez wants to create two studio apartments that would each use a 40-foot and a 20-foot container placed parallel to each other, with a covered breezeway in between. The longer container would be set up as a living unit and the smaller unit could be a guest house, office or artist’s studio.

Assuming he gets permits from Phoenix, he plans to put the units on a lot he owns near Grand Avenue and Roosevelt Street and begin renting them this fall. It’s an area that has attracted a number of artists and is one of the main stops for the First Friday art tours. He said they could probably be rented for about $650 a month.

“I have been intrigued how people are using shipping containers globally for a variety of uses, whether it be transportation or shelter,” he said. “I thought it would be fun to do something in this particular area for affordable housing for artists or people who want to live downtown in something kind of interesting.”

Perez said his shipping-container homes could become models for affordable infill housing.

He especially likes the challenge of making metal boxes habitable in a hot desert environment.

From the inside, the containers would look like regular buildings. They would be finished out with drywall, windows and doors and, of course, plumbing and electricity. They would be insulated and air-conditioned and shaded by mesquite trees.

“We have found some interesting products out there that are used on containers for transporting heat-sensitive goods like produce and stuff that are applied by paint. They give a tremendous insulation value,” Perez said.

He wants to start with two units, rent them out and see how they work out throughout the year.

Perez and his business partner, Jon Kitchell, own Venue Projects, a development company, and Kitchell-Perez LLC, a building company that focuses on infill projects.

Containers have been used as buildings for a long time but generally not for homes.

Camelback Container Services LLC, a Phoenix company, converts containers into offices that can be trucked to remote locations, such as a construction site. Mobile Mini Inc., a Tempe public company founded in 1983, has become a major worldwide supplier of portable storage and offices.

John McManis, a vice president of One Way Lease Inc., the San Francisco parent company of Camelback Container Services, said container architecture is the latest phase in the history of containers. The metal boxes were first developed in the mid-1950s to create a better way to transport goods and cut down on breakage and theft.

In 2006, the 50th anniversary of the creation of shipping containers, Marc Levinson, a New York economist, published a book on their history and significance: “How the Shipping Container Made the World Smaller and the World Economy Bigger.”

But because of the global slowdown in trade, thousands are now parked at ports in Asia. Most shipping containers bring goods from Asia and Europe to North America and return empty because of the trade imbalance. Most containers are made in China, McManis said.

One Way Lease started leasing the containers for shipping and now mostly focuses on its wholesale business of converting them to offices or storage units. Mobile Mini has been a major customer.

Used containers are easy to upgrade for reuse, McManis said. Excess rust can be easily scraped off and then the metal can be primed and painted, and the containers can last more than 50 years.

“You talk about low-tech. They have two moving parts, a left door and a right door,” he said.

To encourage more diverse uses such as Perez’s proposal, One Way Lease’s Web site now promotes their many uses, including as additions to a shop, shelters, vending facilities and fast deployment levees. Walt Disney Studios used 180 containers in 1995 to create a giant movie screen in New York City’s Central Park.

“The person who has taken this farthest (of the company’s customers) is Lorenzo. This is really a neat little project,” McManis said.

The National Association of Realtors said Tuesday the median sales price of an existing home in Tucson was $176,000, down from $221,000 in 2008.

The 20 percent drop is less than half of the 42 percent plunge in the Phoenix metro area, where the median sales price stands at $129,000.

In 2006, Tucson’s median sales price was $244,000.

Median sales prices of existing homes declined in 134 out of 152 metropolitan areas compared with the same period a year ago. Prices rose in the other 18 cities.

Nationwide, sales of foreclosures and other distressed properties made up about half of the market.

Home sales fell in all but six states — Arizona, California, Florida, Virginia and Minnesota — where buyers have been able to snap up foreclosures at a deep discount.

Sales more than doubled in Nevada, rose 81 percent in California and grew 50 percent in Arizona — signaling that the worst may be over for those distressed states.

Still, the median sales price nationwide was $169,900, down 13.8 percent from a year ago. The median price is the midpoint, which means half of the homes sold for more and half for less.

The biggest drop, of more than 50 percent, was in Fort Myers, Fla. Prices fell 40 percent or more in Saginaw, Mich.; Akron, Ohio; San Francisco; San Jose, Calif.; Phoenix; Sarasota, Fla. and Riverside, Calif.

The biggest price gain, of more than 21 percent, was in Cumberland, Md. The only other double-digit increase was in Davenport, Iowa, which saw the median price climb nearly 14 percent.

Lawrence Yun, the trade group’s chief economist, said the $8,000 tax credit for first-time buyers included in the economic stimulus package signed by President Barack Obama earlier this year should boost sales.

“We expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas,” Yun said in a statement.

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By the numbers

Full report on median home prices

The sixth sense that usually gut-checks suspicious offers can get blocked when a person is growing desperate for work, said Judd Rousseau, chief fraud officer of Scottsdale-based Identity Theft 911, which helps victims clean up after their personal information is stolen.

The Arizona Attorney General’s Office reported an increase of more than a 275 percent in complaints about business opportunity scams, from about 225 during the first quarter of 2008 to about 850 in the first quarter of 2009, a spokeswoman said.

The Better Business Bureau of Central, Northern and Western Arizona has seen a spike, too.

“I think that people who run scams and these schemes follow the trends in the marketplace,” said Felicia Thompson, a BBB spokeswoman. Scam artists “know people are out of work and know that’s an opportunity to gain someone’s trust and violate that trust.”

There are ways to avoid getting duped, according to organizations such as the BBB, Identity Theft 911, the Federal Bureau of Investigation and the Federal Trade Commission. Here’s how:

Mystery shopping

Rip-off: There are variations on this scam, but in one instance the victim receives an official looking letter and a sizable check to conduct undercover market research.

First, he or she must deposit the check into a personal bank account within a few days.

A portion of those funds is the victim’s payment and shopping money. He or she is instructed to wire the rest to an address provided in the letter.

The money needs to be wired in order to test consumer experience with services like Western Union or MoneyGram, some scams claim.

Here’s the problem: The initial check was fake. By the time it bounces, the company is long gone with the victim’s own money that has been wired.

The victim could be on the hook for thousands of dollars.

Warning signs: The Mystery Shopping Providers Association in Dallas warns consumers that shoppers never pay up-front fees. Also, mystery shoppers typically earn roughly $10 on average for an evaluation – not hundreds or thousands.

“People should always look at mystery shopping purely as an opportunity to make a few extra bucks,” said John Swinburn, the group’s executive director. “They can’t depend on mystery shopping to keep them solvent.”

Other sophisticated scammers spoof the Web sites of legitimate mystery-shopping companies.

Swinburn advises people to go to his association’s Web site (www.mysteryshop.org) and double-check the Web site address of its list of legitimate companies.

Pyramid scheme

Rip-off: A victim pays hundreds or even thousands of dollars to become a “distributor” for a company that sells items like perfume, lotion or vitamins – often at an insanely high price.

The more friends and family recruited to this “multi- level marketing plan,” the more money is made, the pitch goes.

But only the scammers end up rolling in dough. The scheme eventually collapses under its own weight when there are no more recruits.

Warning signs: A pyramid scheme promises a get-rich-quick approach. New products on the market can take years to make money.

Also, be wary of initial membership fees. You never should have to spend money to get a job.

Work from home

Rip-off: Earn a handsome salary from the comfort of home by stuffing envelopes or processing medical billing claims.

Don’t take the bait. If it worked, everyone would apply for these positions.

Scammers, for example, may charge envelope stuffers to learn the “secrets” of the industry and provide help. But the victims are left to drum up their own business.

It’s worse for medical billing. Scammers can charge victims thousands of dollars to start a firm to help doctors with outsourced billing, accounts receivable, electronic insurance-claim processing and practice management, according to the FTC.

This rarely ever makes money. “Competition in the medical billing market is fierce and revolves around a number of large and well-established firms,” the agency reported.

Warning signs: Not all work-from-home offers are scams, but be wary. In writing, the company should provide information on duties, pay, when your first check will arrive and total cost for supplies, equipment and membership fees, according to the FTC.

Contact the local BBB or Attorney General’s Office and speak to as many references provided by the company as you can.

And research the company online.

Social-networking ads

Rip-off: There’s an advertisement circulating on Facebook and other social-networking sites that features a stay-at-home mom who claims she adds “$67,000 a year to my family’s income working 10 hours a week (that’s over $128 an hour!) by creating Web sites that host Google ads,” according to the BBB.

The advertisement takes the victim to a “blog” that urges signing up for a “risk-free trial” to learn how to get a site up and running. But read the fine print. Victims can be charged $60 to $70 every month if they don’t cancel the trial.

Warning signs: Just because a company uses the word “Google” doesn’t mean it’s a part of or sanctioned by the Internet search giant.

The company’s AdSense program is free and allows users to display targeted ads on pages and earn money from clicks.

A spokesman for the Mountain View, Calif.-based company recommended that “users exercise the same amount of caution they would when evaluating other types of get-rich-quick claims.”

Faraway interviews

Rip-off: Chandler resident Carrie Landry, who was furloughed from her job as a US Airways pilot, answered a classified advertisement in The Arizona Republic for a food and beverage server on a corporate jet.

A man called her back and said the firm had many rich and famous clients who took charter flights to cruise ships and private yachts. It paid $950 and $1,250 per week.

Landry also had nine years as a flight attendant and said she was interested. But the interviewer seemed nervous about her wide range of experience. He hung up on her.

However, the man offered to fly Landry’s friend, who had less experience, from her home in Ohio to San Diego for an interview. She had seen the same ad in a different newspaper.

She was told she would need to wire $300 to help cover the travel expenses. If she was hired, she’d be reimbursed. The woman wired the money, and it was gone before she and her husband learned they’d been taken.

Warning signs: Most companies will not make you pay up-front to travel to a job interview. Reimbursement never should depend on getting hired.

Most importantly, contact the publication where you saw the advertisement.

“We monitor all advertising for fraudulent activity; key is hearing from our readers about their experiences,” said Peter Ricker, senior vice president of advertising at The Republic. “Our staff is trained to handle matters like this with referrals to the proper agencies. Several notices are placed throughout our classified products alerting the consumer on what to look out for and how to direct their complaints.

“Unfortunately on occasion, we do experience advertisers who bypass our safeguards. Once we are informed, they are removed from our products.”

A lawsuit filed Thursday in U.S. District Court in Phoenix contends the builder and lender engaged in systematic appraisal-rigging to inflate by thousands of dollars the value of new homes sold since 2006. The plaintiffs, seven KB Home customers in Buckeye and Surprise, say the practice has cost customers millions of dollars and contributed to the recent flood of loan defaults and foreclosures.

KB Home and BofA representatives said they had not seen the complaint as of Thursday and could not comment.

The lawsuit arrives amid widespread resentment directed at lenders for practices perceived as predatory and at home buyers for taking on more debt than they could realistically afford. It is the latest in a series of lawsuits filed in Arizona and across the country to try to assess blame in the wake of the worst housing meltdown since the Great Depression.

In exchange for its participation with KB Home, Countrywide and its appraisal-management subsidiary, LandSafe, were made the exclusive providers of real-estate settlement services for KB Home, the suit says. They earned thousands of dollars per customer in loan-origination, title-insurance, appraisal and escrow fees.

The plaintiffs are seeking class-action status to add thousands more KB Home buyers nationwide. In the Southwest alone, at least 14,000 KB Home-built houses have been sold since 2006, the complaint says.

Inflated appraisals?

Many critics of the lending industry say inflated appraisals contributed to the nation’s economic crisis. The industry’s shift toward selling off mortgage loans as securities to investment brokers made lenders less concerned about the accuracy of appraisals, the critics contend, just as the rise of new incentives for mortgage brokers gave them more reasons to push risky loans on buyers.

Homebuilders sold their homes for higher prices, the banks profited from making and selling loans, and the mortgage brokers benefited from earning more commissions.

Some appraisers have said that they had to choose between playing along or losing the bulk of their business.

The Phoenix-area residents’ complaint, filed by their lawyer, Robert Carey, a former Arizona assistant attorney general, says the plaintiffs cannot be held responsible for their own lack of due diligence because participants in the homebuying transactions who presented themselves as disinterested third parties actually were in on the scheme.

That includes appraisers “who were under direct instruction to value homes at their contract price and were hand-fed inappropriate – if not outright false – comparable properties to use in completing their appraisals,” the complaint says. Reports written by different appraisers who should not have been communicating with each other or with KB Home relied upon the same “unverified information and patently faulty methodology,” the complaint says.

The complaint cites three common elements to the appraisals.

The first was “improper selection of distant, dissimilar properties” when there were “numerous available neighboring, identical comparable sales that would have revealed lower value.”

In addition, the complaint says, the appraisals contained identical “false and misleading statements regarding market factors and conditions” that ignored known facts about the housing market’s downward trajectory after 2005.

The third sign of a problem, the complaint says, was the use of pending KB Home sales as a basis for appraised value, “even when no sale was actually pending because the ostensible buyer had abandoned the transaction.”

On a more fundamental level, the complaint argues that the use of pending transactions raises a red flag because such information “would only have been known to KB Home” and the appraisers were not supposed to be conferring at all with the builder.

Other lawsuits

The lawsuit is the second filed against Countrywide and LandSafe this year by Carey’s law firm, Seattle-based Hagens Berman Sobol Shapiro, which also filed a similar case in Phoenix against Wells Fargo and its appraisal-management firm, Rels Valuation, in February.

A Wells Fargo representative said at the time that the lender’s process for obtaining home-loan proposals is legitimate.

Appraisers in Idaho filed a still-pending lawsuit in October against Countrywide, claiming the lender had pressured them to manipulate appraisals. A Countrywide representative at the time said that the lawsuit was without merit.

And a recent investigation of appraisals by New York Attorney General Andrew Cuomo prompted federally sponsored lending giants Fannie Mae and Freddie Mac to adopt new standards this month for the way appraisals are conducted.

The newest lawsuit describes the financial impact of KB Home and Countrywide’s appraisal maneuvers as “staggering.”

It contends that price inflation by the builder and lender is an average of $20,000 per home, which would have cost consumers $280 million in the Southwest region alone.

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Transaction process for home sales under fire

Participants in home-sales transactions at all levels have faced accusations of manipulating the process. Here’s a look at how it should work and what can go wrong.

Appraisers

What they do: Establish a property’s fair market value, which is used by banks as the basis for issuing a mortgage loan.

The right way: Produce an independent property-value estimate based on recent similar-sale transactions.

The wrong way: Seek out recent transactions that justify a predetermined price and ignore transactions that conflict with the desired price.

Lenders

What they do: Approve or deny a mortgage loan based on a property’s assessed value and the anticipated ability of a borrower to repay the loan.

The right way: Rely on independent appraisals to determine a prudent loan amount for a given property.

The wrong way: Pressure appraisers to set the value of a property at an amount desired by the loan broker or property seller.

Home builders

What they do: Sell new homes based on current market value.

The right way: Establish a sale price based on an independent appraiser’s estimated valuation.

The wrong way: Pressure the lender or appraiser to set estimated property value at a predetermined amount.

Source: The Arizona Republic

The AAA says drivers here paid an average of just $1.94 a gallon on Friday compared to a national average of $2.17.

Phoenix drivers have it best of all, paying just $1.87 a gallon. Tucson – and Pima County – drivers were paying $1.91 Friday.

The highest price in the nation, as usual, is paid by drivers in Alaska and Hawaii. Drivers in the Aloha State are forking over $2.50 for a gallon of regular, while those in Alaska are paying $2.60.

Richard Laguna, 42, shops for milk at Food City, 3030 E. 22nd St., on Wednesday afternoon. According to the Arizona Farm Bureau, food prices have dropped for the second consecutive quarter. A gallon of milk is down 20 cents, to $2.87.

Raid the dairy section, stock up on O.J., and favor fowl over the hooved proteins.

Those are three ways to save on your grocery bill based on the latest survey by the Arizona Farm Bureau Federation, which does quarterly assessments of 16 common grocery items.

Orange juice showed the greatest decrease, with the average price down $1.40, to $2.49 for a half-gallon container. Shredded cheddar cheese was down $1.31, to $3.65 a pound; a 5-pound bag of flour dropped 50 cents, to $3.19; and milk was down 20 cents to $2.87 a gallon.

The largest prices increases were deli ham, up 70 cents a pound to $5.28; ground beef, up 30 cents a pound to $3.99; and toasted oat cereal, up 24 cents an 8.9-ounce box to $3.23.

“What’s happened with dairy is we’re oversupplied, and milk prices should be staying low through a good chunk of this year,” said Julie Murphree, spokeswoman for the Gilbert-based Arizona Farm Bureau Federation.

Local shopper Stephanie McKerchie said she has seized on lower milk prices.

“My fiancee and I have three gallons of milk in the fridge, because we drink a lot and use a lot for cereal, and I have noticed that it’s gotten a lot cheaper compared to last year,” said McKerchie, 20.

The substantial drop in milk prices will come at an eventual cost to the consumer, as milk producers will most likely pull back on their production, resulting in an eventual uptick in prices that could come as early as this fall, Murphree said.

“Given the suddenness and severity of the plunge in farm-level milk prices, a significant number of farmers won’t survive much longer with the milk prices they’re receiving,” said Paul Rovey, chairman of the board for United Dairymen of Arizona.

Farm-level prices for milk were down almost 50 percent in February from the beginning of 2008 due to the economic downturn, growth in world supplies of dairy products, and lower international and domestic demand, Rovey said.

McKerchie noted that her savings on milk and cheese is canceled out by rising beef prices.

“I buy steak for dinner, and that’s been really hurting our pocketbook,” she said.

For Norm Peterson, the only reasonable prices he sees on beef these days come in quantities too large for him to buy.

“To get a decent price, you have to basically buy the family pack, which is about a dollar per pound cheaper. But unless you’re going to buy that much, it’s up,” said Peterson, an 86-year-old retired contractor. “Milk prices have definitely come down, but overall, if anything, I think I’m paying more.”

Peterson’s 62-year-old daughter, Carol, said it’s not just higher prices that steer her away from beef.

“Don’t even get me started on beef,” she said. “I don’t know where the heck all the good meat is, but they must be shipping it out of the country, because all we get is the weird stuff.”

Most of the savings that warehouse worker Mark Lopez sees when shopping come with a caveat, he said.

“When the prices are really good on milk and other stuff, it’s usually because of the expiration date, because it’s about to go bad,” said Lopez, 40. “Most of the other stuff I buy, like cereal, vegetables and meat, that’s all gone up.”

The bureau compares prices on a quarterly basis for the Marketbasket survey, but comparing the first three months of 2009 to the last quarter of 2008 has been complicated due to a change in six of the items used in the survey, Murphree said.

The Farm Bureau looked at the institute’s data on shopping trends over the last two years and based on that data, updated the 16 Marketbasket items to better reflect consumers’ current buying habits, said Jim Sartwelle, an American Farm Bureau economist.

Based on the former 16 items used in previous quarters, the first quarter of 2009 was down 32 cents from the previous quarter, Murphree said. That’s the second consecutive drop, as the last quarter of 2008 was down $2.71 from the third quarter of 2008.

Arizona’s total price on the Marketbasket was $7.02 higher than the U.S. average of $47.41 for the same 16 items.

The state’s food prices are generally less favorable than the national average because there are a lot of basic foods that are brought into Arizona rather than produced and processed here, Murphree said.

“If you’re in the Midwest, you’ve got the whole integrated supply chain working for you, but here, the middleman-handling and transportation costs increase the prices,” Murphree said.

Arizona also has a lot of rural areas served by single grocery stores, which aren’t under the same pressure to lower prices as those in urban areas with more competition, she said.

The bureau seeks to identify the best in-store prices, excluding promotional coupons and special deals, so shoppers can often find better prices than those listed in the Marketbasket survey if they seek out in-store specials, Murphree said.

The bureau advises shoppers wishing to stretch their dollars to focus on basic food items over processed ones, and when possible, modify their eating habits, Murphree said.

“With that box of corn flakes, the actual corn in the box is not more than 5 to 8 cents, but the box costs you $3.50, so you’re paying for the middleman,” she said. “It might not be as convenient, but instead of cereal every morning, if you have eggs one morning and fruit and milk on another morning, that will make a difference. Eggs are about 16 cents a piece.”

The price of all-purpose flour fell an average of 50 cents for a 5-pound bag.

The cost of Red Delicious apples has remained steady over the past quarter, at an Arizona average of $1.46 a pound.

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Item AZ change over U.S.

average pvs. quarter average

Red Delicious Apples, lb. $1.46 down $.01 $1.35

Russet Potatoes, 5 lbs. $3.69 no change $3.05

Ground Chuck, lb. $3.99 up $.30 $2.94

Sirloin tip roast, lb. $4.99 up $.14 $3.99

Sliced deli ham, lb. $5.38 up $.79 $4.94

Bacon, lb. $3.88 up $.19 $3.26

Boneless chicken breast, lb. $4.75 down $.04 $3.38

Whole milk, gallon $2.87 down $.20 $3.15

Shredded mild cheddar cheese, lb. $3.65 down $1.31 $4.24

Eggs, dozen, large $1.99 up $.20 $1.50

All-purpose flour, 5 lbs. $3.19 down $.50 $2.51

Orange Juice, half gallon $2.49 down $1.40 $3.00

Vegetable oil, 32 oz. $4.29 down $.03 $2.79

American Salad mix, lb. $2.99 up $.10 $2.63

Toasted oat cereal, 8.9-oz. box $3.23 up $.24 $2.91

White bread, 20-oz. loaf $1.59 no change $1.77

Source: Arizona Farm Bureau Federation Marketbasket Survey

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MARKETBASKET SURVEY

FIRST QUARTER 2009

Vendors along Rocky Point's main street report business is painfully slow because few American tourists are crossing the border as fears of swine flu and concerns about drug-cartel violence mount, adding to the problems in Mexico's slumping economy.

ROCKY POINT, MEXICO – Wounded by recession and widespread drug violence, Mexico’s economy convulsed this week as fears of swine flu shut down schools, canceled public events, kept residents in their homes and turned back American tourists.

Among the hardest-hit communities is the coastal getaway of Rocky Point, the city 215 miles south of Phoenix that has been transformed from tourist mecca to virtual ghost town.

“I don’t know where the gringos are, and we depend on them,” said Fernando Lara, 31, a jewelry vendor, gazing down an empty row of souvenir stands.

Arturo Rodriguez Rico is president of CANACO, the chamber of commerce in Rocky Point, the city in Sonora, Mexico, also known as Puerto Peñasco.

He said that business was down 40 percent before the flu. Then, on Sunday night, major drug-cartel mayhem struck for the first time, with four people killed in the heart of the community.

Police tape flutters in the breeze at Rocky Point’s main intersection, where machine-gun fire riddled a Ford Fusion. Some bullets slammed into a nearby bank. Others struck the victims: two men and two women, all outsiders from Caborca and Sinaloa.

Esau Palacios, selling cow’s-head tacos at the corner, said that business is non-existent because of the one-two punch of the shootings and flu.

“People are afraid,” he said.

Across Mexico, economists worry that the flu outbreak could trigger a complete meltdown as shoppers stay home, restaurants close and workers deal with the financial strain of child care amid school closures.

“The death toll of businesses could be much worse than the number of people who die from the flu,” said Alejandro Álvarez Bejar, an economist with the World Economic Studies Network, a think tank based in Puebla, Mexico.

In the nation’s capital, Lisandro Soto looked dourly around the showroom of his Chevrolet dealership, full of cars and bereft of shoppers.

Outside, pedestrians hurried by in face masks, trying to avoid a virus suspected in the deaths of more than 150 so far in Mexico.

Car-buying was the last thing on anyone’s mind, said Soto, adding, “It’s not just Mexico that is going to get hurt. If nobody is buying Chevrolets here, jobs up there (in the United States) are going to be affected, too.”

Wednesday, Mexico’s Central Bank said that it would likely revise this year’s economic outlook, expected to contract up to 4.8 percent. That could be bad news for the U.S., which exported $151.5 billion in goods to Mexico last year.

In the past, upheavals in Mexico have had other effects on the U.S. economy. During 1994, an armed uprising in the southern state of Chiapas and the assassination of a presidential candidate spooked investors and hastened a financial implosion.

Migrants surged across the U.S. border in the wake of that collapse, known as the “Tequila Crisis.” The United States put together a $50 billion bailout package to get Mexico back on its feet.

Back in Rocky Point, streets are quiet. Vendors outnumber tourists 10 to 1. Restaurant workers – in protective masks – stand on sidewalks hoping for customers. With schools closed, children play tag near their parents’ shops.

“I’ve never seen it like this,” said Wayne Howell of Prescott, in an otherwise empty restaurant with wife Candace. “These poor people. . . . Everything has happened against them. It’s sad.”

Rodriguez Rico, the chamber president, said Rocky Point is fighting false fears, not reality. There is no swine flu in the community, he noted, and no hint of drug killings before this week.

“What can we do?” Rodriguez Rico asked, shrugging in frustration.

The few Americans who braved a visit seemed thrilled to have Rocky Point to themselves. Marlyn Friesen, 62, of Nebraska, said she was having a wonderful time on her first visit to Mexico, despite advisories by the U.S. State Department.

“We heard all about the drugs and people capturing you and not letting you go,” Friesen said. “Then, we heard about the swine flu.”

Friesen’s daughter, Melissa Friesen of Chandler, 42, scoffed at public paranoia. “You can get flu anywhere,” she said. “Besides, my company manufactures Tamiflu, so I have some with us.”

Maribel Catarino, 28, operates a curio shop on Avenida 32. She said she sold one item, a $5 hat, in eight hours. Catarino said she and her husband, also a street merchant, are struggling to support three small children.

She gazed down four blocks of stores without a single American customer, shaking her head. “It’s gotten so hard.”

By Dennis Wagner, Chris Hawle

Barney's

Barneys New York is on track to open its first Arizona store, despite financial problems that have impacted the venerable store along with other high-end retailers.

The company hasn’t set a specific opening date, but remains committed to a fall debut of its 80,000-square-foot store at Scottsdale Fashion Square.

Barneys recently introduced itself to 500 of the Valley’s most well-heeled shoppers, through sponsorship of this year’s Trends Charitable Fund’s annual celebrity luncheon.

The event traditionally draws many of the Valley’s most fashionable women and men, termed “fashionalities” by organizers.

Barneys sent its biggest personality to make the introduction, creative director Simon Doonan, who is in charge of ensuring that Barneys’ image always evokes its mantra of “taste, luxury and humor.”

“We’re a playful brand that takes design very seriously,” said Doonan, who has written four books, writes a newspaper column and regularly appears on network television.

Barneys’ sense of humor and style is manifested in the display windows that Doonan has dressed since joining the company in 1985. Doonan’s windows have become a Barneys’ hallmark, ranging from a scathing portrayal of ex-British Prime Minister Margaret Thatcher as a dominatrix to a more lighthearted Tammy Faye Bakker Messner using a Christmas tree as a mascara brush. This year was a 1960s theme: “Have a hippy Christmas.”

Not so humorous was securities-rating agency Standard & Poor’s double downgrade earlier this month of Barneys’ debt and a warning that without a cash infusion, vendors could tighten credit terms or limit shipments.

Owner Istithmar World Capital, the investment arm of the government of Dubai, came to the retailer’s aid with enough cash to allow Barneys to pay for merchandise shipments for the rest of the year.

“We will continue to monitor the company’s performance but we are confident that no further injection is needed at this time,” Istithmar CEO David Jackson said in a statement.

Istithmar bought Barneys for $942 million from Jones Apparel Group Inc. in 2007, when business was booming for luxury retailers.

That swiftly changed with the recession, which has significantly crimped demand for luxury goods and produced huge sales declines at high-end retailers, prompting speculation Istithmar may try to sell Barneys. Saks saw sales at stores open at least a year fall 23.6 percent in March, while Nordstrom sales fell 13.5 percent at comparable stores that had been open more than a year.

Barneys is privately held and doesn’t regularly report same-store sales.

Barneys was founded by Barney Pressman in 1923, with $500 raised from pawning his wife’s engagement ring. For 50 years, Barneys sold exclusively men’s clothes, but in the 1970s, added women’s wear which now makes up about 60 percent of its inventory. The stores also carry cosmetics, housewares and jewelry.

In the U.S., Barneys operates nine traditional stores, 19 smaller and sportier Barneys Co-Op stores and 13 outlet shops.

While its stores in New York and Los Angeles are the size of traditional department stores, they are more spontaneous and less formulated, Doonan said.

What really sets the stores apart from competitors such as Neiman Marcus and Saks, according to Doonan, is the “edit” or merchandise selection.

Doonan noted the Barneys buyers’ goal is to “exceed the expectations of customers with exceptional and exclusive merchandise.”

“Not everything on the runway looks good,” Doonan said. “Our buyers have fantastic taste and incredible eyes for what does.”

Barneys is known for spotting new trends and has consistently supported emerging designers such as Derek Lam, Trovata and Thom Browne, among many others.

Clothes by designers Giorgio Armani and Miuccia Prada first appeared in the U.S. at Barneys, Doonan said.

Barneys is betting that its sense of humor and eye for fashion will hit a bull’s-eye with Valley shoppers.

Phoenix businesswoman Christine Gustafson, organizer of this year’s Trends luncheon, doesn’t think that will be a problem.

“I can’t see a better up-and-coming shopping area to enter,” she said. “This community always has women who can spend money on the right fashion and the right look.”

Geanna Gute, a longtime renter in the Phoenix area, recently bought a home in Buckeye for $75,000 with the help of an USDA loan.

The same government agency known for certifying the quality of hamburger and steak is becoming a prime force in the Arizona housing market.

The U.S. Department of Agriculture has guaranteed mortgage loans for many years, much like the Federal Housing Administration and Department of Veterans Affairs, but this year the value of Arizona loans guaranteed by the USDA is on pace to quadruple compared with 2008.

While USDA home loans are not for everyone – there are both geographic and household-income restrictions – acting USDA Arizona Director Ernie Wetherbee said the federal agency’s loan-guarantee program is available to more people than ever, thanks to a recent boost in income limits.

As of April 20, the maximum allowable yearly income for USDA loan recipients in the Valley increased to $75,750, from $51,000.

The limit apples to families of up to four people, Wetherbee said, and larger families can have a combined income of up to $100,000.

Buckeye newcomer Geanna Gute was approved for a USDA loan recently and said she had never imagined owning a home would be so affordable.

Gute, a 58-year-old bill collector who had been a longtime renter in the Valley, learned about USDA loans from a local radio talk show on KFNN hosted by Sun State Home Loans broker Mike Metz.

She contacted Metz, and within weeks she had purchased a pristine 1,860-square-foot bank-owned home, built in 2005, for $75,000. It had been appraised at $200,000 in October, she added.

Gute said her monthly payment is $650, and the only thing she had to pay for up front was a re-shoot of some inspection-related photos.

“I had to pay $60 – that’s all I paid,” she said.

The USDA guarantee program is similar to the FHA’s in that private banks still provide the loans, and the government promises to pay off the loan if the borrower defaults.

The USDA also has a direct-lending program in which it acts as the lender, but the annual household-income requirements are lower: $52,700 to $69,550, depending on the number of household members.

Unlike FHA loans, which require a 3.5 percent down payment, USDA-guaranteed loans require no down payment, similar to VA loans.

Despite the lack of a required down payment, USDA loans historically have the lowest default rate among government-insured loans. The current first-year default rate for USDA loans is 2.5 percent, compared with 7.5 percent for VA and 10 percent for FHA.

“Our program has been around for years, and it has never changed,” Wetherbee said. “It’s a good product, and it’s being used as intended.”

Angelica Murrieta, a Realtor with Dan Schwartz Realty in Phoenix who specializes in USDA loan purchases, said the lesser-known federal-guarantee program has provided a shot in the arm to outlying areas of the Valley, where an oversupply of speculative homes and abundance of foreclosures have lowered home values significantly.

Many home buyers are still unfamiliar with USDA loans, Murrieta said, adding that she is quick to recommend them to buyers who qualify and don’t mind living in a more remote location.

Although the loans are restricted to “rural areas,” the definition includes Buckeye, Queen Creek and most of suburban Pinal County. This is probably the last year in which some of those communities will qualify for USDA loans, Wetherbee said, because their status as rural is based on 2000 U.S. Census data, and there will be another census next year.

Home buyers and lenders turned away from federally insured loans during the housing boom that peaked near the beginning of 2006, Wetherbee said.

“This was not the road of least resistance, because these are fully documented loans,” he said.

Now that many of those borrowers are losing their homes to foreclosure and banks are reluctant to risk money on new mortgages, nearly everyone has flocked back to the security of a government guarantee.

As a result, the loan volume and value of USDA-backed loans have increased exponentially in the past year.

In the federal agency’s entire fiscal 2007, which runs from Oct. 1 through Sept. 30, it guaranteed 123 mortgages in Arizona with a combined value of $19 million. The following year, it backed 629 home loans worth a total of $97 million.

Since Oct. 1, the USDA has guaranteed 1,366 mortgages totaling $176 million, and Wetherbee said he doesn’t anticipate any federal-budget restrictions that would prevent the agency from continuing to approve loans at its current pace.

“We basically just go back and ask for more as needed,” he said.

Two new teams, the Los Angeles Dodgers and the Cleveland Indians, helped contribute to the increase, as did the addition of a week’s worth of games. The Cactus League played 246 games in 2009 during a five-week season, compared with 177 during four weeks in 2008. This year’s numbers included 11 World Baseball Classic exhibition games, which, for the most part, were sparsely attended.

While the net attendance was up 20 percent, per-game attendance dropped about 1,000 from a year ago. But last spring was a particularly strong season and missed the fallout from the recession, which took hold in the summer and fall, said Robert Brinton, the Cactus League’s president.

In Tucson, the Arizona Diamondbacks drew 121,281 fans to 18 games and the Colorado Rockies drew 75,557 to 16 games.

The Chicago White Sox, who played their first season in Glendale after moving from Tucson, drew 91,782 fans to 15 games.

“Spring training delivered at a time when we really needed it,” Brinton said. “It’s the spring-training stimulus package, better than a government one. It’s like having a Super Bowl every year.”

The league estimated that the economic impact of fan spending was $335 million in 2008 and $311 million in 2007.

According to Major League Baseball, overall spring-training attendance in both the Cactus League and Florida’s Grapefruit League was up 3.3 percent.

Arizona’s 20 percent increase more than offset Florida’s 7 percent decrease.

The Grapefruit League surpassed the Cactus League in total attendance, but that is likely to change next year when the Cincinnati Reds move to Goodyear, joining the Cleveland Indians.

The Reds drew 77,758 fans in their final spring season at Ed Smith Stadium in Sarasota, Fla. In comparison, the Chicago Cubs, the Cactus League’s attendance champions, drew 203,105 fans.

Attendance for the Cactus League, excluding World Baseball Classic games, was 1.53 million in 235 games for an average of 6,516. With the WBC games included, league attendance was 1.56 million, an average of 6,418 per game.

Florida’s total attendance was 2 percent higher than Arizona’s. The Grapefruit League currently has two more teams, including the top-drawing New York Yankees. Even so, the Cactus League’s per game average was higher by 8 percent or nearly 500 fans.

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Spring baseball steps up

Attendance at Arizona Cactus League’s 246 games in 2009 was 1.58 million, up from 1.32 million at 177 games in 2008. Average attendance for the league’s 14 teams fell from 7,436 per game in 2008 to 6,418 in 2009.

Average attendance in 2009 was:

1. Cubs: 10,690.

2. Dodgers: 9,130.

3. Giants: 8,476.

4. Mariners: 6,927.

5. Diamondbacks: 6,738.

6. White Sox: 6,119.

14. Rockies: 4,722.

*Excludes 2009 World Baseball Classic games.