Snow-Job Team 2

The latest shoe to drop in the Chamber (and I’m no longer drawing a distinction between the North Scottsdale Chamber and the old “Area” Chamber) attack to discredit our resident-friendly city council candidates is a new campaign postcard labeling Guy Phillips as having a, “Reckless Agenda.”

Continuing the strategy they implemented with their “dangerous agenda” attack on me, the Chamber has combed through Guy’s website for quotes they can take out of context and twist to portray Phillips as anti-business, particularly anti-small business.

As you know if you’ve been paying attention, Guy is a small business owner himself and has worked very publicly to reduce regulatory burden on small business in Scottsdale.

I guess Chamber chairman (and developer attorney) Loren Molever, and immediate past chairman, developer Craig Trbovich haven’t been paying attention to Scottsdale Leadership’s Civil Dialog initiative, which in part admonishes leaders to, “…be accountable for [your] words and actions.”

I wonder if the three “Chamber endorsed” candidates (Luoma and Korte are Scottsdale Leadership grads, and Klapp serves on the board) will disavow this smear. I doubt it. After attending the Arizona Republic candidate forum this week, it is clear the Republic isn’t going to exercise any “watchdog” (their word) role in this attack campaign.

In addition to the dishonesty (and incivility) of the attack on Phillips, the “Jobs Team” has a few problems with their own business histories. Klapp’s actions on the city council have COST Scottsdale jobs, particularly in the hospitality industry, and we’ve never seen any direct evidence that anything she’s done has led to creating any jobs. I’ll have more on Klapp in a future article.

One of Korte’s biggest bragging points is running the non-profit STARS program. However, one of the first things she did when she took over STARS was to fire employees. She’s sure to claim this was to improve efficiency of delivering services to STARS clients. That’s a conversation I relish, but as with Klapp I’ll postpone it for a future article.

For the moment, I’ll focus on Eric Luoma. As with Klapp and Korte, Luoma seems like a nice guy. We’ve never had cross words, though I’ve been pretty critical of him for never having participated in governmental dialog or advocacy prior to his opportunistic run for office.

It only took a few minutes of research after hearing his name and political ambitions for me to drop Luoma squarely into the “Chamber of Commerce” category. Yet, upon meeting him and asking a very pointed question about that, Luoma denied a link. Further, he told me that he’d quit the Chamber years ago because he disagreed with their aspirations of controlling Scottsdale politics. More on that presently…

Luoma touts himself as a small business owner. He runs a floral business started by his parents early in Scottsdale’s history. However, Luoma doesn’t talk much about his brush with corporate America a decade ago that resulted in the demise of many family-owned floral shops, and the loss of many jobs.

Interestingly, after Luoma merged his parents’ Cactus Flowers with would-be floral corporate overlord Gerald Stevens, Inc. (GSI) in 1998, he took a senior management position with the new corporate owner, and rode that horse into bankruptcy. Luoma and a few other insiders appear to have bought back their businesses for pennies on the dollar. In Luoma’s case he was “…rescuing it from bankrupt Gerald Stevens,” as described in an Associated Press story.

Meanwhile, other mom-and-pop floral shop owners who’d traded their businesses for shares of now-worthless GSI stock were left without chairs when the music stopped.

Inc. Magazine chronicled the rise and fall of Gerald Stevens in a 2003 article.

Luoma is listed in SEC filings as GSI’s, “Senior Vice President of the Southwest Zone.” It seems clear to me that this put him in the point position for evaluating floral shop acquisitions in the Southwestern U.S., and for representing to store owners the benefits of selling to GSI.

The Inc. Magazine article also cites Luoma as having been tapped to be GSI vice president of a $5 million technology upgrade program that was never successfully integrated into company operations.

The Phoenix Business Journal said of Luoma’s sale to GSI, “The deal gave Cactus Flower access to capital, which it is using to fuel acquisitions.” There was no word on what “capital” (cash and/or stock) was used to accomplish those acquisitions. It is also curious to me that having ostensibly sold to GSI, Luoma was able to buy out local competitors under his own banner rather than under GSI’s corporate mantle.

GSI’s modus operandi was one of aggressive acquisitions. However, their ability to convert those acquisitions into revenue lagged their ambitions of a floral empire. Signs of trouble were clearly visible starting in early 2000. Chapter 11 reorganization bankruptcy followed in April 2001.

With GSI’s implosion imminent, Luoma bought back his family’s legacy.

Eric Luoma, for example, was back in control at Cactus Flower, having paid half of his original sale price for twice the number of stores [Inc. Magazine].

A 2002 Mesa Tribune article cited the purchase price as $1.5 million.

By November of 2001, GSI’s reorganization charade was over.

As a Broward County Sun-Sentinal article (Florida was the location of GSI’s corporate home) said,

The creditors who will divide up the remaining assets [of Gerald Stevens] include former employees and vendors. Shareholders get nothing.

What about the aforementioned Chamber of Commerce pullout, you may ask? I think Luoma’s attempt to disarm my concerns may have been a bit disingenuous. Inc. Magazine cites his reason thus,

Even more painful to some of the florists was a corporate mandate to pull out of local chambers of commerce and charitable groups, says Eric Luoma of Cactus Flower.

Luoma may have disagreed with the Chambers politicking at the time, but in his own words that’s not the reason he pulled out. And he hasn’t to my knowledge uttered a single word of objection to the Chamber’s attack ads on his opponent, Guy Phillips.

In a 2006 Florist’s Review article on “sticking to your core specialty,” Luoma speaks about another venture.

One exception to the local focus is Cactus Flower, whose online arm includes Flowershop.com. For Valentine’s Day, a nationwide advertising blitz on 14 XM satellite radio stations generated a good response, Mr. Luoma says. He expects sales from Flowershop.com, which was purchased in late 2002, to surpass Cactus Flower sales this year.

Flowershop.com appears to still be alive and well, as does the Cactus Flower chain.

So, does all that make Eric Luoma qualified to lead Scottsdale in “…job creation and economic growth?” And more importantly, do you trust him to exercise stewardship over money and assets that belong to you, the taxpayer rather than just looking out for himself and his friends?

Luoma has zero history of meaningful involvement in Scottsdale city government. None.

He has never to my knowledge attended a single city council meeting prior to deciding to run for office. He has never advocated for a neighborhood that’s having a problem with development, and he’s never met with concerned citizens about government issues, prior to his campaign.

At the Republic forum, when asked to make a closing statement to tell the residents why they should support him, the core of Luoma’s statement was, “I believe Scottsdale is headed in a positive direction.”

Which leads me to ask, “Is that the best you’ve got? Do we want to elect our representatives based solely on their optimism?” I think the opposite. I think primarily we want someone who has a critical/analytical approach, who is skeptical, and who will ask the tough questions for us so we don’t have to do it ourselves.

We don’t want someone who will ignore reality while they tell us the outlook is rosy and the stock price is going to keep going up in spite of clear signs to the contrary.

While we are day-dreaming, it would be nice to have a skeptical newspaper, too.

Stay tuned for more on the remaining members of the Snow Job Team, Suzanne Klapp and Virginia Korte.