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Benji Shanahan, Arizona Daily Sun 

Coconino High School’s Rebekah Dial (18) interrupts a play being made by Flagstaff High School’s Brianna White (7) Thursday afternoon during play at Cromer Stadium.


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State overturns Flagstaff liquor license denial, majority around the state

On Aug. 21, the application for a wholesale liquor license for Heath’s Custom Wine became one of very few liquor license applications the Flagstaff City Council recommended for denial in the last five years.

The council had received 13 emails from residents around the home where the license was being requested asking that the council not grant the request for alcohol to be sold in their neighborhood.

Among the concerns from the neighbors included increased traffic the business might bring, the bad precedent that could be set by allowing a liquor license in a residential area and problems the neighbors have encountered with the applicant.

However, on Nov. 2, the Arizona State Liquor Board decided to grant the license to Collin Heath, the applicant for Heath’s Custom Wines.

The hearing for Heath’s Custom Wines was one of 10 that have been brought to the board in 2017 because a municipality in Arizona recommended that a license be denied, according to data from the Arizona State Liquor Board. Of the hearings held by the board, only two applications have been denied this year.

In the four previous years, the board denied a total of 26 applications, compared with the 77 licenses that municipalities around the state recommended for denial.

A city or town council serves as an advisory body to the state board, recommending denial or approval of licenses that are then decided on at the state level. If the council chooses to recommend denial, the applicant can then make his or her case to the state board, which makes the final decision.

The board can also choose to deny an application that was recommended for approval by a city or town. That hasn't happened in 2017, but occurred six times between 2013 and 2016 for applications throughout the state. 

In the case of Heath’s Custom Wines, Heath told the council he wanted to start a wine distribution business and could not afford a storage space yet. He had been working at Blendz, where patrons can blend their own wine and personalize the label.

He decided Blendz could grow by expanding to make custom wines for restaurants, hotels and other sellers, but needed a place to store the wine for the 24 hours required by law before delivering it to his customers, he told the council. No bottles would be opened on the premises and customers would not be stopping by the house to pick up the product; Heath would deliver it to them instead.

At the meeting, Councilman Scott Overton said he wished Heath luck, but said he would like to see Heath make more of an effort to get to know his neighbors and talk to them about his business.

“We represent the local community,” Overton said. “It’s important that you go out and talk to the neighbors. You’ve got to find a way to be a neighbor to those folks as well.”

Overton said he thought Heath could have luck in appealing his case to the state board.

The Flagstaff Police Department recommended the council approve the license, but required Heath to submit an addendum to his application to include his three total previous arrests, instead of only the one he listed on his original application.

Jeff Oravits, a former city councilmember and member of the state liquor board, said the board took the police department’s recommendation into account, as well as the fact that the code compliance office at the city also recommended the license be approved.

“The Flagstaff one was pretty cut and dry for me,” Oravits said of the approval, which took place at his first meeting after being appointed to the board. “The applicant addressed all the concerns. It seemed like (the denial) was an emotional decision by the council.”

Oravits said there were other instances around the state of similar licenses issued to a residential area.

“He cannot sell it in a residential area,” Oravits said. “He has to deliver it in his truck to his customers. I saw no reason to deny this.”

Oravits was a councilmember the only other time a business has tried to appeal a decision by the Flagstaff City Council. The Maverik station on Butler Avenue was recommended for denial in 2013. However, the station eventually withdrew the application and did not appeal to the state board.

At the Flagstaff council meeting when the license was recommended to be denied, Councilwoman Celia Barotz said -- even though the posting about the liquor license application was done legally for Heath’s Custom Wines -- the laws are designed for businesses, not homes, and a posting on a window of a home is not visible from the street. Barotz asked that the city consider changing the posting rules for licenses in residential areas at a future meeting to require applicants to post notices so they are legible from the street.


Jake Bacon, Arizona Daily Sun 

Desirae Barquin, left, and Samantha Quintanilla have danced their way through the cast of Canyon Movement Company’s The Nutcracker Suite in Modern Bare Feet over the past 14 years. Barquin started as a flower girl and party girl and this year will dance the role of the Snow Queen. Quintanilla started as a mouse and this year will dance the role of the Sugar Plum Fairy. The show opens Dec. 11 in the Coconino High School auditorium; for more information, visit www.canyonmovementcompany.org.


Washington
AP
Trump weighs plan to oust Tillerson, put CIA's boss at State

WASHINGTON — After months of clashes on policy and personality, President Donald Trump is considering ousting Secretary of State Rex Tillerson and replacing him with hard-nosed CIA Director Mike Pompeo following less than a year on the job, senior U.S. officials said Thursday as turmoil within Trump's national security team burst into the open.

The White House plan, which Trump has not yet signed off on, would force a major realignment early in his term, also creating a vacancy atop the CIA that officials said could be filled by Republican Sen. Tom Cotton of Arkansas. The overhaul could produce a significant shift in both the tone and direction of the president's foreign policy, removing it from the understated former oil man whose style has never fit well with Trump's.

It is exceedingly rare for a secretary of state, America's face on the global stage, to be fired or to serve for a year or less. Nor is it common for presidents to have such a significant Cabinet revamp so soon after taking office. Too much churn could fuel the perception of chaos in the Trump White House — perhaps one reason he has yet to pull the trigger.

Tillerson's likely ouster, which was first reported by the New York Times, loomed awkwardly over an Oval Office meeting Thursday between Trump and the visiting Bahraini crown prince. Asked by a reporter whether he wanted Tillerson to stay on the job, Trump was coy, merely pointing out that Tillerson was in fact in the building.

"He's here. Rex is here," the president said.

Timing for any move was uncertain.

Defense Secretary Jim Mattis, Tillerson's closest ally in the administration, simply brushed off the report. "There's nothing to it," he said when asked.

But White House spokeswoman Sarah Huckabee Sanders didn't deny it. She did suggest that no move was imminent, saying the president and Tillerson planned to "work together to close out what we've seen to be an incredible year."

Does the president still have confidence in Tillerson? "When the president loses confidence in someone, they will no longer serve in the capacity that they're in," she said.

Friction between the president and the nation's top diplomat has grown increasingly public through the year.

After a report last month that Tillerson had called the president a "moron," Tillerson was forced to appear before cameras at the State Department to pledge fealty to his boss. Soon after, Trump publicly challenged his secretary to an IQ match.

For Tillerson, who left his job as Exxon Mobil's CEO, a premature departure from the Cabinet has seemed increasingly inevitable.

"There's been a Tillerson death watch since the spring," said Derek Chollet, a former State Department, Pentagon and National Security Council official in the Obama administration.

When Tillerson was tapped for the job late last year, many Trump critics expressed quiet relief that he'd picked a sober "adult" who could form a counterweight to the president's brasher, impulsive approach, especially on critical matters of war and peace.

Yet divisions on key foreign policy issues emerged quickly, and Trump has repeatedly undermined Tillerson by voicing positions at odds with those the State Department was pushing.

When Tillerson in June called on Arab nations to ease their blockade on Qatar, Trump emerged in the Rose Garden hours later to lambaste Qatar for funding terrorism. Trump also deemed diplomacy with North Korea a waste of time, when Tillerson was pursuing just that. Tillerson's advice to Trump to stay in the Paris climate deal and certify Iran's compliance with the nuclear deal was similarly overruled.

Pompeo, in contrast, has formed a tight relationship with Trump that's led to a role much broader than many past CIA chiefs. A former businessman and conservative Republican congressman from Kansas, Pompeo is at the White House nearly every day to deliver the daily intelligence briefing, a task often delegated to less senior officials. He sometimes stays longer to accompany Trump to other meetings. He shares the president's hardline stance against Iran.

Cotton, a top contender to take over at CIA, has been one of Trump's staunchest defenders on foreign policy in Congress. Yet moving him would create a Senate vacancy just as Republicans need every vote possible. Under Arkansas law, if Cotton steps down before next July, the state's Republican governor would appoint a replacement who would serve until the November 2018 election. If Cotton stays in the Senate, his current term doesn't end until 2020.

Cotton's office wouldn't comment other than to say: "Senator Cotton's focus is on serving Arkansans in the Senate."

Several administration officials said that Pompeo has said previously he's open to the job.

Tillerson's top priority as secretary has been his sweeping overhaul of the State Department, a "redesign" that has been lambasted by lawmakers from both parties and that the State Department concedes has hurt morale among diplomats. Still, Tillerson aides say he expects to remain in his role to see the overhaul through.

At the White House, meanwhile, frustration with Tillerson has mounted over what officials have described as Tillerson's aloofness and his slowness in filling key roles to carry out the president's agenda.


Merrick Morton 

This image released by Fox Searchlight shows Sam Rockwell, left, and Frances McDormand in a scene from "Three Billboards Outside Ebbing, Missouri."


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With revenues still small, Flagstaff's SenesTech looks to sales growth in 2018

Last December, the bioscience company SenesTech became the first publicly traded company headquartered in northern Arizona, raising about $13 million in its initial public offering. The 13-year-old Flagstaff startup produces a formula that decreases fertility in rats, which it is marketing to customers ranging from municipalities to grain storage facilities to poison-averse, zoos, research facilities and sanctuaries.

As the company comes up on a year since that initial public offering, it continues to face a lopsided balance sheet, with operating losses far outweighing sales revenue. But company CEO Loretta Mayer said that will soon begin to change thanks to two new distribution contracts and a handful of pilot programs and initial sales that are expected to switch to longer-term deals. 

“I feel like we've had a tremendous amount of success to go from concept hatched here in Arizona to a product that works to sales expansion,” Mayer said.

The company’s latest quarterly report shows revenues from product sales were $34,000 to date while accumulated deficit was $71.3 million. Total revenues for 2017 would be “negligible,” SenesTech stated in a November press release.

The company’s stock price has also taken a steep dive over the past year, falling from $8 per share at the initial public offering to about 87 cents per share now.

But Mayer wasn’t sounding any alarms.   

Sales haven’t yet picked up because many of the company’s 29 customers are still in a pilot or research phases or are only using the ContraPest rat control formula on parts of their properties, Mayer said. 

The cancellation of a major manufacturing, sales and distribution contract also pushed the company’s stock prices downward but will be a positive in the long run, Mayer said. Pulling manufacturing and sales in-house requires a large up-front investment, but will mean SenesTech will see a 50 to 70 percent profit margin from sales of its product instead of a low double-digit profit margin that was stipulated in the contract with the food and animal company Neogen, Mayer said.

Scaling up its sales staff, manufacturing equipment and raw ingredient inventory hasn’t been cheap, using up what the company raised in its initial public offering and forcing SenesTech to go out for a second round of funding, Mayer said.  

To raise more cash, the company went through another public stock offering last week, raising not quite $6 million, according to Mayer. Demand exceeded the number of shares offered, which could indicate that investors think highly of the company or could be an indication that the company is undervalued, said Adam Gifford, an economics professor at Coconino Community College.

Either way, Mayer said the company is now fully funded to get to a break-even point or cash flow positive. She expects that will happen in 2018.

Two new deals with national distributors of pest control products will help the company get its product into more hands of pest management officials more efficiently, Mayer said.

The company will manufacture all of its product in Flagstaff through 2018 but beyond that expects increased demand will require it to evaluate manufacturing expansion options both inside and outside of Flagstaff.

The company is targeting several customer sectors for its ContraPest formula, Mayer said. Cities like Chicago, New York City, Baltimore and Washington D.C. are one, while animal sanctuaries and research facilities are another. One Colorado sanctuary is one of SenesTech’s happiest customers. Grain and protein production facilities are another area the company is targeting.

In a January press release, however, Neogen stated that the requirements included in the Environmental Protection Agency’s approval of ContraPest mean the product would face “very limited use in the food and agricultural industry.”

For a research-intensive, high-tech company like SenesTech, it isn’t at all uncommon to go through an initial public offering before turning a profit, Gifford said. SenesTech’s position is similar to companies like Google and Amazon that took years go revenue positive because they initially had to put so much money into product development, he said.

“Of course I'm rooting for them because they're a hometown company,” Gifford said about SenesTech. “You always want to see hometown companies do well and succeed, especially after going public -- that’s a really big deal.”

SenesTech also brings diversity to the Flagstaff economy, he said.

“It’s something different. It’s not tourism, not the airport, it’s something completely different," he said.