Corporate Welfare: PHX Politicians Hand Millions to out of State Corporation

By Sal DiCiccio
Phoenix City Council Member
Councilman Danny Valenzuela calls this a “good deal.” I call it INSANE.
This is the same logic some of the same politicians used when they used your money to build the Sheraton losing $145 million of your hard-working taxpayers dollars.
Money that could’ve gone for more police on our streets.
Please read this article from Laurie Roberts:
Laurie Roberts
Arizona Republic 4-20-17
Last month, Phoenix was sued for allowing a developer to skip paying $8 million in property taxes in return for building a 19-story apartment complex near Roosevelt Row in downtown Phoenix.
The city’s continuing tax giveaways – which leave you and I holding the bag for select developers’ share of funding public schools – have prompted a crackdown at the Arizona Legislature. Our leaders, in one of their rare good moves,recently voted to limit these giveaways beginning later this summer to eight years, down from the current 25.
And the city’s response to the legislation and the lawsuit by the Goldwater Institute?
On Wednesday, the Phoenix City Council voted 7-2 to allow yet another developer to skip paying $9 million in property taxes in return for building three apartment towers near Roosevelt Row. (Councilmen Sal DiCiccio and Jim Waring were the no votes.)
Phoenix wants what the market can’t support
A city spokesman says the properties eventually will pay three times the property taxes they’d pay if only a four- or five-story apartment complex was built where these 29-, 25- and 19-story buildings will go in. ($6.9 million over 20 years as opposed to $2.4 million.)
That’s if the schools can wait 20 years, that is.
Five percent of the units will be “affordable” housing.
City leaders say the giveaway – technically called a government property lease excise tax — allows developers to build the types of projects city leaders envision – the sort the free market doesn’t support. (Sort of a like a certain downtown Phoenix hotel.)
“This is going to change the Phoenix skyline now instead of 20 years from now,” Councilman Daniel Valenzuela saidWednesday, in approving the deal.
This is, of course, the same old story we’ve been hearing for decades from Phoenix City Hall as city leaders hand out GPLETs like gumdrops.
Lots of developers got this pass
A fair chunk of downtown Phoenix has been given a pass on paying property taxes — or anything even close to their fair share of the tab.
The Phelps Dodge building got a GPLET. So did CityScape. Renaissance Square has one (both Tower One and Tower Two). So does the Collier Center. And the Westin and Freeport McMoran and at least five apartment complexes along Roosevelt Row.
It works like this. A developer gives the city title to the land, taking it off the property tax rolls, then leases it back. The real owner then pays a lease excise tax to the city based on square footage, in lieu of property taxes for up to 25 years. The excise tax varies but generally is about a fifth of what they would otherwise pay.
And in downtown Phoenix, even the paltry GPLET is suspended for the first eight years.
In this case, there will be no property taxes collected for eight years for these three high-rise towers. Then, one of the three towers will pay only the greatly reduced excise tax for another 12 years.
Something to think about next time your property tax bill comes due.
Guess who pays in the meantime?
So who, you might wonder, will pay $9 million in taxes that would otherwise go to support the schools and other agencies?
While the county hospital and other agencies supported by property taxes just get stiffed, state law requires the state general fund make up the difference for K-12 schools.
That means taxpayers across the state will be paying for Phoenix schools so that a high-rise apartment developer doesn’t have to.
And this is fair, how?
To view this article online from Laurie Roberts, please go here:
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My best to you and your family,
Sal DiCiccio
Phoenix City Council
District 6