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Property tax exemptions may be next battle in Arizona subsidy war

Collier Center, downtown Phoenix (Photo: HooverDam, Skyscraper Forum)

[Source: Mike Sunnucks, Phoenix Business Journal] — The next shoe to drop in the legal fight over special tax breaks and subsidies for developers could be over the 100 percent tax exemptions ponied up for high-profile projects such as ASU SkySong in Scottsdale and enjoyed by professional sports teams.  That action could come after the Arizona Supreme Court decides whether a $97 million tax break for the CityNorth mixed-use development in northeast Phoenix is constitutional under state law.  A judgment in that case isn’t expected before the end of the year, but those opposed to developer subsidies already are strategizing for future battles.

The first is a lawsuit expected to be filed over government property lease excise taxes, or GPLETs.  These funding mechanisms allow government entities that own land to lease it back to private developers and businesses, which then pay lower-than-normal property taxes.  The Goldwater Institute and Arizona Sen. Ken Cheuvront, D-Phoenix, said they plan to file suit to do away with GPLETs.

Cheuvront wants to sue to try to stop the tax breaks.  Clint Bolick, attorney for the Goldwater Institute, said the conservative think tank also is looking at other tax arrangements to determine whether they are legal.  “We’re just beginning to burrow deeply into GPLETs,” Bolick said.  “To the extent that lease rates are below market after tax benefits are taken into consideration, it may represent an illegal subsidy, and also may violate equal protection of the law if similarly situated tenants are paying more in private buildings.”

As that case works its way through the courts, the same skeptics want to go after entities including SkySong, the Arizona Cardinals, the Phoenix Suns, and the Arizona Diamondbacks, which pay no property taxes because they lease their facilities from city or county governments.  None of those arrangements are considered GPLETs, though that mechanism has been used extensively for downtown Phoenix developments including the Colliers Center, Arizona Center, and Renaissance office towers.  The new Cancer Treatment Centers of America hospital in Goodyear also is a GPLET.

Real estate developers and business interests say striking down the CityNorth subsidy, GPLETs or other tax incentives would discourage investments and economic development.  [Note: Read the full article at Property tax exemptions may be next battle in Arizona subsidy war.]

Conflict of interest with $347 million downtown Phoenix court tower?

Story.jpg[Source: Josh Bernstein, ABC News 15] — It’s the largest construction project in Maricopa County history, but the new-state-of- the-art court tower is shrouded in secrecy.  “And why is any of this secret? What does the county have to hide?” said Clint Bolick, an attorney with the Goldwater Institute. “This is not a matter of national security. It is not some sort of tense lawsuit that the county has.  This is a run of the mill project.”

The $347 million dollar taxpayer-funded project is already under criminal investigation by the Maricopa County Sheriff’s Office.  But it’s the secrecy and the apparent conflict of interest that has Bolick outraged.  “This is a flagrant abuse of public trust,” said Bolick, a former attorney with the United States Department of Justice.

Documents obtained exclusively by the ABC15 Investigators reveal attorney Thomas K. Irvine and his firm are representing both the Maricopa County Board of Supervisors, who are funding the project, and the Maricopa County Superior Court, that will occupy the building. “It is a blatant conflict of interest, one of the first kinds of conflicts you learn about in law school,” Bolick said.  “It’s a matter of the fox guarding the hen house.”  [Note: To read the full article, click here.]

Goldwater Institute supports Arts, Culture, & Small Business Overlay

The conservative Goldwater Institute has come out in favor of the proposed City of Phoenix “Arts, Culture, and Small Business Overlay.”  In his March 17 Daily Email entitled, “An Artful Approach to Revitalization: Freedom is the key to economic growth,” Clint Bolick, director of the Institute’s Scharf-Norton Center for Constitutional Litigation, writes:

The City of Phoenix decided a vibrant arts district would be a nifty idea to revitalize its downtown core.  Too often, cities are tempted to achieve such a goal by taxpayer subsidies, eminent domain, tax hikes, or draconian zoning requirements.  Instead, Phoenix decided to try a different approach — deregulation.  The City is proposing an “arts, culture, and small business overlay” that eases zoning restrictions and increases the number of activities that no longer need a special permit in a small area near downtown.  New businesses such as art galleries, bookstores, and restaurants will be allowed to operate without special permission.  Restrictions on alcohol sales, musical entertainment, and outdoor dining will be relaxed.  The City also will make it easier to rehabilitate existing structures.

The City’s action is a rare win-win.  A shaky neighborhood will be revitalized. Small businesses will flourish.  Phoenix will have its own version of SoHo.  City tax revenues, depleted by recession and tax giveaways, will grow.  And less regulation, not more, will be the reason for progress.  The plan is not perfect.  Here as elsewhere, the City is ratcheting up restrictions on street vendors, thereby limiting an important avenue of entrepreneurship.  The expanded list of permissible enterprises is still too limited.  Worst of all, the relaxed rules apply only to a single neighborhood.

But expansion of private enterprise and property rights is always good news, even if it occurs in baby steps.  And when the new arts district succeeds, it will provide an important lesson to local planners throughout Arizona: the best way to create growth and opportunity is freedom.