Curfew Shortens 1st Day Of Trial On Tax Incentives For Proposed Phoenix Highrise

Arizona's statewide curfew is shortening the first day of trial on whether tax incentives for a proposed downtown Phoenix high-rise violates the state Constitution. Ironically, the (virtual) trial is happening in a part of downtown impacted by the last several days of violence while the new tower would be on the undamaged Roosevelt Row area.

The Goldwater Institute sued the city of Phoenix in 2017 about the proposed Derby Roosevelt Row project, and the city's agreement with the developer that involved at least $17M in tax incentives through the use of what is called a GPLET (usually pronounced "geep-let", and standing for "government property lease excise tax"). Plaintiffs - including nearby property owners - claim the agreement violates the Gift Clause of the Arizona Constitution, and that the city's 1979 designation of the Roosevelt Row as a "slum" no longer applies.

That would permit the developer to convey the building and land to the City of Phoenix with the exclusive right to lease it back. It would eliminate the property tax and replace it with a lower tax (and, rent). Additionally, because it is located in Phoenix's Central Business District, the tax would likely be waived (abated) for the first eight years.

Somebody visiting the northern edge of downtown in 2015 (or, now), "would not see a slum in the Roosevelt Row area", Goldwater Institute General Counsel Jon Riches told Superior Court Judge Christopher Coury in today's opening statement. He also argued that whether the judge accepts the city's numbers or Amstar's (the developer's) numbers, it constitutes an inappropriate gift: "Either way, it is grossly disproportionate consideration."

Opening for the City, Kristin Windtberg listed many of the ways that the city would benefit from the 19-story tower, and that it is "just one piece of the city's long-term plan for redeveloping the area". The project includes "micro-unit apartments" of approximately 1,400 square feet each, above-ground parking and commercial. Windtberg said that among those benefits are also jobs, "unique housing options" and combines smaller parcels of land in a way fitting contemporary development.

The Plaintiffs' first witness was Kevin McCarthy, the President of the Arizona Tax Research Association. He presented his analysis of the unfair benefits that Phoenix was giving to the developer. He also doubted the city's contention that the incentives were necessary, saying "that noone would fill that need in the market without this project, seems to escape me."

Amstar is paying the $36M to develop the tower. It entered into the GPLET agreement in 2016.

The trial is expected to take up to two weeks. However, that was thrown into the air yesterday, with the Governor's emergency 8:00pm curfew for this week. Judge Coury announced that he was receiving many emails during the morning session, warning him that he and his staff needed to be out of the courtroom by 3:45pm today.