Posted May 9, 2022, 3:42 PM
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Join Date: Jan 2010
Posts: 6,609
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It appears the Goldwater Institute will continue to fight the GPLET tax break
Quote:
The Goldwater Institute sued the city of Phoenix this week, challenging the use of tax dollars to benefit the developer of a 26-story residential tower being built in downtown Phoenix.
Hubbard Street Group and Cresset Real Estate Partners — both based in Chicago — are making their Phoenix debut with the development of this $87 million project at the southeast corner of Sixth and Garfield streets expected to open in summer 2023. Cresset declined comment and Hubbard Street executives could not be reached.
But the Goldwater Institute lawsuit accuses city officials of devising a tax shell game allowing developer Hubbard Street Group to pay no property taxes on that project for eight years in violation of the Arizona Constitution and a 2020 court decision finding a similar arrangement — involving a 19-story apartment complex in downtown Phoenix— unconstitutional.
Jon Riches, director of national litigation for Goldwater Institute, said Arizona courts have made it clear that taxpayer dollars should not be used to benefit private, special interests.
Using the Government Property Lease Excise Tax, or GPLET, abatement provisions of Arizona law, the city takes over the Hubbard project so that the property technically becomes government property, excluding it from tax rolls, and then leases the property back to Hubbard.
When the eight-year lease expires, the city turns the property back over to Hubbard, relieving what Goldwater calculates as $7.9 million in property taxes in exchange for paying the city a small of amount of rent, Riches said.
Suit is on behalf of two taxpayers
Goldwater Institute is suing on behalf of two Phoenix taxpayers: Bramley Paulin, a property owner in downtown Phoenix, and Mat Englehorn, a small business owner in Roosevelt Row.
"Some taxpayers shouldn't be forced to bear a disproportionate tax burden because other private parties have political connections to get government subsidies," Riches said.
What's frustrating for Riches is that city officials are ignoring not only an Arizona Supreme Court precedent but a lower court that struck down a similar deal four months before the city agreed to enter into this deal with Hubbard Street Group.
"It's sort of breathtaking lawlessness in my view," Riches said.
City officials say they are unable to comment on pending litigation, but said they actually have not been served the lawsuit yet.
Riches said the lawsuit was filed on May 4 and that it could take a couple of days before the city would be served with the lawsuit.
Despite Goldwater's fight against this GPLET incentive the city uses to incentivize developers to build workforce housing and affordable units, it has continued to be used since the statute was enacted in 1996.
Because of Arizona's unique and strong constitutionally based gift clause, Arizona cities have limited tools to incentive good projects to build, said Jordan Rose, founder of Rose Law Group in Scottsdale and a long-time zoning attorney.
"Losing the ability to offer a GPLET would be highly detrimental to economic development," she said.
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Seems very weird to me that they continue to fight for a tax hike LMAO when there's been obviously a massive boost to downtown with this tax break but you'd think there's a 1000 other more important wastes of tax money going they could take on over this.
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