Editor’s note: We take a look at some high-profile projects proposed for the Valley in recent years, and where they stand now.
One project that appears to have momentum is
Developer HB Equities LLC has been waiting for months for $1.2 billion in unconventional bond financing that was created through the tiny < ?xml:namespace prefix = v ns = “urn:schemas-microsoft-com:vml” />
As of early October, however, the company still was waiting for the money to flow. Banovac again said the money was days from being wired to his firm.
Sean Elton, vice president of development for HB, reiterated that the project is on track, with construction to begin early in 2010.
“We are committed to a ball bouncing at USAB in 2011, and remaining construction will be continuous for the following four-plus years,” Elton said. “The bond closing date is imminent.”
The first office and retail tenants will take occupancy in March. Although 70 percent the 600,000-square-foot office tower and 65 percent of the 180,000-square-foot retail space has been preleased, according to RED Development partner Mike Ebert, the project has been scaled back.
A second office tower is on hold, and the block on the east side of the project — owned by
Because that block was to contain mostly residential towers and a hotel, both in oversupply now, “that part has been pushed back,” he said.
The nine-story Kimpton Hotel is still in queue, however. Much of the infrastructure for the high-end, boutique hotel is being completed along with the office and retail space. The rest of the hotel construction will begin in January.
“That will be open in July 2011. We want to get them in before the All-Star Game,” Ebert said.
The Kimpton was to include several floors of privately owned residences above the hotel, but that has been taken off the drawing board because of the many vacant condominium units downtown, Ebert said.
“We assume that Gaylord would be the first to go in,” said Karrin Taylor, executive vice president and chief entitlements officer for DMB.
Although Gaylord has signed a letter of intent, it has not moved forward with the land purchase.
No one from the Nashville, Tenn.-based entertainment and real estate conglomerate would go on the record about the company’s intentions. A representative directed the Business Journal to the company’s second-quarter earnings report, which says: “Gaylord Entertainment’s planned resort and convention hotel in
City property and sale tax incentives for the DMB project — in particular, Gaylord’s hotel — are dependent on meeting specific development benchmarks at certain dates. According to the development agreement, the hotel must be completed by the end of 2014.
Mesa City Manager Chris Brady said he recently met with DMB representatives and believes Gaylord is positioning itself to raise the capital to proceed with the project, but it will take some time for economic conditions to improve.
“They’re looking closely at the tourism market, and those numbers are still very soft,” Brady said.
Phoenix Business Journal - by Mike Sunnucks Friday, October 23, 2009
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
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
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
None of those arrangements are considered GPLETs, though that mechanism has been used extensively for downtown
Real estate developers and business interests say striking down the CityNorth subsidy, GPLETs or other tax incentives would discourage investments and economic development.
‘Attacks will continue’
Grady Gammage Jr., a partner with Gammage & Burnham PLC, is representing developer Thomas J. Klutznick & Co. in the CityNorth case. He expects the GPLET and property tax battles to be waged on the political front, with restrictions proposed by the Arizona Legislature. He said critics of tax breaks and special incentives will continue to look for ways to bring the issue to the forefront.
“I think the attacks will continue,” he said.
Gammage said some projects, such as development around
Tim Lawless, Arizona Chapter president of NAIOP, a national commercial real estate organization, said property tax incentives need to be on the table for redevelopment projects, especially those in blighted areas and those attracting high-wage jobs. But he addded that such tax breaks should be used judiciously so as not to require higher property taxes on others.
Bolick and Cheuvront argue that special tax arrangements are unfair because they benefit favored businesses or developers.
SkySong sits on land owned by the city of
Maricopa County Assessor’s Office data shows the previous owners of the site, including real estate developer Steve Ellman, paid between $52,000 and $189,000 a year in property taxes on the Los Arcos site from 1993 to 2004.
Ellman sold the site to the ASU Foundation in 2005 for $41.5 million. The foundation then sold the land to the city of
Ellman had wanted to build an arena for the Phoenix Coyotes on the site and then later add a big-box retail center, both of which likely would have been subject to property taxes. Those plans were rejected.
Towana Gooch, a single mom who lives with her 10-year-old daughter, was on the verge of losing her townhouse in suburban Maryland after her mortgage lender kicked her out of a government loan-modification program. The problem, she says she was notified, was a 7-cent error. more…
Investor complaints are rising again; there must have been a stock-market slump recently.
As surely as leaves and branches litter the ground after a strong windstorm, financial shocks trigger a jump in the number of arbitration cases. more…
At no time in the Phoenix area’s history has so much office space sat empty.
Nearly 1 out of every 4 square feet of Valley office space was vacant in the third quarter ending Sept. 30, commercial-real-estate experts said.
That’s about 28 million square feet of empty space, according to
Home-foreclosure activity has spilled across every geographic and socioeconomic border this year, proving that no community was too cautious, clever or well-funded to remain unscathed.
Subprime lending gave the home-foreclosure crisis its initial push, but the problem could not have reached existing proportions without feeding on a host of broader economic problems, according to real-estate experts responding to the latest Valley Home Values data, provided by Information Market. more…
For struggling metro Phoenix department stores and malls, the Grinch this holiday season may be carrying a black shopping bag from Barneys New York.
After years of anticipation, the fabled retailer arrives in
Renting out homes has long been a profitable enterprise for many Valley landlords.
The business model was simple: Buy a home. Rent the home for at least the monthly mortgage payment. And when you decide to sell the home, enjoy the Valley’s reliable appreciation in home prices. more…
Five years ago, Debbie and Scott Jarson were sitting on rocks at the edge of the Phoenix Mountains Preserve. From their perch overlooking the Valley, they shared with architect Will Bruder a vision of their dream home.
For at least a decade, the Jarsons had imagined the home on a steep, rocky
Real-estate industry officials are trying to convince consumers to take advantage of the current market conditions that combine low interest rates, lower prices and tax credits for some buyers.
The $8,000 federal tax credit for first-time buyers is set to expire at the end of November, and some observers believe that interest rates are likely to climb from current levels close to 5 percent. more…
The Valley’s retail vacancy rate was 10.9 percent for the third quarter, up 4 percentage points from a year earlier, according to a market report by CB Richard Ellis. more…
For all the doom and gloom about the housing market, it still generally pays to own a home.
That might be a tough case to make right now to the 16 million homeowners who owe more on their mortgage than their house is worth. But history suggests the American dream is a pretty safe bet. more…
New federal loan-guarantee rules imposed to fend off future government losses from plummeting condominium prices have rendered condos utterly worthless, Valley real-estate experts said.
The Federal Housing Administration rules, which took effect Oct. 1, prohibit any new FHA-backed loans on condo units in projects that include more than 25 percent commercial space. more…
Valley-area consumers are on a roll, but it’s in the wrong direction.
For the fourth consecutive month, bankruptcy filings for the
The honeymoon between banks and customers is over, cut short by last year’s credit crunch.
Banks are done wooing customers. Customers have given up on the idea that banks will always be there for them. The thrill - of cheap, easy-to-obtain money, that is - is gone. more…
According to information published in The Wall Street Journal, Freddie Mac and Fannie Mae are preparing to step up and help some of their affiliates in the current credit crunch.
The two government sponsored enterprises (GSEs) are rumoured to be test-driving a program to make it easier for independent mortgage banks to acquire the short-term funding needed to make home loans. more…
If you’re a home mortgage loan originator, mortgage broker, realtor, title agent or other provider of services related to the processing or closing of a residential mortgage loan, you know that January 1, 2010 is D-Day for the use of the new Good Faith Estimate (GFE) of settlement charges (www.hud.gov/respa) and HUD-1 Settlement Statement (www.hud.gov/respa) prescribed by the RESPA reform final rule published January 16, 2009. Hopefully, you and your firm are well on you way to being ready to implement the rule. more…
A new boutique hotel and convention center in Gilbert’s SanTan corridor could soon create hundreds of new jobs and entice larger events to the burgeoning area.
The meeting and event space will be Gilbert’s largest, holding up to 1,000 people. And unlike many other proposed hotels and attractions that have fallen victim to the recession, this one is no pipe dream. more…
Business credit conditions still aren’t where they were a few years ago, when loans flowed as freely as beer at a fraternity party, but the nation’s borrowing hangover is starting to clear up.
Talk to business owners and managers, and you’ll discover that some still can’t move past the rejection stage. But others have been able to secure new loans and lines of credit in recent months. more…
Phoenix Business Journal - by Jan Buchholz Friday, October 2, 2009
Walton International Group is solidifying its position as a major landholder in the
In December 2008, the Phoenix Business Journal reported that Walton had purchased about 10,000 acres in
“We believe in the location, and we believe in the leadership in the town of
Homes and multifamily housing are the most likely uses for the land, with a smaller percentage of commercial development rounding out the mix. The land previously had been master-planned as the Monte Verde community, but interim Buckeye Town Manager Stephen Cleveland said Walton wants to make revisions to that plan and invest more in infrastructure that will benefit the town.
“This is a tract that for us will actually help with infill between the existing town and Highway 85 and the (Interstate) 10 corridor,”
That’s how Walton officials view it, as well.
“We strategically chose this property from amongst a lot of land in the area that is on the market because of its unique position and importance to the long-term growth of the town,” Leinbach said.
Buckeye has been hit particularly hard by home builders and developers that were unable to weather the economic storm. Some walked away from properties, and many acres have been taken back by banks through foreclosure sales.
Walton purchased the Buckeye land from BCREO I LLC, an entity formed by Barclays Capital Real Estate in
Details of the auction, which was scheduled for December, are unknown, as are any specifics about Walton’s negotiations to secure the land from Barclays at a discounted price.
“They were conducting their due diligence,” he said.
Walton will have to build significant infrastructure, including water, sewer and roads, to proceed with its plans, he added. But the company’s land investment is substantially lower than that of previous owners.
Mike Koch, Walton’s senior vice president of land research and acquisitions, sees the purchase as a good deal from the long-term perspective.
“It’s a proven and established market in the
Jordan Rose, principal of Rose Law Group PC and the attorney representing Walton in the land deal, concurs with her client.
“Walton is using this down market to enhance the value of their holdings through good planning,” she said. “They are taking this time to evaluate and sometimes revise previous land plans so that they are poised for positive growth when the real estate engine starts to hum again.”
Walton International Group: www.waltoninternational.com