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.”
CityScape
In downtown
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.
Scottsdale’s
“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.
Never assessed
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
SkySong is being developed by the
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.