A high-profile case involving an economic development tool called GPLET, whose outcome may have significant ramifications for continued growth in Downtown Phoenix, continues to move forward.
Three of the six complaints in the lawsuit brought by the Goldwater Institute against the City of Phoenix in 2017, were dismissed by the Superior Court in May, according to court documents. This is a win for the city of Phoenix, which has used the GPLET program extensively to encourage growth in the downtown area.
What is GPLET?
GPLET stands for Government Property Lease Excise Tax. In short, it allows the city to let a developer build a private structure on city-owned land; the city then collects a lease and an excise tax from the developer while avoiding the more significant property tax that would otherwise be paid by a normal developer. These types of agreements can last up to 25 years in some cases.
But the program is not without controversy, and has become the subject of a lawsuit brought against the city by the Conservative Goldwater institute on behalf of Mat Englehorn, owner of Angels Trumpet brewpub. The institute contends that Mr. Englehorn was harmed by the city when it provided a large tax incentive to a developer to build a residential high-rise next to his establishment, located near 2nd Street & McKinley.
What’s at stake?
Opponents of GPLET assert that the city’s administration of the program plays favorites by offering large developers significant tax breaks that aren’t offered to smaller business owners like Mr Englehorn.
The city of Phoenix, on the other hand, contends that GPLET is an important tool to encourage development in blighted areas of the city. Several large projects, including CityScape on Central avenue and Jefferson, were built under the program. The program is typically used to attract higher-density development than would get built naturally by the market.
The case is being closely watched by potential developers as well as proponents of development who would like to see taller buildings and higher density in a downtown that has seen low and mid-rise projects dominate much of the available infill land currently being converted.
The case is currently pending Goldwater’s response to Phoenix’s second attempt to dismiss the Blight Designation part of the complaint, with a deadline of July 27th to respond.