Downtown Voices Coalition opposes a tax incentive for Circles

Historic preservationists and concerned members of the downtown Phoenix community toured the Stewart Motor building to see the portions of the building that would be preserved. (Kara Carlson/DD)

The Downtown Voices Coalition has taken a stance to formally oppose the use of a tax incentive on the controversial Stewart project at the site of the historic Circles Records and Tapes building.

The DVC steering committee members voted Saturday. A formal letter was sent to the city Monday opposing the use of a complicated tax incentive known as a Government Property Lease Excise Tax.

“Nothing that has occurred in the months after the developer’s demolition has changed the view of DVC that this developer and this proposed project are not deserving of public assistance in the form of a GPLET,” the letter said.

The developer for the project, Empire Group, maintains a GPLET is necessary for the project plans despite pushback from historic preservation activists, community members and the city.

Earlier this month the project got its first big supporter, the Roosevelt Action Association, which voted to conditionally support a tax incentive for the project. The neighborhood group sent a letter to the mayor’s office, city council, the Community and Economic Development Department and the Historic Preservation Office to re-engage negotiations with Empire Group, and to award a GPLET with stipulations.

This was the first time RAA, or any other neighborhood group supported the tax incentive. The building is in the Roosevelt neighborhood, the area the RAA represents. The DVC letter sites the RAA letter, and said it was reviewed.

“I can see the point of view,” RAA President Sherry Rampy said in response to the letter. “I can respectfully disagree that the end result would be as positive as the end result the neighborhood and community supported.”

RELATED: RAA votes to conditionally support a GPLET for Circles

Jordan Rose, a representative of Empire, said the developer spent months working with the RAA, and is happy that the RAA voted in support.

“We were certainly disappointed to hear that some of the board members at Downtown Voices are not fully supportive, but from the feedback we have received over the last several weeks, that seems like the position of a minority of the overall community,” Rose said in an email. “We have worked really hard to create a project that will most certainly set a new standard of excellence in design downtown.”

As part of the conditional agreement, Empire agreed that if a GPLET is granted, conditions include $3.1 million in payments over 18 years for historic preservation, public art, inclusion of a “Historic Interpretation Exhibit,” and a guarantee Empire will not sell for at least a year after a GPLET is approved.

Empire also said it will negotiate with Phoenix Elementary School District in relation to the GPLET to cover losses in tax revenue. It also covered which portions of the building would be preserved, and said an annual minimum of $25,000 of the historic preservation money would be allocated within RAA borders.

RELATED: Circles developer doubles down on tax break despite city and community opposition

Some attendees of the DVC meeting felt the conditions in the RAA and Empire agreement were setting a bad precedent.

The DVC letter said the arrangement contrasted true community benefit and called it a “unseemly arrangement, more along the lines of a quid pro quo.”

“When a developer can destroy a high-profile historic building and then be rewarded with public assistance simply by taking out its checkbook, we have entered an unsustainable and unethical period in municipal history,” the letter said.

The letter also said the DVC believes it will set a “troublesome financial precedent for developers to deal with community objections”, referencing the partial demolition of the building.

Some community members said they felt the agreement was bribery.

“Money or some other benefit given to a person in power, especially a public body in an effort to take a particular action,” Jim McPherson, DVC secretary said at the meeting. Tim Eigo, the DVC chair, suggested it sounded like the definition of a bribe, and McPherson said he agreed.

“I’m sorry, but I think that we stand for something,” McPherson said. “This is something I just can’t stand.”

It is unclear how the city will respond to the letters. Negotiations for the tax break stopped when Empire partially demolished the building in April.

In August, Community and Economic Development director Christine Mackay again recommended the city continue to abstain from negotiations with the developers on tax incentives.  Mackay could not be reached for comment.

Rose said Empire hopes to restart discussions with the city short and start construction later next year.

Contact the reporter at kara.carlson@asu.edu.