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

The Circles Records and Tapes Building has been the center of a clash between community groups hoping to preserve the building and the site's developer. (Sarah Jarvis/DD)

By Brianna Bradley and Kara Carlson

The developer behind the controversial 19-story $70 million mixed-use project at the site of the old Circle Records and Tapes building is still fighting for a tax incentive despite opposition.

“If the city doesn’t cooperate with the approval this space could get scraped,” Geoff Jacobs, a principal of Empire Group LLC, said after a press conference held by the company and representatives from the family of the building’s original owners. Empire is asking City Hall to rethink its decision this week not to support a tax incentive known as the Government Property Lease Excise Tax for the project.

Negotiations for the tax break have been dead since Empire partially demolished the building in April. Widely used by city government to promote development, a GPLET agreement would allow the developer to pay reduced taxes instead of traditional property taxes for up to 25 years. The arrangements are based on a provision in Arizona’s tax code that exempts land owned by governments from property taxes. GPLET allows the city to take over the rights to a piece of land and lease it back to the developer at a significantly reduced rate that replaces the normal property tax. The Scottsdale-based company has said that it needs the incentive to save the rest of the building.

The Roosevelt Action Association and the Evans Churchill Community Association sent letters to city leaders expressing their opposition of the incentive for the project, with the ECCA saying that a GPLET agreement would be “setting a harmful precedent for the future.” Empire had sent a letter of its own saying that it had addressed all community concerns, but the RAA has refuted that claim. Then on Friday, the Phoenix Community and Economic Development Department recommended the city not resume negotiations with Empire.

“We are not giving up nor do we hope the City or interested citizens are either,” Empire spokeswoman Jordan Rose said in an email. ” We are here to fight for preservation, arts and even more economic lift for downtown Phoenix. Until every possible option has been explored, we are not entertaining any plan other than this one.”

CED director Christine Mackay said in the letter that the demolition was “in direct contradiction with deal points the developer had already agreed to in a draft letter of intent it was negotiating with city staff.”

“We believe the circumstances surrounding the partial demolition of the Stewart Motor building and the current lack of neighborhood support make city participation inappropriate,” Mackay said in the letter.

Project architect Brian Cassidy said that the developer intends to repair all of the decomposed area of the building so that it functions again by using a conservation easement, a voluntary legal agreement between landowner and a land trust or government agency.

Rose said in an email that the company appreciates “all the specific comments and will continue to gather community feedback” on improvements it can make on the project, adding that she doesn’t expect the city to re-engage until the community support is there.

“We are fully committed to finding a way to make this work because what the owners propose will set a new standard of excellence in design, allows us to save a building that is meaningful to so many, helps bring new consumers, workers and revenues to our downtown, and, frankly, the alternative should be unacceptable to all,” she wrote.

There have been two separate petitions regarding the project. Stacey Champion, a local activist and head of Champion PR, started a petition to oppose the GPLET agreement. Empire has also circulated a petition, written by Terry Stewart, a daughter of the building’s original owner.

“It’s time for Mayor (Greg) Stanton and the Phoenix City Council to show their leadership and bring all sides together so we don’t lose this terrific opportunity for the arts, economic vitality and the preservation of history in downtown Phoenix,” Stewart wrote in the petition.

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Clarification: August 10, 2016: An earlier version of this story reported that Empire Group circulated its own petition. Terry Stewart wrote the petition independent of the company.