Community members and the Historic Preservation Commission voiced their concerns following the partial demolition of the Circles and Records building, and discussed what actions could be taken to prevent these kinds of demolitions in the future.
In a Historic Preservation Commission meeting Monday, methods were considered to help prevent the demolition of historic properties and encourage developers to pursue adaptive reuse and preservation methods in these buildings. Among the biggest concerns was the reward of a tax incentive called Government Property Lease Excise Tax (GPLET) agreements for developers who demolish historic properties.
The Circles Records building — also known as the Stewart Motor building — was partially demolished on Friday, leading to community backlash and the city of Phoenix ceasing discussions with developers Empire LLC until further discussion.
A statement from Geoffrey Jacobs, a principal of Empire, said the partial demolition of the Circles building occurred at the advice of consultants who have since been changed, and that they “sincerely regret this taking place.” He said they “look forward to getting back on track with a plan that may not make everyone entirely happy, but will undoubtedly raise the bar for preserving Phoenix history, not scraping it away.”
Any current work that is occurring at the Circles property currently is to shore up the façade and clean up any of the demolition, according to Jordan Rose, the attorney who is now representing Empire. Rose is replacing Larry Lazarus as the attorney for the Circles building development.
Some concern was addressed about using public money to work against historic preservation, an issue that’s been raised among the backlash against GPLET approval for developing the Circles building.
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“It’s the projects that are receiving public money as an incentive. Because of that it should be treated as a true incentive to do something that does public benefit,” said Kathryn Leonard, who is a board member on the Historic Preservation Commission.
GPLET agreements 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 incentive has been used widely by city government to encourage development downtown, with notable developments like CityScape, the Freeport-McMoran building and Luhrs City Center all having received development agreements of various lengths.
Community members advocated for the increased protection of buildings. Downtown Voices Coalition Vice Chair Steve Drieseszun encouraged meeting with community members earlier and more frequently.
“We don’t have enough tools in our tool chest, we have to do much more,” Drieseszun said. “We can’t keep running out of these assets we need to do more. We can’t give GPLETs to every request. We have to use them judiciously and we have to demand more. We can’t reward bad behavior.”
Donna Reiner, co-chair of the Postwar Architecture Taskforce of Greater Phoenix, agreed with Drieseszun but also encouraged awareness for historic buildings in particular.
“We need more tools but we also need those tools that aren’t the last minute dire crisis,” Reiner said. “This list matters every month, every week and every day.”
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At a separate meeting, Stacey Champion, local activist and head of Champion PR, spearheaded a petition to encourage the city to adopt an ordinance similar to a code already set forth in Los Angeles which requires at least 30 days of written notice before a demolition permit is actually given to developers.
The Historic Preservation Commission proposed a similar motion for a 30-day waiting period for demolition on historic properties. Reiner supported the 30-day waiting period because it would allow for increased time for advocacy.
“It may not solve the problem, but it is another tool to slow down the process,” Reiner said.
A portion of the petition also strongly opposes the use of a GPLET for the Circles building.
The commission tried to focus on how they could use GPLET agreements and other tools to encourage the preservation of buildings. Many community members were concerned that giving a GPLET to Empire would reward “bad behavior” and demolition of historic property.
A motion was put forth for the Community and Economic Development committee to work together with the Historic Preservation Office to use GPLET and other resources to preserve eligible historic properties and deny resources to developers who would adversely affect a historic property. All exceptions would have to be approved by the Historic Preservation Commission.
Unlike normal property taxes, which are based on a property’s value, GPLET rates are based on the size of a property and the buildings on it. City Council would have to approve the use of the tax incentive on this project, and could grant Empire with eight-year tax incentive after the project is completed.
A 2014 Downtown Devil report found non-GPLET property owners in downtown had been helping subsidize the discounted tax rates GPLET developments paid because of a change in the formula used to calculate state funding for school districts. According to the revised state law, which passed in 2009, GPLET properties are included in a district’s taxable value, potentially reducing the total state assistance provided for districts with many GPLET properties by a significant amount.
The net effect was that property owners paid for the portion of the district’s budget that GPLET properties were not paying.
Editor’s note: Government Property Lease Excise Tax agreements are a complex topic that the Downtown Devil broke down extensively in a previous report. If you’d like to learn more about GPLET you can read the report here.
Contact the reporter at Kara.Carlson@asu.edu.
