The Roosevelt Action Association voted unanimously to reject the potential use of a tax break on the Circles Records and Tapes building project after months of discussion with the developer, according to a letter sent to city officials earlier this week. The project’s backers revealed their plans for the building on Wednesday, tying many community concessions to the incentive.
“Our hope is that you, the city, can impress upon ownership the need for the need for further enhancements,” before granting the incentive to developer Empire Group LLC, RAA President Sherry Rampy said in the letter addressed to Phoenix Community and Economic Development director Christine Mackay and obtained by Downtown Devil.
The 69-year-old building, also known as the Stewart Motor Building, has been the subject of controversy among historic preservationists and neighborhood groups. Scottsdale-based Empire demolished parts of the building in April, leading to the city ending discussions on the possibility of a Government Property Lease Excise Tax incentive. The latest version of the development plan calls for a $70 million 19-story residential and retail tower and ties features including preservation, local art and affordable housing to the tax break.
Widely used by city government to promote development, a GPLET agreement would allow Empire 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 incentive has been used by city government to encourage development downtown. Notable projects like CityScape, the Freeport-McMoran building and Luhrs City Center all received development agreements of various lengths.
The letter noted there have been many meetings, phone calls and emails between Empire and the RAA in an effort to find a “winning scenario” for an “extremely negative project.” The letter said that the RAA feels it is at an “impasse we don’t believe we can overcome, but, perhaps the city can.”
Mackay said Wednesday night that the city is looking internally before they can make the decision of whether to reopen GPLET negotiations, and that she had not spoken with Empire since the day prior to the building’s partial demolition.
“What we’re really looking for is the developer and the neighborhood to come to consensus amongst themselves as to what is a good project that they both feel they can support,” Mackay said.
Empire requested that RAA ask the city to restart discussion on the possibility of a GPLET tax break for the project, according to the letter. But while the letter asked for negotiations to reopen, the group refused to voice support of the incentive for the project as it is currently proposed. The organization said they hope the city will emphasize the need for further enhancements such as better preservation.
Jordan Rose, an attorney representing Empire, said the discussion between the developer and the community members is ongoing. The company has not approached the city about the tax incentive yet, she said.
“We have not yet presented the project with all of the changes the community has suggested incorporated and we are looking forward to doing that soon,” she said by email. “We are also hoping to provide details of a potential GPLET for a thorough discussion.”
Empire sent a response letter on Thursday to the RAA addressing items mentioned in the letter to the city. The letter, written by Jordan Rose, said they wanted to address concerns in writing so the RAA knows Empire is aware and “agreeable to resolving each them.” It addressed the preservation of the building, alternative design solutions, funding for historic preservation, museum space, and alternative funding sources and the steps Empire said they are taking to address them, which included the updated project plans.
Empire revealed updated plans for the project, which they are now referring to as The Stewart, on Wednesday. The updated plans include public art and the possibility of affordable housing units for artists. According to a press release, the art, which will include three murals on the planned facade and a sculpture, will be done by local artists including Pete Deise and Ashley Macias. Phoenix Art Museum Director Emeritus James Ballinger, will also be assisting with the art projects.
The sculpture, which will be a multistory fusion of steel created by Deise, is meant to symbolize the building’s partial razing and rebirth. As part of the preservation, the building will maintain facades, as well as the original Circle Records signage.
As part of support to local art, the building may have ten units of reduced rents set aside for local artists. Rent price and qualification would be determined with the city. The art, preservation of the building, and reduced rents on those units would all be tied to the GPLET, Michael Scerbo, an Empire representative said.
Sherry Rampy, RAA president said the possibility of affordable housing does not make the project deserving of a GPLET. “That’s not what I believe RAA would support, we have eight affordable housing developments within our neighborhood, we probably have more affordable housing in our neighborhood than any other in the city,” Rampy said. This isn’t the first time the possibility of affordable housing has been discussed for this project.
In April preservationists pushed against the possibility of using affordable housing to receive a GPLET for this project. According to the press release these 10 units have the support of local voices. This includes, the daughter of the Jack Stewart, the Stewart Motor Building’s owner.
In June, Rose said Empire had not restarted discussions with the city on the GPLET, and they were focused on listening to community feedback. The company was required to meet with neighborhood groups before the demolition as part of discussion related to the tax break, and those meetings continued even after the city took the incentive off the table.
In April, Larry Lazarus, a former Empire representative for the project, said preservation was dependent on the tax break.
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. Phoenix City Council would have to approve the use of the tax incentive on this project and could grant Empire with eight property tax-free years after the project is completed.
Among RAA’s concerns was preservation of the remaining building and clarification of the relation of historic preservation in the GPLET. The letter noted that a plan which “more fully” preserved the building would most likely be met with the support of the Roosevelt community.
April’s demolition sparked community discussion on how to prevent historic buildings from being destroyed in the future. This included a petition spearheaded by local activist, Stacey Champion calling for waiting periods on demolition permits of historic buildings. Champion, who has been involved with meetings with Empire as well, supported RAA’s formal opposition of the tax break.
Other downtown advocacy groups including the Evans Churchill Community Association and the Downtown Voices Coalition have not voiced an opinion yet, but the building is in the Roosevelt neighborhood, making the RAA’s formal opposition a result of the opinions of the direct surrounding community.
Jim McPherson, a member of Evans Churchill, said the organization has no formal opinion on the incentive yet because they were waiting on RAA to take a stance, and DVC Chair Tim Eigo said the GPLET agreement will most likely be discussed in the Aug. 13 meeting.
Bill Scheel, a chair of the Historic Preservation Commission said he personally has not heard of support for a tax break from any individual or organization on this project, and expects Empire to have an “uphill battle” if it continues to pursue it.
“No one has studied this more thoroughly and knows more about this project than the RAA. This project is in the Roosevelt Neighborhood, so when the RAA says they don’t support the GPLET I think we ought to take that very seriously,” Scheel said.
While the commission has no official role in deciding whether or not the project will receive an incentive, Scheel said they have discussed the role of GPLET agreements and historic properties.
“The consensus of the commission is that GPLETs shouldn’t be provided to developers who are not preserving historic properties and this is not a preservation project,” Scheel said.
Contact the reporter at kara.carlson@asu.edu.
