City goes all in on business incentives downtown

City goes all in on business incentives downtown

The Tucson City Council voted Tuesday to move forward on an incentive deal that when finalized would waive the property taxes for a multi-million dollar downtown development. The deal, a Government Property Lease Excise Tax Incentive (GPLET), would exempt the developer of the 196-unit downtown student housing development The Cadence from paying property taxes for eight years.

“It’s an investment in the future,” said City Councilman Steve Kozachik.

The Cadence, 350 E. Congress St. at the east Broadway entrance to downtown, stands at the site of a former Greyhound Bus depot. The city purchased the property in 2004 and had been using it as a parking lot.

The property is under development now through a partnership with developer Jim Campbell. Construction and related costs are estimated at $34 million.

The essence of the agreement involves an ownership swap to allow for the property tax abatement. The city would assume ownership of the properties for eight years during which time it would be exempt from property taxes.

The city would take no role in the management or care of the property during the term of the deal, however, rather it would maintain ownership solely for tax purposes.

The benefit to city lies in the increased value of the developed properties that in the long-term would demand more in property taxes. In the short-term, the project would provide jobs and spur sales-tax generating retail activity.

“We’re getting something for an investment of zero,” Kozachik said.

The deal looks to signify the start of a new era for Tucson marked by strengthening the city’s ability to incentivize economic development.

Numerous incentives available

“We are entering a new phase,” said Michael Guymon, vice president of regional development with Tucson Regional Economic Opportunities. “It’s not only more inviting from a business perspective, but it gives the city more tools in its economic development incentives tool box.”

In recent years, city leaders have adopted new several incentive programs to help increase economic development and to begin to shed the perception of Tucson as unfriendly to business. The GPLET program was adopted by the city council in June 2012.

The city has also passed a Housing and Urban Development loan program, now called the Tucson Community Development Loan Fund. The program can be used for gap financing for projects that create jobs for low and moderate income people and seek to eliminate blight.

The council also adopted a primary jobs incentive program, which provides up to 100 percent credit of construction sales tax toward expenses like job training, infrastructure improvements and offsets to impact fees. Waivers of building permits also can be used.

In another matter last year the city approved an overlay district in the Main Gate area west of the University of Arizona campus.

The Main Gate Overlay District was envisioned as a way to promote

transit-oriented development, coupled with development of the Sun Link modern streetcar line going through the area. Transit-oriented development is essentially more urban and walkable mixed-use areas of development. In this case, the overlay plan allows for higher building heights and reduced setbacks.

The city also has a downtown infill incentive district and downtown core infill incentive district.

Officials also have initiated numerous ways to streamline the development process by changing the requirements for certificates of occupancy in already occupied buildings and creating an ombudsman program so developers with ongoing projects don’t have to navigate through multiple points of contact during the permitting and construction processes.

“They’re starting to use some of the tools that have been available across the state for some time,” said Mike Varney, president and CEO of the Tucson Metro Chamber.

While not necessarily prepared to say the city has lost its bad reputation, Varney said the recent changes make for a good start.

“We certainly see it as a positive,” Varney said.

Continue reading the article by Patrick McNamara at Inside Tucson Business

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