By Rebecca Spiess for Downtown Devil
A bill amending the application of a controversial Arizona tax incentive has passed through the legislature and awaits Governor Doug Ducey’s signature.
The measure, House Bill 2126, passed after it was heavily amended following a long negotiation process.
The bill would change slum and blight definitions and specifications regarding the size of the city’s Central Business District. It would also require that slum and blight designations be renewed every 10 years. Additionally, the city would have to review its CBD by October 2020.
These designations would directly affect the requirements of areas that qualify for use under the Government Property Lease Excise Tax, or GPLET. The measure can only be employed with tax abatement perks in slum and blighted areas in a CBD.
GPLET tax incentives allow the city to take over the rights to a land for the developer, who then leases it back at a significantly reduced rate, replacing normal property tax. It has saved developers millions.
However, if the development is not taking place in a slum and blight area in a CBD, developers can’t take advantage of the 8-year property tax abatement that is usually part of a GPLET agreement. Currently, (more than) 20 downtown properties use the GPLET tax incentive or are approved to use it.
The Phoenix City Council also opposed the original version of the bill, which included a larger CBD and would have eliminated slum and blight designations after 10 years instead of allowing re-designation.
Christine Mackay, Phoenix Community and Economic Development Director, said redesignation of slum and blight areas was also a good change, as there is currently no requirement for a periodic re-assessment.
GPLET tax incentive will still be available to developers downtown after the new measure, but the areas the incentive can be employed will be more limited. Mackay believes that the GPLET tax incentive is an important tool in downtown development and will continue increasing downtown density.
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