Phoenix Council Considers Awarding Tax Break That's Subject Of Lawsuit

When the City Council meets on Wednesday they will consider awarding a nearly $9 million tax break to a developer planning a large multi-use project at Third and Pierce downtown. Meanwhile, the city is facing a lawsuit over having awarded a similar tax break. That suit has stalled a nearby project.

The project - by Clark Street Holdings, which bought the site last year - would include three high-rise multi-family towers with 24,500 square feet of commercial space. The project would be built in three phases.

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Under the deal being negotiated, the city would take ownership of the land and then lease the land back to the developer. That would allow the developer to avoid paying property taxes. When the leases run out, the developer would regain ownership of the buildings, which would return to the tax rolls.

A similar project is the subject of a lawsuit brought by businesses and the Goldwater Institute that argues the city violated a section of the state's constitution that requires equal properties be taxed equally.

The suit - at this point - only applies to the planned project at Second and McKinley, which would allow the council to move ahead on Wednesday.

According to the city, the Pierce project would "bring a significant number of additional residential units to the downtown area in close proximity to the Arizona State University Downtown Phoenix Campus and the Phoenix Biomedical Campus.

"This project will add to the diversity of housing in the central city area, provide community activation of the ground floor areas if not rented for commercial uses, and provide a workforce housing component."

The developer states:

Phase 1 - approximately 450,000-square-foot high rise, including 252 rental residential units, ground floor commercial space and 225 structured parking stalls.

Phase 2 would be an approximately 300,000-square-foot high rise tower, including 204 rental residential units, ground floor commercial space and 275 structured parking stalls.

Phase 3 would be an approximately 225,000-square-foot high rise tower, including 156 rental residential units, ground floor commercial space and 14 structured parking stalls.

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