On Tuesday, June 18, 2024, the Gilbert Town Council will hold a meeting to adopt the boundaries of a redevelopment plan which could encompass up to 18% of the town’s landmass extending from its western boundary eastward to Lindsay Road and then south to Ray Road, an area of almost 9 ½ square miles. The Town is seeking to take this action under Arizona Revised Statue § 36-1471-1491 using laws intended to curb “slum or blighted areas,” terms that could hardly be used to describe the 22nd Best Place to Live in the U.S. by Money Magazine and the 2nd Safest City in America by Law Street Media according to Gilbert’s website.
The controversial move, which seems to carry the broad support of the Town Council, would allow Gilbert to bypass property taxes over the vast swath of real estate, opening a path for the town to engage in a property acquisition and lease scheme known as a Government Property Lease Excise Tax (GPLET) according to Arizona Tax Research Association President Kevin McCarthy.
Ironically, McCarthy, who has opposed this method of redevelopment for years, told AZ Free News that he penned an op-ed for the Arizona Republic crediting Gilbert with not employing this strategy.
“Most of your suburban cities have done very little of this,” McCarthy explained. “Gilbert to date has done none of it. Ironically, I wrote an op-ed for the paper, I don’t know, six, seven years ago that was in the Arizona Republic, crediting the city of Gilbert for doing development the right way and not doing it by harvesting the property taxes that are otherwise owed, making everybody else’s property taxes higher as a result of some development, not being on the rolls and shorting the schools, their monies, that kind of thing.”
Adding another wrinkle to the matter though, is a potential legal vulnerability to the strategy which could land the town in court. McCarthy continued, “And so now we’ve got them wanting to break through and begin using this tool. But what’s different about this now than even five years ago, the last time we made a legislative effort to narrow the use of it, is that there have been court decisions in this space that we’ve been involved in with the Goldwater Institute that have found that this mechanism violates the constitution’s gift clause.”
As reported by the Arizona Republic, a 2020 ruling found that a similar GPLET scheme between the city of Phoenix and developers of The Derby Roosevelt Row, involving a promised tax break, was illegal. In 2016 the Phoenix City Council okayed a plan that would have had developer Amstar/McKinley successfully avoid paying the appropriate property taxes for 25 years. For eight years under the law, the tax would be completely waived, and it would’ve been further reduced for an additional 17 years.
McCarthy explained how the process works: “I assume what happened in Gilbert: Gilbert’s probably got a new economic development director, or maybe it’s the city manager goes to some meetings, and here’s what fund the city of Phoenix is having harvesting the property taxes that otherwise would be owed on a development. To make development easier, the way these deals are usually done is a developer goes to City Hall, and if a city has a central business district that they’ve declared as slum and blight, they know that if they want to propose an $80 million multi-use building that is 30 stories high and have some residential apartment building and then commercial on the first floor, that kind of thing they can negotiate to have it qualify as a GPLET.”
During a Town Council meeting on April 16th, Gilbert Redevelopment Program Manager Amanda Elliott explained that under the law, a municipality must have a combination of nine findings for redevelopment “to eliminate or prevent your [town’s] signs of decline”
Under the applicable law (ARS § 36-1471), the statute states that a “’Blighted area’ means an area, other than a slum area, where sound municipal growth and the provision of housing accommodations is substantially retarded or arrested in a predominance of the properties by any of the following:
(a) A dominance of defective or inadequate street layout.
(b) Faulty lot layout in relation to size, adequacy, accessibility or usefulness.
(c) Unsanitary or unsafe conditions.
(d) Deterioration of site or other improvements.
(e) Diversity of ownership.
(f) Tax or special assessment delinquency exceeding the fair value of the land.
(g) Defective or unusual conditions of title.
(h) Improper or obsolete subdivision platting.
(i) The existence of conditions that endanger life or property by fire and other causes.”
This language is explicitly presented by the Town as the basis for the redevelopment plan. Further, under the finding for the necessity of the law, the legislature explained clearly, “That the existence of these areas contributes substantially and increasingly to the spread of disease and crime, necessitating excessive and disproportionate expenditures of public funds for the preservation of the public health and safety, for crime prevention, correction, prosecution, punishment and the treatment of juvenile delinquency and for the maintenance of adequate police, fire and accident protection and other public services and facilities, constitutes an economic and social liability, substantially impairs or arrests the sound growth of municipalities and retards the provision of housing accommodations.”
The law adds, “the acquisition of property for the purpose of eliminating the conditions or preventing recurrence of these conditions in the area, the removal of structures and improvement of sites, the disposition of the property for redevelopment and any assistance which may be given by any public body in connection with these activities are public uses and purposes for which public money may be expended and the power of eminent domain exercised.”
According to the Town Council, the moves toward this step have been gradual and ongoing for more than a decade.
Two Words Not Spoken: Property Taxes
During the presentation given by Elliot, the Town explicitly made the claims that the redevelopment plan “will not,” “Specify individual properties, specify commercial centers industrial complexes or neighborhoods, show up on a title report, displace residents or businesses, institute zoning changes, decrease property values or change the voter approved general plan.” However, conspicuously absent from that list is: property taxes.
McCarthy told AZ Free News that when a municipality negotiates to have a redevelopment qualify as a GPLET, “they are exempted from paying any property taxes on the improvement of the property for the first eight years, which is usually when the maximum amount of tax exposure is going to be on a property. That results in the schools not getting all the property tax money that they should get. The counties get zeroed out. The community colleges get zeroed out. The city themselves, it doesn’t get the property. If they do use property taxes, they don’t get any property taxes out of it. And the way that they execute this is that upon completion of the building, they literally deed the property back to the city.”
He added that a developer then wouldn’t have the property added to the tax rolls, “but it’s put on the tax rolls as an exempt property as any government property is, and [wont’] get a property tax bill for eight years.” In prior years, the period was as high as 25 years, but organizations like ATRA, working with the legislature, succeeded in getting that narrowed to eight. A bill was passed to lower it again to four years, but was vetoed by Governor Katie Hobbs. McCarthy noted, “Our argument to lawmakers was that at four years, it’s a lot closer to being able to pass the mathematical calculation of whether or not it’s a gift of public funds and therefore in violation of the constitutional gift clause.” The same gift clause that Phoenix ran afoul of in the Derby ruling.
McCarthy concluded, “Last thing I’ll say is that these property taxes are harvested because in many instances, these deals are agreed to by the cities because there’s a mutual benefit between the developer and the city to exempt the property from paying property taxes and enter one of these GPLET deals, and that is they can enter into any number of agreements that allow them both to benefit financially and maybe not. So not just the developer benefits the city.
So in the example I gave you that the deal might include me as the developer paying for infrastructure that otherwise may not be owed by the developer, but would be a city obligation. Whether the utilities that would be going in the city would bring up to the boundary of the property, any number of improvements in city of Phoenix, it could include, if it’s going to have multifamily, which is a lot of our stuff that we’re seeing in Tempe and Phoenix, a lot of apartment buildings where I as a developer grant concessions to the city council that a certain percentage of the apartments are going to be saved for low-income housing.”
The implications for property taxes also could impact the Gilbert Unified School District considerably as McCarthy observed with properties that “normally would be paying a million dollars a year in property taxes to Gilbert Unified,” not doing so. State funds would be used to subsidize the difference. However, that isn’t so for school bond measures, which are voter approved as are school overrides. “In those instances, the tax rates are going to be higher than they otherwise would’ve been if that property would’ve been on the tax rolls. But even there, the schools really don’t lose money.”
“It’s the other taxpayers that are on the tax rolls that get screwed because the property isn’t paying taxes.”
Gilbert Mayor Brigette Peterson made particular mention during the April meeting that the council is “not trying to turn the town of Gilbert into a city because that’s always a bone of contention with our residents. But it is focused on making sure that this town doesn’t become a city that we’ve seen in the past go downhill. We’re trying to make sure that we’ve learned from other cities’ mistakes in the past and do what’s best for our community to move us into the future and forward.”
Peterson added, “The other thing that we heard at that last meeting that was so well attended was um they they felt like the decisions had already been made. We have not made any decisions, and tonight even we’re just offering more feedback. We’re not voting on anything at a study session, so this still has a lot of time to go through more of a process and to hear from the public too.”
A mailer sent to Gilbert residents in the proposed ‘Blighted area’ indicated that the next meeting is scheduled for June 18, 2024 at 6:30 PM.
The owners of the businesses that power the economy of southern Arizona are about to see some long overdue relief from a 2018 excise tax which was struck down by the State Supreme Court in 2022. Affected businesses will be able to file for a waiver or refund of the tax by April 9, 2026 to recover at least $87 million that was unlawfully collected by the county with another $4 million in interest to be paid out proportionally. Unfortunately, consumers who paid the tax as part of a transaction, will be unable to seek a refund.
The Pinal County transportation excise tax was invalidated by the Arizona Supreme Court in Vangilder v. Arizona Department of Revenue, in which the court found that the Pinal County Board of Supervisors violated state law by adopting a “two-tiered retail transaction privilege tax (TPT) on tangible personal property as part of a transportation excise tax.” While the court held that the basis of the tax was lawful, it invalidated the two-tiered system where the first $10,000 of any one item was taxed at one rate and any in excess was taxed at zero percent.
Arizona Supreme Court Justice Kathryn H. King, a former Deputy General Counsel in the Office of Governor Doug Ducey and appointed by Ducey wrote for the court:
“For the foregoing reasons, we conclude that Pinal County complied with state law in adopting the transportation excise tax. We further conclude, however, that state law does not permit Pinal County to adopt a two-tiered retail TPT structure as part of a transportation excise tax, whereby the first $10,000 of any single item is taxed at one rate and any amount in excess is taxed at a rate of zero percent. For that reason, Pinal County’s two-tiered retail TPT structure in Proposition 417 is unlawful and invalid.
Accordingly, we affirm the court of appeals’ opinion in part and vacate in part. We vacate paragraphs 2 and 23–30 of the court of appeals’ opinion. We affirm the superior court on other grounds. We deny Vangilder’s request for attorney fees.”
The filing opportunity was announced in a letter from the Arizona Auditor General on May 17 according to The Center Square. The letter detailed that approximately $87 million was collected through the excise tax which has earned $4 million in interest adding that the ‘applicable interests” would be paid out to those requesting a refund as well. However, the actual consumers who paid the 0.5% sales tax up to the first $10,000 have no such recourse because of the “transaction privilege tax” status of Arizona the outlet noted cited the Pinal County website.
PINAL COUNTY TRANSPORTATION EXCISE TAX REFUND/WAIVER
Request refund/waiver of Pinal County transportation excise tax invalidated by AZ Supreme Court. Businesses that reported & paid tax 4/2018 to 3/2022 eligible. Must be received on or before 4/9/2026.https://t.co/ybsSxNPBZfpic.twitter.com/zfe3GNrnoL
— Maricopa County Republican Committee | MCRC (@MaricopaGOP) April 24, 2024
The Auditor General wrote, “Between April 1, 2018, and February 28, 2024, the Pinal Regional Transportation Authority did not expend any of the 2018 Excise Tax revenues or accrued interest.”
The county website explained, “Specifically, taxpayers who will be able to request a refund or waiver of monies paid toward this invalidated tax are generally limited to those businesses that filed and paid tax to the Department for the April 2018 through March 2022 tax periods as part of their overall transaction privilege tax liability, for business activity that they conducted either in Pinal County or with Pinal County customers.”
Fresh off of a budget approval that will only see a 0.2% increase in the Phoenix Police Department’s budget, an additional $27 million to be precise, the Department released its 2024 Crime Reduction Plan on Wednesday. The new plan carries over much of the previous plan from 2023 but adds an emphasis on firearm-related violence and the fentanyl epidemic. Also on order is a massive technological upgrade integrating controversial solutions such as drones and gun-shot detection equipment.
In a statement released by the City Newsroom, Interim Police Chief Michael Sullivan said, “We are losing far too many of our young people to gun violence, and the effects of the fentanyl epidemic on our community have been immense.”
Speaking to KTAR’s Mike Broomhead in a Wednesday interview, Sullivan explained, “If the public takes a look at the plan, you’ll see at the back we have some metrics and those are from things that we learned over the past year. We also looked at what we faced last year and added a couple really small changes focusing on juvenile crime. Something that… not just here in Phoenix but I think we’ve seen throughout the valley an uptick in juvenile crime that we saw last year and then really focusing in on the crime and disorder that’s related to the fentanyl epidemic.”
.@PhoenixPolice Chief Michael Sullivan joined @broomheadKTAR to break down the Department's 2024 Crime Reduction Plan.
— The Mike Broomhead Show on KTAR News (@BroomheadShow) June 11, 2024
According to the release from the City Newsroom, in early 2024 the Phoenix Police Department constructed a Real Time Operations Center at the Cactus Park Precinct to utilize more technological avenues to reduce crime specifically in the 27th Avenue corridor.
The plan calls for Phoenix PD to:
“Increase technology tools to continue to assist with lowering crime in the City. This technology includes the Real Time Operations Centers, drones, license plate readers (LPRs), gun-shot detection equipment, fixed cameras and laptops for all patrol officers.”
A 2021 press release from ASU’s Artificial Intelligence Cloud Innovation Center shows the Phoenix PD launched the Firearm Location and Interdiction System (FLIS) combining “acoustical and visual sensors, data analytics and omni-channel data access to help Phoenix police officers and citizens identify perpetrators of gun crimes.” The system reportedly notifies PPD automatically when a gun shot is fired providing audio, video, and location data to the officers via an application.
“Investigators are able to use the application to access the universe of data associated with the incident location and other evidence like license plates, forensics, and known associates.”
A similar, commercially produced system known as Shotspotter by SoundThinking, Inc.. has garnered serious controversy over the past two years facing major opposition in Chicago from Democrat Mayor Brandon Johnson as noted in Law Enforcement Today and from Democrats in Congress such as Senator Elizabeth Warren (D-MA) and Congresswoman Ayanna Pressley (D-MA) as reported by The Boston Globe.
In an interview with AZFamily, Ed DeCastro, Assistant Chief over Investigations explained, “We’re using the community as an ally as a partner with us, which has been a tremendous help. We’ve opened up a real-time operations center, so the technology we’ve gotten as a city is tremendous, and we’re able to catch the suspects a lot faster.”
As outlined in Phoenix PD’s Unmanned Aircraft Systems Use Guidelines published in 2022, the department may currently deploy drones in cases of: Vehicular Crimes, Violent Crimes/Homicide, Crime Scene/Criminal Investigation, Lab Evidence Collection, and Patrol/Investigative Support. Under tactical deployment, the drones are presently deployed for: tactical operational support, to provide enhanced levels of situational awareness during a tactical incident, and critical incident scene management.
On Sunday, June 2, authorities estimate that anywhere between two and three thousand Mexican nationals descended upon Phoenix and gathered beneath the scorching Arizona sun to vote. According to the Instituto Nacional Electoral, the Mexican government body charged with organizing the nation’s elections, only approximately 600 of those present at the Mexican Consulate Sunday were able to place their vote. A Spanish language outlet estimated the number to be up to 7,000.
Cuitláhuac Osorio Technical secretary of the Executive Directorate of the Federal Register of Voters of the National Electoral Institute (INE) told Conecta Arizona that the Mexican authorities are evaluating whether in-person voting should continue or if the government should switch to doing so electronically or at additional voting centers in the U.S. to accommodate Mexican nationals who are outside of the country on election day.
“Certainly, we did not foresee such an overwhelming participation, that so many people were going to suddenly appear before a Consulate; Having 2,000 or 3,000 people made the operation difficult for us in terms of being able to organize the lines, the resources and capacities that we had available to serve the citizens within the Consulate,” Osorio said (translated by Google).
In an interview with Maritza L. Félix, director and founder of the outlet, Osorio added, “We did not have that expectation of having that number of people outside the Consulate. It’s part of learning. We will have to evaluate other alternatives: for example, if this in-person modality would have to continue using electronic devices, if we would have to use ballots, if we would have to think about (more) voting centers. Nowadays the legislation does not allow it, that is, we were also limited to making the election within the Consulate. The INE will make a detailed evaluation, with all the recommendations.
Félix noted that likely many of the voters were, “People from New Mexico, from Texas, from northern Arizona, people who perhaps due to their irregular immigration status could not go to their homeland to exercise their right and decided to come to Phoenix.” The Mexican voters arrived as early as 5 AM on June 2nd coming from as far away as El Paso, TX.
“On this election day in which we witnessed there were thousands of people: according to representatives and volunteers of the INE, there were about 7,000 people who could have met at the consular headquarters. People from New Mexico, from Texas, from northern Arizona, people who perhaps due to their irregular immigration status could not go to their homeland to exercise their right and decided to come to Phoenix with the idea that there were 1,500 extra ballots. For example, the majority of people from Sonora who came could only vote for the Senate and the Presidency of the Republic,” Félix explained.
According to the outlet, the total number of Mexican nationals who voted from outside the country was 184,374, an increase of 87% over the previous election in 2018.
In social media posts on Friday afternoon The West Valley Republican & Independent Coalition, a non-profit PAC, stated that their office located on West Grand Ave. in Sun City, AZ “is almost a total loss,” after what is being called an electrical fire ripped through the building housing it overnight.
The organization wrote in a post to Facebook on Friday that the cause of the fire was electrical in nature saying, “Well, life sometimes sends us curveballs. And what a curveball this is: Our building had an electrical fire last night and our office is almost a total loss. Smoke damage is awful.”
Replying to comments, the organization stated that “everything was contaminated with poisonous chemicals from the fire.”
A volunteer effort in the early hours of Friday led by Chairman Cindy Newman and Congresswoman Debbie Lesko (R-AZ-08) with representatives from the Republican National Committee West Valley, American Majority Action, and GOP LD27 were reportedly able to clear the office of the PAC’s furniture and equipment in just three hours. The PAC expressed thanks in a post to Facebook minutes after the initial announcement.
The West Valley Republican & Independent Coalition is asking for donations to get the office cleaned and remediated, replacing all lost equipment and brought back into commission. According to the PAC’s website, “The West Valley Republican & Independent Coalition is a nonprofit PAC formed by local grassroots conservatives to provide a permanent office in the West Valley for the purpose of voter registration, voter outreach, distribution of political literature and as a meeting place for groups and individuals. The mission of the office is to foster an educated and informed electorate.
The PAC is self-funded through donations and has no paid staff or consultants. All funds donated to the PAC are utilized to pay rent, utilities, supplies, and to promote events.”
Chairman Cindy Newman speaking with AZ Free News confirmed that the fire was electrical in nature and started in another office in the complex. The damage was primarily caused by toxic smoke, and the office is closed indefinitely. The insurance on the office is insufficient to cover the massive losses in excess of $30,000. The organization is seeking an alternate meeting location.
“We’re going to come back even better than before I say,” Newman said. “I think we’ll come back better than what we were and we’ll have an incredible grand re-opening.”
