GPLET: Handouts for developers, Wrong for Tempe

In Affordable Housing, Economic Diversity, Economic Justice, GPLET, Issues by Patrick MoralesLeave a Comment

If there’s one thing that’s clear from rising property values, rental rates, and construction cranes, its that there is no shortage of demand to live, work, and build in Tempe. Arizona is leading in job growth and since the 2010 census, more than 21,000 new residents have chosen to make Tempe their home. There is no sign that this trend is slowing.

With all that to consider, you would expect that our city would be making plans for the increased tax revenue. We could use higher capacity public transit to move these new workers, additional parking, and investment in affordable housing, but those plans will need to wait. Many of the new higher-density developments in Tempe & Phoenix are more than unaffordable, they are being subsidized with a specialized tax handout that is unnecessary and shifts the burden of accommodating a growing population on to you and your family.

Government Property Lease Excise Tax (GPLET) agreements sound complicated, but they are actually quite simple. Government owned land in Arizona is not subject to property taxes. To incentivize a developer to build, a city may acquire the land and lease it to a developer below market rates. For eight-years, the developer pays no property tax. Phoenix alone has lost more than $1.5 billion in tax revenues as a result. You, your family, and your neighbors assume the cost of increasing utility and transportation capacity, and impacts on environmental quality.

In fairness, GPLET agreements can encourage job growth and housing development when a city is struggling. These incentives can even be used to meet specific housing needs by cost-sharing construction of low and middle-income housing, but this is frequently not how they are put to work. When tax incentives for housing are intended to benefit the least advantaged, they are often met with legal challenges or direct legislative action to ensure that only the most well-off benefit from your tax money.

What is most disturbing is that these incentives are rarely necessary. In a number of cases, including several developments in Tempe, businesses expressed that they would build with or without tax breaks. State Farm set up one of its regional headquarters in Tempe, not for tax breaks, but because Tempe has a walkable downtown, accessible public transit, a multimodal transportation development plan, and is affordable for all of their employees. Unfortunately, our city if failing to develop in a way that maintains the unique qualities that 21st-century businesses want in a city. Accessibility and walkability are becoming luxuries, housing and commercial rents are skyrocketing with demand, and the rest us are expected to cover the tab of those who can most afford to pay their fair share of the cost of growing.

Our policy on development incentives must take these factors into consideration. Until we repeal the state law that block cities like Tempe from negotiating fair rents, or overturn it in court, incentives must promote development that benefits all of us. When a builder is incentivized by demand to construct more high-cost homes, Tempe’s should invest in projects that provide worker affordable housing. When commercial rents are on the rise for new class-A offices, Tempe should invest in commercial projects that are affordable to local small business owners. When rents drive out community driven business and development organization, Tempe should invest in collaborative spaces for local entrepreneurs. Giving big business unfair advantages over small locally owned businesses and current residents is harmful, unfair, an unjust.

The high-demand for homes and offices shows us that tax breaks are not what makes Tempe an attractive place to love and work. We want to be welcoming to new neighbors and new businesses, but we must recognize that businesses and new residents choose Tempe for its accessibility, workers, culture, and values. With your vote, we can ensure that Tempe continues to be a resilient and progress focused city that respects neighborhoods, values workers, embraces small businesses, and serves every resident, regardless of income.

Featured Image:
“torndollar” by Kyle @SuburbanDollar.com. Licensed under CC-BY 2.0

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