GPLET forum January 13, 2020

GPLET (Government Property Lease Excise Tax) is a development tool authorized by the state. It requires the government to pick winners, and so offers the potential for misuse. In the mayoral forum on 13 December, Corey Woods argued that GPLETs are over-used and hurt the school districts’ ability to collect taxes. This forum was organized by Ron Tapscott of Tempe Neighbors Together (TNT). You can find TNT on Facebook. The speakers are Ken Jones, Tempe’s CFO, and Alex Smith, Deputy Community Development Director.

The video (about 46 minutes) is here.

The first 8 minutes explain the history and philosophy of the program, how it is grounded in state law, and how it works as an incentive to development. All taxes are rebated for 8 years. Private property can use program by selling and leasing back. After 20 minutes, the discussion veers off the subject of GPLETs. In the discussion afterward (not on the video), Corey Woods acknowledges that the program does not, in fact, hurt the schools and that the school districts probably misunderstand it.

(7:55) Tempe Marketplace is a site that would not have been developed (in Jones’s opinion) without an incentive, because the site required remediation.

(8:15) Arizona legislature corrects lack of inflation escalator, brings excise tax in line with ad valorem, so the subsidy henceforward is the 8 year rebate.

(11:00) Tempe Buttes the original GPLET, on government land.

(13:50) the difference between government land and ASU property, and why developments on ASU land (such as State Farm) will never pay tax.

(15:45) how school districts are protected from loss of revenue.

(17:30) Are the incentives really needed? Jones cites oversight by state, Goldwater Institute, other cities competing for development, as evidence the subsidy is not just given away.

(20:10) the cost of the dam and its repair.

(24:40) other development tools, such as sales tax rebates.

(25:00) Urban Core presents different issues, such as building height. Jones and Smith defend the use of executive session (closed meetings).

(29:30) hotel tax revenues are exceeding expectations.

(30:05) how did the Tempe City for the Arts (TCA) get overshadowed by such big buildings? Who decides?

(32:10) IDEA campus, west of the TCA, as example of remediation project.

(34:00) further amendments to the TCA campus.

(35:40) remediation expense caused plans to change.

(36:30) opportunity zones, a federal development program.

(40:30) Corey Woods asks why the city has so few development tools.

(43:10) how the city follows up on promises made by developers.

(45:20) in response to my hypothetical question about how an owner of a single family lot might use GPLET to build a multifamily development, Jones says the proposal would have to be approved under the zoning law.