May 26 WED Subcommittee Minutes - Draft (Approved by BRD).pdf

Phoenix City Council 
Workforce and Economic Development Subcommittee 
Summary Minutes 
Wednesday, May 26, 2021 
City Council Chambers 
200 W. Jefferson St. 
Phoenix, Ariz. 
Subcommittee Members Present     
 Subcommittee Members Absent 
Councilwoman Laura Pastor, Chair 
Councilwoman Debra Stark 
Councilman Jim Waring 
CALL TO ORDER 
Chairwoman Pastor called the Workforce and Economic Development Subcommittee to 
order at 10:05 a.m. with Councilwoman Stark and Councilman Waring present.  
CALL TO THE PUBLIC 
None. 
MINUTES OF MEETINGS 
1. Minutes of the Workforce and Economic Development Subcommittee Meeting
Councilwoman Stark made a motion to approve the minutes of the Apr. 28, 2021
Workforce and Economic Development Subcommittee meeting. Chairwoman Pastor
seconded the motion which passed unanimously, 3-0.
CONSENT ACTION (ITEMS 2-3) 
Items 2-3 were for consent action. No presentations were planned but staff was 
available to answer questions.  
Councilwoman Stark made a motion to approve consent items 2-3. Councilman Waring 
seconded the motion which passed unanimously, 3-0. 
2. Key Phoenix Economic Indicators Quarterly Report
3. Development Agreement with Metrowest Development, LLC for the Sale and
Development of 814 N. 5th Ave.
INFORMATION AND DISCUSSION (ITEM 4) 
4. Vacant Commercial Storefront Properties
This item was heard out of order.
ATTACHMENT A

Deputy City Manager Ginger Spencer introduced Community and Economic 
Development (CED) Director Christine Mackay, Planning and Development Director 
Alan Stephenson, and Neighborhood Services Director Spencer Self to present on the 
item. 
 
Ms. Mackay began by providing a brief background on commercial storefront vacancies, 
including the retail revolution and the effects of COVID-19, such as e-commerce 
competition, in-person restrictions, and the inability to pivot. She mentioned these 
vacancies followed a natural progression that had accelerated over a five to 10-month 
period because of pandemic restrictions, and neighborhood needs evolved from retail to 
affordable housing, mixed use, education, and new forms of retail.  
 
Mr. Stephenson highlighted the prevalence of strip commercial development along 
major corridors and older areas in Phoenix compared to newer areas. He explained that 
older buildings were a major consideration in commercial development because they 
often lacked certificates of occupancy, were not up to City Code, and required asbestos 
mitigation, occupancy classification, and development feasibility. He also discussed 
underperforming malls that were older and had fallen into disrepair, especially in the 
advent of e-commerce.  
 
Ms. Mackay explained there was approximately 69 million square feet of retail inventory 
in Phoenix, with a vacancy rate of 8.3 percent, an increase from 6 percent since the 
start of the COVID-19 pandemic. She outlined the current inventory of vacant 
commercial properties, including 19 big box retail spaces and 28 shopping centers, and 
discussed opportunities to repurpose and redevelop these spaces.  
 
Ms. Mackay highlighted developments such as North 32nd, located in northeast 
Phoenix, and 19North, located along the light rail at 19th Avenue, which served as 
models for collaboration between the city and the community to revitalize commercial 
development. She explained these types of projects required close collaboration with 
the Neighborhood Services Department, Planning and Development Department, City 
Council, and the communities through activities such as monitoring and mapping 
vacancies, assisting property owners, and community meetings.  
 
Mr. Stephenson discussed the legal considerations associated with addressing the 
current vacant commercial inventory, such as legal action related to development 
agreements and redeveloping older properties. He also outlined opportunities for the 
city to assist residents and businesses through existing city programs. 
 
Mr. Self discussed Community Development Block Grant (CDBG) funding and 
programs that could address these vacancies, such as the Neighborhood Commercial 
Rehab Program. He explained that options such as public property acquisitions could 
be employed to serve low to moderate income communities, and the scope of CDBG 
programs could be expanded to meet the needs of the vacant properties being 
discussed.

Mr. Stephenson concluded the presentation by sharing ideas to revitalize vacant 
commercial property, including expansion of adaptive reuse and CDBG programs, new 
initiatives through American Rescue Plan Act (ARPA) funding, community engagement, 
business attraction efforts, beautification and infrastructure initiatives, general fund and 
bond support, and updating zoning ordinances and converting land use. He mentioned 
that many of these ideas would require further discussion, and staff could return to 
council with additional information. 
 
Councilwoman Stark recounted her recent work with Hatcher Road business owners, 
whose properties were not built in the county, leading to issues with permitting and 
stifling their efforts to improve or sell. She noted that she also recognized this issue in 
other parts of the city, such as along Bell Road between Cave Creek Road and 32nd 
Street and advocated for a full council discussion to comprehensively study the issue 
citywide and explore potential internal process improvements.  
 
Chairwoman Pastor asked Councilwoman Stark if she would like to pursue a committee 
or task force, rather than a study.  
 
Councilwoman Stark spoke in support of creating a task force, recalling her previous 
discussions with a Hatcher Road business owners who wished to be more involved.  
 
Councilman Waring expressed his agreement for further discussion on this item with the 
full council.   
 
Chairwoman Pastor stated she would discuss this item with Mayor Gallego to present at 
an upcoming policy session.  
 
Councilwoman Stark expressed support for discussing this item at a policy session in 
June, to provide staff with time to work on initiatives over the summer. 
DISCUSSION AND POSSIBLE ACTION (ITEM 5) 
5. Discussion of the Government Property Lease Excise Tax Program 
This item was heard out of order. 
 
Deputy City Manager Ginger Spencer introduced Community and Economic 
Development (CED) Director Christine Mackay and CED Program Manager Joseph 
MacEwan to present on the item. Ms. Mackay provided an overview of the agenda for 
the presentation, which covered the findings of the absorption rate study and 
government property lease excise tax (GPLET). 
 
Mr. MacEwan began by discussing downtown developments that were recently 
completed, under construction, and planned, representing significant commercial space, 
more than 4,000 residential units, hotels, amenities, and educational institutions.  
 
Mr. MacEwan reiterated the unique boundaries for the absorption study, which 
encompassed 19th Avenue to 16th Street from Jefferson Street to McDowell Road. He

shared the key findings for this area, including strong demand for multifamily housing, 
which exceeded supply, and was greater than demand throughout the rest of the city. 
He also highlighted findings related to employment, such as downtown residents 
prioritizing proximity to employment centers and a high concentration of high-paying 
employers in the area.  
 
Mr. MacEwan highlighted one of the key findings that downtown had a high 
concentration of high-paying employers. He discussed the key industries found in the 
study area, including information technology, professional scientific and technical 
services, and public administration, with the highest average wages around $80,000 
among the three industries. He also provided an update on the office market, which 
represented 13.5 million square feet total, with a vacancy rate of 13.5 percent and rent 
of approximately $29.08 per square foot. 
 
Chairwoman Pastor opened the floor to the subcommittee for their questions. 
 
Councilman Waring reiterated comments from previous discussion on the downtown 
absorption study. He acknowledged that while the number of people living downtown 
had increased, it still only represented a small percentage of those who live in Phoenix. 
He advocated for developments that could be used by many residents, not only a few 
people.  
 
Chairwoman Pastor observed that the expanded boundary, which included residential 
areas and the government mall to the west, accounted for the high percentage of public 
administration jobs in the study area. She asked if the numbers would be different if the 
study area only represented the typical downtown boundary. 
 
Ms. Mackay affirmed the chairwoman’s comments and explained the study area 
included an additional nine streets to the east and 12 streets to the west, which included 
the Capitol Mall.  
 
Chairwoman Pastor expressed her support for the expanded study boundaries, but 
acknowledged that it shifted the focus of the study from Downtown Phoenix specifically, 
which she noted was between 7th Avenue and 7th Street. 
 
Ms. Mackay transitioned to sharing a history of GPLET, which had been authorized by 
the state in 1996. She explained government-owned properties were not subject to 
property tax, and GPLET provided the ability to collect taxes from private entities who 
lease this property. She added the excise tax would substitute property tax, and without 
GPLET there would be no tax on the properties. 
 
Chairwoman Pastor requested clarification on the taxes. 
 
Ms. Mackay provided further clarification on the history on GPLET and explained it 
created a mechanism to tax private developers.

Chairwoman Pastor stated there were government entities that expanded their growth 
on properties where there was no property tax. 
 
Ms. Mackay shared the two main uses of GPLET, which were to tax non-government 
uses on government property and to serve as an economic redevelopment tool by 
facilitating revitalization through reductions or abatement of the excise tax. She 
explained the city of Phoenix commonly used it as a redevelopment tool, which allowed 
an 8-year abatement of the property tax before requiring full ad valorem property tax 
rules. 
 
Ms. Mackay discussed the Central Business District (CBD) and the economic incentives 
involved, including the requirement to be located within a redevelopment area and CBD, 
required improvements of value by 100% plus $1, 60-day notice for taxing jurisdictions, 
City Council approval, tax options, and changing markets and focus. 
 
Councilwoman Stark asked for examples of the changing market and referred to 
affordable housing uses.  
 
Ms. Mackay explained staff relied on guidance from the community and City Council in 
looking at the changing market focus and determining the types of projects for which 
GPLET could be used. She discussed hotels, workforce housing, preserving historic 
properties and enhanced public amenities as examples.   
 
Ms. Mackay discussed the use of GPLET for properties located in a redevelopment 
area, but not in the CBD. She explained in those cases, the project must improve value 
by 100 percent and highlighted how GPLET was used to address opportunities with 
workforce housing and advancing council and community goals. She added that 
abatement would not be an option in these areas.  
 
Chairwoman Pastor requested a list of redevelopment areas in the city and asked if a 
developer could transfer the property during the eight-year period.   
 
Ms. Mackay confirmed a developer could sell the property and it would be taxed at the 
beginning of the ninth year. She also mentioned she would provide the chairwoman with 
a list of redevelopment areas.  
 
Chairwoman Pastor asked about the difference between excise and property tax. 
 
Ms. Mackay explained multifamily, office, retail, and hotels had different excise tax rates 
which exceeded what developers would have to pay on full ad valorem tax. She stated 
GPLET could still be beneficial for multifamily and it is reviewed on a project by project 
basis. 
 
Ms. Mackay discussed the financial impacts of GPLET, including the creation of nearly 
18,000 new jobs with nearly $1 billion in payroll, construction capital investment, and

revenues through construction sales tax, annual tax impact, Maricopa County, the State 
of Arizona, and school districts.  
 
Chairwoman Pastor asked if school districts, who had immediate needs, were meant to 
see the benefit after eight years.  
 
Ms. Mackay explained the benefits attained by school districts had been affected by 
changes to GPLET and the education equalization program over the last 20 years. She 
stated the eight-year abatement was the only benefit since 2016. She added the 
projects provide significant benefit to all taxing jurisdictions and staff would start up 
monthly meetings with school districts to keep them apprised of downtown projects and 
updates. 
 
Ms. Mackay outlined the projects that had GPLET in Phoenix and added some had 
eight-year abatement.  
 
Chairwoman Pastor asked what community benefits were attained from each project 
with GPLET. 
 
Ms. Mackay highlighted the amenities and community benefit of downtown 
developments using GPLET, such as the Fry’s grocery store at Block 23, coworking and 
open space at X Phoenix Basecamp, workforce housing and parking at various 
developments, and a $100,000 deposit to the city’s affordable housing trust fund from 
Skye on 6th.  
 
Chairwoman Pastor asked for additional information about the workforce housing 
components of X Phoenix Basecamp and Palm Court Towers. She added that in 
addition to addressing the food desert in the area, the Fry’s also brought jobs to 
Downtown Phoenix.  
 
Ms. Mackay stated X Phoenix Basecamp and Palm Court Tower had each dedicated 10 
percent of units for workforce housing. She also expressed her agreement with the 
chairwoman’s comments on the Block 23 Fry’s grocery store, noting that there were 
several thousand jobs in the building and avoiding zone pricing was critically important. 
 
Chairwoman Pastor asked if there were other community benefits or incentives that 
could be leveraged, such as those offered in other jurisdictions.  
 
Ms. Mackay explained GPLET was unique to Arizona and discussed the differences 
between GPLET and tax increment financing (TIF), which had been used in other 
states.  
 
Councilwoman Stark added that Phoenix did not have the same tools as other states 
and used Chicago as an example of a city that benefited from TIF with parks and open 
spaces. She asked if staff could clarify the Central Business District boundary.

Ms. Mackay stated the boundaries were from McDowell Road to Jackson Street, from 
7th Avenue to 7th Street.  
 
Councilwoman Stark acknowledged the boundaries differed slightly from those used for 
the absorption study. She asked Ms. Mackey for her opinion on the potential downside 
of using GPLET. 
 
Ms. Mackay shared one of the considerations was whether developers would have built 
on their own without GPLET, which had been demonstrated by a few previously 
planned projects. She also mentioned the greatest negative was perceived harm to the 
school districts.  
 
Councilwoman Stark asked if Ms. Mackey foresaw the need for future use of GPLET.  
 
Ms. Mackay referred to the earlier discussion on changing market focus and stated staff 
was constantly weighing those considerations. She explained the city was approaching 
the point where construction would soon meet multifamily need, while for hotels that 
point had passed. She added it could still be a tool for high rise office development.  
 
Councilman Waring spoke in opposition to further use of GPLET and advocated for 
focusing on development needs on other districts. He stated he would like greater clarity 
on the future use of GPLET and expressed his appreciation for the discussion. 
 
Chairwoman Pastor stated the item would be heard before the full City Council in June 
and opened the floor for public comment. 
 
Joshua Wells, representing Central Arizonans for a Sustainable Economy, spoke in 
opposition to GPLET use for luxury commercial developments. He expressed support 
for GPLET use with affordable housing and community amenities such as grocery or 
open space. 
 
Scott Natos-Elliott, representing Unite Here Local 11, requested a moratorium on 
GPLET use for luxury commercial developments and advocated for its use for 
affordable housing.  
 
Carmen Quintana, an HMSHost employee and member of Unite Here Local 11, 
requested a moratorium on GPLET use for luxury commercial developments and 
advocated for its use for affordable housing.  
 
Cat Castaneda requested a moratorium on GPLET use for luxury commercial 
developments and advocated for more workforce housing. 
 
Tomika Brown, representing Unite Here Local 11, requested a moratorium on GPLET 
use for luxury commercial development.

Leonila Dailon, a member of Unite Here Local 11, requested a moratorium on GPLET 
use for luxury commercial developments and advocated for its use for schools, 
affordable housing, and projects that benefit residents.  
 
Julius Walters, a member of Unite Here Local 11 and downtown hotel employee, 
requested a moratorium on GPLET use for luxury commercial developments and 
advocated to use GPLET for developments that benefit working residents with families 
and those that live paycheck to paycheck. 
 
Nicholas Ciccalone, member of Unite Here local 11 and downtown hotel employee, 
requested a moratorium on GPLET use for luxury commercial developments and 
advocated to use GPLET for affordable housing and community needs, such as Astra.  
 
Korrine McClemens requested a moratorium on GPLET use for luxury commercial 
developments and advocated for more affordable housing as rents continue to rise.  
 
Marisela Mares requested a moratorium on GPLET use for luxury commercial 
developments and advocated to use GPLET for affordable housing developments.  
 
Brendan Walsh expressed his disagreement with the presentation and requested a 
moratorium on GPLET use for luxury commercial developments.  
 
Beatrice Moore, representing Grand Avenue Arts and Preservation, spoke against using 
GPLET, stating that they create unfair competition between businesses, push property 
values, and create unwalkable mega blocks.  
 
Ryan Boyd stated he felt conflicted about GPLET, and discussed the benefits of its use 
such as creating a more vibrant downtown and developing more units for affordable and 
workforce housing. He spoke in support of learning more about redevelopment areas 
outside of CBD and advocated for infrastructure improvements throughout the city to 
allow people to ride bicycles and walk safely.  
 
Sandy Villatoro, member of Unite Here Local 11 and downtown hotel employee, 
advocated for more affordable housing.  
 
Chairwoman Pastor asked why the absorption study boundaries were expanded.   
 
Ms. Mackay referred to discussion during the March 25 subcommittee meeting about 
studying how area could be more connected, walkable, and how new multifamily could 
be incorporated.  
 
Chairwoman Pastor asked if the timeline on workforce and affordable housing ends on 
the ninth year.  
 
Ms. Mackay explained it would depend on how the agreements are written, and it would 
typically sunset when the GPLET sunsets.

Chairwoman Pastor asked if there was a relationship between the GPLET and the 
development fund as tools for economic development. 
 
Ms. Mackay explained that with the Downtown Reinvestment Fund, the city owned the 
property. She stated the property would be rented out, with rent paid on the property for 
the term of the GPLET, which would then be deposited into the reinvestment fund. 
 
Chairwoman Pastor requested a list of projects that had been funded and at what level. 
 
Ms. Mackay stated a list of projects could be provided and that the information could 
also be found in public notices for City Council meetings. 
 
Chairwoman Pastor stated she had heard the comments from constituents and that 
there would be a larger discussion with the full council in June on the absorption study 
and whether GPLET would continue.   
 
Councilwoman Stark stated there were not enough tools to incentivize developments 
and requested additional discussion on other incentives that might be available. 
 
Councilman Waring stated he would like to end the use of GPLET and expressed 
support for the direction the legislature was moving on this issue.  
 
CALL TO THE PUBLIC  
None. 
 
FUTURE AGENDA ITEMS 
Deputy City Manager Ginger Spencer shared the following items planned for future 
Workforce and Economic Development subcommittee meetings: 
• Contract with Capital Management Inc. for Sale and Redevelopment of 723 W. 
Polk St. 
• Theme Park Districts Extension Legislative Updates 
• Gaming Compacts 
• Downtown Building Signage Study 
• Downtown Kiosks 
 
Ms. Spencer also noted a comment submitted online by Robert Grant who did not wish 
to speak and took a neutral position on Item 5. 
 
ADJOURNMENT 
Chairwoman Pastor adjourned the meeting at 12:20 p.m. 
 
Respectfully submitted, 
Adeoffer-Marie Rabusa 
Management Intern