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  #21  
Old Posted Apr 4, 2017, 5:20 PM
Obadno Obadno is offline
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So this is interesting: http://azbex.com/minor-amendment-rev...-for-block-23/

Quote:
This week the Phoenix City Council will consider a request to amend a previous Block 23 agreement to “allow for additional market flexibility,” though it’s unclear which part of the proposed plans it would affect. The deal would still require a grocery store, office space, parking and streetscape improvements.

Jeff Moloznik, vice president of development for RED Development, said in a statement the project isn’t changing, and the amendment is “just a procedural step required for financing and ultimately construction commencement.”
Maybe an office tower isn't completely out of the question just yet, or maybe im just being overly optimistic.
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  #22  
Old Posted Apr 4, 2017, 8:44 PM
RonnieFoos RonnieFoos is offline
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Originally Posted by Obadno View Post
So this is interesting: http://azbex.com/minor-amendment-rev...-for-block-23/



Maybe an office tower isn't completely out of the question just yet, or maybe im just being overly optimistic.
I think the office tower was always part of the bigger project and was going to be built at some point. Maybe a possible tenant(s) has been found?
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  #23  
Old Posted Apr 4, 2017, 9:05 PM
biggus diggus biggus diggus is online now
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Maybe they have realized the apartment market is over-saturated and don't know if they necessarily want to build them.
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  #24  
Old Posted Apr 4, 2017, 10:13 PM
Phxguy Phxguy is offline
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Originally Posted by biggus diggus View Post
Maybe they have realized the apartment market is over-saturated and don't know if they necessarily want to build them.
The lack of a mention of apartments in what the deal will require bit is slightly unnerving. Or maybe that's post jitters from the Derby axing. Besides the Fry's, that's the biggest part of this project and I'd hate to see it either scaled down.
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  #25  
Old Posted Apr 4, 2017, 10:31 PM
biggus diggus biggus diggus is online now
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Originally Posted by Phxguy View Post
The lack of a mention of apartments in what the deal will require bit is slightly unnerving. Or maybe that's post jitters from the Derby axing. Besides the Fry's, that's the biggest part of this project and I'd hate to see it either scaled down.
I don't necessarily think it's jitters from Derby but I do think there's a realization that we have a metric ton of apartments in the area and each one is a carbon copy of the next. Same price points, same kinds of finishes, the competition between them will be immense and I think the initial excitement blinded a lot of developers.

I don't mean this to sound insulting to anyone it's more just a "hey did you know?" type of comment. People building these apartment buildings have no interest in owning them long term and running them, they're just developers looking to cash out and sell to a REIT. If they think the product will be hard to sell in a year or two years, they aren't going to build it and I think we are getting to that point right now within this high end market. There's money to be made in the lower end products that everyone is overlooking but the land cost and construction cost at this location is too high to make any low end product pencil.
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  #26  
Old Posted Apr 5, 2017, 12:49 AM
PHXFlyer11 PHXFlyer11 is offline
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Originally Posted by biggus diggus View Post
I don't necessarily think it's jitters from Derby but I do think there's a realization that we have a metric ton of apartments in the area and each one is a carbon copy of the next. Same price points, same kinds of finishes, the competition between them will be immense and I think the initial excitement blinded a lot of developers.

I don't mean this to sound insulting to anyone it's more just a "hey did you know?" type of comment. People building these apartment buildings have no interest in owning them long term and running them, they're just developers looking to cash out and sell to a REIT. If they think the product will be hard to sell in a year or two years, they aren't going to build it and I think we are getting to that point right now within this high end market. There's money to be made in the lower end products that everyone is overlooking but the land cost and construction cost at this location is too high to make any low end product pencil.
I disagree. Not that these are flipped to REITS and that much of the same product is available, those are all valid points. I disagree because I believe RED just flipped the CityScape apartments for a record sale. Sure, the market could become saturated, but they just got record prices. Values on a new project could in theory drop, but it won't be much in that time period.

Also, the supply of apartments in general is rapidly increasing, but the supply of high-rise apartments is still very limited. You only have CityScape and 44 Monroe. Sure maybe The Stewart will pan out, maybe One Central Park East will pan out, but supply of high-rise apartments is not near saturation levels and still command a premium, as evidenced by the sale of city scape apartments.
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  #27  
Old Posted Apr 5, 2017, 2:26 AM
ASUSunDevil ASUSunDevil is offline
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Originally Posted by PHXFlyer11 View Post
Also, the supply of apartments in general is rapidly increasing, but the supply of high-rise apartments is still very limited. You only have CityScape and 44 Monroe. Sure maybe The Stewart will pan out, maybe One Central Park East will pan out, but supply of high-rise apartments is not near saturation levels and still command a premium, as evidenced by the sale of city scape apartments.
Bingo. The appeal of a view has been underestimated by developers IMO.
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  #28  
Old Posted Apr 5, 2017, 4:03 AM
soled soled is offline
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Bingo. The appeal of a view has been underestimated by developers IMO.
This is a big thing for me, personally. The only way I'd move downtown would be into a high rise with a great view. I've been hoping for a few years that there'll be more choices. If I'm going to give up the large space of a home, then in exchange I want to be able to have the feeling of bringing some of the outdoors into my apartment or condo-if that makes sense.
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  #29  
Old Posted Apr 5, 2017, 8:46 PM
ASUSunDevil ASUSunDevil is offline
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http://www.phoenixnewtimes.com/arts/...hoenix-9219082

"The Fry’s footprint on the ground floor will be about 200,000 square feet, and the office space is being built above it, which means the developer will include 50,000 more feet of office space than first planned."

Didn't think they'd be altering the development to reduce the apartment phase.

"But the City’s investment could pay off big time, according to financial impact numbers calculated by its department of economic and community development. Those calculations indicate that Block 23 will likely generate $76.5 million in sales tax revenue during the course of its 50-year agreement with the City."

This is why the people that bitch about GPLET's piss me off. They don't comprehend the bigger picture and think that everything is 'unfair'
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  #30  
Old Posted Apr 5, 2017, 9:11 PM
biggus diggus biggus diggus is online now
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While New Times is hardly the source I go to for news, this is both believable and exciting. Can't wait for this to start going vertical.
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  #31  
Old Posted Apr 5, 2017, 10:20 PM
Obadno Obadno is offline
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Quote:
Originally Posted by ASUSunDevil View Post
http://www.phoenixnewtimes.com/arts/...hoenix-9219082

"The Fry’s footprint on the ground floor will be about 200,000 square feet, and the office space is being built above it, which means the developer will include 50,000 more feet of office space than first planned."
How many more floors is that?
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  #32  
Old Posted Apr 5, 2017, 11:39 PM
nickw252 nickw252 is offline
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Quote:
Originally Posted by ASUSunDevil View Post
"But the City’s investment could pay off big time, according to financial impact numbers calculated by its department of economic and community development. Those calculations indicate that Block 23 will likely generate $76.5 million in sales tax revenue during the course of its 50-year agreement with the City."

This is why the people that bitch about GPLET's piss me off. They don't comprehend the bigger picture and think that everything is 'unfair'
The argument that a development will generate sales tax as a consolation for not generating property tax is not a proper justification.

Sales taxes and property taxes are not apples to apples comparisons in the following respects:
  • First, property taxes generally go to pay for specific city resources such as a specific fire department or a specific school, while sales taxes just go into the general state and city budgets without necessarily being allocated. For example, the property taxes I pay on my house go directly to the elementary school up the street and the fire department that responds to my house. Sales taxes have no similar allocation.
  • Second, property taxes are not paid at a standard rate like sales taxes. Property taxes are a zero sum game. The tax assessment is "backed into" every year based on that taxing jurisdiction's budget. When one property is taken off the property tax roll (i.e. The Derby) due to a GPLET, all of the other property owners in that taxing jurisdiction must make up the difference (i.e. Angel's Trumpet). This means their taxes go up dollar for dollar to make up for the GPLET. Again, it's a zero sum game. This is obviously very different from sales taxes. The amount of sales tax collected by "business A" (i.e. The Derby) has zero effect on how much "business B" (i.e. Angel's Trumpet) must collect.

I'm not a big supporter of the Goldwater Institute, nor do I have a strong opinion on any of these specific GPLET issues. I just want people to understand how these tax incentives work and make arguments for or against based on sound logic and analyses.

Last edited by nickw252; Apr 5, 2017 at 11:51 PM.
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  #33  
Old Posted Apr 5, 2017, 11:53 PM
dtnphx dtnphx is offline
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Very good points, Nick.
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  #34  
Old Posted Apr 6, 2017, 6:35 PM
Obadno Obadno is offline
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Good news, groundbreaking next week with all components on track !

Quote:
RED Development, Phoenix Mayor Greg Stanton and the president of Fry’s Food Stores will break ground next week on the much anticipated Block 23 development in downtown Phoenix.

The project will includes a Fry’s Food Stores supermarket, 330 apartments and 200,000 square feet of office space aimed at tech and creative companies.

http://www.bizjournals.com/phoenix/n...-downtown.html
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  #35  
Old Posted Apr 6, 2017, 7:22 PM
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pbenjamin pbenjamin is offline
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Quote:
Originally Posted by nickw252 View Post
The argument that a development will generate sales tax as a consolation for not generating property tax is not a proper justification.

Sales taxes and property taxes are not apples to apples comparisons in the following respects:
  • First, property taxes generally go to pay for specific city resources such as a specific fire department or a specific school, while sales taxes just go into the general state and city budgets without necessarily being allocated. For example, the property taxes I pay on my house go directly to the elementary school up the street and the fire department that responds to my house. Sales taxes have no similar allocation.
  • Second, property taxes are not paid at a standard rate like sales taxes. Property taxes are a zero sum game. The tax assessment is "backed into" every year based on that taxing jurisdiction's budget. When one property is taken off the property tax roll (i.e. The Derby) due to a GPLET, all of the other property owners in that taxing jurisdiction must make up the difference (i.e. Angel's Trumpet). This means their taxes go up dollar for dollar to make up for the GPLET. Again, it's a zero sum game. This is obviously very different from sales taxes. The amount of sales tax collected by "business A" (i.e. The Derby) has zero effect on how much "business B" (i.e. Angel's Trumpet) must collect.

I'm not a big supporter of the Goldwater Institute, nor do I have a strong opinion on any of these specific GPLET issues. I just want people to understand how these tax incentives work and make arguments for or against based on sound logic and analyses.
Your taxes go to Mesa USD, not to a specific school. Some GPLET situations, like Derby, have made deals with the school districts to make up for lost funds.
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  #36  
Old Posted Apr 6, 2017, 7:36 PM
downtownphxguy12 downtownphxguy12 is offline
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Quote:
Originally Posted by nickw252 View Post
The argument that a development will generate sales tax as a consolation for not generating property tax is not a proper justification.

Sales taxes and property taxes are not apples to apples comparisons in the following respects:
  • First, property taxes generally go to pay for specific city resources such as a specific fire department or a specific school, while sales taxes just go into the general state and city budgets without necessarily being allocated. For example, the property taxes I pay on my house go directly to the elementary school up the street and the fire department that responds to my house. Sales taxes have no similar allocation.
  • Second, property taxes are not paid at a standard rate like sales taxes. Property taxes are a zero sum game. The tax assessment is "backed into" every year based on that taxing jurisdiction's budget. When one property is taken off the property tax roll (i.e. The Derby) due to a GPLET, all of the other property owners in that taxing jurisdiction must make up the difference (i.e. Angel's Trumpet). This means their taxes go up dollar for dollar to make up for the GPLET. Again, it's a zero sum game. This is obviously very different from sales taxes. The amount of sales tax collected by "business A" (i.e. The Derby) has zero effect on how much "business B" (i.e. Angel's Trumpet) must collect.

I'm not a big supporter of the Goldwater Institute, nor do I have a strong opinion on any of these specific GPLET issues. I just want people to understand how these tax incentives work and make arguments for or against based on sound logic and analyses.

A positive note about GPLET is that it might help something get built. if nothing gets built, the property owners are going to pay more tax as budgets increase.

I think of the property at mcdowell and central that sat vacant for over 25 years not providing property or sales taxes.

I think don't like the GPLET because of the length of the GPLET. 10 years would be more reasonable.

As downtown becomes more popular maybe the GPLETs can go away.

Not so simple as good or bad.
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  #37  
Old Posted Apr 6, 2017, 8:32 PM
muertecaza muertecaza is offline
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Originally Posted by downtownphxguy12 View Post
I think don't like the GPLET because of the length of the GPLET. 10 years would be more reasonable.
Not so simple as good or bad.
That actually was one of the main purposes for the legislature's recent amendment to the GPLET law--I believe they shortened the period to 8 years.
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  #38  
Old Posted Apr 6, 2017, 10:36 PM
nickw252 nickw252 is offline
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Originally Posted by pbenjamin View Post
Your taxes go to Mesa USD, not to a specific school. Some GPLET situations, like Derby, have made deals with the school districts to make up for lost funds.
Yes that's correct- my property taxes go to my school district, as opposed to sales taxes that go to a general state or city budget that can be used for anything. We're all familiar with how the AZ legislature has drastically cut funding to education, resulting in an even higher reliance on property taxes. GPLETs exacerbate this problem.

Here's a good analysis:

Quote:
The group found that Arizona has become a national leader for local funding of schools, with 48 percent the funding of school districts coming from bonds and budget overrides, compared to 45 percent nationally. Bond and override funds draw on property taxes from residents of area school districts, while state money comes from state taxes on store purchases and job income.

As the Maricopa County Elections website shows, 11 of 21 school districts in the county are asking voters to approve bond elections this November, while 10 are asking for budget overrides. Statewide, according to the ASBA, school districts will hold 53 override and bond elections.
Also keep in mind that even if the Derby has made a deal with a school district, other resources are still getting short-changed (i.e. fire department, police, road constructions, etc.) meaning property owners still have to make up that difference.
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  #39  
Old Posted Apr 6, 2017, 10:44 PM
nickw252 nickw252 is offline
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Originally Posted by downtownphxguy12 View Post
I think of the property at mcdowell and central that sat vacant for over 25 years not providing property or sales taxes.
Property owners still pay property taxes on vacant land. However, the taxes are obviously lower given that the property value is lower. This, however, is rational in that vacant land requires fewer public resources (i.e. no fires, no kids needing school, no road wear and tear). However, once a building goes up, the local government needs to provide additional resources for those new residents, necessitating higher property taxes on that parcel.

Anyway, stating that "the land didn't produce tax revenue before" is a weak argument that, even if true, would encourage antisocial behavior by rewarding bad actors (vacant land bankers) by giving them a government handout (property tax breaks) to develop the land.

Quote:
Originally Posted by downtownphxguy12 View Post
I think don't like the GPLET because of the length of the GPLET. 10 years would be more reasonable.
I agree. I am generally in favor of governments being able to use tax incentives to drive policies, and I don't necessarily want GPLETs to go away. Rather, I think a GPLET program with a shorter time period would be more appropriate.

In the alternative, a better policy might be to raise property taxes on vacant land. This will provide the same incentive to develop without having to give a handout to those landowners and developers. It will also give a break to nearby residents in that they won't have to shoulder the additional costs of city services that arise from a GPLET.

Some jurisdictions have tried this (i.e. Houston), and as far as I can tell, it has worked to encourage development and discourage land bankers.

Last edited by nickw252; Apr 6, 2017 at 11:13 PM.
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  #40  
Old Posted Apr 11, 2017, 5:58 AM
Jjs5056 Jjs5056 is offline
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Wait. What has changed in terms of the office space? 50,000 square feet is easily fit into the 3 originally planned floors.

A massive 200K big box is just not appropriate for downtown. Look at the CVS windows at CityScape and imagine those running 3/4 the length of 1st Street... how... urban. Every grocer in big cities hides these walls with shallow retail.

I also don't get why RED hates Jefferson. A 3rd consecutive block of loading docks and garage ramps planned.

Without the residential tower, this is a total miss. I actually think the renderings look great; but, that's if I pretend 1st Street, 2nd Street, and Washington have much more active ground floors than they do, and with the hope that one day, a hotel tower will rise on 1st St/Washington.
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