Peoria Could Land Full-service Hotel and More with $510 Million Development that Came with a Steep Subsidy

Peoria Could Land Full-service Hotel and More with $510 Million Development that Came with a Steep Subsidy

Article originally posted on AZ Central on April 29, 2021

Peoria offered up a steep subsidy to move forward with a $510 million project to pad out the P83 entertainment district with apartments or condominiums, a full-service hotel and office space.

More than a year after city leaders floated plans for the project, the City Council recently approved a deal to transform 17 acres of city-owned land southeast of 83rd Avenue and Bell Road, near the Cactus League spring training home of the Seattle Mariners and the San Diego Padres.

Peoria gave Seattle-based developer American Life a subsidy that allows the developer to pay $10 per year instead of paying property tax, until portions of the project are complete.

The project, dubbed Stadium Point, is planned in three phases over the next 12 years. Phase 2 and 3 may swap places or finish faster than scheduled, depending on market conditions. The phases are:

  • Phase 1: Multi-family housing, office space and a parking garage.
  • Phase 2: Office space and a parking garage.
  • Phase 3: Full-service hotel, retail and entertainment.

“The P83 Entertainment District is a tremendous point of pride for our city and we have worked strategically to position this area for long-term success,” Mayor Cathy Carlat said in a statement, adding that she envisions the project as a “vibrant and premier destination where residents have greater access to quality employment, retail and dining.”

P83, just off a commercialized stretch of Bell Road that includes the Arrowhead Towne Center mall, has long been a destination for dining and retail in the West Valley, as well as some office space.

Instead of paying property tax, developer will pay $10 per year in ‘rent’

The city gave the developer $13 million with some fairly routine incentives, such as fronting the cost for nearby infrastructure improvements and waiving the city’s development fees.

But the city also gave a specific subsidy that has faced scrutiny in other Valley suburbs.

The city offered a Government Property Lease Excise Tax, known as a GPLET, to the developer for agreeing to build on-site public infrastructure and a plaza area open to the public.

GPLET subsidies are meant to encourage growth in blighted areas, but they’re often used to sweeten the pot for development in increasingly hot areas, such as downtown Phoenix and downtown Tempe.

The subsidies let a developer transfer the ownership of property to the city for a set amount of time, usually several years, and take back ownership at the end of that period. The developer doesn’t have to pay property tax in that time because government properties are not taxable.

In the case of Peoria, the city will continue to own the property until the developer finishes building the project’s roadways and public plaza, which the city plans to use for public events. Instead of paying property tax, the developer will pay the city $10 annually in “rent,” according to the agreement.

Peoria is only able to offer GPLET subsidies in the P83 area. State law says Arizona cities can designate one area in the city a “central business district” for redevelopment purposes. Cities with a “central business district” can offer GPLET subsidies in that district.

The Peoria City Council in September voted to make the P83 area its district.

Deputy City Manager Katie Gregory said the area is increasingly serving as a business and employment corridor not just for Peoria, but for nearby Glendale and Phoenix, too.

“That truly is the central business district, with all the car dealerships and Bell Road,” she said. “There are some pretty defined employment corridors throughout the Valley … there’s really a need and a niche up there.”

Critics say the GPLET creates a tax shortfall and passes the costs onto neighboring communities and businesses. Supporters say the subsidies spur development that wouldn’t have happened otherwise.

In one downtown Phoenix case, the Goldwater Institute represented downtown businesses and sued the city over its use of a GPLET for a high-rise apartment building. A judge sided with Goldwater, saying the subsidy violated the Arizona Constitution’s gift clause, which says the government can’t give benefits to a private entity without receiving an equal benefit for the public.

Project aimed at commuters

Much of the project is aimed at people who leave Peoria every day for work. More than 90% of workers in Peoria commute to Phoenix, Scottsdale or Tempe for work, according to city documents.

And it’s not just a Peoria problem.

West Valley leaders for years have sought to keep their workforce closer to home by building its employment opportunities.

“We want the people of Peoria to live and work in the same city,” Gregory said.

City has floated plans here for nearly a decade

City leaders have tried to bring some iteration of this project to life for nearly a decade.

Shortly after naming the area P83 in 2012, the City Council OK’d a Peoria-based developer’s plans to bring a hotel with a rooftop bar to the area. But the plans never took off from there.

P83, Peoria's entertainment district, is southeast of Bell Road and Loop 101.

Developer Mike Oliver at the time pitched a plan to build over some spring training parking lots with upscale apartments, a hotel with a rooftop bar and a mix of dining and retail.

One thing stood in the way: getting enough funding in the aftermath of the Great Recession.

Stadium Point is still a ways off, too.

City officials estimate it will be finished within 12 years. There is no groundbreaking or opening date yet as American Life is still developing a site plan and working with city staff on zoning changes that are needed for the project to move forward.

Find The Complete Article Here: AZ Central