Jim Kaufman's Bottom Line

The cryptic savior of historic downtown structures says he'll raze his classic PUHS buildings before he'll lose his investment

In 1982, Kaufman bought the former Korrick department store building that now houses the First Watch restaurant at the northeast corner of First Avenue and Washington Street. The property has changed hands several times since then.

Terry Goddard says Kaufman was one of the few people willing to invest in downtown Phoenix in those days.

"He was among the foremost of the people who came to downtown and put their money on the table and saw that this would be a special place. He was one of the pioneers," he says.

The Orpheum Theatre, anostalgic reminder of Phoenix's days gone by, might have been demolished had it not been for the actions of Jim Kaufman.
The Orpheum Theatre, anostalgic reminder of Phoenix's days gone by, might have been demolished had it not been for the actions of Jim Kaufman.
The Orpheum Theatre, a nostalgic reminder of Phoenix's days gone by, might have been demolished had it not been for the actions of Jim Kaufman.
Paolo Vescia
The Orpheum Theatre, a nostalgic reminder of Phoenix's days gone by, might have been demolished had it not been for the actions of Jim Kaufman.

Paul Johnson, another former mayor, points out that Kaufman got no financial incentives from the city, a practice that has become almost commonplace when it comes to downtown development.

"He was willing to go into downtown simply because he believed in it," Johnson says.

He adds that Kaufman has survived and has remained committed to downtown, while other developers from that era are out of business or gone. Consider, for example, Kaufman's competitors for the 1984 Phoenix Union High School purchase: Fife Symington and Barry Wolfson. Symington's subsequent Mercado project bombed, his development company went bankrupt and his gubernatorial career was aborted when he was convicted of felony fraud counts in federal court in 1997. Wolfson, whose unreported $350,000 campaign loan to former Governor Evan Mecham helped lead to Mecham's impeachment, indictment and removal from office in 1988, has reportedly left the state. (Symington's case was overturned on appeal and Mecham was acquitted of the criminal charges relating to the loan.)

Phoenix Union High opened in 1895 and was at one time the largest high school west of the Mississippi. Once a cultural and educational epicenter, it suffered from the city's residential sprawl. Historic architectural qualities and fond memories of graduates were not enough to keep it open. The district shut the doors in 1982 and tried to find a buyer, possibly to convert it to a domed football stadium, offices or a cultural center.

After voters soundly defeated a bond proposal that would have authorized the city to buy the land for $10 million, many feared the buildings were doomed. Barbara Parsons, a member of the Phoenix Union Preservation Society, remembers the relief felt when Kaufman bought the land and its buildings, paying $13 million for 27 acres spanning Seventh Street.

"We felt quite sure that Mr. Kaufman sincerely wanted to keep it," she says.

But as devoted to historic preservation as Kaufman was, and is, he still keeps an eye on the bottom line. And, city records show, he soon began proposing other deals that would allow him to afford the enormous interest payments coming due. He sold 17 acres on the east side of Seventh Street to another buyer right away. (Phoenix Preparatory Academy sits on some of that land now.)

He proposed a land swap with the city, offering to exchange his Phoenix Union holdings with 640 acres in the northwest Valley that would be easier to develop. He later offered to lease a building to the Internal Revenue Service and sell some of the property to the Phoenix Elementary School District for construction of a junior high school.

None of those offers was accepted.

"Things were pretty desperate for him for a while after he bought the campus. There was no obvious use for it," says Goddard.

What did fly was a proposal that the city use some of the vacant buildings to solve a space crunch for the municipal court and other city departments. After sometimes tortuous negotiations, the city agreed to lease several buildings behind the four main ones on the National Register of Historic Places. Over the past 15 years, records show, the city has paid more than $35 million to Kaufman -- most of which involved lease payments for the Phoenix Union properties.

In the fall of 1984, just a few months after Kaufman had purchased the historic school, he entered into a $1.5 million deal to buy the Palace West theater -- the property that later reemerged as the Orpheum Theatre at Second Avenue and Adams Street.

It was his first attempt to redesign a downtown property, and Kaufman planned to build offices inside the theater, a "ship in a bottle" idea he now recognizes as lame. But while the deal was still in escrow, he decided to let the city take over his position as buyer. Kaufman calls it a gift to the city; Goddard (then mayor) recalls it as more of a last-minute offer from someone who had decided not to close the deal. Nevertheless, Goddard says, the city benefited from the contract hammered out by Kaufman.

"Had he not done this, the city would have never been able to negotiate as good a deal as he did. He's the best, the sharpest, most tenacious person in real estate I've ever seen," Goddard says.

Paul Johnson has no doubt that the Orpheum would have been torn down without Kaufman's actions. Eventually, with private donations and a bond issue, the theater was given an $11 million restoration and had its gala reopening in 1997.

Meanwhile, Kaufman began trying to interest the city in buying the Phoenix Union property. And he continued to add to his downtown portfolio.

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