Jerry's World

Jerry Colangelo and his pals have gobbled up the lion’s share of public development dollars. If downtown’s to be saved, City Hall’s got to share the wealth.

In Houston, economic incentives triggered revitalization of a downtown that was deserted a decade ago.

Tax abatements to all kinds of businesses helped attract nightclubs, restaurants, hotels and the Major League baseball stadium.

The pedestrian-friendly scene now is a far cry from the downtown Houston of 10 years ago, when streets were mostly deserted at night and a high crime rate kept businesses and patrons at a minimum.

After reaping $300 million in public subsidies for his downtown edifices, Phoenix's sports mogul's poised to direct  the next wave of downtown development: infill.
Jackie Mercandetti
After reaping $300 million in public subsidies for his downtown edifices, Phoenix's sports mogul's poised to direct the next wave of downtown development: infill.
Under the direction of outgoing Mayor Skip Rimsza, the city has dutifully implemented Colangelo's downtown developments.
Jackie Mercandetti
Under the direction of outgoing Mayor Skip Rimsza, the city has dutifully implemented Colangelo's downtown developments.

Almost $3 billion in construction projects have been completed in downtown Houston since 1995, and another $347 million are in the pre-construction phase.

Downtown Houston residential construction also is booming, as old industrial and office buildings are getting converted to lofts and condominiums. About 6,000 residential units -- compared to the 300 in the pipeline in Phoenix -- have been added to the downtown cityscape in recent years.

Some of the primary inducements that bring companies to downtown Houston and keep them there are tax incentives, said Pamela Lovett, president of the Greater Houston Partnership's economic development division.

Property tax abatements and franchise tax abatements have lured big companies to Houston's redeveloping downtown.

"These incentives give us a big advantage over cities that don't offer [them]," says Lovett.

"You have to offer them to be in the game. "

What happened to two vastly different local developers sums up how public funds are doled out for downtown projects here.

Jerry Colangelo's vision for a ballpark and arena in downtown came to fruition -- with the help of $300 million in taxpayer money. While the BOB and America West Arena are tremendous successes as far as baseball and basketball venues go, they have done little to generate a vibrant downtown.

Colangelo maneuvered government officials to allow his projects in the heart of a warehouse district, where he saw nothing but rot and a few artists. Looking back, he says, "There was no future for the neighborhood standing on its own."

But based on Denver's experience with warehouse redevelopment, the buildings Colangelo detested held great promise.

A few blocks west of Colangelo's venues is the Icehouse on Jackson Street. Reacting to a promise from the city to nurture what was left of the arts-and-entertainment district in the historic warehouse district, the Hestenes family invested hundreds of thousands of dollars toward rehabilitating the historic building and drawing up architectural plans for an arts district that incorporated half-a-dozen buildings and the old Sante Fe Railroad station.

But the city reneged on its promise to protect the remaining warehouses, caving in to the county and the Downtown Phoenix Partnership's desire to build the jail and adjoining parking garage. The city, meanwhile, placed onerous building-code restrictions on the 70-year-old Icehouse that will cost hundreds of thousands of dollars to address.

"We really haven't had anything in the way of significant support or encouragement from the city," says David Hestenes, an ASU mathematics and physics professor, who has financed the project that has been managed by his daughter, Helen, and David Therrien.

What the Icehouse could really use, Hestenes says, is a relatively small subsidy from the city to help defray the cost of bringing the building up to code.

"If we are going to use this historic place for the arts, there are tremendous code requirements that must be met," he says. "[The cost of] that has pretty much consumed us."

Without a dime of support from the city, the project has stalled.

If downtown Phoenix is to burgeon -- become a vibrant nighttime entertainment destination, as well as an interesting place to live -- the city needs to give small-time players like the Icehouse a chance of making it. City Hall must spread the wealth, stop giving nearly all of the taxpayers' money for core-city projects to big developers.

Colangelo now advocates making downtown more livable, but does his vision include people like the Icehouse owners and Beatrice Moore? It never has in the past. The artists' community fears that what Colangelo is talking about is turning downtown into a prefab theme park.

It's true that Jerry Colangelo and the Downtown Phoenix Partnership need to get it, but it's also true that leaders of the arts community like Moore must reengage with corporate executives and city leaders. The two sides have to hash out their differences, listen to each other, says Mayor-elect Gordon.

The new chief executive of Phoenix says he is committed to increasing the amount of city funds going to small businesses and the arts.

"It is crucial to the success of downtown and the city to make sure small businesses prosper," he says.

Gordon -- who was the only City Council member to vigorously oppose the county's destruction of the warehouse district -- says he will create a small-business-advocate's position in his office.

He disagrees with city manager Fairbanks' assessment that incentives are overrated. He says he is investigating ways for the city to make direct investments in small businesses. They must be able to improve their locations, he says, without incurring crippling additional debt.

Most importantly, Gordon vows to break the iron grip the DPP has had on core-city development. He says he and the City Council should be calling the shots.

"I want to make sure everyone has a seat at the table," the incoming mayor says. "I can do that. I believe in that."

E-mail, or call 602-229-8445.

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