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.

Naturally, Colangelo's plans for the arena generated uproar from artists living in the area -- some of whom had invested substantial personal funds in warehouse-redevelopment projects. The brouhaha was not enough, however, to stop America West Arena. The city provided some relocation funds and moved the artists out.

Colangelo got the arena, but the seeds of distrust were sown.

America West was built with $45 million in city funds and about $50 million provided by Colangelo and his partners. It opened to great fanfare in 1992, although many had their doubts that suburbanites would regularly venture into downtown to see the Phoenix Suns and other events.

Downtown sales soared when the BOB opened in '98, but are now on a downward trend.
Source: City of Phoenix
Downtown sales soared when the BOB opened in '98, but are now on a downward trend.
Downtown sales soared when the BOB opened in '98, but are now on a downward trend.
Source: City of Phoenix
Downtown sales soared when the BOB opened in '98, but are now on a downward trend.

"One of the big highlights for me was the first event that we held at the arena," Colangelo recalls. "I was upstairs looking down on the streets of Phoenix watching people walk to the arena. This was emotionally a big moment . . . because so many skeptics had said that it would never happen, that the arena would never be successful."

Soon after, Colangelo turned his focus toward bringing professional baseball to Phoenix. The Maricopa County-owned site for what became Bank One Ballpark is just a few blocks east of America West. The $365-million ballpark was financed by a dedicated $243 million sales tax, with the balance covered by Colangelo's investors. It opened in March 1998.

A year later, Colangelo and his partners struck a deal with the city to build the 5,000-seat Dodge Theater in the western part of downtown.

The city of Phoenix provided two acres for the project at no cost. And well aware that Colangelo and his partners had a proposal in the works, the city allowed only three weeks for developers to submit complicated plans for the site. When the deadline came, the city had only received one response: Colangelo's.

His group invested $35 million to build the Dodge. Like the arena and the ballpark, the theater would be publicly owned -- allowing Colangelo's investors to avoid paying property taxes. The city wound up leasing the theater to Colangelo with the bonus that he owes no rent for 10 years, and allowed Colangelo to rent 1,200 spaces in the city's Adams Street parking garage for the bargain-basement rate of $250,000 for the first five years; Colangelo projects the garage will generate more than $2.5 million in parking revenue during that period.

There's more. The city agreed to pay $600,000 to prepare the theater site for construction and -- in an usual provision that caused other venues to cry foul -- agreed it would provide no financial assistance to other facilities that might possibly compete with the Dodge.

Despite the huge injection of public funds into his enterprises, Colangelo isn't exactly a freeloader. He and his personal business partners -- including the APS and the Arizona Republic (whose executives are also directors of the Downtown Phoenix Partnership) -- have invested $107 million in the 50,000-seat BOB and close to $80 million in the 20,000-seat America West, including recent improvements.

There's no doubt that Jerry Colangelo's three venues have been powerful magnets for attracting people downtown. About five million visitors a year attend events at the three facilities.

But the mobs of concert fans and seasonal sports fans have not stimulated widespread economic development in the surrounding area.

To the contrary, a concentration of parking structures (built by the city and county to accommodate Colangelo's patrons) create a barrier between the BOB, America West and the Dodge and small downtown bars and restaurants.

Indeed, Mayor Rimsza says of Bank One, "I think the ballpark does a great job of keeping business inside the doors. You go to the ballpark and eat there."

So instead of serving as a boon to smaller venues that make downtown diverse, Colangelo's trioka, along with the parking garages, have been a death knell to many. It's true that for almost every small business that has moved out, another has moved in, but consider this:

There has been nearly no increase in the number of businesses operating in downtown since 1991. City records show there were 231 businesses there in 1991 before the opening of the arena, ballpark and theater. By the end of 2002, that number had increased by just seven, to 238. That isn't to say that a number of small businesses didn't open in anticipation of capturing a share of the bucks from downtown sports fans. There were 279 businesses operating in downtown in 1995.

The fact that 41 fewer businesses were operating downtown seven years later suggests that the increase in money spent downtown must be being captured by Colangelo's operations. And there has been a huge increase in money spent downtown.

In 1991, total downtown sales for restaurants, bars, hotels and retail was $90.5 million. In 2002, with the addition of the arena, ballpark and theater, total downtown sales nearly doubled to $179 million.

Part of this increase is due to inflation, but Colangelo's venues generate five million visitors a year. And even if each person attending an event at one of his three facilities spends only $10 inside for food, drinks or souvenirs, that accounts for $50 million in sales.

While the magnitude of these numbers make it appear that downtown is a major player in Phoenix's overall economy, it isn't. Which makes it all the more apparent that something else needs to be done.

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