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.

The huge public subsidies used to build the arena, ballpark, theater, parking garages and other projects -- including the Phoenix Civic Plaza (which loses $30 million a year) -- are generating an extremely small percentage of the city's overall economy. Downtown's taxable sales last year accounted for only 1.3 percent of the city's $13 billion in total taxable sales for bars, restaurants, motels, hotels and retail activities.

Meanwhile, income to the city from these downtown activities is a pittance. Total downtown tax collections hit $4.2 million last year and accounted for only 1.7 percent of citywide sales tax collections of $247 million for these categories.

So for the inordinately large public investment in downtown, there has been a very small return.

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.

Here are some more daunting statistics. Last year, downtown taxable sales for restaurants, bars, hotels and retail establishments declined 5.8 percent compared to the city's overall decline of .7 percent. In 2001, such taxable sales downtown declined 5.5 percent compared to 2000, while the city as a whole expanded 1.5 percent.

Pat Grady, the city's director of Community and Economic Development, says downtown's downward trend is attributable in part to the sluggish national economy that has curtailed tourism and convention business. But, he says, the city is closely examining another, more worrisome factor: competition from other Valley areas.

And the situation will only get worse. Cities across the Valley have built or are building entertainment centers that compete with downtown Phoenix as a destination. Glendale is building the Cardinals football stadium and the Phoenix Coyotes hockey arena, both of which will compete directly with the BOB and America West Arena for non-sporting events. Mesa and Tempe are building performing arts centers that will challenge the Dodge Theater and downtown venues such as the Herberger Theater and Symphony Hall.

You don't have to be an urban-planning genius to see that the competition for patrons -- plus the fact that the large-scale projects in downtown Phoenix have done little to create a bustling central city -- validates arguments for downtown diversity that a cadre of artists have been making for decades.

The artists, many of whom invested in downtown before Colangelo built even America West, have long said that historic preservation is a must. They have also insisted that there must be strong civic support for artists, musicians, small-business owners, independent restaurants, avante garde galleries and moderate-income housing. Without such an environment, they maintain, downtown will always be dead after dark. It will neither be a destination point nor a place where creative people want to live, work and play.

"What really creates the interesting, diverse fabric of a neighborhood are the smaller arts [endeavors]," Beatrice Moore says. "That's what you need to nurture."

Ironically, Colangelo and the Downtown Phoenix Partnership are now advocating small-scale development projects in addition to huge ones like a planned city-owned $300 million, 1,000-room hotel probably destined to be across the street from America West Arena.

Colangelo's already preparing for the hotel's likely opening on the corner of Third Street and Jefferson by investing about $30 million in the arena to add a nightclub and an upscale restaurant.

"Eventually, there is going to be about 75,000 square feet of entertainment and restaurants on the corner," he says. "That corner has about 10 million people a year that cross that intersection, which is an amazing number."

Even though he's preparing for his big venues to capture a large share of the revenue generated by the future hotel, he's making noises that he's ready to share some of the wealth. It's now time, the entrepreneur says, for a dense web of businesses to come in and make downtown great.

"The bottom line is . . . you need infrastructure first," Colangelo says. "Then you fill in.''

In sharp contrast to the sterile, destination market he has created downtown, Colangelo says he would like to see 10,000-more homes built there to serve all income levels. Along with that, he thinks a major retail center featuring an "icon" department store would be great. He now says downtown should have streetscapes made for people rather than cars.

The beneficiary of tens of millions of dollars worth of ugly aboveground city- and county-built parking garages, Colangelo now says he wants to create a vibrant street scene fueled by light rail.

"The future is to narrow the streets, slow everyone down," he says. "Let's have boutiques and art stores and coffee shops and restaurants."

His sudden interest in something similar to what the arts community has been trying to make happen for decades has urban visionaries like Helen Hestenes and David Therrien shaking their heads. Their proposal to create a cultural renaissance in the city's warehouse district on West Jackson Street was crushed when the Downtown Phoenix Partnership backed Maricopa County's plans to level several artist warehouses adjacent to the Icehouse art-and-entertainment venue to make way for the high-rise jail, the new county administration complex and one of those massive parking garages.

"The DPP is funded by the city, yet it supported the county's decision to destroy warehouses that were supposed to be protected by the city's historic warehouse preservation district," Hestenes says.

The DPP's Kearney responds that the Partnership didn't want to see the jail moved out of downtown because it meant many more jobs than the artists' warehouses.

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