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.

Even regarding routine city operations, Kearney has a powerful voice.

A September 9 e-mail from the Downtown Phoenix Partnership director to Phoenix Community and Economic Development chief Grady suggests the nature of their relationship. In the communication, Kearney urges Grady to send city employees to the International Downtown Association annual conference in Cleveland -- even though Kearney acknowledges the city was facing budget restraints.

"I'd like to keep the city involved in IDA" Kearney wrote.

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.

Grady dutifully complied, agreeing to send the workers to the four-day conference. That e-mail was just one of at least a score exchanged between the two during a recent 30-day period.

While Kearney keeps close tabs on the day-to-day operations of the city, Colangelo, and other members of the board of directors, have used the Partnership to pressure city and county leaders to enact policies that shape central Phoenix.

"I see the downtown partnership as having the ability to deal with the city, understanding the process, being a facilitator, and looking out for the interests of all of the members of the partnership," Colangelo says.

In other words, the Partnership is supposed to be lobbying the city to promote the interests of all downtown businesses -- even those that moved in to take advantage of the arena and the BOB but folded when the DPP influenced the city and county to build the massive above-ground parking garages that act as a barrier between them and the sports crowds.

Along with Kearney, several Partnership board members, including Colangelo and Irwin, are registered lobbyists with the state.

While it may not be surprising that the partnership's board flexes its considerable muscle to influence city, county, state and federal legislation, it does so at the risk of violating Internal Revenue Service regulations.

The Partnership was granted tax-exempt status by the IRS and must comply with regulations that greatly restrict its lobbying activities. Critics say the Partnership is violating IRS regulations by engaging in its extensive lobbying campaigns.

"They can't lobby, they can't be political and they can't be propagandistic," says Phoenix artist Rick Handel, who once assisted the IRS in getting a religious organization stripped of its nonprofit status.

Revocation of the nonprofit status could make the Partnership too expensive for even Colangelo and the other high rollers to keep going, since it might have to pay massive back taxes.

The IRS declined to comment on the Partnership's lobbying activities -- but the feds might be interested in the DPP's 2000 and 2001 federal tax returns in which it claimed it has not "attempted to influence national, state or local legislation."

In addition to the largely anecdotal evidence cited above, Partnership and city records show a pattern of lobbying activities where board members routinely contacted elected leaders about pending legislation.

Last spring, for example, board members played a crucial role in pressing the Arizona Legislature to approve a $300-million appropriation to the city that will allow renovation of the Phoenix Civic Plaza. "A number of DPP ...board members personally spent time at the Legislature working on this, including [Chairman] Neil Irwin, [Bank One President] Kris Garrett [and] Jerry Colangelo," states a June 20 e-mail sent by Kearney.

In March 2001, Kearney urged the board to contact Congressional leaders to approve funding for the light-rail project. Kearney provided contact addresses and a form letter for members to sign.

"I hope you will be able to encourage our delegation members, particularly our House representatives at this time, to request that . . . funds be earmarked for the Phoenix project," Kearney stated in a letter summoning the board to initiate lobbying.

Kearney even acknowledges that part of his role is to lobby elected officials on behalf of the Partnership. However, he claims such activities constitute a small portion of the Partnership's function and fall within IRS guidelines.

Elected officials tend to downplay the significance of their contacts with Partnership board members.

"My sense is they are primarily a marketing organization for downtown, Copper Square, but I don't know how they allocate their resources," Rimsza says.

But Rimsza's claim rings hallow. As mayor, he has approved the Partnership's budget each of the last nine years. He also attends Partnership board meetings, where budget matters are routinely discussed.

Despite his supposed lack of attention to the DPP's financial details, Rimsza acknowledges that the organization "is very active" in downtown affairs.

Vice-mayor Stanton, a former non-voting member of the DPP, says Partnership board members naturally command attention from elected officials but that he's never felt "pressured" by board members to cast his City Council vote a particular way.

"I think the folks involved in the DPP are influential," he says, "but they are influential because they are business leaders who take a lead in community issues, not because of the fact they have the DPP next to their names."

Jerry Colangelo's entertainment empire has received the lion's share of the comparatively small amount of economic incentives offered by Phoenix City Hall to fuel business and residential development downtown.

These have come in the form of the city's $45 million direct investment in America West Arena, $2 million in land given for the Dodge Theater and $700,000 provided annually to the Downtown Phoenix Partnership.

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