Sorry, We're Closed
Six-thirty on a Tuesday evening at Tom's Tavern in downtown Phoenix. The place can serve up to 220 people, and it often does -- during the day. But tonight, there are only six people eating dinner. Tonight, like so many other nights, Tom's Tavern is empty.
Near the bar stands a Hispanic man of average height, one of Tom's dishwashers. Two days from now, during the lunch hour, he'll be rushing his tray full of dirty plates back to the kitchen. He'll have no chance to watch television then. But tonight he does. Game Six of the National League Championship Series is on. From time to time, the dishwasher yawns as he watches.
Two days from now, during lunch, the woman tending bar will have no time to wait on every table either. But tonight, during dinner, she says, "How are you doing?" and "What can I get you?" to an older couple sitting in a booth, before returning to the bar and asking two guys there the same.
Two days from now, during lunch, Michael Ratner, one of the owners of Tom's Tavern, will seat everyone who walks in. But tonight, Ratner's gone and people seat themselves.
At 2 North Central, Tom's Tavern is one of the few places open for dinner downtown. Ratner says he gets some business at that hour from those on their way to an event at the Dodge Theatre, four blocks west of Tom's.
But it's not significant business. Ratner says between 85 percent and 95 percent of a day's receipts come between 11 a.m. and 1:30 p.m. "That's high occupancy for a very limited window of opportunity," Ratner says.
And it's the reason a lot of retailers and restaurateurs close early.
Mark Russell is the owner of Oregano's Pizza Bistro at 130 East Washington. "Downtown is a different beast," says Russell, who also owns the five other Oregano's throughout Arizona.
Last year, the downtown location became the first to only serve lunch. Russell couldn't support keeping Oregano's open after the lunch period because the people who work downtown by and large don't live there. So, Russell reasons, why stay open if there's no one to stay open for?
Star Mays lives on Ninth Street and Van Buren in a one-bedroom loft that was a "steal." But despite her "huge" place, the cheap price she's paying for it and the proximity to work -- she waitresses at the Hard Rock Cafe a few blocks west -- she won't live downtown for long. She doesn't like it because, once she's finished waiting tables, "there aren't a lot of things to do."
No place is open, "not even fast food," she says.
Jason Rosendahl, the manager of Sky Lounge at 132 East Washington, moved out of downtown a year ago because "there's nothing for day-to-day needs."
"Where can I get a gallon of milk?" he asks.
The answer: Nowhere. The closest store is on Seventh Street and McDowell.
It is, as city officials say, the problem of the chicken and the egg. How do you get businesses to stay open past five when no one lives nearby? How do you get people to move to a place where there are few services open after work?
For decades, Phoenix and Maricopa County did little, if anything, to help small businesses in downtown. Instead, government helped large businesses and their projects: $13 million to the Arizona Center; $45 million to America West Arena; $243 million to Bank One Ballpark ("Jerry's World," John Dougherty, October 16). The city says the money was a good investment -- these facilities have more than paid their own way and drawn thousands downtown even if they stay just long enough to catch a game and walk back to their cars.
But the city has never offered small businesses the kind of help it's given the big operators. Even city officials admit that what little has been done, in the form of a sales tax reimbursement, has not amounted to much.
Until recently, the same could be said for the city's involvement with small urban residential developers. But slowly, incrementally, things are changing. Experts, including city officials, have come to recognize that bringing residents downtown is the first thing they must do if they hope to bolster a thriving downtown business district that includes restaurants and bars, boutiques and bookstores.
According to public records, since 1997, four housing projects have received financial assistance of more than $1 million from the city. A smattering of other projects have received reimbursements for infrastructure improvements. But the roughly $10 million in financial assistance the city has given small developers since 1993 still falls far short of the hundreds of millions given to mega projects like Bank One Ballpark, America West Arena, or the Arizona Center.
And the number of housing units that the city's dollars are helping pay for is nowhere close to the housing that experts believe is needed to bring life to downtown Phoenix. There are now about 3,400 housing units downtown, providing homes for about 7,000 people.
New projects will add only about 200 new housing units, a far cry from what's needed to bring what the urban planners call "critical mass" to downtown Phoenix. Portland, Oregon, for example, has 20,000 people living downtown; Denver has as many as 75,000.
Housing developer Eric Brown, president of Artisan Homes, has received $2.8 million from the city in the past three years and is working toward opening a new residential building in the next year. But even he recognizes it's not enough.
"I think more needs to be done."
"Sports facilities do not create a 24-hour city," says Bruce Allen, senior development manager with the Portland development commission. "And some people would say they create nothing but dead zones."
In the past, Phoenix has tried to encourage diversity by building large facilities such as America West Arena and Bank One Ballpark, then seeing how many independent restaurants and small businesses build nearby.
This plan worked well in Denver. Many officials there consider the opening of Coors Field in the mid-1990s to be an important step in Denver's transformation into the urban model it is today -- a place where roughly 75,000 people live, work and play.
Phoenix officials hoped to do the same with Bank One Ballpark. Initially, it worked. The total number of business permits in downtown grew to 277 in 1998, the year Bank One opened. But by December of 2002 there were 238 in downtown, 10 fewer than in 1997.
Mark Russell's Oregano's, one block north of the sports arenas, didn't benefit from night games when he served dinner. "Not at all," he says. "We were busier when there weren't any games down there."
During the first two games of the 2001 World Series, David Soltys, owner of Focaccia Fiorentina at 123 North Central, opened his restaurant for breakfast, lunch and dinner. But he saw very little foot traffic. Over that weekend he made only $200 in sales.
That's because the sports facilities are designed to keep people inside -- and off the streets where they might wander into one of Soltys' restaurants. But the arena and ballpark serve dozens of different kinds of food and drink, including alcohol.
Not much of an incentive for restaurant and club owners to open places downtown.
"There's nothing going on," says Daniel Malventano, owner of Daniel's Italian Cuisine at 4225 East Camelback. He thought about putting in a restaurant downtown but decided against it.
Aside from the coffee shops, bookstores and small bars that play live music, Malventano contends a restaurant needs traffic -- and other restaurants nearby. He says a successful restaurant needs people in cars or on foot who decide to have dinner at your place, rather than the one across the street, or the fast-food joint a block over. These people do not have a restaurant in mind when they set out. They're simply hungry, and walking or driving in the direction of food.
Michael Ratner points to American shopping malls as proof of what Malventano is talking about. "All you have to do is walk through a mall. It succeeds because of diversity," he says.
Other cities have succeeded in transforming what had been sluggish, sometimes abandoned downtowns into bustling cores that combine chic, sought-after living with an eclectic mix of shops, restaurants, bars and nightlife.
In Denver, downtown warehouses were turned into lofts, a 14-block outdoor mall was put in and a $40 million amusement park was built. But Rich Grant, director of communications for the Denver Metro Convention and Visitors Bureau, says one thing's often overlooked: parking. Coors Field holds 50,000 people, yet there are only 5,000 places to park.
The lack of parking forced people to use Denver's nascent light-rail system to get to the game. And after it, "you had 50,000 people walking back and forth," Grant says. "Overnight, there were 80 bars in the area."
This foot traffic brought in retail of all kinds, from large chains to small shops. "Some people said [the city] was crazy [for not building more parking]. But that's the secret to its success," Grant says.
Phoenix, it would seem, has already missed that opportunity. Downtown is awash in parking spaces, thanks primarily to the mammoth parking structures built to accommodate America West Arena and BOB.
In Denver, John Hickenlooper, now the mayor, opened the Wynkoop Brewing Co., the state's largest brew pub, in the heart of downtown in 1988. He paid $1 per square foot in rent because the city core was not a sought-after business location. To help him along, the city gave Hickenlooper a $125,000 loan. "Government isn't the solution to everyone's problems," Hickenlooper says, "but it's got to be the catalyst."
The city of Portland long ago adopted zoning regulations requiring the ground floor of all downtown buildings "to be devised for active uses," Portland's Bruce Allen says. Most often, this means retail at street level, retail further encouraged by downtown Portland's pedestrian-friendly 200-by-200-foot city blocks.
In downtown Houston, which is currently in the throes of revitalization, there's roughly $295 million in the state's governor's fund for economic development. The money is being used to lure companies to relocate to Houston. The city also provides land development space for small businesses free of charge or at a cost below market value.
There are, of course, other things to consider, too: Portland is bound naturally by an ocean, by rivers, and by hills. Denver decades ago passed the Poundstone Amendment, which forbade the city from annexing more land.
Phoenix is bound by nothing but desert, and the city has made no plans to stop suburban sprawl.
And today, it's Phoenix suburbia that has all the amenities lacking in downtown. Spread throughout the Valley are major theater complexes, popular clubs and concert venues and most of the city's finest restaurants.
"In Phoenix, you have nine downtowns," says Bruce Allen.
But Pat Grady, the director of Phoenix's community and economic development department, says assisting small businesses can prove difficult.
In the past, he says, the city has helped retail development through a sales tax reimbursement, which meant giving back to a business roughly 50 percent of the sales tax it paid to the city, for a period of three to five years.
But this money can only be used for public improvements, such as cleaning the streets, the alleys, the curbs, or planting trees. "But [these public improvements] often don't benefit the retailer," Grady says, "because the retailer is looking for cash in his pockets."
Public improvements also include the parking garages of Bank One Ballpark and America West Arena. So the millions in cash the city gave those big projects were earmarked for the parking structures that sit near the facilities, freeing up the developers' money for other uses.
Mayor-elect Phil Gordon suggests helping small business by simply increasing the sales tax reimbursement, something he pushed for as a councilman to no avail. While that wouldn't do much to help the businesses already in place, Gordon believes it would encourage new businesses to locate downtown, particularly to long-vacant buildings that need substantial public improvements.
Most states still have far more legal leeway when it comes to helping with redevelopment or providing assistance for small businesses, says Dave Roderique, economic vitality general manager for the City of Scottsdale.
Roderique says there is a "gift clause" in Arizona that prohibits governments from giving public funds for private benefits.
It's "very unfortunate," Roderique says. "[Arizona] continues to do everything to make retail development more difficult."
For instance, Roderique says, most other states allow tax-increment financing for small businesses. Tax-increment financing, or TIF, benefits a business through the way its sales tax or property tax is set and structured.
Let's say a business moves into a blighted area and generates $100 of sales tax for the year. Under TIF, the city sets $100 as the amount of sales tax that the business will generate in each future year, Roderique says. So the next year, if the business does better and generates $300 of sales tax, the business still pays the $100 worth of sales tax it did the year before, but the extra $200 goes to a TIF bond. And this bond is set up to give money back to the retailers that have developed in the area.
Arizona does not have a TIF policy in place, Roderique says.
"And then we wonder why there's sprawl," he adds.
Though rare, the City of Phoenix has helped some small businesses beyond improving streetscapes.
In 1996, the city-owned Rosson House-Heritage Square Foundation, along the 100 block of North Sixth Street, had trouble bringing visitors to its historic sites. After discussions with Chris Bianco, a local restaurateur, a deal was struck. According to public records, Bianco paid $5 a square foot to open Pizzeria Bianco, now a popular restaurant located within Heritage Square. It was a great deal for Bianco, well below the market rate paid by others in the area. Even now, Bianco pays $8.33 a square foot plus interest. Other restaurateurs downtown say market value per square foot ranges from $17 to $24.
Still, moving downtown "was a gamble on his part," says Beth Cole, Heritage Square's manager. "We didn't have enough business from the customers that came to the park."
Now, she notes, there are so many customers to Bianco's small eatery that people often wait more than an hour for a table.
Still, she adds, it's a "rare case" when the city helps a retailer as it did Bianco.
In Mike Hogarty's case -- another of the few instances in which the city offered financial help -- it took two and a half years to get through complicated paperwork and a tedious approval process for a shopping center in a building that had sat vacant for well over 20 years.
Hogarty is the general contractor for the Gold Spot, located on the northeast corner of Third Avenue and Roosevelt. According to public records, in 2001, the Gold Spot received $400,000 from the city's historic preservation department to redevelop a building built in 1925.
The Gold Spot has 12,300 square feet of commercial space available. Still, the building is only about 25 percent leased. This month, at the Gold Spot, Calabria Italian Grocery and Deli is set to open, as is Western Horizon Mortgage. But this still leaves available 9,000 square feet of commercial space, Hogarty says.
He is grateful for the city's help, but says its involvement has actually slowed down his ability to lease space, primarily because of the inspection process. "When we bring in the city, it's a slower process. Once it's [a] historic [redevelopment], we can't do anything to it without approval of city, state and federal. Their rules are not consistent. The federal rules may not apply to state rules."
"Add to that the complication that it was never built to code," he adds.
"And in that process, developers -- nobody -- can afford to wait. We had some of this leased several times, but tenants can't wait," Hogarty says.
Don Keuth of Phoenix Community Alliance, a coalition of business and civic leaders, educators and government employees helping revitalize downtown Phoenix, calls the Gold Spot's efforts "heroic." Keuth says the city needs to find ways to aid people like Hogarty more quickly.
But it hasn't yet. David Lacy owns Willo Baking Company and My Florist Cafe on Seventh Avenue and McDowell. Lacy wants to revitalize the entire block. He's bought virtually all the property on the north side of McDowell between Fifth and Seventh avenues. "You can't rehab one building. You have to rehab all the buildings," he says.
For now, that means providing parking spaces. He thought about asking the city for assistance, but knew the process would take about a year for approval. "I can't wait that long," he says. (He's opening a market next year and a pastry store after that.)
So with his own money -- roughly $500,000 -- Lacy's developed the parking spaces he needs to accommodate his long-term vision.
"Within three years you're going to find this intersection is completely rebuilt," Lacy says. "And the city's done nothing. Nothing. Nothing."
Mike Hogarty and David Lacy are betting that it won't be too long before their retail shops and parking spaces are filled with people who not only work downtown but live there.
But for now, it's a hard sell.
"A lot of bars close early," says Star Mays, the waitress from the Hard Rock Cafe who lives on Ninth Street and Van Buren. But, she says, even if the downtown bars stay open, few people are inside. "How cool is it to go to a bar where no one's there? I usually go to Scottsdale."
The 28-year-old Mays lives downtown because the rent's relatively cheap, $750 a month, and she could walk to work if she wanted to. But she doesn't want to. "Sometimes, there's prostitutes on the street at six in the morning," she says. Not to mention drug dealers and crack addicts.
Still, there is a nice church close to her apartment. But there's a porn shop close, too. "My mom doesn't like me living here," Mays says.
Her mother needn't worry; Mays is leaving once her lease is up.
Betsy Schmidt used to live downtown, but moved farther out -- very far out -- when she grew tired of the crime and the lack of services in downtown.
"I had cars broken into," says Schmidt, who now lives in Carefree and runs a business there, too. "Police helicopters flew over at least once a night. I heard gunshots. . . . There was nowhere to grocery shop."
Nine years ago, when she moved to the Valley, Schmidt wanted a living experience comparable to Seattle, where she'd lived before.
"Seattle has transportation, it has arts, it has culture. And it's pretty. They've been preserving their architectural history for 100 years," Schmidt says. "I think the problem with Phoenix is it never had style. It never had a community feeling. There was never any vision."
She lived downtown for five years. She thinks the biggest problem with downtown is apathy. "I think a lot of people who move here have moved here to be uninvolved and uncommitted. In Seattle, people cared."
But not everyone sees downtown the way Mays and Schmidt do. It's people like Alex Patane that downtown business owners and residential property developers are hoping to attract.
"It's the best decision I made to live down here and be near my work," says Patane, who lives at Artisan Parkview at Seventh Street and Washington.
Patane works as a communications specialist for the Valley's light-rail system, which is scheduled to open in 2006. It's the main reason she moved downtown two years ago. She says cities with a transit system experience "an urban renaissance" they wouldn't otherwise.
"I could talk about this stuff all day," she says.
But she doesn't. Instead, in her less effusive moments, she says she wanted to live downtown because "studies have shown that property value increases near the light rail." And there'll be a station stop outside her door.
More than the light rail, Patane loves the urban setting. "It's the life. It's awesome," she says.
Originally from New York, she spent too many years living in north Scottsdale. "There's no flavor. No personality," she says. She grew tired "of the McMansions." Now, she loves to walk to work, loves it that she's not stuck in traffic an hour a day.
She admits she won't run at night. But that's what the gym's for. She's never had her car vandalized, never felt threatened. And as for things to do, she says she walks to concerts at the Dodge Theatre, or to movies at the Arizona Center.
The smaller, hipper places are out there, too. "It's a matter of really patronizing businesses," she says. "You've got to think outside the box."
Ethan Albert, Patane's boyfriend, lives in the Roosevelt Historic District, at Central and Culver. "He doesn't share my enthusiasm," Patane says.
"There isn't much going on," Albert says.
He's lived downtown for seven years and Patane thinks he's grown impatient waiting for the urban renaissance he's been promised. "I think the progression is really slow," he says, "but we're moving along."
He moved downtown because the hotel and office complex he manages is a block and a half away. Tempe got too young for him (he's now 30) and he didn't want to move to Scottsdale.
"There's a lot of really unique historic little pockets," he says. "I like things like that. I just thought it was cool. . . . I wanted to get in before it was beyond what I could afford."
Albert says the people living downtown want to live in an urban setting, regardless of a night life. "Everyone that's here is hoping for more, hoping that things are going to progress at a faster pace."
"It's kind of imminent that things are going to be better down here," he says. "The people who live here for more than two years . . . believe in it."
Perhaps they do. But for downtown Phoenix to one day teem with residents, more people need to believe.
It's true that 719 new residential units have been built in downtown Phoenix since 2000. But this only brings to 3,455 the total number of housing units in the downtown area, according to Tim Tilton of Phoenix's planning department.
Portland, by contrast, has roughly 15,000 housing units in its downtown, says Bruce Allen of the Portland development commission. This equates to roughly 20,000 people living in downtown Portland compared to only 7,000 in downtown Phoenix.
Denver has only 7,000 people living in its downtown, but when one considers Denver's Center City, which is within walking distance of downtown Denver, the "downtown" population swells to 75,000.
Eric Brown, president of Artisan Homes, which develops housing downtown, believes help from the city is vital for developers like him who want to bring more people downtown but are having a hard time overcoming downtown's image as a cultural and social wasteland.
Brown's current project, Artisan Village, under construction now, received $2.5 million from the city. The project, between Fifth and Seventh streets and Roosevelt and Portland, will have 105 row houses and town homes and 10 spaces set aside for retail. Brown will use the money to bring in housing slightly below market value, which is about $160,000. Units at Artisan Village start at $150,000.
"To get the residential density that everybody's talking about, you've got to have the mid-price housing," Brown says. "There's a huge demand for housing under $200,000."
Artisan Parkview, at Seventh Street and Washington, is an earlier Brown development that was designed as affordable living for working adults. The city owned the property there but sold it to Brown for $387,000 in 2001, according to public records. Using this money, Brown built 35 row houses at a cost, again, below market value. Units started at $135,000. Artisan Parkview sold out before construction began.
But it's not just the affordable housing that's appearing, slowly, in downtown.
Norman Sheldon is the developer for the Orpheum Lofts, a luxury development that will open next year and house 90 lofts across its 11 stories. It will also make room for a coffee shop, a wine bar, a dry cleaner and a grocery. Located on the northwest corner of First Avenue and Adams, Orpheum Lofts is the first luxury development of its kind in downtown Phoenix. A penthouse is available for $1.5 million.
"Oh, it's plenty risky [developing in downtown Phoenix]," Sheldon says. "But we draw on our experience and expertise from Denver."
Sheldon developed in Denver before Denver was, well, Denver.
(Now, the urban core there is filled with luxury lofts, says Kate Vincent, the housing program manager for the Downtown Denver Partnership.)
Still, in Phoenix, Sheldon needed to rely on more than his expertise to make the Orpheum Lofts work. So he turned to the city. All told, he received $2.5 million in public funds. "They were incredibly helpful and incredibly cooperative," Sheldon says.
The city is helping developers more than it has retailers because it believes downtown needs, first and foremost, residents living there.
"We really need to have a primary focus on the residential to help drive that long-term," says Pat Grady of the community and economic development department.
Adds Brian Kearney, president and CEO of the Downtown Phoenix Partnership, "We need to continue to focus on housing, get people to live in and around downtown."
Since 1997, when it gave Post Roosevelt Square $1.6 million in direct assistance and $450,000 more in city-owned land, the city has given developers $6.7 million to develop residency downtown.
Even small business owners recognize the need for downtown dwellers and don't argue with the city's decisions to put money in residential projects, rather than retail assistance.
Says Michael Ratner of Tom's Tavern, "First off, you've got to have the residents." Downtown restaurateurs and retailers say shops will open -- and stay open into the night -- if enough people are living nearby.
Still, the city only plans to participate in downtown residency projects "on a case-by-case basis," says Pat Grady.
That's far from a solid public plan to build downtown residency, something that downtown boosters say is sorely needed.
But Grady says, "I think case-by-case is in fact the policy."
Currently in discussion are the three acres of land the city owns north of Post Roosevelt Square between Central and Third avenues on Portland. Grady says that property could house residential condominiums.
And then there's the artist housing project, north of Roosevelt between Second and Third streets. Though it, too, is only in discussion, Grady says some units could be "live/work" units, meaning the artist could live in a unit and have space set aside for a studio.
As to whether the piecemeal approach will work, Richard Fleming, who served as the president and CEO of Denver's downtown partnership during the boom years, says, "The old urban renewal way of plunking down a 500- to 1,000-unit development is not the answer."
He says Phoenix can "chunk away" as long as "chunking away hits a critical mass."
On a Saturday night about a month ago, Phoenix mayor-elect Phil Gordon was walking downtown. He passed a McDonald's. It was closed.
"Show me another McDonald's in America that's closed on a Saturday night," Gordon says.
A couple days later, someone brought it up in conversation. Then it hit him. "If we don't have enough activity going on downtown to keep open a McDonald's, we have to get a [university] downtown," Gordon says.
This is just one of many ideas Gordon has to revitalize the area. The new mayor is arguably the key player in any effort to build a new downtown. He's certainly one of downtown's most ardent supporters. If Gordon has his way, downtown Phoenix will be a drastically different place when he leaves office.
Forget chunking away. For Gordon, a downtown campus is the urban density home run. "I'm making it my downtown vision," he says.
This particular vision happens to be of the Arizona Biomedical Collaboration. Although the specifics are lacking at this point, the proposed downtown campus would coordinate research between the universities and the state's hospitals. It's supported by the presidents of the state's three public universities.
"This is huge," Pat Grady says.
The university presidents say the campus could house 12,000 Arizona State University students and 3,000 more from the University of Northern Arizona.
"Those individuals will filter into First Fridays and the Herberger, Majerle's and Kincaid's," Gordon says.
They'll need rental housing as well. "It's so obvious to me now," Gordon enthuses. "My vision is we get that downtown campus built within the next couple of years."
Gordon has other ideas to help the small retailers and those who want to combine historic preservation with modern-day entrepreneurship.
He suggests creating merchant associations, much like the Seventh Avenue Merchants Association he helped form as a councilman. It was the first of its kind in downtown Phoenix.Consisting of 90 businesses between Indian School Road and Camelback Road, SAMA has used a $90,000 "Fight Back" grant from the city and a $700,000 federal grant to improve denigrating areas along Seventh Avenue, says Renee Pepino, founder of SAMA and owner of Roman Table Restaurant, at 4221 North Seventh Avenue.
If SAMA is successful in fighting blight and promoting more pedestrian-friendly intersections, Pepino says other associations will form in other neighborhoods, each of them working, as SAMA is now, to get more mixed-use retail.
For the historic preserver, who faces two years of paperwork because of the city's code, as the Gold Spot's Mike Hogarty did, Gordon says speed up the process by eliminating the parts of the code that don't directly relate to safety issues.
"Our code is a great code," Gordon says, "but it's designed for new construction, not for infill or preservation of buildings. Our philosophy and our intent is that we should look at our code or revise the current code so that it would give flexibility to the people wanting to do [historic] projects. But we've got to make sure we don't change the safety issues."
And for increased foot traffic throughout downtown, which would help create a 24-hour city, Gordon says people will use the light rail once it's finished in 2006.
"Before I leave office," he promises, "we'll be at the front of the line as one of the great downtowns in America."
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