Controversy Swirls Around Roosevelt Business Improvement District — Again

Two lawmakers and a lobbyist have hurled serious accusations at the City of Phoenix over its creation of the Roosevelt business improvement district (BID). Senator Warren Petersen, Phoenix City Councilman Sal DiCiccio, and lobbyist Marcus Dell'Artino say the City Council acted improperly or illegally when it voted during its January 20, 2016, meeting to approve the creation of the district. 

All three oppose the formation of the district and support a bill moving through the Arizona Legislature that would do away with it. Petersen, a Republican representing District 12 in the East Valley, sponsored the bill at the behest of Dell'Artino, according to Representative Ken Clark. Clark is a Democrat representing District 24, which includes the Roosevelt BID area. Dell'Artino lives and works in Roosevelt Row.

It's just the latest development in a contentious debate over the business improvement district, which would allow the City to tax property owners within district boundaries to pay for services above and beyond those typically provided by the City.

For more than two years, a group of Roosevelt Row property owners have worked to create a business improvement district that would provide improvements within a designated area funded through a special tax on many of the area's property owners.

Prominent supporters include Greg Esser, who was instrumental in launching a trio of shipping container galleries in Roosevelt Row, and Local First Arizona founder Kimber Lanning, who owns Modified Arts gallery and is spearheading preservation of the Wurth House for adaptive reuse. Esser and his wife, Cindy Dach, are Roosevelt Row artists, residents, and business owners who co-founded the Roosevelt Row Community Development Corporation that's worked for years to improve the area.

The Roosevelt BID is bounded by Seventh Street and Seventh Avenue, roughly between Fillmore and Moreland streets. It's home to Roosevelt Row, an area that's received national recognition as a top neighborhood and arts district. In October of 2015, the American Planning Association named it one of 15 great places in America.

Although the Phoenix City Council approved the formation of the Roosevelt BID at its January 20 meeting, opponents are continuing their efforts to ensure the district won't become operational. They're running on two tracks at this point; one involves the City Council, and the other involves the Arizona Legislature.

The City Council has to approve certain details, including a district plan and budget, before the Roosevelt business improvement district becomes fully operational. But the City Council won't vote on any of that until May, according to Monica Hernandez, public information officer for the City.

By then, the outcome of HB 2440, which is currently moving through the Arizona Legislature, should be known. If it passes and gets signed into law, further City Council action on the district they approved in January won't be necessary. That's because the bill would change how these districts are created. It would apply retroactively, meaning that any districts created after January 1 wouldn't officially exist.

The bill has already passed through the House of Representatives. Now, it's moving swiftly through the Senate, where bill supporters made their case during a February 24 Senate Finance Committee hearing. They included not only Petersen, but also DiCiccio and Dell'Artino.

All suggested the City Council acted improperly, or even illegally, when forming the district on January 20.

Petersen told the Finance Committee that the district was created without people having any say or input in the process.

In reality, community outreach included nine separate mailings, more than 30 community meetings, and seven City Council and subcommittee actions or updates, according to Cynthia Weaver, public information officer for the City. 

But Petersen also leveled a more serious charge, questioning whether the formation of the Roosevelt BID complied with current state law. "I'm not convinced of that completely," Petersen told the committee.

DiCiccio, who voted against forming the BID at the City Council's January 20 meeting, suggested that the City had illegally approved the district because it voted without seeing a district map containing assessment information. Dell'Artino concurred, telling the Finance Committee that the absence of that map when the City Council voted means there is no district.

But that's not the case.

The map DiCiccio referenced isn't required to approve forming the district, Lanning says. And that's just what City attorney Tom Stack told the City Council on January 20. Instead, the map is part of a process that happens after creation of the district gets approval, so approving the district without that map wasn't illegal. 

Still, comments by DiCiccio and Dell'Artino were enough to leave Senate Finance Committee chair Debbie Lesko, a Republican representing District 21, wondering whether the district was formed legally. "I think there's a valid argument that can be made if this district was formed in an illegal manner," Lesko told New Times by phone following the hearing.  

"There's so much misinformation in there, it's really rather shocking,"� Lanning told New Times by phone after the hearing, where she spoke in opposition to HB 2440.

That's not the only misinformation out there, says Lanning. "I believe they're trying to create a very gray area so there is a lot of confusion," she says of district opponents. 

Lanning disputes DiCiccio's claim that 29 percent of property owners didn't know they needed to follow formal protest procedures to object to creating a district because their mailings bounced back to the City. Nancy Hormann, whose firm Hormann & Associates was instrumental in the Roosevelt BID development process, also disputes DiCiccio's numbers. After a mailing went out that included district plan details and protest procedures, she says, just 13 came back undeliverable.

There's an element of conspiracy theory, too, Lanning says. Some suggested to the Finance Committee that a mailing detailing protest procedures was deliberately sent between Thanksgiving and Christmas so most people wouldn't read it. "It's ridiculous,"� Lanning says of the claim. "We followed the law,"� Lanning says.

"Now people who came late to the party are trying to claim they weren't included," she adds.

New Times reached out to Petersen and Dell'Artino by phone and email to discuss the Roosevelt BID and HB 2440, but neither responded to our inquiries.

It's not just district opponents who are speaking out. Several opponents of HB 2440, including Vermon Pierre, who heads the Roosevelt Row Community Development Corporation board of directors, conveyed a unified message during the Finance Committee hearing: It's unfair to change the rules in the middle of the game. At the very least, they'd like the bill amended so it's no longer retroactive.

Even Senator Kimberly Yee, a Republican representing District 20 who ultimately voted to give the bill a "do pass" recommendation, expressed concern about HB 2440 during the hearing, suggesting it's a piece of "special legislation" specifically created to nix a particular district. Yee tried unsuccessfully to offer an amendment that would remove the retroactivity clause from the bill.

But there's something else that caught Lanning's attention during the Finance Committee hearing.

DiCiccio claimed that it might make sense to go back and require older districts to meet the requirements in Petersen's bill. Try telling that to Downtown Phoenix Partnership, the district founded in 1990 which extends from Seventh Street to Third Avenue, between Fillmore Street and the Union Pacific Railroad tracks. It's one of several districts described during the hearing as "phenomenally successful" by Senate Finance Committee member Steve Farley, a Democrat representing District 9 who opposes HB 2440.

Whether, and how far, the Arizona legislature opens Pandora's box on this one remains to be seen.

The Senate Finance Committee voted 3-2 (along party lines) to give HB 2440 a "do pass" recommendation, but it needs to pass through the Senate Rules Committee before it goes to the full Senate for a vote. Lesko says amendments may still be offered as the bill moves forward.

Lanning and other HB 2440 opponents will be watching, although their strategy for trying to keep the legislature from moving the goal post isn't clear at this point. "We aren't giving up yet," Lanning says. "I'm hoping we're going to be able to get the truth out."