The City of Phoenix is suing the State of Arizona over its most prominent arts district, Roosevelt Row. Months in the making, the lawsuit is the result of a back-and-forth between the city and state. Back in January 2016, the city voted to create a business improvement district in Roosevelt Row. But in March 2016, Governor Doug Ducey signed into law House Bill 2440, which retroactively changed the way such districts are formed.
Hence, the lawsuit, which was filed with the Superior Court in Maricopa County on September 8. The city's suit posits two things: First, that HB 2440 does not apply to the Roosevelt BID; and second that HB 2440 is unconstitutional because it was designed specifically to negate Roosevelt Row BID efforts.
Supported by downtown business owners Kimber Lanning, Greg Esser, and Cindy Dach, the BID would have affected the area bounded by Seventh Avenue and Seventh Street between Fillmore and Moreland streets.
Lanning founded Local First Arizona, operates Modified Arts gallery, and saved the historic Wurth House from demolition due to development. Esser and Dach own MADE art boutique, and a building with artist live-work spaces that include Bassim Al-Shaker's new Babylon Gallery.
Roosevelt Row has been recognized nationally as a leading neighborhood and arts district. Today, it's undergoing significant development, including several multistory residential units. And the approval of the BID would have meant yet another change.
Like similar business improvement districts, the Roosevelt BID would mean an extra city tax on property owners in a designated area in order to fund services beyond those already provided by the cty — think security, beautification, and special events. Phoenix is already home to a BID called the Downtown Phoenix Partnership, which was created in 1990. Typically, such districts form nonprofits to manage decisions about how tax monies collected get spent.
But creating the Roosevelt BID proved more difficult that expected.
Community members in Roosevelt Row, and the Evans Churchill neighborhood it overlaps, started working to create the district more than two years ago. They hired Hormann & Associates, an urban revitalization firm specializing in BID formation, and undertook community outreach efforts, including multiple meetings and mailings to let property owners know about BID efforts and get their input.
At that time, forming a BID required having the support of more than half the property owners in the designated area. Opponents of the Roosevelt BID weighed in during a formal protest period — one that's required by law — and they comprised just less than one-third of the area's property owners. So the city of Phoenix moved forward.
The City Council voted to create the district on January 20, 2016. However, some opponents said the vote wasn't valid because city staff didn't provide a map of district properties and assessments at that meeting. City attorneys countered that the map wasn't required to approve forming the district.
At the January 20 meeting, Council members Sal DiCiccio, Bill Gates, and Jim Waring voted against the creation of the BID, citing various concerns. Still, those in favor of the Roosevelt BID won.
Throughout the process, the Roosevelt BID was supported by many of the people who helped Roosevelt Row make the transition from blighted to trendy — including monOrchid owner Wayne Rainey and Carly's Bistro owner Carla Wade Logan.
Indeed, some Roosevelt-area property owners, including Erick Baer, David Bakke, and Marcus Dell'Artino opposed the creation of the BID. Baer, who owns two rather unkempt properties on Sixth Street, took to Facebook, calling artists "parasites." David Bakke, who owns a small residential rental property on Portland Street just north of monOrchid, told the Phoenix City Council that creating a district would bring more "ghetto murals." But Dell'Artino, a lobbyist and relative Roosevelt Row newcomer who spoke against the Roosevelt BID during the January 20 hearing, took a different approach.
Allegedly, Dell'Artino urged House of Representatives member Warren Petersen, a Republican from Gilbert well known for his conservative, anti-tax stance, to get involved. Here's where HB 2440 comes in. Petersen sponsored the bill, which Governor Doug Ducey signed into law on March 11, 2016.
The law changes how business improvement districts are formed in Arizona, and applies to all BIDs formed after December 31, 2015. That's a problem for Roosevelt BID supporters because the City didn't approve the BID until January 20, 2016.
Filed earlier this September, the City's lawsuit asks the court to take one of two actions: Either declare that HB 2440 does not apply to the Roosevelt BID or deem HB 2440 unconstitutional.
It's a course of action six months in the making.
Phoenix Mayor Greg Stanton spoke with New Times shortly after Ducey signed the bill and said it was entirely possible the City would decide to sue the state. He called for the City Council to discuss its legal options in executive session.
Neither Ducey nor Petersen have responded to New Times' requests for comment on the lawsuit. But it's clear where Stanton stands.
Both Stanton and Representative Ken Clark, whose district includes Roosevelt Row, told New Times in March that the State broke the law by enacting “special legislation” – a term used for laws meant to benefit or harm a specific person or group. Special legislation is prohibited by the Arizona constitution.
The League of Arizona Cities and Towns supports the city's position, says Patrice Kraus, legislative director for the group. Kraus says the Roosevelt BID was the only district impacted by the retroactive clause. "It certainly looks like special legislation," she told New Times by phone on September 15.
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It's impossible to know when the court will rule on this case, but the next step will likely be Arizona filing its response. Typically, those filings happen within 30 days.
But Roosevelt BID supporters aren’t waiting around for that decision, Esser says. Rather than putting the Roosevelt BID on hold, they're proceeding with cautious optimism, hoping the lawsuit will be successful.
A preliminary Roosevelt BID board of directors is getting positioned to create a Roosevelt BID nonprofit, as well as drafting an initial budget and goals. Its members include Tim Sprague, a principal with Habitat Metro, a local real-estate development firm with projects that include Oasis on Grand, FOUND:RE, and Portland on the Park.
That way, they'll be closer to making the district fully operational if and when the time comes.