Three weeks ago, it looked like plans were moving forward smoothly for implementing a Business Improvement District in Roosevelt Row and the Evans Churchill neighborhood in Phoenix that would tax property owners to pay for extra services. The Phoenix City Council voted to approve the creation of a Roosevelt BID at its January 20 meeting.
But it soon became clear that the Roosevelt BID faces some serious challenges. There's a bill moving through the Arizona Legislature that could essentially nullify the January 20 approval. And many property owners have expressed objections to the BID, mostly because they don't want to pay the extra taxes or they don't agree with the process used to create it.
Still, the BID is moving forward at this point. The next step for the City Council is voting on an assessment diagram, which is on the agenda for their March 2 meeting. Next up for BID organizers is creating an organization that will handle its operations.
Business improvement districts are city-designated areas that provide enhanced services to property owners. Here's how they work: Services are paid for by assessing property owners in the district. Basically, property owners get services above and beyond those already provided by the city, but they’re required to pay an extra tax that funds them.
More than 1,000 BIDs exist in cities throughout the United States, including San Diego, Seattle, and San Francisco. In fact, Phoenix already has a BID called Downtown Phoenix Partnership, which was created in 1990. It extends from Seventh Street to Third Avenue, and between Fillmore Street and the Union Pacific railroad tracks, and provides services such as hospitality, security, and marketing. And it includes some of downtown's best-known destinations — including Arizona Center, Chase Field, and Phoenix Convention Center.
The Roosevelt BID recently approved by the City Council includes the area between Seventh Street and Seventh Avenue, roughly between Fillmore and Moreland. It's home to Local First Arizona, Beth Hebrew Synagogue, and Phoenix Public Market — plus a thriving arts district called Roosevelt Row, which was named a 2015 Great Place in America by the American Planning Association.
The area is rife with change – including an influx of new small businesses and residential developments. Several new developments aiming for occupancy in 2017 could mean 3,000 new residents in the area, according to Greg Esser. He's an artist and longtime Roosevelt Row advocate who's part of the group working to moving the BID forward.
Some property owners support the Roosevelt BID, but others oppose it.
Several proponents who spoke at the January 20 City Council meeting said Roosevelt Row has been transformed from blighted to vibrant by thousands of volunteer hours undertaken for more than a decade, adding that ongoing improvements aren’t sustainable without a BID to manage and fund them. Some cited the area’s rapidly growing population, saying it presents challenges a BID can help to mitigate.
Those speaking in favor of the BID included Esser, artist and business owner Cindy Dach, and Local First Arizona founder Kimber Lanning. Others included Nicole Underwood, director of operations for the Roosevelt Row Community Development Corporation, and Catrina Kahler, president of Artlink. Several more attended the meeting to show their support — including Jim McPherson, president of the Arizona Preservation Foundation, and Joseph Benesh, director of Phoenix Center for the Arts.
Opponents offered a variety of objections, saying BID assessments constitute taxation without representation or that the taxing of many would benefit few. Some objected to the proposed BID budget of $375,000, which includes $100,000 for administration. And David Bakke expressed concern that BID funding would go towards “ghetto murals.” Several people, including attorney Gary Birnbaum with the Phoenix office of Dickinson Wright, criticized the very process by which the BID had been created. Birnbaum attended the meeting to speak on behalf of several clients who own property in the BID area.
Arizona cities can’t vote to approve a BID unless more than 50 percent of property owners in the designated area support it. During a formal protest period required by Arizona law – which ran from November 18 to December 15, 2015 – 29 percent of affected property owners filed formal protests against the Roosevelt BID with the city. Those who don’t submit a formal protest are counted as supporters, according to procedures for creating BIDs that are spelled out in Arizona statutes. Hence the Roosevelt BID has a 71 percent approval rate.
But some property owners have taken issue with that procedure, voicing their objections during City Council meetings and House of Representative committee hearings. They want an actual vote to take place, so property owners will have a way to submit their aye or nay – rather than being considered pro-BID simply because they haven’t filed a formal protest.
That's where the bill comes in.
Gilbert Republican Warren Petersen, who represents District 12 in the East Valley, sponsored a bill, HB 2440, that initially called for a vote by property owners and other electors in the district, and he made it retroactive to cover BIDS not formed by January 1, 2016. Petersen hasn't responded to New Times' requests for comment on the bill. Supporters of the original bill included Republican Phoenix City Councilmen Sal DiCiccio and Jim Waring.
According to Phoenix Democrat Ken Clark, Petersen got involved with the bill at the urging of lobbyists Marcus and Meghaen Dell'Artino. Clark represents District 24, which includes the Roosevelt BID area, and the Dell'Artinos own property in the area.
But Petersen's bill has since been amended to require a petition of property owners, rather than a vote. If HB 2440 becomes law in its current state, a BID couldn't be created unless there's a petition that is both "signed by owners of more than one-half of the taxable property units" within the proposed BID area and "signed by persons owning collectively more than one-half of the assessed valuation of the property" within that area.
Clark expressed concerns when the full House voted on the bill on February 9. He said that although he's sensitive to the fact that some people in his district object to the way BIDs are created, he's concerned that the bill could give a small number of people with large land holdings a disproportionate say in whether or not a BID gets approved, creating a situation in which a minority controls the taxation of the majority. "If you're gonna do this," he tells New Times regarding efforts to change the BID procedure, "make it one person, one vote."
"Petersen's bill doesn't solve the problem, but it could set us up for bigger problems," Clark says. He doesn't think legislation is the answer. "This is a perfect opportunity for shareholders to get in a room and sort it out."
The House of Representatives ended up approving HB 2440 on February 9 — with 35 in favor, 23 opposed, and two not voting. Both Clark and Lela Alston, the other House member from District 24, voted against it. Now it moves to the Senate for consideration, and more amendments are possible. If the bill makes it through the Senate, it will go to the full legislature for a vote. The last stop, of course, would be the Governor's desk.
Bottom line: If it moves through the Arizona Legislature to become law, HB 2440 will essentially nullify the creation of the Roosevelt BID by retroactively changing the way BIDs are established in Arizona.
During the January 28 Government and Higher Education Committee meeting, Petersen explained HB 2440 this way: “In essence, it’s simply a matter of making sure people have the right to be involved.” But that’s hard to reconcile with facts shared by Christine Mackay, community and economic development director for the City of Phoenix, during the City Council’s January 20 meeting. Mackay detailed extensive outreach undertaken through mailings, meetings, and other means starting in August of 2014.
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The fate of the Roosevelt BID affects hundreds of property owners. There are 1,006 parcels in the designated area, which are owned by 752 property owners, according to a presentation made by Mackay during the City Council’s January 20 meeting. Mackay told the Council that only 401 parcels, owned by 211 owners, will be assessed, because some types of properties – including single-family homes and residential rentals with four or fewer units – are exempt. Most people don't call their land a parcel, of course, but that's the term used by the Maricopa County Assessor's Office.
According to Mackay's presentation, the breakdown of properties in the Roosevelt BID area looks like this: commercial (38 percent), assessed residential (27 percent), vacant (23 percent), parking (10 percent), and hotel (2 percent). Assessments get calculated based on land size, use, and location. About half the owners would be assessed less than $500. And the average assessment would be about $781.
If HB 2440 becomes law, Roosevelt BID supporters will be free to seek approval for the BID through the new process. However, all those services BID organizers want to provide can't begin until the approval is in place, and assessments are collected to pay for providing them.
There’s still time for property owners and other interested parties to weigh in on the debate by contacting city and state representatives, or attending meetings where public comments are allowed. Policy wonks and advocates of either position can follow developments on the Phoenix City Council and Arizona Legislature websites.