Jim Kaufman's Bottom Line

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Jim Kaufman, a developer who has played a key role in the revitalization of downtown Phoenix, has been credited with saving many cherished buildings: The renovated Orpheum Theatre, the art deco Professional Building just south of Bank One center, the majestic administration building on the old Phoenix Union High School campus (it dates to territorial days) and three adjacent historic school properties, including Union Hall, which he restored and reopened.

Such structural treasures provide a link to the past, preserving memories and paying homage to those who helped build the community. During more than 20 years as a downtown investor and developer, Kaufman, 58, has tried to keep those higher motives at heart.

So it is the ultimate irony that Kaufman could be the one who tears down the imposing historic structures remaining on the Phoenix Union High School campus at Seventh and Van Buren streets.

All four -- the administration, liberal arts and science buildings and Union Hall -- were listed on the National Register of Historic Places in 1982. But as many alumni are horrified to learn after all these years, that doesn't protect them from the wrecking ball. It just means there are a few bureaucratic hurdles to clear before they can be reduced to rubble.

Kaufman has quietly started stepping over those hurdles. But when members of the Phoenix Union High School Alumni Association heard about his plan to possibly tear down their most hallowed halls, they began to gear up for a fight.

"We are not going to sit idly by and watch the buildings be destroyed," vows Don Jackson, head of the 5,000-strong association.

City historic preservation policy does allow for the demolition of historic properties under certain conditions. Kaufman says one condition, economic hardship, would apply to his PUHS buildings if the city should decide to condemn and take his property as part of its grand Phoenix Civic Plaza expansion plan. Already, the city is proceeding with a $3.3 million demolition of the buildings on the north side of the PUHS campus that it purchased from Kaufman three years ago.

Assistant City Manager Sheryl Sculley says the land north of Kaufman's buildings needs to be cleared for construction of a $20 million to $30 million Civic Plaza exhibition hall, which would host events while a $500 million expansion of the Civic Plaza facility that straddles Washington Street is undertaken.

According to the code, "economic hardship" exists when a reasonable price cannot be obtained from a property "that retains its historic features or structures." Kaufman fears that if the city decides it wants the land beneath Union Hall and his other three school buildings -- and the city has said it may -- the property would be worth more with nothing on it. The structures, which also house his business office, a charter school for the arts and the headquarters of a new Internet venture, would likely just be in the way of any city plans.

Kaufman says he hasn't commissioned an appraisal of the land for 12 years, so it would be meaninglesss to talk about today's value of the property and how much it would be cut by the buildings' presence. But city documents hint at how far apart the city and Kaufman could be: A 1995 bank appraisal puts the value of Kaufman's four acres at $3.5 million. In 1996, the city paid nearly $50 a square foot for the northern parcel -- which would equate to more than $8 million for the rest of Kaufman's land. In a January memo contained in city files, Kaufman suggests the land is worth more than the $40 per square foot the city paid for a small strip of land on the south end of the campus in 1991. At that rate, Kaufman's minimum asking price would be nearly $7 million.

In what he calls a protective action, Kaufman applied for a demolition permit in January and was turned down by the city -- the standard procedure for such a process. That triggered a 12-month wait before Kaufman can get the go-ahead (if he proves economic hardship) to tear down his four buildings.

Should the stately buildings be razed, he says, "It would be a very sad day for me. It would be a very sad day for Phoenix."

He is, he says, someone who has put much of his life and life savings into the property. And he is also a resident of Phoenix, a citizen who hopes that public policy will support saving old buildings while new projects rise to keep downtown vital.

But he is, ultimately, a businessman. And he intends to protect his equity.

Suddenly, Kaufman is hoping for his own savior. He needs somebody to come forward and save the day, sparing not only the buildings, but also his reputation.

Because the fact is, despite the lovely monuments to Kaufman's downtown investing over the years, if he knocks down what is left of PUHS, that likely will be his legacy.

"I'd hate for that to happen," he says. "But I have a stated purpose. And I've restated my purpose and I will continue to restate my purpose. And hopefully, somehow, there will be a resolution before that event has to happen."

Kaufman says he's not bluffing just to get people on his side, or fanning controversy. But he says repeatedly that such historic buildings should belong to the community and should be protected by the community (hint, hint).

Here are some possible scenarios for what could happen over the next seven months:

• The city moves to condemn the land, Kaufman gets an appraisal proving it's worth more without the buildings, then flattens them to get the highest price from the city.

• The city doesn't condemn the land, but someone else -- interested in the land and not the buildings -- makes an offer that is less than what Kaufman considers fair market value. So Kaufman knocks them down.

• The city decides to condemn the land but pay Kaufman the full price for the property, then in a partnership (with the Civic Plaza Corporation or someone else) turns the entire property into a Civic Plaza extension, integrating the historic buildings.

• A mega-development company partners with the city and pays what Kaufman says the land is worth, again saving the old buildings while constructing high-rise condos or another revenue-producing venture.

Kaufman is hoping for one of the latter outcomes.

"That's all I'm trying to do -- it's a difficult task -- to see if we can't get the fair market value of the land and figure out a way to get the preservation in the same deal."

Kaufman -- who also owns two shopping centers in the Valley -- has already had an impressive return on his 27-acre PUHS property. He purchased the property more than 15 years ago for $13 million, then sold nearly half of it (east of Seventh Street) for an undisclosed price. Since then, he has earned more than $40 million leasing and selling portions of it to the city and the Civic Plaza Corporation. Kaufman says such amounts don't reflect the millions of dollars put into operating and improving the properties "or the debts I've incurred with lenders all over the place."

Both sides -- the city and Kaufman -- are being quite civil now, couching polite comments on the issue with indications that nothing has been decided, that they hope everything can be worked out, that they are both just protecting their positions.

But many, including former Phoenix mayor Terry Goddard, are furious at the city for starting demolition of the structures on the north side of the campus, including a 1921 building that was not on any registry but was the first to be destroyed. He says the older parts of the campus need to be saved. Period.

"It's a major piece of our heritage and something of spectacular quality," he says. "Knocking stuff down for the sake of knocking stuff down -- it's absurd and shortsighted."

Phoenix city councilman Phil Gordon says already the "tragedy" of the demolition of the 1921 industrial arts building has spurred some action: He and councilman Doug Lingner will propose a change to the city code that would call for thorough review and public hearing before any old building -- not only those on a historic registry -- can be demolished by the city.

"Just because a building is not on a historic registry doesn't mean that it's not historic," he says.

And, now that the city has plaster on its face over that case, officials are trying to find a way to spare Kaufman's four PUHS buildings from demolition. Gordon says City Manager Frank Fairbanks vowed last week to save them.

Amazingly, the destruction of the northern PUHS buildings began even though the full City Council has not formally approved the Civic Plaza expansion plan. (A council subcommittee adopted it a week ago, after demolition had already begun.) When and if the council approves the plan, the city would have to ask voters for permission to spend bond funds on the deal. Assistant City Manager Sculley says that may not be until March.

Meanwhile, the city is clearing most of the old high school site. And the clock on Kaufman's demolition permit is ticking.

Goddard, now the state coordinator for the federal Housing and Urban Development office, says the city has put Kaufman in a tough position: "An ironic twist after all he's done for the city." While both sides seem cordial now, Goddard predicts the controversy will get nasty.

"And in a fight between Jim and the city, I'd bet on Jim," Goddard says.

Jim Kaufman is uncomfortable. After wading through a throng waiting to be seated for lunch at the Hyatt Regency's Compass restaurant, he learns they are part of a dental convention. He shudders. He doesn't like going to the dentist.

Worse, he is meeting a reporter. Kaufman is hesitant about talking, unsure why anyone would want to read about him.

"I'm not very interesting," he says.

But friends and colleagues frequently use that word to describe Kaufman. They also call him talented, wealthy, influential, mysterious.

"He's the Howard Hughes of Phoenix," says longtime friend Phil Gordon. "He's even got the long hair, but not the long fingernails."

Indeed, Kaufman sports a long, white ponytail bound by three bands. His nails are trimmed and clean. He wears no fancy watch or diamond jewelry, just a wrap-around silver wedding ring in the shape of an eagle, part of a matched set he and his wife bought in Sante Fe.

Dressed casually in black pants and a plaid button-down shirt and carrying a large felt hat, Kaufman does not look like a big-time developer or real estate mogul. He could be a guy on vacation, an aging hippie, a musician or artist. And in various ways, he is all of those.

But from the slowly revolving restaurant 24 stories above downtown, Kaufman can point to evidence that he is much more. Among the exhibits: the Orpheum Theatre to the west, the restored grand dame of the Phoenix performing-arts scene, which Kaufman got listed on the National Register of Historic Places before letting the city take his place in its sale; the Professional Building (south of Bank One center), which he bought and sold; the Chamber of Commerce building on Monroe, an office and parking structure which he acquired in 1993 (and just painted); and the Phoenix Union High School property, originally a 27-acre site he bought in 1984.

He can look out on the landscape and remember what it used to look like when no one came to downtown and the area was called "The Deuce."

"I love the metamorphosis," he says. "It's been the most incredible thing."

It's fitting that Kaufman ends his lunch with a decaffeinated espresso. The man is a walking contradiction.

He has been very successful buying and selling properties, working through bureaucratic mazes, sorting through complicated leases and contracts. Yet because of a learning disorder, he can barely read.

Some describe him as shy and quiet, hardly noticeable in a room full of people. Others say he can be an extrovert. Some say he has had a contentious relationship with city staff over the years. Kaufman says it's been a good relationship. Some say he is a fabulous mediator, someone who can bring opposing sides together and find common ground. Many describe him as an impassioned advocate who drives a hard bargain.

Those who know him say he is a generous person but a wary businessman. He is a tough-as-nails negotiator, but also a writer of tender love songs. He has a passion (and, many say, a gift) for improving his downtown properties, but he wants to wean himself from that line of work so he can return to his original career: music.

Phil Gordon has known Kaufman since the early 1970s. Both were part of a group of businessmen that met for breakfast every day. Their children grew up together.

"I think Jim clearly differentiates between business and friendship and doesn't mix the two. And he can draw clear boundaries," Gordon says. "On the one hand, when he's involved in business, he puts on his business hat and focuses on accomplishing the best business deal. But when he's involved in social issues or a friendship, he's the most social, most progressive individual you'd want to meet. He's one of the few people that doesn't try and pretend to mix the two."

A large contributor to the Maricopa Community College District and United Way, Kaufman also gives regularly to political candidates. But he's not the type of person to hobnob at charity balls or draw attention to his donations. And while he is generous in some arenas, he is meticulous about business deals.

Gordon says if a stranger asked Kaufman for $1,000, Kaufman would likely give it to him on the spot if he felt the person really needed it.

"But if you -- as one of his closest friends -- asked him to borrow $1,000 on a business deal, he'd do a full credit report on you, a mortgage check and ask for your third-born child as security."

Gordon says Kaufman lets people know where he stands, "which I think is a very positive thing, a remarkable trait. But sometimes that's too straightforward for individuals who are used to people sugar-coating a lot of things."

Margaret Mullen, who has known Kaufman since her days as founding head of the Downtown Phoenix Partnership, says this quality can bother folks.

"For some people, he's very hard to deal with. Jim's not terribly flexible, but I don't see that as a negative. He knows exactly what he wants and he has very strong feelings about historic preservation," she says.

Many who have worked with Kaufman say he is a big-picture guy. While consultants, engineers or politicians may sit in their offices, planning downtown projects, drawing up plans that can be too "project specific," Kaufman says, he has conducted a prolonged study of downtown by merely walking around, looking at what is there and envisioning what it could be.

He's not afraid to speak up.

Don Keuth, head of the Phoenix Community Alliance, another business-driven advocacy group, says Kaufman has been a strong voice. "And not only in support of some of these programs. He's the one to say, 'Let's make sure we're doing the right thing,' which is good. You need that kind of assessment and reality check."

Often, groups like PCA are too quick to jump into a project, Keuth says. "It's the 'ready, aim, fire' syndrome. He makes sure we know what we're aiming at."

Sometimes Kaufman's vision of the target is different from what others are seeing. "The one quality that I think I have is to see what's there without it being so obvious," says Kaufman.

Two examples:

When the city was planning to build the new Downtown Transit Center at Central Avenue and Van Buren Street, the original plans called for a linear development running north and south on Central Avenue. A narrow strip of land facing First Avenue would have been left open. Kaufman noted that the configuration would limit the remaining land's development potential -- who would want a skinny parcel of land facing a one-way street? The more logical layout would be to place the station on the southern part of the block, facing Van Buren, leaving the northern part open for development.

Some, including parking-lot owner Leon Woodward, smelled a rat, complaining that Kaufman's proposal would plow under private parking spaces that compete with Kaufman's garage across the street. And they noted that Kaufman was a contributor to Phoenix mayor and council races.

Kaufman says he wasn't seeking any favors, just offering a sensible alternative. The city reconfigured the station plans.

Another time, Kaufman sat in on meetings regarding the construction of the Arizona Science Center and the Civic Plaza East parking garage. After hearing how many busloads of schoolchildren would be visiting the center on field trips and how the garage would easily accommodate them all, Kaufman asked what he thought was a simple question: Where's the bridge?

Officials hadn't planned a pedestrian bridge to transport kids safely across a busy street. Today, there's a bridge spanning Washington Street, connecting the museum and rest of Arizona Heritage and Science Park with the garage.

Kaufman says he can't help but throw in his two cents on such things, whether or not they directly involve his properties. And he says his comments are not always immediately welcomed.

"I'm not a planner or an architect. People look at me and say, 'Who the hell are you?'"

Who the hell is Jim Kaufman?

His résumé might conjure an image of a businessman who took a routine path to success. It definitely would describe someone who wears a suit (a pricey one) to work each day in a luxurious downtown high-rise. He's got a business degree from Arizona State University. Years of experience as a mortgage lender and real estate developer. Key positions on the executive committee of Phoenix Community Alliance and the board of the Downtown Phoenix Partnership, powerful groups that work toward improving downtown.

But Kaufman has traveled a difficult, roundabout route. He not only breaks the millionaire-developer mold, he demolishes it. He is long-haired and prefers to dress modestly and casually. He works out of an office on his Phoenix Union High School property that features a music studio.

His college degree was a miracle, he says, considering he suffers from dyslexia, a learning disorder that hadn't even been identified when he was going through school.

"I thought I was just stupid. So did everybody else," he says.

Kaufman's family had moved to Phoenix from Syracuse, New York, in 1956. A self-described nerd, Kaufman entered West High School as a sophomore and struggled to keep up.

He graduated in 1959 near the bottom of his class. When the final grade-point averages were posted on the door of the principal's office with the highest achievers at the top, Kaufman had to get down on his hands and knees to find his name. He was torn between his father's dream that he get a college degree and his English teacher's advice that he eschew college and become a tradesman.

Kaufman got into Phoenix College, which at the time accepted all Valley high school graduates. For that, he will be forever grateful. He says the community college gave him a chance when no one believed in him. And it helped prepare him for higher studies at Arizona State. Since then, he has been a passionate supporter of the community-college system, contributing money and speaking its praises whenever he can.

Kaufman's first career was in music. He played guitar at a Scottsdale coffee house and a Phoenix steak house, performing his own songs. He sold pianos and taught guitar on the side.

"But I wasn't good enough as a performer or old enough as a composer to make anything meaningful happen," he says. While he continued to dabble with his instruments, he gave up songwriting for nearly 30 years.

He found work as a mortgage lender, then got into real estate investing. In 1981, he bought his first downtown Phoenix building, the property on the northwest corner of Central Avenue and Washington Street that is now Renaissance Square. He sold the building a few months later, but the transaction tossed his name into the ring as a downtown player. As a result, he says, he was one of about 20 people invited to a lunch hosted in 1982 by Keith Turley, then head of Arizona Public Service.

The gathering was organized to discuss ways to save downtown Phoenix, Kaufman says. He credits Turley, who died in December, with having the vision for getting the revitalization started. (He says sports mogul Jerry Colangelo has provided "the magic" over the years that has helped the new downtown take shape.)

The Phoenix Community Alliance grew out of that meeting, with Kaufman as a founding board member. And when the Phoenix Downtown Partnership spun off from that group in 1990 to focus on a narrower section of downtown, Kaufman was a founding board member again. He still sits on both boards.

In 1982, Kaufman bought the former Korrick department store building that now houses the First Watch restaurant at the northeast corner of First Avenue and Washington Street. The property has changed hands several times since then.

Terry Goddard says Kaufman was one of the few people willing to invest in downtown Phoenix in those days.

"He was among the foremost of the people who came to downtown and put their money on the table and saw that this would be a special place. He was one of the pioneers," he says.

Paul Johnson, another former mayor, points out that Kaufman got no financial incentives from the city, a practice that has become almost commonplace when it comes to downtown development.

"He was willing to go into downtown simply because he believed in it," Johnson says.

He adds that Kaufman has survived and has remained committed to downtown, while other developers from that era are out of business or gone. Consider, for example, Kaufman's competitors for the 1984 Phoenix Union High School purchase: Fife Symington and Barry Wolfson. Symington's subsequent Mercado project bombed, his development company went bankrupt and his gubernatorial career was aborted when he was convicted of felony fraud counts in federal court in 1997. Wolfson, whose unreported $350,000 campaign loan to former Governor Evan Mecham helped lead to Mecham's impeachment, indictment and removal from office in 1988, has reportedly left the state. (Symington's case was overturned on appeal and Mecham was acquitted of the criminal charges relating to the loan.)

Phoenix Union High opened in 1895 and was at one time the largest high school west of the Mississippi. Once a cultural and educational epicenter, it suffered from the city's residential sprawl. Historic architectural qualities and fond memories of graduates were not enough to keep it open. The district shut the doors in 1982 and tried to find a buyer, possibly to convert it to a domed football stadium, offices or a cultural center.

After voters soundly defeated a bond proposal that would have authorized the city to buy the land for $10 million, many feared the buildings were doomed. Barbara Parsons, a member of the Phoenix Union Preservation Society, remembers the relief felt when Kaufman bought the land and its buildings, paying $13 million for 27 acres spanning Seventh Street.

"We felt quite sure that Mr. Kaufman sincerely wanted to keep it," she says.

But as devoted to historic preservation as Kaufman was, and is, he still keeps an eye on the bottom line. And, city records show, he soon began proposing other deals that would allow him to afford the enormous interest payments coming due. He sold 17 acres on the east side of Seventh Street to another buyer right away. (Phoenix Preparatory Academy sits on some of that land now.)

He proposed a land swap with the city, offering to exchange his Phoenix Union holdings with 640 acres in the northwest Valley that would be easier to develop. He later offered to lease a building to the Internal Revenue Service and sell some of the property to the Phoenix Elementary School District for construction of a junior high school.

None of those offers was accepted.

"Things were pretty desperate for him for a while after he bought the campus. There was no obvious use for it," says Goddard.

What did fly was a proposal that the city use some of the vacant buildings to solve a space crunch for the municipal court and other city departments. After sometimes tortuous negotiations, the city agreed to lease several buildings behind the four main ones on the National Register of Historic Places. Over the past 15 years, records show, the city has paid more than $35 million to Kaufman -- most of which involved lease payments for the Phoenix Union properties.

In the fall of 1984, just a few months after Kaufman had purchased the historic school, he entered into a $1.5 million deal to buy the Palace West theater -- the property that later reemerged as the Orpheum Theatre at Second Avenue and Adams Street.

It was his first attempt to redesign a downtown property, and Kaufman planned to build offices inside the theater, a "ship in a bottle" idea he now recognizes as lame. But while the deal was still in escrow, he decided to let the city take over his position as buyer. Kaufman calls it a gift to the city; Goddard (then mayor) recalls it as more of a last-minute offer from someone who had decided not to close the deal. Nevertheless, Goddard says, the city benefited from the contract hammered out by Kaufman.

"Had he not done this, the city would have never been able to negotiate as good a deal as he did. He's the best, the sharpest, most tenacious person in real estate I've ever seen," Goddard says.

Paul Johnson has no doubt that the Orpheum would have been torn down without Kaufman's actions. Eventually, with private donations and a bond issue, the theater was given an $11 million restoration and had its gala reopening in 1997.

Meanwhile, Kaufman began trying to interest the city in buying the Phoenix Union property. And he continued to add to his downtown portfolio.

In 1991, he purchased the Professional Building at 15 West Monroe Street for $650,000. Sometimes called the Valley Bank Annex building, the 12-story property is "an architectural treasure," he says. He considered putting loft apartments into it but never moved on that plan. He did sign two key tenants on the lower floor -- McDonald's, which opened its first downtown restaurant there, and Focaccia Fiorentina, a quality pasta house for the time-pressed working crowd. He sold the building in 1996 to Noel Heller, who at first planned to convert it into a hotel but is now trying to revive the residential plans as part of a mixed-use project. The purchase price was not disclosed.

Two years later, Kaufman bought the Chamber of Commerce Building at 44 West Monroe in a trustee sale for $1.9 million. The 10-story building that once housed the chamber includes a parking garage that spans the block to Van Buren Street. He also owns some property south of Fillmore between First and Third avenues to serve as parking for potential tenants. Kaufman is trying to sell or lease the chamber building now.

Over the years, Kaufman has also contributed to the downtown landscape in other ways. He jokes that his first "free lunch" with Turley and the group that became the Phoenix Community Alliance has cost him about $40,000 in voluntary dues since then. And he has contributed substantial amounts to the Downtown Phoenix Partnership, which has mandatory memberships among public- and private-property owners. Annual assessments (to the tune of $1.63 million this year) are made based on a square-footage-based formula.

Margaret Mullen says Kaufman once was among the top 10 landowners in that group, paying a big chunk of the budget. He has since sold some property and new projects have been built, edging him out of the top-contributor list. (Jerry Colangelo, who pays the dues on America West Arena and Bank One Ballpark, is at the top of the contributor list now. Rouse Company, which built the Arizona Center on city-owned land; Bank One; and the Barron Collier Co., which is erecting the massive Collier Center at First and Washington streets, are also top contributors.)

Downtown Phoenix Partnership Executive Director Brian Kearney says Kaufman has been a key, influential player in downtown redevelopment.

"He clearly has a knack for identifying key properties and knowing ultimately where they're headed," Kearney says.

Kaufman's membership contributions have helped the partnership accomplish its ongoing mission -- providing security, traffic and parking management and marketing and economic development functions in a contract with the city. (Phoenix pays no extra fee for these services other than the annual assessments as a downtown property owner.)

He also helped foot about $300,000 of the $9 million bill for the 1996 Downtown Streetscapes beautification project. About $4.1 million was paid by property owners in that program, bringing new purple lanterns and benches, among other things, to downtown.

Mullen says Kaufman has had additional, less tangible influence. She says he was very involved when her group helped get all of downtown rezoned, complete with new design guidelines and standards.

"Jim was very helpful in that process and very instrumental in it. The same thing with parking codes. There is always a struggle. There's one side of the community that thinks we built too much parking downtown and there's another side of the community that thinks we didn't build enough parking, and the arts and cultural entities suffer because of it," she says. "And Jim has always been a very positive force in getting people to talk about the issue and getting them to identify very specifically what their concern is."

Terry Goddard is also passionate about downtown and about historic preservation. That's why he nearly came unglued when he drove by the Phoenix Union High School property a few weeks ago and saw the industrial arts building being demolished.

He called Jim Kaufman.

Kaufman told him what isn't common knowledge: that he sold the northern eight acres of land to the city in December 1996 for $17.5 million (nearly $11 million of that was in planned lease payments and $6 million was from Civic Plaza funds) and that officials decided to tear down the existing buildings for the proposed Civic Plaza expansion project. And that there was really nothing he could do.

When city officials and Kaufman could not reach an agreement for the city to buy the remaining four acres of the parcel by a December 31, 1999, deadline, Kaufman says he took the necessary protective step: filing for a demolition permit. At risk are the administration building, circa 1911; the soon-to-be renamed Union Hall, built in 1912; the 1911 science building; and the 1921 liberal arts building.

Assistant City Manager Sheryl Sculley says the city's plans for the northern part of the school property have not been kept secret. Indeed, city records show that staff asked the council for permission to proceed with demolition in November. A staff report says improving the buildings for new tenants would require $25 million to $45 million in structural repairs and environmental-hazard abatement. An alternative, to merely fence and abandon the buildings, would create an eyesore and safety hazard, the report said. The council chose the third option, which was to use $3.34 million in Civic Plaza bond funds to demolish the structures.

The council approved the first phase of the demolition -- including the 1921 building -- in December. The second phase, which will include the remaining structures and possibly the pedestrian bridge across Seventh Street, was approved at the April 12 meeting, Sculley says.

Asked why three City Council members told the Arizona Republic recently that they had no idea the industrial arts building -- also known as building 6 in the school layout -- was being razed, Sculley says she didn't read that article carefully. And she says the council members have many items before them each week.

So they simply must have missed the one about bulldozing a 79-year-old structure without giving it a second thought.

Sculley admits she did not realize the building was quite that old. She knows that it was not included on a list of historic buildings derived after an extensive 1980 survey conducted by the city's historic preservation staff.

Copies of electronic messages obtained by the New Times show at least a couple of city staffers raised questions about the building's historic value.

In an October 6 e-mail to Victor Morrison-Vega and Rick Naimark of the Neighborhood Services Division, Cecile Fowler, then acting historic preservation officer, talks about the plans to demolish the city-owned buildings: "Bill tells me that Building 6, at the corner of Taylor and 5th Street is a nice historic building, should have been designated, but is not. I DID share this with Sean. Sounds like they plan to demo it." ("Bill" is an apparent reference to longtime preservation officer Bill Jacobson; staffer Sean McBride is no longer with the city.)

This heads-up apparently went unnoticed.

In a March 23 e-mail to City Manager Frank Fairbanks, Naimark, Morrison-Vega and others, Sculley responds to a media inquiry about the demolition by painting all the buildings there with one brush.

"With the opening of the new court, we are now in the process of asbestos removal and demolition of those old, decrepit, hazardous but NOT HISTORIC buildings," she wrote.

That's odd, Terry Goddard says now, because that particular building and others on the site were perfectly suitable for several city departments to occupy until a short time ago. He says some of those buildings could have been easily adapted for occupancy for a restaurant or office space. And he says he knows developers who might have been interested in turning the land into downtown housing, something city officials say they covet.

Meanwhile, asbestos removal is continuing on the property and the rest of the buildings will gradually come down by the end of the year, according to Sculley. The last to go will be the city-owned Channel 11 studios, which will move to the first floor of the new Adams Street garage.

Don Jackson, president of the PUHS Alumni Association, says his group was shocked to learn the buildings Kaufman still owns that are on the National Register of Historic Places could be torn down, too.

His group has been interested in buying one of those buildings, preferably the administration building at Fifth and Van Buren streets, to turn it into a museum. But he says Kaufman proposed a multimillion-dollar price to them. While they had hoped he might decide to donate it to them, they were surprised to learn that he had filed for the demolition permit.

Now, Jackson says, his group will closely monitor the situation.

"There is no way those buildings are going to be torn down without a huge public outcry involving lots and lots of prominent citizens who are now retired or in big corporations of the Valley who are graduates from Phoenix Union High School," he says. "We will do whatever it takes to mobilize the forces, because they are just too important -- way too important -- to be torn down."

Kaufman says if the city issues him a demolition permit, he would have another year to use it. But one idea -- giving the properties local historic landmark status -- could buy another two or three years before the structure would be razed. The landmark designation is aimed at providing a higher level of protection for historic properties "of exceptional significance."

That would set a precedent. According to Morrison-Vega, deputy director of the Neighborhood Services Department, nothing in Phoenix has ever been declared a city landmark.

And so far, Morrison-Vega says, his suggestion to pursue landmark designation for the PUHS property hasn't gone anywhere. He had hoped that the longer waiting period (three years under the landmark ordinance) would allow more time for someone to step forward with a plan to save the property.

"If nothing has come through in three years, then it's not going to come through," he says.

Sculley says the city has no plans now to condemn and take over Kaufman's property.

"But that could change," she adds.

Meanwhile, Kaufman is moving forward with yet another new business deal, one that presented itself after he applied for a demolition permit. He has joined forces with Tom Gaffney, a Phoenix promoter, and Gaffney's partner, Derreck Manteau, a Washington, D.C., Internet whiz, to convert Union Hall into the Web Theatre, a venue that will offer live acts and transmit them via Internet for pay-per-view digital television viewing.

Kaufman, who renovated and reopened the school's auditorium in 1996 as Union Hall, a 2,000-seat venue, says this new tack will not only lure top talent to Phoenix, but will showcase local artists and complement the curriculum of Metro Arts High School, a charter school that leases space (at an extremely low rate) from Kaufman.

Gaffney says he and Manteau met with Kaufman in February to present their business plan. They reached a deal on March 17. Kaufman will be a stockholder and a board member, according to Gaffney.

"He's a visionary," says Gaffney. "We'll be in good hands."

The administration building on the old campus -- which the alumni group favors for a museum -- will house the executive offices of the business. The theater is undergoing further technical renovations to bring it into the 21st century, Gaffney says, so performances can be recorded for real-time or delayed transmission across the Internet.

Gaffney says the venue will debut May 14 through 20 when shock rocker Alice Cooper tapes a music video there. A grand opening is planned for June 2, with talent to be announced.

Kaufman says the new venture will be something exciting and unique for Arizona. He realizes that the Web Theatre plans with Gaffney and Manteau don't jibe with his application to demolish the buildings the theater business would occupy.

"They would like to be here awhile. I would like them to be here awhile. But I also don't want to suffer a discount on the value of the land because the buildings are here," he says.

Whatever happens with the property, it will likely mark the end of Kaufman's decades-long dedication to downtown investing and development. Kaufman says his musical inclinations were rekindled as he renovated Union Hall. So he's decided to turn his attention to composing music.

Ballads are his specialty, although he once penned a country song called "Tall Paul Johnson" for Johnson's unsuccessful gubernatorial campaign. (It was nixed by the campaign strategists, Kaufman says.) Margaret Mullen says Kaufman wrote "the most incredible love song I've ever heard" for his wedding.

Kaufman is touched that Mullen would say such a thing, but he says he's not sure to which song she's referring: "I've written several romantic songs for my wife."

He thinks it might be "Like Love," a plaintive jazz piece recorded by Valley artist Khani Cole. Another of his tunes, "Love Wave," is being offered to hot boy bands 'N Sync and the Backstreet Boys.

Mullen says as Kaufman divests his property to transition back into the music scene, she hopes he stays involved in downtown issues.

"Because you need some of the institutional memory, but you also need someone with passion," she says. "And Jim has a lot of passion for downtown."

Contact Laura Laughlin at her online address: laura.laughlin@newtimes.com

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