Phoenix Council Members Plan To Terminate CityNorth's $100 Million Tax Rebate Deal

Vice Mayor Thelda Williams and Phoenix City Councilmen Bryan Jeffries and Michael Nowakowski  plan to undo a deal that gave a nearly $100 million tax break to Chicago-based developer Thomas J. Klutznick.

The trio are having a press conference at 2 p.m. outside of City Hall.

Jeffries, recently appointed to the City Council to fill a vacancy left by now mayoral candidate Peggy Neely, says the agreement is "contrary to sound public policy and places a significant burden on taxpayers as well as city services."

"I feel that it is imperative to take decisive action to terminate this agreement," he says in a press release.

All three council members are running in the August 30 election to keep their seats.

The agreement involved the Phoenix City Council, include mayoral candidates Neely and Councilman Claude Mattox, approving a performance-based tax deal with the developers that would put nearly $100 million worth of sales taxes back in their pockets.

In exchange for that 2006 deal, the city would get spaces in a CityNorth parking structure.
The arrangement between the City Council and the Klutznicks was challenged by the Goldwater Institute, a local conservative think-tank. Ultimately, both the state Court of Appeals and the Arizona Supreme Court ruled that such subsidies violated the state's gift clause. But their decision was not retroactive, meaning that the CityNorth deal could move forward.

It is unclear how Phoenix officials plan to break their contractual agreement with the CityNorth developers. Sources tell New Times that the deal will be dissolved on the basis that the Klutznicks have not lived up to all the terms of the contract.

See our story on Neely's ethically challenged dealings with the Klutznick firm here.

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Monica Alonzo
Contact: Monica Alonzo