On Monday, July 24, Superior Court Judge Daniel Kiley ruled in favor of the state.
The case stemmed from efforts to create a Roosevelt business improvement district (or BID) that would tax property owners in the Roosevelt Row neighborhood to pay for services above and beyond those provided by the city.
The judge determined that a state law, which changed how such districts are created, applied to the Roosevelt BID.
Forming a business improvement district requires approval by more than half the area's taxable property owners. Before this law went into effect, property owners who didn't object to the BID in writing were counted as supporters.
Now, district organizers have to collect signature from more than half the taxable property owners on a petition to form a BID, and the signatures have to represent more than half the area's assessed property value.
Besides changing protocol, the ruling negates a business improvement district the Phoenix City Council approved in January 2016 for the Roosevelt district, which comprises a part of downtown Phoenix roughly bounded by Seventh Street and Seventh Avenue, between Fillmore and Moreland streets.
That meant property owners in the district would be taxed to pay for extra services, such as increased security or beautification.
But a state law passed in March 2016 changed the way such districts can be created. And it made the law retroactive to districts not created before January 1 that year, which meant Roosevelt BID organizers would need to start over again, under the new procedures.
Arizona House of Representatives member Warren Petersen, a Republican from Gilbert known for his anti-tax stance, sponsored the bill shortly after the city approved the Roosevelt BID. So district supporters, including the city, suspected it was designed specifically to nix the Roosevelt BID.
So the city sued the state in September 2016, in hopes that the judge would allow the Roosevelt BID to stand.
The city's lawsuit alleged that the state law passed in March constituted "special legislation" created to harm a specific entity: the Roosevelt BID. Special legislation is prohibited under the Arizona constitution. It also argued that the retroactivity provision should not apply to the Roosevelt BID.
But the judge disagreed.
The court's ruling, issued on Monday, July 24, includes two key findings.
First, that the retroactivity clause applies to the Roosevelt BID. And second, that the legislation does not constitute "special legislation."
Monday's ruling is the latest development surrounding the Roosevelt Row arts district.
The area is home to Local First Arizona, Beth Hebrew Synagogue, and Phoenix Public Market, in addition to several galleries and other art spaces. It’s undergone significant change in recent years, largely due to new multilevel apartment buildings.
Efforts to create the BID were more than two years in the making.
In 2014, community members in Roosevelt Row, and the Evans Churchill neighborhood it overlaps, started working to create the district. They hired Horman & Associates, an urban revitalization firm specializing in BID formation, and launched extensive community outreach efforts through a series of meetings and mailings.
Several proponents who spoke at a January 2016 City Council meeting said Roosevelt Row has been transformed from blighted to vibrant thanks to thousands of volunteer hours over the course of a decade. Supporters also noted that ongoing improvements to the area wouldn't be sustainable without a BID to manage and fund them.
Not everyone agreed.
Some opposed the Roosevelt BID because it raises taxes on most area property owners, other than people owning single-family homes or small residential rental properties. Others cited procedural concerns, including the fact that property owners who didn’t file formal protests against the Roosevelt BID were counted among the 51 percent needed for approval.
In the end, BID proponents won the city's approval. But now that's all for naught.
It's possible that the city will appeal the July 24 ruling. New Times will provide updates as warranted.