The City of Tempe will no longer be able to use a 2010 resolution the mayor and council adopted to offer favorable tax incentives to private developers, Arizona Capitol Timesreports.
According to a five-page settlement agreement signed Tuesday by the city and the Attorney General’s Office, the city agreed to not use a resolution approved on May 20, 2010, as the basis for offering lower tax rates under Government Property Lease Excise Taxes (GPLET), rates that the Legislature eliminated in 2010.
The agreement resolves a special action the AG’s Office filed with the Arizona Supreme Court on May 24 that asked the court to determine whether property tax incentives in lease agreements the city signed with several developers violated state law.
The 2010 resolution, which the city adopted prior to the new law taking effect, allowed the mayor and council to offer the lower GPLET rates to “any” future developments in the city executed under the resolution.
GPLETs are incentives that allow municipal governments to lease publicly-owned properties to developers at a lower tax rate. The rates were updated in 2010, but under state law, projects can be grandfathered in under the old, lower GPLET rates if the development agreement or ordinance was adopted by June 1, 2010, when the old rates were eliminated.
Capitol Timesreported the AG’s office argued in the special action that in order to qualify for the old GPLET rates, a development agreement, ordinance or resolution must have been signed before the deadline and must be lease- or property-specific. The resolution the city adopted was not lease- or property-specific.
The settlement agreement means the city will have to renegotiate its lease agreement with the developers of the Bank of the West branch in Tempe. In addition to the Bank of the West lease, Tempe will also have to sign new leases with the developer of a mixed-use development featuring 286 apartments and a Whole Foods Market and another with Northern Trust, which were both offered lower GPLET rates under the old rates.
