Gordon to cities: Tax lures must end
Calls rivalries over retail 'destructive'
Ginger D. Richardson
The Arizona Republic
The issue is a high-stakes one in the Valley, where cities are estimated to have given or offered more than $300 million in incentives in recent years. Even now, Chandler and Gilbert are engaged in a bidding war for auto malls on sites about two miles away from each other.
Gordon says that money could be better spent on public safety and education.
"You all know me," Gordon said. "I am not anti-development. But how do we justify these upside-down spending sprees?
"It's destructive. It's shortsighted, and I say close the public checkbook on these projects and let the market dictate where retail development goes."
The proposal was part of a wide-ranging State of the City address that outlined Gordon's goals for the city on crime, education, economic development and neighborhoods.
But it was Gordon's challenge to other cities regarding tax incentives that got Valley-wide attention.
It was well-received by Tempe, Chandler and Mesa leaders but may prove to be a hard sell with elected officials in the West Valley, who generally rebuffed the idea.
"I would not support that," Glendale City Councilman Phil Lieberman said Tuesday.
Peoria Vice Mayor Bob Barrett said cities need the revenue that the retail developments provide.
"A subsidy for an auto mall is not done to attract jobs," Barrett said. "It's done to attract sales-tax dollars."
Others, however, said Gordon's proposal was long overdue.
"We'd rather be sharing sales-tax dollars with other cities than with the development community," Chandler Mayor Boyd Dunn said.
Economic experts said they didn't believe such a plan has been tried before on such a widespread scale and that it could be beneficial to the entire Valley.
"It would essentially force projects to go where it is economically viable, and it wouldn't be at all detrimental to the Valley," Scottsdale economist Elliott Pollack said.
But Tracy Clark, an economist with Bank One Economic Outlook Center at Arizona State University, cautioned that Gordon's proposal needs almost-unanimous support to be effective.
"If it is a good decision to be here, the companies will come regardless of whether they get a tax break," Clark said. "But whether it will work depends on which cities are participating."
Gordon said the goal is to put a "screeching halt to subsidizing and incentivizing $7-an-hour jobs."
Public dollars, he said, should be awarded only to companies that bring industry and new capital to the Valley, such as the Translational Genomics Research Institute.
Gordon expects to contact Valley mayors during the next few weeks to discuss the proposal and get their input.
He said he doesn't foresee the Valley's cities reaching one overarching agreement but rather plans to pitch a series of agreements between each Valley city and the others it borders.
Gordon said he would like to have at least some of the agreements in place by Jan. 1.
Once Valley leaders agree to the concept, he said, city managers should work out what businesses and developments could be included in the bans. Generally, Gordon said, he would be against offering tax breaks to build shopping malls, hotels, auto complexes and big-box retail centers.
But officials in Glendale, Peoria and Avondale are hesitant.
Avondale Economic Development Director Jeff Fairman said public subsidies can be beneficial to a community.
"If your entire goal is to steal from other communities, that's probably an improper use of incentives," Fairman said. "If you're using incentives to fulfill goals the City Council has set for the city, they probably have a lot of merit.
"An incentive has to make sense for both parties."
But Tempe Mayor-elect Hugh Hallman, who attended Gordon's State of the City address at the Hyatt Regency Phoenix, said Valley cities are no longer exercising restraint in their zeal to land new retail development.
"You heard the wild applause when the mayor mentioned this idea? That was me," Hallman said. "These incentives are extraordinarily destructive to the economic viability to the cities in this area.
"We need to stop looking at this on a municipal level and look at it on a regional basis rather than the way we do now, in hostile competition with each other."
©Arizona Republic 2004
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