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Underlying the Overlays

The city OKs more controversial zoning changes meant to spur economic development


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The city continues to enact massive zoning changes that could wreak havoc on neighborhoods and property rights, while doing little to boost local fortunes.

All this is driven by the modern streetcar, a multi-million-dollar juggernaut that has small businesses in its construction zone struggling, even as fresh cash cows for the big boys are trotted out almost daily.

"Shame On You City of Tucson for Playing Favorites," says a sign in the window of downtown store Hydra, where the streets are a sea of chain link and earth movers.

In the meantime, Humberto Lopez, owner of the Hotel Arizona, closed down his decrepit lodge on April 23, in what some see as a bid to pressure the city into helping him refurbish his property on the taxpayer dime.

He may be on to something, if the City Council's latest moves are any clue. On April 17, the board unanimously approved a redevelopment area and, within it, a central business district. The new district shoots north up Stone Avenue, includes a broad swath along Miracle Mile, encompasses most of downtown and reaches south to Silverlake Road.

Under state law, cities can offer eight-year property-tax abatements in these special districts. To participate, owners must relinquish their property to the city, and then lease it back. They're also required to boost the value of those holdings by 100 percent.

But state law also allows cities to exercise eminent domain and condemnation powers in these redevelopment areas, and gives them a new incentive for doing so. (See "Lay of the Land," Currents, April 19.)

That raised concerns for Councilman Steve Kozachik, who in March threatened to remove his Ward 6 from the incentive area. Kozachik's complaints led to a beefed-up emphasis on the preservation of historic buildings, and a pledge that the city wouldn't use its condemnation powers to seize large parcels for development.

Nonetheless, the city's final statement of intent still contained a suspicious share of wiggle words. "Condemnation of property is not a primary objective of the adoption of this redevelopment area," it said, "and its use is not anticipated within the redevelopment area; and the use of eminent domain/condemnation for slum clearance is not anticipated within this redevelopment area."

One could be forgiven for thinking that "not anticipated" is a long way from "not permitted."

At the same time, City Attorney Mike Rankin routinely points to Arizona's Proposition 207 as a trusty bulwark against run-amok condemnations. Passed by voters in 2006, it shackles the ability of governments to claim eminent domain over private property in the name of economic development, if such development would mostly benefit another private interest. The proposition also boosts the ability of owners to seek fair compensation if their property is seized for a public purpose, such as expanding roadways.

But protecting property rights may be only half the battle.

Some suggest that property-tax breaks offered by these districts may not be quite the development sweetener its champions claim. Among the skeptics is Greg Furrier, a retail properties principal with Tucson's PICOR commercial real estate company. He says the district will probably do little to spur the construction of apartment complexes, for instance, because their property taxes are already low. "You'd probably have to develop a retail property to justify saving a bunch of tax money. But the reality is that the taxes on any development really aren't the main issue."

Property-tax abatements "would only save a developer roughly 15 percent," he says. "There's just not enough juice in it."

Furrier also questions whether lenders will finance development on properties deeded to the city. "What if you're Wells Fargo Bank," he asks, "and the city suddenly changes their regulations or charter to pull the rug out from under you?"

But local officials believe the district will spark interest. "It's been used in Phoenix with a number of their major downtown projects," says Albert Elias, head of the city's Urban Planning and Design Department.

However, other jurisdictions, such as Scottsdale, have abandoned tax-abatement districts altogether at the insistence of property owners, who feared their holdings would be condemned and sold to developers.

Our new central business district isn't Tucson's only development-related anxiety. Just north of downtown, residents of the West University Neighborhood are still fighting a rezoning on their fringes, next to the UA, that allows for 14 stories of student housing. The prospective builder, Campus Acquisitions, has enjoyed a cozy relationship with the city, even helping to flesh out the rezoning blueprint.

West University activists fought back by gathering nearly 12,000 referendum signatures, aimed at either squelching the rezoning or putting it to a citywide vote. They subsequently saw their petitions tossed on a technicality by the city clerk, and a Pima County Superior Court judge later upheld the city's move. The activists have since filed an appeal.

At the heart of this lies a tussle over state laws versus local ordinances. Bill Risner is an attorney for the West University activists, and he says the city made it impossible for them to overturn the rezoning, first by giving them incorrect sample petitions, and then by claiming that those petitions didn't conform to state law.

He points out that Tucson took exactly the opposite position back in 2000, when it fought attempts by Walmart to override a local ordinance restricting big-box stores. Back then, an Arizona Court of Appeals judge upheld the city's position that it could enforce its own referendum requirements, even if they were stricter than state standards.

"The key to the (judge's) decision is that West University did not comply with the form of an Arizona statute. So then the question arises: Why should they have?" he asks.

He says even the state petition language provided by the City Clerk's Office was defective. "This is a no-win game that the City Attorney's Office and the clerk had set up, where there was no way West University could comply."

Rankin, the city attorney, defends the ruling. "Our argument that we've offered in this case is very consistent with the arguments in the Walmart case," he says. "In both instances, we've argued that you needed to comply both with state law and city law in order to get petitions certified.

"In Walmart, the only thing at issue was complying with city requirements in addition to state requirements. In the current case, they didn't even comply with the state law requirements."

Stay tuned.


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