Subsidy 'gift' squanders taxpayer money

Posted on January 09, 2008 | Type: In the News
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In the next few weeks, expect to hear a lot of boo-hoos coming out of City Hall as Phoenix leaders take a chainsaw to their budget. Apparently, slashing and hacking will be involved, which means libraries, parks.

You know, the stuff people care about.

Me? I'd start with the lawyers. Specifically, I'd start with the $450-an-hour guys the city has hired to protect its $100 million handout to a Chicago-based developer.

This, so the company will build a shopping center at the economically depressed corner of 56th Street and Loop 101.

You know the story. How Phoenix Mayor Phil Gordon for years railed on about cities that throw huge tax subsidies at developers to get them to build shopping malls that they would build anyway. "It's destructive," he said in his first State of the City speech in 2004. "It's shortsighted, and I say, 'Close the public checkbook on these projects and let the market dictate where the retail development goes.' "

Three years later, he pushed through the largest known retail subsidy in state history.

Under the deal, Phoenix will give half of the city's sales taxes collected at CityNorth for 11 years - up to $97.4 million - to the Thomas J. Klutznick Co.

Sen. Ken Cheuvront, a handful of small-business owners and the Goldwater Institute sued the city in August, pointing out that among other things, the giveaway violates the state Constitution's ban on politicians giving our money away.

Now it's up to the city to prove that giving this developer $100 million isn't a gift from the taxpayers at all. Apparently, the legion of city-employed attorneys aren't up to the task so they've brought in the $450-an-hour big boys at Fennemore Craig, who explain in court papers that this is not a gift. It's a way to combat "urban sprawl."

Not a gift but a way to bring millions more into the public treasury that absent CityNorth wouldn't be there. (Because, of course, nothing else would be built along the freeway in the wealthiest part of town if there were no $100 million subsidy.)

Not a gift but a purchase of . . . parking garages!

According to the $450-an-hour guys, the $100 million handout "would grant the city the right to use and make available for use by the general public 3,180 parking spaces within the garages," including 200 for people who ride buses or carpool.

Or put another way, 2,980 spaces that the developer would have to provide anyway if he wants any customers or tenants, and 200 spaces for commuters. That is, 200 spaces at a cost of $487,000 per space.

Wouldn't it be cheaper to just chopper them in to work?

Then again, I'm sure those $450-an-hour minds will come up with a sleek way to explain it all to Judge Robert Miles on Feb. 4.

I called City Attorney Gary Verburg to ask why one of the 100 attorneys already collecting a city paycheck couldn't handle the case, but he never got to back to me.

Pity. If he had, I would have asked him how much he's spent to date defending his bosses' giveaway. The city racked up $100,929 in legal fees on this case from Aug. 14 through Oct. 31, according to bills from Fennemore Craig.

That's $9,175 a week. Assuming that rate of lawyering continues, the tab thus far is $192,682. And they haven't even had a hearing yet.

Meanwhile, I'm expecting notice any day now that libraries will be closing at noon and hey, you'll have to pay a fee to use those public parks that were built with your money.

Times, after all, are tight.

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