Frequently Searched

Goldwater to Phoenix: Just Say No to Sweetheart GPLET Deals

September 21, 2020

September 21, 2020
By Jon Riches

Despite a court order declaring certain tax subsidies unconstitutional, the city of Phoenix continues to award similar deals to private developers the city favors—in plain violation of the law. Today, the Goldwater Institute sent the city a letter urging city leaders to follow the law and stop awarding sweetheart deals to selected special interests.   

The Government Property Lease Excise Tax (GPLET) is an arrangement whereby a private developer constructs a private development and then conveys the project to the city, thereby converting a private project to “government property,” which takes it off the tax rolls. The city then leases the project back to the developer to use as the developer sees fit and, after 25 years of extraordinarily favorable tax treatment, transfers the property back to the developer at no cost. 

In June, a Maricopa County Superior Court judge struck down one such arrangement between the city of Phoenix and a private developer as a violation of the Arizona Constitution’s Gift Clause. In that case, the city gave the developer, Amstar, a tax subsidy totaling as much as $27 million in exchange for a building that would generate only $5.8 million in revenue for the city. 

In a strongly worded order that questioned the “vitality of the GPLET as a useful redevelopment tool,” the court found that this disparate tax treatment amounted to an unlawful gift of public resources to private entities.   

Despite this judicial declaration, the city continues to approve GPLET tax treatment for private developments under substantially similar terms. For example, just last week, the city approved a GPLET for a 19-story residential rental project, nearly identical to the project that was declared unconstitutional. The city also plans to consider a GPLET for a 26-story high rise, which, if approved, would mean that the tallest building in downtown Phoenix would be removed from the tax rolls for many years, forcing other taxpayers to make up the tax deficiency this would cause.

The city’s actions in continuing to approve GPLETs under similar terms as a GPLET transaction that was declared unconstitutional is both lawless and reckless. And that’s why today, the Goldwater Institute has sent a letter to the city warning that it is in danger of violating the Arizona Constitution again and urging it “to disapprove any financial arrangement that provides a GPLET tax abatement or other form of favorable GPLET tax treatment under similar terms,” or face the possibility of additional taxpayer lawsuits. 

The Arizona’s Constitution forbids the city from “ever giv[ing] or loan[ing] its credit in the aid of, or mak[ing] any donation or grant, by subsidy or otherwise, to any individual, association, or corporation.” As the courts have said many times, and as the trial court ruled in the Amstar case, public resources must be utilized for public purposes, not to disproportionately enrich private, special interests.

It appears the city is unwilling to adhere to this basic legal principle. And because city leaders refuse to hold themselves accountable, aggrieved taxpayers may have to step in to do so, yet again.  

You can read the Goldwater Institute’s letter to the city of Phoenix here.

Jon Riches is the Director of National Litigation at the Goldwater Institute.

 

 

More on this issue

Donate Now

Help all Americans live freer, happier lives. Join the Goldwater Institute as we defend and strengthen freedom in all 50 states.

Donate Now

Since 1988, the Goldwater Institute has been in the liberty business — defending and promoting freedom, and achieving more than 400 victories in all 50 states. Donate today to help support our mission.

We Protect Your Rights

Our attorneys defend individual rights and protect those who cannot protect themselves.

Need Help? Submit a case.

Get Connected to Goldwater

Sign up for the latest news, event updates, and more.

Wait! Don’t close this yet!

We are grateful for your support of the Goldwater Institute’s efforts to advance and defend liberty throughout the United States. For over 36 years, we’ve been defending the rights of Americans to live their lives free from government interference.

And Goldwater is unique in that we direct our efforts to the 50 states where we introduce and advance innovative ideas that expand freedom. And we fight in courtrooms and capitals nationwide to defend individual liberty.

In 2024 alone, we scored over 50 policy and litigation victories defending liberty!

And that’s just the beginning.

Our plans for 2025 include:

  • Stopping pernicious DEI and other woke programs in America’s universities.
  • Ensuring that patients suffering from rare and terminal diseases have access to cutting-edge, lifesaving medical treatments, without having to first seek permission from the government.
  • Defending parental rights across the United States so that parents can send their kids to the school that best fits their needs, free from leftist indoctrination.
  • Eliminating government interference in the fundamental right of individuals to own property and use it as they see fit.
  • And much, much more

We seek to restore the presumption of liberty; that people are free to act without first asking permission from the government.

But we cannot do this without you. Will you join us as we fight to preserve and advance liberty throughout the country? As we seek new and innovative ways to defend freedom in all 50 states?

And there’s great news: Thanks to a generous Goldwater supporter, your donation today will be doubled!

So please, join us in fighting to advance liberty and score real wins for freedom from coast to coast!