Title
Discussion of the Government Property Lease Excise Tax Policy
Description
This report provides the Economic Development and Equity Subcommittee with information regarding the proposed Government Property Lease Excise Tax (GPLET) program.
THIS ITEM IS FOR INFORMATION AND DISCUSSION.
Report
Summary
Created as an economic development tool by the Arizona State Legislature in 1996 via ARS Title 42, Chapter 6, Article 5, as a successor to the state's possessory interest tax program, GPLET provides for an excise tax option, in lieu of property tax, based on the use and square footage of a building rather than its value. Depending on the type and location of a development, the current GPLET excise tax rates can be reduced or abated for a specific period of time, which can help to close a funding gap that would otherwise make a development project unfinanceable.
The GPLET program has had a significant development and economic impact on Downtown Phoenix. Approximately 17,800 new jobs with an approximately $995.5 million in payroll have been created as a result of utilizing the GPLET program. In addition, $3.03 billion in construction capital investment with construction sales tax revenue to Phoenix of $35.3 million, and an increased annual tax impact of $17 million. Other taxing jurisdictions have received economic returns as well, with Maricopa County and local School Districts realizing a $99.2 million total tax impact, and the State of Arizona seeing a $250.3 million impact. At the City Council's direction, GPLET has created other public benefits such as the inclusion of workforce housing units in residential projects, contributions to the Phoenix Affordable Housing Trust Fund, new public infrastructure, solving for a food desert, public open space, public parking, and the incorporation of public art.
At the June 22, 2021 City Council Policy meeting, the City Council directed staff to explore public benefit options and bring a proposed policy to a future City Council meeting. Staff will present the proposed policy to engage the subcommittee in a discussion about the future use of GPLET in the City of Phoenix.
Concurrence/Previous Council Action
City Council provided direction for staff to develop a GPLET policy at the June 22, 2021 City Council Policy meeting.
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Community and Economic Development Department.