Maps Show Southern Arizona Business Incentive Districts But Not the Money
Internet sleuths can find maps of tax incentive districts, but where are the spreadsheets showing who got the tax breaks and what taxpayers got out of the deals?
Stopping corporate tax giveaways and other wasteful state spending were cornerstones of my service1 in the Arizona House. As long as education, access to care, and programs to combat drug addiction, food insecurity and housing insecurity remained chronically underfunded in Arizona, I saw no need to fund ever-increasing corporate tax giveaways. During my six years, I fought for transparency and was the only Legislator who voted against every tax giveaway.
Many Democratic Legislators took the Red for Ed Pledge in 2018 and vowed “no new tax breaks until education is fully funded,” but that promise became more distant as new Legislators were elected.
In local government, the Red for Ed Pledge had little clout since the Legislature — not the City Council or the Board of Supervisors — controls the education budget.
What is controlled locally are property taxes and sales/excise taxes. How much is collected in property tax does have an impact on school funding. When everyone doesn’t pay their fair share in property taxes, the rest of us pick up the tab.
Recently, I have spent two days going down multiple governmental rabbit holes trying to track the money being spent in Southern Arizona on corporate tax incentives, particularly on the Government Property Lease Excise Tax (GPLET) which excuses corporations from paying property taxes. With the GPLET, local governments allow designated businesses to pay excise tax rather than property tax on their real estate projects while they are building them and for years afterward. I found enough information for three articles on this topic, but I never found the money. That’s a transparency problem.
Maps Show Multiple Levels of Tax Giveaways in Tucson
Many of you may remember me asking: “Where are the spreadsheets?!” in multiple speeches when I was a Legislator. In Southern Arizona, there multiple levels of business tax breaks and six specialized taxing districts connected to different levels of government. As a Legislator, I asked many people — from the Arizona Tax Research Association (ATRA) to Democratic policy staff to the City Council members — for the data on who gets tax breaks, how much they get, what they built, what the overlap in tax giveaways is and what the taxpayers got out of the deals. I was looking for hard numbers, not fluffy prose and rosy projections based on fuzzy math.
ATRA said mine was an interesting question, but they weren’t “sure it was in [their] wheelhouse.” (Apparently, they’re tax hawks but not tax break hawks.) The policy staff provided a list of statewide list of GPLETs by Legislative District and other information available online. The GPLET information was thin back in early March 2020, when I gave a community speech about GPLETS and gentrification. Unfortunately, the information is even less transparent now.
My long-time theory was that clever business owners were scoring multiple tax breaks for building the same property. The map above shows how concentrated the incentive districts are in Southern Arizona. Except for a few federal Opportunity Zones (lilac), all of the tax giveaway deals are concentrated along the freeway and on the west and south sides in Congressman Raul Grijalva’s district. There is so much overlap in the incentive districts that, of course, businesses are getting multiple deals for the same property. That’s the name of the game.
I did a lot of digging …
The Arizona Commerce Authority (ACA) website has loads of spreadsheets and dozens of annual reports for different incentives but little or no explanation or analysis of the data. One would need a team of grad students to comb through all of those files to make any sense of them in terms of finding long-term trends and following the money. Arizona has been doing the same economic development tactics for 10-20 years. How about some effectiveness data?
Arizona taxpayers are giving away BILLIONS of dollars in tax breaks. Republican Legislators push for additional tax breaks each year. How about some effectiveness data?
Some local incentive deals — like World View — got money from the Commerce Authority and from local government, but not all incentive deals go through the ACA. The ACA website is an example of DRIP information — Data Rich Information Poor.
Rio Nuevo (RN) is another site that has some financial information on their projects, including their 2023 response to the Auditor General’s report here. To explain their projects, RN relies on the slide show format where one sees a pretty picture of what is to be built, a short list of particulars including a dollar amount, and a high-level description. Rio Nuevo does list projects that received GPLETs, in addition to RN funding. Some project profiles, like Bautista, clearly state that the project is getting three levels of tax breaks. It is in a federal Opportunity Zone and is getting a GPLET from the city and funds from Rio Nuevo, which is part of state government. It’s housing on the near west side but not affordable housing.
The ACA and RN sites are more transparent than other governmental websites because both are under tight scrutiny by the Auditor General. Tax giveaways are a bipartisan issue in the Arizona Legislature. I was there when we put both the ACA and Rio Nuevo on a short leash and made the GPLETs less generous. I voted for these measures.
The City of Tucson, Pima County, Connect Tucson and Sun Corridor websites have lots of information on how to get tax breaks in Southern Arizona but nothing concrete about the millions of dollars being spent, how this benefits taxpayers who are paying the bills and no list of tax giveaway recipients.
The City of Tucson publicizes four business tax incentives on the Connect Tucson website: Primary Jobs Incentive, Government Property Lease Excise Tax (GPLET), Site-Specific Sales Tax Incentive and Global Development District. Connect Tucson and Sun Corridor are local and regional economic development groups. There are many of layers of information on these websites but no financial data on tax giveaways and their effectiveness.
Where’s the Data? Does Anyone Do Annual Reports Anymore?
The Department of Revenue website has a GPLET section that includes a GPLET information database by county and city. Unfortunately for Southern Arizona, the links to Tucson and Pima County go nowhere. Phoenix has an extensive GPLET report including several lists and links to related services and information. Flagstaff’s GPLET list is very concise and readable, and it is more detailed than the simple list of names on RN’s GPLET list. Prescott has a collection of financial report links with GPLETs at the bottom. Although RN, Phoenix, Flagstaff, and Prescott provide more GPLET info than Tucson, nobody addresses finance and return on investment. (Pima County does have a 500-page 2023-24 Recommended Budget and annual and comprehensive reports online for insomniacs.)
After two days spent scouring multiple websites, I learned a lot about economic development in Southern Arizona. In terms of financial data on tax giveaways, that information is not on public city, county or state websites. Locating any concrete, comparable financial data on tax giveaways in Arizona is nearly impossible. The data are either missing completely from public websites or massive amounts of data have been dumped online with no explanation.
When I was a freelance writer, annual reports were my niche. I wrote about big wigs and breakthroughs, created financial graphics and explained the numbers, including one, five and 10 year trend data. Auditors crunched the numbers, and I translated their work into stories and pictures that shareholders, donors, employees and the public could understand. These websites have marketing fluff, but they don’t have lay explanations or financial data on tax incentives — let alone any long-term analyses of investments.
Although I didn’t find the money, I did find an online tool that allowed me to map many variables, including the special taxing districts. There definitely are sweet spots where developers can cash in on multiple levels of tax breaks for the same property. Many thanks to the City of Tucson for the Map Tucson Link on the Connect Tucson.
There’s No Public Tax Incentive Data for Southern Arizona Online, But We Have Maps of Incentivized Districts
Opportunity Zones (Federal)
Opportunity Zones were created by the Trump Administration’s Tax Cuts and Jobs Act which was passed on a party line vote just before Christmas in 2017. The TCJA resulted in the biggest changes to US tax code in recent history. The New York Times called Opportunity Zones a “once in a lifetime boon for elite investors.”
Community Development Block Grant (Federal)
This ongoing grant is funded by the US Department of Housing and Urban Development and administered by Pima County. Since 1978, the feds have returned $55 million in our tax dollars to Pima County to “revitalize lower income neighborhoods through housing rehabilitation, public facilities, infrastructure improvements and the provision of public services.” What did they do with the $55 million? There should be a report somewhere.
Central Business District (City)
Downtown Business District (City)
Rio Nuevo (State)
Global Economic Development District
Rep. Pamela Powers Hannley (me) served as ranking Democrat on the House Health and Human Resources (2017-18 and 2022), Regulatory Affairs (2019-20), and Commerce Committees (2021) and as a member of Banking and Insurance (2017-18) and Ways and Means (2019-22).
Pam, what a comprehensive review. Hope you continue to be checking up on the $$$ flow...Rick