Marketing to Corporate Transplants Focuses on Gleaming Buildings & Making Money
From suites in gleaming buildings to cheap apartments, economic development websites offer hundreds of properties for sale or lease.
A few weeks ago, I tumbled down the economic development rabbit hole in a futile attempt to determine how much money the residents of Southern Arizona have paid and continue to pay in business tax incentives and what our return on investment is.
After two days of digging around on government websites, I wasn’t able to follow the money1. I did learn a lot about Tucson and Southern Arizona economic development marketing strategies including offering multiple types of tax incentives to businesses and targeted marketing efforts focused on people and businesses who are looking to buy property and/or relocate. This article on marketing to businesses is the third in this Substack series on local economic development.
Sun Corridor: Tax Breaks & Property in Southern Arizona
Sun Corridor is a regional economic development group, while Connect Tucson is the most recent name for economic development efforts for the City of Tucson.
In Local Marketing Efforts to Transplants Focuses on Lifestyle & Living on Less, I described Sun Corridor’s “Thrive on Less in Tucson” marketing campaign and the cost calculator that allows potential transplants to compare the cost of living in Tucson to more than 100 other cities, using federal data. Sun Corridor slide shows and video clips show young people — college age through early 40s — having a great time in a hip town with football, nightlife and natural beauty. The underlying message is: “Tucson’s a cool place, and it’s a lot cheaper than LA or Seattle!”
In contrast, Sun Corridor’s marketing to businesses is more like an Oprah Winfrey car give away: “You get a tax break, and you get a tax break, and you get free land … and a tax break!”
On Sun Corridor’s website, the Site Search under the “Do Business” tab takes you to a collection approximately 50 stylish, gleaming buildings and complexes for your new corporate headquarters in Southern Arizona.
Many are at the original University of Arizona Tech Park, near Rita Ranch, or at the UA Tech Park at The Bridges, south of 22nd St. and Kino Parkway. The Refinery at the Bridges (top photo) is one of them. The online mapping tool shows that both Tech Parks are in the City of Tucson’s Global Economic Development District but not in the large southside Opportunity Zone.
The “Do Business” tab also lists other scattered buildings and offices, including an entire floor of this office building in Midtown, which is not in any special taxing district, although it is just a few blocks south of the Midtown Opportunity Zone. (This is why tax giveaway game is labeled “picking winners and losers” by both Republians and Democrats.)
When you look at Sun Corridor’s Pima County Land link, you’ll find county land on which you can build something and most likely get a property tax break because you don’t own the land. Some of the advertised Pima County-owned land is in a federal Opportunity Zone. For example, both the Southeast Employment and Logistics Center and the Kino Sports and Entertainment Complex are in Opportunity Zones.
I didn’t even know some of these entities — like the Southeast Employment and Logistics Center — even existed, much less know anything about promotion of these areas with tax incentives.
Connect Tucson: Tax Breaks & Property in Tucson
On the Connect Tucson website, “Site Selection” brings up completely different types of business opportunities when compared to the Sun Corridor’s regional marketing to businesses.
If you click on the “Why Tucson?” tab and then the “Key Data” tab, the “Site Selection Tool” takes you to many, many pages of commercial real estate for sale or lease in Pima County. The “Key Data” tab also takes you to the extremely handy online mapping tool I wrote about in my first article in this series.
I sifted through four or five pages of real estate listings for sale or lease, which was approximately 50 of the 300+ listings on the website. By far, most of the listings were for commercial space — anything from a suite in a medical practice building to restaurants, strip malls, warehouses and apartment buildings ... many locations you will recognize.
The apartment buildings for sale piqued my interest since Tucson has a tight rental market and, in my opinion, high prices.
What I found shocking on the Connect Tucson website were apartment building sales promotions that advertised buying a particular rental properties and raising rent! One site promoted raising the rent on the property’s unsuspecting tenants by 25-75% after the new owner purchased it.
This marketing message is: “Buy some property in Tucson and raise the rent! You don’t even have to make improvements!” Tucson needs more affordable housing, not less affordable housing.
Here are four apartment buildings that were for sale in mid-August 2023 in different parts of town.
Midtown
The Sevilla Apartments are very basic two-story apartment buildings in the Palo Verde Neighborhood, just a few blocks south of the Midtown Opportunity Zone but not in any special taxing district. The detail sheet suggests raising the current $850 per month rent for the two-bedroom apartments to the $1195-1250 per unit, a 40.5%-47% rent increase with no upgrades. With upgrades, the seller suggests the Sevilla Apartments could get $1400-1500 per month per unit, a 65%-76% rent increase. Where will these people live if the rent increases by 75%?
University Area
The 7th Ave Apartments are a collection of adorable little dwellings you have walked past if you go to 4th Ave. They are in the Pie Allen Historic Neighborhood but just outside of the Central Business District and an Opportunity Zone. The detail sheet shows rents ranging from $600 per month for a studio to $1200 for a four bedroom. The suggested rental increases are $750 per month for studio (25% increase) to $1600 per month for the largest unit (33% increase). These rent increases are projected to increase the monthly gross by 34% with no improvements to the property.
Southside
The Mission Apartments are a modest set of low-slung 1960s era apartments that up until recently would have been described as being located on the edge of the San Xavier Indian Reservation. Now thanks to the Trump Tax Cut and Jobs Act, the poor people who live in the Missions Apartments are strategically located (no joke) on the edge of an Opportunity Zone, near the corner of South Nogales Highway and Aerospace Parkway, and not far from the airport, Raytheon, World View, the Home Goods warehouse and the developments. The detail sheet lists the current rent as $641 per month and suggests one could get $840 per month, a 31% increase. Judging by the location, these are not going to be apartments long.
Pima College Area
The Elm Street Villas is a small apartment building on Elm, west of Stone, not far from Oracle Road. It is located in the City of Tucson’s Central Business District, in an Opportunity Zone and on the edge of the Global Economic Development District, according to the online mapping tool. The Offering Memorandum suggests raising the rent from $1625 to $1725 for a four bedroom apartment. 7.5% increase in rent.
Not all of the apartment buildings on the Connect Tucson website suggested raising the rent. Many listings give fewer financial details, and prospective buyers have to contact them to learn more. The Sherwood Terrace detail sheet gives the current high ($960) and low rent ($700) in the 20-unit building with studio, one-bedroom and two-bedroom apartments, but this listing doesn’t give rent increase prompts and prices. The North Park Place Apartments on Alvernon Way have a more basic detail sheet with no per unit rental costs. Northpoint Apartments on Alvernon Way has great photos, but you have to unlock the financial details.
Where Does This Leave Us?
In August 2019, I was walking down High Street in Columbus taking pictures of the gleaming buildings — most likely built with tax breaks — in an area south of the Ohio State campus that was pretty marginal when I lived there, when I received a phone call from a constituent back in Tucson.
“Did you ever get ‘the spreadsheets’?” were the first words out of his mouth. No hello, but I knew from caller ID who it was.
“No.”
“Do you think they exist?”
“I’m not sure at this point …”
He had come to the same conclusion.
I’m hoping someone has ‘the spreadsheets.’ At this point, with six special taxing districts in Southern Arizona and a lot of overlapping geography and deals, figuring out the cost of business incentives to the taxpayers and the return on investment could be difficult and time consuming, but taxpayers have a right to know.
About the author
Pamela Powers (formerly Rep. Pamela Powers Hannley) served in the Arizona House of Representatives (2017-2023). She was ranking Democrat on the House Health and Human Resources (2017-18 and 2022), Regulatory Affairs (2019-20), and Commerce Committees (2021) and a member of Banking and Insurance (2017-18) and Ways and Means (2019-22) Committees. She holds a BA in Journalism from Ohio State University and a Masters in Public Health from the University of Arizona.
Don’t worry. I have not given up my years-long quest to get to find the spreadsheets and learn how much money local governmental bodies — particularly the City of Tucson, Pima County and Rio Nuevo — are giving away in business tax breaks, tax shifts and special taxing districts and what the taxpayer’s actual return on investment is. All of this information is supposed to be transparent and available to the public but isn’t. That’s a problem.