Tax Deal Offered To Bring Micro Apartments To Downtown Phoenix
They’re called ‘micro-units.’ They're small — about 400 square feet — with higher rents than many people would expect. Phoenix city leaders will be asked to not only approve a plan to bring "micro-units" downtown, but to also offer the developer a multi-million dollar tax deal.
The formal term is a “Government Property Lease Excise Tax” transaction. It’s often referred to by its acronym, GIPLET. A GIPLET lets a developer transfer land ownership to a city. The city then leases the land back to the developer at a reduced rate. A GIPLET property also pays lower property taxes.
In this case, Phoenix Economic Development Director Christine Mackay said the difference in property tax is approximatley $8 million.
Mackay laid out the 25-year deal before a city subcommittee earlier this month. The project, called Derby Roosevelt Row, would transform a lot on the northwest corner of McKinley and 2nd streets, which has been vacant since 1979, into a high-end high rise.
The project calls for 4,500 square feet of retail space on the ground floor along with two amenity floors featuring a lounge, fitness center and outdoor pool. While the fully-furnished units would have high end touches, their size requires the living room to become the bedroom at night. The developer expects the units to appeal to people who work downtown and spend most of their time enjoying the project's amenities and restaurants and cultural activities in the area, rather than inside their abodes.
“These are for people who have money," said Stephen Earl, who represents the developer AMSTAR. "These are not inexpensive rents. They’re over $1,000 to $1,200 per month and the unit size is fairly small in relationship.”
That had some residents at the meeting questioning the deal.
"This is the hottest area in town," one man said. "Every developer in town is looking to do something downtown. There is no need for this GIPLET."
But Mackay said without the GIPLET, rents would be too high.
“It’s very costly to build what they’re planning to buld on this site," she said. "The cost of elevator service, cost of steel, construction of a parking garage on 14,000 square feet, it’s an engineering marvel.”
The full council is scheduled to vote on the deal on Wednesday.