Tempe Mayor Hugh Hallman wants to join forces with Scottsdale in banning tax subsidies to developers along the cities’ shared border.
His plan, modeled on Tempe’s recent agreement with Chandler and Phoenix, would avert a future subsidy war by blocking the cities from paying developer incentives within certain boundaries.
Hallman said he envisions the zone including all of Tempe north of Loop 202, up to Indian School Road in Scottsdale. The area within the zone has received more attention from the cities as they work to revitalize some of their oldest neighborhoods.
Hallman said he fears businesses will attempt to take advantage of those improvements, promising to move to the highest-bidding city — a practice that often costs taxpayers tens of millions of dollars in subsidies.
The goal would be to avoid the "blackmail" that benefits a few private bus- iness people, Hallman said.
The proposal is in its infancy, brought forward only in discussions, he said. It has not been submitted to Tempe’s council and the majority of Scottsdale officials interviewed for this article had heard nothing of it.
Scottsdale and Tempe have major redevelopment projects near the ends of Hallman’s proposed zone.
At the southeast corner of Scottsdale and McDowell roads, construction is scheduled to begin by year’s end on the ASU Scottsdale Center for New Technology and Innovation. The research facility — a partnership between the city and the Arizona State University Foundation, an independent fundraising organization — is expected to draw new businesses and residents to the area.
"We’re going to see a lot of change on our side of the line," said Scottsdale Councilwoman Betty Drake.
To the south, Tempe Town Lake continues to be developed into a strip of retail, restaurants and residences.
Property owners in the area may be encouraged by the up-and-coming projects to repair dilapidated buildings and draw new investment for some redevelopment, officials from both cities said.
Tempe Councilwoman Barb Carter said any such agreement with Scottsdale would need to be far different than the one with Phoenix and Scottsdale.
Chandler and Phoenix still have pockets of empty land near their Tempe borders. There are no such pockets where Scottsdale and Tempe meet, Carter said.
The retailers that typically start subsidy wars — auto dealers and "big-box" stores — would likely have to undertake a redevelopment project, she said.
However, Scottsdale does not have any plans for such projects in the city’s southern half, said David Roderique, the city’s economic development general manager.
"There’s nothing that we’re doing that would require us to really think about some kind of a subsidyfree zone or something like that," he said.
Since August, Scottsdale officials have met with their Phoenix counterparts to discuss creating a revenuesharing zone, within which the cities would split sales tax cash, for the empty desert on their northern borders. Roderique said little real progress has been made, citing "philosophical differences."
Roderique said Scottsdale will require that any antisubsidy pact be long-term and include few loopholes.
The deal between Tempe, Phoenix and Chandler allows incentives to improve public infrastructure, environmental cleanup, landscaping, facade improvements and historic preservation. It lasts three years.
"While it is a ‘no-incentive zone’ there were so many exceptions to that rule that, quite frankly, we could have done any incentive we’ve done in our history," Roderique said.
The incentive-free zone was forged as the state Legislature considered a bill to create crippling penalties for cities that pay out subsidies. Carter said the deal was meant to show cities could restrain themselves from using subsidies.
Scottsdale’s focus, Mayor Mary Manross and Roderique said, is working with Tempe on the cities’ respective revitalization projects.
An antisubsidy deal with Phoenix remains the priority, they said.
During Tempe’s negotiations with Chandler and Phoenix, Carter said she told the gathered officials their pact would do little to show state lawmakers should leave subsidies alone. But a deal between Scottsdale and Phoenix would show a lot.
"Then you’ve got something," Carter said. "The rest of this, maybe, is window dressing."