1. Investing in Arizona
Council of Development Financing Agencies/AAED
November 18, 2014
Investing in Downtowns
Pamela K. Sutherland, JD, EDFP
Connecting the Dots
I. Variety of tools available for development
II. This session has focused on some of the underutilized tools, including
Community Facilities Districts and other special districts designated in ARS
title 48
III. Some tools are specifically designed to assist with revitalizing downtowns;
other tools can be adapted:
A. Business Improvement District (BID): ARS 48-575 requires all of the
property owners within the district to consent to the formation of the BID;
BID provides enhanced services for those properties, including enhanced
security, landscaping, promotion, parking, etc. Municipal authority
assesses costs and expenses of enhanced services and proportionately bills
the property owner (tax bill)
BIDs are very popular elsewhere: New York City has a department
dedicated to assisting areas set up BIDs (see,
http://www.nyc.gov/html/sbs/html/neighborhood_development/bids.shtml
)
BIDs bring together private property owners and business owners with the
city to collectively work to improve the maintenance, security and
promotion of their commercial district, which in turn catalyzes other
economic development in the surrounding areas.
B. Revitalization District: ARS 48-6801 et seq requires property owners of
51% of the net assessed value of the property to be included in the district
to consent; a board is selected by the municipality, and thereafter the
board may make decisions on behalf of the district including taxing and
entering into debt on behalf of the district
Relatively new in AZ. Flagstaff adopted a Revitalization District in
February, 2014: $127,000 in seed money from the City of Flagstaff and
then an assessment to be paid by property owners in the area (39 cents per
$100 assessed value). See, http://azdailysun.com/news/local/govt-and-
politics/flagstaff-city-council-approves-downtown-improvement-
district/article_fb73a0fa-8efe-11e3-8c0a-001a4bcf887a.html

2. Other states: Massachusetts (CARD – used by municipalities to channel
private and public investment into targeted areas in order to redress the
economic decline and physical deterioration that accompanies
disinvestment); Baltimore County, Maryland (Commercial Revitalization
Program --
http://www.baltimorecountymd.gov/Agencies/planning/neighborhoodresp
onse/commrevitalization/); Indianapolis
(http://www.indy.gov/egov/city/dmd/ed/new_expanding/revitalization/Pag
es/home.aspx).
C. Tax Increment Financing (TIF): Arizona is the only state to fail to adopt
legislation enabling this tool (see, CDFA’s resource,
http://www.cdfa.net/cdfa/cdfaweb.nsf/ordredirect.html?open&id=tifrc.htm
l). Three municipalities have their own TIF districts tied to sales tax
(Tucson, Apache Junction, and Casa Grande).
TIF can be attached to property tax (freeze assessed value at a certain date,
and then as the property gains value, the delta is collected by the district to
use for infrastructure and other costs of development). TIF can also be
attached to any other taxable item, such as sales tax.
From Tucson’s Rio Nuevo website (http://rionuevo.org):
In 1999 Tucson voters approved the creation of a new TIF district; the Rio
Nuevo Multipurpose Facilities District. This vote authorized the new TIF
district to receive State-shared funds derived from transaction privilege
taxes (i.e. sales tax) collected from within the District’s boundaries under
the authority of the City of Tucson. The taxpayers approved the TIF
district’s $80 million dollar project to revitalize Tucson, however, the City
of Tucson’s controlled Rio Nuevo spent $230 million dollars and
abandoned many of the voter’s projects so the legislature took control.
The Governor and state Legislature took the oversight away from the City
of Tucson, with overwhelming support on a vote of 51-4 in the House and
23-4 in the Senate, after 10 years of mismanagement, incomplete projects,
and millions of dollars by the City of Tucson.
The bill created a newly reconstituted Rio Nuevo District Board under the
State’s authority in March of 2010. The Governor, the President of the
State Senate, and the Speaker of the State House of Representatives now
appoints the members of the Board of Directors of the Rio Nuevo
Multipurpose Facilities Districts. The Board of Directors consists of up to
nine board members and five of the board of directors must reside in the
municipality in which the district is located.
D. Central Business District/GPLET: required to be in a designated
Redevelopment Area (defined in ARS 36-1479 as an area designated by

3. the governing authority as a slum or blighted area), and each city may
have one contiguous “Central Business District” within the
Redevelopment Area within which GPLETs may be offered pursuant to
ARS 42-6201 et seq.
E. New Markets Tax Credits (NMTC): Federal program of tax credits for
commercial development in distressed areas.
http://www.cdfifund.gov/what_we_do/programs_id.asp?programID=5
F. IDAs – Private Activity Bonds (ARS 35-701 et seq, 35-901 et seq):
G. Historic Tax Credits: Federal program of tax credits for the rehabilitation
of historic structures. http://www.nps.gov/tps/tax-incentives.htm
H. Funding options through HUD (CDBG programs): many options through
municipality
The lights are much brighter there
You can forget all your troubles
Forget all your cares and go
Downtown, things'll be great when you're
Downtown, no finer place for sure
Downtown, everything's waiting for you
Downtown