Phoenix City Council OKs project that will bring tallest building in Arizona to downtown

A plan to develop Arizona’s tallest tower cleared its final hurdle Wednesday, as the Phoenix City Council approved a development agreement and tax incentive for the downtown Phoenix project.The development, called Astra, is planned by Aspirant Development, part of Scottsdale-based Empire Group, at Second Avenue and Van Buren Street. It will include a luxury hotel, office space, apartments and ground-floor restaurant and retail space.The council voted 8 to 1 in favor of the agreement, with Councilman Jim Waring voting against the proposal in opposition to an included tax incentive.In total, the project will bring about 2 million square feet of buildings to the 2-acre site, Nick Wood, the zoning attorney for the project, said. The highest tower is planned to reach 541 feet, making it the tallest building in the state. The former Chase Tower at First and Van Buren streets is the tallest building in Arizona, climbing to 483 feet.The apartments are planned to include both traditional units and co-living units, where residents rent a bedroom and bathroom and share a common space with roommates who are on separate leases.Astra’s two phases will include:697 apartment units, 300 of which will be co-living and 387 of which will be market-rate apartments that rent traditionally.229 luxury hotel rooms.185,000 square feet of office space.36,000 square feet of commercial space, like retail and restaurants.A pedestrian paseo through the site that will connect Taylor Mall, which currently does not connect through the site.The buildings feature a rooftop amenity deck on the tallest tower for residents, offering views from the highest building in the city, and multiple amenity decks for residents of the apartments and hotel guests, Wood said. The hotel will be a luxury hotel, but there is no brand associated with it yet.The site where Astra will go up is a surface parking lot, mostly used by the adjacent YMCA. The new plan calls for underground parking with 1,156 parking spaces, some of which will be dedicated to YMCA users.Tax incentive for project granted by City CouncilAs part of the approval, the City Council granted an incentive, called a government property lease excise tax, or GPLET. The arrangement allows a developer to deed the land back to the city to forgo paying property tax on the site for a standard period, generally eight years.Wood said Astra represented the first GPLET granted by the city since it revamped its rules around the incentive, which created a standard formula for what a developer must do to receive it.The city adopted a community benefit formula to standardize the GPLET, and now requires a developer to either commit 20% of the residential units in the development to workforce housing, or contribute 200% of the city’s portion of the forgone property tax to the city’s affordable housing trust fund. In Astra’s case, the contribution is $5.5 million. At Wednesday’s meeting, city officials said the contribution would mark the largest single contribution so far to the fund.“The mayor and council wisely said we need to create some predictability around the GPLET process,” Wood said.Phoenix is also limiting the types of projects that it will consider for the incentive, especially as apartment development has grown in downtown Phoenix. In prior years the city had granted the incentive to apartment towers to encourage more housing downtown, but those developments no longer need the incentive for the deal to make financial sense.“Downtown rents are high enough now where you don’t need the GPLET for residential towers,” Wood said.Wood said the size, scope and components of Astra qualify the project for the GPLET, as well as the inclusion of the co-living units, which offer a cheaper alternative to renting a traditional apartment.There are various developments that could qualify for GPLET, Xandon Keating, deputy director of community and economic development for the city, said. Those could include affordable housing, historic preservation, and economic development pieces like office and major destination retail.However, including one or more of those components does not guarantee a GPLET would be granted, he said.“Ultimately each proposal is considered on its merits specifically,” Keating said.Despite the changes in the rules, GPLETs are still controversial. The libertarian Goldwater Institute think tank, which has taken legal action against the city’s GPLETs before, sent a letter to the city opposing the incentive for Astra.“Based on our understanding of the facts, 200% of the city’s foregone tax revenue does not even remotely approach the value of the subsidy to the developer,” Jon Riches, vice president of litigation for the Goldwater Institute said in a written statement. “The city also fails to mention the multiple other taxing jurisdictions that will not receive tax revenue because Phoenix has decided to give a gift to one private, special interest.”Riches also took issue with the mandatory contribution to the affordable housing fund.“Finally, the city is prohibited by law from imposing conditions on private parties that require them to set aside housing for specific groups of people,” he wrote. “The ‘contribution’ to the city’s housing fund is extortionary and appears to be an attempt to evade the requirements of state law. It is hard to understand why it is so difficult for Phoenix to simply abide by the law.”  During the period of the GPLET, the developer also must pay the area’s school districts a payment equal to what the tax was on the undeveloped property, so the districts do not lose out because of the abated property tax.Mixed reception from neighborsSeven members of the public spoke about the project at the meeting, with some opposing the tax incentive but others praising the added height, density and housing downtown.Phoenix community advocate Stacey Champion spoke at the meeting opposing the GPLET. She said if the city council had previously used the tool for only affordable housing development, the city might have avoided the affordable housing shortage it has. Other neighbors also said they would prefer more large-scale retail included in the project, so residents of Astra and the surrounding developments could shop and eat closer to home.Other members of the public, including representatives from a union that represents hotel, airport, restaurants and other tourism areas, said the density and co-living options planned at the development were a benefit to the community, and that the developer has worked closely with neighbors to address concerns.According to documents submitted to the city, the Astra developer aims to begin construction in the summer of 2024, with completion expected in 2027.Reach the reporter at Follow her on Twitter @CorinaVanek.

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