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Joyce Clark Unfiltered

For "the rest of the story"

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

On November 21, 2023, at city council workshop, the long-awaited revised Economic Impact Study for VAI Resort and Mattel Adventure Park was released. The numbers are just astounding and are shared here.

The project has grown considerably since it was first envisioned and presented to the city. The Applied Economics Study presented this project description:

“The development includes 10 mixed-use buildings. Buildings 5 and 8 will open at the end of 2024 and the remainder of the development will open in summer 2025.

  • VAI Resort Hotel

    Building 1 will include a 299-room luxury hotel with 17,000 square feet of restaurants, 18,000 square feet of retail shops and 130 underground parking spaces.

  • Building 2 will include 29,500 square feet of retail and restaurants, a 9,000 square foot spa, a 155-room hotel and 230 underground parking spaces.
  • Building 3 is a parking structure with 3,900 spaces.
  • Building 4 will include 47,000 square feet of restaurants and themed retail, an aerophile balloon, a 3,000-seat theater, an 8,000 square foot Barbie theater and a 19,000 square foot Barbie Dream House attraction.
  • Building 5 will include a 9-acre Mattel Adventure Park with 250,000 square feet of indoor and outdoor rides and amusements and 8,000 square feet of themed restaurants.
  • Building 6 will include a 311-roon hotel, 28,000 square feet of retail and restaurants, an 8,500 square foot kid’s club and 150 underground parking spaces.
  • Building 7 will include 70,000 square feet of meeting and convention space, a 20,000 square foot night club, a 10,000 square foot fitness center and a 10,000 square foot swim up bar.
  • Building 8 will include 318 hotel rooms, including the Amphitheater Tower with 27,000 square feet of sky boxes overlooking the 90,000 square foot concert venue. This area also includes 37,000 square feet of restaurant space, a 4,500 square foot retail/café area and 390 underground parking spaces.
  • Building 9 represents Konos Island in the middle of the swimming area with 40,000 square feet of island beach amenities, 10,000 square feet of restaurant space, and the elevated Aerobar attraction.
  • Building 10 includes 55,000 square feet of corporate office space occupied by the developer/owner.
  • Other Amenities include the beach and pool decks, service areas, and 1,060 surface parking spaces.”

In summary and please note that my numbers are estimated based on available information, there will be on the site including both VAI and Mattel Adventure Park:

  • 1,013 hotel rooms available in a 5-building complex
  • 5,860 parking spaces on site including 900 underground; 3,900 in a parking garage; and 1,060 surface parking spaces.
  • 100,500 square feet of restaurants
  • 108,500 square feet of retail space
  • 387,500 square feet of attractions

It should be noted that that estimates of development costs and revenues earned are conservative as can be shown by a conservative estimate of 4 of the hotels’ occupancy rate of 42% to 46% and one hotel at an occupancy rate of 66%. Please note in the Westgate area, hotels are averaging a 70% occupancy rate.

In total, there will be 2,346,523 square feet of development at a cost of over $900,000,000 (nearly $1 billion dollars). The magnitude and complexity of this development should not be underestimated. It is not like building a one-themed development such as a single, large manufacturing facility or a hotel or a retail center. Rather, it is building all these combined and more at once.

The project site is forecast to earn $2.2 billion dollars in new sales, property and bed tax revenues to the city, schools, county and state over the next 25 years. How is Glendale incentivizing this $1 billion dollar project? It will waive permit and plan fee waivers of up to $1 million dollars and enter a Government Property Lease Excise Tax (GPLET) agreement on the entertainment, recreation, and concession portions of the development. In total, all fee waivers and the GPLET is $107.4 million dollars over 25 years in return for a 25 year income of $2.2 billion dollars.

How does the 25-year revenue break down? Starting in the year 2025 Glendale is estimated to receive annual tax revenue of $29,318,615 and to receive $40, 289,165 by year 2049. That means each year Glendale will receive $29 plus million dollars escalating to $40 million dollars a year by 2049. That is more revenue than that earned by the city from the Arrowhead/Bell Road corridor per year. These revenues go a long way in making up for the state-imposed loss of approximately an annual $14 million in rental tax that cities can no longer collect.

With the GPLET the County and Schools will receive $7,833,554 in year 2025 annually escalating to $18,972,199 by 2025. The State is estimated to receive $45,768,687 in year 2025 annually escalating to $50,980,151. The current and potential revenues to school and county districts are:

  • Pendergast Elementary School District currently receives $55,452 in tax revenue. Even with a GPLET it will receive $2,906,600 annually.
  • Tolleson Union School District currently receives $51,883 in tax revenue and with the GPLET will receive $2,719,506 annually.
  • WESTMEC currently receives $1,765 in tax revenue and with the GPLET will receive $92,498 annually.
  • Community Colleges currently receive $11,121 in tax revenue and with the GPLET will receive $582,938 annually.
  • All other taxing districts (county) currently receive $32,997 in tax revenue and with the GPLET will receive $1,734,838 annually.

These statistics should give you a sense of the magnitude of this development. This development will solidify Glendale as THE Entertainment and Sports destination not only in the state but nationally.

I am so pleased and excited about this development that I have arranged to do a half hour “Beyond the Headlines” on each component, VAI Resort and Mattel Adventure Park. Taping of the videos will occur in January 2024. Expect them to be on air toward the end of February 2024.

© Joyce Clark, 2023     

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such material. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

In Part III of this three-part blog, I offer the specifics of the Glendale GPLET and Worker Power’s public statements regarding their opposition to the GPLET.

In the Fall of 2020, Applied Economics submitted an analysis requested by and paid for by the city. Its purpose was to present future tax revenues should the city decide to incentivize the development of what, at that time, was called Crystal Lagoon (now known as VAI Resort). The report also presented two other development alternatives for the same site. Keep in mind that the information I cite from this report is based upon old numbers. Since that report Crystal Lagoon is now VAI Resort and the hotel portion of the site has doubled. In recognition of these facts, the city has commissioned an updated report from Applied Economics. It is not yet available.

The 2020 report concluded that, “The proposed incentive structure outlined here would include permit and plan fee waivers of up to $1 million and a 25-year Government Property Lease Excise Tax agreement (GPLET) on the entertainment, recreation and concessions portions of the development. The total value of the incentive is estimated at $29.7 million, in return for $700.8 million in new sales, property and bed tax revenues to the city, county and state over the next 25 years. These incentives are performance based and the amounts will be less if the project is not built in its entirety.” (Page 2, Applied Economics, August 31, 2020).

The report goes on to state, “In terms of precedent for including the lagoon, Tempe has included sections of the Tempe Town Lake in the parcels for several different GPLETs that also include various types of development along the shoreline.” (Page 6, Applied Economics, August 31, 2020).

Further, “In order to demonstrate that the proposed GPLET meets the economic and fiscal benefit requirement in A.R.S. 42-6206, it is necessary to isolate the portion of the development that would be part of the GPLET. This analysis considers the property tax impacts the GPLET relative to the amount of benefit to the property owner or prime lessee. During the 25 year term, the prime lessee would normally pay lease excise tax instead of real property tax, although the recreation, entertainment and related retail and restaurant concessions of the development are assumed to b exempt from lease excise taxes…The estimated public benefit, or value of the other tax revenues generated by the projects exceeds the property tax savings to the prime lessee from the GPLET by $176.2 million over the 25 year term.” (Pages 6-7, Applied Economics, August 31, 2020).

Lastly, “The Crystal Lagoon Island Resort could result in an annual increase in property tax revenues to schools of $2.8 million, and $3.7 million to all jurisdictions in total after accounting for the GPLET exemptions.” (Page 12, Applied Economics, August 31, 2020).

What the report said is that this property, incentivized with a GPLET earns more money per year over the 25-year period for the city, the schools, the county and the state than if it were allowed to develop sometime in the future as apartments, retail and office buildings with no incentive.

Why does Worker Power object? In an Arizona Republic story dated 7/28/2023, entitled Community group that fought Tempe’s entertainment district aims for Glendale’s VAI Resort, Jordan Greenslade, a Worker Power senior field director, claimed that this tax break was unnecessary, stating, “Greenslade explained that the tax exemption was likely an initiative that began as a means to bring growth and prosperity to an area that could benefit from the jobs and development. Though, as Greenslade noted, Glendale is not that. In fact, Glendale is booming with development.

With additions like the Cardinals’ stadium and Westgate Entertainment District, Greenslade does not see why a 25-year tax break was necessary to draw a luxury resort like VAI to a booming tourist destination.”

Let’s unpack Greenslade’s assumption. He obviously hasn’t done his homework and has no knowledge of the history of this site. Historically, it has been farmed. About ten years ago Michael Bidwill bought the site, called it Organic 101 and had planned to build a gazillion apartments and some office buildings on the site. Apparently, that was not to be, and Bidwill let the property go into bankruptcy.  About six years ago, IKEA had the property in escrow but never completed the sale, so it remained farmland.

It was obvious, despite the success of Westgate, no entity was willing to purchase this site and make a major investment in its development until ECL (now VAI) approached the city with its vision for development and asking the city to consider offering an incentive for such a massive project. The city commissioned the Applied Economics study in 2020 and based upon the facts presented in the study, entered into a development agreement.

The massive size of this development coupled with an investment of a billion dollars along with the revenue return of this project justified an offer to incentivize this project ensuring that this coveted project would come to Glendale and be a perfect fit for Westgate, the city’s sports and entertainment district. Glendale has never had a resort within its jurisdiction and its placement at Westgate on an underutilized piece of farmland made good, economic sense.

The Phoenix Business Journal on 7/28/2023, ran this story entitled, Labor group that opposed Coyotes’ arena wants Glendale resort incentives placed on ballot. The article states, “Brendan Walsh, executive director of Worker Power Institute, said in a statement that GPLETs should ‘not be used to subsidize luxury development that brings little or no benefits to working families already living in the area’.”

Mr. Walsh is offering the same brand of Kool-Aid as Mr. Greenslade. This massive development project will employ at least 1800 Glendale residents. Every possible kind of job from restaurant waitresses and bar tenders to hotel workers to retail managers to skilled tradesmen to maintain this massive property. Another 1800 jobs is nothing to sneeze at and certainly is a major benefit to “working families already living in the area.”

Worker Power on its website offer the following as its Economic Policy:

“A primary focus of Worker Power’s advocacy efforts has been to challenge the misuse of GPLETs (Government Property Lease Excise Tax) by local municipalities. GPLET is a tax abatement program used to spur development in Arizona cities. While these developments purport to bring new jobs and additional tax revenues to aid the economy, GPLETs can add up to hundreds of millions of dollars not spent on local schools and other community needs over time. In addition, GPLETs can contribute to gentrification, exacerbate the deepening housing affordability crisis in our cities, and push low-wage earners out of town.”

Where is the “misuse” of the GPLET in this case? There is none. The Applied Economics study of 2020 stated that all entities – the city, the schools, the county and the state, earn more revenue over 25 years with this GPLET than without.

In addition, Glendale is leading the forefront of Valley cities in creatively financing affordable housing within the community. In fact, Glendale’s homeless population has decreased year over year. There is no demonstration of fact by Worker’s power that Glendale is “pushing low-wage earners out of town.”

Worker Power is spouting phrases designed to gin up general citizen support with absolutely no fact to back up their baseless accusations. It’s as if just because they said it and they are a PAC, it must be true. They are looking for a cause where none exists.

The deadline for turning in their petitions was last Thursday at 5 PM. The signatures collected are in the process of being verified. They claim to have collected over 5,000 signatures but how many of them are good and can be verified?

Worker Power has no legitimate cause to follow in Glendale. Really…don’t be buyin’ their brand of nonsense.

© Joyce Clark, 2023     

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such material. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.Yesterday in Part I, I shared the concept of Worker Power and their current referendum effort to oppose the City of Glendale’s use of a GPLET within portions of the VAI Resort. I alerted those who had signed their referendum petition that an email with their personal contact information was generated and sent to the Glendale city council.

What in heaven’s name is a GPLET? Its full title is Government Property Lease Excise Tax. It is an incentive created by the Arizona Legislature that permits cities and towns to encourage development within their communities. A GPLET permits a temporary lower property tax payment for up to a maximum of 25 years. This means instead of a developer paying property tax, the developer must pay an excise tax in its place. The excise tax amount is determined by a formula created by the Arizona Legislature. Please note that tax is still paid on the property but at a lower rate called an excise tax instead of property tax.

A project eligible for a GPLET would typically not otherwise be built at the desired scale or design or timing because of the expense of the land, the cost of building massive projects, and the high rates of commercial property tax.

A city is providing the GPLET to land that it does not expect to develop soon. It is by no means counting on the property paying taxes in the near term. A GPLET can cause a project to be built sooner rather than later.

Historically, Arizona cities and towns have used GPLETs often. It is not some kind of exotic incentive rarely used. In the past twenty years at least 8 Valley cities have used GPLETs.

  • Avondale currently has 4 GPLETs including one for its Phoenix International Speedway
  • Chandler currently has 4 GPLETs including one for its Overstreet Cinema
  • Glendale currently has 21 GPLETs, a majority of which are airport related but there is one for Cabela’s and one for the Renaissance Hotel
  • Goodyear has 1 GPLET for its Western Regional Medical Center
  • Mesa has 51 GPLETs including its Mesa Convention Center and Visitor’s Bureau
  • Phoenix’s financial report is not so opaque but I was able to identify at least 58 GPLETs, including restaurants and hotels
  • Scottsdale has 19 GPLETs including the Tournament Players Club of Scottsdale (part of the PGA Tour)
  • Tempe has 40 GPLETS including the Tempe Town Lake and the Hilton Hotel

Why is Worker Power doing a referendum on the VAI Resort development now? Remember, I said in my last blog post that they are opportunists? If they were genuinely opposed to the use of GPLETs, they would have opposed the original GPLET for this project passed by the city council two years ago. Where were they then? Crickets. Oh wait, weren’t they in Georgia working on Rafael Warnock’s senatorial campaign? That action would bring them far more notoriety than opposing a no-nothing GPLET in Glendale. How come the only other GPLET they’ve opposed is the one involving the Coyotes project in Tempe?

It looks like there will be a Part III to this GPLET blog tomorrow. In the next part we’ll look at the benefits of this GPLET as well as Worker Power’s publicly offered reasons for their opposition.

© Joyce Clark, 2023     

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such material. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

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