Hundreds of people flooded Roosevelt Street in downtown Phoenix on April Fools’ Day.
Some carried signs offering “free hugs.” Others decried the bungled presidential preference elections and vowed to organize against elected officials.
They came to check out art galleries, eat at local restaurants and get to know one of the region’s most successful arts districts, Roosevelt Row, for its monthly First Friday art walk.
It’s been such a success that Roosevelt Row was recently named one of the “Great Places in America” by the American Planning Association, the first such designation for a Phoenix destination.
But a law signed by Gov. Doug Ducey could derail future plans for more formal support and money to aid the burgeoning district. And neighborhood advocates say they’re gearing up to fight the law and vow to continue their plans for a special taxing district.
About three years ago, Roosevelt Row stalwarts started talking about ways to make the neighborhood better, said Greg Esser, the board vice president of the Roosevelt Row Community Development Corporation.
After a survey of community members, door-to-door outreach and help from an urban planner, the community came up with a to-do list, Esser said. One of the key goals was a business improvement district, a special area that would be taxed in order to pay for things that volunteers had been handling for years, he said.
The district, which was defined as Seventh Avenue to Seventh Street and Moreland Street to Fillmore Street, eventually won the approval of the Phoenix City Council in January, though the council didn’t set up a budget or a board of directors or finalize a map of affected properties.
But then came the Arizona Legislature and a bill from Gilbert Republican Rep. Warren Petersen. Petersen’s HB2440 changed the way business improvement districts, like the one just approved for Roosevelt Row, could be formed.
Under the old rules, a city council could pass an ordinance to say it wants to start a municipal improvement district. After the council passed such a resolution, property owners could file written protests within 15 days.
HB2440 requires more than half of property owners who collectively own more than half of the property in a given area to sign a petition approving the district before it can move forward.
A big problem with the law, Esser said, is a retroactivity clause to Jan. 1, just before the Roosevelt Row district was approved.
That makes the law a candidate for a lawsuit, an option Esser said his group is exploring.
“It’s clearly special legislation that does target a single group, so that does open a legal challenge,” Esser said.
Phoenix Mayor Greg Stanton said the city is still “looking at all of its legal options,” too.
“If you look up special legislation in the dictionary, you will see HB2440 and its impact on Roosevelt Row,” he said.
Opponents of the special district argued their voices weren’t heard in the process, and the way districts are formed runs contrary to the idea of democracy. If the district has the support advocates say it does, it shouldn’t be too difficult under the new law to form it again, the critics say.
When the city announced its intention to form the Roosevelt Row district, 50 property owners representing 112 different parcels protested the formation, according to Cynthia Weaver, a spokeswoman for the city of Phoenix’s Community & Economic Development Department. Within the district, there are 1,062 parcels owned by 660 different people.
The city of Phoenix spent about $90,000 on outreach and developing a final plan for the special district, plus about $2,000 on legal notices and notifications, Weaver said. The city doesn’t track staff time spent on each project, but economic development staffers started working on the project in 2014, she said.
The average tax assessment for the special district would be about $781 each year, though 400 parcels, including single-family homes and publicly owned properties, wouldn’t be taxed at all, Weaver said.
The money collected could be used for things like “added security and safety measures, streetscape maintenance, landscape maintenance, marketing and special events, economic development, graffiti removal, parking management and beautification,” she said.
The people who opposed the district, Esser said, were mostly land speculators who didn’t have a hand in making the Roosevelt Row area vibrant and attractive on a national scale.
“They don’t live in the community, and they have no interest in the health, safety or vitality of the community,” he said.
Esser said he is confident the district will still go forward because the numbers are still on his side.
“This is really more of a rallying cry for us and the supporters of this district who’ve invested so much over such a long period of time,” he said.
Erick Baer, who owns a single-family home and a vacant parcel beside it in the Evans Churchill neighborhood, said he rejects the idea that “out-of-town speculators” are the force of opposition against the Roosevelt Row business improvement district. Baer said he has owned his properties for nearly three decades, and property owners like him deserved a voice in the process.
“We are a fabric of the neighborhood, and we really don’t like being dismissed as irrelevant. … Without being able to vote up or down, we are being dismissed,” he said.
Baer said his main concerns were a lack of due process and a lack of transparency on what the assessment money would actually pay for. Special districts can operate as “shadow governments,” with no sunset provisions, largely unregulated, he said, which can be a “very scary proposition.”
“It is really, really a bizarre system. The right thing would be, all right, we’re just going to let the taxpayers that are paying for this, who are the stakeholders … get the opportunity to vote for it,” he said, noting that the law signed by Ducey accomplishes that idea.
The business improvement district for Roosevelt Row would have collected money for community improvement projects like trash pickup, immediate cleaning of graffiti, signage for visitors and parking management, said Tim Eigo, chair of the Downtown Voices Coalition. The area was reaching the limit of what it could do with an all-volunteer force, he said.
But what money collected from the special district would specifically be used for wasn’t fully spelled out right away by design – the board of the special district would be given a bit of latitude to decide what was needed, he said.
The fact that Roosevelt Row community members reached out to a Gilbert lawmaker instead of working within the neighborhood irked Eigo.
“I would say the general mood is demoralized and disappointed. … It boggled the mind and it’s hard not to be insulted,” he said.
Baer said opponents of the plan have been labeled as people who don’t care about the community, but he insists he only wanted a fair process for everyone.
“I love the changes. I absolutely love them. I love the investors and the builders and the condos and all the excitement. I appreciate even the homeless people that are there because this is their neighborhood as well, it’s not just the elite. Diversity is not just one group of people who think exactly alike,” he said.
Angels Trumpet Ale House, whose owner Mat Englehorn opposed the district and supported the legislation, has seen negative reviews on Yelp after speaking out against the district plan.
“The owner is actively undermining the local arts and creative scene,” a one-star review says. “He moved into this neighborhood and has cashed in on downtown’s renaissance, driven by the very people he undermined by tanking the BID (business improvement district). Shameful behavior from someone who must not value their neighbors or the unique neighborhood.”
Another property owner who protested the formation of the district, Bramley Paulin, said he and others only moved forward with legislation because “we felt that the city council was unresponsive to hearing and understanding and working on behalf of property owners.”
Paulin said they had “little confidence” in the elected officials at the city level, so they went to the Legislature.
Paulin also said he doesn’t believe the city actually approved a district in January because there were missing pieces, including a budget, a tax assessment methodology and a map of the properties that would be taxed.
“It’s kind of like having an automobile that has no engine, no brakes, no interior. … Is that a car? It’s not maybe a car yet.” Paulin said.
Paulin alleged the process of forming the district was opaque, and those who opposed the idea weren’t always kept in the loop. He said he originally thought there would be a vote of property owners on any sort of district before it was approved, and it wasn’t clear in early talks that there would be a tax assessment.
If the district’s proponents still want to move forward, they have a path to do so by getting more than half of property owners to approve of the idea, he noted.
“I really think there was a very poor job of communication. I think that, if anybody wanted a district to move forward, they need to really work hard on perception and providing facts. The property owners were essentially sandbagged in that last process,” Paulin said.
CHANGING THE RULES
And while there are some “issues of trust” and “resentment” toward city officials because of the process, it’s water under the bridge if the proponents follow the new law and form a special district, he said.
“Everybody is interested in Roosevelt Row being a spectacular place to live and work and have a neighborhood,” Paulin said.
People just have different ideas on how to get there, he added.
Still, changing the law after the fact isn’t fair to the people who spent years coming up with the plan, Stanton said.
“(Roosevelt Row BID supporters) followed the rules. They worked really hard over a long period of time to put together this BID,” the mayor said.
The council approved the district itself, but had not set a budget or a board of directors for it yet, meaning opponents still could have fought on the fine tuning of the district, he said.
“The people that were unhappy about being included in the district, they would have lived to fight another day. They would have had a full and fair opportunity to come before the City Council and fight,” Stanton said.
Stanton said the law targeting special districts is part of a larger trend going after cities this session, including threats to withhold state-shared revenue if cities adopt ordinances that conflict with state law. Approving municipal improvement districts is a job for city councils, not the Legislature, he said.
Eigo said the proponents of the Roosevelt Row special district have some “hard choices ahead” now that Ducey signed the law.
He said there are still some divisions in the Roosevelt Row district, but not among the people who have “actually done the work for a decade or more,” like neighborhood associations, arts representatives and businesses, who are all on the same page.
“What we have are some outliers who have sat on empty or barely used parcels for a very long time, waiting for their own money train to come in, and they have benefited from a burgeoning neighborhood through these people’s work, but they don’t want to pay to improve it,” he said.
Roosevelt Row CDC’s Esser said it’s more than just a Roosevelt Row or Phoenix issue, since it changes the process for all municipal improvement districts going forward.
“It happened so quickly that there are many statewide partners that are only now beginning to learn that it’s happened,” he said.
“There are other unintended consequences that have not been thoroughly explored yet. That’s the danger of passing a comprehensive legal change in less than six weeks.”