Roosevelt Row restaurant sues city over new tower

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A Denver-based company received tax subsidies for its new apartment tower and a small business in downtown Phoenix isn't happy about it. (Source: 3TV/CBS 5) A Denver-based company received tax subsidies for its new apartment tower and a small business in downtown Phoenix isn't happy about it. (Source: 3TV/CBS 5)
Construction is already underway on the new Derby Apartments, near Second and McKinley streets in downtown Phoenix. (Source: 3TV/CBS 5) Construction is already underway on the new Derby Apartments, near Second and McKinley streets in downtown Phoenix. (Source: 3TV/CBS 5)
PHOENIX (3TV/CBS 5) -

One of the Roosevelt District's most popular restaurants is suing Phoenix City Hall over a special tax deal offered to developers of a new apartment tower.

Construction is already underway on the new Derby Apartments, near Second and McKinley streets in downtown Phoenix.

In two years, it will stand 19 stories tall.

The owners of Angels Trumpet Ale House are already feeling the impact from construction, especially on their popular back patio.

"If you have cranes swinging over your head, jack-hammering and welding, do you want to sit out here on this patio? I don't know," owner Mat Engelhorn said.

He fears losing business and having to lay off some of his 42 employees.

He is even more bothered by a tax deal approved by the Phoenix City Council a year ago. It allows the developer to go eight years without paying property taxes, and another 17 years paying a reduced rate.

Engelhorn and the Goldwater Institute filed suit against the City over the tax deal, known as a Government Property Lease Excise Tax (GPLET).

"This is a shell game to avoid taxes. The developer owns the property. He gives it to the city, and the city gives it back to the developer. The reason for that? So the developer doesn't have to pay taxes," explained lead Goldwater attorney Jim Manley.

Engelhorn estimates, in the next eight years, he will pay $400,000 in taxes, while his neighbors pay zero.

"It's fundamentally unfair to require every property owner in the city to subsidize one developer's profit," Manley said.

"It is the big guy against the little guy, and it seems like the City is only giving deals to the big guy," Engelhorn said, referring to the Denver-based developer building the tower.

A Phoenix City Hall Public Information Officer said the lawsuit was just served Wednesday afternoon. In general, the City does not comment on pending litigation.

Tax deals are a common incentive offered by many cities and counties to lure and encourage development.

"But this is a booming area. It doesn't need government subsidies to keep things moving," Manley said.

The apartments are said to offer "micro-living" environments, of between 400 and 600 square feet.  They are expected to rent for around $1,350 per month.

Copyright 2017 KPHO/KTVK (KPHO Broadcasting Corporation). All rights reserved.


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Jared DillinghamJared anchors the weekend newscasts at 5, 6, 9 and 10pm on both 3TV and CBS5. He also reports during the week for both stations.

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Jared Dillingham

Over his decade in Phoenix, Jared has worked all shifts at 3TV, including a yearlong stint anchoring the weekend morning show.

Since 2007, Jared has covered everything from Senator John McCain's campaign for president, to the Jodi Arias trial, to the largest wildfire in Arizona history.

Jared grew up in New York, and graduated from Syracuse University with degrees in broadcast journalism and political science.

After internships at News12 Long Island and NBC in Washington, DC, Jared moved to beautiful "Big Sky Country." He spent a year at KRTV in Great Falls, Montana, before moving to KREM in Spokane, Washington.

The Valley has truly become "home" for Jared. He lives in Phoenix, and spends his mornings listening to as many news/political podcasts as possible, while walking his (now elderly) rescue dogs, Gabby and Bree.

On his days off, Jared can be found at any of the local restaurants which have popped up in the city since he first moved here, or hiking Piestewa Peak or Camelback Mountain.

He also travels as much as possible and runs a blog with advice on visiting cities around the world.

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