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Analysis of Proposed GPLET Tax Abatement for Hotel and Office Building
Client: City of Tempe, Arizona
dashed line separator Gruen Gruen + Associates (GG+A) was asked to analyze the proposed development of a 159-room upscale hotel and 264,000-square-foot office building at Hayden Ferry Lakeside in Downtown Tempe and a request for a Government Property Lease Excise Tax ("GPLET") abatement. The City specifically asked GG+A to determine whether the economic and fiscal benefit to the City of Tempe resulting from the development of the hotel and office building would exceed the value of the contemplated eight year GPLET abatement.

GG+A reviewed development cost and operating projections furnished by the developers and conducted primary research to verify the reasonableness of the estimates provided. To complete the analysis, GG+A prepared estimates of: (a) the value of the proposed developments at build-out; (b) the total amount of property tax likely to be abated over the eight year period; (c) City of Tempe tax revenue likely to accrue from development and occupancy of the proposed projects; and (d) the economic impact of project construction and operation of both the hotel and office building on the local economy. GG+A also estimated the tax revenue to the County and State likely to accrue from development and occupancy of the two projects. Over the construction and abatement period, the analysis indicated that tax revenue generated by the proposed development and retained by the City would exceed the value of the abatement by approximately $7.0 million on a present value basis.




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