Client: City of Tempe (AZ)
The City of Tempe requested that GG+A render an independent opinion concerning the estimated value of the benefits the City can be expected to receive in comparison to the incentives that will be provided to Omni to bridge the feasibility gap associated with the proposed development. The proposed development will consist of approximately 330 hotel rooms and approximately 30,000 square feet of conference center space on the Arizona State University campus. GG+A estimated the benefits to accrue directly to the City of Tempe over a 60 year period (the duration of the restrictive use covenant and term of the agreement between developer and the City as well as the term of the agreement between developer and Arizona State University).
To complete the analysis, GG+A relied on a proforma and related information provided by the developer which GG+A found to be realistic based in part on comparisons with other proposed similar projects and review of industry and market data GG+A completed. GG+A also relied on applicable tax rates and tax source information provided by the City of Tempe.
The cumulative value of direct benefits to the City of Tempe was estimated to exceed the cumulative value of tax rebates (incentive) provided to the developer by approximately $134.8 million on a nominal, undiscounted basis over the duration of the agreement. The value of direct benefits to the City exceeds the incentive provided to the developer by approximately $9.0 million on a present value basis.
In addition to the direct benefits, the proposed construction and operation of the development will also produce positive economic impacts and indirect tax (fiscal) benefits for the City. The proposed tax incentive will directly raise more revenue and generate other fiscal and economic benefits than the amount of the incentive within the duration of the agreement.
An electronic copy of the analysis and Opinion Letter can be found here.