Tucson Weekly: Tax Whacks (October1

The BID Makes Its Presence Felt In Downtown Tucson.
By Margaret Regan
THE ODD FELLOWS building is a downtown success story, with exactly the mixture of arts and business uses that is seen as the salvation of downtown. Located at 135 S. Sixth Avenue, the three-story building houses the sleek and trendy Barrio restaurant at ground level. The place has been in business 13 months, and is doing just fine, thank you, according to its owners. At the end of a long flight of stairs to the second floor is spacious Etherton Gallery, all white-walled austerity. One of the leading purveyors of contemporary art in the city, the gallery has been there 11 years.
The building's owners, Barbara Grygutis and Tim Fuller, are honest-to-goodness working artists, sweat-equity types who took control of their real-estate fate by buying the place over 10 years ago. Environmental sculptor and public artist Grygutis occupies an indoor-outdoor space at the first floor rear, big piles of her signature ceramic tiles lying beyond a green metal fence; a cavernous studio and separate office are inside. Photographer Fuller's studio takes up half the second floor and all of the third.
But all is not well in this downtown paradise. One recent Friday, co-owner Grygutis got the building's annual real-estate tax bill in the mail. Her jaw dropped when she opened the envelope: The tax due had jumped a whopping 44 percent over last year. She and Fuller owe $8,743.06, up from last year's bill of $6,031.50.
Currents The reason for the leap? The brand-new Business Improvement District, aimed at sprucing up the city's faltering downtown, has levied a $2,727.13 tax on the property. As obligatory as any other portion of the bill, the BID tax accounts for about 31 percent of the money that Grygutis and Fuller owe. In fact, the BID tax is bigger than any other line item on the bill, including the taxes set aside for the Tucson Unified School District. At $2,539, the school tax ranks at 29 percent of the total tax bill.
"This is taxation without representation," Grygutis railed the day she got the bad news. "I haven't seen any legal document that tells me this is how I'm getting taxed."
Grygutis had a lot of questions that weren't explained on the bill.
"What am I getting for my money? What is the tax based on? And why is it more than the school district?"
Carol Carpenter, the new executive director of the BID, which calls itself the Tucson Downtown Alliance, sighed when she heard about the angry taxpayer. Grygutis wasn't the first person whose complaints had wended their way to Carpenter's office. The way she sees it, the discontent is mostly a matter of poor timing. The 132 property owners in the BID district got their tax bills September 11, and the BID services don't start up until October 19.
"You want to get the services on the street before the tax bills go out," Carpenter said. "I don't blame people who say, 'I don't see any difference.' "
What Grygutis and the 131 other downtown property owners on the BID rolls will see, in just a few weeks, Carpenter said, is "the kind of intensive maintenance you would get in a high-end shopping mall. By opening each day, her place will be swept, washed, graffiti-free and urine-free."
New security crews, called ambassadors, will be patrolling the streets 18 hours a day, seven days a week. They won't have guns, but they'll carry two-way radios to alert police to trouble, and they'll "shuffle along" vagrants if they violate laws against sleeping on the sidewalk during business hours or camping in, say, El Presidio Park.
"This is not about violating civil rights," Carpenter said. "It's about conduct, not people."
The ambassadors will carry maps to direct tourists, and they'll even carry change to give to harried shoppers who need to feed the parking meters. BID patrols will pick up garbage, eliminating the need for private-pay garbage services, Carpenter said. And the mean downtown streets will soon be blooming with 500 flowerpots.
As for the BID tax rate, Grygutis's elected representatives on the City Council voted it into law when they approved the new district in April. The Grygutis-Fuller tax bill, and everybody else's, was calculated through a complicated formula that Carpenter herself worked out when she was still a city staffer at the Office of Economic Development. It's modeled on a Sacramento BID tax, and Carpenter called it the "most equitable" she's seen.
The rate is about 10 cents a square foot for the land a building occupies, including its first floor and any parking lot or outdoor area. Then a separate rate kicks in for the building itself: about 5 cents a square foot. So the Odd Fellows Building gets taxed 10 cents a square foot for its parking lot, 15 cents for the first floor of the building, and 5 cents a square foot for the second, third and fourth stories.
Under this scheme, Carpenter argued, all downtown property owners pay the same rates for the first story, where the BID services will have the most impact, while the big office towers will be chipping in a fair chunk of change for their upper stories. Opponents have argued that the lower rate for the upper floors has the result of making small-property owners--such as Grygutis and Fuller--pay proportionally more.
AND ALREADY the BID tax is causing some dissension among the Odd Fellows dwellers. While the situation in each of the taxed downtown properties will be different, the response among the tenants of 135 S. Sixth Avenue is instructive. Grygutis said right away that she'll have to pass part of the tax along to her tenants, dividing it into four equal shares of $682 to be paid by the two owners and the two renters.
"I'll object to splitting it," said Terry Etherton, proprietor of Etherton Gallery. He and his landlord have quarreled in the past on the issue of improvements to the building. "I'm not getting anything in return...I really like this space. I like being downtown. But I've had serious philosophical differences with the landlord."
Still, he said, while his business is stable, something, anything, needs to be done for the downtown.
"Congress Street is a mess," he said. "It's the worst it's looked in a long time. There are a lot of vacancies...The security is definitely going to help, but they need to move the Toole feeding station" from the northern end of downtown, where several hundred homeless people get free meals every day. The BID tax "is money I don't really want to pay, but I don't mind if I'm going to see results...The danger is that if all the property owners pass it along, businesses on the edge might go under. It could be the straw that broke the camel's back."
Downstairs at The Barrio, Tess O'Shea, one of six co-owners of the restaurant, said, "I about died when I heard" the size of the tax. "For God's sake."
Ted Parks, another co-owner, had a more measured response:
"I have a wait-and-see attitude," he said, " to see if there's going to be a difference" when the BID services start. "Every landowner who has tenants is going to pass the tax onto the leaseholders. It's certainly a burden, another tax burden, that's being passed onto the retailers and the shop owners once again."
He said that the new passed-on tax represents a lot of money to a small business, but might not be so bad if divided into 12 monthly payments of just under $60. "I'm all for improving downtown," he added. "And I think the BID could help if retailers are involved in it."
The other landlord, Tim Fuller, said he's not as upset as partner Grygutis, but he opined that the tax "is a stiff increase, a monstrous increase on a building this size...It's not fair. Why should we have to pay for all these improvements that the city should be doing? But I'm willing to see what happens."
As a 27-year veteran of downtown, Fuller takes the long view. "I've seen hookers with urine stains and now there's Yikes. Going downhill? Are you joking me? I could tell stories! But lately there's been a diminishment of the downtown spirit that was resurging three years ago."
And while Fuller praised Carpenter's work in the now-thriving city of Baltimore, where she worked on BIDs in the inner suburbs, he criticized the way the BID has been structured. The BID board is an unelected body of downtown property owners, merchants and assorted arts heads; given the go-ahead by the City Council, the organization is a private nonprofit unaccountable to voters. It gets its income from taxation, but is allowed to operate outside the public sphere.
"I have no voice on the BID but I'm too busy to scream," Fuller said. "(The new tax rate) seems a little summary. There was no voting on it, but if you didn't like it there was no avenue of redress.
"The best reading is that the city is trying to do something. The worst reading is that a fiefdom is being created."

Home | Currents | City Week | Music | Review | Books | Cinema | Back Page | Archives