We are surrounded by small businesses in Downtown Phoenix, and we know much of Downtown’s success rests on the shoulders of these business owners. As we survey the current economic climate, it is critical to understand the impact a national retailer can have on the health of our local economy. Kimber Lanning, founder and executive director of Local First Arizona, provides insight on the ramifications of the current sales tax impasse between the State of Arizona and Amazon.
Last week at the Arizona State Senate subcommittee hearing Don Isaacson, the lead attorney for Amazon, took the podium to make the case that economies change over time. “We all remember the days of mom and pops,” he said, “and then there were the days of the big box retailers….” I surmise this to be a very honest glimpse into the world vision Amazon holds, but what does it mean for Arizona?
For the moment, let’s forget the fact that there are over 40,000 independent businesses operating in Arizona today, with a payroll of around 21 billion per year, and let’s focus on our state’s economy and what would be left of it if Amazon’s vision becomes reality.
“For every book store or hardware store that closes, one more accountant loses a job, one more web developer loses a client, one more graphic designer loses a project.”
Let’s say Amazon is successful in eliminating 20% of the independent businesses in Arizona. Most people understand the immediate job loss and can easily process the thought of, say, 5,000 people losing their jobs because businesses closed. “Amazon is hiring,” some people will say, and that’s true. So let’s be fair and say Amazon will create 1,000 more jobs over the next couple of years, leaving a net job loss of 4,000. But now, let’s move on to calculate the secondary jobs that were supported by the 20% of now defunct independent businesses. For every book store or hardware store that closes, one more accountant loses a job, one more web developer loses a client, one more graphic designer loses a project. Soon these supporting businesses will close down, because, well, Amazon isn’t hiring them for their services.
Now let’s measure the impact on real estate. How could we put a number or real value on the blight caused by over 8,000 closed up businesses littering our state? With no new start ups looking to rent commercial space, how many building owners would be forced into bankruptcy? What exactly would the world look like if we all decided to buy everything from Amazon? Where would we all work and how would we earn enough money to keep shopping on Amazon?
“With no new start ups looking to rent commercial space, how many building owners would be forced into bankruptcy?”
Given this bleak picture of the world, which may or may not come true, it’s unfathomable that Amazon has convinced so many people that they should not have to collect sales taxes as every other business has in the history of this country. Sales taxes, or transaction taxes, are collected to pay for services we all enjoy like police and fire protection, libraries, neighborhood services, parks, transportation, and additionally, a small percent of sales taxes are dedicated to education. Anyone interested in improving education in Arizona should be screaming for consistent sales tax collection.
The word TAX has become such a political lightening rod that people are not thinking clearly about which tax we are talking about. This is not a corporate tax that causes companies to have to reach into their profits to pay, nor is this a NEW tax. This is the tax that consumers have always paid on their purchases in order to be able to enjoy the services I outlined above. We could revisit our founding fathers’ logic and decide that we all want to opt out of fire protection or any other services provided by the city, county, or state, but it’s a safe bet that most people are not ready to fight their own house fires with garden hoses.
“Anyone interested in improving education in Arizona should be screaming for consistent sales tax collection.”
Recently the Arizona Department of Revenue handed Amazon a bill for $53 million to cover part of the taxes they failed to collect between 2006 and 2010, and there was some public outcry about this being “unfair” to Amazon. Think of this bill as a simple fine for breaking the law. With four distribution centers located here in Arizona totaling over 4 million square feet of space, Amazon is and has been refusing to collect transaction taxes on sales conducted to the people of Arizona.
Every other retailer operating in this state collects these taxes, whether they are on-line or bricks-and-mortar businesses. Order from Walmart on-line and you will pay AZ transaction taxes. Order from Land’s End and you will pay the same taxes because their parent company, Sears, has stores here in Arizona, even though Land’s End does not. They are law-abiding companies doing business here and enjoying a comfortable profit.
I have heard many Amazon defenders claiming that forcing their company to collect sales tax flies in the face of free markets. In reality, allowing one company to be exempt from a law requiring all transactions to include a tax for municipal services is absolutely anti-free markets. I don’t know a single independent business that wants a government hand-out. In fact, most are happy to compete as long as the playing field is level.
“Amazon is and has been refusing to collect transaction taxes on sales conducted to the people of Arizona. Every other retailer operating in this state collects these taxes, whether they are on-line or bricks-and-mortar businesses.”
Amazon will most definitely take Arizona to court over their $53 million bill, not because they feel they have a case, but just to drag the battle on longer. Meanwhile they continue to ignore the tax, which gives them a 9.3% advantage over all other businesses. They may offer the Arizona Department of Revenue a bargain and agree to collect the taxes starting in 2014, which is what they did in California, but in the duration how many other Arizona businesses will be lost?
Arizonan’s are currently the 7th LEAST taxed people in the union. If we fail to pay sales taxes our services will decay rapidly. Already it is estimated that Amazon has failed to collect upwards of $750 million in sales taxes, so let’s not be surprised when we get our next property tax bill and it’s double what we expected. The taxes have to come from somewhere. It’s in our best interest to stick to the agreement we have and pay our sales taxes and to require businesses operating here to collect the exact same taxes.
Senate Bill 1338 is currently moving through our legislature and will close Amazon’s last loophole by specifically requiring businesses with warehouse space OR retail space to collect the same amount of sales tax. This initiative, which supports the very fundamentals that makes capitalism work in this country, is nothing short of the only solution to save jobs in Arizona.
About the author
Kimber Lanning is an entrepreneur, economic specialist, and community activist who works to cultivate vibrant, sustainable communities and inspire a higher quality of life throughout Arizona. Lanning is actively involved in fostering cultural diversity, economic self-reliance, regional planning, and responsible growth in the greater Phoenix area. She is the founder and Executive Director of Local First Arizona, a non-profit organization dedicated to raising public awareness of the positive economic and environmental impacts of supporting locally owned businesses.
Located just off the light rail tracks, nestled beneath Midtown’s skyscrapers and surrounded by the bustle of the city is a neighborhood where the residents know each other’s names and still get together for holiday block parties.
The Willo neighborhood is Phoenix’s largest historic district, made up of more than 900 houses built from the 1920s through the 1940s in various styles such as Tudor, Spanish Revival, Bungalow and Ranch.
About 24 years ago, a group of residents decided to showcase their unique homes to the public. They created the Willo Home Tour, which has become an annual event featuring about a dozen historic homes.
It attracts around 3,000 people each year and has had visitors from places outside of the Valley such as Tucson and California, says Andrea Katsenes, Volunteer Publicity Committee Chair and seven-year Willo resident.
The funds raised by the tour help support some of the neighborhood’s programs and events, and also contribute to its maintenance efforts. By using the tour’s proceeds to install speed bumps and tend to parks, the Willo district helps save money for the city of Phoenix.
The self-guided tour, which is run by residents on a volunteer basis, is also about bringing the neighborhood together and sharing it with the community, Katsenes says.
“We feel like we own a kind of treasure in Phoenix, a little bit of history,” she says.
This year’s tour will include homes that have not been showcased the previous 23 years. To keep the line-up fresh, residents may only display their home once every few years unless they have made significant changes to it.
The only building that is featured every year is the district’s historic fire station, and it is also the only non-residential building included on the tour.
Katsenes says the longstanding traditions and signature projects such as the home tour are part of what make Willo unique.
“It’s just a real neighborhood feel that you don’t get in a lot of neighborhoods anymore,” she says. “We’re a very close group.”
The tour also includes a street fair each year with live music and local vendors selling food, jewelry, antiques, arts and crafts, and other items.
If you go
Where: Willo Historic District, which is between Thomas and McDowell roads and First and Seventh avenues
Date: Sunday, February 12, 2012
Time: 10 a.m. to 4 p.m.
Tickets: Can be purchased online for $15 or at Walton Park at Third Avenue and Holly Street the day of the event for $18
Business Real Estate Weekly of Arizona is reporting a loan on Park Central is currently in default, and the property is scheduled for a trustee’s sale on April 19. Read the full story here.
Park Central has played a key role in this community’s development and the potential change of ownership of this prime Midtown property could set the stage for a renewed interest in the Central Corridor.
Upon hearing the news, DPJ asked its colleagues what they thought the potential change might mean.
“In residential terms, the Park Central site is one of the strongest potential development plays in Midtown,” David Newcombe, realtor for Russ Lyon Sotheby’s International Realty, who represented the nearby One Lexington condominiums. “With the right mixed-use elements included it could be game-changer for the Central Corridor.”
“You can’t talk about Park Central development without mentioning METRO Light Rail, and how it has changed people’s view of Central Avenue in recent years,” said Don Keuth, Phoenix Community Alliance President. “Will there be an opportunity to capitalize on that asset by developing a dense, multi-use project more appropriate for an urban setting? We’ll have to see how it shakes out.”
Park Central was billed as Phoenix’s first “modern” shopping mall and has been more recently viewed as the impetus of Phoenix’s propensity for sprawling development. As mentioned by Phoenix residents J. Seth Anderson, Suad Mahmuljin, and Jim McPherson in their recently published book, Downtown Phoenix, (Arcadia Publishing, 2012):
“In 1957, Phoenix’s first shopping mall, Park Central Shopping Center, opened along North Central Avenue between Thomas and Osborn Roads, enticing downtown retail fixtures to move – Goldwater’s, then Diamond’s, then J.C. Penny’s.
In the 1960s, all of the major department stores fled downtown and empty storefronts replaced bustling activity. Where the action (and corporate investment) took place was midtown and uptown Phoenix in the first wave of high-rise development, exemplified by the construction of the Phoenix Corporate Tower in 1960 (replacing the Westward Ho as the city’s tallest building), the Executive Towers Condominiums in 1963, and 4000 North Central Avenue in 1964.” (Downtown Phoenix, page 95.)
[Note: Phoenix Community Alliance partners with Urban Affair, publisher of Downtown Phoenix Journal. David Newcombe partnered in the development of DPJ's Live Here section. J. Seth Anderson writes for DPJ. Jim McPherson is a sponsor of DPJ's Engage Page. All are knowledgeable and trusted voices of Downtown Phoenix.]
From the Wire | Phoenix Receives $2.9 Million Grant from HUD to Promote Transit-Oriented Development
(From the Wire includes press releases received from reliable sources that help tell the story of the many happenings in Greater Downtown Phoenix. Yep, they are ripped from our inbox.)
This morning, Ophelia Basgal, regional administrator for the U.S. Department of Housing and Urban Development (HUD), announced a $2.9 million Sustainable Communities Grant to the city’s Planning and Development Department to fund a program to promote transit-oriented development along the light rail line.
Congressman Ed Pastor, Mayor Phil Gordon, Mayor-Elect Greg Stanton and City Manager David Cavazos joined Administrator Basgal, community members, business partners and other stakeholders for the morning announcement at the light rail station at 24th and Washington streets.
“We chose the City of Phoenix’s proposal because the city not only had a great plan – but the right community partnerships and a vision for success,” said Administrator Basgal. “It is with partners like Mayor Gordon and Congressman Pastor that we’ve proven that small investments can yield big results for our economy – and that this debate isn’t about government that’s big or small. It’s about government that’s smart.”
The Reinvent Phoenix: Cultivating Equity, Engagement, Economic Development and Design Excellence with Transit Oriented Development Program includes area research, short- and-long-range planning, community engagement and development incentives to set the foundation that will encourage commercial and housing development along the light rail.
“Thank you to the U.S. Department of Housing and Urban Development for continuing its legacy of investing in the residents of Phoenix,” said Mayor Gordon. “This grant will continue Phoenix’s rise on the national and world stage – to become a model for innovation, sustainability and quality of life for all.”
The city of Phoenix received the fourth-largest grant amount during this funding cycle. HUD received more than $500 million in funding requests from communities in all 50 states, the District of Columbia and Puerto Rico for the $96 million in available funding.
During the next three years, the Reinvent Phoenix Program will promote, encourage and provide incentives for transit-oriented development along the light rail line to provide all residents with safe, convenient access to quality, affordable housing, well-paying jobs, education and training programs, fresh food and healthcare services.
Core partners include: Arizona State University, St. Joseph’s Hospital, St. Luke’s Health Initiative, Mountain Park Health Center, METRO, Discovery Triangle Development Corp., Urban Land Institute, American Institute of Architects, American Society of Landscape Architects, Southwest Autism Research Center, Arizona Bridge to Independent Living, Phoenix Union High School District, Maricopa County Community Colleges, Art Link, Local First Arizona, Native American Connections, Gorman and Co., Inc., Cloudbreak Phoenix LLC, Bethel Development Inc., NRP Group, Desco Inc.
It has been a year since DPJ Magazine’s debut and we’re celebrating the anniversary by sharing some amazing Downtown stories:
Creating Downtown | Downtown resident and artist Susan Copeland examines the creative community’s contribution to the development of Downtown Phoenix.
Roundtable Q&A | An exclusive inside look at the future plans of Downtown, featuring a conversation with Deputy City Manager David Kreitor, Phoenix Community Alliance Board Chair Marty Shultz and President Don Keuth, Downtown Phoenix Partnership Executive Director David Roderique, and RED Development Managing Partner Mike Ebert.
One-on-One Interview | Guest editor David Leibowitz talks with Arizona State University President Michael Crow about the ASU campus, Downtown community and Phoenix’s competitive advantage.
Development Roundup | The latest in Downtown development news from City of Phoenix Community and Economic Development Deputy Director Jason Harris.
Shop Local PHX | Get shopping this season at Downtown Phoenix galleries and retailers.
The District Beat and Buzz | The calendar is jammed packed with happenings that make Downtown come alive every day.
NEW Fashion Section! | Editor Corbin Chamberlin brings the “Seamless” fashion world of Greater Downtown Phoenix into focus, with interviews with Phoenix Art Museum’s Dennita Sewell, and boutique owners Rachel Malloy and Misty Guerriero.
Photography | Photography director Jason Garcia captures the action of the new Crescent Ballroom for our cover and Jack London shares rare views of our Downtown Phoenix skyline.
Pick up a copy at one of 300+ locations in and around the Greater Downtown area or check it out right here!