Wyndham Phoenix Hotel is now a Marriott
Phoenix tax break helps hotel owner pay for transition
4 commentsby Emily Gersema - Dec. 28, 2011 05:55 PM
The Arizona Republic
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A Phoenix hotel owner who years ago fought a city-backed effort to open a Marriott hotel in downtown has turned the Wyndham Phoenix Hotel into a Marriott Renaissance with help from the city.
Steve Cohn, majority owner of the Wyndham, launched an effort nearly five years ago to make the 520-room Wyndham at 50 E. Adams St., once a Crowne Plaza Hotel, a Renaissance hotel to draw bigger convention groups and increase profits.
Cohn sought assistance from the city in 2009 to ease his debt burden for the transition, which he said required an estimated $40 million in renovations to fulfill the standards set by Marriott for its Renaissance hotels.
Seeking city aid was an unusual step by Cohn, who in 2000 had sued to stop a city-backed effort to build a Marriott and Embassy Suites downtown, arguing it would have made the city a competitor of private businesses such as his then-Crowne Plaza Hotel. A Maricopa County Superior Court judge that year ruled that a city-financed hotel was unconstitutional.
In an interview this week with The Arizona Republic, Cohn bucked criticism that he had requested a city subsidy for the Renaissance transition, citing his prior legal battle with the city.
"I don't like subsidies," Cohn said. "I filed a lawsuit to stop them (the city) from doing that for a Marriott."
Cohn now benefits substantially from a tax break that the City Council approved in October for his limited-liability company, Phoenix Hotel Ventures, the majority owner of the Renaissance hotel.
The Phoenix deal known as a government property lease excise tax, or GPLET, eased property taxes for 20 years for the hotel by taking ownership of the property.
City officials said the break will ease the hotel's tax burden by an estimated $400,000 per year as it pays off loans that funded the renovations. That means Cohn's company will save an estimated $8 million in property taxes over 20 years.
School districts, community colleges and other public institutions rely on property taxes for some of their financial support. With voter approval, property-tax-funded overrides and bonds can finance needs such as repairs, new computers or new construction.
Although these institutions are not directly affected by the disappearance of a business from the tax rolls, other residents and businesses within their institutional boundaries are. They end up filling the void left by the GPLET by paying additional tax, said Chuck Essigs, interim head of the Arizona School Boards Association.
School advocates say tax increases caused by the GPLET can aggravate districts' efforts to court voter support for overrides and bonds.
"The higher the people's property taxes are, the harder it is to pass a bond and override," Essigs said.
Cohn said he is a supporter of Phoenix Union High School District. Online records show the Wyndham has given a few thousand dollars a year in scholarships to students in the district.
Cohn and his company are one of several beneficiaries of the GPLET around the state, but particularly in Phoenix, which state records show has the most GPLET properties of any Arizona city.
Phoenix has an estimated 700 or more properties that were pulled off the property-tax rolls since the mid-1990s with the goal of promoting economic development. Several businesses that have benefited are concentrated downtown, including the Valley Metro and Maricopa Association of Governments building at 302 N. First St., CityScape at 50 W. Jefferson St., and The Arizona Republic/12 News building at 200 E. Van Buren St.
Phoenix officials said there are great economic benefits to utilizing the GPLET to aid projects such as the Renaissance -- primarily, national groups that hold annual conventions.
"Hotels are extremely large tax generators. ... Their visitors spend it on the hotels, restaurants and bars, and it's a pure, make-the-pie-bigger enterprise," Deputy City Manager David Krietor said.
The city has strongly supported development of hotels downtown to sustain the recently expanded Phoenix Convention Center and build sales-tax revenues. That expansion cost around $600 million.
An analysis commissioned by Cohn in 2009 predicted that in the first year as a Renaissance, the hotel would generate $96 million in taxes, mostly through sales taxes, with $57 million going to the state, nearly $6 million to the county and $33 million to Phoenix.
Read more:
http://www.azcentral.com/business/articl...-wyndham-now-marriott.html#ixzz1hwHuHRwU
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