TEMPE, Arizona — Tempe has offered a developer a 20-year incentive package that could give back as much as $800,000 each year in taxes in exchange for building a hotel and conference center in the city’s downtown, according to the Arizona Republic newspaper.
Developer USA Place Hotel Management LLC could receive as much as $16 million in rebates on city sales taxes and hotel-bed tax revenue.
The project will include a 330-room Omni hotel, a 30,000-square-foot conference center and the national headquarters for USA Basketball.
The Tempe City Council unanimously approved the incentive for development of the site, which serves as a western gateway to Arizona State University (ASU).
ASU and Tempe have long targeted the corner for a high-end development. Before the recession, several developers had proposed hotel-conference centers for Tempe’s Mill Avenue District. The deals, including a $500 million mixed-use project, fizzled out when the economy went south.
The land is owned by ASU, which has partnered with USA Place to build the mixed-use development.
Tempe officials have said downtown is ripe for a midsize conference center the city and ASU would market to groups and conventions that want to be centrally located, near the university and Mill Avenue restaurants and entertainment.
The city’s civic leaders said a smaller center would be attractive because of its affordability compared with larger venues, such as the Phoenix Convention Center, and its proximity to ASU’s Tempe campus, the nation’s largest college campus by enrollment.
Tempe’s incentive applies only to the hotel and conference center, not to other components of the project. The distinction is important because Tempe officials have said the deal is aligned with state laws requiring that hotel-bed taxes be used to promote tourism.
Tempe officials say the incentive is worth the investment because it would bring an estimated $34.7 million in net revenue to the city during the 20-year agreement. Public records tied to the development agreement argue that “in the absence of the tax incentive,” the project would not have been located in Tempe.
The agreement also says the developer must spend at least $495,000 annually for 20 years on the promotion of tourism in Tempe.
