Tucson’s Downtown Financial Incentive District, which gives developers a break on building permit fees and construction sales tax, is now about twice as big as it used to be.
The Downtown Financial Incentive District, or DFID, has followed a westerly expansion, moving its western edge from Meyer Avenue to a little past the Santa Cruz River. It now aligns with the Downtown Core Sub-district of the Infill Incentive District, a planning district that grants regulatory relief on requirements like parking, loading, setback and landscaping.
In other words, developers can obtain both the regulatory relief of the Downtown Core Sub-district and the financial incentives of the DFID without any geographical gap. The Tucson City Council approved the change earlier this month.
Chris Kaselemis, director of the city’s Economic Initiatives program, said the city renewed the DFID through 2018 at the beginning of the current fiscal year but staff asked the mayor and council to adjust the boundaries to match another downtown boundary to simplify and improve downtown development.
Downtown has several overlay, regulatory and incentive districts within its dense area, with some gaps between them. The old DFID, which did not share boundaries with any other financial or planning district, was bounded roughly from the Union Pacific railroad to the north and east, Cushing, 14th and 12th streets to the south, and Meyer to the west.
“We have a lot of downtown boundaries and people get confused of what downtown boundary are we talking about,” Kaselemis said.
The DFID’s benefits include a $10,000 building permit fee waiver and a 2 percent construction sales tax credit for public right-of-way improvements. In a memo to the City Council, City Manager Richard Miranda said that in the last three years 28 projects have taken advantage of the construction sales tax credit and saved $66,000 in building permits, and has been a useful tool in incentivizing downtown development.
“Given the success of this incentive, it could be a catalyst for development in other areas as well,” Miranda wrote.
The Gadsden Company stands to benefit from the combined district boundaries with its planned Monier apartments near another Gadsden project, the Mercado San Augustin. Gadsden partner Jerry Dixon said hopefully, the 165-unit complex will start building next year.
“We think every incentive we can get is good for the project. It makes it more feasible,” he said. “As you know, financing is extremely difficult and we struggle to make sure that we get the very best financing for our projects so they have the highest chance of success.”
Contact reporter Hillary Davis at email@example.com or (520) 295-4254.