Conservatives criticize ASU downtown campus financing

The Business Journal
Friday, June 10, 2005
Mike Sunnucks

Voices of dissent regarding a proposed $233 million city of Phoenix bond to bankroll Arizona State University's downtown expansion are growing louder. They are coming from conservatives and tax watchdogs who are questioning the effectiveness of another publicly financed center city project and why a local government is funding a state university.

The city of Phoenix is scheduled to hold bond elections next March that will offer funding for various capital improvement projects, including $233 million for expansion of ASU's downtown center. Plans call for ASU's downtown campus to grow to 15,000 students, and several university schools will move to Phoenix from the main Tempe campus. The bond proceeds will help the city acquire and develop downtown real estate for ASU's expansion.

The idea has strong backing from Phoenix Mayor Phil Gordon, ASU President Michael Crow and the regional business establishment, which has supported other downtown public investments such as light rail, expansion of the Phoenix Civic Plaza, sports stadiums and incentives for new biotechnology labs.

The only opposition and skepticism is coming from conservative and watchdog quarters.

Satya Thallam, fiscal policy analyst for the Goldwater Institute, said other downtown investment projects and incentives (such as sports stadiums, office developments and museums) have not produced stunning results, and he is pessimistic the ASU expansion will deliver economic prosperity.

"The city of Phoenix will not see the kind of return they are hoping for," said Thallam.

The Goldwater group argues the keys to downtown economic growth are not large-scale public investments. Instead, it is offering a business-friendly operating environment via low taxes and regulations, increased law enforcement and neighborhood-oriented zoning and public-safety initiatives that help property values and attract and retain residents and businesses.

Thallam said there is no guarantee that just because more ASU classes and operations are downtown, that means students, faculty and university staffers will live or shop in the center city, drawing parallels with the sports stadiums where fans come to games and concerts but do not hang around downtown before or after events.

"America West Arena was supposed to mark the renaissance of downtown," Thallam said.

Kevin McCarthy, president of the Arizona Tax Research Association, said his group has not taken a position on Phoenix's ASU bond, but is concerned about the city funding a state obligation.

McCarthy said he had problems two years ago when the state government funded half of a $600 million expansion of the Phoenix Civic Plaza.

"Now we have the reverse occurring," said McCarthy.

ASU bond backers argue the expansion will bring more economic activity to downtown Phoenix and spur more retail, restaurants and housing. The lack of retail and restaurants and a "24/7" feel long has hamstrung downtown economic development efforts.

"You are going to have 15,000 students and a couple of thousand faculty and staff," said Brian Kearney, president of the Downtown Phoenix Partnership economic group. "That's going to generate enormous vibrancy to the downtown area."

Kearney is confident the ASU bond plan will pass next March with plenty of support from voters as well as political and business leaders. Supporters also argue ASU's expansion could help bring more residents to downtown Phoenix to fill proposed condominium and loft projects.

Some top political and business insiders expect the ASU bond to pass next year but warn that fiscal conservatives should not be taken lightly, considering defeat of a business-backed university tech-transfer bill last year and other bond programs.

"The surprising defeat of the university tech-transfer initiative last November and the defeat just last month of the Pinal County Community College bond package are reminders that nothing should be taken for granted," said Jason Rose, a public relations and political consultant.

"However, this proposal will ultimately win, and win big, because it is not only about education, but a great idea to accomplish a great objective: downtown Phoenix revitalization."

Greater Phoenix Chamber of Commerce Vice President Jay Kaprosy said the key to the bond effort is balancing the ASU component with other capital and construction needs of the city and securing broad support.

That will help counteract opponents who argue the city financing for ASU means other city services are losing out.

The city government recently approved a budget that included just under $21 million worth of budget cuts including in areas such as information technology, libraries and city attorneys.

"It will be a balancing act," Kaprosy said.