Mohave Daily News: State

PHOENIX (AP) - A proposed agreement between the city of Phoenix and a developer that would give the firm nearly $100 million in sales tax rebates has caught the attention of state legislators who oppose such deals as giveaways.

The agreement between the city and developer Thomas J. Klutznick Co. would be one of the largest tax breaks ever offered for a similar development. It comes as Phoenix is vying with Scottsdale for a steady stream of sales-tax dollars. The developer plans a project called CityNorth, a $2 billion urban community with luxury retail, condominium and office complexes. The deal would rebate 50 percent of sales taxes due to Phoenix for 11 years.

Legislators said the deal could finally bring about a state law penalizing cities who ink similar agreements to lure developers.

‘‘This is exactly what we didn't want to have happen,'' said Sen. Ken Cheuvront, D-Phoenix. ‘‘We thought that cities could control themselves but apparently they can't. We will have a bill dealing with it, and we'll have to use creative means to get the bill through.''

A bill sponsored by a Republican that would withhold state tax money from local governments if they enter into such rebate deals was not heard this session, and others have failed in the past.

Phoenix Mayor Phil Gordon led an effort to get area cities to ban sales-tax breaks for malls, auto complexes and big-box retail centers in 2004. He urged leaders to ‘‘close the public checkbook'' and ‘‘let the market dictate where retail development goes.''

But Gordon is now supporting the deal with Klutznick.

‘‘This city attempted to get everyone to agree that there shouldn't be sales-tax incentives,'' Gordon said Friday. ‘‘And until that happens, my . . . responsibility is to make sure we don't lose any sales-tax revenues.''

The CityNorth project is competing with at least two other large developments, one in northeast Phoenix called Palisene and another called One Scottsdale in that adjacent city.

The practice of luring developers with significant tax breaks, rebates or paid infrastructure like sewers or streets is becoming widespread as towns vie for sales-tax money. Gilbert agreed to pay $60 million in sales-tax rebates get the state's largest auto mall three years ago. Scottsdale gave a $28.7 million tax rebate to help land Nordstrom at Scottsdale Fashion Square in 1996. Mesa and Glendale have given similar breaks to developers.