Proposition 312 looked to be headed for approval by Arizona voters as of Wednesday afternoon. If the proposition passes, property owners could apply for a tax refund if their city isn’t addressing problems in their neighborhood. This issue has been linked to the homeless crisis here in Arizona.
"Shocked," said Joe Faillace of the likely passage of the ballot measure. "But happy. Really happy."
Faillace and his wife, Debbie, ran the Old Station Sub Shop in downtown Phoenix for nearly four decades.
The shop was sandwiched in the middle of "The Zone," the area that used to be Phoenix's largest homeless encampment. The neighborhood is blocks away from the state capitol.
"What impact did that have on your business? " asked the I-Team's Erica Stapleton.
"It was the worst four years of our business," said Joe. "The pandemic was a six or seven month problem. But the homeless crisis? Just the filth...the drugs, the violence. The mental stress. Having to call police almost every single time I came in in the morning."
"It was constant chaos in our life 24/7 for several years," Debbie added.
In 2022, the Faillaces and other property owners sued Phoenix for not doing enough to keep conditions clean and safe. The next year, the judge determined the area was a public nuisance and ordered the city to clear out the encampment. The city did close down the blocks in "The Zone" to camping and said it helped a majority of people sleeping on the streets get into new shelter space or connect with other services.
"The city is under the gun now to do what they’re supposed to do," Faillace said. "Take care of their citizens. Take care of their neighborhoods."
Here's how Prop 312 would work if it passes. If a property owner incurs damages as a result of a city or county not enforcing certain zoning ordinances, they may be able to apply for a refund.
"Usually relating to the homeless," said Jenna Bentley. "Having to do with public camping, public intoxication, public urination, those types of things. If you have documented expenses for those, you are able to submit those expenses to the Arizona Department of Revenue and get a refund for those expenses."
Bentley is the Director of Government Affairs with the Goldwater Institute, a group pushing for Prop 312 to pass.
Starting next year, Bentley said people can submit a claim once a year. The refund can't exceed the amount someone paid in property taxes the year prior.
People can apply for up to 10 years and there needs to be not only proof of expenses but proof the expenses are related to municipalities failing to enforce these kinds of ordinances or addressing a public nuisance.
Cities and counties will have the opportunity to contest the claim. Bentley also said that although the claim would be a property tax refund, the refund itself would not be coming from paid property taxes. Instead, potential payouts would come from shared state revenue.
"The main reason we pay property taxes are for public health and safety services," Bentley said. "It’s not fair that the taxpayer should have to take those burdens on themselves."
The measure received support statewide, but there are others that are opposed to the measure, like activist groups and the ACLU of Arizona. Some of the arguments detailed ahead of the election expressed concerns that Prop 312 would make the housing crisis in Arizona worse and would negatively impact those experiencing homelessness.
As for the Faillaces, they want to see people experiencing homelessness get the help they need.
"The state needs to get involved in this," Joe said. "They need to help these people."
Since "The Zone" cleared out, the Faillaces were finally able to sell their business, a challenge they said they faced when the encampment was still active. They still own the property at the Old Station Sub Shop.
They aren't sure whether they'll benefit financially from Prop 312 if it officially passes and anticipate it might not be an easy process to prove damages. But they hope it can help others who were once in their shoes.
"We're glad that we were able to do something for the next group of mom and pops and the next group of business owners," Debbie Faillace said. "We went through hell for many years."
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