Government Property Lease Excise Tax (GPLET): A Tool to Support Strategic Development in Tempe
A state-enabled incentive that helps reduce operating costs and advance high-impact development.
The Government Property Lease Excise Tax, commonly known as GPLET, is a development incentive authorized by the State of Arizona and used by municipalities to support catalytic and economically beneficial projects. GPLET allows qualifying developments to replace traditional real property taxes with a reduced excise tax, creating meaningful long-term operating cost savings that can improve project feasibility and financial performance.
Under Arizona state law, the excise tax rate is determined by the building’s use and is calculated based on the gross square footage of the completed structure. This predictable tax structure provides developers and investors with greater certainty during underwriting and long-term planning. To participate in the GPLET program, the land and any improvements must be conveyed to a government entity and then leased back for private use under a formal lease agreement. State law limits the term of a GPLET lease to a maximum of 25 years.
Properties located within a designated Central Business District or Redevelopment Area may qualify for additional benefits. For eligible projects in these areas, the excise tax may be fully abated for the first eight years following issuance of a Certificate of Occupancy, further reducing early operating costs during the critical lease-up and stabilization period. After the abatement period, the reduced excise tax is applied for the remainder of the lease term.
In Tempe, GPLET is used selectively to support projects that align with the city’s economic development goals, including job creation, reinvestment in targeted areas, and high-quality urban development. Developers considering projects in Tempe are encouraged to evaluate whether GPLET may be an appropriate tool to support their investment.
For details on the process or examples of existing GPLET agreements, visit Tempe's Finance page here.
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