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As if the developers for the proposed Jackson Street entertainment district need any more bad news:

A state legislative package  that would have steered tax breaks to the proposed corridor of shops, residences and nightclubs is on the ropes, Arizona Republic's Mary Jo Pitzl reports.

The tax deal would have waived a combination of city and state construction-related sales taxes, to give the developers a break on construction costs. 

The Jackson Street plan includes a 380-room Fairmont hotel, a boutique hotel from the Marriott Hotels line, a 2,500-seat House of Blues, high-end restaurants and other amenities, developer Brad Yanover has told lawmakers.

"Like a brightly exploding asteroid, the jobs-stimulus package unveiled last week has broken into a million little pieces," Pitzl wrote.

"All that remains (as of this writing) of the rapidly changing package is the portion that would allow Pima County to hold a vote on whether to create a sports authority and hike taxes to pay for baseball-stadium improvements," she continued.

"Gone, and spinning off in their own orbits, are other original parts of the plan" including the tax deal, the reporter wrote.

Meanwhile, Dale Jensen another developer for the Jackson Street project, is looking for a new lender to handle a loan that he got from troubled Mortgages Ltd.

The loan, which Jensen says was for "seven figures plus" helped buy two city blocks -- within a larger swath of land -- that developers want to transform into the entertainment corridor.

The loan was for land bound by Harrison, Lincoln, Fourth and Third Streets, he said. 

Neither issue is likely to be a major setback for the Jackson Street project, boosters say. 

While it's tough to get financing for many projects these days, the property deal should be relatively easy to resolve, Jensen says. 

The tax rebates were not an essential part of the Jackson Street entertainment district, Jensen added. 

The stimulus package would have merely accelerated it, he said.

The good news is that the Jackson Street project is moving forward, backers say. 

The city has had early planning talks with the developers, said John Chan, director of Phoenix's downtown development office.

The Jackson Street group wants entitlements for the area, which would stretch along Jackson Street from roughly Chase Field to Central Avenue, said Larry Lazarus, a development lawyer who represents one of the business entities in the Jackson Street project.

While Jackson Street backers had hoped to start construction this year, the planning process could take six months, Lazarus said.    

The IRS is raising the mileage deductions for taxpayers who drive for business, medical or moving reasons during the second half of 2008. But not everyone will be able to take advantage of this break.

In particular, people subject to the Alternative Minimum Tax can't utilize job expenses and miscellaneous itemized deductions, which include employee business mileage expenses, says Bob Kamman, a Phoenix tax attorney. "I have several clients whose deduction for mileage puts them into the AMT penalty box," he said, citing a salesperson and home health-care provider who do a lot of driving. "These are not the kind of people whom (the) AMT was meant to punish for being rich."

The IRS said the deduction for using a personal vehicle for unreimbursed business purposes will rise to 58.5 cents a mile starting July 1 from 50.5 cents currently. Expenses for medical or moving purposes will increase to 27 cents from 19 cents, but the mileage deduction for people who drive to help charities will stay at 14 cents.

The IRS normally adjusts mileage rates in the fall but expedited the process this year to provide relief from higher gasoline prices.

The respected State of the Nation's Housing report is out for 2008. One of the key findings from the Joint Center for Housing Studies of Harvard University is that the nation is facing its worst housing crisis in 50 years.

That premise is based on foreclosures doubling to 1.3 million last year, and the number of vacant homes for sale climbing to 2.12 million. And both figures continue to climb this year.

The Center's Director Nicolas Retsinas said "historically, housing markets recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability. It is difficult to judge how far away from these conditions we may be. It will take longer this time to rebound given the unusually high levels of foreclosures and constrained credit markets."

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