In a 3-2 vote at its April 7 meeting, the Oro Valley Town Council approved a controversial incentive package that gives Vestar Development Co. up to $23.2 million in sales tax rebates over the life of an agreement on Oro Valley Marketplace, a large-scale shopping mall planned at Oracle and Tangerine roads.
Councilmembers Dick Johnson, Werner Wolff and Bart Rochman voted for the agreement; Mayor Paul Loomis and Councilmember Paula Abbott opposed it.
The new figure is $6.7 million less than the $29.9 million proposed March 15, when the council continued the matter for further review. The new contract provides a 45/55 percent split between the developer and the town, with the developer having opportunity to increase its share to 50 percent if it exceeds revenue projections by 10 percent.
"So if in any one year, the sales tax revenue forecast was $1 million, but it came in at $1,100,000 , they could share up to 50 percent of the sales tax
revenue," Oro Valley Economic Development Administrator Jeff Weir explained.
The agreement limits each of the four phases of the development to 10 years with the life of the arrangement lasting no longer than 16 years, he said. The agreement provides for a project of up to 900,000 square feet in size.
After the council approves Vestar's development plan - which could take up to 18 months for submittal and approval - the company has another 18 months to pull permits and begin
"They're making a huge initial investment which they'll want to recover as soon as possible," Weir said. "They would rather promise a little and deliver a lot. They're being conservative."
The $100 million project is expected to generate in excess of $3.6 billion in sales and $96 million in sales tax revenue over 20 years. The town could receive $26.4 million during the sharing agreement and an additional $48 million after the sharing ends, Weir said.
"The market (rooftops) will dictate how quickly it will be built. If we can build the entire project in one phase, that's to our advantage," Vestar spokesman David Malin said.
A recent report commissioned by Oro Valley indicated that the town probably has insufficient rooftops to attract the kind of high-end retailers many residents would prefer.
"Are you amenable to working with us to get the kinds of tenants we want for the project?" Rochman asked.
"Vestar is not in the practice of boycotting or discriminating against any company," Malin replied. "The market will (dictate) who the potential tenants are."
Earlier, Rochman had asked Town Attorney Mark Langlitz, "Through this agreement, do we have any ability to say there are certain stores we'd prefer not to see?"
Langlitz replied that as a condition of the revenue sharing agreement, the town could restrict the types and categories of stores and impose requirements to raise the level of store to the type the town was interested in.
That condition didn't sit well with Vice Mayor Werner Wolff. "We're sending a message that we'll make it as hard as we can to get a commercial enterprise into this town," he said.
The mayor limited speakers from the audience to those who had not spoken on the issue previously. About 20 residents - most of them opposed to the agreement - spoke during the council's March 15 meeting. Last week, fewer than a half dozen people spoke; they were about equally divided on the issue.
"We make it so difficult for people to get into this town, so prohibitive that they can't be successful," Northwest EXPLORER Publisher Melanie Larson told the council. She asked that it move the agreement forward in an expeditious way.
"I agree, this town needs this, but what do we need to pay for it?" asked Alan Dankwerth, husband of council candidate Helen Dankwerth. "What are the costs incurred by the developer? Put them on the table. I beseech the council to act as business people."
As the night went on, Abbott and Loomis moved to strike a clause rendering the project immune from any future development standards or town ordinances, specifically big-box ordinances, but the motion failed for lack of support.
"The big box issue is moot," Weir said. "We do not have a big box ordinance. Almost all big-box ordinances focus on one thing - limiting Wal-Mart supercenters." Vestar's current design doesn't have a freestanding pad big enough for a Wal-Mart, he added.
In other matters, the council approved in a 4-1 vote with Abbott the lone dissenter a request by Blake Hastings of CDO Partners to change the designation of a 76.5-acre parcel at First Avenue and Lambert Lane from mixed-used to single-family residential and create new development standards for "Area Z" of the Rooney Ranch Planned Area Development.
Town staff had previously recommended denial because the developer plans to severely grade just over three acres of the property's many hills and slopes to accommodate 152 single-family homes and build some of those homes in a floodplain.
Several neighbors spoke in support of the project, which they favor over apartment buildings.
The council also unanimously approved public art for the new Northwest Medical Center Oro Valley scheduled to open next year. The hospital has commissioned 52 works by 15 artists, all local but two, representing $335,000 in commissions. The hospital is also donating $100,000 to the Oro Valley Public Arts Endowment Fund. The proposal more than meets the town's requirement that 1 percent of construction costs be dedicated for public art.