Jan. 12, 2005 - A piece of land a little larger than a football field is holding up the approval of a multimillion dollar county bond historic preservation project in Oro Valley.

Steam Pump Ranch, a former watering hole and stage stop on North Oracle Road, was built by George Pusch in the 1800s, and is said to have been the beginnings of what is now Oro Valley.

Acquiring and preserving the property was deemed the "highest priority" project by the town after passage of a county bond package last May, which included $2 million for the preservation of Steam Pump.

The town is hoping to make the property a local jewel by preserving and restoring the historically significant areas and supporting a surrounding development that will attract people to the area as a destination.

The town intends to make the 4-plus acre historic core of the property its own, although Community Development Director Brent Sinclair said negotiations have been hindered by an impasse between the county, which controls the money, and Michael Naifeh, who is developing the land.

The historic portion of the property accounts for only four of the 15 total acresof the Steam Pump property. Naifeh is concerned about losing that prime property, but by negotiating a swap for a piece of county land at the southwest corner of the property, along the wash, Naifeh looks to get back 1.7 of those acres, giving him more developable land with which to work.

But until that agreement can be reached, talks about acquiring the historic core are stalled.

"It is difficult for the town to work a purchase price with Mr. Naifeh when he doesn't know how much land he will be working with," Sinclair said.

Naifeh had been pursuing a rezoning of the Steam Pump property, through the town, to move from low-density residential to the highest volume commercial zoning designation.

The Planning and Zoning Commission unanimously recommended denying that request Feb. 3, stating that the plans were in conflict with the General Plan designation and that the uses being considered were incompatible with the site's historic significance. Between February and September, Naifeh requested three continuances of his rezoning request to work out the details of the plans.

Sinclair said, although there have been multiple meetings between all the parties during those months, and some consensus has been reached, Naifeh has not yet submitted revised plans that meet the town's conditions. For that reason, town staff recommended denial of the rezoning, and the council agreed with a unanimous vote at the Jan. 5 regular meeting.

Naifeh is now considering applying for Planned Area Development zoning, but because the property is too small for its own PAD, he could seek to join the existing PAD to the north of his property, being developed by Diamond Ventures.

Sinclair said staff supports this move, for several reasons, including that architecture, setbacks and other design elements are already in place for that development, and joining it would provide a comprehensive look for the entire area. The two properties were originally part of the same PAD, but were split and sold as separate parcels.

While rezoning denial presents a temporary setback for the progress of the project, six months of meetings between the developer, staff, the county and other parties, including council members and historic preservation experts, has resulted in a plan for the development of the area that is acceptable to everyone.

Councilmember Conny Culver, who took part in many of these meetings, said she is encouraged with the design concept that has been developed.

She said included in those designs are ideas such as building three "casitas" on the Oracle Road frontage, possibly housing artists, with an L-shaped hotel on the corner. The ground floor, she said, would hopefully attract an upscale restaurant, with an outdoor patio, and boutiques.

"So that the ambiance of the historical site really surrounds you," she said. "That would be just wonderful."

Other similar businesses would be ideal for the area, she said, so that tourists and native Tucsonans alike would be attracted to the area.

Culver said all those involved with these meetings are aware that the project remains a business venture for Naifeh.

"We have to make sure it is economical, of course. They own that land," she said.

Naifeh had wanted automotive uses for the property in the past and has, at one point, even said he considered paving over the historic site to make way for intense development. He has since said he is willing to work with the town, as long of the project remains "economically" sound from his vantage point.

The concept plan, now agreed upon, should have been the "toughest nut to crack," Sinclair said, but instead the issue of acquiring the land has been the biggest obstacle for the town.

"It is a county deal at this point," Sinclair said, because the funding for the project will be coming from them and because of its ownership of the 1.7-acre parcel. "They hold the cards."

Deputy County Administrator Mike Hein said the county has maintained a firm position regarding the project and any land swap deal to be negotiated, stating that it is willing to do so for an equal amount of land in the Steam Pump historic core.

In a letter dated Aug. 27 from County Administrator Chuck Huckelberry to Oro Valley's Town Manager Chuck Sweet, Huckelberry outlined the official position of the county regarding an appraisal of the property and potential land swap agreement.

"It has been the position of Pima County, in previous correspondence, that since Steam Pump Ranch is not zoned commercial, and given the historical importance of Steam Pump Ranch and the nexus between the planning, preservation and development, it would seem appropriate that the site, in part or in whole, could be obtained through a development agreement with the land owner, and that a significant portion of the site could be obtained without cost," Huckleberry wrote.

He advised Sweet that it would be "premature" to extend county bond funds to pay for an appraisal of the Steam Pump historic core, and that any appraisal should be paid by the developer, "seeking to profit through the development agreement."

"It would also be inappropriate to invest public funds into the Steam Pump Ranch project simply to ensure that an otherwise unviable development can meet some private party investment target," he wrote. "Any county bond funds not used for acquisition can be invested in rehabilitation and repair of Steam Pump Ranch, increasing its value to the whole community."

The county has outlined in several correspondences with the town specific conditions to be met if a swap were to be OK'd.

Those conditions include making sure equal acreage is exchanged and that the balance of the preservation area be dedicated to the town.

This could mean the town would not have to use any of the bond money for land acquisition.

The adoption of architectural guidelines for the new buildings and ensuring that the new buildings are aesthetically compatible with the ranch, also are included in the county's conditions.

The county also maintains that several conditions be placed on any rezoning of the property, although the developer may take a different approach after this recent rezoning denial. If it is to exchange its land, the county wants to make sure the developer: Provides shared parking and public access to the Cañada del Oro trail; constructs and maintains an access road, sidewalks and landscaping buffer; provides "pedestrian-friendly" access to the preservation area; and installs necessary utilities and includes hook-up points for plumbing systems to the ranch buildings.

If all of these conditions are met, the county will then convey the exchanged preservation land to the town, according to several letters sent to the town from Huckelberry and Hein.

Naifeh said he believes he has tried to come up with a fair solution that both he and the town can live with, meeting many of their requests.

"I am doing everything I can to work this out," he said. "But I am not going to negotiate with Pima County in an Oro Valley rezoning. Unfortunately, that's delaying me."

He said he does not understand why he has to work with the county, "a government entity that doesn't have jurisdiction."

In response to Naifeh's concern over county involvement in what he sees as an Oro Valley matter, Hein said the county does not have anything to do with the rezoning, but does have involvement with the project, because it is a county bond project.

Hein said in his last meeting with Naifeh and Oro Valley staff regarding the plans, he thought they had agreed on the steps necessary to keep the project moving forward. However, step one, to submit a new map of the site plan, has not yet been completed by Naifeh.

Naifeh said he has worked with town staff and council and has met with historic preservation specialist, parks specialists and others in order to come up with a plan to appease everyone involved.

"We have a consensus on a plan," he said. "And, I think, we have a reasonable shot at being successful."

However, he said the key for him at this point is making it work economically.

"Any time you neutralize four or five out of 10 acres of a property, on the frontage, it's a little bit painful. But we've been working to ameliorate that. Brent (Sinclair) and the council has been supportive. They are cognizant of what is going on. It seems to me we can resolve this once the economics are handled," he said.

By economics, Naifeh means getting some kind of compensation for the land that is considered historic, the land the town hopes to preserve for the future.

"When you are taking one-third of someone's property, it's hard to work that out without some kind of compensation" he said.

He said he was asked by the the town to mitigate the asking price as much as possible, and he has been trying to do that, but cannot go to the owners of the property with a total loss.

He said he is no longer asking to be paid the full value for the historic core. While he would not go into the exact figures, he said he has worked to reduce the asking price and reach a resolution with the town.

"I think that qualifies us as being nice guys," he said. "We are not opposed to treating people fairly, but as a property owner, you deserve to be treated fairly, too," he said.

Hein said he never had any "meaningful" discussions over the value of the property with the owner.

He said the county has never put a cap on the price it is willing to pay for the land, which has remained open to negotiations, however, he said, "We have told the town, the less it costs you for acquisition, the more you will have to develop the site."

In the meantime, Naifeh said he believes plans for a project that "could have been done six months ago" are being dragged out unnecessarily.

If the county continues to "take their time with this," Naifeh said he will have to consider some alternative plan for the project.

Naifeh said he is ready to move forward with this process, and has no problem bringing plans back through the planning and zoning process, but will not do that until the money issues are worked out.

"We still have an interest in bringing this to fruition," he said. "Frankly, I think this could move along a lot faster than it has."

Hein said there is "no sense of urgency" in the county's opinion as far as how long the town has to get this project moving forward. He said until the town asks the county to start selling bonds, the money will be there.

"We're talking years," he said.

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