The agreement is based on conditions agreed to by Vistoso Partners earlier this year in exchange for council approval of amendments to a planned area development proposal advancing Vistoso Partners' plans to build 89 homes on 90 acres of land designated as open space in Neighborhood 11 of Rancho Vistoso.

Under the agreement, Vistoso Partners will pay the town $194 an acre foot for all water used to irrigate its golf courses. The developer had been paying an average of between $58 and $74 an acre foot for up to 339 acre feet of recharged water set aside in its behalf. The change covers between 80 and 235 additional acre feet at the higher rate.

An acre foot of water equals about 326,000 gallons, or enough water to cover an acre to a depth of one foot.

The agreement also calls for Vistoso Partners to deed to the town 65 acres in the northeast corner of Neighborhood 11, 77 acres of Honey Bee Park and 98 acres of the common area of Honey Bee Wash. An additional 120 acres of ITC property in the northern portion of Neighborhood 12 would be deeded to the town upon approval of a final plat.

Vistoso Partners has an option to buy the ITC property, but doesn't own it.

All of the land is included in a development agreement between Vistoso Partners and Pima County approved by the Pima County Board of Supervisors March 12. That agreement sets aside 848 acres as open space to create a five-mile biological corridor leading to Tortolita Mountain Park.

In addition, if the agreement is approved, Vistoso Partners will pay the town $890,000 in the form of first liens on each of the 89 lots proposed for development in Neighborhood 11. The town would receive $10,000 on the sale of each lot.

The town would pay $803,214 to Vistoso Partners as compensation for water system improvements under way when the town bought the privately owned Rancho Vistoso Water Co. in 1996.

At its previous meeting Aug. 21, the Town Council addressed revisions to town policy that would allow Town Manager Chuck Sweet to provide cash bonuses, added vacation time or sick leave and other incentives to attract employees in critical or hard to fill positions.

The council also unanimously approved providing $7.6 million in projected sales tax revenues over the next 16 years as an incentive to developers of Steam Pump Village, a 460,000 square-foot mix of restaurant, retail, office and entertainment uses at West Tangerine and North Oracle roads.

As an example of the need for new employee bonuses, Human Resources Director Jeff Grant noted the town currently has a shortage of police officer candidates, recruits and lateral officers. It's been an industry norm for the past three or four years, he said. In prior years, Oro Valley has had a waiting list, but that situation has changed dramatically. Similar situations have arisen with civil engineers, urban planners, and a park maintenance supervisor, he said.

The change would provide Sweet with short-term recruitment strategies to alleviate the hiring problems.

Councilman Dick Johnson wanted to make sure the council is kept in the loop in the offering of such incentives.

Staff was directed to look into presenting a policy that included caps on any cash incentive, a commitment to a term of employment and a periodic reporting to the council.

Mayor Paul Loomis suggested requiring a one-year minimum employment commitment and any cash bonuses over 10 percent of the employee's salary to be discussed with the mayor who in turn would notify council members.

Councilmember Paula Abbott asked what would happen if the employee didn't work out. Grant said the awards would be spread over time and paid out only as long as the employee was working.

The measure was continued indefinitely on 5-0 vote.

On the tax incentives, Economic Development Administrator Jeff Weir said towns like Marana and Prescott are giving breaks of from 50 percent to 85 percent to attract retail development but doing so for shorter periods ranging from four to six years.

Oro Valley's offer is 40 percent of the projected 2 percent sales tax over 16 years.

Johnson pointed to an apparent reluctance to invest in retail in Oro Valley and noted that the town needs to jump start retail sales. "Activity begets activity," he said.

Mark Weinberg of Diamond Ventures said after the agreement was approved that the company would be meeting with Harkins Theaters again, offering to pass the incentive on to them. If they're not interested, Diamond Ventures will seek out other major theater operators, he said.

Harkins Theatres was to be an anchor for Steam Pump Village with a 14-screen 72,000 square-foot theater until talks reached an impasse earlier this year.

Weinberg said the theaters would be built in the initial development phase to attract other users.

Bill Adler, a Board of Adjustment member, expressed a lack of confidence in sales figures indicating the $70 million project would generate revenues of more than $1.8 billion over 20 years and questioned assumptions being made to defend those figures.

Councilmember Abbott said she would have been more comfortable about approving incentives if quality standards for restaurant, hotel and entertainment portions adopted in 1996 were applied to the project. She was told that planned area development requirements will force the developer to exceed the 1996 standards.

The council also received a progress report on efforts to establish a reclaimed water distribution system for the town.

Consultants told the council that at a Northwest area regional planning meeting recently it became clear other communities aren't ready to move on development of such a system as fast as Oro Valley. Tucson Water, they said, recognizes Oro Valley is going to move ahead on its own.

Efforts are being made to dovetail any reclaimed water system work with Oro Valley's road projects, but there are certain challenges as to where to locate the distribution system, consultants said.

In the northern section of Oro Valley, golf courses are ready to go once the infrastructure is in place, but the Arizona Department of Environmental Quality's liner requirements may pose problems for a couple of the golf courses, consultants said.

The initial phase of the system would cover Tangerine Road north of Thornydale Road, the second phase south of Tangerine.

The north section would go from Tangerine and Thornydale to a Tucson Water connection, east to La Canada Drive to Moore Road, then to Rancho Vistoso and turf users up there.

The southern portion would run south along La Canada to the town site, south to the CDO Wash and Calle Concordia up Oracle to the El Conquistador Resort.

The first phase would be implemented in 2006, the second in 2008. The cost of the first phase is estimated at $13.3 million, the second phase $9.4 million.

Johnson said this project is high on the council's radar screen because residents have been promised the town's golf courses would be off ground water ever since he was appointed to the council in 1997.

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