Andrews says westward look asked for incentives; resort boss says no serious talks took place

Oro Valley leaders recently pitched the idea of annexation to the Westward Look Resort.

"I think it would be a good fit because of Oro Valley's resort character," Oro Valley Town Manager David Andrews said.

The resort, located at 245 E. Ina Road, sits just south of the town boundary in unincorporated Pima County.

If an annexation agreement were met, the Westward Look would join the Hilton El Conquistador as the town's second resort along with six golf courses. But there's a catch.

"Essentially, they indicated that they would need some financial incentives to consider it," Andrews said.

In other words, the Westward Look would want an economic development agreement with the town. The town had discussed a similar arrangement in 2005, when Oro Valley looked to expand its boundaries, and again in recent months, Andrews said.

In August 2007 the town council decided to take economic development agreements off the table when negotiating with businesses. Then, in January 2008, the town decided to halt payment on its existing economic development agreements.

That decision was made in light of a pending Arizona Supreme Court case, Turken v. Gordon, in which the plaintiffs have challenged a $97 million incentive deal the city of Phoenix gave to developers of CityNorth, a mixed residential and commercial center. Claimants say the agreement violates the state constitution's gift clause, which prevents governments from offering favorable deals to one entity over another.

In November, the court of appeals sided with the plaintiffs. Defendants appealed to the Arizona Supreme Court, where the case awaits judgment. If the court finds in favor of the plaintiffs, future incentive deals would not be allowed and current deals might also face challenges.

Alan Klein, general manager of the Westward Look, downplayed talk of a potential annexation.

"The simple answer is, there have been no talks," Klein said.

He said that in 2005, when the town approached the resort about annexation, the chances were better that an agreement would be met. Discussions focused on bed-tax rebates, similar to the one Oro Valley has with the Hilton Tucson El Conquistador.

At the time, the town council was at the tail end of a flurry of economic development agreements, having penned deals with four retail developers. An earlier tax-sharing deal with developer Vestar-Athens to build a Ritz-Carlton resort in the town was scrapped. The resort has since been built in Marana.

Klein said that recently, a representative from the town had called him to discuss annexation, but he said the resort was no longer interested in joining Oro Valley.

"Nothing has changed, we're not interested in sitting down to talk about now," Klein said. "What's in it for us?"

A real beneficiary of annexation would be Oro Valley. As the recent battle of the town budget made clear, Oro Valley is increasingly strapped for cash. During the recently ended budget year, sales tax receipts fell 13 percent, state-shared revenues declined 10 percent, and impact fee and construction sales tax collections dipped by nearly 25 percent.

If the Westward Look did become part of Oro Valley, the town would see an influx of sales, utility and bed taxes. Sales and bed tax charges would increase at the resort.

Oro Valley charges a 2 percent sales tax on top of the state's 5 1/2 percent sales tax. Local bed taxes sit at 6 percent. With state and local sales taxes added, hotel stays in Oro Valley have the some of the highest levies in the state at 14 percent. Only Eloy (16.6 percent), Guadalupe (16.2) and Cave Creek (14.2) impose higher taxes on hotel stays than Oro Valley. At 7.5 percent, Huachuca City's total levy is the lowest in the state.

Economic incentive deals in Oro Valley

The town has entered into five economic development agreements over the years, including:

Oro Valley Marketplace

Vestar Development Company

45 percent of sales taxes

Up to $23 million

Oro Valley Town Centre

Cañada Del Oro Properties

45 percent of sales taxes and one-third of bed taxes

Up to $11 million (in sales taxes)

Steam Pump Village

Evergreen/Diamond Ventures

40 percent of sales taxes

Up to $7.6 million

Oracle Crossings

Bourne Partners

46 percent of sales taxes

Up to $6.5 million

Hilton El Conquistador

Rebate one-third of town's 6 percent bed tax

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