Developer, town near agreement pact - The Explorer: Pima Pinal

Developer, town near agreement pact

Roads would be repaid from Mercantile sales tax revenue

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Posted: Tuesday, September 8, 2009 11:00 pm | Updated: 1:22 pm, Mon Apr 18, 2011.

On Sept. 15, the Marana Town Council is expected to consider a development agreement that would provide incentives for a commercial developer to build roads into and around the Marana Mercantile project proposed for Marana Road and Interstate 10 on the community's northwest side.

As proposed, developer DTD-Devco would be required to pay for roadway improvements, to be repaid from sales tax revenue collected by the town from the retail center. Specifically, the property owner would be repaid 100 percent of the cost of roadway improvements as derived from 45 percent of revenue generated by the town's sales tax levy. Marana would retain the remaining 55 percent of its sales tax dollars.

Michael Racy, representing DTD-Devco and Desert Troon, told the town council last month that reimbursements should total less than $5 million.

"I really think we've come up with something that is a win for the entire community," Racy said.

In August, Town Attorney Frank Cassidy explained the proposal for Marana Mercantile, with an anchor retailer – "expected to be a WalMart" --  at the heart of the 39.09-acre parcel that would hold up to 280,000 square feet of retail shopping development.

"We want to try to address how to pay for some of the improvements," Cassidy told the council. "We are asking your feedback concerning the main deal elements that are proposed."

At Marana Mercantile, there is an incentive for earlier road development, in the form of higher interest rates paid by the town. From a start of 5.5 percent annual interest on the unpaid balance of the road construction cost, the scale falls every 12 months, eventually to 4 percent interest if the project remains undone into 2015.

"We're trying to incentivize the prompt development of the site," Cassidy said. "They are not obligated to build it within any time period. The interest rate incentivizes a quicker construction of it."

Roads to be improved include sections of Marana Road, Sandario Road and Marana Main Street. Marana would share in some of the costs for the "Shoofly," a detour road on the property.

Marana has entered such an agreement for road improvements "one other time," with the Marana Spectrum development at the Twin Peaks interchange project now under construction. At Twin Peaks, "they're required to build within 3-1/2 years after the interchange is opened," Cassidy said.

Councilman Jon Post wondered if other nearby landowners should share in the cost of road construction near Marana Mercantile.

"Why aren't some of the other property owners required (to make) payback when they go for development?" Post asked. "I see benefit by other landowners. They're not asked to reimburse the town."

As nearby landowners "come in for entitlements, they would be required to contribute their fair share," Cassidy replied. "Until they move forward with an entitlement, you're not going to get much payback."

The town had considered the possibility of a wider improvement district for road construction, but that idea was sidetracked by current economic conditions, Cassidy noted.

Racy said "the entire market has changed," and with it has come "a rational level of transportation development" for the property, which is expected to have retail, restaurant and banking development space.

"Actual groundbreaking in this market is almost impossible to say," Racy said. He put forward "three to five years, but don't hold me to it. All bets are off."

Racy praised the town and its representatives for meeting numerous times to discuss the plan.

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