City looks to change westside development deal, postpone streetcar payments - Inside Tucson Business: News

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City looks to change westside development deal, postpone streetcar payments

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Posted: Thursday, April 11, 2013 1:17 pm | Updated: 10:23 am, Fri Apr 12, 2013.

A 2008 deal that gave a contractor exclusive rights to develop city-owned property west of downtown appears ready to be changed, allowing for slower development and to delay its share of payment for the modern streetcar development.

With opposition only from City Councilman Steve Kozachik, the council told the city manager and attorney Tuesday (April 9) to write amendments to the deal that would allow Gadsden Company to alter the development schedule for the 14-acre plot on Congress Street west of Interstate 10.

“From a city management standpoint, I think it’s a bad decision,” Kozachik said.

The amendments would allow the company to develop only a portion of the next phase of the property, which was divided into phased development blocks when the city and Gadsden finalized the deal in 2008.

Gadsden wants to build on only one block of the upcoming second phase of the development and have the remaining blocks collapsed into the final two phases.

The proposed second phase would include building a multi-level, multi-use building that includes underground parking, ground-level retail and affordable housing in upper levels.

Gadsden has been working with the U.S. Department of Housing and Urban Development to receive funding for the project.

According to the agreement, Gadsden was supposed to purchase the second phase blocks from the city two years after the closing of the first phase. That date is May 13.

In addition, the company wants to postpone payments to the city, required under terms of the deal, to fund a portion of the western end of the Sun Link modern streetcar project.

The original deal stipulates that

Gadsden would pay $3.2 million toward construction of streetcar infrastructure prior to the May 13 date. Gadsden wants the city to allow it to pay instead by April 2014.

Kozachik also questioned that change, suggesting it could create problems with the federal funding that was acquired to build the streetcar. The

Gadsden contribution was included as part of the application for the U.S. Department of Transportation grant.

Councilwoman Regina Romero has been a champion of the Gadsden project and defended the changes.

“The city has been sitting on this land since the 80s,” Romero said. The 14-acre parcel was part of a 68-acre section that the city bought in the 1980s with help from a federal Community Development Block Grant.

Romero said the agreement to build on the property was important because it came at time when few developers were interested in west side developments.

Gadsden and its affiliates have already built housing and retail on properties adjacent to the land subject to the development deal.

As part of the proposed amendments, Gadsden would agree to post an additional $500,000 in performance bonds, bringing the total amount to $1 million. The bonds would secure that Gadsden meet its obligations and the city would keep the money if the obligations under the development agreement were not met.

The company also would agree to complete Linda Avenue, which runs into the property, at a cost of nearly $500,000.

Gadsden also would agree to waive the city’s obligation under the original agreement to make improvements to land south of the parcels where the so-called “hole-in-the-ground” property lies.

The city was to bring that property up to construction grade to make fit for development after environmental remediation occurred.

“I hope we never negotiate another development deal like this again,” Kozachik said.

A senior housing apartment stands on completed first phase of the development. When fully built, the 14-acre property is expected to have a mix of residential and retail developments.

The council is expected to vote on a finalized package of amendments on May 7.

Contact reporter Patrick McNamara at pmcnamara@azbiz.com or (520) 295-4259.

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