The Town of Queen Creek and Vestar Development have negotiated a development agreement that provides a method for the Town to have needed roads and infrastructure built in the Town Center sooner than would otherwise be possible, improving overall transportation and access for the whole community and helping to expedite bringing new sales-tax generating businesses to downtown Queen Creek.
First of all the bit about 'negotiated a development agreement' should tell us all that this particular developer does not have a magic wand to make everything go their way.
Further, the rest of it sounds similar to the situation that Kingman is facing.
Development agreements are a tool allowed by state law, and commonly used by municipalities, to ensure a developer makes specific improvements to publicly owned roads and rights-of-way.
Good.
The agreement between the Town of Queen Creek and Vestar requires
the developer to build and expand large portions of new roads, including the Ellsworth Loop Road, Rittenhouse Road and other arterial streets, at a cost of $9.7 million to Vestar.
In addition, Vestar will contribute $10 million toward the construction of a railroad underpass on Ellsworth Loop Road. This totals $19.7 million that Vestar will pay toward public improvements in the downtown.
Still sounds like a plan... but I bet you have the same question by now. How does a municipality pay the developer back??
In return for advancing these funds and making these road improvements, the Town
agrees in the development agreement to reimburse Vestar over time from the sales taxes collected from the new businesses Vestar brings to the Town Center development.
Meaning that the retail sales taxes collected everywhere else throughout, say, Kingman would NOT be used to pay back the developer.
Beginning one year after the first retail businesses open, the Town will pay 50 percent of the sales tax received each year to Vestar. The total repayment by the Town will be $19.7 million, plus interest.
Please note... the interest is not amortized, it is simple interest. It's in one of those infamous city emails.
There are no "incentives" or "give-aways" in this development agreement. Only those funds spent by Vestar for construction of publicly owned infrastructure are to be repaid.
Just like a city would pay for up front... without a bond issue... if it could.
The Town of Queen Creek hired Ernst & Young to review the Vestar pro forma financial statements and compare them to other successful development projects. The results show that the repayment proposed of 50 percent of Town sales tax will be sufficient to repay Vestar within a 13-year time period, or sooner if development of the total site happens more quickly and sales tax receipts are larger. The Town’s repayment to Vestar is limited to $19.7 million plus interest, or 13 years, whichever comes first.
I still fail to see a problem.
The development agreement includes an additional sales tax to be paid to the Town on businesses within the 133 acres. This additional Town sales tax of 0.25 percent on those businesses will fund other necessary infrastructure and programs in downtown Queen Creek. These funds can be spent throughout the downtown area. Possible projects to be funded with this revenue might include widening other parts of Ellsworth and Ocotillo roads, new sidewalks, storm drains, landscape, street lighting and benches.
So the new development is helping fund other projects throughout the town?? Say it ain't so. And again, if another city in Arizona is doing this to improve the sales tax revenues... we should be, at the very least, considering something similar.
The development agreement contains performance standards that assume Vestar will complete the development within eight years (beginning September 2006) in order to ensure the generation of expected levels of sales taxes for the Town. If these standards are not met and construction is delayed, the Town will repay a lesser portion of the $19.7 million than would occur if the standards are met.
What is the reason we don't want the city of Kingman to begin these kinds of negotiations again??
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