Council targets $1.6 million in new sales tax revenues from annexing three Oracle-Ina Centers
Annexation of retail-rich commercial areas is part of Oro Valley’s financial strategy. The three shopping centers at the intersection of Oracle and Ina roads are a prime target. Two of them already meet the state’s annexation requirement because they touch Oro Valley’s boundaries. Together, the three centers could generate about $1.6 million annually in sales tax revenue for the town with minimal added cost. How annexation of all three centers might occur was the focus of last week’s Oro Valley Town Council strategic planning study session.
But Center owners see no benefit in annexation
The town has approached the owners of the commercial properties, but there has been no interest in annexation. Several say they already receive acceptable service from Pima County. What they would prefer is a financial incentive, such as a rebate of sales tax revenue. State law, however, prohibits that approach. While the town can offer inducements to encourage annexation, those typically involve infrastructure improvements such as roads or other public facilities. Those types of incentives have little relevance for the existing shopping centers.
So, the town will turn to Plan B: Include nearby residential areas in the annexation
The town is moving to Plan B. Under this approach, nearby residential neighborhoods would be included with the commercial properties in a proposed annexation area. Arizona law requires annexation petitions to be signed by property owners representing more than 50 percent of both the owners and the assessed property value within the area. Including nearby homes could help meet those thresholds and allow the commercial centers to be annexed as part of the same action.
The approach may have promise. Vice Mayor Melanie Barrett said residents living near one of the Ina and Oracle shopping centers have approached her asking why their neighborhoods have not already been annexed into Oro Valley.
There are a number disadvantages to Plan B.
- First, it requires convincing far more people to support annexation than a simple discussion with a single property owner. This would require a significant outreach effort by the town. It also opens the discussion for negotiations.
- Second, some residents, or perhaps outside groups, could organize to oppose the annexation.
- Third, the strategy is more complicated to structure because the annexation area must be carefully designed to meet state requirements for both property ownership and assessed value.
- Fourth, including residential properties generally reduces the financial attractiveness of the proposal. Residential areas produce less revenue and increase the town’s service obligations, particularly for police, road maintenance, and administrative services. According to staff, adding residential support to annex the two areas south of Ina Road, for example, would add about $116,000 in annual costs while generating only about $40,000 in additional revenue. This is a net cost of roughly $76,000 per year.
Plan B could guide future annexations of Foothills and LaEncantada
Plan B could provide a roadmap for pursuing the annexation of the former Foothills Mall and LaEncantada
- The Foothills Mall area is not contiguous with Oro Valley’s current boundaries. Annexing it will require bringing in residential areas that together include roughly 2,500 residents.
- Annexing La Encantada will require residential participation, which may not be readily available. During the Westward Look annexation discussions several years ago, some residents in nearby neighborhoods expressed little interest in becoming part of Oro Valley.
- The cost of serving larger areas such as these could be significant. For example, the roads in those areas are currently maintained by Pima County, and the town would need a much clearer understanding of road conditions and long-term maintenance costs before moving forward.
For now, the safest direction for the town and the one most likely to produce results in the next several years are the Ina–Oracle annexations. That is where the council directed staff to focus their effort.
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