"CLOSING THE BARN DOOR" on EDA's

Oro Valley may stop using incentives to lure new retail businesses

Brian P. Nanos
April 18, 2007

Town officials are questioning if the Oro Valley should continue to give economic incentives to any retail businesses.

By the terms of an agreement made by the town, Vestar Development Co., the developer of Oro Valley Marketplace, will get $23 million in sales tax rebates. However, the deal was only approved after a citizen group challenged it in court and then succeeded in getting the deal put to a citizen vote.

At an April 11 meeting to revise Oro Valley’s policies for giving economic incentives to new businesses, several council members seemed as if they would be hesitant to make that deal again.

Councilman Barry Gillaspie questioned the usefulness of giving incentives to retail developers if “a Vestar probably would have gone in anyway” and, “we’re retailed out.”

Those questions, Councilman K.C. Carter said, “hit a big nail on the head.”

Alluding to Vestar’s promise that the Oro Valley Marketplace would contain high-end retail shops, Vice Mayor Helen Dankwerth added that the town should at least have a way to get some of the incentive money back if the developers don’t fulfill their part of the deal.

At the study session, the council seemed more interested in providing incentives that would attract high-tech businesses to the town. “We get into a Ventana Medical Systems, that may be a whole new ball game,” Gillaspie said in reference to the biomedical company that is one of the town’s largest employers.

However, Economic Development Administrator David Welsh warned that providing incentives is a “big-boy sport.”

“We really don’t have the resources to really play in that game,” he said.

He added that Oro Valley cannot yet afford to match incentives offered by cities like Portland, Ore., or Albuquerque, N.M. He said, the town should instead focus on “setting the stage” to make the town an attractive place to live and work.

If setting the stage is most important, Gillaspie suggested, the money given to the developer of Oro Valley Marketplace would have been better spent on the proposed $151 million Naranja Town Site or other town improvements.

“It’s the quality of life, it’s the police protection,” he said. “And we’re struggling to pay for those things.”

The town has had one policy for providing economic incentives to all businesses, but when that policy comes before the board later this year it will be split into three. One policy will be for high tech businesses that provide high-paying jobs. Another will be for existing retail shops annexed by the town. The third proposed policy will be for future retail stores.