City hopes to market failed downtown-area redevelopment site

2014-04-17T00:00:00Z 2014-04-17T12:29:21Z City hopes to market failed downtown-area redevelopment siteBy Darren DaRonco Arizona Daily Star Arizona Daily Star

Tucson could soon get out from under a 55-year lease for a downtown dirt lot for which it pays about $195,000 a year in rent to a trust benefiting former Rep. Gabrielle Giffords’ family.

The City Council recently agreed to split about 12 acres of land the city owns north of West 22nd Street along the east side of Interstate 10 into five separate parcels to make it more palatable to developers.

One of those parcels would be 6.5 acres, which the city real estate office is trying to sell in a package with the 2.4-acre Giffords property at 600 W. 22nd St. The city hopes to sell its piece for $1.6 million to a buyer who will take over the lease on the Giffords site.

The council also paved the way for the city’s real estate office to seek proposals for buying 6.5 acres of city land for about $1.6 million and pitching the 2.4 acres of leased land as part of a package deal.

A bid solicitation is expected to go out within a month.

The move would be the latest in an effort to sell about 50 surplus properties to remove them from the books and put some money in city coffers.

So far the city has sold about $2.4 million of excess land.

It could also relieve taxpayers from having to pay rent on unused vacant land where the city intended to attract a long-defunct redevelopment plan. In 2000, city officials hoped to attract a grocery store to the site, to encourage people to live downtown and to bolster Rio Nuevo revenue.

“It was a neighborhood revitalization project,” said Hector Martinez, city real estate program director.

The city determined the property, the former site of an El Campo Tire store, would be the best fit for that, city records show.

The Giffords family and another owner of the property — which was originally 3.3 acres before freeway expansion shaved nearly an acre off — didn’t want to sell and the city lacked sufficient grounds to condemn the site.

So the city leased it at a rate of $141,930 a year with annual increases up to 3 percent. The city later renegotiated the annual increases to be capped at up to 2.5 percent. The lease expires in April 2055.

City officials believed a grocery store would jump at the chance to build in a prime downtown location. And once a store was in place, the city expected to turn the lease over to it.

But those plans never materialized, and then the economy tanked.

“It became clear there was no market that was going to drive that,” said Tim Murphy, city real estate special projects coordinator. “And the plans pretty much died.”

The city attempted throughout the years to attract development to the area, without success.

It recouped some costs by leasing it out for events such as the gem show.

A recent agreement with the gem show expired this year, which is partly why the city didn’t put the property up for bid sooner, Murphy said.

Martinez conceded the city has been paying a higher-than-market rate for the property because the deal was signed when real estate prices were peaking.

An appraisal last year valued the property at just over $2 million.

With the economy turning around, Martinez believes there will be some interest in the property.

Al Roughton, who owns the property along with the Giffords family trust, said he hopes the city can finally find someone to develop the site.

He said that while the owners aren’t interested in selling, they would be willing to work with the city as long as they don’t have to surrender too much in any deal.

Roughton said they shouldn’t have to take a steep hit just because the city couldn’t find a viable project .

The City Council would have to approve any final deal.

Contact reporter Darren DaRonco at 573-4243 or ddaronco@azstarnet.com. Follow him on Twitter @DarrenDaRonco

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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