Tucson took a major — and potentially expensive — legal issue off its plate last week when it settled with the developers who were hoping to build a south side Sam’s Club.
Irvington Interstate Partners LLC, which had filed a $13 million claim with the city, sued last year after the City Council nixed a plan to sell the company land for the project.
The settlement does not require the city to pay any damages. It calls for the city to sell the 53-acre parcel at Interstate 19 and West Irvington Road at no less than the same $4 million price agreed to five years ago, but for a less intensive commercial development.
The city pulled the plug on the original deal after realizing an earlier economic redevelopment agreement with a neighboring shopping center prohibited “big box” retail development such as Sam’s Club on the site.
After years of dispute and negotiation, the council voted in February 2013 to put the land back out to rebid, after the Sam’s Club determined it couldn’t build a store under 100,000 square feet, which would put it under the size limit for the city’s big box ordinance.
While the property will undergo an independent land appraisal to determine the actual sale price, the agreement stipulates the purchase price will not be lower than $4 million.
In addition, Irvington Interstate Partners has nine months to perform environmental and other studies on the property.
If either a problem with the land arises or the final purchase price is too high, the company can refuse to buy.
But even if it winds up not buying, the settlement prohibits them from filing another lawsuit against the city, said City Attorney Mike Rankin.
Paul Schloss, a partner in Irvington Interstate Partners, lamented the fact it took years, and legal action, to get to this point.
By holding firm on its big box ordinance, the city has lost out on an estimated $1.5 million to $2 million a year in sales taxes.
Schloss didn’t reveal specific plans for the site. He said they would now perform their land studies and move forward from there.
It’s unlikely it will be a Sam’s Club or any other big box store though. The settlement prohibits the group from seeking approval for a “large retail establishment” use at the site.
The agreement offers a conclusion to the tumult that has plagued the project from the beginning.
The city initially agreed to sell the site for a Sam’s Club in the summer of 2011.
But once the deal became public, Tucson Spectrum’s then-owner, Scottsdale-based Barclay Group, filed a $112 million breach of contract claim against the city.
As an incentive to build the Spectrum on the south side, the city promised Barclay it would prevent retail development on the city-owned property across the street until 2017.