For the first time in years, there’s good news coming out of metropolitan Phoenix’s housing market. In March, home sales soared to levels not seen since 2005, foreclosures fell for the first time in a year and prices showed signs of leveling off in some areas. more…
Projects slated for development on the
According to some developers involved, the proposal would raise impact fees from current levels of $3 to $4 per square foot to $9 to $12 per square foot, making new development on leased tribal lands cost-prohibitive for many. They said impact fees in surrounding communities are significantly less, with Scottsdale,
A spokesman for the tribe said no decisions have been made and the tribe could not provide any estimated fee increases.
Impact fees — which are used to pay for infrastructure, such as roads, schools and public safety — normally are paid when a building permit is obtained, so the increased assessments would be levied only against new phases of construction.
The proposed — and, in some cases, partially built — commercial developments are along
Most of the land on the
The land leases signed between developers and individuals took years to negotiate. They have 65-year terms and normally include 10-year options beyond that.
“We’ve spent a long time building relationships with these families,” said Gerry Blomquist, a partner in
That project, which has yet to break ground, is designed to include 2.5 million to 3 million square feet of office, industrial and hotel space.
Two other development firms,
In an unusual twist, members of the tribe who negotiated leases with developers oppose the fee increase because they fear it will diminish their property values.
According to a letter obtained by the Phoenix Business Journal, the tribe invited landowners to an April 7 roundtable discussion on the matter. Developers and nontribal members are not allowed to participate. The tribe’s media specialist, Levi Long, would not confirm that such a meeting was scheduled, but he emphasized that discussions are ongoing.
Russell Ray, a spokesman for the
“It was a complete farce. There was no exchange of views or positions,” Ray said of the meetings. “The staff and consultant presented their plans, but would not explain how they came up with their information and positions. They completely worked on this in a vacuum.”
Meanwhile, Trey Eakin, senior vice president of development at The Barclay Group, which hopes to build a SuperTarget and large retail center near
“They will completely shut down commercial development in the community. The total impact fees to our retail project, if we developed 80 acres, would be in the $18 million range,” he said. “The damage now is that most of our tenants have us on hold pending some formal resolution of this issue; and until that is accomplished, we just sit and continue to eat up land carrying costs.”
Chuck Kennedy, president of Grosvenor Holdings, said his company has spent 13 years negotiating with landowners to build two mixed-use projects on sites held by individual families. He said most developers understand the need for assessing impact fees, and he was not concerned until he saw the proposed numbers.
“When we got that initial draft, the fees were significantly increased,” Kennedy said. “It showed that the price per square foot for retail would be $12 to $13. That would be a killer for us.”
Although he has heard the increases likely will be reduced from those initial numbers, he believes assessing any increase now is hard to swallow.
“One problem with all of this is the timing,” he said. “We’re all struggling to survive in this economy. If we start adding this on at this time, it kills our ability to complete these projects.”
Marty De Rito, CEO of
Kurt Rosene, senior vice president of national development for
The seven-member Tribal Council, plus the president and vice president, must vote on the issue before any change can occur, but no timetable has been set.
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The construction industry is divided on how stimulus money should be disbursed to businesses after contracts for transportation, public works and other projects are awarded
Existing government procurement procedures do not pay contractors up front when they win bids, but rather dole out monthly payments and reimbursements for bond-backed expenses.
Some construction groups and contractors want that process to change, saying stepping up the usual payment process would expedite the potential benefits of stimulus projects and spur job creation.
The Arizona Contractors Association would like to see contractors get as much as 40 percent of their money from stimulus-related projects up front. ACA President David Jones said that would allow contractors to ramp up operations, bring back laid-off workers, buy equipment and hire subcontractors more quickly.
That would be a big help to the hard-hit construction sector, which had massive layoffs as projects screeched to a halt during the recession.
The U.S. Commerce Department said April 1 that February construction activity was down 10 percent from February 2008 and 0.9 percent from January.
Jones said his proposal would “stimulate the economy faster.” He wants the federal government to allow Arizona and other states to use construction contracts as possible pilot projects for up-front payments. He has talked to
Another leading construction industry group, however, does not want to change federal procurement rules because of concerns about how effective the $787 billion American Recovery and Reinvestment Act will be in turning around the U.S. economy.
“This is no time to be experimenting with new gimmicks that could fuel skepticism about delivering projects funded by ARRA,” said David Martin,
“I know payment methodologies vary worldwide, but ARRA is very clear that payments to contractors follow currently established processes and, in the case of funding, established distribution formulas,” Martin said. “I think it’s dangerous to be talking about lump-sum payments to contractors before there are established reporting criteria. The industry should focus on creating a uniform methodology to limit confusion about reporting. That is what AGC intends to work on.”
Bill Kelton, senior vice president of
“I feel the procurement rules are just fine as they are. We have already made so many unprecedented changes in the system, and we don’t really know how it will all turn out,” Kelton said. “If we have a bunch of contractors that ultimately defraud the taxpayers by getting front money and failing to complete the work, then we will have a scandal similar to the AIG bonuses that will give the taxpayers even more reason to be afraid of the economy.”
Stimulus contracts are governed by federal and state procurement rules. Paul Senseman, spokesman for Gov. Jan Brewer, said federal rules are attached to stimulus money coming into the state that govern how and when the money is to be allocated.
Arizona Department of Transportation spokesman Timothy Tait said stimulus highway contracts, for example, follow federal rules that offer little up-front money. Most of those contracts are paid on a monthly or quarterly basis as the work is done. Tait said changing those rules would have to occur at the federal level.
Stimulus money already is being allocated for Arizona construction projects, including $10.5 million for runway improvements at Phoenix Sky Harbor International Airport, $36 million for Metro light rail and $14.8 million for repairs, renovations and construction at Luke Air Force Base.
The city of
Greg Jones, a construction and real estate attorney with Phoenix-based law firm
“I do think there could some areas where you could front-load a little bit,” he said.
Jones said some contracts might qualify for up-front payments, but that would depend on the project and the governing agency. He does not expect major changes to federal procurement rules, and he acknowledged questions could arise if money is disbursed differently to certain stimulus projects.
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Ryley Carlock & Applewhite: www.rcalaw.com
R.E. Monks Construction Co.: www.remonks.com
The Phoenix City Council voted unanimously to permit a small strip development at Tatum Boulevard and
Pinnacle West Capital Corp.’s real-estate subsidiary, SunCor Development Co., will attempt to sell $400 million in housing developments and golf courses - most of them in Arizona - to reduce debt and focus on commercial building, the company announced Thursday. Arizona Public Service Co. is Pinnacle’s main subsidiary, but the smaller SunCor business has been a drag on earnings recently. more…
Lenders signaled their intention in March to foreclose on more than 10,000 Valley homes and other properties, the highest single-month total on record. The 10,635 notices of trustee sale issued through March 30 represent a 25 percent increase from February and a 100 percent increase over March 2008, according to
Paradise Valley Mall has nearly 15 vacancies, including stores and food court restaurants - the highest it has had in years. Officials say the vacancies are common for comparable malls in this economy. more…
The Costco planned for Paradise Valley Mall has been delayed again. Mall officials hoped to open the northeast
The home had been on the market a year ago for $2.6 million.
John Pappas bought it in February for $975,000.
He plans to restore and preserve the house, which was also the home of architect Bennie Gonzales, who among other things designed
Gonzales, who died in December at 84, did a major addition to the original MacDonald adobe.
Elsa Rector, who lived in the historic home from 1992 to last year, had a deep attachment to the home and was hoping that it would not become another
It appears her wish will come true.