Closing date on $8.6M Queen Creek town land sale extended

Queen Creek has extended the closing date on a developer’s $8.6 million purchase of more than 8 acres of town property in downtown.

Creation RE is buying 8.2 acres of town-owned land on the northeast corner of Ellsworth Loop and East Ocotillo roads where it plans to develop retail, office and multifamily housing.

During its Dec. 18 meeting, the Queen Creek Town Council voted 6-0 to extend the closing date of the sale. Vice Mayor Leah Martineau recused herself from the vote due to a family connection.

The item originally was part of the council’s consent agenda, which is voted on with one motion and vote. Due to Martineau’s recusal, the item was removed from the consent agenda for a separate vote.

In December 2023, the council agreed to sell 6.8 acres of land at Ellsworth Loop and East Ocotillo roads to Creation RE for $7.4 million.

In June, Creation RE unveiled its plans for a $120 million mixed-use development at the site called The Switchyard, which will include 45,000 square feet of restaurants, retail spaces and offices, plus a 150-300 unit luxury apartment building.

The company also announced that it had secured the first two leases for the Switchyard, the wine café Postino and The Porch, “a retro-inspired” pub. Postino will take up 3,800 square feet and The Porch will have an 11,900-square-foot space that includes an outdoor patio.

In July, the council approved selling an additional 1.4 acres of land at the site to Creation RE, raising the total cost of the acquisition to $8.655 million.

Under the original terms of the agreement, Creation RE was scheduled to close on the sale by Dec. 31, contingent upon the company obtaining building permits.

“Due to unforeseen circumstances, the developer cannot secure these permits by the agreed upon closing date of Dec. 31, 2024,” a council staff report stated. “As a result, the developer has requested a 90-day extension, moving the closing date to March 31, 2025.”

To accommodate the change, Creation RE’s request to move the closing date 90 days will result in three 30-day extensions with each extension requiring a non-refundable payment of $75,000 for a total up to $225,000. The $225,000 will be credited toward the total purchase price, the staff report stated.

In addition, earnest money will become non-refundable with no contingencies; start of construction will be adjusted to April 1; and the developer will be able to extend the construction start date to July 1 without incurring penalties.

“This balances the developer’s request for flexibility while ensuring the town is compensated for delays and that project timelines remain relatively defined,” the report added.

Proceeds of the land sale will be deposited into the Town Center fund for future use.

“If the multifamily project develops as proposed, staff estimates that the development will generate approximately $2.9 million in one-time revenues from building permit fees, impact and capacity fees, and construction sales tax,” the report stated.

Staff estimates that ongoing revenue from the multifamily development will be about $500,000 per year in property tax, sales tax and state-shared revenues.

“Due to changes in state statute over the past year, the town will not collect sales tax on residential leases beginning in January 2025. Therefore, lease sales tax revenues have not been included in this analysis,” the report continued.

The commercial portion of the project is expected to generate about $850,000 in one-time revenues from construction sales tax, impact and capacity fees, and building permit fees. Staff also estimates that ongoing revenues for the commercial portion will be about $430,000 per year from sales tax and property tax.

“Ongoing costs to provide services to the property and residents are not known at this time but will include fire and medical calls for service, police protection, and general government services offered to all town residents such as library and recreation services,” according to the report.

Costs of water, sewer and trash/recycling services will be covered by utility rates and fees paid by the commercial and residential tenants.

We’d like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions@iniusa.org. Janet Perez can be reached at jperez@iniusa.org.