Queen Creek to reimburse Vestar $7.8M for infrastructure

The town of Queen Creek will be reimbursing shopping center owner-developer Vestar more than $7.8 million for publicly used infrastructure the company built as part of its Vineyard Towne Center project.

The Vineyard Towne Center is located at Gantzel and Combs roads. The first phase of the center is anchored by a Sprouts Farmers Market. The entire center is nearing completion with Target as the anchor tenant for the second phase of the project.

Target is scheduled to open in October and with conditions nearly met, town staff asked the Queen Creek Town Council for the authority to proceed with the $7.8 million payment to Vestar under an approved prepayment agreement.

The council voted 4-0 on Wednesday to approve the payments. Council Members Dawn Oliphant and Travis Padilla were absent from the meeting, and Mayor Julia Wheatley is on leave until late fall. The approval was part of the council’s consent agenda in which all matters are dealt with in one motion and vote.

In July 2007, the town entered into a development agreement with Vestar for the development of what would become the Vineyard Towne Center. The Great Recession put the development on ice until 2022, when the agreement between the town and Vestar was reactivated.

“Under the agreement, the town is obligated to reimburse Vestar for the costs of certain public infrastructure improvements, including road and drainage improvements, streetlights, and traffic signals surrounding the property,” a council staff report stated.

Originally, the reimbursement was structured to take place over a 15-year period, capped at $7,810,030. The payments were limited to 50% of sales tax revenues generated from the site, and the town was also required to pay 7% annual interest on the unpaid balance until full reimbursement or expiration of the 15-year term, the staff report continued.

“Recognizing the financial benefits, staff recommended a prepayment agreement that was approved by council on Dec. 21, 2022. This agreement allows the town to make a one-time lump sum payment once all conditions precedent are satisfied. This approach avoids ongoing interest costs and eliminates the administrative burden of tracking incremental sales tax revenues over many years,” the report stated.

The conditions met for the lump payment were final annexation of the property into the town back in 2008, the installation and acceptance of all required public infrastructure improvements, and issuance of a certificate of occupancy for 120,000 square feet of retail space, including a major tenant of at least 100,000 square feet.

“Approval of the spending authority will result in a one-time payment of $7.8 million to Vestar. This approach is projected to save the town approximately $4.3 million in interest compared to the original reimbursement schedule,” the report added.

The payment, which will come from the operating budget, does not increase the town’s current fiscal budget.

“Over time, the revenues (mainly sales taxes) will more than recover the cost of the payment for this infrastructure,” the report stated.

Please send your comments about this article to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines. Janet Perez can be reached at jperez@iniusa.org.