The agreement constitutes a significant risk for the developer, acknowledges Arizona Land Commissioner Mark Winkleman, because once the plan is approved and the land is released for development, Westcor will have to compete against rival companies to buy development rights at auction.
"They're taking a big risk," he tells GlobeSt.com. "We're not hiring them as would normally be the case. It's their money being put up. Yet they might get outbid for any parcels they want and end up not being able to develop anything."
The agreement includes mechanisms to ensure Westcor gets at least some of its money back from any collected funds when the state finally auctions the land. But, the commissioner says it will take a minimum of three years, and probably five, to complete the plan. He adds, however, that a few parcels could be auctioned in advance of the master plan's completion.
The planning is to be one of the largest in Tucson's history, effectively creating a mini-city within the city. The Tucson Department of City Planning, which will coordinate with the Westcor team, envisions residential, office, retail, recreational, cultural and possibly industrial development. According to Winkleman, the site is in the city's current path of development and large enough to handle the bulk of the city's growth in the foreseeable future.
Winkleman's department oversees some nine million acres, representing about 13% of the Arizona's land area. It rarely relinquishes ownership of land under its authority, but does auction ground leases for some sites that are in the path of development. But, before doing so, it prefers to have a plan in place to prevent sprawl.
Winkleman says unfortunately the department is short on funds and personnel, prompting it to turn to the private sector for help. Companies step up to the plate, he continues, because they believe poorly planned environments ultimately erode the value of properties they already own in surrounding communities.
They also come away knowing more about the development than their rivals, giving them a potential leg up when sites come up for auction. Still, he says not many developers are not willing to take the chance.
"We talked to various parties down there," Winkleman says. "Westcor is the one who stepped up and said we'll do it. Everybody acknowledges this is terrific property, but not everybody's willing to spend money on planning it without some guarantee of return. A lot of people might be challenged by saying we'll put out a few million dollars even though we might not get to develop this. Westcor wasn't."
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