900 acres go undeveloped near Gateway Airport - East Valley Tribune: News

900 acres go undeveloped near Gateway Airport

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Posted: Thursday, August 28, 2008 4:28 pm | Updated: 11:53 pm, Fri Oct 7, 2011.

More than 900 acres of vacant land for planned commercial development adjacent to Phoenix-Mesa Gateway Airport remains empty today despite three years of efforts to sell it using tax and other incentives.

There are no bids to purchase any of 16 lots, ranging in size from 18 to 308 acres, in a district known as the Williams Trade Zone south of the airport, according to Michael Blenis, senior vice president of operations for property owner, Paragon Properties. The company began purchasing the land three years ago.

Mountain Rd., Power Rd., PINAL COUNTY, QUEEN CREEK, Pecos Rd., Ellsworth Rd., 202, 60, MESA, Phoenix-Mesa Gateway Airport, Rittenhouse Rd., Ray Rd., Elliot Rd., GILBERT, Map by Gabriel Utasi/TRIBUNE, SOURCE: Paragon Properties

“We’ve been discussing it with several companies, but nothing so far,” said Blenis, whose company spent more than $70 million to obtain the property.

The acreage, formerly farmland, is zoned for potential retail businesses and manufacturing, warehouse and industrial developments.

Michael Haenel, vice president of Grubb & Ellis/BRE Commercial, the brokerage firm handling potential sales, said the unnamed companies have expressed interest in buying some parcels, but no firm commitments have been made.

“The area has a lot of incentives that are attracting investors’ interest,” Haenel said.

Those incentives include two prime development tools, a community facilities district and a designation by the U.S. Departments of Commerce and Treasury as a Foreign Trade Zone.

Jay Butler, a real estate professor at Arizona State University Polytechnic Institute, located at Gateway Airport, said the financial lures offered on the land aren’t enough yet to attract businesses.

“Because of the weak economy, and the competition among businesses, it is taking more time for an incoming business to get established,” he said.

The trade zone is expected to offer several advantages to businesses, including proximity to Loop 202, U.S. 60 and major thoroughfares such as Crismon, Germann, Pecos and Power roads, as well as the growing Gateway Airport.

Geography aside, a large financial attraction on the land is a Communities Facility District, or CFD, a distinction that allows the developer to issue tax-exempt bonds to pay for infrastructure such as waterlines, sewers, roads and other basic facilities. Mesa is being asked to approve a CFD for the property, which would be the first such district in the city.

“A CFD is a great way to have growth pay for growth,” said Carter Froelich, manager of development and planning for DPFG, a real estate consulting firm hired by Paragon to process the CFD through the city.

The district allows a developer to establish a separate political subdivision in the 900-acre area, from which tax-exempt bonds can be issued to finance improvement projects. The city and residents outside the district are not responsible for repayment of the bonds. There are currently between 65 and 70 CFDs in Arizona, Froelich said.

The Williams Trade Zone is part of the airport’s larger Foreign Trade Zone, or FTZ, which offers tax-free incentives for companies dealing with foreign countries.

Businesses, for customs purposes, are treated as if they were located outside U.S. borders. Merchandise may be brought in duty-free for storage, repacking, display, assembly or manufacturing, and imports may be landed and stored quickly without full customs formalities.

Property owners in the zone qualify for up to an 80 percent reduction in property taxes.

“A FTZ benefits the community by creating jobs,” Blenis said.

Lynn Kusy, Gateway executive director, said the airport board of directors supports the zone for several reasons, including protecting the airport against residential encroachment.

“It also generates customers for the airport,” he said.

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