Tony Boccaccio, an owner of a small Tempe business, is betting $1 million the city is bluffing.
The owner of Allied Gases and Wielding Supplies said he plans to build additional office and warehouse space despite warnings that the city is prepared to condemn most, if not all the property around him.
"They may attempt to use eminent domain, but I don't think they have the legal right to," Boccaccio said.
The city never cautioned Boccaccio directly, but last week Tempe officials warned that they were prepared to seize property to make way for a major shopping center.
"We waited and waited for a representative from the city," Boccaccio said. After waiting about six months to begin construction on the 7,000-square-foot warehouse and the 3,200-square-foot office building, Boccaccio decided to press ahead. If the city is able to condemn his property, the $1 million construction cost would not be reimbursed. Boccaccio said the city was using the threat of condemnation to scare people into selling. In the wake of a recent court decision that held Mesa could not condemn a brake shop to make room for a hardware store, Boccaccio said Tempe will have a hard time taking over the properties. Developers, seeking to build a 200-acre outdoor shopping and entertainment center have been working to acquire the 50 parcels of land near Rio Salado Parkway and McClintock Drive necessary for the project.
Currently, about 30 property and business owners have refused to sell to the developers, leaving the city to step in and begin tendering offers beginning as early as the end of this week. H.L. Kelly, owner of Kelly's Copper Works, said the developers were not offering property owners a fair price for their land and has vowed to fight the city in any attempt to seize his property.
He also rebutted the city's claims that condemning the property would be in the public's best interest. Tempe has argued that the area, which has been declared a brownfield, has environmental problems that need to be addressed. One environmental study, funded by the developers, also indicated there were environmental hazards in the area. Last month, the City Council approved an agreement that includes more than $23.7 million in incentives.
Tempe will borrow the money from the developers, paying back the loan during the next 15 years at 8.5 percent interest, said Neil Calfee, the city's redevelopment manager. Additionally, Tempe will lay out $9 million in property tax rebates over eight years. Tempe also secured a $7 million federal grant to help clean up the area, giving landowners an additional incentive to sell. Calfee said that property owners will not be responsible for the cost of cleaning their property if they sell.
A number of high-profile businesses, including Arizona's first Dave & Buster’s and an 18-screen Harkins movie complex, have committed to the development.