Mesa’s Riverview at Dobson project and the Tempe Marketplace cannot exist side by side, a major accounting firm has concluded.
The Ernst and Young market analysis commissioned by Mesa to study its site states that if the Tempe project breaks ground first, it could "cannibalize the (Riverview) tenants."
The report goes on to add that it’s probable only one of the centers —which are planned about two miles apart — will be built immediately while the other site will sit vacant for five or more years until additional market demand is created.
"We only think one of the projects is feasible at this time," Steve Klett of Ernst and Young told the Mesa City Council on Thursday during a study session.
Klett added: "It will be a dogfight."
Kimco Developers and De Rito Partners Development have proposed a roughly 1.3 million-square-foot retail area to be anchored by Bass Pro Shops Outdoor World. The group has announced a 16-screen Cinemark movie theater and "big-box" power center that Ernst and Young said will include a Wal-Mart Supercenter for the 250-acre site at Dobson Road and Loop 202.
Vestar Development is planning a 200-acre outdoor shopping center at McClintock Drive and Loop 202 in Tempe. Vestar has announced a Dave & Buster’s restaurant/bar/arcade and an 18-screen Harkins movie complex as tenants.
Kimco and De Rito zoning attorney Mike Withey said both centers could still be built but not with the same amount of retail square footage being proposed.
"We believe it’s critical that whoever comes out of the ground first is going to have a huge advantage," Withey said. "That’s the nature of retail and the tenants we’ve been talking to."
Tempe Mayor Hugh Hallman said Marketplace will be completed before Riverview, leaving Mesa to decide whether to follow the conclusion of the Ernst and Young analysis.
"You’re looking at a project that is 60 days away from breaking ground," Hallman said of Marketplace. "And Ernst and Young is saying that only one of them can succeed."
Withey said Kimco and De Rito were planning to break ground on Riverview in the first three months of next year, but a referendum may force a change in plans.
Vestar officials have said the company is on track to break ground in January despite a number of landowners who are refusing to sell their property.
Construction crews have already knocked down several buildings in the area, including the former legendary music venue Nita’s Hideaway.
Representatives with Vestar were unavailable for comment on Thursday, but in the past have said the $225 million project could move forward with the land already acquired.
The holdouts could force a showdown with the city, which has been given the power to seize their property if negotiations fail. Earlier this year, the City Council authorized the use of eminent domain.
Mesa paid about $25,000 for the Ernst and Young report, which concluded the Riverview site is superior to the Tempe site because of its access, as well as the ownership issues and environmental concerns in Tempe.
The report did not mention the referendum effort in Mesa, which could possibly kill the Riverview project.
David Molina, chairman of three political committees created to fight the Riverview project zoning, turned in more than 4,600 signatures Wednesday on behalf of each committee — Protect Mesa’s General Plan, Stop Excessive Subsidies and Stop Corporate Welfare.
The signatures must still be validated by the city and county before an election is called.
The earliest election date would be in May.
The Mesa City Council is scheduled to vote Monday on the nearly $80 million incentive package with the hope of securing Bass Pro Shops. A majority of members Thursday expressed their support of the deal.
In May, the Tempe City Council approved an agreement that includes more than $23.7 million in incentives — not including interest — and $9 million in property tax rebates.
Tempe also secured a $7 million federal grant to help clean up the area, giving landowners an additional incentive to sell.