Town may face painful choices in 2009

A year ago, as the town looked forward to 2008, there were ambitious plans to expand it through annexation to pave the way for economic development. The mood was upbeat, and town officials seemed exuberant.

During the year, the town held its coming out party in the form of the first State of the Town address by Mayor Lynne Skelton, which was attended by a huge audience of stakeholders.

As the town looks toward 2009, it will follow up on those plans and pursue annexation agreements and rezonings requested by the property owners, and it will pursue other goals.

Still, in 2009, one of the biggest issues facing the town is one that is out of its control: the nose-diving national economy and its effect on public revenues. The town doesn’t have a formal hiring freeze in place, but it doesn’t expect to fill vacant positions, Town Manager Jim Stahle said in a recent interview.

“On the budget, I see cutbacks. I won’t commit to layoffs. We will look at all expenses. We don’t want to reduce any services, we do not want to reduce staff, but it may mean both. It’s too early to tell at this time. We’ve taken prudent measures to make sure were not going to be upside down. The Town Council has combined reducing costs and dipping into cash reserves. We will plan for the long term, plan for the worst,” Stahle said.

The economy has cast a large shadow over the new possibilities facing the town.

The new construction sales tax, which funds capital projects, is going down because there are fewer buildings of all types going up, and that means some roads and parks capital projects may be delayed. There is still residential growth expected in Rancho Sahuarita, which has sold about 500 homes a year regardless of the general housing market, and there is commercial growth in town, as businesses catch up with the thousands of homes built in the past five years.

Still, some important projects that have been under way are scheduled to be started or in some cases completed in 2009, including some with funding that is less volatile.

Notable among these are the North Park near the town wastewater treatment plant, east of Rancho Sahuarita Boulevard, which is set for a soft opening in February and a grand opening later. Temporary traffic signals are to be installed in the first quarter of 2009 on the Interstate 19 exit and entrance ramps on Sahuarita Road and substantial work is to be done this year on the relocation of the north end of La Canada Drive, which will hit Sahuarita Road at the entrance to Rancho Resort.

The relocation of La Canada Drive could help development of a proposed power center, or regional mall, at the southwest corner of Interstate 19 and Sahuarita Road. The town staff and Town Council this year are expected to consider a request by Rancho Sahuarita for a $38 million development incentive that the developer said is necessary to attract Home Depot to that site.

Annexation in doubt

The eastward annexation of 16 square miles of State Trust land is in some doubt now. With the nomination of Janet Napolitano as Interior Secretary in the Obama administration, Republican Secretary of State Jan Brewer will become governor when Napolitano is confirmed by the U.S. Senate, and that likely means a new head of the Arizona Land Department. That in turn might mean the closing of the Tucson office, but even if that office stays open, a new land commissioner might mean a big delay in the annexation effort, Stahle said.

That possibility is “a great frustration” after four years of negotiations between town and state staff, Stahle said, and would be a setback for the town in terms of creating options for a diversified economy.

The current 31 square miles of the town do not contain much room for new industrial, light industrial, office or commercial land uses, officials say. Those are the kinds of land uses that would help develop the knowledge economy, one that takes advantage of one of the town’s biggest assets, its well-educated work force. Those uses also could provide high-wage jobs and a diversified tax base that would not be as volatile as are business cycles.

On the other hand, town commissioners and staff continue working on the other elements of the economic development plan, which involve taking advantage of the town’s location near the Mexican border and big California markets. One element that is expected to advance this year is development of a section of the townWeb site that will give business prospects instant access to information about available land in town.

Also, the town will get help from the Maryland consulting firm TischlerBise on evaluating requests for development incentives and the economic impacts of various kinds of growth.

Taking a hit

The operating budget is being damaged as the town’s 2 percent sales tax takes a hit and may take a double hit from state shared tax revenues, Stahle said. For one thing, the state is losing revenue as residents’ incomes and purchases drop, reducing sales tax revenues and leaving less to share with cities and towns.

For another, the manager said, “one deep concern is the Legislature, in dealing with the state’s own budget problems, may tinker with the formula for state shared revenues. One of the most significant challenges for the next fiscal year is we may not see the state budget until June 30.”

pfranchine@sahuaritasun.com | 547-9738