Plans for a proposed Sam's Club near Spectrum Mall are dead.
The Tucson City Council nixed a deal with Irvington Interstate Partners LLC on a 6-0 vote Tuesday and put the property at Interstate 19 and West Irvington Road back out to public bid after the developer couldn't agree to build a store smaller than 100,000 square feet.
"I'm disappointed," said Larry Hecker, attorney for Irvington Interstate Partners. "My client worked very hard on this."
The vote offers a potential end to a project that has been tumultuous from the beginning, when the city awarded the 22-acre property to Irvington Interstate Partners in the summer of 2011.
Shortly after the city accepted that deal, Spectrum's then-owner, Scottsdale-based Barclay Group, filed a $112 million claim against the city for breach of contract. One city incentive to get Barclay to build the Spectrum at that location was to prohibit retail development on the adjacent city property until 2017.
In September 2011, the council voted to scrap the Irvington partnership deal, prompting that developer to file its own claim against the city for approximately $13 million, said City Attorney Mike Rankin.
Last October, the council re-entered discussions with the Sam's Club developer, but added some stipulations, including that the developer had to find a way to get the proposed building under 100,000 square feet in order to comply with the city's "big box" ordinance - or the council would reject the proposal outright.
Rankin said the developers couldn't find a way to reconcile the size of the building. "They couldn't proceed at less than 100,000 square feet," Rankin said. "They analyzed it, but they couldn't meet that requirement."
The Sam's Club deal would have brought in $4 million to help the city balance its books. In addition, the city would also have received an estimated $1.5 million to $2 million in sales taxes generated from the property for years.
Barclay's claim against the city has expired.
The Irvington partnership still has time to move on its claims against the city if it chooses.
Hecker said he wasn't certain if his clients will sue. He said since the Sam's Club was never a part of the original proposal, his clients may argue they should maintain the rights to the property and be allowed to come forward with a new plan for the site.
"When a contract was awarded, it wasn't designated for (a Sam's Club)," Hecker said. "I believe there are other potential users out there."
Councilman Steve Kozachik said that according to the original agreement, the city retained the right to reject any offer for any reason. He said since the deal was initially made, things have changed in the real estate market.
"It's been two years since the property was appraised, and the market has improved," Kozachik said. "We owe it to the taxpayers to see if putting it back out yields better offers. … This is a prudent fiscal decision."
Contact reporter Darren DaRonco at 573-4243 or firstname.lastname@example.org