Closer to Home (Depot)

By Robert Plain
Ashland Daily Tidings

After months and months of pleasant conversation, business wrangling and downright horse-trading, the City of Phoenix, Home Depot and the Oregon Department of Transportation have reached the final days in what could finally yield a deal to build a new home improvement superstore at the Fern Valley Road interchange along Interstate 5.

The proposed home depot would be situated in the elbow of the wide turn on North Phoenix Road before it heads up a hill. Orville Hector | Ashland Daily Tidings
Late Thursday afternoon, all parties necessary to broker the deal met at the Phoenix Public Works building. The freeway interchange is the last remaining obstacle and an absolute necessity for Home Depot to finalize plans to build a store in Phoenix. After the city of Phoenix voted to approve the store’s project, ODOT appealed the matter to Oregon Land Use Board of Appeals.

Sen. Alan Bates and Rep. Peter Buckley facilitated negotiations between Jim Hanks, Home Depot’s traffic planner; Art Anderson, the Oregon Department of Transportation’s Rogue Valley area manager; Phoenix Mayor Vicki Bear; and landowner Bob Robertson.

By the end of the meeting – with prompting from Bates – a tentative deal had been reached, pending approval of several parties, especially Home Depot, which must come up with an additional $600,000 to contribute to the cost of improving the interchange.

A deal?

The group came to a tentative agreement stipulating that Home Depot and Phoenix would join several other funding sources to make up the difference between what it will cost to construct a new interchange and what ODOT is willing to pay. Should all parties agree, ODOT will drop its appeal to LUBA.

The Fern Valley Interchange will cost between $36 million and $41 million to construct, Anderson said.

While many t’s need crossing and many i’s dotting, what was clear was that ODOT, with federal and state funding sources, will pay $33.5 million and no more.

At Thursday’s meeting, Home Depot was asked to pay $1.3 million toward this bill and the city of Phoenix was asked to pay approximately $2.4 million toward the cost. The remaining funds will likely be paid by county and other governmental organizations.

Bear, who was joined at the meeting by city council President Carlos DeBritto, said this amount was amenable to her. The entire council will discuss the mediation at Monday night’s meeting, 6:30 p.m. at the Phoenix City Hall.

“This is a very exciting move toward the positive growth we have been striving for,” Bear said after the negotiating ended. “This is not only great for Phoenix but for the entire region.”

Anderson said Phoenix could potentially recoup the $2-million-plus from future systems development charges – a tax charged to new developments.

Bear said Phoenix’s “future tax base,” which would likely grow as a result of both the interchange and the Home Depot, could also help defray these expenses.

A stiff price

Brian Cannard, Home Depot’s real estate manager, said the $1.3 million is twice what he was expecting to pay in systems development charges and other fees. With $600,000 left unaccounted for, Bates urged all parties to reconsider what they could commit to. Home Depot officials consulted via cell phone and said they would consider taking on the extra money.

Still, Cannard said he was not yet certain that these new figures would work for his company.

“I haven’t had the chance to model what these new costs do to the project, so I don’t know if it is affordable or not,” he said. “If it doesn’t work in that location we are still looking at a variety of other potential locations in the Medford area.”

Cannard said Thursday’s meeting produced a result he was not anticipating.

“It’s unusual to have a state agency appeal a project and then use that as a lever to extract more money than is normally available,” he said.

Robertson, who still owns the land that would house the Home Depot, said the building supply store will pay him $10 million for the land and it will cost the company approximately $4 million to build the store.

If Home Depot is taxed at the regular rate for Phoenix properties, which is $6.51 per thousand dollars of assessed valuation, then the city could generate $91,000 per year from a Home Depot. However, because Phoenix would have to reimburse Home Depot for the construction of a traffic light near the project as part of the proposed deal, there could be a tax abatement associated with the new development as well.