Mesa staff outline proposed Medina Station development agreement, $6.36 million tax reimbursement for anchors and restaurant row

City staff told the Mesa City Council study session Thursday that a proposed development agreement for the Medina Station commercial project would reimburse up to $6,360,000 of city sales tax revenue to the developer for public infrastructure if a set of milestones are met.

The agreement would apply only to the roughly 40‑acre commercial portion of a larger 64‑acre Medina Station site north of U.S. 60 and south of East Southern Avenue at Signal Butte Road. Jay O’Donnell, Mesa’s economic development director, said the commercial build‑out envisions about 328,425 square feet of retail including anchors such as Target, Dick’s Sporting Goods and Boot Barn, roughly 33,000 square feet of full‑service restaurant space and additional inline and pad retail.

City Attorney Deputy Kelly Whittemore said the reimbursement is split into two types. A one‑time construction sales‑tax reimbursement would return 100% of the city’s non‑dedicated 1.2% sales‑tax share collected from the project from the DA effective date through 60 days after Dick’s opens, provided the developer meets five conditions precedent. Separately, a retail sales‑tax incentive would return 50% of that non‑dedicated 1.2% for up to a 10‑year incentive period for the retail anchors and the restaurant row, again only after the conditions are satisfied.

The five conditions Whittemore listed are: execution of the development agreement; building permits for public infrastructure obtained within six months of the DA effective date; design, bidding and construction of public infrastructure to applicable law within roughly a year; dedication of infrastructure to the city and to the Arizona Department of Transportation (ADOT) where required; and opening Dick’s Sporting Goods to the public within 48 months.

Whittemore and staff explained one of the eligible infrastructure components would be grading on ADOT‑owned property needed for drainage. Because part of that grading serves the residential portion of the larger project as well as the commercial portion, staff said only 60% of the ADOT grading cost would be treated as eligible for reimbursement. Whittemore said the developer must obtain the necessary ADOT encroachment/permit approvals and leave that area under ADOT ownership and control when work is complete to qualify for reimbursement.

City staff and the developer, represented by Josh Simon of SimonCRE, said anchors and restaurant commitments were central to the city’s retail strategy for East Mesa. Whittemore noted the agreement borrows industry definitions from a retail consultant: to qualify for the expanded construction tax bucket tied to restaurant row the restaurants must be higher‑end mid‑ or contemporary‑casual brands and not have multiple locations within a 10‑mile radius in Mesa (with an exception for a restaurant already at Mesa Gateway Airport).

An independent economist’s analysis—required under state law for retail sales‑tax incentive agreements—will be provided to council before final action, Whittemore said. Staff summarized Applied Economics’ draft findings on the slide deck: the city’s projected revenues from the development over the 10‑year incentive period were shown on the summary slide at roughly $26.9 million versus the proposed $6.36 million cap on reimbursements.

No final agreement was approved during the study session; staff said a “notice of intent” to consider the DA would go on the council’s June 16 regular meeting agenda and the resolution and final DA would be scheduled for the July 1 council meeting. Whittemore and O’Donnell said the July 1 package would include the independent economist’s report and the full DA terms.

What officials said matters: the DA ties public reimbursements to specific performance triggers (permits, public infrastructure completion, anchor openings); it limits reimbursement for ADOT grading to the commercial share; and it requires the developer to deliver specific restaurant brands to qualify for a larger reimbursement pool. Council members asked for typical timing and whether ADOT had been engaged; staff said the developer must secure ADOT approvals and that construction is anticipated to start in mid‑August with a 12–15 month primary construction window for the roadwork and grading.

The council will consider a notice of intent June 16 and formal adoption items July 1, including the statutory findings and the independent economic review.

Acknowledging the process: the development agreement remains subject to the city’s approval steps, required statutory findings for retail incentives and the developer’s ability to meet the listed conditions.

Speakers quoted or referenced in this article are: Jay O’Donnell, economic development director; Kelly Whittemore, deputy city attorney; and Josh Simon, developer with SimonCRE.