Submitted by Carefree Unity
During the October 1st Carefree Town Council Meeting, Carefree Economic Development Director Steve Prokopek announced that the development of the property located at the NE corner of the Carefree Highway and Cave Creek Road intersection had reached the development stage where it was now in a position to rapidly move forward.
The name of this major retail center will be “Carefree Quarter”, and if completed as currently planned in 2026 it has the potential to be transformative to the financial security of the Town of Carefree.
Walt Brown, the owner of development company Diversified Partners, said that the project currently had Letters of Intent from about fifteen retailers, representing about 75% of the available retail space. Prospective tenants of this property include a PetSmart store as one anchor. Mr. Smith said that Trader Joe’s was their “number one priority” to become a second anchor, with talks ongoing. Other retailers are representative of the developer’s desire to create the right mix of properties, with breakfast restaurants, a dry cleaner with no onsite chemicals, general restaurants of various categories (e.g., Cold Beers and Cheeseburgers, The Vig) and other retailers that will be good neighbors to neighboring residential areas.
Diversified Partners (DP) is the third developer to work with the Town on developing the site since the area was re-zoned in a public process in 2018. Earlier efforts failed because of the costs of development, especially remediation of the wash and flood plain that currently occupies most of the parcel.
The key to success in this latest effort is a Retail Development Tax Incentive Agreement negotiated between the developer and the Town after DP became the third successive developer to conclude the business case for development could not overcome initial infrastructure costs. Mitigation of the wash is estimated as a $4,200,000 expense, and total infrastructure costs, including water & sewer access, road modifications and elevation mitigation, are estimated at $7 million.
Steve Prokopek, Stacey Bridge-Denzak and Gary Neiss, advised by Town attorneys Denis Fitzgibbons and Nick Cook, negotiated a Tax Incentive Agreement to partially reimburse developer infrastructure costs thorough sales tax sharing, with sales tax in years 1-5 being shared 51% by Carefree and 49% by DP, to a limit of the total infrastructure expenditures, or $7 million. This structure is a very strong match to the project for several reasons:
-The structure ensures the Town of Carefree will never have to make a payment from existing cash balances
-Town revenues are improved only by sales tax revenue. The agreement structure ensures that only sales tax generating businesses can contribute to developer reimbursement. Therefore, the agreement incentivizes the developer to maximize exactly the types of businesses that are most beneficial to Town revenues.
-The structure is also a classic risk-sharing arrangement. Should the economy encounter a recession during the five-year tax-sharing period, Town sales tax receipts will be reduced proportionately, but the Town will never experience out-of-pocket expenses. Conversely, should the property over-perform during the sharing period, Town revenues will be increased, both during and beyond the tax-sharing period.Mr. Brown also explained that moving rapidly on this project was essential to capitalize on a closing window of development opportunity in the Cave Creek Rd / Carefree Highway area, which has already seen rapid growth on properties to the west and south. With expedited reviews and approvals, which the Town Council assured the owner and developer would be handled in a timely manner, the initial tenants will be slated to open for business during the summer of 2026. The developer assured the Town Council that they would work closely with adjacent homeowners to ensure that their concerns were addressed and satisfactorily resolved within this timeline.
This location is located on one of the very few remaining properties in Carefree appropriate for retail development, and its development should both bring exciting new retailers to Carefree as well as make substantial financial contributions to the Town from the retail sales taxes generated. The developer estimated that 60% – 65% of the people who will frequent Carefree Quarter will be from adjacent municipalities.
The Council voted unanimously to approve Resolution 2024-12, a Notice of Intent to enter into a Retail Development Tax Incentive Agreement consistent with Arizona Revised Statute 9-500.11K with CCS Crossroads LLC for development of Carefree Quarter at the intersection of Carefree Highway and Cave Creek Rd.
Additional steps remain, as this agreement will be reviewed by Planning & Zoning this month, will be reviewed by an independent third-party expert within 2-3 weeks, and will return once again to Council for a final approval. Given the obvious benefits to both the owner & developer and to the Council & residents, however, rapid advancement seems likely.
Major negotiators for the Town included Economic Development Director Steve Prokopek, Planning and Zoning Director Stacey Bridge-Denzak, and of course, Town Administrator Gary Niess, who have worked through various developers since 2018 and are now bringing a fully formed project together.
Carefree Water Company General Manager Greg Crossman provided technical support. Council Member Mike Johnson and the residents of the Carefree Ironwood Estates, Carefree Mt. Estates and Sentinel Rock Homeowners Associations have also consistently demonstrated their acceptance, for the benefit of the entire Town, of a carefully developed retail development in proximity to their homes.
For more information on this project click on the link to the Town’s Carefree Highway and Cave Creek Road webpage. Stay up to date as updates become available at Carefree Unity
