Brenna Goth

The Republic | azcentral.com

Phoenix leaders said downtown has arrived as a true urban city center when they broke ground Thursday on a mixed-use project featuring the area's only grocery store.

The project, led by RED Development, also is slated for 330 apartments, 200,000 square feet of office space and restaurants and retail at First and Washington streets. The site is known as "Block 23" for its place in Phoenix's original townsite.

The team expects completion of the project sometime in 2019.

Developers at the event said the full-service Fry's Food Store anchoring the complex comes after more than a decade of planning. City Council members and residents have for years pushed for better options in a "food desert" with little access to fresh food.

But downtown needed to progress, mature and attract new residents before it could land a neighborhood Fry's, Mayor Greg Stanton said. Phoenix also is helping, with $18.3 million in development incentives as well as a long-term property tax break on the land.

"This project is going to be a game changer for our city," Stanton said.

Downtown investment 'feels safe'

Developers referred to the project as the next phase of CityScape, a mixed-use complex developed by RED Development across the street. That project also received Phoenix incentives.

The team knew more than a decade ago that a grocery store was a "missing link" downtown, said Mike Ebert, managing partner of RED Development. But CityScape came at a time when building in the urban core felt risky, he said.

"Today investing in downtown feels safe, smart, wise," Ebert said.

The store is a "well-deserved amenity" for communities just south of the site that often take multiple forms of transportation to reach fresh food, said Eva Olivas, executive director of the Phoenix Revitalization Corporation. Not only will the development save people time and money, but the project could bring them new job opportunities, she said.

The complex also aims to generate its own customers with hundreds of new residential units that have the feel of an "urban boutique hotel," said Tom Bakewell, president of StreetLights Residential.

The Phoenix City Council recently approved extra flexibility in the balance of residential and office space in the development after seeing huge demand on the office side, Community and Economic Development Director Christine Mackay said.

Site played role in Phoenix's early history

RED Development and Fry's announced the grocery store plans roughly a year ago. Much of the interim period was spent negotiating incentives from Phoenix and development rights for the land.

The developer will receive about $18.3 million in payments and sales-tax reimbursements from the city, according to an agreement approved in October.

MORE: Phoenix OKs incentives for downtown Fry's grocery store, high-rise

For 50 years, the property will also maintain an existing property tax break, known as a government property lease excise tax. RED will purchase the land over that period for a total of $18 million.

The city does not have an estimate for how much the incentive saves the company because the land has never generated property taxes, Mackay said.

The city has long held the site. Most recently, the Barron Collier Companies secured development rights and a 75-year property tax break through a deal made in the 1990s.

Barron Collier used the land for parking. Before that, the parcel changed from Phoenix's first City Hall and fire station to the Fox Theatre and a J.C. Penney store with a Cold War-era bomb shelter.

Archaeologists also recently found signs of prehistoric people on the site. Part of Phoenix's incentives went toward evaluation and excavation of the land.

READ MORE:

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Phoenix grocery store construction site yields prehistoric artifacts

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