The Bautista: This Upscale Development is Coming to one of Tucson’s Oldest Neighborhoods

Article originally posted on AZ Central on June 1, 2023

The Bautista, a new development in the historic Mercado District near downtown Tucson, will add apartments, retail space and a restaurant to a neighborhood in the midst of urban revitalization.

The $110 million project was approved by Tucson in 2022, and construction started in March. The development is slated to be completed by late 2024.

What is coming to the Mercado District?
The Gadsden Company is building an upscale mid-rise building with 16,500 square feet of retail space, restaurant space and 253 apartments, including studios and one-bedroom and two-bedroom units.

The building will have a central plaza that will allow visitors to walk to the Santa Cruz River, which soon will be flowing year-round in the area, according to the Rio Nuevo District, a tax increment finance district that invested in this project.

Where will the development be located?

The Bautista will be located near West Cushing Street and South Linda Avenue in the Mercado District, located in the Menlo Park neighborhood on Tucson’s west side.

The neighborhood features an upscale, Southwestern feel, with numerous mission-style adobe buildings and diverse architecture. It is one mile west of downtown on the other side of Interstate 10.

What is the Mercado District?

The Mercado District is a historic neighborhood that was torn down during urban renewal and in recent years has been the focus of revitalization efforts. The neighborhood is home to the popular Mercado San Agustin, an open-air courtyard lined with local shops and places to eat.

Nearby is the MSA Annex, an extension of Mercado San Agustin, with locally owned eateries and shops inside shipping containers and communal outdoor seating areas.

How much will the project cost?

The Bautista is a joint venture between The Gadsden Company and PEG Companies, a property management firm based in Provo, Utah.

The total project cost stands at $110 million, with $2.8 million invested by Rio Nuevo. The Gadsden Company is investing $20 million with the rest coming from PEG Companies.

Rio Nuevo purchased the land the Bautista will sit on for $7.2 million. The Gadsden Company invested $4.5 million to qualify for an Opportunity Zone Fund, which provides tax benefits to investors.

Rio Nuevo will lease the land to the Gadsden-PEG joint venture using a GPLET, or Government Property Lease Excise Tax. GPLET is a mechanism that allows property owners to avoid paying property taxes for an allotted amount of time and instead pay an excise tax on city-owned property.

What is the Gadsden Company?

The Gadsden Company is a family-owned real estate investment and development company with a focus on community development. The company’s portfolio consists of other Mercado District developments, including the San Agustin Mercado, the MSA Annex, the Monier apartments and the Westend Station Apartments.

What is the Rio Nuevo District?

This project is one of the biggest projects approved by Rio Nuevo, the only tax increment financing district in Arizona.

Rio Nuevo is administered by the state and funded by a share of state sales tax dollars. It aims to revitalize downtown by investing in projects in the district, which stretches from the west side of I-10, through downtown, Broadway, and El Con Mall to Park Place Mall.

The district was created after approval by voters in 1999. In its first decade, Rio Nuevo was involved in multiple controversies, from multimillion-dollar lawsuits with Tucson to federal and state investigations about unaccounted for money and delayed projects, according to the Arizona Daily Star.

In recent years, Rio Nuevo has made a comeback. Recent projects include revitalizing empty storefronts in downtown Tucson and bringing Caterpillar Tucson Mining to the Mercado District.