Durango City Council could enter into an agreement with a private developer to extend Wilson Gulch Road to a new interchange with U.S. Highway 160 and open up the Grandview area for the commercial development of big-box retailers such as Target, Best Buy or Sports Authority.

Once there are more local shopping options, city officials during a study session Tuesday estimated La Plata County could recoup as much as $39 million in sales currently going to bigger cities such as Farmington. They are counting on increased revenue from sales taxes to pay off the debts incurred on building a four-lane, 1.2-mile road extension to accommodate a busy interchange.

Finding the money for the up-front costs, estimated at $5.7 million, is the problem. The weak economy seems to preclude the usual solution of selling bonds.

City consultant Andy Knudtsen of Economic and Planning Systems suggested a deal in which the Three Springs developer would pay to build the road.

“Durango has a unique opportunity,” he said.

Three Springs is a deep-pocketed subsidiary of the Growth Fund of the Southern Ute Indian Tribe.

The city would then enter an agreement to pay back the developer, most likely by creating a special taxing district for the new 37-acre commercial development. Knudtsen preferred “fee” over taxes because they would be self-imposed within the district and because shoppers most likely wouldn’t see an increase in their sales tax.

City councilors seem opposed to increasing the sales tax within the district. City Councilor Doug Lyon predicted shoppers would be “ticked off. It would not be pleasant.”

So the special taxing district most likely would devote a small portion of the existing sales tax for debt service.

Many contingencies must be worked out, such as whether La Plata County would participate in the scheme as it also claims a portion of the overall sales tax.

Councilors also recognize that many local businesses would feel threatened by the arrival of major retailers.

Rather than fear a “cannibalization” effect, City Manager Ron LeBlanc thinks the big boxes would help grow the local market. He estimated for every dollar spent in the new big boxes, an economic rollover effect could create four additional dollars for the community.

City Councilor Sweetie Marbury said a big demand exists for increased shopping options.

“I get asked all the time, ‘When is this going to happen?’” she said.

City staff is working toward bringing a deal back to the City Council by mid-January, which also could include an annexation agreement of the Crader family property, where the big-box stores would be located.

jhaug@durangoherald.com