PICOR Connect | Trends in Commercial Real Estate

Occupying Tucson Buildings: The City Removes a Barrier

Posted on Fri, Oct 28, 2011

The City of Tucson deserves substantial credit for the way in which they now deal with Certificates of Occupancy (C of O). In the past, challenges obtaining a C of O were significant enough to devalue properties and bankrupt tenants. The current policy places the focus on the building, not on the tenant. Under the new policy, a business owner may now purchase a building and have a reasonable expectation of having that building retain its value into the future. Once approved, the building remains approved unless there is a significant change in use. For example, a sale of a building from one user to another would not require a new C of O unless the new owner  made a significant change in use (i.e. a change from retail to restaurant). 

This new policy, which became effective this year (2011), does not require a new building occupant to re-certify the building. Per the Planning & Development Services Department Policy, "these code provisions intend for COs to be issued only for new construction, alterations (dependant upon the extent), and change of occupancy classifications." For example, if a building owned and operated by a retail store sells their building to another retail store, the new retailer does not need to get a new C of O. Once legal, the building continues to be legal until or unless it is used for a different purpose. This is in stark contrast to the past. Under previous policies, a change in ownership or tenancy triggered full enforcement of required upgrades in building requirements, if the building code changed since the last C of O was issued.  At times, these costs of compliance were significant enough to prevent small businesses from occupying buildings and created unnecessary barriers to entry for new businesses.

While the City of Tucson deserves credit for this more practical policy, so too does the Tucson commercial real estate community. This positive change largely came about from the furor over the enhanced enforcement of the City’s Certificate of Occupancy policy that resulted from adoption of the Model Cities Tax Code. Under this tax code, business licenses were no longer issued to businesses that did not have a C of O. The pushback from the business and real estate community helped the City understand how difficult the older policies were. Through a collaborative effort between public and private interests, this new policy was conceived and implemented. This effort was strongly supported by PICOR, and several PICOR brokers were active participants in this long and challenging process.

Certificate of Occupancy Relief

On July 7, 2010, City Council eased the rules governing the conditions under which businesses may be granted a Certificate of Occupancy. The new rules will allow businesses to open in existing structures without meeting all Land Use Code requirements. The change is intended to make it more affordable to open a business in Tucson and encourage infill and reuse of existing buildings. Find out more about the new ordinance.

Rob Tomlinson has been clearly focused on the needs of retail landlords andRob Tomlinoson Tucson retail brokertenants for over twelve years. With valuable insight on the dynamics of the site selection process, experience with assemblages, and education in Urban Geography, Site Analysis, and Land Use Planning, Rob brings an informed perspective to challenging sites. A CCIM Candidate and International Council of Shopping Centers (ICSC) member, Rob has countless hours on land use commissions and committees and public/private development efforts.

Photo source: Gary Rumack Photography

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Topics: Tucson, Industrial, Economic development, Leasing, Retail