R&R Realty Group and the city of Urbandale are considering a development plan that could lead to the extension of a street that city leaders consider key to commercial growth.

The Urbandale Planning and Zoning Commission is set to consider a grading plan submitted by R&R for land the company owns but has not developed in an area south of Interstate 80 and west of 86th Street.

City leaders for years have promised other business owners near the intersection of 86th and Plum Drive that Plum, which terminates a short distance west of the intersection, would be completed, providing increased traffic flow and potentially more customers.

Earlier this year, two other owners of property between Plum and 100th Street to the west agreed to a city proposal for extending the street.

R&R had been a holdout, saying it wanted to leave open options for development of the 46 acres it owns in the same area.

Currently, development of the open land is limited to offices. However, R&R has submitted a draft plan for a development called Highland Pointe that would include a mix of offices and retailing, similar to its Three Fountains office and retail park in West Des Moines.

That mix of commercial uses would be located north of the planned street.

“We are trying to be sensitive to the neighbors in the area,” said Steve Gaer, R&R’s chief operating officer and general counsel. In the past, some residents who live south of the area have expressed concerns about retail development.

If the plan, which would have to be presented at a public hearing, is approved, paving could begin next year, a city official said.

Plum is located in an area that has been the subject of development ambitions since at least the late 1980s. To the north of the corridor, and north of I-80, is the Northpark business district, an area that carries a Johnston address but lies within the city of Urbandale. Development amenities – streets and sewers – have been in place along Northpark Drive for several years.

Both streets figured prominently in the city’s 2001 comprehensive improvement plan. Northpark recently was completed from 86th to 100th, and it has experienced significant office and retail development. Its potential as a commercial corridor attracted DeWaay Capital Management, which purchased a retail development that had been initiated by Regency, before Regency and its affiliated businesses were hobbled by overreaching land deals and a slump in the housing market.

Urbandale city leaders have held out the promise of a connected Plum since 2001, when its construction was included in a comprehensive improvement plan and scheduled for completion in 2003.

Under a city proposal, R&R and two other property owners in the area would have their assessed costs reduced by $57,983 each. The city’s share of the nearly $4 million street extension project would be reduced by $172,961. In all, the landowners and the city would use nearly $346,000 in I-JOBS funds to pay down the cost of the project.

In the final tally, the city will pay about 80 percent of the cost to extend Plum Drive, and property owners would pay a total of 20 percent.

In addition, Plum Drive lies in a tax increment finance district where property owners would receive a five-year tax break.