Saturday, September 25, 2010

Scottsdale seeks development proposals for 80 acres near WestWorld

Scottsdale is looking for developers interested in an 80-acre site north of WestWorld that will cost the city $81 million in bond payments over the next 25 years.

The Scottsdale City Council on Tuesday, with little discussion, voted unanimously to issue a request for proposals for the former state trust land at 94th Street and Bell Road.

The city bought the site at auction five years ago.

"We want to determine the level of interest to develop this site," said Harold Stewart, economic development director. A background report from Scottsdale's Economic Vitality Office recognizes the challenge of unloading the property.

"The City Council may want to determine whether committing the land for development in the current marketplace would be the correct step to take because of financial or other reasons," the report said.

But council member Bob Littlefield, a longtime advocate for selling the site, expressed public optimism.

"I think we're going to get more than one proposal," Littlefield said.

Councilman Ron McCullagh convinced the council to extend the submission deadline from 60 to 90 days because of the size of the site.

The city is offering all or part of the 80 acres for sale or lease.

McCullagh said he did not want the city to be accused of having rigged a deal with a preselected developer by having a short response time.

Scottsdale bought the 80 acres in September 2005 for $47.2 million to protect its interests at WestWorld and make sure it would have adequate parking for WestWorld events and the Waste Management Phoenix Open nearby.

The land was appraised for $27.6 million, but state land auction bidding involving homebuilders pushed the price up by about $20 million more.

Scottsdale financed the land deal with municipal property corporation bonds that will nearly double the cost to $92 million.

Scottsdale already has paid $10.5 million on that debt, leaving a balance of about $81 million.

In December 2005, the city also bought another two parcels of state trust land totaling 69 acres for $31.4 million.

The larger of the two sites, nearly 52 acres, is immediately adjacent to WestWorld and is well suited for parking and expansion of the events center.

The bond financing for the 52-acre site will cost Scottsdale $46.7 million.

That purchase made the 80-acre site expendable in a vibrant commercial real estate market.

But city leaders chose to hold onto the land, which is split by 94th Street north of Bell Road.

At the time, Littlefield argued that the city should sell the land because it got the other site closer to WestWorld.

"Now we're stuck," he said last week. "There may not be a buyer for it."

A hotel company talked to the city two years ago about the developing the site, Littlefield said.

"We'll run it up the flagpole and see what salutes," he said about seeking developer bids for the land.

There is no shortage of vacant land along Bell Road.

The developer of the Scottsdale Epicenter project on 125 acres northeast of Pima and Bell roads defaulted earlier this summer on its lease payments for the site.

Scottsdale Vistella LLC was the winning bidder three years ago to lease the land from the Arizona State Land Department for $68.5 million.

That site has gone back to the department.

In other matters, the City Council:

• Asked for more details on the potential cost savings of reducing or eliminating an after-school program serving about 1,100 children.

• Voted to discuss at a future meeting a citizen petition challenging the Scottsdale Cultural Council to disclose its financial-performance information as required in its city contract.

by Peter Corbett The Arizona Republic Sept. 23, 2010 11:23 AM

Scottsdale seeks development proposals for 80 acres near WestWorld

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