Developers aren’t interested in bidding on the recently annexed state trust land in Fountain Hills because they say the more than $100,000-per-acre price tag is too high.
“We have talked to quite a few parties and I have not found anyone yet that said they would show up to bid at auction at a starting price of $130 million,” said State Land Commissioner Mark Winkleman.
An appraiser is reevaluating the 1,276 acres, which sit in the northeast corner of town, because of the lack of interest and a declining housing market.
Although the auction is still scheduled for Sept. 28, Winkleman said “there is an extremely high likelihood” that it will be delayed.
“I think at this point it is certainly unlikely that there would be a successful auction,” he said.
The original applicant for the auction, Tempe-based SunCor Development, said there are no plans to bid at the current price.
“It’s definitely too high,” said Jim Adair, director of community development for SunCor. “In order for us to be interested in the land, it would need to be about 40 percent less than the last appraisal.”
Fountain Hills-based MCO Properties similarly announced in July that it is not interested because the price is too high.
When the land is finally sold, a developer will be able to build up to 1,750 homes that adhere to current zoning restrictions because of an agreement negotiated in January by the town and land department.
While an auction delay would affect town plans for growth, Mayor Wally Nichols said a lower appraisal could be good for Fountain Hills.
“If it sells at a lower price than what it’s appraised at now, then that could turn out to be favorable for the town because there would be less pressure by a developer to try and recover their investment,” Nichols said.
This would mean that the highest bidder might consider building fewer homes.
“I know it’s going to be sold eventually,” he said. “We want to make sure the bidders show up to bid.”