With a surprise entry into a state trust land auction, Steve Ellman is now a force in the far north East Valley.
The developer and former owner of the Phoenix Coyotes outbid one competitor for 1,276 acres in Fountain Hills, agreeing to pay $110.1 million. The auction began at $95 million, and bounced between The Ellman Companies and Pivotal Group 29 times before the winning bid.
Arizona Land Commissioner Mark Winkleman said the amount paid is the second largest in state history. Arizona’s schools will benefit from the land sale.
State officials tried to auction the land in September, but developers balked at the then-assessed price of $130 million, an appraisal made at the peak of the Valley’s housing boom.
This purchase is Ellman’s second high-profile venture in a once-remote area. Last year he bought 2,100 acres in nearby Goldfield Ranch and plans to build a 1,000-home community there.
“We are thrilled with the prospects in Fountain Hills,” said Don Kile, president of the Preserve at Goldfield Ranch. “It is an outstanding community. We will work with all to plan and build an outstanding project.”
Kile acknowledged that it wasn’t until Wednesday afternoon that the company finally decided to buy. And once Ellman made that commitment, he would not be deterred.
“We had a sense he really wanted it,” Pivotal CEO Francis Najafi said. “We wanted it, too, but he wanted it more.”
Attending the auction were members of the Fountain Hills government, elected and appointed. Last year the town moved to annex the land, as civic leaders thought it important to make sure the property was developed to the standards of Fountain Hills and not Maricopa County.
The property is zoned for a maximum of 1,750 units.
“We’re looking forward to working with the Ellman group,” Mayor Wally Nichols said.
Although Kile didn’t provide details on Ellman’s plans for the land, the bidders themselves provide good clues, noted a local real estate expert.
Pivotal is building upscale residential communities across the West, and Ellman is doing the same in Goldfield Ranch. Their interest in the land could mean the two firms see Fountain Hills as ripe for another such development, said Jay Q. Butler, director of Realty Studies at Arizona State University Polytechnic.
“It’s an area that has potential,” Butler said. “A lot of developers have been talking for the past few years about the next Paradise Valley — a highend enclave that’s known to be high-end. It’s an area that’s well-known for being that kind of development site.”
Ellman is best known as the former owner of the National Hockey League’s Phoenix Coyotes and the developer of Westgate City Center in Glendale.
In his previous forays into this side of the Valley, Ellman squabbled with Scottsdale’s political leaders over a pair of projects.
First, Ellman wanted to develop the former Los Arcos Mall at Scottsdale and Mc-Dowell roads. The property sat vacant for several years while Ellman — backed by two public votes — wrangled with the City Council over how to fund and build his arena-centered development.
In April 2001, a frustrated Ellman went to a welcoming Glendale to build his hockey palace, now called Jobing.com Arena.
Later, Ellman proposed Wal-Mart-anchored developments at the Los Arcos site. But his requests for tax subsidies totaling about $40 million did little to curry political favor with either council members or voters.
Eventually, Ellman pulled out of Scottsdale and sold the land to the ASU Foundation.
A potential problem with the Fountain Hills land stems from a dispute over how many residences it can hold.
Despite the town’s zoning, officials with the Fountain Hills Sanitary District — a governmental entity separate from the town — said they would be unable to service more than 1,071 homes on the land without expanding the wastewater treatment plant, which they have resolved not to do.
“That’s something (Ellman) is going to have to work through,” said Richard Turner, Fountain Hills planning and zoning administrator.
But that issue and others will be handled in months, if not years, to come. For now, the developer and his representatives are tickled pink. Or punk.
Said Kile: “I feel like Joey Ramone — I wanna be sedated.”