Developer Jim Rhodes probably will not have to explain why he kept a crooked Nevada politician on his payroll for years as he finalizes his plans for a massive development on state land in Apache Junction.
Rhodes’ success in dodging efforts to force him to testify about his past business dealings comes as he is in the final stages of developing a master plan for about 7,700 acres of state trust land near Baseline Avenue and Ironwood Drive in Apache Junction.
Rhodes bought about 1,000 acres of state land, and the right to master-plan the surrounding 6,700 acres of state holdings, in December 2006. The auction was the first sale from Superstition Vistas, a 275-square-mile swath of state holdings extending from western Apache Junction to Florence.
Rhodes had been facing the prospect of delivering his master plan for the Apache Junction property to state land officials while being forced to testify to the Arizona Corporation Commission about his past business relationship with Erin Kenny, a former Clark County, Nev., commissioner who admitted taking bribes in 2003. Kenny worked as a consultant to Rhodes for about four years after she reached a plea deal with federal prosecutors in Nevada.
ACC members have been trying to force Rhodes to testify under oath about his ties to Kenny as part of his application for a permit to operate a water and sewer company that would provide service to a pair of city-sized developments he plans in Mohave County near Kingman.
But late last month, Rhodes notified the commission he had sold the utilities, which will operate under the name Perkins Mountain. If he has no remaining ownership in the utilities, the commission probably lacks any basis to force him to testify, according to Commissioners Bill Mundell and Kris Mayes, who had requested Rhodes’ testimony so he could be questioned about Kenny.
Both say they still want proof Rhodes has no ties to the new owners, Utilities Inc., described in commission filings as a firm that operates about 500 water, sewer and irrigation systems in 17 states.
“If he has no interest in the water and sewer company, then that ends the concern about Mr. Rhodes being a fit and proper person, because he will no longer have any interest in the operation of the water company,” Mundell said.
That means there would be no reason for Rhodes to testify about his past, Mundell said.
The decision to sell the Perkins Mountain utilities came at a critical time for Rhodes’ efforts to develop and master-plan the state trust land in Apache Junction.
Rhodes, a Las Vegas homebuilder, is nearing completion of his master plan for the Apache Junction area, according to state land commissioner Mark Winkleman. In the next few months, Rhodes is expected to submit his land use plan for the entire 7,700 acres to the agency. By late fall, the state should be ready to take the proposal to Apache Junction officials and begin the process of getting the property rezoned.
Actual construction is still about 18 months away, Winkleman said. The first phase of development will probably be on the 1,000 acres Rhodes bought from the state, Winkleman said.
Fred Baker, planning manager for Apache Junction, said the ultimate plan for the state properties being devised by Rhodes will have a mix of commercial and residential uses. No plans have been submitted to the city, but Baker said he has been working closely with Rhodes executives and the state to develop the master plan for the area.
Rhodes was not well-known in the Valley when he bought the state land in Apache Junction.
He had ventured into Mohave County a few years earlier, buying up thousands of acres extending from Golden Valley west of Kingman to the Nevada state line.
In July 2005, Rhodes filed applications with the ACC for certificates to operate water and sewer companies to serve two of those developments. But by mid-2006, commissioners had begun asking about his background to determine whether he met a legal requirement that a person be of “fit and proper” character to operate a regulated utility in Arizona.
Lisa Urias, company spokeswoman, said the commission’s case had dragged on too long as it increasingly focused on Rhodes’ personal background and less on the ability of the companies to provide water and sewer service to his communities. Part of the reason he sold Perkins Mountain was to take himself out of the equation, she said.
“They thought this will expedite the process,” Urias said of Rhodes company officials’ decision to sell the utilities.
The Tribune published a three-part series in April laying out Rhodes’ long history of legal problems, including allegations of fraud and theft from past business associates. The newspaper also reported Rhodes’ close ties to Kenny, who admitted she took hundreds of thousands of dollars in bribes from a Las Vegas strip club owner and others in return for favorable votes when she sat on the Clark County Commission.
Rhodes was not directly implicated in the bribery scandal that rocked Las Vegas when indictments were announced in mid-2003.
By then, Kenny had left the commission and was working for Rhodes as a consultant. She reached a plea deal with prosecutors and earlier this year was sentenced to 30 months in prison.
Last June, Kenny testified in a federal criminal trial that she was still on Rhodes’ payroll as a consultant, making more than $200,000 per year.
Though Rhodes testified in front of the commission in March, he was not asked about his relationship with Kenny. After her testimony in June, Mundell and Mayes took the unusual step of requesting the investigative phase of the commission’s hearings be reopened, and that Rhodes be compelled to testify about his dealings with Kenny.
Rhodes was able to stall the commission’s demand he testify through procedural maneuvers.
Just before his time ran out, he notified the commission he’d sold Perkins Mountain, and that neither he nor any of the companies he controls would have any ownership interest in the utility.
Mayes said that when the application does come to the commission for more hearings, she will seek assurances that Rhodes will have no control over the new utility company and that the sale is legitimate.
“I have become increasingly concerned about the use of stock transfers as a means of purchasing water companies in Arizona because it has become a vehicle for skirting commission oversight,” Mayes said.