Scottsdale suddenly has become a considerable player in the local real estate market.
Consider three recent purchases:
• On Aug. 9, 2004, the city purchased the old Los Arcos Mall site, a 42-acre parcel, from the Arizona State University Foundation, which earlier purchased it from developer Steve Ellman. Cost: $41.5 million.
• On Sept. 14, Scottsdale outbid four major developers for an 80-acre tract of state trust land north of WestWorld of Scottsdale, the city’s special events and equestrian center. Cost: $47 million.
• On Thursday, the city purchased two state trust parcels totalling 79 acres adjacent to WestWorld. Cost: $31 million.
In all, the land rush comes to 201 acres and $119.5 million.
The wheeling-dealing begs the question: When is it appropriate for a government body to act like a private sector land baron?
Unlike other land purchases, such as those that have contributed to the McDowell Sonoran Preserve, the three recent buys aren’t unequivocally for public uses. They’re intended to support private uses.
Details of the Los Arcos purchase call for the city to provide $40 million to $45 million worth of improvements to the site, then lease all but 5 acres to the ASU Foundation.
The ASU Foundation, in turn, is developing it into the ASU Scottsdale Innovation Center, a combination research and retail development.
The foundation will provide the city with 50 percent of the net revenue it receives on the site from leases with private sector tenants with the city.
The city will recoup its initial $41.5 million outlay, plus $40 million in improvement expenses, in 30 to 40 years, according to projections.
The city is projected to derive an additional $5 million to $8 million in lease revenue from a potential hotel developer on its 5-acre slice.
Meanwhile, both land deals near WestWorld are designed to support a trio of signature tourist events — the Barrett-Jackson Classic Car Auction, the Scottsdale Arabian Horse Show and the FBR Open golf tournament.
Executives with both the car auction and horse show had threatened to move their events to Glendale without additional space for parking and other needs. The golf tournament also found itself squeezed for parking as other open parcels surrounding the Tournament Players Club of Scottsdale were purchased.
Thursday’s purchase should solve the growing pains.
While neither the Los Arcos land nor the 79-acre parcels were for public purposes, city planners can reasonably argue they were made in the public’s interest.
September’s 80-acre deal was intended as a fallback in case the city failed to grab the 79-acre parcels, officials said. Now, though, the public interest in that land has expired.