Developer bids for Mesa’s Pinal land

Mesa is considering the sale of 1,600 acres of city-owned land in Pinal County to a Colorado-based firm currently building a heavy, rail-driven industrial development near Denver’s airport.

GRAPHIC: Mesa's stake in Pinal County

The city’s property, near Eloy, just east of state Route 87 and north of Interstate 10, hugs a Union Pacific line.

Schuck Colorado Ltd. approached the city’s real estate broker, Nathan and Associates Inc., about three months ago to inquire about purchasing the property, said Doug Tessendorf, Mesa’s real estate director.

Selling the 1,618 acres could bring the city $48.5 million in new revenue during a time when the city has been selling surplus property to help balance its budget.

However, about six months ago, the city backed off a more aggressive plan to sell some of the Pinal County acreage because of a toppling real estate market — especially in the residential sector.

Despite the earlier hesitation, city officials said the deal on the table now is a good one that shouldn’t be passed up.

The first phase of the sale covering 560 acres would close a year from now at a price of $30,000 per acre. Two subsequent phases would close a year after the first property sale, Tessendorf said.

“That’s a real good price out there,” Tessendorf said. “The real estate market is down, but industrial development isn’t down.”

The City Council is scheduled to consider the land sale at Monday’s regular meeting.

A local real estate broker said the city is fielding a competitive price for its Pinal County property.

“We’re still seeing land being absorbed and development, but it’s just not quite at the frenzied pace we got used to,” said Pete Wentis, a senior vice president for commercial brokerage firm CB Richard Ellis.

Wentis said the Mesa property could fetch a higher price if it were farther west, near major freeways such as interstates 10 and 8. Undeveloped property closer to those interstates has recently sold from $40,000 to $55,000 an acre, although those deals have been smaller than the city’s bulk offering.

About 18 months ago, a CB Richard Ellis study showed a massive sale of some of the city’s 11,600 acres may only command $15,000 to $20,000 an acre, he said.

Some of the city’s Pinal County land doesn’t have direct access to sewer or utilities, which can cost a developer hundreds of thousands of dollars to install, Wentis said.

The Mesa property on the block, now zoned for agriculture, is planned for annexation into Eloy if it is sold. Eloy has slated the area for industrial development, according to city documents.

Meanwhile, the potential buyer of Mesa’s property has a history of planning distribution centers near rail lines and airports.

Mesa officials said the industrial development could complement the city’s plans to develop industrial job centers near Phoenix-Mesa Gateway Airport, more than 50 miles to the north.

In Colorado, the Schuck company is moving ahead with a 5,000-acre “inland port” planned as a major transportation distribution and cargo center just miles from Denver International Airport, according to the company’s Web site.

The development, dubbed TransPort, would be one of the largest such developments in the region, anticipated to draw millions in development investment and thousands of jobs.

Schuck plans to use the Pinal County land as an industrial subdivision served by the Union Pacific Railroad, according to the city’s documents.

Representatives of the Schuck company did not return phone calls on Wednesday.

Selling surplus property has been a strategy Mesa has adopted since 2003, when the city uncovered chronic budget problems.

Mesa has reaped around $50 million in land sales since then through a variety of sales. It’s last major land holdings lie in Pinal County.

In June, the city anticipated selling just $16 million in Pinal County over the next five years.

However, flagging sales tax revenue is putting a dent in the city’s budget forecasts after the first quarter.

Mesa’s most recent forecasts show that the city’s total revenue trails projections by $2.6 million for the first four months of the 2007-08 budget year.

That means the city could be headed for mid-year budget adjustments that cut programs and services.

Tribune reporter Misty Williams contributed to this story.