Drop in land auctions could affect Scottsdale

State Trust Land officials are unlikely to bring many tracts up for auction in 2009, and it could have implications for Scottsdale development and the McDowell Sonoran Preserve.

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The State Land Department's Web site lists six auctions targeted for the next year for land in Scottsdale totaling more than 1,800 acres.

That includes 1,700 acres in north Scottsdale the city wants for the preserve. Officials refer to the acreage as "postage stamps" because of the parcels' shape.

But State Land Commissioner Mark Winkelman said Thursday that the department had about eight auctions in the last year with no bidders. And although the Scottsdale properties are listed as tentatively going to auction next year, only one has a definite auction date, he said.

"I think with the market the way it is, you'll see us bringing fewer properties to market," he said. "I don't see staff working on an auction that's not going to have any bidders."

Scottsdale City Councilman Bob Littlefield said less state land coming online for development means less tax and fee revenue for city coffers.

"It means less development revenue, no question," Littlefield said.

The lack of interest in buying and developing vacant state lands is a reflection of the prevailing economic slowdown, said Rick Kidder, Scottsdale Area Chamber of Commerce president.

"That's a pretty good sign that the market is telling us all that it has slowed down really radically," Kidder said. "Businesses are feeling it fairly sharply."

Consequently, developers are finding it harder to get loans, which translates into fewer new development projects, he said.

"What's happening in national and global markets is affecting us just as much," he said.

There is a possibility, however, that not bringing state lands to auction could help stabilize the value of other developable parcels in Scottsdale, Kidder said.

"It could perhaps solidify some of the values of privately held land in the city," he said.

Winkelman said only one parcel in Scottsdale has a definite auction date - a nearly 11-acre parcel northwest of Bell Road and Thompson Peak Parkway. Byxbee Development Partners filed the application to bring the land to auction.

The land department values the parcel at $2.75 million. Winkelman said the plot is adjacent to land Byxbee already owns.

The department's Web site lists five other auctions targeted for 2009, but Winkelman said none of them is likely to go to auction next year. That includes the 1,700-acre postage stamp parcels Scottsdale wants for the McDowell Sonoran Preserve.

The blocks reach off to the southwest from the northern half of the preserve and encompass land that developers may see as highly valuable, mainly parcels between Scottsdale and Pima roads and between Happy Valley Road and Dynamite Boulevard.

Buying the postage stamp parcels is a lower priority for Scottsdale than other properties closer to the current boundaries of the preserve, city officials have said. Officials place more importance on lands that are contiguous and can provide public access.

Tempe-based SunCor Development Co. filed an application to bring the land to auction in late 2006. Winkelman said department officials haven't discussed the land with SunCor for about a year. The company has proposed residential development, he said.

He said that when the real estate market recovers and the postage stamp parcels finally go to auction, they could fetch up to $300,000 an acre, or a total of $510 million.

Scottsdale officials, on the other hand, have said the city currently has authorization to issue $460 million in bonds to be used toward acquiring the remaining 19,643 acres for the planned 36,000-acre preserve.

Littlefield acknowledged that the city could have a tough time getting the 1,700-acre postage stamp parcels at auction.

"It's going to be difficult for us to outbid people like SunCor," he said. "We know the developers are going to be competing for it."