ARIZONA'S ISLAND PARALYZE

THE STATE HAD GRAND HOPES FOR DEVELOPING ITS $80 MILLION ISLE IN LAKE HAVASU. IT'S BEEN A REAL BEACH.

State Land agreed with MCO.
"That's it!" Lake Havasu City Mayor Richard Hileman reportedly said. "The Land Department has just killed the plan."
Hileman turned the controversy over to a group called the "Stakeholder's Process," which has acted outside the eye of public meetings to collect basic points of view from all sides of the debate.

The Stakeholder's Process--an odd combination of debate by mail and smoke-filled room--is spearheaded by Richard Rumage, a retiree whose previous claim to fame was the ability to write a series of locally printed opinion pieces in the almost unreadable jargon of an old miner.

Is such a process legal? Dan Barr, Phoenix attorney and spokesman for Arizona's First Amendment Coalition, isn't sure.

"Clearly, it violates the spirit of the open meetings law for a public body to have given their authorization totally to this group," he says. "It's kind of a de facto advisory committee. . . . It's certainly very disturbing."
Disturbing it may be, but the good people of Lake Havasu City have small regard for the niceties of constitutional law. To local politicians, the bizarre process provided breathing room, time to allow tempers on both sides of the debate to cool. It is also a chance to cut deals without having to worry about the press. Although both local newspapers squawked to open the process for a few days, no serious opposition was ever voiced.

The unofficial, private group invited Hassell to play, and the land commissioner accepted. "I agreed to participate in this," he says, conceding that he feels a sense of urgency to recoup on the state's $80 million Island.

Still, he says, nobody is standing in line for a chance to develop The Island.
"I think people are scared to death of Lake Havasu City," Hassell says.
But MCO still owns that 100 acres, and the descendant of McCulloch's empire is tired of waiting for a solution. Beginning last month, MCO execs moved to build 500 homes on their Island land. Their stated threat to the city: Let us build or we'll sue.

"We saw no real end in sight," says MCO exec Greg Bielli. "We just kept hearing about erosion of our position." Bielli worries that the current plan for The Island progressing through City Hall looks like one that will prohibit houses. MCO wants to break ground before the city and state can stumble into such a deal.

"If they don't accept our application, we have possible legal remedies," Bielli says.

@rule:
@body:Despite the protracted imbroglio, state officials attempt to put the best face on The Island saga. They stubbornly defend their decision to take The Island off the feds' hands.

"Despite all we've been through," the Land Department's Glendon Collins says, "The Island remains an excellent asset."
Not everyone holds that view. Land appraiser Paul Johnson (no relation to Phoenix's ex-mayor) calls the $80 million figure "too expensive" for The Island, whose recent history he terms "a mess."

Longtime Lake Havasu City resident Ken Standal, executive vice president of the local board of realtors, says when it comes to The Island, everything is relative.

"If you put it on the market today, you probably wouldn't get a penny for it. You'd have to sell it for $100 million, and who'd want to buy it?" he says.

Standal believes no useful appraisal of The Island's value has ever been done. "It seems to me the only way it can be appraised is as it's developed. No one's ever gone outside the community to find [the value of] comparable properties," he says. "I think to get a true appraisal of The Island, that's exactly what you'd have to do."

Bob Deitrich, whose California appraisal and consulting firm has done work in the Lake Havasu area, is more optimistic.

"In 15 years, that land will become very valuable, when the current leases are up and the Land Department can sell or lease it. On that basis, I think it was a good long-term investment," Deitrich says.

But after nearly nine years of wrangling, Land Department officials are hungry for a plan that would show some promise for a return on their investment.

"In Lake Havasu City, we get one problem solved and it just sits there and waits for another," Collins laments.

So if he had to do it all over again, would Collins urge the state to acquire The Island?

"I'm not going to answer that," he says.

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