By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
State officials made their own overtures to the company, specifically an offer to create a foreign trade zone, which comes with an 80 percent property-tax break.
But tax breaks weren't the only incentive the state and Governor J. Fife Symington III offered Sumitomo.
Newly discovered documents indicate that Symington directed state employees to secure an incentive the state had no right to give.
In September 1995, several weeks after two independent appraisers hired by the state Land Department had valued the state land Sumitomo wanted to lease, Symington sent a letter to Sumitomo officials assuring them that the appraisals were "flawed" and that new valuations would "provide a fairer market value" for the land.
Soon thereafter, state Land Department employees directed appraisers to reevaluate the Sumitomo parcel and subtract huge amounts of money from their original estimations.
In less than a week, the appraisers produced new reports--the first set of appraisals had taken nearly a month--and decided that the land Sumitomo wanted was worth a little more than half of what they'd said earlier.
Six days after the appraisers submitted their new, cut-rate valuations, Sumitomo announced that Phoenix had won the sweepstakes for the plant.
On their own, the state's fire-sale appraisals will end up saving Sumitomo $60 million over the life of the lease.
In their willingness to cut Sumitomo a deal, however, Arizona officials appear to have violated their legal responsibility to get as much money as they can for the sale or lease of state trust land.
That money goes to support Arizona's schools.
Symington and the state had several incentives to offer Sumitomo at their disposal, but diverting money intended for the state's schoolchildren into the coffers of a corporation that owns one of the biggest banks on Earth was not one of them.
Land Department officials claim they only reappraised the value of Sumitomo's parcel when changes in the conditions of the lease required it, and not on directions from Symington.
But that explanation is difficult to believe in light of Symington's letter to Sumitomo, in which he said he had discussed the "flawed" appraisals with state Land Commissioner M. Jean Hassell. Hassell denies ever speaking with the governor about the matter.
Bob Corbin, former Arizona attorney general, says the deal "doesn't look good" and that he would have investigated it. He also says the state could be sued by a taxpayer or school district in an attempt to set aside the lease agreement.
And if land-use attorneys New Times consulted are correct, Symington's letter, combined with the instructions later given to appraisers by the Land Department--instructions other real estate experts have called outrageous--could result in a criminal investigation.
Yes, another one.
The governor is no stranger to questionable property valuations. He has shown a penchant for adjusting the value of his assets up or down, depending on whether he was trying to get financing or trying to keep from paying back a loan. He is awaiting trial on 23 criminal counts, most of them for fraud--federal prosecutors say he lied on financial disclosure statements submitted to lenders.
In this case, the asset devalued for the benefit of a foreign corporation was the state land trust--a commodity designed to benefit the people Symington was elected to serve.
If the Sumitomo corporation wanted cheap land for its silicon-wafer plant, it went looking in a pretty unlikely place.
The Desert Ridge development in northeast Phoenix is one of the hottest-selling upscale neighborhoods in the Valley, and Mike Chierighino and Mark Wirth--who were hired by the Land Department to appraise state land containing the proposed Sumitomo site--found sky-high prices.
Neither was unfamiliar with appraising state-owned land. Wirth reportedly specializes in appraisals for county and state agencies. Chierighino has an even closer connection to the Land Department: He spent more than 20 years as an employee of the agency, retiring in 1989 as the state's chief appraiser.
They knew that to put a price tag on the 520-acre parcel of state land lying to the northeast of Tatum Boulevard and the Central Arizona Project canal, they would have to find what folks were paying for similar tracts in the area.
They found that sales ranged from $80,000 to more than $100,000 per acre for unimproved land.
Even though these sales were very near the Sumitomo parcel, the appraisers rightly considered other factors besides location that differentiated the sample sales--called "comps"--from the large parcel Sumitomo wanted.
Chierighino, starting from a figure of $88,000 per acre taken from nearby comps, deducted discounts both for the bulk of the 520-acre parcel as well as for the time--six years, he estimated--it would take a typical developer to sell off various parts of the plot. He also estimated that $2 million of off-site improvements would be required before a typical tenant could make the land usable, and adjusted his estimate downward by that amount.