BUY ME OUT FOR THE BALLPARK
Jerry Colangelo's plan to build a glorious, open-air baseball stadium in downtown Phoenix has Norman King sitting somewhere in the infield.
King, proprietor of King's Onion House, is a 34-year-old farmer's son who has run a produce operation in an almost-historic building at 425 East Jackson for seven years. He had heard rumors of a downtown stadium, but didn't learn until last month that the ballpark might be built on top of his 70,000-square-foot onion house.
"I was a little shocked," says King, one of a handful of people who own property in the footprint of the proposed stadium. In the days since the November 10 announcement, King has begun to casually explore his options. Though he says he hasn't spoken with government officials about his future, he's scouting other locations and thinking about what his suddenly important Jackson Street property might be worth.
The Onion King has also picked the brains of realtors who have asked him what he's up to. "What do you think is gonna happen?" he'll ask them.
Trouble is, no one--not even sports potentate Jerry Colangelo--knows for sure if the downtown stadium will come to pass.
An upcoming vote by the Maricopa County Board of Supervisors on raising the sales tax to pay for the stadium is just the first of several large hurdles the project faces.
The deal also depends, among other things, on whether Phoenix is awarded a major-league franchise and whether taxpayers will revolt, forcing a public vote on the stadium project.
Then there is the pesky problem created last week when developer John F. Long offered to give the county 60 acres of west-side land for the stadium. The move could save taxpayers about $100 million but flies in the face of Colangelo's desire for a downtown ballpark.
If all the dominoes do fall the right way, King and his neighbors will have to go. And while the public may assume that landowners like King are poised for a financial bonanza, nothing of the sort is guaranteed.
For now, stadium-site landowners can only guess how they will fare if negotiations for their land begin in earnest. And, more important to everyone else, Valley taxpayers can only wonder how much they will be expected to cough up for the deal.
In theory, landowners at the proposed site should get no more than the current market value for their land. In reality, fair market value is in the eye of the beholder. The actual, final cost of acquiring the land will depend on which side--the landowners or the county--negotiates most effectively.
The experience with America West Arena--the last time government condemnation power and taxpayer money were used to build a home for a Phoenix sports team--proved crafty landowners can profit handsomely from hardball negotiating.
Colangelo wants the proposed Phoenix ballpark next door to the arena, the taxpayer-built Purple Palace where his Phoenix Suns play their home games.
The land in his way includes active businesses, run-down structures already bound for the bulldozer and property whose owners would be just tickled to sell.
The most prominent of the property owners--in land ownership and power--is Phoenix Newspapers, Inc., publishing parent of the Arizona Republic and Phoenix Gazette. The largest structure in the stadium's path is an R&G newsprint-storage warehouse that essentially became obsolete last year when the papers moved their printing presses to suburban plants.
The newspaper company owns the entire block on which the warehouse sits, bounded by Fifth and Sixth streets between Madison and Jackson.
Colangelo's field of dreams would also displace the Yount brothers, Robin (a major-league ballplayer destined for the Hall of Fame) and Larry (a former minor-league pitcher turned investor who's been riding out the local real estate crash for the past few years). The Younts, operating under the corporate name Y&Y Partners, bought most of a city block about a decade ago. Their land is now occupied by vacant shells that once held skid-row bars and restaurants. Though the Younts and other property owners in the area claim to be uncertain about having to divest their properties, the R&G's corporate mind is made up: It's rarin' to sell.
"I'm sure the value will be greatly enhanced by all the things that have been happening--the arena and so forth," says R&G public relations voice Bill Shover.
Not surprisingly, the papers have been strident in their editorial support for the new ballpark since Jerry Colangelo called a press conference to announce his preferred site. The papers' let's-break-ground-and-quickly editorial stances are troubling some keenly interested observers.
David Therrien, a pioneer in the recent downtown-resettlement movement by the Valley arts crowd, is suspicious of the proprietary interest in the downtown stadium deal held by the state's largest newspapers.
Therrien concedes that the stadium might drive up the value of land he owns west of the proposed site, and he could end up profiting from the deal.
But, he says, the papers' financial interest in the deal "is nothing to sneeze at. It ends up being an awful nice piece of leverage to get some favorable stories written about your project."
@body:Strip away the hyperbole about sun-dappled afternoons at the ballpark, forget the prestige and fountain of riches that supposedly would follow major-league baseball to Phoenix.
If the downtown stadium deal is to come together, only two things really matter--land and money.
And on both fronts, Jerry Colangelo and his investors need help from Maricopa County and its taxpayers, or the deal is dead.
A 25-acre chunk of land will have to be assembled from the jumble of warehouses and vacant lots that skirt the southern skyline. The targeted site is south of Jefferson Street between Third and Seventh streets, just southeast of America West Arena.
In addition to Colangelo's obvious interest in the geographic consolidation of his sports holdings, there are other reasons to locate the new ballpark on the downtown site.
Last summer, Maricopa County officials approached Margaret Mullen and Brian Kearney to review more than a dozen possible sites for a ballpark. To reach their conclusions, Mullen--the executive director of the Downtown Phoenix Partnership--and Kearney--program manager of Phoenix's Commercial and Economic Development Office--used "a conglomeration" of numerous previous site studies.
Mullen and Kearney were asked to evaluate potential locations based on a checklist of Major League Baseball's requirements for new ballpark construction.
They faced a tight deadline. The stadium is supposed to be completed by April 1997 and will take at least 24 months to build.
Certainly, Mullen adds, Jerry Colangelo's own desires were also factored into the mix. (According to Mullen, Colangelo wanted, among other things, a location that wouldn't negatively affect residential neighborhoods.) Not a big surprise: The downtown plot now favored by Colangelo seems a sound fit for the stadium, at least based on site-selection criteria suggested by Colangelo and organized baseball.
Baseball, for example, requires any new stadium to have 5,000 adjacent parking spaces managed by the occupant ball club, Mullen says. In addition, 15,000 unreserved parking spaces must be located within six blocks of the park. Those parking requirements are easily met by this downtown location. The proposed plot is held now by only ten landowners, Mullen says, reducing the number of deals that must be cut for the land. There are no houses with occupants to force out, and only one historic structure to consider. Other nearby sites have less favorable parking prospects, more potential land-ownership entanglements and a greater impact on residences. Mullen cautions that site selection is not final, and county Board of Supervisors chairman Jim Bruner says other possible sites--including vacant land on the corner of 40th Street and McDowell--are still in the game. But there is no question where Colangelo and the investors who have allegedly pledged $100 million to buy a team want the stadium.
How much taxpayer money would be needed to buy the proposed site is impossible to determine with certainty this early in the game.
To date, stadium backers and county officials have been offering $100 million as a rough estimate of what it will cost to buy land, relocate businesses and make needed changes such as closing streets and moving utilities.
But the county Board of Supervisors--acting as the board of the county Stadium District--is being asked to do more than raise taxes to pay for the land and build a stadium.
Most likely, observers say, the county will be asked to assemble the needed parcel, using the power it is afforded to condemn land for the public good.
In effect, the supervisors will be sending economic ripples through a host of businesses and individuals. Condemnation will enrich some, force others to move from the area whether they want to or not and determine which nearby, untouched landowners will be able to cash in if the value of their property leaps after the stadium is built.
Those likely to be affected are not necessarily strangers to the supervisors. In his last campaign, Board chairman Jim Bruner received campaign contributions of $120 each from Larry Yount and his wife. Yount and his baseball-playing brother, Robin, own land on the proposed stadium site. Bruner also received $200 from the political action committee of the Dial Corporation, a key investor in the baseball team.
Supervisors Ed King, Tom Rawles and Mary Rose Wilcox also received contributions from the Dial PAC: Rawles and Wilcox $240 each and King $100 given after he won office. Rawles also received personal campaign contributions from two of the company's highest-ranking officers.
Colangelo and his wife also gave $480 to Rawles' campaign, the only supervisor's race to which Colangelo contributed in 1992. Ironically, Rawles is offering some of the greatest resistance to imposing a quarter-cent sales tax to pay for the stadium.
The supervisors ultimately will decide if a relatively moribund section of the city, where crumbling warehouses sit next to thriving, longtime family businesses, will be dramatically transformed.
The process of condemnation is far from scientific, and almost surely will spawn countless billable hours for attorneys representing the county and landowners as they clash over fair prices for the land.
Those who own the land on the stadium site itself, several experts contacted by New Times agree, do not necessarily stand to make a fortune if their property is condemned and taken. By law, those landowners are entitled only to the fair market value of their property now, not what it might be worth as a baseball stadium, parking lot or tavern.
"In theory, there is no windfall at all," says longtime land attorney Jay Dushoff, who specializes in representing landowners who face condemnation proceedings. "You value the property as of the date of condemnation, excluding from your mind any of the positive aspects or negative aspects of the proposed public improvement."
Theory and reality can differ, however.Deciding fair market value can be a mystical process, particularly in a fringe area of downtown where there are few benchmarks for what any given lot may be worth.
"Where do you look for comparable sales?" Dushoff asks. "Downtown has always been its own market."
The City of Phoenix, for instance, spent $10 million--or more than $100 a square foot--for just one downtown block in the heady days of the early 1980s. That parcel, called Square One, is now a parking lot.
Two years ago, however, a downtown block similar to Square One sold for just $35 a square foot.
Therrien, whose investments in the warehouse district include the Icehouse art gallery, says land on Jackson Street west of Central Avenue is selling these days for only about $2 a square foot. But, he notes, a row of old buildings across Jackson Street from America West Arena recently sold for a rumored $40 to $50 a square foot.
Values for the land and the eventual price tag for taxpayers will be hashed out in the condemnation process.
The process itself is straightforward. The government goes to court and files a condemnation on the land. It hires an appraiser to determine a fair value. If the landowner doesn't agree with that figure, he can hire his own appraiser, and the fight is on.
If the county and the landowner just cannot cut a deal, the whole mess may be trotted out before a jury, which finally decides how much money the landowner should get.
The government also has to pay relocation costs for businesses that are forced to move. If, for example, a produce company is forced to find a new place of business, the county would pay for the entire move.
Condemnation certainly would serve Colangelo's interests when it comes to one of his stadium project's most precious commodities--time. If the county wishes, it can condemn property and take control of it almost immediately.
Says attorney Jay Dushoff, "The purpose of immediate possession is that if the only argument is 'How much money?', then the public should have the right to put together the parcels and break ground on the proposed public improvement."
Colangelo has indicated that if Phoenix is awarded a major-league franchise, a stadium would have to be built at breakneck speed. Grabbing the land as quickly as possible would be essential, say sources familiar with similar situations.
And if the 1989-90 experience with America West Arena is any indication, such haste may drive up the amount of taxpayer money needed to acquire the downtown site.
@body:Bob Francy peered out the window of a downtown Phoenix high-rise last week and imagined he was Jerry Colangelo.
"I tried to pick out some alternative stadium sites just for the hell of it," says the veteran property appraiser. "But the site they've picked honestly makes some sense to me."
Francy's 20 years of experience and sound reputation in assessing downtown Phoenix's turbulent real estate market keeps him in plenty of work. Freelancing for the City of Phoenix, he has appraised numerous properties the city took by "condemnation" for its Civic Plaza expansion, the realignment of Jefferson Street and other prominent projects.
But Francy hasn't been told, officially or informally, that he's in line to appraise the stadium site. And he says he'll be surprised if he does get a call, considering what transpired in 1989, after the city hired him to appraise the land on which America West Arena now sits.
"I don't know if I'd do it even if they offer it to me," Francy says bluntly. "I appraised the arena land for what it would sell for on the open market to any buyer, and the city said I was far too conservative. It was quite a behind-the-scenes story."
Francy is the first to admit he is the practitioner of an inexact art. But he still shakes his head over what happened in 1989. His experience may speak volumes to those who wonder how the land-sale part of the stadium project may turn out if things fall into place for Colangelo and company.
The story Francy is referring to can be found in public records. First, the dollars-and-cents finale to the 1989 condemnation proceedings: The City of Phoenix paid 15 separate landowners at the three-block arena site $10.8 million. The Phoenix Suns' ownership added another $500,000 to the pot.
"An appraiser is supposed to go in without considering the project that is contemplated," Francy says. "It's not fair for a guy to announce a new arena and then force him to pay a bunch more for the land because he's going to improve it. It also isn't right to punish the current landowners for the depressed values that would accompany a slaughterhouse or something."
With that in mind in 1989, Francy went to town. Things proceeded fairly smoothly at first, with the City of Phoenix using Francy's appraisals in settlement negotiations that routinely accompany condemnation proceedings. The city quickly bought out the first ten of the 15 landowners for about $5.5 million--a total roughly $540,000 higher than Francy's appraisal of the properties. That differential between appraisal and purchase price is considered in the ballpark for governmental land dealings.
But the remaining five parcels proved to be a much larger obstacle for the City of Phoenix.
Attorneys representing the remaining landowners threatened to sue if the city didn't fork over far more money than Francy's appraisals had indicated. The barristers posed a question that lingered like a bad dream: Was Phoenix trying to condemn land for private purposes, which is illegal?
Though the City of Phoenix would technically own the arena, Colangelo and the Suns--for-profit, private enterprises by any measure--would become the prime financial benefactors after it opened for business. (Similar questions may be raised about the stadium proposal, observers say, and could gum up the works in land negotiations.)
Maybe a judge should decide, the attorneys for the private-property owners mused. Condemnation proceedings are known to drag on, sometimes adding 25 percent or more to the appraised value of condemned real estate.
Suns owner Colangelo and the team of lawyers representing the city were spooked and, near the end of 1989, they caved in. Without informing Francy, the city hired John Loper to reappraise the remaining five properties.
Dual appraisals are often sought in major land purchases, but the dollar difference between Francy's and Loper's appraisals was dramatic.
For example, Francy had appraised arena-area property owned by John and Pamela Vogel at $1.44 million. Loper said its market value was $1.86 million. The city later cut the Vogels a check for $2.26 million, or about $800,000 more than Francy's appraisal. Real estate types consider that kind of difference between two appraisers to be out of the land-acquisition ballpark.
Francy appraised the final five arena properties at $3.46 million. Loper said the same land was worth a whopping $5.07 million. When it was over, the City of Phoenix (and the Suns, to a far lesser degree) paid the landowners $5.8 million--or $2.3 million more than Francy had envisioned.
"It was funny because I tend to err on the high side in these things," Francy tells New Times. "In condemnations, you often deal with unwilling sellers, and I think they should be given a bit of benefit of the doubt for their troubles. But this one. . . . Wow! Those arena-site landowners did very well for themselves."
Francy cautions that it's still very early in the stadium game, but a few things are clear to him about the set of landowners at the proposed site.
"I don't think they'll strike it as rich as some people think," he says. "They'll do okay, but they're not going to do as well as if this whole thing had happened in 86."
In 1986, Francy points out, the block on Central Avenue due east of Patriots Square Park sold for $100 per square foot. But two years ago--after the Charles Keating revelations, the Valley's real estate dive and the coming of the Resolution Trust Corporation--the same block sold for $35 per square foot.
What that means, Francy continues, is that landowners at the proposed stadium site may not be in for a windfall.
"You've had a lot of positive impact downtown," he says, "but a lot of downside, too--the banks bailing out, the dumping of properties by the RTC, a lot of downward pressure. What the net effect will be, who the hell knows?"
But Francy says he's "absolutely, positively" confident the stadium land won't sell for anything close to the $100-per-square-foot figure some dreamy-eyed speculators have been tossing around in after-hours sessions at Tom's Tavern.
"Jackson Street is pretty industrial, with the exception of a few commercial ventures [begun] because of the arena," he says. "If some appraiser goes in and says it's worth $100 [per square foot], he ought to have his buttons cut off. I guess we'll see, won't we?"
@body:Of all the landowners where Jerry Colangelo wants his baseball team to play, none is sitting prettier than Phoenix Newspapers, Inc.
The state's largest newspaper has lucked into a speculative real estate situation likely to add millions more to its already healthy coffers. If the stadium happens at the currently contemplated site, Maricopa County will condemn and then purchase an entire block of R&G property.
PNI, the parent company of the Arizona Republic and Phoenix Gazette, bought the block for a song back in 1958. The paper acquired the property because it was conveniently located near Southern Pacific's downtown railroad tracks. But the R&G has moved its printing plants to Deer Valley and Mesa, and the storage warehouse is of little use these days to the paper.
Stories published by the papers have noted the potential conflict of interest in the case of county supervisor Betsey Bayless, whose family owns a small piece of property where the stadium may sit.
But the papers rarely have mentioned their own far more consequential land ownership, and then that information has been buried.
Depending on the final appraisals, PNI stands to receive millions for the property, which it had been trying unsuccessfully to unload since its printing operations moved to the suburbs. At $20 a square foot, for instance, PNI would receive about $1.8 million. At $40 a square foot, the company would receive about $3.6 million.
The Republic and Gazette continue to trumpet the coming of the stadium in columns and unsigned editorials.
"What happened to the critics of the arena?" Republic editorial-page editor Paul Schatt wrote in a November 21 column. "They have changed their tune to something else, because their dire predictions on this project were so far off the mark."
PNI spokesman Bill Shover insists the papers' coverage of the stadium proposal hasn't been dictated by their land-ownership question.
"We happen to think major-league baseball is the last piece in the great growth of downtown," Shover tells New Times. "And we said that editorially many times before we even knew where Jerry was looking."
Still, the state's largest daily has alal but ignored developer John Long's offer of free land for the stadium. Long's announcement ran on the front page of the Phoenix Gazette and led several local television broadcasts, but has been afforded only one paragraph deep in a Republic story last Sunday.
Shover says the PNI board met last Friday and the issue was not on the agenda. But it will be, he adds.
"We'd have an interest, obviously, in being part of a civic unit to make the stadium a reality," Shover says.
Does that mean, he is asked, that his fat-and-happy company might be willing to donate the prime property?
"Noooo, I don't think so," he quickly responds. "There would be an appraisal price on the property and it would be sold. . . . It's been said around here that we're standing right at home plate."
If the R&G has fallen into a potentially lucrative land deal, so in a different way have Valley brothers Robin and Larry Yount. Robin is a future Hall of Famer nearing the end of a distinguished career with the Milwaukee Brewers; Larry is a real estate investor who is president of the Phoenix Firebirds.
Larry Yount is candid about the rocky financial road he and his younger brother have been on for some years. Failed real estate investments during the speculation-crazed 80s, Larry Yount says, "has made it a roller-coaster ride for the last five years or so. Don't speak to me about the rich get richer. Anyway, we're so far from a done deal on this that it's ridiculous."
By "this," Larry Yount means a prime piece of property--almost an entire block--he and Robin bought as Y&Y Partners in 1983. The block is bordered by Jefferson to the north, Jackson to the south, Fifth Street to the east and Fourth Street to the west. It is directly across the street from the R&G warehouse.
The brothers held onto the property even during their hardest times.
Says Larry Yount: "I'd like to say that ten years ago, I knew Jerry Colangelo was going to buy the Suns, that the arena was going to be next door, that a ballpark was going there, and that I'm the smartest guy who ever walked. But that's not true."
Larry Yount says he and his brother bought the property "because the area around downtown convention centers always grows, and I thought Phoenix would be no different."
Three appraisers and two attorneys contacted by New Times say property in that area would have sold for about $20 to $22 per square foot in 1983. And there's no guarantee, Larry Yount agrees, that the property he and his brother own may sell for much more than that during a condemnation.
"I wouldn't be surprised to see a low return on some of the investments down there," Yount says, "but that doesn't mean I'm not going to try to get me a fair price--if this happens. The land values have got to be on the upside since what happened next door [the arena]. As far as I'm concerned, I'm sitting just fine, and I've got no great desire to sell. But I'm not gonna be the guy who holds up the deal."
@body:Contrast the R&G's empty warehouse and the run-down structures on the Younts' speculative block with three Jackson Street buildings also in the proposed path of stadium development. These buildings have some history. They also house thriving businesses.
Norman King bought his warehouse seven years ago to house his flourishing produce operation. The huge structure stands at 425 East Jackson, two blocks east of America West Arena. King moves tons of fruit and vegetables through this building every day. Battery-powered fork lifts whiz down the aisles of onions, which are stacked in net sacks stored three pallet-loads high. Truckloads of potatoes are loaded into the basement to be computer-sorted and boxed. Phoenix's first all-concrete structure, King's Onion House is built like a bomb shelter, and has in the distant past functioned as one: When King moved in, the basement walls were papered with civil-defense instructions. Erected in 1915, the building is known to historic-preservation authorities as the Lightning Delivery Company Building, after an early tenant.
"Right now the best use for this building is packing and distributing produce," Norman King says. "But if they decide the stadium is gonna go, I don't think I'll be able to stop them."
King's Onion House occupies one of several buildings along Jackson Street that house produce companies. This small warehouse district grew here because of its proximity to the Southern Pacific Railroad tracks. Though most of the other produce operations now receive and ship their products by truck, King's Onion House still gets its deliveries via the nearby rail. Just east of the Onion House, on 601 East Jackson, is the Stern Produce building. Built in 1924 by the Arizona Citrus Growers' Association, it is the only building on the stadium footprint with much historical significance to preservationists. In fact, it's listed on the Phoenix Historic Property Register and the National Register of Historic Places.
Other older buildings on the stadium site have been altered or damaged in ways that make them less appealing historically, says Roger Brevoort, preservation planner for the City of Phoenix.
The Stern Produce building was designed by the firm of Lescher and Mahoney, considered to be among the most important architects in the early history of Phoenix. The downtown post office and the Orpheum Theatre are among other historic buildings drawn by the duo.
As important as its architecture, to historians, at least, is the Stern building's status as a reminder of the citrus industry's role in the local economy in the early 20th century.
Brevoort notes that the existence of one historic structure can't and won't scotch the stadium deal, but preservation authorities will encourage the developers to try to save such a building, or incorporate it into their plans, as the Baltimore Orioles recently did at Camden Yards.
Another example of such a use is the Suns' private health club, which operates in the restored Sun Mercantile Building, a historic structure located just east of America West Arena.
Stern Produce predates its current home, which it has occupied for about a decade. The business itself began in 1917, the year Bill Stern started farming in Phoenix, near what is now the intersection of Grand Avenue and Interstate 17. His grandson, also named Bill, now runs the company out of a basement office below the loading docks. Stern Produce employs about 70 workers to deliver fruit and vegetables to local restaurants. The workday starts early--Bill Stern the younger is in his office by 5:30--and most of the company's 30 or so delivery trucks are parked back on the yard by 1 p.m.
"We've just now started talking with realtors," says Stern, a young-looking 46. And he's just begun to investigate the value of his building, as well as relocation costs for his business. "That's our only dilemma right now, whether to go forward with what we're doing here or find a new building."
Stern's company shares a skybox with another company at America West Arena. "My friends say I should arrange for season tickets in the negotiations," he says, chuckling just a little. Connected to the Stern Produce warehouse via an underground tunnel is the former citrus warehouse that now houses the Charlie Case Tire Company.
The company wholesales several brands of tires to dealers and fleets, operating in several western states and Mexico, and does some retail drive-up business at the old warehouse. The company, which also employs about 70, is run by Claude Case, son of founder Charlie Case, who died in 1983.
Charlie Case sold his first tire in 1937, out of a gas station at 18th Street and Van Buren. He later became a bit of a Phoenix institution; his commercials--Charlie My Boy" was the theme--made him a public figure, and he successfully ran for the Phoenix City Council in 1968. But he didn't like the job, and quit after one term. The Case building, at 234 North Seventh Street, was erected as a cold-storage warehouse for citrus growers in the same year Charlie Case sold his first tire. It long was used as an annex to an older building directly to the south across Jackson. The building has had several uses over the years, including a stretch as a furniture warehouse. The little-known tunnel under Jackson was sealed years ago, according to Claude Case, when a fire broke out at the Stern building and water leaked through the tunnel and damaged furniture stored across the street.
Charlie Case took his business to the old cold-storage plant in 1977, when the City of Phoenix condemned property at Seventh Street and Jefferson he had occupied since the 1940s. Much to Claude Case's chagrin, the parcel on which his dad's old store sat remains an empty lot.
Like his neighbors on Jackson Street, Claude Case is sitting tight, wondering where and when the stadium-development dominoes may fall. "I am aware that there's been some speculation that there may be a stadium here," he says, "but I've got bigger fish to fry than to worry about something that's sort of idle speculation at this point. To me this is not yet real. This is neither a threat nor an opportunity.
"Maybe sometime in the future, if all of a sudden I see bulldozers next door. . . .
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