Sweetheart Deal

The APS parking lot sold to Mary Rose Wilcox (inset).

The Arizona Public Service Company's sale of a one-acre paved parking lot to Maricopa County Supervisor Mary Rose Wilcox and her husband smells like trout left rotting in the Phoenix summer sun.

APS sold the land to the supervisor and her husband, Earl Wilcox, at a price several hundred thousand dollars below fair market value, according to my examinations of public records and interviews with real estate investors familiar with the transaction.

The property is across Grant Street from the couple's successful Mexican food restaurant, El Portal, in downtown Phoenix.

The terms of the real estate deal bring a couple of words to mind: Unbelievable! Outrageous!

Regarding the land sale, a well-connected former county law enforcement officer told me, "At the very minimum, [there's] a legitimate issue that should be looked into. It clearly looks bad."

When Mary Rose Wilcox finally called me back minutes before my deadline, she said the land purchase was simply part of her family's effort to improve a downtrodden part of town and that she received no special treatment from APS.

But the facts surrounding this deal lead me to think otherwise.

Mary Rose Wilcox is serving her fourth four-year term as a supervisor. Before that, she served on the Phoenix City Council for nine years. Earl Wilcox is a former state legislator. The couple long has played a powerful role in local Latino politics and in the Democratic party.

In her role as a supervisor, Mary Rose Wilcox has repeatedly voted on matters directly affecting APS, including high-profile issues such as where high-voltage power lines will be located and approval of a lucrative plan by an APS subsidiary, Northwind, to provide air conditioning to county buildings in downtown Phoenix.

Mary Rose Wilcox has never officially disclosed that, as a public official, she engaged in a major financial transaction with APS, a deal that could reap her family a large windfall.

Members of the Board of Supervisors are required to file written disclosures detailing important business deals and potential conflicts of interest with the Maricopa County Clerk's Office.

The Wilcoxes didn't buy the parcel personally. Instead, they acquired it through Grant Park Enterprises LLC, a company they formed in September 2000.

They are planning to build a mixed-use residential, commercial and retail project on the site. They have brought in a third partner to help with the development phase of the project -- a close associate of notorious land-fraud kingpin Charles Keating.

APS spokesman Mark Fallon says the Wilcoxes opened escrow on the 45,000-square-foot property on February 25, 2003. The sales price, Fallon says, was based on a November 2002 appraisal that APS obtained from a private company, Burke-Hansen LLC.

The sale, however, didn't close until September 11, 2003, when Grant Park Enterprises signed a contract to purchase the lot for $152,750, with only a $2,750 down payment, according to a property affidavit filed with the Maricopa County Recorder's Office. The Wilcoxes obtained a $150,000, federally subsidized Small Business Administration loan through the Arizona Business Bank to secure the property.

Fallon insists that the "final selling price represented [Burke-Hansen's] appraised value or better."

But public records and real estate investors cast serious doubt on the accuracy of that appraisal.

As anyone who owns property in the county knows, the County Assessor's Office mails notices of valuation for land and improvements every February. The assessor places a "full cash value" on the property and any structures, which is then used to compute property taxes for the next year. The county's full cash value of property typically understates the true market price of the property by a range of 10 percent to more than 30 percent.

No one in his or her right mind would sell property at the assessor's "full cash value," since market prices are far higher. So why did APS sell its property to a member of the Board of Supervisors for nearly $80,000 less than the county assessor's full cash value for the land?

I can't answer that question. All I can do is show you how the deal went down.

The property purchased by the Wilcoxes made up 75 percent of a paved parking lot parcel whose full cash value was set at $306,000 for the 2004 tax year by the County Assessor's Office. Since the entire parcel was the paved parking lot, this means that the property purchased by the Wilcoxes had a full cash value of $229,500 (75 percent of $306,000) -- nearly $80,000 more than the actual sales price of $152,750.

APS knew, or should have known, the county's full cash value of the property long before it closed the deal with the Wilcoxes. The assessor's office mailed the notice of valuation for the 2004 tax year to APS in late winter 2003 -- months before APS closed the sweetheart deal with the Wilcoxes in September 2003.  

If for some reason APS was not aware of the county's 2004 full cash value of the parking lot property before entering into escrow with the Wilcoxes in February 2003, all the company had to do was look at the county's 2003 full cash value figure to see that it was selling the land far below market.

Using the same methodology as above, I quickly computed that the full cash value of the Wilcox parcel for tax year 2003 was $198,750 -- $46,000 more than the actual sales price.

There is absolutely no doubt that APS sold the land way below the full cash value placed on the property by the assessor's office. But get a load of this: As I've stated, the assessor's full cash value is usually far below the market value. In this case, the market value of the land purchased by the Wilcoxes in September 2003 was more than four times greater than what APS sold it for, according to downtown Phoenix real estate investor Michael A. Levine.

APS sold the land to the Wilcoxes for $3.40 per square foot. Levine, who owns and operates surface parking lots within a few blocks of the Wilcox property, says paved parking lots were selling for between $15 and $20 per square foot in 2003.

"That land should have gone for at least $675,000 and possibly for as much as $900,000," Levine told me.

Levine said even a "fire-sale" price would have fetched at least $10 per square foot, or $450,000 for the land sold by APS to the Wilcoxes.

There's no doubt that downtown Phoenix land prices were clearly beginning a sharp increase by late 2001. In early 2002, the City of Phoenix, for example, purchased mostly dilapidated houses that were later torn down, paying as much as $24 per square foot for downtown property located north of Van Buren Street and west of Seventh Street.

So why would APS, a regulated electric utility company, eagerly sell downtown property far below market rate?

APS was under no financial pressure in 2003 to sell land to the Wilcoxes at the cut rate of $3.40 per square foot. APS is a subsidiary of Pinnacle West Capital Corporation, one of the state's largest companies with about $10 billion in assets.

Interestingly, about the same time the Wilcoxes opened escrow on the property in February 2003, a major downtown planning effort led by APS and sports mogul Jerry Colangelo was being secretly put together.

Sometime in early 2003, downtown power brokers began work on a downtown master plan to guide a multibillion-dollar redevelopment project to transform the city's inner core over the next decade.

The electric utility was among the insiders participating in the early stages of developing the master plan. And Mary Rose Wilcox had to be aware of the planning effort through her membership on the board of directors of the Downtown Phoenix Partnership -- a civic and business group that encourages development and played a leading role in developing the master plan.

Colangelo told me in the fall of 2003 that he and other business and civic leaders wanted to keep their master plan out of the public arena for as long as possible to prevent land speculators from moving into the market and driving up prices ("Operation Mickey Mouse," November 20, 2003).

It was during this time period -- when only a limited number of people knew that a major downtown redevelopment plan was in the works -- that APS sold its property at a rock-bottom price to Supervisor Mary Rose Wilcox and her husband.

In the past two years, property values have soared in downtown Phoenix and the rest of the metropolitan area. Levine says investors are now buying land in the area near the Wilcox property for between $30 and $60 per square foot, depending on the zoning.

This suggests that the Wilcoxes have seen the value of their property go up between 1,000 and 2,000 percent in two years.

Not a bad return.

You would think, with that much profit looming, that the supervisor and her husband could pay their county property taxes on the parking lot on time. But as of June 10, they were delinquent $9,214 for their 2004 property taxes, including $575.86 in interest.

The Wilcoxes' deal with APS only gets more questionable with the appearance of a con man like Charles Keating on the horizon.

Keating pleaded guilty to fraud charges and spent four years in prison for his role in the spectacular collapse of Lincoln Savings and Loan in the late 1980s. He also owes $3 billion to bondholders stemming from a civil judgment ("DeConcini & Keating," July 14, 1993).  

The Lincoln Savings scandal led the U.S. Senate Ethics Committee to hold hearings into the actions of five senators -- including former Arizona senator Dennis DeConcini and Senator John McCain. All five received reprimands from the Ethics Committee for their unsavory ties to Keating.

Keating's longtime secretary, Carol Kassick, is one of the Wilcoxes' partners in Grant Park Enterprises II, the company formed to develop the land purchased from APS.

Keating was recently spotted by Arizona Republic columnist Richard Ruelas meeting with Earl Wilcox inside an SUV parked near the restaurant. He was also seen at the restaurant by New Times writers on one other occasion. Ruelas stated in a June 6 column that the Wilcoxes described Keating as a family friend.

Ruelas also reported that when he called Grant Park Enterprises II, none other than Charlie Keating answered the phone. Keating, Ruelas wrote, proceeded to berate him, telling him to "drop dead."

I called Grant Park Enterprises II on June 13, and an older man (based on his voice) answered the phone. Obviously, I can't say for sure that it was Keating, but immediately after I identified myself, the man laughed and hung up.

So what does Mary Rose Wilcox have to say?

After repeated phone calls placed to two different county public information officers who assured me on June 10 that the supervisor had received my urgent request for comment, Mary Rose Wilcox finally returned my call a few minutes before 6 p.m. on June 13 -- just moments before my deadline.

Wilcox blamed the gross disparity between the fair market value and the price she and her husband paid for the prime real estate north of her restaurant on APS.

"APS gave us what they thought was a fair price," she said.

Then she said she was only buying the property as a service to the community, which wanted the APS parking lot to be developed and serve as a link between the Grant Park neighborhood and downtown.

If this was true, a nonprofit neighborhood association could have been formed to purchase the land rather than the Wilcoxes' personally acquiring the property for pennies on the dollar.

The county supervisor said no conflict of interest existed because her lucrative deal with APS was a one-time transaction.

That is simply ludicrous. A 2,000 percent return on investment in two years is something one tends to remember for a while, don'tcha think, Mary Rose?

As for good old Charlie Keating, Mary Rose says she and Earl have severed ties with the con man and his secretary because of the negative perceptions.

Sorry, Mary Rose, but your attempts at explanations don't obscure the obscene bottom line: You and your husband made a killing on an insider real estate deal with a company over which you wield immense power in your role as a county supervisor.

It's time for Attorney General Terry Goddard to bring on the grand jury and get to the bottom of this mess.

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